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Wow Stack Overflow has 300 employees!! So at a typical benchmark of $500,000 of revenue per employee they should be making atleast $150,000,000 per year in rev

Wow Stack Overflow has 300 employees!! So at a typical benchmark of $500,000 of revenue per employee they should be making atleast $150,000,000 per year in revenue. I have to imagine that they are making much more than that, given that I've seen valuations of $500 million. http://www.businessinsider.com/revenue-per-employee-at-apple-facebook-google-others-2016-2 http://www.businessinsider.com/revenue-per-employee-at-apple... I'm going to give them the benefit of the doubt and assume that they are still very lean and well run, I'm a big fan, but the fact that they do data dumps makes me feel much better. I've seen too many bankruptcy/wind downs of companies, and one thing you can usually bet on is that once that process starts, the data gets locked up and treated the same as any other asset, which is to say, sold to pay debts. Or put another way, once a company gets into trouble, releasing their data often gets taken off the table as an option. Again as a reminder to startup employee's, the company was founded in 2008 and hasn't really had any talk about going public or selling, so always make sure you get atleast a market salary from any startup you join as your options even at a well run company could take more than a decade to provide you with liquidity. EDIT I can't math

rm999 10y ago
>Wow Stack Overflow has 300 employees!! So at a typical benchmark of $500,000 of revenue per employee they should be making atleast $15,000,000 per year in revenue. Isn't that 150 million a year in revenue? If so, 500M is about right assuming a 3x revenue valuation.
- chollida1 10y ago
  Yes sorry, I made a mistake. StackOverflow should eventually be doing about $150,000,000 in revenue each year to justify their head count.
josho 10y ago
> founded in 2008 and hasn't really had any talk about going public or selling, so always make sure you get atleast a market salary from any startup you join as your options even at a well run company could take more than a decade to provide you with liquidity. Best advice that I've read here in awhile.
deleted 10y ago
[deleted]
bearcobra 10y ago
Is $500,000 a common benchmark? A couple of quick searches seemed to show $100-300K for tech companies with a $1 billion valuation. My current employer has something like 315 employees, and while I'm not privy to their financials or our investors projections, the thought of hitting that kind of revenue target is bonkers to me.
- runako 10y ago
  It really depends on the company. (Although $100k sounds really light as it would be hard to make payroll unless the company's employees are all in a low-cost country.) TL;DR is most successful tech companies at scale make > $300k/employee in revenue. Here's something I saw a while back: http://www.businessinsider.com/top-tech-companies-revenue-per-employee-2015-10/#2-google-1154896-per-employee-11 http://www.businessinsider.com/top-tech-companies-revenue-pe... Also this more recent edition: http://www.businessinsider.com/revenue-per-employee-at-apple-facebook-google-others-2016-2 http://www.businessinsider.com/revenue-per-employee-at-apple... and this: https://www.statista.com/statistics/217489/revenue-per-employee-of-selected-tech-companies/ https://www.statista.com/statistics/217489/revenue-per-emplo...
- nostrademons 10y ago
  Benchmark for the big-5 is about $1M/employee/year in revenue. FB is about $1.2M, GOOG is just over $1M, AAPL is $1.8M, MSFT is $740K, AMZN is $460K (but recall that they have a large warehouse staff and with their 3rd-party sellers, they only recognize revenue off the fees charged to the seller and not off GMV). That's how they can afford to pay $400K+ total comps, and why they're sucking the atmosphere out of the engineering hiring market. It can vary a lot by industry. A number of recent unicorns are glorified restaurants or retail shops that happen to deliver their product over the web or smartphone. Their revenue/employee numbers are going to be much lower because they don't have any significant proprietary technology to build an economic moat around, and their employees cost less.
mathattack 10y ago
$ per employee varies quite a bit on industry, the type of employees, insourcing/outsourcing decisions, stage of company, etc. $500K per person assumes massive profitability. As recently as January 2015 they needed $40mm to help pay the bills. I think it's more reasonable to assume they are near cashflow neutral. Perhaps $150K per person is more reasonable? That would imply $45 million in revenue. Seems reasonable, but perhaps slightly high. Then there's a question of what multiple should be attached to their valuation. That would be driven by growth, margins and customer retention. Since their revenue model is similar to LinkedIn, perhaps their 8X multiple would be correct? That would put the value at $360mm. Given the wide variety of built in assumptions, I'd put it anywhere from $180mm to $540mm. One other way to get at their valuation... How much would their investors have demanded for their $40mm investment? If it's 20%, then you'd have a $240mm post-money valuation in 2015. Are things going better or worse than their investors would have planned for? I'm not qualified to make this judgement, but if you assume it's the same, then we're at the lower end of the $180mm to $540mm range. Net - I don't agree with your math, but your conclusions are sound. :-)
drakenot 10y ago
That really surprised me. I've followed Stack Overflow from before the site hit beta. At the time, Joel and Jeff put out a podcast every week talking about software development and the new "project" they were working on that ended up being Stack Overflow. It still feels like they had just made their first few hires. I'm completely blown away they have 300 employees now. The last I had seen they had what looked like half a dozen closed door offices for their developers. Does Stack Overflow also encompass Stack Exchange or is that a separate entity?

