How Growth Can Drain Your Cash Faster than You Can Raise Money with Ariel Menche
In this episode of Very True, Alex sits down with Ariel Menche, Founder and CEO of Raftel Strategy, to explore the calculus of the modern business model: The New Net Working Capital. Following up on their first conversation, they move from theory to high stakes scenario modeling, breaking down why traditional accounting often fails to capture the reality of SaaS and AI driven companies.
Alex and Ariel dive deep into the working capital hole explaining why even a company with great unit economics can go bust by growing too fast. They cover the dangers of relying on LTV as a benchmark, the hidden costs of AI on gross margins, and how to build a True CAC model that tracks the actual attribution of every dollar spent. This episode is a masterclass for founders on how to stop lighting money on fire and start building a self funding growth engine.
Episode Highlights:
- [01:05] The Modern Float: Ariel redefines Net Working Capital for the software age, explaining it not as physical inventory, but as the cash cushion required to fund the gap between spending and receiving subscription revenue.
- [04:02] The LTV Graveyard: Why Alex has thrown LTV in the garbage as a benchmark and how to shift your focus toward LTV as a strictly internal, cohort based operating metric.
- [08:31] The AI Margin Squeeze: A critical warning on how AI token costs and high touch customer success are ending the era of 99% gross margins and what that means for your unit economics.
- [12:25] Mastering CAC Payback: Why CAC payback is the ultimate unit economic metric and how to calculate it accurately using the inverse of your churn rate.
- [14:15] Building True CAC: Alex breaks down the attribution math for a 6 month enterprise sales cycle mapping marketing spend, SDR costs, and AE commissions to the actual month they occur.
- [20:12] The Annual Contract Hack: Lessons from the early days of monday.com on why being maniacal about annual upfront payments is the best way to solve the working capital problem.
- [27:44] The No Chain Bike: A powerful analogy on the dangers of venture growth: pedaling as fast as you can with marketing spend, only to realize you’re just coasting downhill without actual attribution.
- [29:02] The Self Funding Formula: Ariel shares his framework for calculating whether your current customer base generates enough margin to fund the acquisition of new customers without outside debt.
- [32:12] Three Lenses of Finance: The three types of metrics every founder needs to run a modern tech company: Accounting, Cash, and Economic metrics.
Links & Resources:
- Raftel Strategy: https://www.raftelstrategy.com/
- Verissimo Ventures: https://verissimo.vc/
- Follow Ariel on LinkedIn: https://www.linkedin.com/in/ariel-menche/
- Follow Alex on LinkedIn: https://www.linkedin.com/in/alex-oppenheimer/
About Very True: Hosted by Alex, Very True by Verissimo Ventures explores the honest, unvarnished stories of founders and the real problems they are solving. We look past the hype to find the truth in technology and entrepreneurship.
