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LTV/CAC >3 Sustainability Threshold
Consumer mobile apps need lifetime value to customer acquisition cost ratio above 3:1 to sustainably scale with paid marketing
Decision Rule
Don't spend on paid ads until LTV/CAC >3. Focus on organic growth and retention optimization until hitting this threshold.
How It Works
Ratio above 3 provides buffer for payback risk, allows aggressive scaling, and maintains healthy unit economics during growth
Failure Modes
Starting paid ads too early with poor ratios
Calculating LTV incorrectly with overly optimistic retention
Ignoring CAC increases as you scale spend
Example Decision
“App has $15 ARPU and 8 months average retention = $120 LTV. If CAC is $50, ratio is 2.4:1, so focus on retention improvement before paid ads. If CAC is $35, ratio is 3.4:1, so start scaling paid.”