Sam Jacobs

There we go.

I know, he's quicker and it's less generic.

So the point is, the first thing that we do is we publicize and we publish our unit economics to the company on an ongoing basis.

And we've got thresholds that tell us when we want to invest and when we don't want to invest.

We're trying to solve backwards from five to one lifetime value to customer acquisition cost.

David Scott, the founder of Matrix Partners, one of the early investors in HubSpot, he talks about three-to-one being the benchmark.

But the point is, if your company doesn't know what your unit economics are, if you don't know how much you're spending, then it's really hard to drive efficiency because it can't tell you how to throttle forward or back.

The reason that unit economics are important is because they tell you, can you spend a certain amount of money on growth or not?

Right, if you have very, very high churn, it doesn't mean that you're not allowed to have a company.

It just means you can't spend as much on sales and marketing as you would normally.

So higher retention, the more you can spend on sales and marketing to acquire a customer.

Again, the fundamental premise of all recurring revenue businesses is we can spend more on acquiring a customer because we have a point of view on how long they're gonna stick around.

So if we don't have a point of view on how long they're going to stick around or we don't have any predictability, then obviously we can't spend as much to acquire them.

What they also tell you, though, is whether your business is in alignment with growth or not.

So I wrote this week, growth is not a right.

It's the privilege of companies with good unit economics.

The point is...

Your business will tell you when it wants to be invested in, and it will tell you when you shouldn't be invested in.

Anything below three to one LTV to CAC, and in my experience, again, this is a little bit more controversial, you see on the screen, but this is payback period, and we've been told for a long time,

that 24- to 36-month payback periods are acceptable in SaaS, I would posit to you in a world of higher interest rates that really we need to be solving backwards from 12 to 18 months.