An area I have wrestled with as a VC over the last five years is how to really understand the unit economics of businesses. The basic concept of LTV>CPA (lifetime value greater than cost to acquire) is pretty simple. The complexity comes when you try to work out what will happen to these economics as the business scales.

I’m not going to get into lifetime value calculations here, as it is well covered elsewhere e.g. by Bill Gurley here. Where I’d like to focus is on CPA.

Often as a VC you are presented with a headline CPA figure and nothing more. This can look good on the surface but mask underlying issues. For example…

Source: Understanding Customer Acquisition Costs  — Growth Hacking, Marketing and Venture Capital — Medium