Edit including an apology for my harshness.<p>But on the other hand, the key failure point for the app is pretty obvious: its revenue is a one time fee, and the costs are a function of how much people use the app. Based on the post, they clearly mispriced the app, since it depended on new sales to fund existing customers.<p>This isn&#x27;t very different from a pyramid scheme (without the intention to fraud, naturally): you need to keep growing indefinitely to stay afloat, clearly impossible. When sales flattened (which they did) the company would go bust (which it did).<p>Another way to look at this is treating a sale as an annuity. If I sell an app for $10, expecting users to use it for 10 years with a 10% WACC, this would be equivalent to receiving a $0.13 subscription fee from each customer over the 10 years.<p>Therefore, if your variable cost per customer is higher than $0.13&#x2F;year, you&#x27;re in serious trouble. Even if it&#x27;s lower, you might still not break even.