I'm hoping someone can chime in more on how to think about that adjusted gross margin payback period. It's wild to see that for most companies, it will take 30 months for their gross profit from new ARR added in a specific quarter to exceed the quarterly spend on sales & marketing that quarter? On the surface, it seems like this would be an unsustainable CAC, and positive net income would never be achieved? You used to hear about the rule of 3 back in the day, where the lifetime value of a customer had to be 3X the CAC. If it takes 30 months just for gross profit to equal CAC, would it take 10 years for a customer to generate a lifetime value equal to 3X the CAC?
Is another factor driving the ten year higher the expectation that rates may actually have to be increased in the near future? So might be smart to hold off on buying a T Bill if that is going to happen? Hence treasury has to goose rates to bring them in now.
I'm hoping someone can chime in more on how to think about that adjusted gross margin payback period. It's wild to see that for most companies, it will take 30 months for their gross profit from new ARR added in a specific quarter to exceed the quarterly spend on sales & marketing that quarter? On the surface, it seems like this would be an unsustainable CAC, and positive net income would never be achieved? You used to hear about the rule of 3 back in the day, where the lifetime value of a customer had to be 3X the CAC. If it takes 30 months just for gross profit to equal CAC, would it take 10 years for a customer to generate a lifetime value equal to 3X the CAC?
Is another factor driving the ten year higher the expectation that rates may actually have to be increased in the near future? So might be smart to hold off on buying a T Bill if that is going to happen? Hence treasury has to goose rates to bring them in now.