I agree that being a "custom engineering contractor for BigCustomer" might not have been the ideal outcome, but at least the entire company would have gotten some expertise, and probably be able to pivot and finally build their own thing given more resources (*cough*moreVCfunding*cough*).
This entirely. I've been CTO at a handful of startups, most recently one that sold for a very large sum of money — and the successful ones are almost always led by people who keep things dirt simple: focus on the customer, execute quickly, communicate clearly, keep costs low, and keep the technology simple. That's basically it. Just a few simple things, applied relentlessly.
The ones that failed were always the total opposite — not listening to their customers, poor communication across the org, blowing their runway on "we need Google-scale infrastructure," switching languages or frameworks halfway through the project, and so on.