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The curse of paid acquisition for early-stage SaaS
(explained using greek mythology)


It's often very tempting to use paid spend (e.g adwords, etc) to acquire customers, but it's a siren song in disguise...

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A common belief is that it'll prove out CAC in a scalable channel, but in reality it proves very little.

Ad algorithms are now sufficiently advance that they'll find the lowest hanging fruit, the users who are most interested in your product. They don't scale however.

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As you try to scale the channel your conversion rate will drop as your ads end up hitting less well fitting customers.

You also typically end up competing with the more established players in your market who often have higher ACVs so can simply outbid you, limiting scale.

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Worse still, you have zero-defensibility on ad platforms, a competitor can emerge tomorrow and simply out-bid you forcing you to up your spend to retain growth. You have no customer acquisition advantage.

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It's very hard to wean yourself off paid-spend once you've started. If half of your customers are coming from a paid channel and it doubles in price your choice often becomes cutting it and killing your growth or letting your CAC spiral out of control. You end up stuck.

6/ Organic growth channels are hard to build, but they force you to have real product-market fit and are generally much harder for competitors to replicate. Almost every successful SaaS unicorn had meaningful organic growth at the early-stages.

Find your organic path!