A small set of compounding metrics separates efficient growth from capital-hemorrhaging growth. The Burn Multiple, popularized by David Sacks in a 2020 tweet-thread framing it as "the SaaS metric that matters most in 2020," is net burn divided by net new ARR. A burn multiple under 1.0 is excellent, 1.0–1.5 is acceptable, and above 2.0 is inefficient — capturing how much cash a company burns to generate each dollar of new ARR. The Rule of 40 states that a SaaS company's growth rate plus profit margin should exceed 40% — for example, 30% growth plus 10% margin — for a healthy balance of growth and efficiency. The Quick Ratio captures the same idea at a smaller cadence: (New + Expansion MRR) ÷ (Churned + Contraction MRR) in a period, with above 4 excellent and below 2 weak.
Sales efficiency has its own canonical metric. The Sales Magic Number is net new ARR in a quarter divided by sales and marketing spend in the prior quarter; above 0.75 means a company should invest more in S&M. A sales pipeline coverage ratio — open pipeline value divided by quota — typically needs to be 3–4× to reliably hit a number. The fully loaded cost of a salesperson includes base, commission, benefits, manager, tools, and office, divided by customers or ARR closed to determine per-rep productivity, and ramp time — the months until a new rep hits full quota productivity — must be amortized across the rep's productive months in a ramped CAC. Without that adjustment, CAC math understates true acquisition cost.
The choice of go-to-market motion radically reshapes unit economics. Sales-led growth produces high-touch, high-CAC, enterprise-ACV customers; product-led growth (PLG), where users discover, try, and adopt a product with minimal sales involvement — often via free trial or freemium — produces low-touch, low-CAC, SMB-ACV customers; unit economics differ by an order of magnitude between the two. The "Land and Expand" model lands with a small initial contract, then grows usage and footprint inside the account, relying on net negative churn mechanics to expand revenue without new sales. Enterprise and SMB unit economics diverge systematically: enterprise brings high ACV, high CAC, long sales cycles, low churn, and multi-year contracts; SMB brings low ACV, low CAC, short sales cycles, higher churn percentages, and monthly contracts. Multi-year deals increase LTV proportionally (no churn between years) and dramatically improve LTV:CAC, but introduce collection and credit risk.
Channel-level discipline is what keeps these systems from drifting. Payback should be calculated separately for each acquisition channel so spend can be reallocated from inefficient to efficient channels. Channel saturation is the point at which spending more in a channel yields diminishing returns, and the marginal CAC — the CAC of the next incremental customer, not the average — rises above LTV; once marginal CAC exceeds LTV, the channel is exhausted for that audience or creative. The "burning platform" warning describes a business unprofitable per unit but funding growth with capital: the only path to breakeven is dramatically improving LTV or reducing CAC, and both are hard, making this one of the most dangerous unit-economic positions a founder can occupy.