Business Owners: Only Two Numbers Matter Ross Kimbarovsky | December 7th, 2011

Howard Morgan, the Managing Partner of First Round Capital has a simple and practical view on evaluating Internet-based businesses:

If you have a business that’s based around the internet, basically only two numbers we need to know: What’s the cost to acquire a customer? What’s the lifetime customer value? If the lifetime customer value is higher the than cost to acquire, you’ve got a business. If it isn’t, you don’t.

All business owners – and not only those building Internet-based businesses – should follow this advice. Here’s Howard Morgan’s short video on this subject.

Do you agree?

From many minds, the perfect design. Post your project today and let the crowd wow you!

  • Paul

    I respect the guy and he has is pretty much spot on. In the interest of your readers though a little more… it wouldn’t be as catchy of an article if it was “the only 4 numbers that matter” because there are a couple more:

    – # of new customers acquired each month. You can have a great Cost to Acquire but if you can’t acquire them, well then…

    – Gross marginal Costs or conversely, COGS. Granted, for web businesses, the marginal costs are typically low, so we can probably ditch this one. And if LTV is including COGS and/or overhead already and is really meant as incremental lifetime net profits discounted back, well then, he’s spot on.

  • Hey guys:

    First off this was an amazing video, and I have since passed it along to all of my readers and followers of my social media channels.

    Problem: When I try and share this very valuable post, your social graph data is done so poorly, that when the social channels try and pick up an image, title and description, it is not working properly, looks terrible and reads even worse.

    You are doing a serious disservice to a great post, website and blog especially when someone like me tries to purposefully share it with others!

    You should have your web team look into fixing this IMMEDIATELY!

    If you have questions about how exactly to do that, or what I am talking about, please contact me privately, and we can talk about it, you can follow my firm @Biquitous on Twitter, and we can private message from there.

    In the mean time, please keep up the great work!


  • Those of the interesting information you always bring out the best that I know, thanks.

Join the crowd that's raving about the crowdSPRING Blog

Get our weekly digest of can't-miss content on how to take your brand to the next level.

Creative needs?

We have 200,000 creative professionals ready to help you with custom logo design, web design, or a new company name. Take your project to the crowd!

Click to get started on

Free eBooks

interviews with graphic and web designers

12 Question Interviews with cS designers.
Get it »

contracts for graphic designers

Contracts for designers who hate contracts.
Get it »

contracts for software and website developers

Contracts for software developers who hate contracts. Get it »

Latest tweets

crowdSPRING @crowdspring
Small Business Spotlight of the Week: SpotHero
crowdSPRING @crowdspring
Small Business Spotlight of the Week: Orazure Hand Roasted Coffee

About crowdSPRING

Tens of thousands of the world's best and most successful entrepreneurs, businesses, agencies and nonprofits rely on crowdSPRING for affordable and risk-free custom logo design, web design, a new company name or other writing and design services. More than 200,000 designers and writers work on crowdSPRING. We create designs and names people love. 100% guaranteed.

Learn more »
Read previous post:
Small Business Spotlight of the Week:

There are lot of benefits to owning your own car.  Like not having to haul groceries a mile and then...