Acquisition is Eating the World
As AI eats into operating expenses, customer acquisition will naturally soar.
Abraham OpenClaw
A few weeks ago, I sat down with my friend Vincent at Soho House in Barcelona and we spent a few hours building me an OpenClaw agent. We set it up on Elestio, an open-source hosting platform, hosted it, connected my Claude API key and finally connected it to Slack app.
Since then, Abe (he’s named after his real-life dog brother) has become my social media manager. We use this newsletter, information from Pavilion, and essays and transcripts from Topline, to create daily content across X and LinkedIn and ensure every comment on all posts gets responded to.
Abe is not the most intelligent person I’ve ever dealt with. But he’s coachable and, over time, he and I are learning how to give him the context he needs to be good at his job. He takes direction, asks clarifying questions, and executes tasks with a level of consistency that feels familiar. Not superhuman. Not magical. Just competent. Like working with a reasonably capable person.
He makes mistakes. Is absent minded. Doesn’t naturally retain context. He has to be reminded. We create systems to ensure he remembers what he’s doing.
Nevertheless, the truth is: I’ve worked with lots of people like Abe. Interacting with him in this way feels familiar.
And that familiarity is what is so odd. Because of how unextraordinary it is.
It’s like working with a lot of people I’ve worked with over the last 25 years. Except. Abe doesn’t get tired. He doesn’t get annoyed. He’s resourceful and capable of iterating his way to a solution. Most of the time. And, depending on what model we’re using, he costs about $300 in Claude credits every month.
If this is the baseline, then the baseline has moved. And when the baseline moves, the structure of the economy tends to follow.
First Order Effects
The first order effect of AI is operational efficiency. Tasks that once required multiple tools, multiple people, and multiple layers of coordination collapse into a single agentic interface. Marketing workflows compress. RevOps tasks synthesize. Customer support becomes partially automated, then fully automated. Internal coordination shrinks.
This is not speculative. McKinsey’s 2025 report, “The State of AI: How Organizations Are Rewiring to Capture Value,” finds that workflow redesign is the single biggest driver of profitability, with 21 percent of companies already fundamentally redesigning parts of how work gets done.
At the individual level, the gains are measurable. A 2025 MIT economics paper studying large-scale field experiments across Microsoft, Accenture, and a Fortune 100 manufacturer found that developers using AI tools saw a 26 percent increase in completed tasks. Microsoft’s own 2025 Copilot study shows workers spending 7–18 percent less time on email while responding faster, and a 2026 field experiment on human-AI teams found 50 percent more output per worker with improved quality.
Across settings, the conclusion is consistent: the cost of execution is falling.
The natural assumption is that these gains will flow to the bottom line. Companies will become more efficient. Margins will expand. Profits will increase. But firms are not passive. They do not sit on their laurels nor do they exist in isolation. They exist in the market. And markets compete.
On Advertising
We have seen this movie before. In the late 19th and early 20th centuries, industrialization dramatically reduced the cost of manufacturing. Railroads expanded distribution. Factories scaled production to levels that exceeded local demand. For the first time, companies could produce more goods than the market naturally absorbed.
The constraint shifted from production to demand. Which meant shifting operational efficiency into customer acquisition. The scale of that shift is visible in the data. In 1900, total U.S. advertising spend was estimated at roughly $500 million. By 1929, it had grown to approximately $3 billion, a more than sixfold increase in less than three decades as national brands emerged and mass media scaled.
This was the birth of modern advertising. Agencies like J. Walter Thompson and Ogilvy & Mather helped brands differentiate increasingly commoditized products through storytelling, positioning, and persuasion. As historian Roland Marchand documents in Advertising the American Dream, the rise of “Madison Avenue” was not incidental. It was a response to abundance. As products became cheaper to produce and more similar to one another, the locus of competition shifted from the factory floor to the consumer’s mind.
By the postwar period, the transformation was total. U.S. advertising spend grew from roughly $2.9 billion in 1940 to over $12 billion by 1960, fueled by the rise of television and the explosion of consumer markets. By the 1970s, advertising stabilized at roughly 2 percent of GDP, making it one of the largest and most persistent categories of corporate investment.
Brands like Coca-Cola and Procter & Gamble did not fundamentally compete on product differentiation. Instead, they competed for the attention and engagement of the global consumer. Soap became brand. Sugar water became identity. As functional differences narrowed, advertising became the primary lever of differentiation.
It was the Cambrian Explosion of customer acquisition.
The Cost of Acquisition
We are watching a similar pattern emerge in modern software markets. Over the past several years, the cost of acquiring customers has increased materially, even as companies have tried to operate more efficiently.
Start with payback. Jamin Ball’s public SaaS benchmarks show that CAC payback has stretched into the mid-30 month range, sitting at 35 months in late 2025 and 36 months in early 2026, even after multiple years of cost cutting. At the same time, sales and marketing spend has held stubbornly high at roughly 36–37% of revenue. Customers are getting more expensive to acquire, even before the agentic AI explosion.
