[greghinch]

Without knowing more about the OP's business it's hard to say for sure, but I can give some thoughts based on my own experience. I'm going to assume they are a B2B company of some kind based on the limited description. In this capacity, when you are starting out, often you have a very small customer base. You likely know each of your customers individually. And as individuals, they have their own thoughts and opinions about how they want a service like yours to function. If you're not careful, you end up becoming something more akin to a consultant than a vendor. Your service becomes tailored to the specific needs of one or a few customers.

The problem is, when you are going for growth, you can't focus on the needs of one. You have to be able to take a higher level view, and build a product that can do the most for all of your customers. Sometimes that means cutting features, or at the very least making changes. If you had a product which was tailored for one customer, that fact may very well be quite limiting to expand to many more customers. Even if you build something that could do just as much for that early customer, the fact that you had to make those changes may be enough to sour the relationship and end it.

Again it's hard to know what happened in this specific case without details, but I would wager it was something along those lines. It's a decision not to be made lightly, but one you're likely to face as you grow a B2B service.

[ronaldx]

Ditching a client who generates 80% of revenue - and enough to provide for 2 people - is akin to quitting a good job with no job to go to.

If you have a client like that who is hindering to growth, then a dominating strategy would be to spin-off rather than ditch. You can afford to put 1 or 2 people on that work while you build from what's already been done.