Burn Multiple

“I love like the pretty dashboards of looking at CAC and CAC payback and burn multiple and all that stuff. But this early on, not saying that stuff isn't valuable, but it doesn't matter. All that matters is, are you solving a need Are you a painkiller or a vita…”

“We've reduced calc pretty significantly and we've operated with a one or a sub one burn multiple.”

“And then there are metrics to track efficiency, right? Things like burn multiple, gross margin, NRR, all of these things. They're all of them are just like not applicable at this stage. It's too early and you shouldn't be worrying about that stuff.”

“So like, you know, we're talking about our gross margin needs to be above 60%, hopefully above 70%. Our burn multiple is now below three, right? Like ideally we're in like the, ideally we're like close to one, right? Burn multiple, like in the one to three zon…”

“What I was seeing in metrics like CAC, is that if the finance team simply misattributed a certain expense, then, like, it would make the CAC Payback look great... Magic number is even the worst version of this. Like, no one knows how to calculate. It was const…”

“Your burn multiple, which is just your burn divided by your net new ARR, it should be going down. And obviously, by the time... That's the point, it should be going down, and so, like, if you're a late stage company, you're like a growth stage company, like, y…”

“Do not let your burn multiple go above two, because We're going into a tough period. It's more likely that you're gonna miss than exceed, and if you miss, your burn multiple's gonna, like, go off the charts. It's gonna be even worse than you're planning, right…”

“I warn founders going into this year do not have a burn multiple greater than two because there's just so many headwinds right now that what happens is if you end up missing your revenue forecast, your burn multiple is going to look terrible. It could shoot up…”

“My big recommendation is for later stage companies, particularly if you're five, if not ten million AR and higher, to definitely start measuring your business by a CAC payback, because it's a true measure of new revenue that you're generating from your sales a…”

“As a rule of thumb, for earlier stage companies below twenty-five million ARR it's probably not, not fair to still call them earlier, like, let's say early and mid-stage company at less than twenty-five million ARR one to 1.5 is generally considered to be good…”

“Here this data set comes from Andreessen Horowitz, and you can see the typical numbers that they can see here in their portfolio for different revenue bands, and as you can see, the median for them in the zero to ten million ARR range is 1.6”

“If there are two companies growing from zero to about a hundred million in ARR, one of them has a burn multiple of four. The other one has a burn multiple initially starting at about three and then decreasing to about .75. Then just because you have to raise s…”

“As a general rule of thumb, for SaaS companies, around a million to twenty-five million in an ARR, which I'm assuming is probably the like, the range most people in the audience here are in one to five 1.5 to two is, is good. One to 1.5 or even lower is, is gr…”

“If you can spend a dollar or less to generate an Incremental dollar of ARR. You're doing amazing. And between one and two is good. So in other words, if you're burning twenty million in a year to add an incremental ten million of ARR, you're doing quite well i…”