We are in an age of the "hurry let's IPO before they realize our customer acquisition costs are unsustainable" IPO.
Take Blue Apron, for instance.
They stated their blended Cost Per Customer is $94 in their prospectus, this # has been parroted all over the place.
This little piece of "hope the Analysts dont dig in" masks their most recent quarter costs which exploded to $460 per customer. (1)
This is a classic, groupon-like example of somebody figuring out a really profitable niche that's easily duplicate and relies almost entirely on paid media to drive acquisition.
The efficiency and sheer scale of todays' online advertising market means that if you're armed with a shit ton of cash you can buy your way into public-market growth.
Sustainable it is not.
No wonder they don't bother reporting a pesky little detail like "churn" in their prospectus (2)
I wonder how much longer companies will be able to get away with this game.
(1) https://www.recode.net/2017/6/1/15727182/blue-apron-ipo-s1-a...
(2) https://www.forbes.com/sites/neilstern/2017/06/05/meal-prep-...
Take Blue Apron, for instance.
They stated their blended Cost Per Customer is $94 in their prospectus, this # has been parroted all over the place.
This little piece of "hope the Analysts dont dig in" masks their most recent quarter costs which exploded to $460 per customer. (1)
This is a classic, groupon-like example of somebody figuring out a really profitable niche that's easily duplicate and relies almost entirely on paid media to drive acquisition.
The efficiency and sheer scale of todays' online advertising market means that if you're armed with a shit ton of cash you can buy your way into public-market growth.
Sustainable it is not.
No wonder they don't bother reporting a pesky little detail like "churn" in their prospectus (2)
I wonder how much longer companies will be able to get away with this game.
(1) https://www.recode.net/2017/6/1/15727182/blue-apron-ipo-s1-a...
(2) https://www.forbes.com/sites/neilstern/2017/06/05/meal-prep-...