(Note: The ideal measurement would use profit instead of revenue and payroll instead of employee headcount. But those are tougher numbers to find for obvious reasons.)
After the jump: The story behind this chart.
The Calacanis/DHH discussion touched on the idea that web companies should pay more attention to unique visitors per employee. The theory: That ratio forces you to get away from talking sheer size/traffic and instead focus on efficiency.
Now a while back we posted about this idea. Back then (2006), Craigslist was the king of getting traffic while keeping employee count low. The Top Sites landscape has changed since then though. Let’s take a look at some notable sites and how many employees they have today.
| Rank | Site | Employees |
|---|---|---|
| 1 | 19,835 | |
| 2 | 1,200 | |
| 4 | yahoo | 13,900 |
| 11 | 175 | |
| 21 | amazon | 24,300 |
| 25 | ebay | 16,400 |
| 36 | craigslist | 30 |
(Site rank via Alexa. Employee headcounts via Yahoo! Finance except where otherwise linked.)
But how important is site rank really? Amazon may get less traffic than a media site, but they’re actually selling something and making more money. The bottom line should be the bottom line.
So let’s take those same companies and add annual revenues into the picture:
| Rank | Site | Employees | Revenue |
|---|---|---|---|
| 1 | 19,835 | $23,650,000,000 | |
| 2 | 1,200 | $1,100,000,000 | |
| 4 | yahoo | 13,900 | $6,460,000,000 |
| 11 | 175 | $25,000,000 | |
| 21 | amazon | 24,300 | $24,510,000,000 |
| 25 | ebay | 16,400 | $8,730,000,000 |
| 36 | craigslist | 30 | $100,000,000 |
(Revenue figures via Yahoo! Finance except where otherwise linked.)
Dividing revenue by employee gives us a better look at which companies are the most efficient. And that’s what you see in the chart at the top of this post.
Matt Linderman wrote this on Apr 21 2010 There are 61 comments.
Andrew 21 Apr 10
I still don’t get why you’re posting these top line numbers…
Kris 21 Apr 10
Wouldn’t a profit/pay check ratio be a bit weird as calculating the profit has already subtracted the pay checks from the revenue?
Matt B 21 Apr 10
Why track these seven companies in particular? There are lots of other tech companies that are plenty successful but which aren’t as focused on their web presence (i.e. companies that sell products; Adobe, Microsoft, Apple, etc).
Ahmad Alhashemi 21 Apr 10
Redrawing the graph using profits instead of revenue would significantly widen the gap between Google and Amazon.
Matt Henderson 21 Apr 10
I think I may have missed the point of this post.
Per-employee efficiency is interesting, but are you suggesting that craigslist is somehow doing better than Google, because they earn $3.3M per person on $100M revenue, instead of $1.2M per person on $24 BILLION ?
Assuming craigslist’s profit is infinite (i.e. all $100M is profit), and Google’s profit is 10% of revenue, I think I’d still rather be Google. :)
ML 21 Apr 10
Andrew: They’re the numbers we have access to.
Kris: It’d show you a different sort of efficiency.
Matt B: Other companies could certainly be included here. Kept the list short for the sake of brevity.
Matt H: It does seem that Craigslist is somehow doing better than Google. How much doing better in this way matters depends on your priorities.
Matthew Latkiewicz 21 Apr 10
So where you guys at? ;-)
Alexandr 21 Apr 10
Just you wait! :D
Twitter has just started a monetization process. ;)
http://blog.twitter.com/2010/04/hello-world.html
Nano 21 Apr 10
Does this take into account the current trend among big companies to “hire” contract workers? Do the finance sites take into account these workers in their employee counts?
Joe W 21 Apr 10
I wonder where Plenty of Fish ranks here then. Until relatively recently wasn’t it just one guy?
Romain 21 Apr 10
To me it looks like Amazon makes a pretty efficient use of its employees considering it is the only company of the list that needs people to actually shift physical stuff around.
Craiglist certainly appears to do extremely well.
guy 21 Apr 10
One thing to consider: Googles employees are mostly highly paid technical and management folks with college degrees, many of which are Phds. The majority of Amazon’s employees are people working in the distribution centers picking merchandise, packing and shipping boxes. Most of them don’t have college degrees. It seems that looking at this way that Amazon has found a magic formula to make a high school graduates have nearly the same revenue generating capacity as a Phd. Pretty neat trick!
