Should marketing spend be governed by LTV and CAC, or by payback time on short cohorts?

Harry Stebbings · Mar 15, 2023

You determine acquisition spend by looking at existing cohorts and per-rider LTV, which tells you what you can pay to acquire a customer

Scope: given as an answer to a marketplace interview exercise

19:06 20Growth: The Inside Story to Uber's Hypergrowth Scaling; What Worked, What Did Not? | Spending a $1BN Budget at Uber and Why China was the Wild West for Uber | Why You Do Not Need a Growth Team with Adam Grenier

Harry Stebbings · Jan 31, 2026 · hedged

Cohort retention data gives a good enough LTV proxy to work back to an acceptable CAC

If 87% of a cohort lasts four years you can treat four years as the LTV window and reason backwards from there

Scope: offered as the standard-practice steelman while challenging Omer's rejection of LTV

14:08 20Growth: How Wix Built a $100M Marketing Machine | Why LTV is BS and Why Time Return On Investment is the Most Important Metric | How to 10x Your Growth: What is the Next Great Channel with Omer Shai, CMO @ Wix

Luke Harries · May 23, 2025

The metric to run day to day is CAC to payback period rather than CAC to LTV, with target payback set per product line between twelve and thirty-six months depending on how aggressive you want to be

Scope: payback target varies by product line and appetite for aggression

37:04 20VC: ElevenLabs Head of Growth on Why You Do Not Need PMs | The 7-Part Launch Playbook That Gets 700K+ Views Per Product | The Truth About CAC, Payback & Performance Marketing in AI with Luke Harries

Omer Shai · Jan 31, 2026

Time to return on investment (TROI), measured on very short cohorts of 1, 7, 14 and 28 days, is the right growth metric because it lets you act fast enough to change company results, whereas LTV is far too slow

In 2012, when Wix was a poor pre-IPO company, measuring a new Facebook ad format on a same-day basis let him 5x spend in one day off the results he could see; the shortest cohort is what allows that speed

14:39 20Growth: How Wix Built a $100M Marketing Machine | Why LTV is BS and Why Time Return On Investment is the Most Important Metric | How to 10x Your Growth: What is the Next Great Channel with Omer Shai, CMO @ Wix

Omer Shai · Jan 31, 2026

If a company holds its time-to-return-on-investment (TROI) at the level it is comfortable with — around eleven to twelve months for Wix — then marketing budget is effectively unlimited

The comfortable TROI level already prices in user retention, upgrades to more expensive packages and churn, and TROI can be measured per traffic source and blended across all of them

Scope: eleven-to-twelve months is Wix-specific; the comfortable level is company-dependent

16:17 20Growth: How Wix Built a $100M Marketing Machine | Why LTV is BS and Why Time Return On Investment is the Most Important Metric | How to 10x Your Growth: What is the Next Great Channel with Omer Shai, CMO @ Wix

Omer Shai · Jan 31, 2026

An extra $100M of marketing budget would be returned rather than spent, because Wix already has all the money it needs to grow on a healthy path

He treats the budget as investing money rather than spending it, and more budget would break the efficiency discipline he believes the business requires

34:44 20Growth: How Wix Built a $100M Marketing Machine | Why LTV is BS and Why Time Return On Investment is the Most Important Metric | How to 10x Your Growth: What is the Next Great Channel with Omer Shai, CMO @ Wix

Guillaume Cabane · Nov 29, 2023

Any CAC payback below twelve months is good, and where LTV is very long — as in financial platforms like Ramp where mid-market customers stay many years — you can afford to be aggressive and spend one to two years of payback

Long retention means a huge LTV, which supports a longer payback period

17:17 Twelve month payback is baseline good longer payback justified by long ltv

Mike Duboe · Feb 15, 2023

CAC/LTV is a flawed metric because the 'lifetime' component is unknowable early in a company's life and because it is usually computed too coarsely on a blended basis

A two-year-old company cannot credibly assert a five-year customer lifetime, and blended figures hide large variance in customer quality by channel, keyword and audience

43:03 Cac ltv is unreliable early since lifetime is unknowable and blended calculations hide channel variance

Harry Stebbings · Feb 15, 2023

CAC/LTV fails to capture word-of-mouth and brand marketing becoming more effective over time, which can actually reduce true acquisition cost

At a business like Stitch Fix, customers recruit family members through conversation, so real CAC falls in ways the formula never registers

44:41 Cac ltv fails to capture word of mouth and brand effects that reduce true acquisition cost over time

Omer Shai · Jan 31, 2026

Optimising for conversion rate as a metric is a mistake, because a rate is meaningless without knowing the size and cost of the top of funnel

A million extra users that cost you nothing and convert at 1% are great even though they drag the headline rate below the previous 10%; what matters is improving conversion within a specific paid cohort, not the company's overall conversion rate

21:35 Conversion rate is meaningless without funnel size and cost

Omer Shai · Jan 31, 2026

The right optimisation target is the company's TROI, not day-two conversion to paid; improving brand brings in unpaid users which creates the option to relax the TROI you accept on paid users

His mandate is to bring in as much collection as possible within the agreed TROI, so free brand-driven volume buys flexibility on paid acquisition

24:16 Optimize total payback so free brand volume buys paid headroom

Omer Shai · Jan 31, 2026

TROI removes the need for a different measurement philosophy between sticky small-business users at Wix and promiscuous AI-builder users at Base44, because churn and switching are already priced into the metric

Churn and users moving between products are calculated inside TROI, and the same team carried the measurement methodology from Wix to Base44 — only inputs like monthly-user percentage and package price differ

25:22 Payback metric prices in churn so it travels across business models