CJ- we at Procore slice/dice LTV/CAC by segment/stakeholder(buyer) and geography. We just disclosed the by geography one at the 2022 Investor Day. Difference between measuring how we operate vs what we disclose. Hope that helps.
Great post as always CJ! And thanks for including a link to my post on analytics.
I still think we'll see LTV:CAC in decks, b/c a lot of VCs have spoken positively about it, benchmarked it (primarily for SaaS businesses at 3:1), but I hear you re: the fact that it's not super actionable.
It might represent some high-level "gut check" metric, but I think there are better ones out there as well. Revenue per employee as an example. It's not super actionable either, but it gives you a good sense of how you're performing overall, especially when fundraising is tight and everyone needs to be cautious with spending.
The challenge is that LTV always is an estimation, it is never a fact. And the worst place in the world to have good estimates is in a startup, where the metrics still have a very short life.
For those startups that would like to work with LTV/CAC even with all the challenges, I have a suggestion. Invert your thinking.
(Nothing original. That's an idea that came from Lean Startup Tools and Prof. Mauboussin on Expectations Investing).
In the following article, I and Prof. Daniel McCarthy proposed a framework (spreadsheet included) to do exactly that. Hope it can be useful for the readers.
CJ- we at Procore slice/dice LTV/CAC by segment/stakeholder(buyer) and geography. We just disclosed the by geography one at the 2022 Investor Day. Difference between measuring how we operate vs what we disclose. Hope that helps.
Totally fair. And that makes sense.
Also, you have one of THE best investor decks in the game!
One of the greatest (LTV/CAC) articles ever written (on Substack)
Thanks this one had been kicking around in my head for so long. I had the title before I ever wrote it.
Great post as always CJ! And thanks for including a link to my post on analytics.
I still think we'll see LTV:CAC in decks, b/c a lot of VCs have spoken positively about it, benchmarked it (primarily for SaaS businesses at 3:1), but I hear you re: the fact that it's not super actionable.
It might represent some high-level "gut check" metric, but I think there are better ones out there as well. Revenue per employee as an example. It's not super actionable either, but it gives you a good sense of how you're performing overall, especially when fundraising is tight and everyone needs to be cautious with spending.
Thanks Ben!
The challenge is that LTV always is an estimation, it is never a fact. And the worst place in the world to have good estimates is in a startup, where the metrics still have a very short life.
For those startups that would like to work with LTV/CAC even with all the challenges, I have a suggestion. Invert your thinking.
(Nothing original. That's an idea that came from Lean Startup Tools and Prof. Mauboussin on Expectations Investing).
In the following article, I and Prof. Daniel McCarthy proposed a framework (spreadsheet included) to do exactly that. Hope it can be useful for the readers.
https://thetaclv.com/resource/clv-focused-discovery-driven-planning-for-customer-centric-startups/