Bastian Nutzinger 21 Apr 10
@Kris: Yes indeed. profits/paycheck doesn’t make sense. profits/employee is an interesting number.
@Matt: If you’re going to headline the article “tech companies” why is Apple missing in the chart? With a revenue/employee ratio of 1.1M they should be somewhere between Amazon and Google.
tommy 21 Apr 10
curious, where does 37signals rank on the revenue per employee chart?
Dave 21 Apr 10
Is there a reason that Microsoft with $58.4B in top line revenue didn’t make the cut as a “tech company”? With 93,000 employees and #5 on Alexa’s top sites, I think they might qualify. My back of the envelope calculations show that they have top line revenue of $627,957/employee.
steve 21 Apr 10
Do like that as a way of looking at employees effectiveness on the bottom line.
Would be interested by microsofts
Gregory 21 Apr 10
@ML
Google, Yahoo, Amazon and eBay are public companies and their profitably is made public.
I’ve linked above to each of their income statements.
Please rework the the graph for profit per employee since it’s much more meaningful.
Also, linked below is a 2008 chart of profit per employee for the companies above.
2008 Profit per Employee for Tech Giants (Google, Yahoo, Amazon, etc)
Tyler 21 Apr 10
Say, I am a partner in a 2-person business generating $300,000 of revenue annually. We’re incredibly profitable, but on your chart, would be at (pitifully low, twitter-level) numbers.
When I first read this post, as a detached observer, it felt like you were mocking twitter, but that’s still a pretty good place to be.
I guess my point is, is running the most efficient company the end all, be all?
I can argue that team slugging percentage is a better measurement of success than the number fans who watch games on TV, but I’d rather be a player for the Royals than the Yankees.
I’d much rather being doing what I am now than earning $100k as a consultant, or working as CEO of ebay, as long as I’m playing baseball.
An interesting perspective nonetheless, thanks!
Christopher 21 Apr 10
Why are Facebook’s numbers not underlined? They’re a private company and haven’t released any of these numbers. It would be more honest if you pointed out that Facebook’s numbers are speculation (like you did with twitter and craig’s list).
Gregory 21 Apr 10
@Tyler
Does the article I linked above help put your company in comparison?
On the low side, Sun profit per employee is around $12k and on the high side, Google’s profit per employee is around $210k.
It’s now just all a matter of scale.
James 21 Apr 10
The difference in employees between craigslist and ebay is astounding (16,400 vs 30). I wonder what ebay would be like if it was run by 30 people.
ML 21 Apr 10
Why are Facebook’s numbers not underlined?
Good point, forgot to include source for Facebook data. Updated the post with links.
Chad 21 Apr 10
Wow. That is flipping amazing. What this really tells me is who has the best business model. It’s a story of efficiency, too, but that will only take you so far. Cudos to Craigslist—I always wondered how they made their money, but now I know. Great post!
Colin Devroe 21 Apr 10
Where does 37signals fit?
Anonymous Coward 21 Apr 10
+2 for Colin question
Mike 21 Apr 10
Not just who has the best business model, but who has the most productive employees!
Keith Mancuso 21 Apr 10
Yea, like tommy said I’d love to know 37signals revenue per employee.
JF 21 Apr 10
We don’t share our revenues so you won’t see us on the list.
Graham 21 Apr 10
I wonder where tumblr would be on this list, especially in light of their 1bn pageview milestone.
Ryan.theJenks 21 Apr 10
I think Wolfram|Alpha might be a handy tool here.
If “profit” is too hard a number to come by, what about Net Income / Employee? Using that measurement, we get:
Google: $328,711.87 /employee Amazon: $37,119.34 /employee eBay: $145,670.73 /employee Yahoo!: $10,492.65 /employee
Ryan.theJenks 21 Apr 10
P.S. I’m not sure where that article got the “Twitter has 175 employees” number. They just announced a couple weeks ago that they have 140 employees. I really doubt that they’ve hired 35 more since then. (Maybe it’s counting contracted workers? If that’s the case, should all the other company’s numbers be modified as well?)
