The Hidden Knowledge Gap: Why Startups Struggle to Build on Their Insights

I find this difference extremely compelling, especially considering my time spent working in startups. Startups move fast, sometime break things or end up breaking themselves, but they do have a weird relationship with knowledge. More specifically, they struggle more than bigger companies at transforming cyclical knowledge into compound and functional knowledge. One of the most evident examples of this challenge in startups is in customer acquisition and retention strategies. This was extremely apparent in the last startup I've worked at [...]. It seemed to have an insane handicap to acquire and retain functional knowledge to then compound it. Same with financial and performance data - it seemed that everyone was so struggling to make sense of things and invest those learnings with the next round of initiatives. Every quarter was the same old story - no focus on learnings, knowledge was siloed in a few people with the relevant analytics background but unwilling to share or evangelize, little or no reinvestment of knowledge from previous experience.

The Issue with Cyclical Knowledge

Startups often operate in short, iterative cycles—launching campaigns, testing new channels, and quickly pivoting based on immediate feedback. While this approach helps them move fast and experiment, it tends to foster cyclical knowledge, or at least it should. They learn what works for the moment (e.g., which ad creative converts better this week or which email sequence drives signups), but that knowledge is often siloed, fragmented, or quickly forgotten as they chase the next big idea. A few things are in the way of compounding knowledge from cyclical to functional:

• Turnout rates - folks coming and going within a few months-years at best
  • startups frequently face turnover or role changes, which can lead to gaps in functional knowledge.
• Managers and leadership uncomfortable with prioritizing documentation and process-based workflows to retain knowledge
  • They may not have the time, tools, or team bandwidth to properly document campaign learnings, analyze performance trends over time, or extract principles that could guide future decisions
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• lack of proper post-mortem analysis and in general data analysis capabilities
  • Unlike more established companies with robust processes, startups often lack the infrastructure to transform these lessons into compound knowledge.
• the focus on the short term and always looking forward mentality (e.g. next round, next quarter etc.)

The Struggle to Build Compound Knowledge

Cyclical knowledge, and the inability to fully learn from others’ past experiences, means you have to accept a level of volatility and fragility not found in other fields.

Some fields have quantifiable truths, while others are guided by vague beliefs and individual circumstances. Physicist Richard Feynman said, “Imagine how much harder physics would be if electrons had feelings.” Well, people do. So any topic guided by behavior – money, philosophy, relationships, etc. – can’t be solved with a formula like physics and math.

But in the case of companies and organizations, there is a degree to which you can build on cyclical experience to create compound and functional knowledge. This distinction between cyclical, compound, and functional knowledge isn't just theoretical—it's a lens through which companies can critically evaluate their biggest blind spots. Without systems to retain, share, and build upon knowledge, organizations end up spinning their wheels, repeating the same mistakes, and missing opportunities for growth. While the fast pace and focus on innovation are part of what makes a startup exciting, they must balance this with deliberate efforts to transform fleeting insights into lasting knowledge. Startups that recognize the importance of investing in knowledge—not just the next product launch or funding round—stand a far better chance of breaking the cycle. By prioritizing documentation, creating a culture of shared learning, and embracing processes that make knowledge accessible, they can bridge the gap between cyclical and compound knowledge. In doing so, they not only move faster but also smarter, turning short-term wins into sustainable success. Companies that succeed aren’t necessarily the ones that break the most things—they’re the ones that figure out how to learn, adapt, and build on the pieces.