I’m Bob Moore. I’m the CEO and Co-founder at Crossbeam, and a serial SaaS founder, AMA!

It’s certainly possible (and admirable when it happens), but there are many products out there – especially ones where you are selling into large enterprises or experience long sales cycles – where it’s impractical or can be debilitating to your ability to grow at the highest possible clip.

Imagine a company where your CAC ratio is 1 (that means you make back your “costs to acquire a customer” once you have collected one year’s worth of revenue from them). Now imagine in this same world that you are growing at 100% per year.

In this world, at any given time, 1/2 of your customers have been acquired less than one year ago. That means you are always “in the red” for half of your customers, “in the black” for the other half. So, assuming they all pay the same average monthly rate, you are perfectly breakeven.

Now imagine you want to increase that growth rate to 150%. That makes your business better and more valuable, right? Heck, if you can do that and not increase your CAC ratio, you are a stuperstar! But now the percentage of customers in the red is over 50%. You are, by definition, now burning cash. This is why VC becomes more and more important as growth becomes more and more realizable. It costs short-term cash to build long term equity value, and that’s just the way the cookie crumbles for the vast majority of companies in this space.

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