Tweet by fredwilson about The 40% Rule


via https://twitter.com/fredwilson

“Your annual revenue growth rate + your operating margin should equal 40%.

So, if you are growing 100% year over year, you can lose money at a rate of 60% of your revenues

If you are growing 40% year over year, you should be breaking even

If you are growing 20% year over year, you should have 20% operating margins

If you are not growing, you should have 40% operating margins

If your business is declining 10% year over year, you should have 50% operating margins”