Date of Publication: February 4, 2020

Author: Sean Harper

Summary:

When startups launch, growth goals often center on customer acquisition. If you can’t figure out profitable unit economics on a small scale, growth via customer acquisition just means losing more and more money. One solution is to focus on vertical integration early, rather than exclusively customer acquisition. Once you figured out something people were willing to pay for, you could start charging what it was worth and – voilà – become profitable. One way to do that is to look for opportunities to integrate vertically. By controlling a greater portion of your supply chain or distribution, you have the ability to improve efficiency and reduce costs. That, in turn, can lead to profitable unit economics, which, of course, translates to profits for investors. Startups – especially insurtechs – need to think beyond simple customer acquisition from the earliest stages of growth. Long-term profitability starts with considering vertical integration opportunities early on.

Link to Full Reading:

https://www.forbes.com/sites/theyec/2020/02/04/how-vertical-integration-prevents-existential-threats-to-your-business/?sh=42ee3f9865c0