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.
“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
What is one unit for your venture? What do you sell one unit for, and approximately what does it cost to produce?
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.