In a brief exchange, Speaker A argues that the first person an investor should meet when evaluating a potential acquisition is the social media manager, to assess customer acquisition cost (CAC) and return on ad spend (ROAS) as the primary driver of profitability. Speaker B counters that the social media manager likely lacks the necessary data, and that the investor should first speak with the CEO to understand overall strategy, then the head of Customer Success to gauge churn, refunds, and product quality, asserting that a solid customer experience is a prerequisite before focusing on acquisition metrics. The dialogue highlights contrasting views on the order of stakeholder interviews and the relative importance of marketing efficiency versus product satisfaction in acquisition due diligence.
Chapters
What's the first thing I look at when I walk in a new business thinking maybe about investing in it? Do I talk to the CEO? Do I talk to the head of finance? Maybe marketing, sales? No, that's not what I do. What I do is I say, who is doing your social media? Let me meet them. Because what I want to learn about is customer acquisition. CAC and roas. CAC and roez. CAC and roas. And what does that mean? Customer acquisition cost and return on ad spend. Oh God. That's the most important thing about any business. Because if you can do that profitably, then you make money. Then I, as an investor am simply pouring gasoline on the fire of great CAC strategy. That's how you make money, my friend.
Okay, so before you talk to the CEO and you're thinking about buying a business, you're going to go talk to the social media manager. That's not true. I think it's a cute little dance. And I'm all about CAC and roas. But the social media person probably doesn't actually know what the customer acquisition costs and what the return on ad spend is. The person who will know is the head of marketing, the cmo, the VP of marketing. And if they don't, that's a problem. Still, that's not the first person that I actually want to talk to if we're looking at doing an acquisition. The first person that I want to talk to. Well, actually the first person, the CEO. The second person that I want to talk to is the head of Customer success because I want to find out what the customers are saying, I want to find out what they're complaining about. I'm more interested in what's the churn rate, what's the refund like? Because you're never going to be able to market your way out of a sucky product. So let's first make sure the customer experience is amazing. Then we'll solve for KAK and Roas. Then you could do a cute little dance like that.
