Paying for ads could ruin your startup.

“In reality, most founders pay for ads as a shortcut for having to build great product — this will usually come back to bite them in the long run.”

What’s so bad about paying for ads early on?

Priority #1: Finding Product-Market Fit

What if there’s no other way for me to reach my target user than buying ads?

Figure 1. Credit: James Currier in The 4 Signs of Founder-Market Fit

“Paying people to download an app is easy. Building an amazing product that people want to pay for is a lot harder.”

Paying for ads is not always bad

(1) After finding PMF:

(2) LTV > CAC, with high switching costs:

(Rev. per customer — expense per customer) / (1 — customer retention rate)

Figure 2. Credit: Mark Sevinc in Mobile Game Retention Rates, LTV, CAC and Acquisition Channels

Stop paying for users and start getting scrappy

Figure 3. Credit: Lenny Rachitsky in How the biggest consumer apps got their first 1,000 users

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store