CAC

Customer acquisition cost — what it costs to win a new customer — and one of Kyle’s go-to lenses for judging whether a business is Durable or just generating vanity revenue. The recurring theme across his notes is that CAC is rising and that a business whose unit economics depend on cheap acquisition is structurally fragile. In Product Led Growth — The End User Era he flags ProfitWell data that CAC is up 50–65% over five years across B2B and B2C as marketing/sales channels saturate — except for freemium businesses, where it rose only ~25%, which is part of why PLG emerged as a response to channel commoditization.

CAC is central to Kyle’s skeptical read of the One-Person Billion Dollar Company thesis. In The $1B Rorschach Test - Research (and the linked MEDVI page) he lists “ungodly CAC in a commoditized market” as one of four margin “takers” — alongside rented infrastructure, churn to the latest discount, and lawsuit costs — that hollow out a headline billion-dollar revenue number. The back-of-envelope there pegs MEDVI’s CAC at roughly $500–700 per customer, “working” only because overhead is near zero and LTV holds; price-conscious customers who churn between intro offers turn the whole model into a CAC War where companies overspend on acquisition for LTV that never materializes. The older counterpoint comes from Berkshire Hathaway Annual Letters, where Warren Buffett describes GEICO’s durable advantage as the opposite — lowest operating cost for renewal business, a structurally cheaper cost of new business that competitors “will be unable to replicate”; Kyle even riffs on “LTV/CAC for stocks” in a margin note there.

The missionary-economics reading

Kyle also runs the metric in the opposite direction — onto religious institutions rather than businesses. In Law of the Harvest the book reports that “the LDS Church has spent far more money per convert than any other major denomination in Eastern Europe, including those with comparable membership requirements and better retention.” Kyle annotates: “Convert Acquisition Cost aka CAC.” The pun reframes per-convert missionary spending as a customer-acquisition-cost problem, and invites exactly the questions a portfolio or company-building lens would ask: what does it cost to acquire each “customer,” and how does that square with retention — where the book notes the Church performs worse despite higher spend? It is a bridge between his reading of religious institutions and his investing/company-building vocabulary.

Context: CAC (customer acquisition cost) is a standard SaaS/consumer unit-economics metric, typically read against LTV (lifetime value); a healthy LTV/CAC ratio (often cited as 3:1+) is shorthand for an efficient, defensible growth model.

Where this appears

• Berkshire Hathaway Annual Letters — GEICO’s low, sustainable cost of new and renewal business as a durable moat; Kyle’s “LTV/CAC for stocks” note
• Product Led Growth — The End User Era — CAC up 50–65% in five years as channels saturate (only ~25% for freemium), the structural driver behind PLG
• The $1B Rorschach Test - Research — “ungodly CAC” as a margin taker; ~$500–700/customer estimate; the CAC War dynamic
• MEDVI — high CAC in a commoditized market cited as a durability red flag
• One-Person Billion Dollar Company — CAC among the takers that make the billion a revenue (not value) vanity metric
• Law of the Harvest — Kyle’s “Convert Acquisition Cost aka CAC” note against the data on LDS per-convert spending in Eastern Europe vs. retention

An Apple Notes capture on this topic is held privately in the wiki.