3 ms·
What's badly needed here is a sensitivity analysis. For example, he lists ZocDoc's CAC as in the range $1k to $10k. If it's $1k then their LTV/CAC = 4.8 (wow
by robzyb 11y ago
What's badly needed here is a sensitivity analysis.
For example, he lists ZocDoc's CAC as in the range $1k to $10k.
If it's $1k then their LTV/CAC = 4.8 (wow good!)
If it's $10k then their LTV/CAC = 0.48 (wow horrid!)
The author chose $3k, seemingly arbitrarily.
There's nothing wrong with arbitrary assumptions in general, but in this case a lot more scrutiny is needed before we judge if its a unicorn or donkey.
- vlasev 11y agoWhen dealing with numbers that span orders of magnitude, it may be better to use the geometric mean (sqrt(1x10) approximately 3), not the usual mean ((1 + 10)/2 around 5). Just my guess.
- robzyb 11y agoI would argue that's no better. I would say: When dealing with numbers that span orders of magnitude, and the result is very sensitivity to those numbers, you need to obtain more information in order to make a better estimate.