Founders Only Need This Simple Math Equation

Sustainable businesses make money. To scale, you have to make a lot of money.

As a startup founder, you need to learn if you’re building a sustainable business as quickly as possible. It doesn’t need to be profitable from day one but there has to be a clear path to sustainability. If you can’t identify that path, you need to make changes immediately.

You have to make more money than you spend to be profitable. No glitz, no glamour. Just basic math. Here is how it works:

If Cost of Acquiring a Customer (CAC) is lower than the Lifetime Value (LTV) of that customer, you win. In other words, CAC < LTV = $$.

I’m constantly amazed at how many entrepreneurs don’t understand this simple equation. Drive down CAC. Increase LTV. Make money. Invest the profits. Scale. Win.

Nothing is better than winning.


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