This podcast episode analyzes the Rule of 40, a measure of efficient growth used in evaluating SaaS companies, to examine its correlation with valuations. The analysis reveals that while the Rule of 40 alone showed no correlation with multiples before 2023, deconstructing it into revenue growth and free cash flow margin exhibits a stronger correlation. Additionally, strategies to improve growth and efficiency in sales, such as narrowing the ideal customer profile, focusing on pipeline generation, extreme accountability, and radical candor, are discussed.
