GraphedMinds
The Startup Ideas Podcast

The Startup Ideas Podcast

The best businesses are built at the intersection of emerging technology, community, and real human needs.

Back to Mental Models

Business as Math Equation

View every business decision through the lens of unit economics: Cost of Traffic × Conversion Rate × AOV = Profit

Decision Rule

Only make changes that improve the overall equation, even if individual metrics get worse

How It Works

Every business activity can be reduced to measurable inputs and outputs that either improve or worsen profitability per customer

Failure Modes

Optimizing individual metrics without considering overall equation

Ignoring cash conversion cycle timing

Focusing on revenue without considering profit margins

Making emotional decisions instead of data-driven ones

Example Decision

Increase price 20% even if conversion rate drops 10% because overall profit per visitor increases due to higher AOV offsetting lower conversion