📂 How Gusto grew ARR by 100x in 4 years

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Jaleh Rezaei

@jalehr

As head of marketing at Gusto I shifted us from "growth at all costs" to profitable growth.

ARR grew 100x in 4 yrs while CAC <12 mos.

Now every company is asked to do the same.

I shared how we did it in a recent talk to @ycombinator & @sequoia founders.

Here's the summary:

6:7 AM • Sep 7, 2022

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Jaleh outlined how Gusto achieved significant growth by prioritizing profitability over unchecked expansion.

In boardroom discussions, she observed the tendency to indiscriminately cut marketing budgets, often leading to stalled growth.

So what's the alternative?

She advocates for a detailed understanding of Customer Acquisition Cost (CAC) at the program level, the importance of investing in conversion mechanisms over mere demand generation, the need for iterative program launches, and the establishment of a structured operating rhythm.

This approach involved real-time monitoring of conversion rates and CAC, especially for high-cost programs like advertising, and using a revenue attribution model for indirect revenue-generating programs.

They also formed a dedicated growth engineering team, highlighting the substantial ROI from focusing on conversion enhancement.

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

They redirected ~50% of their budget to conversion and analytics. The result? CAC <12 months & ARR grew way faster.

This is a classic story of how unoptimized ad spend gets you growth, but unsustainable growth.

All growth is unsustainable if your CAC and Payback Period are out of control.

—Corey

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📂 How Gusto grew ARR by 100x in 4 years

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