Many many software companies end up spending more money to acquire a customer than a customer will ever pay them. I tend to think this is because the demand and need for many tools is not significant enough to justify the amount of capital allocated to promote them.
Finance spreadsheet alchemists last 10 years saw big gross margins in software (overinflated by not taking into account cost to acquire user), bought into long-term incumbent dominance narrative from founders, and now they're stuck with companies that are willing to spend 10x+ lifetime customer value to acquire a user.
Everyone with a vested interest in these companies/investments always seems to say the real returns are 10 years+ once they are in a dominant position in their industry and have monopolistic pricing power.
How are we supposed to know what happens in 5 years, let alone 10+? Seems like a big carnival trick to me. What's interesting is that this mentality is so engrained that the people promoting it don't seem to even get that they're in on an act.
You could have the best tool on the planet, but if the cost to distribute it is greater than what those customers acquired will ultimately pay you, you don't have a company.
Finance spreadsheet alchemists last 10 years saw big gross margins in software (overinflated by not taking into account cost to acquire user), bought into long-term incumbent dominance narrative from founders, and now they're stuck with companies that are willing to spend 10x+ lifetime customer value to acquire a user.
Everyone with a vested interest in these companies/investments always seems to say the real returns are 10 years+ once they are in a dominant position in their industry and have monopolistic pricing power.
How are we supposed to know what happens in 5 years, let alone 10+? Seems like a big carnival trick to me. What's interesting is that this mentality is so engrained that the people promoting it don't seem to even get that they're in on an act.
You could have the best tool on the planet, but if the cost to distribute it is greater than what those customers acquired will ultimately pay you, you don't have a company.