Startups Don’t Die from CAC, They Die from CAC Math They Never Understood

Read time: 3 minutes.

Welcome to the 132nd edition of The Growth Elements Newsletter. Every Monday and sometimes on Thursday, I write an essay on growth metrics & experiments and business case studies.

Today’s piece is for 8,000+ founders, operators, and leaders from businesses such as Shopify, Google, Hubspot, Zoho, Freshworks, Servcorp, Zomato, Postman, Razorpay and Zoom.

Today’s The Growth Elements (TGE) is brought to you by:

Modernize your marketing with AdQuick

AdQuick unlocks the benefits of Out Of Home (OOH) advertising in a way no one else has. Approaching the problem with eyes to performance, created for marketers with the engineering excellence you’ve come to expect for the internet.

Marketers agree OOH is one of the best ways for building brand awareness, reaching new customers, and reinforcing your brand message. It’s just been difficult to scale. But with AdQuick, you can easily plan, deploy and measure campaigns just as easily as digital ads, making them a no-brainer to add to your team’s toolbox.

Learn more now.

^{Thank you for supporting our sponsors, who keep this newsletter free.}

Everyone talks about CAC.

But CAC on its own is meaningless.

The real killer is bad CAC math, when early GTM teams measure the wrong thing, ignore payback timelines, and misread where CAC is actually coming from.

And then they raise a round, burn faster, and hit a wall with no way to scale profitably.

Most Startups Miscalculate CAC 3 Ways

[1] All-in CAC vs Paid CAC

Founders often say CAC is “$300”
→ But are you including:

• Salaries of sales + marketing?

• Agency fees?

• Tools?

• Discounting or onboarding costs?

A CAC that only includes ad spend is not CAC. It’s a media bill.

[2] CAC by Channel, Segment, Plan

Averaged CAC hides everything.

→ Paid Google traffic: $500 CAC
→ LinkedIn outbound: $300 CAC
→ Referral customers: $100 CAC

If you can’t cut CAC by channel, segment, and plan size, you can’t scale the right ones.

[3] CAC Payback = Growth Health

$500 CAC isn’t bad if you pay it back in 2 months.

But 12-month payback in a high-churn business? You’ll never survive.

The best SaaS companies track:

• CAC Payback Period

• CAC Payback by Channel

• CAC vs LTV by Segment

It’s not about “good” or “bad” CAC.
It’s about knowing where CAC is recoverable and where you’re burning margin with no return.

What I’ve Seen in the Field

Inside Salesflow and other advisories, we found:

• Channels that looked cheap… but converted poorly

• Channels that looked expensive… but had 3x LTV

• Hidden costs buried in ops and onboarding

By the time we fixed CAC math, we shifted spend toward:

• High-payback retargeting

• Programmatic SEO

• Cold outbound with tight ICP

And we killed 2 acquisition channels that looked great in Google Analytics but were CAC traps in reality.

Final Words

Startups don’t die from high CAC.
They die from unvalidated CAC assumptions.

You can recover CAC if:

• Your payback window is short

• Your LTV is expanding

• Your unit economics are real

But you can’t grow what you can’t track.

Clean CAC math isn’t a finance problem.
It’s a GTM survival skill.

That's it for today's article! I hope you found this essay insightful.

Wishing you a productive week ahead!

I always appreciate you reading.

Thanks,
Chintankumar Maisuria