hormozi-cfa

name	hormozi-cfa
description	WHAT: Alex Hormozi's Customer Financed Acquisition framework — using LTGP, CAC, and Payback Period to make customers finance your growth. From $100M Lost Chapters. WHEN: When applying hormozi cfa knowledge

Hormozi Cfa

hormozi-cfa

Core Principle

"If customers pay you fast enough, you can eliminate cash as a bottleneck to grow."

The key insight: Instead of using loans or investors, use your customers to finance your growth. When 30 days of gross profit from a customer exceeds what you paid to acquire them, you can recycle that money to get more customers infinitely.

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The Three Levers of CFA

Lever	What It Affects	The Goal
1. CAC	Cost to Acquire Customers	Lower = more customers per dollar
2. LTGP	Lifetime Gross Profit	Higher = customers worth more
3. Payback Period	How fast you get money back	Shorter = faster you can reinvest

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The Three Metrics

CAC: Cost to Acquire a Customer

Formula:

CAC = (Ad Spend + Payroll + Software + Commissions) / Number of New Customers

Example (Outreach):

• Email software: $200/month
• Cold emailer: $3,000/month
• 8 sales at $100 commission each
• CAC = ($3,000 + $200 + $800) / 8 = $500/customer

Example (Content):

• 2 media team members: $10,000/month
• 10 new customers
• $100 commission per sale
• CAC = ($10,000 + $1,000) / 10 = $1,100/customer

Example (Paid Ads):

• Media buyer: $4,000/month
• Ad spend: $20,000/month
• Software: $1,000/month
• 10 sales at $1,000 commission each
• CAC = ($4,000 + $20,000 + $1,000 + $10,000) / 10 = $3,500/customer

LTGP: Lifetime Gross Profit

Formula:

LTGP = Gross Profit per Transaction × Number of Transactions

For Recurring Revenue:

LTGP = Gross Profit per Customer / Churn Rate

Gross Profit Example:

• Product sells for $100
• Costs $20 to make/ship
• Gross Profit = $100 - $20 = $80
• Gross Margin = 80%

Service Example:

• 10 clients at $3,000/month
• 1 rep handles 10 clients, costs $6,000/month
• Revenue: $30,000
• Gross Profit = $30,000 - $6,000 = $24,000
• Per customer: $2,400

Payback Period (PPD)

Definition: How long until GP from a customer exceeds what you spent to acquire them.

Example:

• CAC = $100
• Monthly GP per customer = $50
• PPD = 2 months (break even at month 2)

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The Three Levels of CFA

CFA Level 1: CAC > 30-Day GP

• You make less in 30 days than acquisition costs
• Need outside capital (loans, savings)
• This is where most businesses stay

CFA Level 2: CAC = 30-Day GP

• You break even within 30 days
• Credit card becomes your advertising budget
• You can recycle money but can't scale fast

CFA Level 3: GP > 2× CAC in 30 Days (Target)

• You make 2x what you spent within 30 days
• Customers pay for themselves AND fund the next customers
• This is how you eliminate cash as a bottleneck

"In my first year of GymLaunch, we got $100 back in profit for every $1 we spent. Yes, 100x."

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The Compounding Effect

When GP > 2× CAC, your business grows exponentially:

Month 1: 1 customer
Month 2: 3 customers (each pays for 2 more)
Month 3: 7 customers
Month 4: 15 customers
Month 5: 31 customers
Month 6: 63 customers
Month 7: 127 customers
Month 8: 256 customers
Month 9: 511 customers
Month 10: 1,023 customers
Month 11: 2,047 customers
Month 12: 4,095 customers

You only pay for the first customer. The rest are financed by customers.

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The 30-Day Cash Concept

30-Day Cash = Gross Profit from a customer in first 30 days

Why 30 days matters:

• Credit cards offer 30-day interest-free financing
• If 30-day GP > CAC, you can use credit to acquire
• By the time the bill is due, customers have paid it off

The Loop:

Day 0: Charge CAC on credit card to acquire customer
Day 1-30: Customer pays, you deliver, gross profit accumulates
Day 30: Pay off credit card balance with gross profit
Day 31: New cycle begins with zero debt

Result: Free customers forever.

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The Value Grid (Offer Stacking)

Use this framework to visualize and maximize LTGP:

┌─────────────┬─────────────┬─────────────┬─────────────┐
│   Prospects │   Trial 1   │   Trial 2   │   Total     │
├─────────────┼─────────────┼─────────────┼─────────────┤
│     10      │      8      │      3      │   Revenue   │
│             │  ($75/each) │ ($200/each) │   = $600   │
└─────────────┴─────────────┴─────────────┴─────────────┘

30-Day Cash = $75
CAC = $12 (for 10 prospects to get 10 trials)

The Goal: Stack offers to increase 30-day cash per customer.

Real Example:

• Before stacking: $75/customer
• After stacking (with upsells): $1,763/customer
• Result: 23x increase in revenue per lead

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Why LTGP is the Arms Race

"The business that makes its customer the most valuable wins."

Why:

• Higher LTGP = higher CAC you can afford
• Higher CAC = you can outbid competitors on ads
• Outbid competitors = you own the marketplace

Example:

• Your LTGP: $10,000
• Competitor's LTGP: $1,000
• You can spend 10x more to acquire customers
• You can literally starve them out

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Action Steps

Calculate Your Current State

1. Calculate CAC — by channel (outreach, content, paid ads)
2. Calculate LTGP — for each product/service
3. Calculate PPD — how fast does customer pay back CAC

Identify Which Lever to Pull

If CAC is...	Focus On
Too high	Lower CAC through better targeting/offers
Already low	Increase LTGP through upsells

If LTGP is...	Focus On
Too low	Add upsells, continuity, increase price
Already high	Focus on lowering CAC

If PPD is...	Focus On
Too long	Increase 30-day cash (deposit, payment plan)
Already short	Scale what's working

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The Progression Path

1. Make your first sale (any offer)
2. Add upsells to increase LTGP
3. Add continuity to increase LTGP further
4. Reduce CAC through testing/optimization
5. Reach CFA Level 2 (break even in 30 days)
6. Reach CFA Level 3 (2x CAC in 30 days)
7. Scale — customers finance growth

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Key Quotes

"A dollar today is worth more than a dollar tomorrow."

"You can only get CAC to zero, but LTGP can go infinitely high."

"This is how you achieve forced viral growth — your customers pay for your new customers."

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Key Questions for CFA

/prompts:

• "What's my current CAC by channel? (Outreach, content, paid ads)"
• "What's my LTGP for each product/service?"
• "What's my payback period? How many months until break even?"
• "Am I at CFA Level 1, 2, or 3?"
• "Which lever should I pull first? CAC, LTGP, or PPD?"
• "What's my 30-day cash per customer?"
• "How can I stack offers to increase 30-day cash?"
• "What's the minimum LTGP I need to reach CFA Level 3?"

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Source

From $100M Lost Chapters by Alex Hormozi, Chapter: "Customer Financed Acquisition"

Core concepts:

• The three levers: CAC, LTGP, PPD
• The three levels of CFA
• The 30-day cash concept
• Compounding through customer-financed growth
• The value grid for offer stacking

Transcript source: ~/Downloads/100MLostChapters.txt (Docker: /home/GOD/100MLostChapters.txt)

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Related Skills

• hormozi-money-models — The four types of offers (Attraction, Upsell, Downsell, Continuity)
• hormozi-attract-offers — How to generate leads with premium/free/discount offers
• hormozi-offer-stacking — How to stack offers to maximize LTGP
• hormozi-lead-generation — Getting customers efficiently