Most VC pitches hinge on a key number:
Return On Investment (ROI) = LifeTime Value (LTV) / Cost to Acquire a Customer (CAC)
And I can’t blame them: VCs are in the business of selling money. They want to know that if they sell you their money (paid for with equity), it’ll be put to good use. This is more true today than ever because startups are so cheap to run anymore, meaning the only realistic way you can spend millions of dollars is on customer acquisition.
But the open secret that has taken me years to learn is this: it’s all bullshit. Continue Reading…