Why Canary Speech Spent $1M on Project Revenue Before Building Their Real Product

Every pitch deck promises the same trajectory: build product, launch, hit $1M ARR in 18 months, scale. The metrics investors want are clear—recurring revenue, negative churn, predictable growth. Project work is what you do when you can’t build a real business.

In a recent episode of Category Visionaries, Henry O’Connell, CEO and Founder of Canary Speech, explained why he deliberately chose the opposite path—and why that decision is the reason his company survived eight years while competitors with better metrics are dead.

The Million-Dollar “Mistake”

By year two, Canary Speech was generating revenue. “During the second year we started, in the second year, we were probably at about a million or a million won, and that would go up and down. It wasn’t recurring revenue like we have today. It was project based revenue,” Henry explains.

They worked with UnitedHealthcare on engineering contracts. “We actually did multiple ones with United Healthcare, probably eight of them, which really helped our company.”

On paper, this looks like a lifestyle business. No recurring revenue. No compounding growth. But Henry wasn’t building a lifestyle business—he was buying time to solve a problem that had stumped research institutions for thirty-five years.

What Project Revenue Actually Buys

The conventional wisdom is backwards. Investors hate project revenue because it doesn’t scale easily, not because it doesn’t work. For deep tech requiring years to validate, project revenue buys something more valuable than growth metrics: survival runway while maintaining equity and control.

Canary Speech used contracts strategically. “While we protected the ownership of what we were doing, they’re more like an engineering type of contract. It’s a project work. We got paid for doing it,” Henry notes. They weren’t selling core IP—they were getting paid to develop adjacent capabilities while building foundational technology.

This solved multiple problems: cash flow without dilution, relationships with future customers, real-world data to refine technology, and market validation before productization.

The Problem Only Project Revenue Could Solve

Why did Canary Speech need years? Because they were solving what no one had solved before. For thirty-five years, researchers tried using speech to detect disease by analyzing words—natural language processing applied to healthcare.

Canary Speech took a different approach: analyzing sub-language elements. Not what you say, but how you say it. “We weren’t doing word based analysis. We were really, truly doing analysis that were sub language and objective in nature. You didn’t choose to say a word. You couldn’t say, I’m feeling really great about myself, and today’s the best day of my life. We were measuring. It didn’t matter what you said, we were measuring your actual anxiety based on sub language biomarkers.”

This required new algorithms, clinical partnerships with Harvard Beth Israel and Hackensack Meridian, peer-reviewed studies, and processing 15.5 million data elements per minute. You can’t do that in 18 months on a seed round.

When the Math Changes

The SaaS model assumes quick validation, then scalable sales. For Canary Speech, validation required clinical studies, peer review, and years of relationship building. “Healthcare markets don’t change. They don’t change quickly. Their processes, their procedures, the tools they use are being used in situations and circumstances that are critical, life saving in many cases,” Henry explains.

When a single customer takes five years from first contact to commercialization, burning capital while waiting creates an impossible situation. Project revenue inverts this—generating capital while building toward your real product.

If you need eight years to build defensible technology and raise capital with five-year fund cycles, you’ve created structural misalignment. Project revenue extends runway without investor pressure to show premature growth.

The Decision Framework

Not every company should choose project revenue. The decision depends on validation timeline, technology defensibility, and available resources.

Canary Speech needed years because they were working in healthcare with novel technology. “At some point, we would be approached by a pharmaceutical, or we’d be approached by a healthcare company to do that kind of work. They had friends that were, or they were graduates of a university, and they would go to their university,” Henry recalls. If universities could replicate their work, they had no business.

The decision came down to survival: raise more capital and face pressure to show SaaS metrics before the technology was ready, or generate revenue through adjacent work while building their core offering. They chose survival.

The Transition Point

The critical question isn’t whether to take project revenue—it’s when to stop. For Canary Speech, that moment came when they recognized universities could do their work. “We thought, you know, if a university graduate program can do what we’re hoping will be advanced technology, then we’re probably not in the right fitting situation.”

This triggered a fundamental shift. They rebuilt their team and moved toward productized offerings. “During the last two years, we moved into a SaaS recurring revenue mode, which has allowed us to build revenue month over month, which is a totally different phase of a company.”

The transition took years. But project revenue gave them runway to make it on their terms, not investor timelines.

What This Means for You

If you’re building deep tech in a regulated market, the SaaS playbook might kill your company. The question isn’t whether project revenue is “real” business—it’s whether you need time that venture capital won’t give you.

Henry’s advice: “You’ve got to put the stake in the ground, and that stake may be three years out, it may be eight years out, it may be ten years out.”

Project revenue isn’t a compromise. It’s a strategic choice that trades growth metrics for survival runway. For Canary Speech, that choice is why they’re still building eight years later with $26 million raised and twelve patents, while competitors who chased SaaS metrics are gone.

Sometimes the best way to build a venture-scale business is to ignore venture metrics until you’ve built something that actually matters.