The CAC Slope of Pain: A Data Driven Guide To Growth Vectors

I was recently catching up with the CRO of a $35M ARR business. He had taken over 2 years ago when the company was barely growing. His mission was to reignite growth and in less than 24 months the company was back on track, growing at 40%/Y - mission accomplished!

But now the company was at a crossroads.  The CEO was pushing to expand into adjacent verticals.  The company had started in the retail vertical and was considering expanding into QSR restaurants.  At the same time, they had an opportunity to become a consolidator - acquiring other point solutions to deepen their relationship with existing customers.  And finally, from across the ocean, Europe beckoned.  The promise of cheap easy expansion into a seemingly homogeneous population.  “They’re just like us!” The sirens call.

This question - where and how to grow - seems straightforward and obvious.  And yet, for so many growth stage companies in B2B technology, it has become existential.  Over the past few years, as the tide of cheap ZIRP money has receded, growth for non-AI native companies has hit a wall.  Jamin Ball has written that median top-line growth among public cloud companies has fallen from 30–40 % in 2021 to ~15–17 % in 2024. At the same time, CAC payback has exploded — the typical company now needs 60 months to recoup its acquisition costs.

That’s not a typo.

Five years to break even on a customer.

Growth is getting harder to find but for these non-AI native companies fighting for relevancy, it’s the only way out. Most are at the same crossroads as my friend. A few seemingly attractive paths, one balance sheet, and a dwindling number of chances to get it right.  And if they get it wrong: doomed to become a low EBITDA multiple zombie.

As boards, companies, and GTM leaders ponder where to search for growth, it seemed sensible to me to try and map out a coherent framework for evaluating growth options. 

Blending a bunch of different data from Jamin Ball, Benchmarkit (hi Ray!), KBCM, Forrester, and McKinsey I derived the following rough proxies.  

In the table below, we’re looking at 6 different possible paths.  The simplest and most obvious: keep doing more and push harder.  Think of your baseline GTM motion as a 1.0 CAC multiplier.  Whatever you’re currently doing gets a multiple of 1.  From there, we evaluate new choices ranking them from least to most expensive.  The question becomes, how much harder and more costly are new GTM motions and how should you prioritize them.

In today’s world where growth is both rare and critical, every step away from your core adds 20–80 % CAC — and now that payback periods have ballooned to four years or more, mistakes compound brutally.

The research showed something pretty clear: 

I needed to contextualize this research with actual operator conversations.  So I picked up my Pavilion Gold rolodex and made some additional phone calls to stress test these ideas.  I called Jimmy Hart, President of YipitData, who had helped take the company from $20M to $200M over the past few years.  And I called Jenny Dingus, SVP of Sales at Clio, who had helped scale their verticalized legal tech platform from $125M to $300M over the last 3 years since she joined in 2022.

When I called Jimmy Hart, President of YipitData, he didn’t hesitate.

“If you’ve already got something successful, your odds of success are much higher when you evolve from the core - same customer, new product, or same product, new customer - not both at once.”

YipitData started as a single-product business serving hedge funds. For five years, they sold the same kind of data to the same kind of customer.  And it worked.  

“We were one product, one customer for about five or six years,” he said. “That alone got us to roughly $30 million in revenue.”

Then came the familiar inflection point: TAM limits and investor pressure to expand. The team explored a few of the classic vectors: new geographies, new customers, and new products. 

The first experiment was geographic. “We tried to service Asia from the U.S.,” Hart told me. “It was just not working at all — language barrier, time zone, all the challenges. It only worked when we had someone in market, on the ground.” Even then, the returns were slower than expected.

That experience reinforced what the data already showed: international expansion almost always takes longer, costs more, and yields less than the spreadsheet says. It’s the most seductive form of false efficiency - “they’re just like us!” - and yet, the moment you hire your first rep in London, you’re building a second company.

So if new geographies are the trap, what’s the smarter move?

Both Hart and Jenny Dingus, SVP of Sales at Clio, agree: sell more to the customers you already have.

“The biggest drivers have been additional products to the same base,” Dingus told me. “New products are for sure our biggest lever.”

At Clio, the legal-tech platform, that meant expanding from core practice management into payments, and now into legal research. “Lawyers spend hundreds of dollars more on research than on practice management,” she said. “Now we can capture that separate share of wallet.  Effectively doubling ACV”

That’s the high-efficiency growth play most operators underestimate.  If you can introduce a new product to your existing base, your CAC might increase 20–30%, but your payback shortens as NRR climbs.  That CAC increase might come from investments in enablement or new sales motions.  But it’s also possible CAC itself doesn’t move at all. It’s the one vector that compounds instead of dilutes.

