Episode 580: Why ‘The Law of Inverse Profitability’ Is The #1 Way to Scale Your Business

In this episode of Perpetual Traffic, Ralph and Kasim discuss the importance of customer acquisition and how to make more money with less profit. They delve into the concept of lifetime value customer (LTV) and cost per acquisition (CAC), which are crucial data points for determining profitability ratios. They also touch on the law of inverse profitability, which states that businesses cannot scale if they still want a high net operating income. They provide examples from companies like Tesla and Apple to illustrate their points. Additionally, they share their own experiences with testing new theories on themselves and discuss the benefits of organic social media over paid traffic. Overall, this episode offers valuable insights for businesses looking to increase revenue and profitability.


  • 00:00:00 Déjà Vu Intro: Kicking It Old School with a Modern Twist
  • 00:00:48 The Price of Fame in Business: Deciphering the Da Vinci Code of Costs
  • 00:05:54 The Great Scale Debate: Why Bigger Isn’t Always Richer
  • 00:08:39 The Happy Accident: When Marketing Missteps Turn into Gold
  • 00:17:07 Jay Abraham’s Encore: The Trinity of Business Growth, Reimagined
  • 00:21:39 LTV Unleashed: The Epic Saga of Customer Value
  • 00:24:25 Traffic Wars: The Organic Rebels vs. The Paid Empire
  • 00:26:11 The Growth Conundrum: When Scaling Feels Like Tightrope Walking in Heels
  • 00:29:17 Smart Scaling Tactics: Ninja Moves for the Ambitious Business
  • 00:36:03 From Garage to Glory: The Rollercoaster Ride to Big Business
  • 00:38:51 Growth Hacking Mastery: Turning Inverse Profitability Into Your Secret Weapon


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