Markkinointi uutena investointikustannuksena - Pranav Singhvin keskeiset kirjoitukset

Pranav Singhvi, a Managing Director at General Catalyst, has written and spoken extensively about treating marketing and customer acquisition costs (CAC) as a form of capital expenditure (CapEx) rather than a traditional operating expense (OpEx). Below is a compilation of his notable articles and publications on this topic, with summaries, dates, sources, and key arguments in his own words.

“The Unbundling of ‘Growth’ Equity” (General Catalyst, March 31, 2023)

Source: General Catalyst “Insights” blog (co-authored by Pranav Singhvi and KV Mohan) .

Summary: This article introduces General Catalyst’s Customer Value Strategy (CVF) as a new financing model for growth. Singhvi explains that modern subscription-based tech companies face a “cash trough” when acquiring customers: they spend heavily on sales & marketing (S&M) upfront but recoup that spend over time via customer lifetime value . Traditionally, such CAC spend is funded by equity (diluting founders) because using standard debt creates an asset-liability mismatch when payback is variable . Singhvi argues for “unbundling” this growth expenditure from equity financing. The CVF solution treats S&M/CAC as an asset that can be separately financed . As the article states, “We did this by treating S&M/CAC as though it’s an asset” . General Catalyst’s fund pre-funds a company’s sales & marketing budget and is “entitled only to the customer value created by that spend,” with its return capped . If the marketing investment underperforms, “GC owns the downside – GC only gets paid if and when the company gets paid” . This effectively gives companies a dedicated “CAC balance sheet” to invest in growth without draining their own cash or equity. Singhvi emphasizes that this approach allows founders to continue aggressive marketing investment (when ROI is good) without the usual fear of near-term losses or dilution . In essence, marketing spend is reframed as a capital investment with structured financing, aligning the cost of capital with the predictable returns on CAC rather than treating it purely as an expense.

“How Fivetran Scaled Its Growth While Generating Excess Cash” (General Catalyst, May 9, 2024)

Source: General Catalyst case study (by Pranav Singhvi and Harry Elliott) .

Summary: This piece is a real-world case study illustrating Singhvi’s marketing-as-CapEx concept in action. It details General Catalyst’s partnership with Fivetran, a Cloud 100 SaaS company, which leveraged the Customer Value Strategy to fund its customer acquisition. As a result, Fivetran “almost doubled revenue, while generating excess cash – a near unheard-of combination” . Rather than raise dilutive equity or slash other investments, Fivetran tapped CVF to finance its growth spend. The article highlights that Fivetran’s go-to-market engine was very efficient (strong unit economics and payback) but traditionally would “burn money early in the life of each new cohort of customers” . Using the CapEx-like funding model for marketing, the company could scale customer acquisition without hitting its P&L as hard. Fivetran’s CEO is quoted saying the impact of GC’s CVF is “hard to overstate” and that “it seems so obvious that this is the appropriate way to invest in and scale your GTM [go-to-market]” . This underscores Singhvi’s argument that treating marketing as an investment leads to superior outcomes. Publication details: Published on General Catalyst’s website with direct input from Singhvi; the content reinforces the strategic framing that funding customer acquisition via a separate capital vehicle can drive growth and preserve cash . The Fivetran example provides evidence of marketing treated as CapEx yielding positive financial results (high growth and positive cash flow).

“CAC is the new CapEx, EBIT‘CAC’ should be the new EBITDA” (LinkedIn Pulse/General Catalyst, July 19, 2024)

Source: LinkedIn Pulse article by Pranav Singhvi (also available on General Catalyst’s blog) .

Summary: In this in-depth thought piece, Singhvi directly equates Customer Acquisition Cost (CAC) to capital expenditure for tech companies. He notes that late-stage tech firms often “severely underinvest in growth” because they face pressure to maintain positive EBITDA and conserve cash . Singhvi draws an analogy to John Malone’s invention of EBITDA in the cable industry: Malone added back depreciation to reflect that heavy CapEx was building valuable assets . Similarly, Singhvi argues, expensing CAC upfront obscures the true earnings power of tech firms, since CAC creates a long-term asset (customers and their LTV) . He proposes using EBITCAC (earnings before interest, tax, and CAC) as a more appropriate profitability metric for growth companies . This reframing treats CAC more like depreciation – something to be added back when assessing core earnings. As Singhvi succinctly puts it, “CAC is the new CapEx and should be thought of in the same way.” He points out that tech businesses are falsely considered “asset-light” when in fact they are “expense heavy”, investing huge sums in customer acquisition that yield future cash flows . If a tech company has proven CAC ROI, its “CAC machine effectively has the properties of an asset and is highly underwritable”, meaning it could be financed similar to a hard asset . Singhvi contrasts this with traditional manufacturing: no one expenses a factory purchase in one go, so why do so for customer acquisition ? He warns that relying solely on equity to fund growth is like expensing all CapEx – it “massively under-invest[s] in growth” and ties up cash that should be producing returns . The article then reinforces the solution: finance CAC with external capital aligned to its returns (much as project finance or asset finance works), thereby lowering the cost of capital and enabling companies to spend optimally on marketing for long-term value . Key arguments from Singhvi include the idea that a late-stage tech company can be viewed as two entities – “the ‘CAC machine’ and the ‘operating company’” – where the CAC machine is an investment engine that should be evaluated and funded separately . By removing CAC expenses from the income statement (conceptually capitalizing them), many tech firms would be profitable and “highly cash generative in nature” . Overall, this publication cemented the notion that marketing spend is not just an expense, but a strategic investment akin to building an asset, and it calls for both new metrics (EBITCAC) and new financing approaches to reflect that reality .

References:

• Singhvi, Pranav et al. “The Unbundling of ‘Growth’ Equity.” General Catalyst Insights, Mar. 31, 2023 .
• Singhvi, Pranav and Harry Elliott. “How Fivetran Scaled Its Growth While Generating Excess Cash.” General Catalyst, May 9, 2024 .
• Singhvi, Pranav. “CAC is the new CapEx, EBIT‘CAC’ should be the new EBITDA.” LinkedIn Pulse (General Catalyst), Jul. 19, 2024 .