kellblog.com · 2019-01-30 · 2682d

Rule of 40 Glideslope Planning: A Long-Term SaaS Growth Framework

This article reframes the Rule of 40 metric from a binary compliance question to a multi-year glideslope planning tool for SaaS companies. Rather than targeting Rule of 40 compliance by IPO, companies should define their desired trajectory and use it as a self-correcting mechanism for balancing growth and profitability while managing expense planning risk.

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Metrics in this report

Customer Acquisition Cost Ratio

1.32$ spent per $ ARR

median

Enterprise SaaS companies

Customer Acquisition Cost Ratio - 75th Percentile

1.92$ spent per $ ARR

75th percentile

Enterprise SaaS companies

Rule of 40 Score

31%

median

Public SaaS companies

Rule of 40 Score

87%

at IPO

Elastic (exceptional case)

Time to IPO

14years

median

Enterprise SaaS companies

Total Capital Raised Before IPO

300$ millions

median

Enterprise SaaS companies