

Want to scale? Make sure your LTV is greater than your CPA - DanLivesHere
http://www.avc.com/a_vc/2011/04/ltv-cpa.html

======
alain94040
Unusual 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
I 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.

------
flyosity
I'm surprised he wrote something like this. This seems like the most obvious
business information you can write beyond revenue - expenses = profits.

------
mctavjb9
David Skok of Matrix Partners has blogged comprehensively on this topic:
<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
My 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
Actually 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
tl;dr - You shouldn't spend more to acquire a customer than she is worth to
you.

