Your LTV:CAC Says 3:1. Your Bank Account Disagrees

💡 Insight Block — The Three Lies in Your Dashboard

Your LTV:CAC ratio looks healthy at 3:1. But you're probably losing money.

The uncomfortable truth: Most UA teams calculate LTV wrong, measure CAC incompletely, and compare mismatched timeframes. The result? Decisions based on fantasy math.

The three LTV lies:

1. The Projection Lie — Using 12-month modeled LTV for users who've been active 6 weeks. You're betting budget on predictions, not reality.

2. The Blended Lie — Averaging LTV across all channels. Your "2.5:1 ratio" hides that organic is 8:1 and paid is 1.2:1. You're subsidizing losers with winners.

3. The Timeframe Lie — Comparing 12-month projected LTV to 30-day CAC. Makes every campaign look profitable until cash runs out at month 6.

When you actually understand your unit economics, you stop guessing and start compounding.

🎯 Permissionless Play — The Blended Metrics Trap

The hidden problem: Blended metrics mask channel-level disasters.

I've seen this pattern repeatedly:

What the dashboard shows:

• LTV:CAC ratio: 2.8:1 ✓

• D7 retention: 42% ✓

• Trial conversion: 11% ✓

What segmentation reveals:

• Organic: 7:1 (carrying the average)

• Apple Search Ads: 3.2:1 (healthy)

• Meta iOS: 1.4:1 (bleeding)

• TikTok: 0.9:1 (disaster)

The "healthy" blended ratio is hiding two unprofitable channels eating 40% of budget.

The fix: Split everything by channel AND platform. Every channel should justify itself independently. If you can't show positive contribution margin by segment, you don't have unit economics—you have hope.

What actually matters:

• D7 retention predicts trial conversion

• D30 retention predicts subscription LTV

• 90-day cohort revenue beats 12-month projections

• Channel-specific analysis reveals what blended hides

🛠️ Vibe Tool — The True CAC Calculator

Most teams calculate: Ad Spend ÷ Installs = CAC

Reality check: True CAC is typically 20-40% higher.

Here's what to include:

The formula:

True CAC = (Media + Creative + Tools + Team Allocation) ÷ Installs

Payback period reality check:

• VC-backed with runway: 12-18 months acceptable

• Bootstrapped/profitable: 3-6 months required

The difference between survival and shutdown often isn't LTV:CAC—it's whether you have cash to reach payback.

🛰️ Field Notes — The Math Most Teams Miss

Four calculation mistakes that destroy profitability:

Mistake #1: Projected vs Realized LTV Your dashboard shows $45 LTV. But that's a 12-month projection for users who've been active 6 weeks. Actual 90-day realized LTV? Often 40-60% lower. Use cohort data, not models.

Mistake #2: Media CAC vs True CAC

• Media CAC: Ad spend ÷ Installs

• True CAC: (Ad spend + Creative + Tools + Team) ÷ Installs

True CAC is typically 20-40% higher. That "healthy" 3:1 ratio becomes 2.2:1 when you include all costs.

Mistake #3: Blended vs Segmented "Our LTV:CAC is 2.5:1" means nothing. Split by:

• Acquisition channel

• Platform (iOS vs Android)

• Campaign type

• Geo

The average is a lie. The segments are truth.

Mistake #4: Ratio vs Payback LTV:CAC tells you IF you'll profit eventually. Payback period tells you IF you'll survive to get there.

A 4:1 ratio with 18-month payback kills bootstrapped companies. Cash flow matters more than ratios.

🧃 Personal Sidebar — Financial Discipline as Leverage

I used to think of budgets as constraints. Now I see them as leverage.

The mindset shift:

When I started in UA, "good" meant spending more. Scale was the goal. Efficiency was secondary.

Then I joined a company with tight margins. Every dollar had to work. And something unexpected happened: I got better.

What financial discipline looks like:

1. Realized over projected — 90-day cohort LTV, not 12-month models

2. Segmented over blended — Channel × Platform × Geo

3. Cash flow over ratios — Payback period matters more than LTV:CAC

4. Contribution margin over revenue — What's left after all costs?

The questions I ask before scaling:

• What's the realized 90-day LTV for this specific segment?

• What's true CAC including all costs?

• What's the payback period? Can we survive that long?

• Which channels justify themselves independently?

If I can't answer those questions with cohort data, I don't scale.

The paradox:

Teams with "unlimited" budgets often perform worse than constrained teams. No pressure to optimize. No accountability for efficiency. No incentive to understand the math.

Financial discipline isn't about spending less. It's about knowing exactly what you're getting for every dollar spent.

That's leverage.

🏁 Key Takeaways

The 5 Numbers That Reveal Truth:

1. Realized LTV — 90-day cohort, not projections

2. True CAC — Fully-loaded, all costs

3. Payback period — Cash flow survival

4. Contribution margin — Per-user profit

5. Channel-specific LTV:CAC — No blending

The 3 LTV Lies:

• Projection Lie (modeled vs realized)

• Blended Lie (hiding losers with winners)

• Timeframe Lie (mismatched comparisons)

The Framework:

• Split everything by channel AND platform

• Use 90-day cohort data, not 12-month models

• Calculate True CAC (20-40% higher than media-only)

• Focus on payback period, not just ratios

📊 Want the True CAC Calculator spreadsheet?

I built a multi-channel spreadsheet that calculates your real CAC, LTV:CAC ratio, and payback period—per channel.

 Reply to this email and I'll send you the template.

📅 Next week: Strategic Context Framework — Thinking like a chess player

P.S. The blended LTV:CAC ratio is one of the most misused metrics in UA.

It's not that blended is always wrong- once you understand each channel's true contribution, you CAN make portfolio decisions. Diversification matters.

But making those decisions while hiding behind averages? That's how budgets bleed.

Split first. Understand each channel. Then decide what the portfolio should look like- with eyes open.

P.P.S. If your payback period is 12+ months without VC runway, that "profitable" 4:1 ratio won't save you.

Cash flow kills companies. Not ratios.