To see what it means to maintain a burn multiple at each of these levels, we built a simple spreadsheet, available below, that demonstrates growth at given burn multiples, and we graphed out performance over six years. We made some assumptions about the size and makeup of the company in its pre-revenue days. Since we’re talking about SaaS, we broke spending into three areas: Production Cost = Cloud Cost + Support Cost, Customer Acquisition Cost = Sales Cost + Marketing Cost, Overhead Cost = Executive Team Cost + General Business Cost + Development Team Cost. Initially, these costs are higher than they should be because the company has yet to generate any revenue. After the first year, production costs efficiently adjust to a set gross margin, which is 80% in our examples. Overhead increases as a percentage of new ARR, which in our examples is set to 20%. CAC does not adjust efficiently because we don’t want to fire most of the sales and marketing team and cut those budgets after the first year, when sales won’t be sufficient to produce the desired CAC.