ReferenceGlossary
Rule of 40
A heuristic for software-as-a-service companies: annual revenue growth rate plus profit margin, both in percent, should be at least 40. It lets you compare a fast-growing, loss-making company with a slow, profitable one on one number. Investors often pay higher valuation multiples to companies above 40.
Business
In Quorum#
Your Valuation is annual revenue times a multiple set by the Rule of 40: 4 + 0.15 × the score, kept between 2 and 30. The game scores user growth over the last calendar week, annualized, plus margin, which is (Revenue − Burn) / Revenue. A score of 40 or more is an IPO checklist item, so cut Burn or grow faster before you go public.