Don't Trade Luka, and Don't Turn Off Your Marketing Spend

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The leading cause of death in CMOs is CFOs.

There’s a silicon valley joke that the average CMO tenure is the shortest in the C Suite, around 18 months, because that’s about how long it takes to update the company color scheme, overhaul the logo, and run a big, expensive conference that doesn’t result in pipeline.

As much as I jest, the friction between finance and marketing is a tale as old as time. We both have assumptions (right or wrong) around how each group allocates and uses resources.

The friction can usually be traced back to one of the following misalignments:

And to take it a step further, most of this misalignment can be traced back to one bucket of spend - programs.

What do we mean by programs? Well, to simplify, we can break marketing spend into three somewhat mutually exclusive buckets:

You can certainly make things more complex, but I can rationalize getting 100% of marketing spend into one of these (well, plus travel, as I budget to have travel follow the human it links to).

Now let’s imagine the most common “glow up” a startup experiences, scaling it’s GTM engine from nothing to something. When you are building your first marketing team, People and Systems are the first places you spend. And it makes sense. You can’t run a user conference if there’s no one to organize it, and you can’t run advertisements if there aren’t people and tools to put it into motion.

Rule of thumb is that if you took the total S&M spend you can assume 1/3 is marketing and 2/3 is sales (in recent quarters I’ve seen it swing even more strongly towards sales, but I digress). And if we drill down into Marketing, in the early days 3/4ths is spent on the people and tools. But over time you creep further and further towards a 50/50 split, with programs eventually becoming the bulk. This assumes you find “leverage” in your team and tools to go and drive pipeline from that spend (i.e., your people and tools don’t scale linearly along with program spend).

You need a “base” of people to run any marketing department. At first it feels like dollars are flying out the door to hire specific roles - you don’t have an in house web designer, you don’t have a marketing ops person to track campaign attribution, you don’t have someone specifically focused on field marketing…. But once you have them in place, you can take it pretty far without adding additional people.

In the same vein, when you start out you don’t have any technology. Google sheets aren’t going to cut it. Maybe you have a CRM, like Salesforce or Hubspot, but that’s really more of a sales tool. You still need Amplitude for analytics, Hootsuite for socials, and Adobe for creative. So now you’re a couple hundred grand in the hole on software.

Program spend tends to be the highest value add once you get all the other stuff right; that's the variable that drives all the incremental value into the org. It’s where you unlock arbitrage opportunities across select channels where you can turn $1 of spend into $7 of sales.

But it’s also the area that gets attacked first during budget cuts because it's the path of least resistance.

Headcount in tech can be a little bit tougher or stickier to unseat from the cost base. No one wants to fire Hillary who runs ABM because she’s great. And Hubspot isn’t letting you out of a 3 year contract in year 1.7.

But program spend is pretty easy. Like, hey, just turn off the LinkedIn ads. So that's the one that generally gets attacked.

In many ways, it’s kind of like an Eisenhower matrix. Program spend is Important, but not seen as Urgent to impacting results.

As finance people we are often guilty of not acknowledging the medium and long term impact of turning the program volume down.

Marketing dollars, even if we want them to be, are not like sales capacity models.

It’s a pretty linear relationship in sales: throw $250K at a new sales rep, give them a few months to ramp, and you expect a certain output, which you represent in your model as a quota.

But marketing spend is closer to a network, a flywheel. Brand visibility, pipeline, customer engagement, mind share, all that stuff builds and compounds on each other. If you turn it off, all those elements get weakened and it takes time and money to regain that momentum.

And if you go to a CMO and say , "Hey, we need a 15% reduction in the budget," and they deliver that, the reality is it's probably coming from program spend. What do I mean?

When you get to year end… are you just handing that 15% back to them for next year? Probably not. You're probably going to tell them, "Oh, you get a 5% growth on this year's budget." You build the new budget off the existing (trimmed) baseline.

And so now we're actually seeing two to three years before they recover to that level of spend and are able to deliver that same output and execution that they were before you gave them the cut.

That's a major failure path we see in the CMO job.

Through that process, they just got 15% taken away and only gotten 5% back next year so that they're 10% in the hole. Yet they end up with higher top line targets because you want to grow over what you've done next year. Now we’re in a physics problem we can’t dig out of.

It sometimes puts my brain in a pretzel that if you turn the volume down on the marketing spend today, you're actually hurting 3, 6, 9 months out. And the really hard part to visualize is it’s a non linear recovery to get your network effect back up and humming.

Finance people are in many ways the GMs of their orgs. You have to trust the process, and not make rash moves, like cutting the lifeblood of your future pipeline.

As tempting as that might be to make this quarter’s EBITDA targets, you end up like the Dallas Mavericks, under the payroll apron but with a pissed off fanbase and low merchandise sales.

For all the finance people evaluating marketing spend… if you find yourself in a pinch, don’t wake up in a panic and trade Luka, or turn off your program spend. Because it’s hard to make the playoffs when you’re playing for short term costs.

CoreWeave CFO Nitin Agrawal joins Run the Numbers to unpack the finance engine behind one of the fastest-growing AI infrastructure companies on the planet.

CJ and Nitin dive into what it takes to build financial discipline in an environment where business models are being invented in real time, discussing the company’s 700% growth last year and massive first-quarter performance as a newly public company.

They cover capex strategy, securitizing GPUs, managing billion-dollar revenue backlogs, and structuring incentives for hyperscale deals, all while keeping investors grounded and servers running at full tilt. If you want a front-row seat to finance in the AI arms race, this episode delivers.

In this episode of Mostly Growth, CJ Gustafson and Kyle Poyar interview Roland Ligtenberg, Co-Founder and SVP of Growth & Innovation at Housecall Pro (and the world’s most interesting man).

The crew delves into how vertical SaaS can scale in messy, offline markets - like the trades. Roland shares how Housecall Pro grew from a $4-per-month scheduling tool into a platform with more than a dozen products, emphasizing the importance of sequencing “layer cake” monetization… building a solid core before adding new revenue streams.

He walks through unconventional customer acquisition tactics like cold-calling trades businesses, Yeti giveaways, truck-wash offers, and word-of-mouth tracking, all rooted in one principle: speak to customers through the channels they already use.

The conversation also hits pricing strategy, PLG vs. SLG balance, TAM turnover, and using AI to tailor messaging by segment, trade, and intent.

Sam Walton had a ruthless saying: “Your margin is my opportunity.” What he meant was simple… if you gave him an inch to provide more value at a lower price, he’d take a mile and bury you.

He could do this because he knew that in the long run, he’d earn a higher customer lifetime value. He understood the flywheel and was willing to play the long game.

David Senra recently had a conversation with the founder of Raising Cane’s, Todd Graves. The company sells a lot of chicken fingers…. Like $6 billion a year worth of chicken fingers.

Given the volume the company does, the conversation naturally led to a discussion on trading speed for margin. Graves explained how CFOs have historically urged him to optimize margin by shaving costs in small ways:

This is an analysis of how doing the “main thing” the best is so much better (and margin friendly in the long term) than chasing short term gains.

Hoping we aren’t in a bubble,

CJ