Andreas Dantz 21 Apr 10
@JF why not?
Matt 21 Apr 10
@Andreas…I won’t answer for Jason, but would “it’s none of your business” be an acceptable answer? (I’m not accosting, just curious).
Donny V 21 Apr 10
@Dave For some reason 37signals hates Microsoft. They can’t stand them. Not sure why?
elai 21 Apr 10
Even if your not as ‘employee efficient’, there is something to be said about having 2 orders of magnitude of revenues/profits more., and thus making that much more with the business.
Andreas Dantz 21 Apr 10
@Matt one could argue, that sharing revenues might be part of beiing open.
JF 21 Apr 10
Andreas Dantz: We don’t share revenues because there’s nothing to gain from sharing revenues. There’s often plenty to lose, though.
Anonymous Coward 21 Apr 10
So if 37signals isn’t going to share there numbers … what’s the point of this post?
Also, I noticed recently that 37signals removed all reference to the # of employees they have (though I do believe it up near 18 people now)
Sean L 21 Apr 10
But JF, you’d satisfy our burning curiosity. Is that not enough gain? ;^)
Alejandro Moreno 21 Apr 10
I would guess 37signals to be somewhere around (or above) Google-level in that chart.
Aaron 21 Apr 10
I am not a quant, but I ran a model of revenue per employee for tech sector stocks yearly since 1996 compared against 6, 12 and 36-month returns. Over 1500 companies, it just doesn’t correlate. So while revenue per employee might be an interesting indicator to lead to another analysis (getting into how/why they do it at that margin may indicate a well run company), and while it might combine well with other factors, it’s probably not a very good basis for a ranking on its own.
David Andersen 21 Apr 10
Has anyone asked 37s to share their revenue ‘cause I hadn’t noticed. But really guys, why stop there? We want your source code, payroll data, credit card PINs and deepest personal secrets too. To quote Tom Waits, “we have a right to know.”
Eric Timmer 21 Apr 10
“Over 3,000,000 people use our web based apps” from the front page X $24 a month for Basecamp lowest plan = rough ball park figure to start with :-) ($72,000,000 give or take)
Now that is a business model!
JF 21 Apr 10
Eric: Just to clarify, the 3MM number is user accounts, not separate accounts that pay us. Plus we have free versions of our apps.
GeeIWonder 22 Apr 10
This is very interesting. The discussion too.
I actually am not so sure about this statement though
I think there are arguably better, correlated, metrics to one using those measures that already exist and are quite widely available for these companies.
There’s value in not using those ‘ideal’ measurements. Maybe.
Jamie O 22 Apr 10
Nice. This post is very much representative of the fun that we had in B-school. It’s true that 37Signals is quick to trash MBA ’s in their books and even posts on Twitter. I find it fascinating that so many of your commenters used the word ‘interesting’ or the like to describe the post/conversation.
I have an MBA , and read ‘Rework’. Just so you know. :-P
Dylan 22 Apr 10
Great post.
Amazon.com however have to pay for inventory out of their revenue so their profit per employee is likely to be tiny in comparison?
Henrique Carvalho Alves 22 Apr 10
Interesting metric.
Good to see companies under a “Marine’s Special Forces” light, where some have a small workforce capable of achieving objectives with efficiency, while others work in big platoons to achieve comparable absolute numbers.
Doug Clinton 22 Apr 10
The focus on this graph and article seems to be that the primary measure of “goodness” of an organisation is how much revenue (and by implication profit) they can make from how few employees.
In terms of a nationwide economy, though, perhaps another way of looking at this is to ask “what is it costing to create jobs for people?” On that scale, Craigslist looks pretty inefficient. It’s costing $3.3M to create each job, whereas Twitter is managing to cost only $142k for each job.
Of course, this is a wildly oversimplistic model, the profits get spent and go back into the economy to create jobs elsewhere, but the point I am making is that we tend to focus very heavily on the amount of profit an organisation can generate rather than the benefit it brings to the individuals who work in those organisations. That unbalanced focus, I’d argue, is a big part of what led us into the recent worldwide financial crisis.
