The 'magic number' is a measure of sales efficiency. It measures how much it costs you to grow, essentially by dividing revenue growth by the cost of expenses to drive that growth.
The magic number is a rule-of-thumb indicator often used by investors to evaluate the growth of a business. It's not fully comprehensive, because it looks at revenue and cost of acquisition only, and ignores other important financials such as gross margins. But for a simple start, the magic number can be useful.
A ratio between zero and 0.5 normally suggests that a company is growing very inefficiently and there's no sustainable growth model in place. 0.5 to 1 is an acceptable number, with the company able to drive new recurring revenue acquisition with affordable investment. Over 1 is ideal – the business has a capital-efficient growth model.
There are a couple of useful resources from Ben Murray worth reading, each providing more context on the magic number: