Thanks VCPete, appreciated the straightforward and direct explanation. Rule of 40 is trickling into our C-suite vocabulary and I was looking for an explanation like this.
Glad it was useful!! I'm thinking of redoing a lot of my videos to try and create the best, most definitive guide to topics like this. This one is good, but I think I can do even better. Thoughts?
@@peterharris2812 Great Video and super useful concept. Maybe a feedback would be to be a bit more concise, the example was great but I think you over-explained the concept. Really enjoyed learning about this metric nonetheless. Thank you!
Thanks for the feedback! It's always a tricky balance of trying to explain it well enough so that those with no background can understand it without boring those that don't need as much handholding. I'm trying to script a lot more to help be more concise though. We'll see how well it is received.
Sorry that wasn't more clear. Revenue growth. Simple rule of 40 equation is Revenue growth rate + Profit Margin should equal about 40%. So if you're growing at 100% year over year, then you can have -60% profit margins. Or if you're not growing at all, then you'd want to see 40% profit margins.
The glorious rule of 40. Simplest investment strategy for V.C’s. Terrific video as always Peter!
Thanks for the support as always @davidwilfand916!
Thanks VCPete, appreciated the straightforward and direct explanation. Rule of 40 is trickling into our C-suite vocabulary and I was looking for an explanation like this.
Glad it was useful!! I'm thinking of redoing a lot of my videos to try and create the best, most definitive guide to topics like this. This one is good, but I think I can do even better. Thoughts?
@@peterharris2812 Great Video and super useful concept. Maybe a feedback would be to be a bit more concise, the example was great but I think you over-explained the concept. Really enjoyed learning about this metric nonetheless. Thank you!
Thanks for the feedback! It's always a tricky balance of trying to explain it well enough so that those with no background can understand it without boring those that don't need as much handholding. I'm trying to script a lot more to help be more concise though. We'll see how well it is received.
Simple and applicable. Keep the good work up! -:)
Thanks for the feedback! Straight forward is the goal!
Hey Pete! What is measured by the "growth?"
Is it revenues? Or is it the equity/book value of the company?
Sorry that wasn't more clear. Revenue growth. Simple rule of 40 equation is Revenue growth rate + Profit Margin should equal about 40%. So if you're growing at 100% year over year, then you can have -60% profit margins. Or if you're not growing at all, then you'd want to see 40% profit margins.
my question: Why we don't apply it to non-SaaS company?. Thanks.
You can for sure and many do. I call it a SaaS metric because it was first put forth as a way to measure SaaS businesses.