Rule of 40 - Analysis of Meritech Capital Benchmarks at SaaS Metrics Palooza '23
Update: 2023-11-15
Description
Rule of 40 is a long standing metric used by investors to determine the health and enterprise value of a SaaS company, that is misunderstood far too often - so CAC and Growth dedicated an episode to how the Rule of 40 is calculated and how it impact company valuations including:
- Calculation formula
- Best variable for the operating profitability component
- Balance of growth and profitability yielding the highest valuation multiples
- When does the Rule of 40 become valuable versus a vanity metric
If you are a SaaS operator or a public SaaS company investor, this episode covers and important topic and is a great listen!
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