Now layer in growth. Bessemer’s Cloud 100 Benchmarks Report shows that even the best private cloud companies saw average growth fall to 55% in 2023, which it describes as “nearly halved” from prior levels. The best companies in the world are growing more slowly, even as they continue to spend heavily to acquire customers.
And importantly, this isn’t a short-term spike. CAC payback used to sit closer to the mid-20s months in healthier markets. These elevated numbers seem to represent a near-permanent metastasis. Taken together, the pattern and relationship is clear. Growth has slowed as acquisition has become more expensive.
More companies are competing for the same customers. More messages are being delivered through the same channels. The supply of software has expanded faster than the demand for it.
Repeating what we know:
Software has become easier and cheaper to build
Becoming harder to differentiate
And creating a seemingly endless number of new competitors
Driving up the cost of acquiring any particular customer
If you believe this shift is structural not temporal, the implication becomes unavoidable.
You have to fund it.
The cost of execution is falling. The cost of acquisition is rising. The gap between the two is not margin.
The gap is trapped in operating expenses.
Your Customer Experience is Trapped in Opex
Most companies do not think about their spending this way. They treat opex as neutral. Tech stack is necessary. Headcount is required. Internal systems are the cost of doing business.
But opex is not neutral. It is a choice about where you compete. It is your capital allocated.
Every dollar spent on internal systems, coordination, and tooling is a dollar not spent on winning the customer. Bloated tech stacks. Redundant tools. Layers of coordination. Work that exists because systems are messy, not because customers demand it.
A company with size and a meaningful footprint might find itself unable to respond to a competitor because resources are trapped serving internal stakeholders.
That capital is not gone. It is misallocated. In a world where execution is becoming cheaper, funding internal complexity at the expense of customer experience is a strategic blunder and a potential death trap.
IRL
At Pavilion, we have millions of dollars tied up in tech and operational spend. Like most companies, those investments were made over time. Tools were added. Systems were layered. Processes evolved. Each decision made sense in isolation.
But taken together, they represent a meaningful allocation of capital away from the customer.
If we freed up a portion of that spend, we would not simply flow it to the bottom line. We would invest it directly into the member experience. More dinners. Better programming. More touchpoints. A deeper sense of connection and value. Because in our world, that is where competition is going.
And so we will.
In a market where execution is cheap, differentiation moves to experience. The companies that win are not the ones that save money. They are the ones that redeploy it toward the customer faster and more effectively than everyone else.
They are the ones, as Cassie Young might say, that are willing to fund the “jaw dropping customer experience.”
Judgement in the Loop
It is important to be precise about what this shift means. This is a story about capital reallocation. Not starvation.
The question is not whether you have fewer people or fewer tools. The question is what those resources are doing. If your team is spending time managing internal systems instead of improving the customer experience, you are underinvested where it matters.
Research from Bain & Company underscores this reality. Companies that invest in customer experience grow revenues 4% to 8% above their market and generate materially higher retention over time. In competitive markets, the highest-return capital is typically deployed closest to the customer.
And as agents become more capable and more efficient, the pressure to ensure every dollar is properly allocated to it’s highest and best use will increase.
The humans in that loop will need to clearly demonstrate their creativity, their judgement, and their taste to ensure they are viewed as essential to delivering the customer experience. But the more important shift is not simply the number of people. It is the focus of the organization.
Acquisition is Eating the World
We are entering a world where execution is abundant, supply is expanding, and competition is intensifying. That combination moves the battlefield.
Not to product. Not to internal efficiency. But to acquisition. To brand. To experience. To attention. To persuasion. To CAC.
AI will not create a world of effortless profit. It will create a world of intensified competition. The companies that win will not be the most efficient. They will be the ones that take the gains from efficiency and deploy them into the customer faster than everyone else.
Efficiency is the fuel that feeds acquisition’s voracious appetites.
And we all must feed the beast.
Next Week
The Anthropocenic. We’ve never run out of anything. We’re not destroying the world. The biggest threat to markets and to our survival is simple. We are voluntarily extincting ourselves. We need more babies. Desperately.
Also On My Mind
A few other things on my mind. Let me know what else you might like me to write about.
The debate right now is centralized vs decentralized AI. You want the better output of a centralized AI function with in production support. But you also want to let your best athletes run and build cool stuff.
The most active conversation about AI’s impact on Go To Market right now is inside Pavilion. We’re also launching a new AI Buddy program (build AI with someone else for accountability and faster learning), a new pulse survey, and of course our AI in GTM School launching soon. If you’re interested in knowing what’s going on as it happens, take a look here.
Thanks for reading.
Sam
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Good info about CAC and completely agree on the importance of a unique customer experience to differentiate. Thanks, Sam.
Love this so much. “The companies that win will not be the most efficient. They will be the ones that take the gains from efficiency and deploy them into the customer faster than everyone else.” Important takeaway.