Hart saw the same dynamic at YipitData:

“New product, same customer is easier,” he told me. “You already have the relationship.  They’ll hear you out. New customers - they don’t know who you are at all.”

What about the next layer out: new verticals?

This is where CEOs get restless. “We’ve nailed retail,” the logic goes, “so why not restaurants?” It feels tantalizingly close and so possible, particularly if you’re accelerating in your core market.  

Dingus explained why Clio has deliberately stayed in its lane:

“We rise and fall on how many lawyers there are in the world,” she said. “If we went after accountants or psychiatrists, it would be a fool’s errand. We’d confuse our base and dilute our authority.”

The research backs that up. BCG and McKinsey data show that vertical expansion costs 20–40 % more CAC and adds at least a quarter to your payback period. At 60 month pay back periods, we’re looking at an additional 1-2 years.  You’re rewriting your narrative, building new proof points, training sellers to speak a different dialect.  Unless your right to win is overwhelming - unique data, existing relationships, or regulatory advantage - new verticals are rarely cheaper than deepening the current one.

Hart put it simply:

“Why are we so special? Why do we have the right to do this thing? If it’s not our core, we’ve got to really believe we’re special — or find another angle. What is our right to win?”

That phrase, the right to win, kept popping back up in my mind. 

It cuts to the essence of the point.  In your core market, you’ve built and earned the trust, the longevity, the brand that earns you the next renewal.  In an adjacent market, you’re starting from scratch.  

What is your right to win that market?  That question must have an answer to justify the bet.

Both leaders framed expansion as a sequencing problem, not a guessing game.

Hart:

“You’re never getting 100% of your SAM. Once you’ve penetrated half of it, you either need your customers to spend 5× more, or you need a new leg on the stool.”

Dingus:

“If I had to prioritize: first, new products, especially ones that tap a different share of wallet. Second, move up-market. Third, international.”

That ordering mirrors the data in the table above. It’s the “CAC slope of pain” — from 1.0× to 1.8× as you move further from the core.

And it’s rational. Expanding product lines and pricing models improves NRR and valuation multiples. Going up-market increases ACV without changing your buyer persona. Crossing the ocean introduces entirely new compliance, cost, and time-to-payback layers.

Of course, sometimes you do the hard thing anyway.

Hart told me about a decision YipitData made to build a new platform internally, something that violated every CAC efficiency rule.

Yipit fundamentally sells data to their customers. But what happens when you run out of 3rd part data to license?  In Yipit’s case, it meant build it yourself, through the development of a new stand-alone subscription management app called SpendHound that provides free SaaS subscription management tools in exchange for the right to anonymize and license the underlying data to their core customers.  

“Sometimes it’s not about the right to win, it's the importance,” he said. “If it’s that important that you have to do it, you find a way.”

Dingus echoed the same reasoning on Clio’s research expansion:

“Even within our vertical it’s taken a lot of resources,” she said. “But it’s strategically essential. If it were outside our space, it’d be impossible.”

In other words, some bets you make not because they’re cheap, but because they’re existential. That’s fine.  But know the game you’re playing and be intentional about it.

Bets like SpendHound aren’t about pursuing adjacent verticals but about creating entirely new vectors for enterprise value, even above and beyond revenue acceleration.

If you’re sitting in a leadership meeting debating where growth will come from this year, here’s a simple way to structure the conversation:

Score each vector

35 % efficiency (CAC & payback)
25 % NRR lift potential
20 % time-to-impact
20 % strategic or narrative value

Once you’ve assigned scores to each possible growth vector, you can stack rank and evaluate the investment based on more than just the CEO’s gut.  

Now you have a framework.

From there, sequence the bets and establish success-or-kill criteria.  

Sequence the bets

Short-cycle (quarters): pricing, packaging, channel optimization.
Mid-cycle (12–18 months): product adjacencies, vertical packaging.
Long-cycle (24–36 months): new geographies, major rebuilds.

Set kill criteria

If CAC payback exceeds 32 months for two quarters in a row or NRR doesn’t move, pause the vector. As Hart put it:

“Get feedback next week, not nine months from now.”

The takeaway from both the data and the operators is surprisingly consistent:  When growth slows, the instinct is to look outward. The smart move is usually inward.

Hart summed it up best:

“Same product, same customer is easiest. But the real decision is about the right to win and strategic importance. That’s what decides whether the bet’s worth it.”

Dingus agreed:

“We’re doubling and tripling down in our space. More products, up-market expansion, then international. You can’t be everything to everyone.”

In a world where it takes five years to earn back your acquisition cost, the companies that win won’t be the ones blindly chasing the next frontier. They’ll be the ones who know exactly where and why they deserve to grow.

Become a Topline insider by joining our Slack channel.

We want to hear your feedback! Let us know your thoughts.