E162: Live from Davos! Milei goes viral, Adam Neumann's headwinds, streaming's broken model, microplastics & more
All-In with Chamath, Jason, Sacks & Friedberg
Heuristic for Evaluating Profitability in SAS Businesses
Profitability in SAS businesses can't be determined solely by high gross margins, as excessive overhead, ineffective marketing, and unnecessary R&D can lead to financial losses. The 'rule of 40' heuristic considers the operating margin and growth rate, with a combined value ideally greater than 40, to evaluate the attractiveness of a SAS business. Startups primarily focus on achieving product-market fit initially, whereas in the later growth stage, it's crucial for businesses to carefully consider the rule of 40.
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