I divided businesses into 2 camps in my previous article

Makers and Seller.

Makers generally don’t need to spend too much on customer acquisition because they charge less. There are less of them. Sellers are eager to take products from them so that they can upsell it. The kryptonite of makers is underutilized capacity because they have already paid for it. If the utilization is not proper, they are not making enough, they are not selling enough and thus they cannot finance it and they go under.

For sellers, the capital requirements are much less because all they are tied up into is the inventory. If they can rotate the inventory, they can make money.The kryptonite of sellers is customer acquisition cost because prices are usually not very flexible, but the inventory cost is fixed, and on top of that, customer acquisition cost can be variable and inflates so fast. I describe it as CAC and is fat tail in this article.

Another thing emerges – social capital. Makers do not require high social capital because their capacity speaks for itself. But sellers have to use social capital so that it can help them cushion their customer acquisition costs.

Just like you cannot start being a maker without huge capital commitment, I don’t think it is wise to start being a seller without having huge social capital. Otherwise, you will be relying on either the mercy of keywords so that you can rank in SEO or spending a lot of money on ads. Which brings us back to square one. That them not having social capital makes them bring a lot of financial capital. So that deal does not make sense because if you were bringing a lot of financial capital, just go for making, right? If you want to internalize the locus of control when you are selling, you have to have social capital.

So if you wanna be a seller, please go create some social capital, have some authority, and have some nice content pieces. Without it, sellers become pure arbitrageurs competing on paid acquisition efficiency. At that point, product or niche won’t even matter because what you are playing this game is based on your ability to do acquisition better than your competitors. Your product is your capacity to do acquisition efficiently. In the business of selling some product.

When sellers lack social capital, they're not actually in the business they think they're in. They believe they're in the "selling coffee" or "selling skincare" business, but they're actually in the "customer acquisition optimization" business that happens to move coffee or skincare as a byproduct.

This is why you see so many e-commerce sellers with identical:

-Shopify stores with the same themes
-Dropshipped products from the same suppliers
-Facebook ad creative following the same formulas
-Landing pages with the same structure

They're all competing on the same variable: who can extract slightly better ROAS from the same acquisition channels. The product becomes almost irrelevant - it's just the widget that flows through their acquisition funnel.

^from claude

This game has no durable competitive advantage. Whatever acquisition edge you find (a better ad angle, a better audience segment, a better landing page layout) gets arbitraged away within months. Your competitors copy it, the platform algorithm adjusts, CPMs inflate, and you’re back to square one. Just the same way, some minor innovation in manufacturing gets arbitraged away, and everyone soon has it. Just that in manufacturing, it can last for decades. Here, it can last for weeks or months only.

See, as long as customer acquisition cost is a concern, you will be in the game of CAC optimization or customer acquisition optimization. Once it is not a concern, you can actually focus on your product and social capital is what allows you to do it. Cag needs to stop being an existential threat and needs to become an ordinary, just another background metric. Because when you’re in CAC survival mode, “better product” just means “converts better in a cold Facebook ad.” That is not product-centric at all.

CAC needs to stop being a do or die and just become something as ordinary as shipping costs. Just another cost of business, not an existential threat.

Social capital and its ancillary benefits, such as network, access to presence in landmark locations etc. can help you not be stuck in survival mode and actually play the game you want to.

When CAC is existential, "product improvement" gets redefined through a narrow, distorted lens:

Better product = higher conversion rate on cold traffic
Better packaging = more thumb-stopping on feed
Better copy = optimized for 3-second attention spans
Better features = whatever A/B test wins this week

You're optimizing for acquisition compatibility, not actual product quality. The product becomes a conversion tool first, a useful thing second.
The insidious part: this creates a local maximum trap. You keep iterating toward "converts better in paid ads" which might actually make the product worse for long-term satisfaction, retention, or word-of-mouth. But you can't see it because you're measuring success by immediate conversion metrics, not by whether customers love it enough to tell others.