General Catalyst reposted this
Technology companies today structurally underinvest in growth, which severely hurts their long term equity value. At scale, their largest use of cash is S&M/CAC. This spend creates an “asset” in the form of lifetime value (LTV). A company’s investment in that asset should not be constrained by their balance sheet or other irrelevant metrics – but solely by the yield on that asset. This is how the company maximizes its value. I wrote a longer piece about this. If you find this interesting – or would like to talk through the impact this way of thinking has on companies – please feel free to reach out.