1/ When an investor talks about "unit economics," they are taking about a discounted cash flow (DCF) analysis.
CLV = "the present value of cash flows that a customer generates while they are engaged with the firm minus the cost to acquire the customer." morganstanley.com/im/publication…
2/ The value of understanding the CBCV/LTV of customers was immediately apparent when I saw cable, mobile and software businesses create obvious value without GAAP earnings. By focusing on cash flow and value creation having a variant perception that generated alpha wasn't hard.
3/ The current customers are the basis for the steady-state value and
future customers are the source of the present value of growth opportunities (PVGO). Exhibit 1 shows the drivers of
value.
CBCV = a bottoms-up DCF of all present and future potential customers.
4/ Who was delighted when their accountants confirmed their up front investments in customer acquisition and capex deferred taxes since they reduced GAAP earnings even though cash flow was healthy and real value bring created on a DCF (unit economics) basis?
Malone, McCaw...
5/ Businesses have always focused on discounted cash flow (DCF). Cash is king.
CBCV transforms what was an analog unit economics process into a scientifically driven process that improves outcomes via real experiments. The data scientists you've been reading about do this work.
Share this Scrolly Tale with your friends.
A Scrolly Tale is a new way to read Twitter threads with a more visually immersive experience.
Discover more beautiful Scrolly Tales like this.