← Every exhibit
Executive Diagnostic Framework and Audit Checklist
| Diagnostic Dimension | Exemplary Maturity (2 Points) | Acceptable Baseline (1 Point) | Critical Structural Defect (0 Points) |
|---|---|---|---|
| 1. Unit Definition Precision | Indivisible atomic unit clearly defined across all commercial tiers | Unit defined generally, with minor ambiguity in enterprise contracts | Unit definition shifts between quarters to manipulate metrics |
| 2. Fully Burdened CAC | Includes all S&M salaries, commissions, benefits, tools, travel, and overhead | Includes all salaries and media, but omits tooling and travel | Only digital ad spend and commissions counted; salaries omitted |
| 3. Cost-to-Serve Boundary | Captures all cloud hosting, APIs, CS labor, and technical support | Captures cloud and primary support; excludes onboarding labor | Only basic server hosting counted; all servicing labor buried in G&A |
| 4. Contribution Payback Horizon | CAC payback calculated on contribution cash; $\le 12$ months | Payback on contribution cash; between 12 and 18 months | Payback calculated on top-line revenue, or exceeds 24 months |
| 5. LTV:CAC Ratio Calibration | Finite-horizon contribution LTV:CAC sits between 3.5x and 5.5x | Ratio sits between 2.0x and 3.5x; requires optimization | Ratio is below 1.5x (insolvent) or calculated using infinite horizons |
| 6. Disaggregated Cohort Auditing | Unit economics calculated separately across enterprise, mid-market, SMB | Segmented by customer size, but using shared cost allocations | Blended company-wide average masking unprofitable segments |
| 7. Time Horizon LTV Caps | LTV calculations strictly capped at maximum 36 to 60 months | LTV capped at 7 years; applies moderate discount rate | Uncapped infinite-horizon LTV assuming 15+ year customer lifespans |
| 8. Channel-Isolated CAC | Paid outbound, inbound, and partner channels audited independently | Outbound and inbound separated, but tooling costs shared | Blended CAC combining organic signups with expensive field sales |
| 9. Capital Working Cash Flow | Multi-year upfront cash terms ensure positive working capital | Annual upfront invoicing with occasional quarterly terms | Monthly billing in arrears with 18+ month payback creating cash crunches |
| 10. Sales Comp Alignment | Sales commissions linked to contract margin and cash collection | Commissions tiered by contract size, independent of CTS | Sales reps paid full commission on low-margin or churn-prone accounts |
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Reference & Evidence
Source: Table from this essay. Sources and interpretation are given in the article.