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Rule of 40 - Analysis of Meritech Capital Benchmarks at SaaS Metrics Palooza 23'

with the Metrics Brothers

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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