RE: So24 Apr 2026 20:25
Wakeyinvest: This was in an article in a substack, from someone who made call with management on the same day they published results.
"However, what completely changed things for me is the churn number they reported: 1.7% a month. I initially thought that this would not even get to 10% a year, and when I initially talked with management they did not seem to argue otherwise. However, this churn seems to be historical, so it was not a surprise for them. They said that this was in part due to people changing insurers and another big part was the batteries being depleted, at which point people just forget about changing them and they stop getting paid. That happens after three years because they use two AA batteries. They plan to change to lithium batteries that last three times longer. The only problem is that lithium batteries can cost $2–4 apiece, roughly four times more than normal batteries. This would further increase the CAC."
3 years.
$2–4 would increase CAC, but it would massively increase the value of each installed LeakBot if we believe what management said (that a big part os batteries being depleted). Now, I've learnt not to trust this management, so it might not be such a big part, and since only 70% (from what I remember) of the Leakbots sent end up being installed, that would increase the cost by $3–6 per installed Leakbot. Not negligible. But well worth it if churn is reduced significantly.
The problem is the company has a cash flow problem, which is normal for many startups. It even has a name: "the valley of death".
Now it seems that instead of recognizing the issue early and planning accordingly, they swept it under the carpet until it became impossible to hide.
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