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Their efficiency is impressive. On an annualized basis, they are doing ~$120B. They have ~85k employees. That means they are generating ~1.5M Revenue Per Emp
by alberth 9y ago
Their efficiency is impressive.
On an annualized basis, they are doing ~$120B.
They have ~85k employees.
That means they are generating ~1.5M Revenue Per Employee.
That's crazy
- kgwgk 9y agoIf anyone is curious about what companies in the S&P 500 rank higher in the revenue per employee metric: https://craft.co/reports/s-p-500-revenue-per-employee-perspective https://craft.co/reports/s-p-500-revenue-per-employee-perspe...
- ghazak 9y agoThat kinda revenue with those profit margins are the insane thing. I’m less impressed at revenue per employee generated from oil.
- kgwgk 9y agoOperating margin is 22%, not bad (better than many, probably most, of the companies on that list) but not insane. Apple is better on both metrics.
- bob_theslob646 9y agoNot a far comparison considering the size of some of the companies. Definetely needs to be weighted. An example, Murphy Oil Corporation has 1,294 employees... Also another interesting trend is how many healthcare companies are in that list.
- aaavl2821 9y agoHealthcare is just under 20% of US GDP and 20% of the companies are in healthcare AmerisourceBergen is a drug distributor / wholesaler, so they have huge revenues bc they sell expensive drugs, but they don't capture much of that (their net income is negative) Express scripts is a PBM and highly profitable. I don't really know what PBMs do at a useful level of detail, but their profitability has been a subject of debate as pharma companies blame them for high prices. They basically aggregate demand for drugs and negotiate prices on behalf of payers, and make money on their ability to do so Gilead had one of the best selling drugs of all time, that did $5B in revenue in the first quarter of launch, and $20B+ in the first year I think. Since then rev has declined but still massive The insurance companies get lots of rev from premiums but margins are low Biogen and celgene also have one or two drugs that do $5-10B / year Should note that drugs only account for 10% of health spend. The biggest driver of healthcare costs -- hospital care (30%) and physician services (20%) don't show up in this chart bc they are fragmented industries and also human-capital intensive
- killjoywashere 9y ago> drugs only account for 10% ... hospital care (30%) and physician services (20%) Were you in a class with Professor Long at Tulane? He has a great, great slide illustrating these and many other facts about the US healthcare economy over the last century.
- aaavl2821 9y agoI was not but would be interested in seeing the slides. Are they publicly available?
- gabept 9y agoAny ideas why energy companies have highter RPE than tech? Perhaps they have a larger rate of subcontracting?
- kgwgk 9y agoThe bulk of their cost is capital, not labour.
- ilevtov 9y agoHi, thanks for the link! we're building out more analyses like this, would you be up for a brief chat to share some feedback? thanks, ilya [at] craft.co (founder/ceo)
- ksec 9y agoDo we have a Profits per employee rank for S&P500?
- panarky 9y agoUsually companies grow at a slower rate as they get larger. Alphabet's growth rate is actually accelerating. And they're not acquiring this growth, they're generating it organically. Truly astounding.
- killjoywashere 9y agoIt's been said that they created the first self-replicating talent machine. Having worked with them, I believe it.
- nopinsight 9y agoCould you elaborate on self-replicating talent machine (or link to posts if available)? Does that mean their talent attracts other talent from outside or their culture and process help develop (already talented) people working there into greater heights, or something else? It sounds really interesting and might benefit others as well.
- guiambros 9y agoLaszlo Bock, Google's former head of HR, covered this idea in his book "Work Rules" [1]. It's a good read. (disclaimer: I work at Google, although I read the book before I joined. I remember initially thinking the book was just corporate PR, but later I had the opportunity to see firsthand how accurate it was) [1] https://smile.amazon.com/Work-Rules-Insights-Inside-Transform/dp/1455554790/ https://smile.amazon.com/Work-Rules-Insights-Inside-Transfor...
- underwater 9y agoThe self-replicating hubris machine seems to be functioning as well.
- sebleon 9y agoSeems like a good time for employees to unionize.
- fjsolwmv 9y agoBecause recenue per employee is dropping?
- anongooglerXYZ 9y agoBecause perks and satisfaction are on the rapid decline. And salary too. Last year new employees were told that a new policy enacted after they joined would make then ineligible for stock refreshers their first year.
- sebleon 9y agoAh didn’t realize it was dropping. However, it’s clear there’s a large discrepancy between average employee income and average revenue per employee.
- danieltillett 9y agoYes if you don't have any support staff it is easier to reach such numbers.
- anameaname 9y agoThis is on purpose. If the number of support people is a linear function of the number of users, the business cannot grow past half the worlds population.
- danieltillett 9y agoYes I understand it is on purpose, but it is not a useful metric to use when measuring a company. Many other companies that have more customers than Alphabet manage to have support staff. While I doubt Alphabet cares, I won't use one of their paid services until I can get support.
- maddyboo 9y agoWho is counted in the 85k number? Are low-wage positions (like janitorial services) considered employees, or are they employed through subcontractors?
- fjsolwmv 9y agoSubcontractor
- killerdhmo 9y agoGoogle counts them differently. When I worked there a few years ago, it was 65k FTE, and 65k TVCs (Temps, Vendors, Contractors). TVCs included the shuttle drivers, janitorial staff, etc. but also included some part time / temp "typical FTE roles" like UX researchers. My guess is that this 85k is just FTE
- fjsolwmv 9y agoThat just means their lower margin work is performed by vendors and contractors.
- ocdtrekkie 9y agoGoogle has billions of users and has thrown out everything that doesn't scale, like support or customer service. A lot of support and content moderation is done by volunteers (there's a certain hilarity to the way the world's most valuable corporation recruits unpaid labor as if it's some sort of charity) in Google Local Guides or Google Help Center type stuff. Also, the "cost per employee" can look artificially higher because they contract out so many of the support positions they do have. I think "employees" mostly constitute management, marketing, and engineers?
- youpassbutter 9y agoIt also means that their employees aren't being paid as well as they should be. It also means that they are enjoying a monopolistic position. Usually, when a business is as lucrative as google's, competition arrives. But it seems like tech doesn't work that way. For example, if a chicken restaurant is making $1.5 million in revenue per employee, then you'd see tons of chicken restaurants pop up to compete. Even the employees, seeing such extraordinary revenue, would quit and open up shop. But for a variety of reasons, tech doesn't seem to work that way. Is it lack of capital? Lack of opportunities? Lack of tech-oriented people? Lack of entrepreneurs? > That's crazy It's ridiculous. It's amazing how profitable large tech companies are. What's even more puzzling is why there aren't more googles/facebooks/etc, especially in other countries like france, germany, britain, etc.