Most of the Cloud Business Models Have Been Wrong(mikebz.com)
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Most of the Cloud Business Models Have Been Wrong
http://www.mikebz.com/2016/02/most-of-cloud-business-models-have-been.html
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Many Cloud startups have built their business models assuming that the cost of acquiring a customer can be recouped in a reasonable amount of time through recurring revenue. These calculations based on Customer Acquisition Costs (CAC) and Long Term Value of the customers (LTV) have omitted a major factor in running a recurring revenue business – Customer Management Costs (CMC). As a result, a lot of the Cloud Startups are overvalued because investors incorrectly assume there will be little or no marginal cost to maintain recurring revenue from existing customers.