Startups and Unicorns in India
Business Models and Unit Economics
A startup must eventually earn more per customer than it costs to win and serve one, a test called unit economics.
Growth without sustainable economics cannot last.
Customer acquisition cost
CAC is how much a firm spends to gain one customer.
Lifetime value
LTV is how much revenue or profit the customer brings over time.
The test
If LTV is not greater than CAC, more growth loses more money.
Burn rate
Burn is how fast a startup spends its cash. Investors track runway, the months before money runs out.
Discount-driven growth
A firm offers huge discounts to win users but finds they leave once the discounts end.
Chasing users without profit logic
Growth must eventually pay.
Key takeaways
- CAC is cost to win a customer.
- LTV is what the customer brings.
- LTV must exceed CAC.
- Burn and runway matter.
No recording for this one yet - EconReader can read it aloud for you.