Startup Killer: The Cost of Customer Acquisition

Extract from article by David Skok

In the many thousands of articles advising entrepreneurs on what they have to focus on to build successful startups, much has been written about three key factors: team, product and market, with particular focus on the importance of product/market fit. Failure to get product/market fit right is very likely the number 1 cause of startup failure. However in all these articles, I have not seen any discussion about what I believe is the second biggest cause of startup failure: the cost of acquiring customers turns out to be higher than expected, and exceeds the ability to monetize those customers.

In case you are not familiar with the importance of Product/Market fit, Marc Andreessen has a great blog post on this topic:  The Pmarca Guide to Startups, part 4: The only thing that matters.

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