I'm not exactly sure what the OP's point is, but the price/employee ratios do not make any sense outside of acquihires.
Take US Air for example, they have 30k employees and are worth 2B. That ratio is meaningles. It is even more meaningless when one programmer can eliminate 100s of jobs using automation.
I'm sure it is a useful metric for some analysis, but it doesn't seem to be in the case of instagram which seemed much more like a play to remove a question mark from institutional investors minds prior to an IPO.
Agree. That's why we're calling it a "bubble": the sheer disproportion between revenue, employee number and brand value, and price tag. I'm merely putting things in perspective, not writing a "market analysis". :)
My point is that those metrics are not always valuable to rely on. Unlike hard science, you don't have to prove their significance through statistical analysis, but you should be able to state why market cap/employee is a reasonable valuation tool.
IMO, Facebook would not have paid less for 15 employees or more for 100 employees so it seems like a poor metric.
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I'm not exactly sure what the OP's point is, but the price/employee ratios do not make any sense outside of acquihires.
Take US Air for example, they have 30k employees and are worth 2B. That ratio is meaningles. It is even more meaningless when one programmer can eliminate 100s of jobs using automation.
I'm sure it is a useful metric for some analysis, but it doesn't seem to be in the case of instagram which seemed much more like a play to remove a question mark from institutional investors minds prior to an IPO.
Agree. That's why we're calling it a "bubble": the sheer disproportion between revenue, employee number and brand value, and price tag. I'm merely putting things in perspective, not writing a "market analysis". :)
My point is that those metrics are not always valuable to rely on. Unlike hard science, you don't have to prove their significance through statistical analysis, but you should be able to state why market cap/employee is a reasonable valuation tool.
IMO, Facebook would not have paid less for 15 employees or more for 100 employees so it seems like a poor metric.