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From the link, LinkedIn does $15B in revenue, or $681k per employee with 22,000 people. That seems pretty reasonable to me, even though I don't know what all of

From the link, LinkedIn does $15B in revenue, or $681k per employee with 22,000 people. That seems pretty reasonable to me, even though I don't know what all of those 22,000 people do.

danpalmer 3y ago
This is a great way to think about it, thanks! This sounds roughly in line with Twitter's (circa 2021) at ~$700k, but a long way from MS/Apple/Google who are all in the $1-2.5m range. Even Amazon is at ~$500k and has many low paid workers, so would likely be much higher if focusing on the tech/product/etc side. It's not terrible, but maybe a little low?
- stathibus 3y ago
  How exactly is that a good way to think about it? What proportion of employees at a tech company are tasked with bringing in revenue and why would that be expected to scale linearly? Google is a terrible point of comparison because we have plenty of direct evidence that thousands of people at Google are doing nothing of any consequence to the business
  - danpalmer 3y ago
    It's a rough measure of business efficiency. You're right that many people aren't directly related to bringing in revenue, that's inefficient (although necessary at some level), and so they change the denominator and reduce the overall amount. The fact that Google has ~$1.5m revenue per employee suggests that it's a more efficient business than LinkedIn's at $700k.
    - stathibus 3y ago
      No it doesn't suggest that at all lol
      - danpalmer 3y ago
        How so? Open to being persuaded here, I only have a basic understanding of this, but you've not provided any alternative?
- Gh0stRAT 3y ago
  The real way to look at it is via the marginal revenue minus the marginal cost. Generally speaking, it makes sense to keep hiring more workers if you're getting a net benefit from hiring each one. That being said, at a certain scale the organizational challenges may eat into your net marginal profit. (eg unclear ownership and diffusion-of-responsibility, more layers in the org chart making it harder for decision-makers to hear from the people actually doing the work, longer deprecation cycles, etc) Hiring is hard and slow, so it's definitely possible that the other companies you used as examples were theoretically understaffed. (if you ignore the costs of hiring, anyway)
- runako 3y ago
  Apple is an outlier because they sell hardware, which carries lower margins than pure software/information services. LinkedIn at $700k vs $1.5m at Google (perhaps one of the best business models ever) doesn't feel bad! For comparison, here are RPEs for other large successful tech firms: - Oracle: $310k - Salesforce: $416k - Intuit: $830k - Adobe: $645k - Workday: $317k - Meta: $1.5m Studying these numbers confirms that Google and Meta are indeed extraordinary businesses. Which is not to take anything away from LinkedIn, as they operate in a different market. More interesting is the hypothetical question: if you were in charge of LinkedIn, how would you prioritize achieving an RPE near the top of the industry against other priorities (perhaps such as increasing market share)?
  - addicted 3y ago
    And to your point, Google and Meta are indeed extraordinary businesses. That’s why everyone wants/wanted to be Google or Meta. Even being somewhere in the ballpark of a Google or a Meta is incredible.
cleverwebble 3y ago
I don't know about LinkedIn, but a comparable company would be Indeed - something like 12-15k employees. The majority of the company is sales & marketing. Their customer base is basically every company in the world, so having each sales person nurture a few dozen to a few hundred relationships is not uncommon.
willio58 3y ago
But how can you pay the ceo millions when 22,000 other people need to make a living wage?

From the link, LinkedIn does $15B in revenue, or $681k per employee with 22,000 people. That seems pretty reasonable to me, even though I don't know what all of those 22,000 people do.

danpalmer 3y ago

This is a great way to think about it, thanks! This sounds roughly in line with Twitter's (circa 2021) at ~$700k, but a long way from MS/Apple/Google who are all in the $1-2.5m range. Even Amazon is at ~$500k and has many low paid workers, so would likely be much higher if focusing on the tech/product/etc side. It's not terrible, but maybe a little low?

stathibus 3y ago
How exactly is that a good way to think about it? What proportion of employees at a tech company are tasked with bringing in revenue and why would that be expected to scale linearly? Google is a terrible point of comparison because we have plenty of direct evidence that thousands of people at Google are doing nothing of any consequence to the business
- danpalmer 3y ago
  It's a rough measure of business efficiency. You're right that many people aren't directly related to bringing in revenue, that's inefficient (although necessary at some level), and so they change the denominator and reduce the overall amount. The fact that Google has ~$1.5m revenue per employee suggests that it's a more efficient business than LinkedIn's at $700k.
  - stathibus 3y ago
    No it doesn't suggest that at all lol
    - danpalmer 3y ago
      How so? Open to being persuaded here, I only have a basic understanding of this, but you've not provided any alternative?
Gh0stRAT 3y ago
The real way to look at it is via the marginal revenue minus the marginal cost. Generally speaking, it makes sense to keep hiring more workers if you're getting a net benefit from hiring each one. That being said, at a certain scale the organizational challenges may eat into your net marginal profit. (eg unclear ownership and diffusion-of-responsibility, more layers in the org chart making it harder for decision-makers to hear from the people actually doing the work, longer deprecation cycles, etc) Hiring is hard and slow, so it's definitely possible that the other companies you used as examples were theoretically understaffed. (if you ignore the costs of hiring, anyway)
runako 3y ago
Apple is an outlier because they sell hardware, which carries lower margins than pure software/information services. LinkedIn at $700k vs $1.5m at Google (perhaps one of the best business models ever) doesn't feel bad! For comparison, here are RPEs for other large successful tech firms: - Oracle: $310k - Salesforce: $416k - Intuit: $830k - Adobe: $645k - Workday: $317k - Meta: $1.5m Studying these numbers confirms that Google and Meta are indeed extraordinary businesses. Which is not to take anything away from LinkedIn, as they operate in a different market. More interesting is the hypothetical question: if you were in charge of LinkedIn, how would you prioritize achieving an RPE near the top of the industry against other priorities (perhaps such as increasing market share)?
- addicted 3y ago
  And to your point, Google and Meta are indeed extraordinary businesses. That’s why everyone wants/wanted to be Google or Meta. Even being somewhere in the ballpark of a Google or a Meta is incredible.

cleverwebble 3y ago

I don't know about LinkedIn, but a comparable company would be Indeed - something like 12-15k employees. The majority of the company is sales & marketing. Their customer base is basically every company in the world, so having each sales person nurture a few dozen to a few hundred relationships is not uncommon.

willio58 3y ago

But how can you pay the ceo millions when 22,000 other people need to make a living wage?