Expecting a purely ad based arbitrage might be dumb

CAC will always try to fuck you, it increases over time as competition bids up costs

Even to expect positive cashflows when growing via ads is unwise

You gotta get your wedge in your own funnel.

You have to optimise your funnel for getting as much cash out as possible.

Yearly subs and other upsells are the only way to have positive cash flows in face of corrosive effects of CAC.

As a startup your GTM & funnel is more important than your product

At 10% yearly subs, you’re profitable only at very low CACs.

But at 30% yearly subs, you can absorb CACs up to $400+

Your funnel will have to do most of the work to keep your cashflow above water.

If you’re not extracting maximum value from each visitor through your own funnel optimizations, you’re just subsidizing Facebook’s and Google’s revenue growth while hoping CACs stay low.

Every dollar extracted efficiently from your funnel can be reinvested in product development

Competitors can copy features, but they can’t easily replicate your entire GTM machine, customer relationships, and funnel optimizations.

You can outbid competitors who haven’t optimized their funnels.

With better funnels you can survive CAC environments your competition cannot.

You have to respect your funnels and GTM as much as you do your product.