Dave Kellogg: How to Forecast in 2024 & Why CaC Payback is Flawed and CAC Ratio is Better | E1110
Harry Stebbings (host), Dave Kellogg (guest), Narrator
In this episode of The Twenty Minute VC, featuring Harry Stebbings and Dave Kellogg, Dave Kellogg: How to Forecast in 2024 & Why CaC Payback is Flawed and CAC Ratio is Better | E1110 explores dave Kellogg Redefines SaaS Efficiency: CAC, Forecasting, CS, and AI Dave Kellogg, veteran SaaS operator and advisor, explains how to think about efficient growth in today’s tougher funding and buying environment, emphasizing simple, “atomic” metrics like CAC ratio over compound metrics like CAC payback period. He argues that most startups underuse basic analytics to double down on what’s working and misunderstand key concepts like ICP, retention, and sales efficiency. Kellogg dives deep into forecasting (new sales vs. churn), the real job of customer success, the dangers of sloppy outbound, and how to structure sales organizations, incentives, and close plans. He closes with views on AI in sales, the outbound arms race, and why subscription pricing and founder idolatry have both become problematic ‘religions’ in SaaS.
Dave Kellogg Redefines SaaS Efficiency: CAC, Forecasting, CS, and AI
Dave Kellogg, veteran SaaS operator and advisor, explains how to think about efficient growth in today’s tougher funding and buying environment, emphasizing simple, “atomic” metrics like CAC ratio over compound metrics like CAC payback period. He argues that most startups underuse basic analytics to double down on what’s working and misunderstand key concepts like ICP, retention, and sales efficiency. Kellogg dives deep into forecasting (new sales vs. churn), the real job of customer success, the dangers of sloppy outbound, and how to structure sales organizations, incentives, and close plans. He closes with views on AI in sales, the outbound arms race, and why subscription pricing and founder idolatry have both become problematic ‘religions’ in SaaS.
Key Takeaways
Use CAC ratio as your core efficiency metric, not CAC payback period.
Kellogg prefers CAC ratio (sales & marketing spend / new ARR) because it’s simple, hard to fudge, and isolates sales and marketing efficiency, whereas CAC payback folds in gross margin and churn, making it useful for VC screening but less useful for operators trying to diagnose and fix specific problems.
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Evolve your ICP from aspiration to regression as you scale.
Early on, ICP is a hypothesis about who should buy (company–buyer–problem); over time it must become data-driven—using win rates, deal cycles, ASP and NRR to find the segments where you sell faster, retain longer, and expand more, then doubling down there.
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Separate ‘atomic’ metrics for operating from ‘compound’ metrics for investing.
Operators should rely on single-purpose metrics (e. ...
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Redefine customer success as an explicitly commercial, revenue-responsible function.
Kellogg argues that CS teams often drift into ‘hugger’ or pseudo-support roles; instead they should introduce themselves as account owners whose job is to secure renewals and grow the account, work a portfolio to a target NRR, and share upsell credit with sales to reduce channel conflict.
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Run disciplined, triangulated sales forecasting and avoid ‘club’ forecasts.
Forecasts should be each rep’s honest prediction, rolled up across reps, managers, and multiple views (stage-weighted pipeline, forecast categories, historical conversion rates) to triangulate; managers who bully reps into inflated ‘commit’ numbers destroy forecast accuracy and decision quality.
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Use close plans and curiosity to prevent deal slips, not excuse them.
Most end-of-quarter slips are avoidable if reps maintain detailed close plans (signer, approvals, budget, precedent, timing) and constantly ‘sell through curiosity’ about the buyer’s internal process; only true acts of God (e. ...
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Treat outbound as a targeted, high-ACV, vertical play—not a generic savior.
Kellogg sees many teams using outbound as a panic lever and being disappointed; he recommends heavy, ABM-style outbound when you have large deals in clearly defined verticals/use cases, and otherwise favor building strong inbound and content engines—especially as AI-driven outbound becomes commoditized.
