Reference
The Four Levers of Company Valuation
ARR, LTV, CAC payback and NRR are the four inputs to what a company is worth. Valuation is not a fifth item on that list. It is what the four produce, so it moves arithmetically when they do. You feel each lever as a pressure when the valuation is not where you want it.
What it is not
Not four separate initiatives with four separate owners.
What each lever responds to
This is the asymmetry. Acquisition moves one lever and leaves three where they were. Expansion is the only motion that pulls all four.
| Lever | A new logo | An expansion |
|---|---|---|
| ARR | Up. This is the one it moves. | Up. |
| NRR | Nothing. New logos are excluded from the calculation. | Up. It is the only thing that moves NRR. |
| LTV | Nothing. More customers at the value your model already produces. | Up. The same customer becomes worth more. |
| CAC payback | Nothing. CAC and the time to earn it back are effectively fixed per customer type and channel. | Better, and it is the only thing that moves this one. The acquisition cost is already sunk. |
None of that is an argument for acquiring fewer customers. It is an observation about how much of the scoreboard one motion can reach.
Where it was staked
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Gross retention cannot exceed one hundred percent. So perfect retention is not slow growth, it is flat. Which leaves exactly two sources of growth, and only one of them keeps working after you stop paying for it.