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Want to scale? Make sure your LTV is greater than your CPA
- alain94040 16y agoUnusual for Fred Wilson to repost spammy content. Did you count how many times the newsletter - by the way you should subscribe - is mentioned? And then the content was very basic.
- DanLivesHere 16y agoI wrote it, with two subscribe links, for what it's worth. The content is basic as per his MBA Monday's theme. He tackles one basic concept each Monday.
- rudiger 16y agoThere's a lot of good stuff in the comments.
- flyosity 16y agoI'm surprised he wrote something like this. This seems like the most obvious business information you can write beyond revenue - expenses = profits.
- mctavjb9 16y agoDavid Skok of Matrix Partners has blogged comprehensively on this topic: http://www.forentrepreneurs.com/ http://www.forentrepreneurs.com/ The content may seem obvious, but how many startups can you think of that have utterly failed to achieve LTV > CPA?
- DanLivesHere 16y agoMy first startup totally misunderstood the concept in reverse fashion -- we miscast the definition of "customer," and therefore thought our LTV was tiny when it was actually huge, and focused our acquisition paths incorrectly. That's why I think about ideas in these terms so much.
- hammock 16y agoActually seems backwards to me. Of course you want LTV > CPA... but when we're talking about scaling, you often get increasing returns to scale. Which means that you can start with a poor LTV/CPA ratio, even an unprofitable one, and end up with a better one after scaling.
- imjk 16y agotl;dr - You shouldn't spend more to acquire a customer than she is worth to you.