ET carries an article today on potential accounting and legal risks in the Indian ecommerce space. I doubt if entrepreneurs and investors would allow such subversions. People know well that this road doesn’t lead to heaven. Read on
On a business level, the lifetime value notion is well understood and used – and in my view is the appropriate way of looking at direct user acquisition costs. As an investor, that is the conversation I want to have with entrepreneurs to understand the health of the business at a nascent stage. Accounting is supposed to be, and should continue to be more conservative – I do not think investors are valuing early stage companies on basis of their accounting profits in any case.