As head of marketing at Gusto, I shifted us from “growth at all costs” to profitable growth. ARR grew 100x in 4yrs while CAC <12 months.

Now every company is asked to do the same. Boards and execs are scrambling to rewrite their growth playbooks.

I recently gave a talk to Sequoia Capital and Y Combinator founders on how we did it at Gusto. I’ll share the highlights below.

First, some context:

It's no secret that investors—public or private—are no longer rewarding growth at all costs. Now CAC, burn multiple and profitability are king.

Here's how it's playing out in a typical boardroom right now:

- Board: Capital is now expensive. You need a path to profitability.
- CEO: We need to grow more efficiently.
- CFO: Marketing spends a lot. What parts drive revenue?
- CMO: It's hard to pinpoint
- CFO: Let's cut it all

6 months later: growth is dead. Here's the conversation at the next board meeting:

- Board: Why aren't you growing faster? Your competitors are outpacing you. 
- CRO: We don't have the pipeline.
- CEO: Let's hire a new CMO.
- CFO: *crickets*

Why does this conversation keep happening?

For a decade we've built ad-centric growth engines that wasted $19 out of every $20. Most companies don’t even have the infrastructure to tell you how much they’re wasting and where.

You can't just take out the scissors and cut your way to profitable growth. Most Exec teams eventually find this out the hard way.

At Gusto I learned that growing at all costs is fundamentally different than growing efficiently.

Companies need to change 4 things to transition:


1. Shift to program-level CAC

To drive profitability, you have to understand CAC at the program level, not overall. Build real-time infrastructure to see full funnel conversion and CAC for expensive programs like ads.


2. Invest in conversion, not just demand

There are 2 growth levers:
- Demand helps you get in front of the right buyers. CPC = $$$
- Conversion gets them to buy your product. CPC = 0

When I first took over Gusto's marketing, ~100% of our spend went into generating demand (ads, content, PR). CAC >20 months.

We redirected ~50% of budget to conversion and analytics. CAC <12 months & ARR grew way faster.

Don't just cut. Reallocate budget to efficiency drivers.


3. Launch new programs iteratively

All new programs require optimization to become profitable. Fund experimentation liberally, but in small amounts (<$50k). Define a gate to get additional funding in 3 months. Cut programs that don't hit the target.


4. Design an operating cadence

Create quarterly goals across GTM teams, and turn those goals into weekly targets. Bring finance, sales and marketing leaders together weekly.

In summary: CFOs & CEOs should partner with the CMO to understand their growth levers, cash guzzlers & efficiency drivers.

Reallocate your budget & team to drive efficient growth from the ground up.

Otherwise you'll throw the baby out with the bath water & your company will pay the price.
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