How does Aviron approach customer acquisition costs and differentiate its marketing strategies?

For Aviron specifically, we look at CAC every day, but we are very fortunate that our contribution margin is very strong. We’re almost net zero on every sale. That gives us a lot more freedom to do more testing and be more aggressive and to lose money some months because of our strong margin. Like I mentioned, most of our competitors are in the 20-30% range, we're way north of that. That's why we look at it a little bit differently and that's why we're still spending a lot.

Right now, it's funny because we are noticing that most competitors are spending a lot less, so CPMs are a lot more affordable. We're using this opportunity to actually ramp up and sell even more. There's a famous Brazilian F1 driver, Ayrton Senna, and one of his lines is “You can’t overtake 15 cars in sunny weather, but you can when it’s raining.”

We're using this opportunity for that same reason. We're not the biggest company, but because we have strong business fundamentals and strong economics, we can actually take advantage of this opportunity to grow our business.

From a hardware standpoint, we're just good at making hardware and keeping our costs low. In terms of the content, you nailed it, Peloton is paying 30% of their membership fees on just music licenses, and then they have to pay instructors. To make our video game, we pay $0 on any type of music licensing, and our developers, we make a game and pay them a salary and they just produce a game and then work on the next game.

Our costs are very manageable and predictable, which gives us better margins and allows us to be more aggressive in our ads, and to have a higher CAC because we can afford to market while our competitors can't. Then we can do more testing and more experimentation—it just gives us an advantage.