The current value of such a company will still be in future cash flows. Any realistic financial model will project flattening growth at some point. This means that retention dominates the long term -> dominates future cash flows -> dominates present value.
A good financial model captures the scenario you describe. The examples in the article should be seen as illustrative, not exhaustive.
To clarify, the problem is that most people are only talking about "organic retention" when they say "retention", and ignore any "paid retention".
So in my example, I can get a very high percentage of people to return if I continue to spend money. But if I stop spending money to acquire users, they mostly stop coming back.
Comments
The current value of such a company will still be in future cash flows. Any realistic financial model will project flattening growth at some point. This means that retention dominates the long term -> dominates future cash flows -> dominates present value.
A good financial model captures the scenario you describe. The examples in the article should be seen as illustrative, not exhaustive.
To clarify, the problem is that most people are only talking about "organic retention" when they say "retention", and ignore any "paid retention".
So in my example, I can get a very high percentage of people to return if I continue to spend money. But if I stop spending money to acquire users, they mostly stop coming back.