Thread by @d_mccar

@patrick_oshag Golly - there's a lot that one could say, but let me try:
1/ The paradox of great NDR: great for valuation, but leaves you extremely sensitive to changes in long term competitive position and the discount rate, a variant of duration risk.

@patrick_oshag 2/ Some of the best opportunities in B2C could be those for which we see a "retention smile" -- NDR that falls then rises again. During the growth phase, aggregate-level retention measures *must* by construction look really bad, yet sales growth will be surprisingly resilient...

@patrick_oshag ... over time as those older cohorts get better and better. You'd only see this when you peek under the hood at the cohorts.

@patrick_oshag 3/ Sad to say, but people in marketing generally care a lot less about getting the absolute levels for these figures right than people in finance. Lending against customer contracts, like @pipe does, forces you to think more carefully about what payback really is.

@patrick_oshag @pipe 4/ Payback period is when you get your money back, full stop. You get paid when cash is in your pocket -- cash flow. So why even look at a "gross profit payback" when it is so easy to account for the other variable expenses that sometimes hit opex, and cash conversion?

@patrick_oshag @pipe 5/ As @trengriffin notes, aggregate measures don't do justice to the extreme polarization of customer valuations within each cohort. At most consumer businesses, 20% of the customers generate more than 100% of the profit....

@patrick_oshag @pipe @trengriffin This creates opportunity on the one hand if you can figure out what makes the best customers tick, but on the other, it means your valuation is predicated on your ability to continue finding what can sometimes be an exceedingly tiny group of customers to "carry the cohort."