Grazen 22 Apr 10
You should track them by gross profits rather than revenues.
David Andersen 22 Apr 10
“It’s costing $3.3M to create each job, whereas Twitter is managing to cost only $142k for each job.”
???
So company that loses money, job creation is free?
GeeIWonder 22 Apr 10
Amen. Doug’s point is so backwards I’m still amazed it was made.
DL 22 Apr 10
@Doug, it’s apparent that you’re not much of a capitalist. Government intervention into the private sector is what has caused the financial issues that we’re seeing unfold right now.
The success of a company should be based on how much revenue each employee can generate. Why have a company if the revenue generated per employee isn’t a large number. People do not start business to just barely make any money. They start business because they want to not worry about money, among other various reasons.
The idea that a company should be concerned with how much money they’re receiving from the economy and trying to make sure that they’re employing enough people to keep everything fair is asinine. If the product isn’t worth the money then people wouldn’t relinquish their hard earned dollars.
Check out The Science of Getting Rich. The idea is to create a product that is worth more than what you charge for it. The free market works out the rest. There is nothing wrong with making as much money as you can in this manner and I believe every company on the list has done just that.
George Morris 22 Apr 10
Two thing. 1) So where is Twitter generating this revenue? Workshops, training…? 2) Why doesn’t 37Signals share revenue? You preach about being transparent and sharing what makes you great. Revenue is certainly relevant. Your revenue is partly what allows you to have the freedom to go where you want to go with the company. I personally would find great value in comparing the head-count/profitability of 37Signals to other companies… it might change the way I perceive the 37Signals brand. My guess is it would only be a positive benefit because I believe you are doing very well.
Just my 2 cents.
Lamasney 22 Apr 10
Interesting post. I’m curious to see how The Drudge Report ranks against Craigslist. Is that data even available to you?
JF 22 Apr 10
George: To put it bluntly, you aren’t entitled to know how much money we make just as I’m not entitled to know how much you make. “Transparency” has nothing to do with it. Money is a private matter. If you walk around telling everyone how much you make that’s fine, but we prefer not to. Some things are none of anyone’s business.
Nothing personal, just giving you the straight answer so you know exactly where we stand on this.
Mike 23 Apr 10
Maybe they’ll go public some day, then they’ll have to tell us how much they make and the color of their underwear…
I see super profitable businesses as great, its proof they dont waste time. If I work for McBurgers and make 8 bucks an hour, part of it is because im probably only contributing 10 bucks an hour of value to the world.. If I can work somewhere that I can contribute 1,000,000 an hour… awesome
And to the fool who said the cost of creating a job, it is not a businesses job to create jobs. It is a employees job to create value. If a employee cannot create value, then no job is made.. If an employee creates more value than they cost, no brainer to hire them :) ...
Colin Devroe 23 Apr 10
At LessConf in Jacksonville in 2010, during the Q&A after my presentation there, the host asked me a few questions. The first question was “How much money do you make?”
Although I get asked that question a lot, working for a reasonably well known brand as I do, I was never asked this question in such a public forum.
To this day I have no idea why that question was asked. I think they were trying to give the people in the audience some gauge to set for themselves. The better question probably should have been “How much should people pay themselves when they start their company?” – And that is a valid question that has some value to people and probably one I would have had an opinion on.
I grew up in a household where money “didn’t matter” and it was a very private issue. I’ll be turning 30 this year and after a lot of thinking I believe that is the proper stance. How much money one makes is far less important, and much less interesting frankly, than what they do.
Eric Timmer 23 Apr 10
@JP I think I need to readjust my ball park figures :-)
Patrick 24 Apr 10
I was actually very shocked by this. One thing though, I bet these revenue statistics were before twitter introduced their new sponsored tweets. That will definitely increase their revenue.
Michael 26 Apr 10
Why does everybody like to know how much revenue 37s has? Just to tell everybody “If I’d find a business modell like them, I’d make x money”. I don’t think that works. It’s all about execution and that’s what they do well. And they even share almost everything about how they came to that point. That’s worth a lot more and I can learn a lot from that. What do I learn from knowing their revenue – nothing.
This discussion is closed.