# Top 10 in Tech - What to know for Week ending January 24, 2025

Published: 23 January 2025
Canonical: https://www.top10in.tech/posts/week-ending-january-24-2025

## 1. SaaS METRIC OF THE WEEK: RULE OF 40

Back in 2021, OpenView observed that "investors have forgotten all about the [Rule of 40](https://twitter.com/PointNineCap/status/1108374783262158849).", which is a metric to measure if a company is balancing revenue growth and profit margins (a health indicator). For example, a 20% growth rate combined with a 20% profit margin achieves the Rule of 40. In recent years, we have seen the Rule of 40, "[back from the dead](https://www.dropbox.com/s/aer76d3cq20f0z3/3%20-%20Rule-of-40-public-companies.png?dl=0)." This year it's [increasingly important but a very tough bar to continually achieve](https://www.dropbox.com/scl/fi/6i8iacj9v18z4a02vtnae/Rule-of-40.png?rlkey=mvfzcc41d2pa51bdo6797ixa0&dl=0), which has Thibaut Claes ask the intellectual question: [Is the Rule of 40 a bullshit Metric?](https://www.linkedin.com/pulse/rule-40-bullshit-metric-thibaut-claes-fmcfe/)

Link: https://twitter.com/PointNineCap/status/1108374783262158849

## 2. BUDGETS and FINANCE—DEEP DIVE

Because for some of you, the new Financial Year just started, here is a great six-part "fundamentals of startup finance" series from Bessemer: [Part 1](https://www.bvp.com/atlas/how-cfos-build-a-just-right-budget) (Goldilocks Budgets), [Part 2](https://www.bvp.com/atlas/forecasting-101) (Forecasts), [Part 3](https://www.bvp.com/atlas/how-to-hire-a-cfo-and-build-a-finance-team) (Hiring), [Part 4](https://www.bvp.com/atlas/a-ceo-s-tactical-guide-to-driving-profitable-growth) (Growth and Profits), [Part 5](https://www.bvp.com/atlas/linear-volumetric-or-bundling-which-type-of-usage-based-pricing-is-right-for-you) (Pricing), and [Part 6](https://www.bvp.com/atlas/scaling-to-100-million) (Metrics and benchmarks).

Link: https://www.bvp.com/atlas/how-cfos-build-a-just-right-budget

## 3. PROFITS

Just how profitable should a SaaS Company be? [This article from OnlyCFO looks to benchmark profitability data in SaaS](https://www.onlycfo.io/p/how-profitable-should-saas-be) and here are the main takeaways: Gross Margins are Crucial: Companies with low gross margins (around 50%) face a hard limit on profitability, even with efficient operations (one of the reasons SaaS is favored); As SaaS companies grow decreases in OpEx as a percentage of revenue should occur, as should Sales and Marketing costs (typically the biggest component of OpEx).

Link: https://www.onlycfo.io/p/how-profitable-should-saas-be

## 4. AI

McKinsey's latest report on the Gen AI skills revolution dives into how companies are rethinking talent strategies with actionable steps to future-proof your team. The BIG takeaway for all of us is that roles are theoretically being combined as AI compresses the role surface areas enough. Actually, not even theoretically. [Look at how Anthropic/Perplexity is merging roles in Product Roles](https://www.linkedin.com/posts/agrawalpulkit_i-first-heard-explicitly-about-the-pm-designer-engineer-activity-7285018935672897541-pje3/). On top of that observation in the McKinsey Report, the other standout insight is that 75% of leaders plan to re-skill or hire for AI expertise in 2025.

Link: https://www.linkedin.com/posts/agrawalpulkit_i-first-heard-explicitly-about-the-pm-designer-engineer-activity-7285018935672897541-pje3/

## 5. CLOUD COSTS

Operations efficiency time. Cloud costs are on the rise, according to [this Datadog report](https://www.dropbox.com/scl/fi/phnxdqyexxwwhvfbzuqtl/ResearchReport-2024CloudCosts.pdf?rlkey=j1fajz2uttv3gqtrs8ltrx3ps&dl=0). GPU instances now make up 14% of compute spend, and 80% of container costs are being wasted on idle resources. Missed discounts and outdated infrastructure add to the problem—it's time to optimize your Cloud, y'all.

Link: https://www.dropbox.com/scl/fi/phnxdqyexxwwhvfbzuqtl/ResearchReport-2024CloudCosts.pdf?rlkey=j1fajz2uttv3gqtrs8ltrx3ps&dl=0

## 6. UNFAIR ADVANTAGES

Gaurav Vohra's [Unfair Advantages Framework](https://substack.gauravvohra.com/p/the-unfair-advantages-framework) is a new addition to your tech dictionaries. It's all about identifying unique, hard-to-replicate strengths: Proprietary data, customer networks, and logged industry experience let you leverage what others can't—it's a startup superpower moat.

Link: https://substack.gauravvohra.com/p/the-unfair-advantages-framework

## 7. STRENGTHS AND WEAKNESSES

Expanding on to number 5 above, [this article explores how to turn a competitor's strength into your own advantage](https://aprildunford.substack.com/p/how-to-turn-a-competitors-strength): Reposition their wins as your opportunities to differentiate, pivot, and outpace - really critical in today's competitive SaaS markets (with some good examples)

Link: https://aprildunford.substack.com/p/how-to-turn-a-competitors-strength

## 8. COMPENSATION

This is the first Founder comp report of the year for you all. This one is from Creandum, whose [third edition of their Founder Compensation report](https://creandum.com/stories/founder-compensation-3-0), which is fairly global, highlights that Founder salaries have increased across all stages (and significantly for bootstrapped and Pre-Seed companies). BONUS compensation calculator [here](https://foundercomp.creandum.com/).

Link: https://creandum.com/stories/founder-compensation-3-0

## 9. TRENDS

Carilu's [2025 Tech Trends](https://www.carilu.com/p/2025-tech-trends-how-to-thrive-in?) lays out how startups can thrive in 2025 (I like the rhyme). Key takeaways (things I often talk about here tbh): AI productization, deeper vertical SaaS adoption, and a continued focus on profitability over growth-at-all-costs. Also predicting that buyers will be back and budgets internally stay tight.

Link: https://www.carilu.com/p/2025-tech-trends-how-to-thrive-in?

## 10. CASE STUDY

Here is the start of an incredible 3-part article from Notion covering [the challenges faced by (VC-backed) startups towards $100m in revenue](https://www.notion.vc/resources/from-1-to-100m-revenue-scaling-vc-backed-saas-with-notion-capital-and-stephen-millard). Fun (?) fact: Only 1.2% of us achieve this milestone.

Link: https://www.notion.vc/resources/from-1-to-100m-revenue-scaling-vc-backed-saas-with-notion-capital-and-stephen-millard

## POD OF THE WEEK

From The Practical Founders podcast which provides [an intro to growth equity](https://open.spotify.com/episode/0C8u0nMiCFmiw8qopzkGHU?si=s-6yA2W6TyCw6kkg2MwaTQ) (and how it differs from traditional private equity and venture capital money), with some great examples of how earlier-stage founders leverage this kind of equity for growth.

Link: https://open.spotify.com/episode/0C8u0nMiCFmiw8qopzkGHU?si=s-6yA2W6TyCw6kkg2MwaTQ