unit-economics-validation

name	unit-economics-validation
version	0.1.0
status	PROBATIONARY
description	CFO-side gate for CMO ad-spend requests. Validates a proposed campaign on CAC, LTV, contribution margin, payback period, and target close rate BEFORE Atlas approves any portion of the cap. Approves, partial-approves, or rejects with a one-paragraph rationale.
metadata	{"category":"spend-governance","owner":"atlas","consumers":["maven-spend-requests","bravo-runway-decisions"],"tier":"full"}
triggers	["validate-unit-economics","check-ltv-cac","ad-spend-gate","spend-approval","maven-request","review-campaign-math"]
sources	["Benjamin Graham — margin of safety (unit economics must clear with buffer, not at parity)","Warren Buffett / Berkshire letters — owner earnings, durable advantage, reinvestment ROI","David Skok / For Entrepreneurs — SaaS LTV:CAC > 3, CAC payback < 12 months","Alex Hormozi — Value Equation, CFO-side pairs with Maven's offer-side","Philip Fisher — 15 points (retention, operator skill, real growth vs vanity)","CPA Canada — audit-defensible cost classification (T2125 line 8521)"]

unit-economics-validation — CFO Spend Gate

Maven draws up the campaign. Atlas checks the math. No ad dollar leaves until the unit economics clear.

When to invoke

Automatic whenever:

1. data/pulse/cmo_pulse.json.current_spend_request_cad > 0
2. A new brand or channel is proposed
3. CAC or close rate moves ±20% from the last approved baseline
4. Spend request > 25% of current approved_ad_spend_monthly_cap_cad

Manual: any time the operator or Bravo asks "should we greenlight this spend?"

Required inputs (Maven must provide; Atlas rejects if missing)

Field	Definition	Source of truth
channel	Meta, Google, TikTok, cold email, organic	Maven campaign brief
brand	OASIS / Bennett-shared / SunBiz / PropFlow / Nostalgic	Maven pulse
proposed_monthly_spend_cad	Total budget before buffer	Maven request
target_cpl_cad	Cost per lead, forecasted	Maven forecast / historical
target_close_rate_pct	Lead → paying customer conversion	Bravo CRM / historical
avg_deal_size_cad	First-touch revenue	Stripe / invoice history
gross_margin_pct	After cost of delivery (excl. ad spend)	CFO books / brand_economics in cfo_pulse
expected_retention_months	Median customer lifetime	Cohort data if available, else sector benchmark
time_to_payback_months	Months until cumulative GM >= CAC	Derived

If any field is forecast-only (no historical evidence), flag it SPECULATIVE and demote the approval to experimentation-only.

The 5 Checks

Check 1 — LTV:CAC ratio (Skok's 3:1 rule)

CAC            = proposed_monthly_spend_cad / (leads × close_rate)
LTV            = avg_deal_size_cad × gross_margin_pct × expected_retention_months
                 (for subscription products: use MRR × gross_margin × avg_lifetime_months)
LTV:CAC ratio  = LTV / CAC

PASS if ratio >= 3.0
WATCH if 2.0 <= ratio < 3.0  (allow only if at least one lever has headroom)
FAIL if ratio < 2.0

Rationale: Skok's canonical benchmark. Below 3:1 the business can grow but generates no surplus to compound. Below 2:1 growth actively destroys capital.

Check 2 — CAC payback period (the cashflow check)

monthly_gross_margin_per_customer = avg_deal_size_cad × gross_margin_pct
                                    / expected_retention_months
payback_months                    = CAC / monthly_gross_margin_per_customer

PASS if payback_months <= 12  (SaaS default)
PASS if payback_months <= 6   (services / one-time revenue)
WATCH if 12 < payback_months <= 18
FAIL if payback_months > 18

Rationale: Atlas guards the capital floor. Long payback periods compound into runway problems if retention misses. Canadian sole-prop tax treatment amplifies the hit (spend is deductible but cash is cash).

Check 3 — Positive contribution margin at target close rate

contribution_per_customer = (avg_deal_size_cad × gross_margin_pct) - CAC

PASS if contribution_per_customer > 0 AND close_rate IS historical (not forecast)
WATCH if contribution_per_customer > 0 but close_rate IS a forecast (allow 25% of cap)
FAIL if contribution_per_customer <= 0

Rationale: Graham's margin of safety. Positive contribution with forecast close rate = theoretical; with historical close rate = validated.

Check 4 — Concentration and runway drag

Read cfo_pulse.json.liquid_cad and montreal_floor_target_cad.
Read ceo_pulse concentration_risk_single_client_pct.

