CAC is the cost directly related to the acquisition of the next customer (ie the variable costs). This is not the fixed costs of running a company (salary, rent, etc). It includes basically anything you spend before you sign up the customer, like answering emails to prospects, implementing new features, fixing bugs found during trials, writing blog posts, etc. Or for high $$ SaaS companies, advertising, phone calls, meetings, proposals, demos, seminars, writing letters, lunch & learns, etc.

If CAC is zero, you are basically saying customers are finding you and signing up on their own, with zero effort from you. This is possible (ie Twitter), but the LTV (life-time value) for these products is usually very low. Usually, the company is expecting a few dollars per year of revenue from each customer from advertising.