Been looking at our metrics and wondering if I should even bother with rule of 40 at this stage.
We’re pre-Series A with volatile growth rates and still figuring out unit economics. Feels like this metric might be more noise than signal right now.
You’re right to question it at your stage. The rule of 40 works better when you have predictable revenue and costs.
Right now focus on finding product market fit and understanding your customer acquisition costs. Those numbers will tell you way more about your business health than a combined metric that assumes stability you don’t have yet.
I’ve seen teams waste time on this metric way too early. Had a client obsessing over rule of 40 when their monthly cohorts were swinging 30-40% because they were still A/B testing everything.
The math breaks down when your growth comes in chunks from campaign tests or seasonal spikes. You end up with a number that changes dramatically month to month.
Stick to the basics until you hit more predictable revenue. I usually tell founders to revisit it once they have at least 6 months of stable acquisition channels and can forecast quarterly numbers with some confidence.
Total waste of time until you get real traction.
Focusing on growth metrics makes more sense now. The rule of 40 isn’t helpful without stable data.
Skip it for now. Rule of 40 assumes you have clean data and consistent patterns. Early stage means your growth is choppy and your margins are all over the place while you’re still testing pricing and channels. Track growth rate and burn rate separately instead. Way more useful when you’re trying to figure out what actually works and what doesn’t.