Knowing when to scale (and how to prove that you can do it)
When you’re talking to investors about a Series B, Series C or later round, one of the questions that will inevitably come up is “What are your CACs?”. It sounds like a simple question, but from the question of what costs to include and the right way to account for organic traffic to the pandora box of multi-touch attribution , there are lots of devils in the details. What's more, the real question is not "What are your CACs?" but "What will your CACs be if you invest $10-20 million in sales & marketing?" . It’s hard enough to calculate historic CACs for different acquisition channels with a high degree of accuracy. It’s much harder to predict future CACs at bigger scale. And yet it shouldn’t come as a surprise that later-stage investors are so focused on this question. When you’re raising a Series B or later round, you’ve achieved Product/Market Fit (which is hard to define, see me attempt here ) and you’ve got what Jason M. Lemkin calls “Initial Traction” ...