Moz has 140 employees and is at a revenue run-rate of ~$33mm, putting us around $235K/employee. I know companies with higher revenue/employee than us (many of those are smaller) and some with lower revenue/employee (many of those have lots of funding and are going negative to grow faster). So long as you're applying additional metrics into the equation (funding, growth rate, cost/person by location/type, etc) I think this is a reasonable baseline.<p>That said, there's lots of very important metrics to understand if you're trying to do a comparison - rate of growth, margins, churn, etc. - all of these figure prominently into the health of a SaaS business.
Those are great numbers........<p>Too bad they can't be even close to used to predict the revenue of my SAS apps (so far....). Then we have the train of weekly "Sorry users, we are shutting down" posts here on HN (unlikely to happen if they are pulling in ~200K per employee no?).<p>There is a lot of variation.
I view this method with more than a little skepticism.
Or you could just look it up, most people don't this info is available from a variety of places for established companies (such as Hoovers and Dun & Bradstreet).<p>Search them for free here: <a href="http://nuggety.com/u/nuggety/company-or-business-search" rel="nofollow">http://nuggety.com/u/nuggety/company-or-business-search</a>
Walmart - $480 Billion revenue, 2.2 million employees, $218,000 per employee per year.
So that is a company dealing in physical goods, and it kind of fits.
Or you could just get their annual accounts from the business registry, and see what they've reported there.<p>[won't be up-to-the-minute accurate, of course, and won't work for all jurisdictions. But it's a data source that far too few people use, IME]
Applies to my company (GrantTree), huh.<p>However I know that one of our competitors had 7 employees in their first year and, because they mistakenly published their full accounts, I also know they made just £80k of revenue that year.<p>So it doesn't necessarily apply to all companies.
Insofar as this works, can anyone explain why it might or might not work? Or perhaps why it must be coincidental.<p>If I squint, I can imagine it being related to a few things. Average salary at a SASS startup is roughly the same across startups. Marginal revenue is very high. And then there's something about keeping revenue and costs pretty close even though the entity is in 'start-up mode'. Or perhaps that's more a function of average round size and average targets for making the round last.<p>Still seems weird that this would come close. Or maybe it's bogus...
How could a SAAS company survive long term if they are making less than 200k per employee per year? The fully loaded cost of an engineer which I assume are the majority of their employees has to be close to 200k or more after you include desk space, taxes etc...
People have made various arguments for why this is arbitrary and may not apply.<p>A reason why it may: VC advise start-ups on what their run-rates, burn-rates, and staffing levels should be. VC operate on standard formulae.<p>One result is that you'll see a fairly strong pattern.<p>Or at least that's my hypothesis.<p>Phenomena and relationships such as this are why there may be relationships between data patterns, though causality may not be on the basis that's first apparent. And why there may be strong autocorrelation between variables.
I am not so good in English and business language: I am wondering, that companies which are "well funded" have lower revenue per employee as companies that are modestly funded. Seems to me contradictory at first sight .... (unless "well funded does mean funds from investors and well funded companies are still startups ... but still does not seem to fit in, because startups are more likely burning money and the examples wont fit).<p>Can somebody explain?
Like others have said this is for SaaS startups with more than 1mm ARR. It won't work for your local Kwik-E-Mart and it won't work for non-startups.
Simply ridiculous. Sure it works out for some companies, so does my "secret" stock market strategy if you conveniently ignore the 90% of other cases where it does not work.<p>Just absurd.. what about 90% of all those startups that fail that have venture capital and have 10+ employees?