rm999 10y ago

>Wow Stack Overflow has 300 employees!! So at a typical benchmark of $500,000 of revenue per employee they should be making atleast $15,000,000 per year in revenue. Isn't that 150 million a year in revenue? If so, 500M is about right assuming a 3x revenue valuation.

chollida1 10y ago
Yes sorry, I made a mistake. StackOverflow should eventually be doing about $150,000,000 in revenue each year to justify their head count.

josho 10y ago

> founded in 2008 and hasn't really had any talk about going public or selling, so always make sure you get atleast a market salary from any startup you join as your options even at a well run company could take more than a decade to provide you with liquidity. Best advice that I've read here in awhile.

deleted 10y ago

[deleted]

bearcobra 10y ago

Is $500,000 a common benchmark? A couple of quick searches seemed to show $100-300K for tech companies with a $1 billion valuation. My current employer has something like 315 employees, and while I'm not privy to their financials or our investors projections, the thought of hitting that kind of revenue target is bonkers to me.

runako 10y ago
It really depends on the company. (Although $100k sounds really light as it would be hard to make payroll unless the company's employees are all in a low-cost country.) TL;DR is most successful tech companies at scale make > $300k/employee in revenue. Here's something I saw a while back: http://www.businessinsider.com/top-tech-companies-revenue-per-employee-2015-10/#2-google-1154896-per-employee-11 http://www.businessinsider.com/top-tech-companies-revenue-pe... Also this more recent edition: http://www.businessinsider.com/revenue-per-employee-at-apple-facebook-google-others-2016-2 http://www.businessinsider.com/revenue-per-employee-at-apple... and this: https://www.statista.com/statistics/217489/revenue-per-employee-of-selected-tech-companies/ https://www.statista.com/statistics/217489/revenue-per-emplo...
nostrademons 10y ago
Benchmark for the big-5 is about $1M/employee/year in revenue. FB is about $1.2M, GOOG is just over $1M, AAPL is $1.8M, MSFT is $740K, AMZN is $460K (but recall that they have a large warehouse staff and with their 3rd-party sellers, they only recognize revenue off the fees charged to the seller and not off GMV). That's how they can afford to pay $400K+ total comps, and why they're sucking the atmosphere out of the engineering hiring market. It can vary a lot by industry. A number of recent unicorns are glorified restaurants or retail shops that happen to deliver their product over the web or smartphone. Their revenue/employee numbers are going to be much lower because they don't have any significant proprietary technology to build an economic moat around, and their employees cost less.

mathattack 10y ago

$ per employee varies quite a bit on industry, the type of employees, insourcing/outsourcing decisions, stage of company, etc. $500K per person assumes massive profitability. As recently as January 2015 they needed $40mm to help pay the bills. I think it's more reasonable to assume they are near cashflow neutral. Perhaps $150K per person is more reasonable? That would imply $45 million in revenue. Seems reasonable, but perhaps slightly high. Then there's a question of what multiple should be attached to their valuation. That would be driven by growth, margins and customer retention. Since their revenue model is similar to LinkedIn, perhaps their 8X multiple would be correct? That would put the value at $360mm. Given the wide variety of built in assumptions, I'd put it anywhere from $180mm to $540mm. One other way to get at their valuation... How much would their investors have demanded for their $40mm investment? If it's 20%, then you'd have a $240mm post-money valuation in 2015. Are things going better or worse than their investors would have planned for? I'm not qualified to make this judgement, but if you assume it's the same, then we're at the lower end of the $180mm to $540mm range. Net - I don't agree with your math, but your conclusions are sound. :-)

drakenot 10y ago

That really surprised me. I've followed Stack Overflow from before the site hit beta. At the time, Joel and Jeff put out a podcast every week talking about software development and the new "project" they were working on that ended up being Stack Overflow. It still feels like they had just made their first few hires. I'm completely blown away they have 300 employees now. The last I had seen they had what looked like half a dozen closed door offices for their developers. Does Stack Overflow also encompass Stack Exchange or is that a separate entity?