There are outliers. Rules of thumb are just general guidelines, and sure enough there are significant outliers. 45% of Dropbox’s spend was on R&D while only 13% of Zoom’s spend was on R&D. Similarly, 73% of Zoom’s spend was on sales & marketing, Dropbox spent only 37% on S&M, and Bill.com spent 28% on S&M. Snowflake spent a whopping 130% of revenue on S&M and indeed their EBITDA margin is the worst of the bunch at -192%.
COGS isn’t 20%. The other rule of thumb that needs to be debunked is that COGS is 20% of revenue. The median and averages are 29%. Below you can see percent of revenue calculations.
Sammy is the Managing Partner and Co-Founder of Blossom Street Ventures. Visit us at blossomstreetventures.com and email directly at email@example.com://blossomstreetventures.com/metrics/