CAC

Definition

Customer Acquisition Cost—how much you spend in sales and marketing to land one customer. VCs compare this to lifetime value to determine if your business model is actually viable or just an expensive hobby.

Example Usage

Our CAC is $500 but lifetime value is only $300, which explains why investors keep saying our unit economics don't work.

Origin

Marketing and finance metric, standardized in SaaS industry during 2000s

Fun Fact

The ideal CAC to LTV ratio is 1:3, but most startups optimize their pitch deck math rather than their actual metrics.

Source: SaaS and startup financial metrics standards

Related Terms

Beginner

investor

Someone who gives you money in exchange for a piece of your company, future profits, or the thrill of watching their capital evaporate. They're either your best friend or worst nightmare, depending on whether your quarterly numbers are trending upward. In startup land, they're the people whose calls you always take.

🚀 Startup / VC

Beginner

metrics-driven

A company culture claiming to make decisions based on data analysis rather than gut feeling, though which metrics get measured mysteriously align with what leadership already wanted to do. It's astrology for MBAs.

🚀 Startup / VC

Intermediate

founder-market fit

The degree to which a founder's background, skills, and experience uniquely position them to solve a particular problem. The startup equivalent of being born for this moment, or at least having a plausible narrative for why you were.

🚀 Startup / VC

Beginner

monetize

The art of turning literally anything—your attention, your data, your grandmother's cookie recipe—into cold hard cash, typically by inserting ads or charging subscription fees. It's what happens when tech companies realize that 'free' products need to pay the bills somehow, usually by selling your eyeballs to advertisers. Essentially, if you're not paying for the product, someone's monetizing you.

🚀 Startup / VC

Intermediate

spray-and-pray

An investment strategy of making many small bets across a wide portfolio, hoping a few massive winners will compensate for numerous failures—essentially portfolio construction as gambling. The scatter-shot approach favored by funds who believe they can't predict winners.

🚀 Startup / VC

Intermediate

TAM

Total Addressable Market -- the theoretical maximum revenue if you sold your product to every possible customer on Earth, including people who don't want it, can't afford it, and live in places without internet. It's the biggest number in every pitch deck and the most fictional.

🚀 Startup / VC

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