4thly Virtual Academy, Sprint 2, Lesson 1
Understanding Unit Economics
The most boring thing that can kill your startup.
Every venture distills down to Unit Economics – the notion that there’s one unit of something we make and sell. Understanding the Unit Economics for your venture – and how we build them into Enterprise Economics – is essential to startup success.
Lesson Video:
“Nothing can give a startup the illusion of success like negative unit economics. This occurs when a startup is selling a product for less than its variable cost. Hypergrowth is easy when you’re selling dollar bills for 90 cents.” — David Sacks, Craft Ventures
Required Reading:
Assignment:
What is one unit for your venture? What do you sell one unit for, and approximately what does it cost to produce?
Example Deliverable:
Our example venture, Breakfust, is a subscription service and so one unit is one subscription month. We expect to charge $250 for a subscription month, and we expect our costs on that unit will be approximately $110.
Additional Reading:
Sam Altman on Unit Economics.
Spero Ventures on Unit Economics.
