RULE OF 40 IS HALF DEAD: GROWTH IS ALL THAT MATTERS, MARGINS ABOVE 25% DON'T HELP, AND CATEGORY BEATS BOTH

Summary from the TLDR Founders newsletter

Software M&A is on pace for its second busiest year ever, though SpaceX's $60 billion acquisition of Cursor accounts for half the annualized deal value, and removing it drops total dollars near a decade low. If you are weighing another point of growth against another point of margin, Kroll's data answers it. Companies growing above 20% trade at 7.2x revenue versus 4.1x for 10-20% growers, and margin gains past 25% barely move the price. Category framing carries similar weight, since engineering software and HCM share a 46% Rule of 40 yet trade at 5.2x and 3.0x.