IF liquid_cad < montreal_floor_target_cad:
    cap_multiplier = 0.5
IF concentration_risk_single_client_pct >= 70:
    cap_multiplier *= 0.5
IF concentration_risk_single_client_pct >= 80:
    spend_veto = True

approved_cap_cad = approved_ad_spend_monthly_cap_cad × cap_multiplier

Rationale: Capital preservation beats growth. No campaign is worth taking the operator below the relocation floor. No campaign is worth doubling down on a concentrated revenue book.

Check 5 — T2125 deductibility

Spend on line 8521 (advertising) is a dollar-for-dollar deduction against self-employment income. Post-CCPC it deducts at the CCPC bracket (~12.2% in Ontario on first $500K). Atlas logs the expected tax offset so the after-tax spend number is honest.

after_tax_spend = proposed_monthly_spend_cad × (1 - marginal_rate)
Note: marginal_rate is a savings, NOT a justification. A deductible bad spend is still a bad spend.

Decision matrix

Check 1	Check 2	Check 3	Check 4	Decision
PASS	PASS	PASS	OK	APPROVE up to cap
PASS	PASS	WATCH	OK	PARTIAL at 50% of cap, require 14-day CAC feedback
PASS	WATCH	PASS	OK	PARTIAL at 50% of cap, require payback re-proof by day 30
FAIL anywhere	—	—	—	REJECT with specific failing metric + what would unblock
any	any	any	veto	REJECT regardless — concentration/floor breach

Output format Atlas writes into cfo_pulse.json

"maven_spend_decision": {
  "request_id": "<uuid or timestamp>",
  "campaign": "pulse-lead-gen",
  "brand": "OASIS",
  "requested_cad": 1200,
  "approved_cad": 100,
  "decision": "PARTIAL",
  "checks": {
    "ltv_cac": { "value": 4.2, "verdict": "PASS" },
    "payback_months": { "value": 9.1, "verdict": "PASS" },
    "contribution_margin": { "value": 180, "verdict": "WATCH", "reason": "close_rate is forecast" },
    "concentration": { "value": 94, "verdict": "VETO_ACTIVE", "cap_multiplier": 0.25 },
    "deductibility": { "line": "T2125 8521", "marginal_rate": 0.2565 }
  },
  "rationale": "LTV:CAC healthy, payback inside 12 months. Close rate is a forecast not historical, so downgraded to experimentation only. Bennett concentration at 94% caps total monthly spend at $100 CAD until diversification below 70%.",
  "unblock_at": ["Bennett concentration < 70%", "14-day historical close rate ≥ forecast", "liquid_cad ≥ $10K floor"]
}

Anti-patterns Atlas actively rejects

1. "Trust the creative" — creative variance is real but can't rescue broken unit economics. Reject.
2. "Scale reveals retention" — retention gets WORSE at scale (light buyers have lower loyalty per Sharp). Don't budget based on early-cohort retention.
3. "We'll make it back on upsell" — model upsell separately with its own LTV. Primary purchase must stand on its own.
4. "Competitors spend more so we should" — competitor spend is not a signal of their unit economics. They may be burning capital too.
5. "Lifetime value is theoretical anyway" — no: without LTV, every campaign is a gamble. Require historical cohort data or use conservative sector median.

When to probationary-promote → VALIDATED

After 3 successful decisions where:

• The approval rationale held (6-month post-approval review)
• Maven hit CAC within ±15% of target
• No capital-floor breach occurred

Log review outcomes in memory/PATTERNS.md as they happen.

Cross-references

• [[CFO_CANON]] — the investors/frameworks this skill derives from (pillars 1–5 especially)
• [[AGENT_ORCHESTRATION]] — pulse protocol, spend handshake sequence
• [[skills/financial-health-check/SKILL|financial-health-check]] — concentration and runway inputs
• [[skills/position-sizing/SKILL|position-sizing]] — parallel sizing logic for equity positions
• [[skills/self-improvement-protocol/SKILL|self-improvement-protocol]] — the loop that promoted this skill from gap to build
• [[STATE]] — live liquid_cad + approved_ad_spend_monthly_cap_cad
• cfo_pulse.json.brand_economics — per-brand gross margin inputs to Check 1
• [[INDEX]] — graph hub

Success metrics for this skill itself

Metric	Target	Review cadence
Approval accuracy	≥ 80% of approvals hit target CAC within ±15%	Monthly
Rejection accuracy	≥ 80% of rejections would have burned capital if approved	Quarterly (retrospective on rejected campaigns)
Time-to-decision	< 10 minutes from Maven request → pulse write	Per-request
CC override rate	< 10% of decisions overridden by operator	Monthly

If any metric trips below target for two consecutive reviews, trigger self-improvement Protocol 4 Reflexion on this skill.