What's what's when we're thinking about that? What's the logic behind how you're evaluating a brand's health with totally with with that ratio or those economics? Yeah.

So one of the reasons why I hate the three to one LTV to CAC myth is because brands can get... really attached to like i want to get to three to one let's just say that it's in 12 months right and the reality is that isn't always the healthiest thing for a particular brand to do and you have to look at you have to look at multiple layers but there's an order in which you should you should look at things right the first thing that we want to understand is is what month does CAC get paid back? And that in the simplest terms, it's in what month is your LTV and margin dollars equal to your CAC, right? So if your CAC is 50 bucks for a cohort and you get to month three and you have $50 of accumulated margin before ads, That's your break-even point.

It's taken three months to pay that back.

As a general statement, when you're starting a consumables brand that can have subscription as part of your growth marketing strategy, kind of the step one is to figure out how to get your brand to be able to break even on your CAC or pay back your CAC.

between three and six months, generally speaking.

Now, where do you need to sit on that spectrum from three to six? It depends on multiple factors.

One of the factors, and this is kind of like the next step, after you figure out break-even point, you need to then look at how LTV accumulates kind of every three months, roughly, by month six, by month nine, by 12, by 18, by 21, by 24, and keep going out.

How are you guys seeing that or using that? Or what would be your word of caution for anybody listening to this thinking, hey, John sounds smart, but I'm going to go figure this out in Claude?

Mm-hmm

... at the end of the day, like, when you look at their new versus returning customer sales data, the returning customer sales is so negligible.

You can basically just assume every, more or less, every purchase is a fir- is a, is a new customer.

And so attribution actually is not that, from the CFO lens, is not that complicated.

Like, basically everyone's a new customer, more or less.

And so you can think about your CAC as just all of your ad spend divided by all of the customers that you have in a particular period.

Now, where it shows up more, and it's because it's much more nuanced and more important, is the LTV to CAC game, the game where you're, you're selling a consumable.

What are some things that you think are, are critical for them, and what kind of advice would you give them?

And I guess, do you guide brands in that? Like based on historicals, based on projections, based on the liquidation plan, boom, this is how you do POs.

So let me explain this conceptually.

If you want this to be done in your brand, you can hire a CFO to work on the nuances of your situation because every situation has nuance.

So there's guidelines and there's conceptual frameworks.

But then at the end of the day, we have to break this down and make it the best bet.

This is a bet.

Let's be clear about that, that we can make for your business and you as an owner.

What is your perspective seeing all these really amazing brands at scale layering AI and how do they look different?