Moz has 140 employees and is at a revenue run-rate of ~$33mm, putting us around $235K/employee. I know companies with higher revenue/employee than us (many of those are smaller) and some with lower revenue/employee (many of those have lots of funding and are going negative to grow faster). So long as you're applying additional metrics into the equation (funding, growth rate, cost/person by location/type, etc) I think this is a reasonable baseline.
That said, there's lots of very important metrics to understand if you're trying to do a comparison - rate of growth, margins, churn, etc. - all of these figure prominently into the health of a SaaS business.
The whole benefit of this method is that its simple.
Its first order of magnitude estimation by taking the fact that headcount is usually close to linear with revenue and then applying maybe the next biggest twiddle. So you get maybe 80% accuracy recognizing the linear trend, and then another correction for the valuation.
As such, even 1 correction is kind of twiddly, since it does pretty good with average salary. But, its also in that range where you can do it off the top of your head in conversation, by simply referencing a well known labor number, and a +/- factor that most entrepreneur folks you're having drinks with will know.
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Moz has 140 employees and is at a revenue run-rate of ~$33mm, putting us around $235K/employee. I know companies with higher revenue/employee than us (many of those are smaller) and some with lower revenue/employee (many of those have lots of funding and are going negative to grow faster). So long as you're applying additional metrics into the equation (funding, growth rate, cost/person by location/type, etc) I think this is a reasonable baseline.
That said, there's lots of very important metrics to understand if you're trying to do a comparison - rate of growth, margins, churn, etc. - all of these figure prominently into the health of a SaaS business.
The whole benefit of this method is that its simple. Its first order of magnitude estimation by taking the fact that headcount is usually close to linear with revenue and then applying maybe the next biggest twiddle. So you get maybe 80% accuracy recognizing the linear trend, and then another correction for the valuation.
As such, even 1 correction is kind of twiddly, since it does pretty good with average salary. But, its also in that range where you can do it off the top of your head in conversation, by simply referencing a well known labor number, and a +/- factor that most entrepreneur folks you're having drinks with will know.