We think of motivation as the wind - it comes and it goes, and if it's not blowing you're stuck
- Understand biology of motivation to do better
- Brains are meant to facilitate motion
- Snails have two brain cells - one to sense food and one to tell hunger - if hungry find food
- Complex brains used to escape uncomfortable things and maintain homeostasis
Motivation is the desire to escape discomfort
The need for homeostasis spurs action
- When something's off, the brain generates emotions to make us fix the problem
- Eg. hours of focus in video games is driven by need to escape schoolwork, social pressure, parents - quick easy way to escape discomfort
- Humans take the path of least resistance
Feeling bad isn't bad - we can manage motivation and distraction
Discomfort is not a bad thing
Don't look for the easiest path away from pain
Find what drives our desire to escape how we feel
You don't need to feel like writing to write - a "real" writer won't constantly write effortlessly
Prepare yourself for uncomfortable emotional states
Lots of techniques to avoid inevitable urges (eg. ten-minute rule)
Understand why you got distracted, then try to avoid them
They often give off signals that are inconsistent with the real probabilities of their actually making an investment.
Don't get excited about meeting a VC, they're paid to listen to your pitch.
Being invited back is common after a great first meeting and not a strong signal.
Being invited to a partner meeting is forward momentum but still around half of all deals vaporize at this stage as partners lose enthusiasm.
Don't take closing for granted when a term sheet is offered. ~10% of deals fail at this stage and it's often the biggest disconnect between founders and VCs.
Celebrate once a deal is closed, not before.
Customer Acquisition Costs (CAC) are expenses to acquire customers. CAC payback is how long it takes to recoup the CAC, but it's a complex metric with no universal framework.
Calculating CAC Payback
This is the single best measure of efficiency of your go-to-market engine. The recommended formula is:
- CAC Payback = (Sales & Marketing Expenses in Period) / (Net New MRR Acquired in Period * Gross Margin)
- MRR figure should include net new MRR
- Measure & make improvements.
Benchmarking CAC Payback Goals
Faster is better, but focus on peer benchmarks instead.
Look at it in the context of logo retention & net dollar retention.
Long term trends are key.
Tips for Reducing CAC Payback
Continually experiment to optimize by:
- Leveraging PLG best practices
- Nailing product / market fit
- Driving funnel efficiencies
- Optimizing conversion rates
Retention is also powerful:
- Take advantage of upsell & cross-sell
- Avoid the lifetime value trap
- Finally, don't forget about your margins!
Bottom Line: Faster Payback = Stronger Company