Learning objectives
By the end you can:
- State in one sentence why an advisor's use of unit economics differs from an analyst's, and explain what "judge quality and scalability, not just report them" concretely demands beyond arithmetic that happens to be correct.
- Recompute (never accept on the deck's or the client's own say-so) a business's contribution ladder, CAC (three ways), honest discounted LTV, and cohort-level retention from data-room-grade raw inputs, applying M4.01/M4.02's mechanics without re-deriving them, and use only the recomputed figures as the basis for every judgment that follows.
- Route any business-model question through the Unit → Machine → Market diagnostic tree, correctly identifying which layer is broken, and hand off cleanly to CN5.02 or the moat modules (M4.04–M4.05) when the true problem sits outside this module's remit rather than forcing a unit-economics fix onto a market-level disease.
- Apply the Scalability Verdict Rubric (five dimensions, scored) to render one of three defensible verdicts (Scale, Fix-First, No-Go) each attached to the specific evidence that would flip it, rather than treating the rubric as a formula that outputs a verdict by itself.
- Prioritize among competing levers (price, CAC efficiency, retention, cost structure) under a real constraint (a fixed budget, limited management bandwidth, a fundraising clock) using an explicit impact × cost × time-to-effect scoring, and defend a sequence, not just a ranked list.
- Read operating leverage as a scalability risk, not only a margin fact: compute DOL and margin of safety, stress-test a demand shock in both directions, and translate the result into a phased-financing or covenant recommendation rather than a flat go/no-go.
- Recognize, in a client's or founder's own presented numbers, the M4.02 §4.13 games catalogue in the wild, and raise it in the room by naming the specific definitional gap, never the person, while pairing the hard finding with a constructive, fundable alternative ask.
- Compress a full teardown into an answer-first governing thought fit for a steering-committee slide (cross-link CN1.03/M10.03; this module never re-derives the pyramid) and state precisely where your job stops and deck craft (the future Presentation galaxy) begins.
- (AI-Augmented Consultant: R10.) Use AI to accelerate a first-pass read of a data room, drafting a candidate rubric fill-in, flagging likely games-catalogue patterns, proposing diplomatic phrasing for a hard finding, while tracing every figure it touches to your own recomputation (Guardrail 1–5) and owning the verdict yourself; AI proposes, you dispose.
Prerequisites & connections
Builds on. This module assumes two bodies of mechanics are already yours, cold, by hand. M4.01: business-model anatomy, the six revenue archetypes, the revenue-to-FCF waterfall, and operating leverage's formal treatment. M4.02: unit economics in full, meaning choosing the unit, the CM1/CM2/CM3 ladder, CAC three ways, the churn algebra, discounted LTV, cohort retention triangles, the two flagship unit-P&L builds, and the games catalogue of §4.13. If any formula below is unfamiliar (DOL, LTV = m·r/(1+d−r), the CM ladder, the reconciliation test) stop and complete M4.01–M4.02 first; this module cites them at every turn and never re-derives them. It also assumes CN0.01's honest-scope contract and structure-hypothesis-answer-first habit, and CN1.01–CN1.03's issue-tree, hypothesis, and synthesis reflexes. The routing framework below is an issue tree, and the verdict at the end of every worked example is delivered answer-first because CN1.03 already made that the only acceptable way to deliver one.
M4.01–M4.02 teach the mechanics and reward getting the arithmetic right, and this module leans on them without re-teaching them (R1). It assumes the arithmetic is already right (or that you've just caught that it wasn't) and teaches what to do about it under a deadline, in a room, with a specific ask attached. Where a worked example needs a number, it is recomputed once, cited to its source formula, and then the page moves immediately to the judgment the number demands. The ratio between "here is the LTV/CAC" and "here is why that means Fix-First, and here is the exact churn target that flips it to Scale" is roughly one line to twenty. When the diagnosis instead turns out to be about market structure, size, or a shifting profit pool rather than the business's own machine, that is CN5.02's question, not this module's, and you hand off rather than force a unit-economics answer onto a market disease. When it turns out to be about why good unit economics might persist against competition, that is M4.04–M4.05's moat question, this module judges quality and scalability today, not durability for a decade. And when the diagnosis is one workstream inside a full engagement rather than the whole of it, CN5.03 is where it lives alongside a market model, voice-of-customer, and a formal go/no-go with risks and mitigations.