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Notable Quotes
“ICP starts out as an aspiration, and over time it becomes a regression.”
— Dave Kellogg
“I like what I call atomic metrics, because I'm looking at one thing, it's harder to cheat, and I know exactly what I'm looking at.”
— Dave Kellogg
“My name is Dave. I'm your account manager. My job is to get your renewal and grow your account.”
— Dave Kellogg
“The single biggest sin in SaaS is putting your farmer against someone else’s hunter.”
— Dave Kellogg
“We’ve learned how to do inefficient growth really well in the last four years.”
— Dave Kellogg
Questions Answered in This Episode
How should early-stage founders practically transition their ICP from ‘aspirational’ to data-backed when they only have a small number of customers?
Dave Kellogg, veteran SaaS operator and advisor, explains how to think about efficient growth in today’s tougher funding and buying environment, emphasizing simple, “atomic” metrics like CAC ratio over compound metrics like CAC payback period. ...
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In a world where NRR benchmarks have reset downward, how should boards recalibrate their expectations for ‘good’ NRR and GRR by segment?
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What specific behaviors or metrics best distinguish a truly great CSM team (revenue-focused) from a ‘hugger’ team in disguise?
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How can a founding team design sales incentives and upsell credit sharing that reduce hunter–farmer conflict without overpaying on expansion?
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Given the impending saturation of AI-powered outbound, what enduring sources of sales advantage should SaaS companies invest in over the next 3–5 years?
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Transcript Preview
We've seen this explosion of AI sales tools. (graphics pulsing) How do you advise SaaS founders?
Get out there and know you're playing musical chairs, and when the music stops, you're either gonna be a player or not. (coins clinking)
This is Dave Kellogg. He is the executive in residence at Bolderton Capital, and one of the best SaaS expert and strategic advisor in the field.
The low-hanging fruit on efficient growth is a dispassionate, calm analysis of (cash register ringing) what sectors do we sell to? There's a lot of just good old-fashioned analytics, and so much of SaaS success is based on this, Harry. You just have to ask the question, "What's working?" And then double down. (graphics whooshing)
What worries you most in SaaS today?
Subscription pricing. (graphics beeping)
Why? (cymbals clanging)
'Cause I think... (graphics whooshing)
Dave, I am so excited for this. I always learn so much from our discussions. I got so many messages from our last show years ago from people who literally stopped to take notes, which I think is probably one of the biggest compliments a podcaster can get. So thank you for joining me once again.
Well, it's great to be here, Harry, and it's great to see you again. And congrats on all the success.
Ah, that's so kind. It's so lovely to see you again. I do wanna ask, for those that do not know the Dave Kellogg brand, what would you say is the career highlight, what you're best known for to date?
Sure. I'm probably best known for one of two things. Uh, operationally, being the CMO of BusinessObjects for nine years as we grew from 30 million in revenue to a billion in revenue. Uh, not market cap, but revenue. Um, then from 240 people to over 4,500 people. So that was probably my biggest operating accomplishment. But I have run two companies, one from zero to 80 million after that, and I've, uh, run another one from eight to 50 and sold it. But, uh, but the biggest one has gotta be the BusinessObjects run.
I mean, I, I, I love that clarification of revenue, not market cap, as well. Important in all markets. (laughs) Uh, knowing, knowing all you know now, before we dive in, what, what do you w- know now that you wish you'd known when you started your career in SaaS?
Well, that's a tough question, Harry. Um, for me, (clears throat) I'm not sure how applicable this is gonna be to everyone in the audience, but, but power. I never really understood power. If I could go back in time 20 years and just say one word to myself, it would be, "Understand the power structure of corporations." Um, 'cause I, I tend to be a call it as I see it always kinda person. (laughs)
(laughs)
With kind of blatant disregard for power structure, and, and that has got me in trouble over the years.
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