One thing that caught me off guard while learning about SaaS metrics is this: adding more customers doesn't automatically make the business healthier.
Everyone talks about ARR.
Very few people talk about how much it costs to create that ARR.
That's probably because ARR is exciting. Customer acquisition costs aren't.
Let's say you land a new customer after spending $10,000 on sales and marketing. They sign up for $700 a month.You're growing, but you won't recover that acquisition cost overnight—it takes months before the numbers start working in your favor.
Now repeat that with another hundred customers.
Revenue goes up.
Cash goes down.
Nothing is broken. That's simply how subscription businesses work.
This is one reason early SaaS companies can look healthier than they really are. The top line keeps moving, but underneath, the business is carrying a growing pile of acquisition costs that haven't paid for themselves yet.
That's why I find metrics like CAC payback or LTV/CAC more interesting than ARR in isolation.
ARR tells you that customers are signing.
Those other metrics tell you whether signing more customers is actually making the business stronger.
The companies people admire for "hypergrowth" usually didn't ignore these numbers. They fixed them first. Better retention. Lower churn. Faster payback. Only then did they pour more money into sales.
Growing quickly isn't difficult if capital is available.
Growing without creating a bigger financial headache is a different challenge altogether.
