Morris: Ignoring unit economics for customer growth leads to disaster
Nigel Morris · 20VC: Why Bundling Does Not Work, How The Best Founders Analyse Unit Economics, Why The Way We Approach Mental Health in Venture and Startups is Wrong with Nigel Morris, Co-Founder & Managing Partner @ QED Investors · May 24, 2021 · at 26:05
Nigel Morris, co-founder of QED Investors, discusses why unit economics discipline is essential for fintech company survival.
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“Now, we have seen fintech companies that have eschewed the whole notion of unit economics. Hey, what does it matter? I've got a net promoter score that's off the scale. I can book customers for five bucks. I have no idea what the attrition rate's going to be, and you know what? I'm going to figure out how to make money down the road. Now, that sort of land-grabbing California gold rush mentality can work in certain businesses, and it has worked in fintech. For us, though, that is far too much of a Promethean leap, where you say, I'm going to just get loads of customers, they'll love me, and then I'll figure out how to make money down the road. That usually ends in tears. It usually ends with down rounds, and then you're fighting this losing battle internally of trying to tell people why they should stay with you on the journey when the valuation of the company has just fallen in half.”
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