Fintech LTV must use gross margin, not gross payment volume
Kirk Simpson · 1323 How FinTech Company Wave Is Deploying $100m in Capital, $25m+ in ARR · Mar 9, 2019 · at 12:36
Kirk Simpson, co-founder and CEO of Wave, explains financial metrics and unit economics in payments businesses to host Nathan Latka.
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“Essentially in our business, because we're paying out to Visa and MasterCard and Amex on our payments revenue, It's important to not look at the gross revenue, but instead to the net, right? And to like take lifetime times by your net revenue to get a true view of LTV. Now, some people, listen, there's a lot of companies that are valuing growth at all costs, and they'll look at the gross revenue, and they'll paint a really nice picture of the LTV to CAC. We just don't think that's sustainable, and so we look at that gross margin LTV, and then on the flip side, we also look at fully loaded CAC, so not just the cost of what we pay Google for SEM, but what about the salaries? What about the content that we're producing? All that kind of stuff, and that is what we view to be the important metric.”
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