A CEO ranks five business metrics for a $20 million company. CAC tops the list because acquisition costs drive spending decisions. LTV ranks last because the time horizon is too fuzzy to trust.
Rank the importance of these metrics when you're at $20 million in revenue. Net profit. I'm gonna say 2. I mean, net profit's really essential. You're running fast, so yeah. Gross margin. I probably would've put gross margin at 2 and net profit at 3 because really understanding how much it actually is costing you to deliver the thing, but gross margin will go 3. LTV. LTV, I'm gonna put at 5. I have a general problem with lifetime value, and that's just because you never quite know what the L is. You don't know how long it is. You can always be optimizing towards it. I just think there's better metrics out there. Customer concentration. Customer concentration, I'm gonna put that at 4. You definitely need to be thinking about at this point, you don't want too much of your revenue concentrated in any 1 or 2 customers. So yeah, I'll put that at 4. It's an important one. And number 1 is cost to acquire a customer. Yeah, CAC. Yeah, 1,000%. I'm happy with that being number 1. You should have that dialed in at this level. And if you understand your acquisition costs, and if you understand what the value is, not LTV, but what the value is over an acceptable period of time, That is what's going to give you how much you can actually afford to spend and even go backwards if you need to, to acquire. So CAC at number 1, feeling good about it.
