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Founder's Journal cover image

The Dangers of LTV

Founder's Journal

NOTE

The Pitfalls of Unsustainable Growth in Direct-to-Consumer Companies

Unsustainable growth in direct-to-consumer companies often leads to eventual collapse due to excessive spending on paid marketing. Early investors benefit initially, but later stage investors suffer as profitability becomes a challenge. These companies become reliant on paid marketing and face difficulties in acquiring customers organically. The focus on the Lifetime Value (LTV) versus Customer Acquisition Cost (CAC) creates a cycle of dependency on paid marketing, leading to unsustainable growth.

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