> According to a measure I’ve heard once (probably depends on many factors), a new full-time engineer adds some $1,000,000 to your company’s sell value.
Hmm, that's a suspiciously round number. I'm also curious as to why employees in an industry where labour costs are the majority of your costs, would suddenly be considered such a valuable asset by a business guy.
I didn't want to directly quote the business guy who told me that number for various reasons.
But I think what he was getting at is the way VC's value a company. More engineers, more valuable for fundraising because of greater ability to deliver, more need for money, and more assets in general. Especially important if the company ends up doing poorly and needs to be acquihired. The more engineers to sell, the less money the investors lose.
Another calculation you can use is that if company makes $X million in revenue, and its value-per-employee is $Y, then an extra employee is in theory worth $Y. Especially in early stages where revenue has potential to scale linearly or even exponentially with every new hire.
Also, from what I remember of running a startup as a techie and talking to a lot of people with MBA's, revenue-per-employee is one of the most important performance indicators for companies.
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[ 3.8 ms ] story [ 23.7 ms ] threadIf the "learn to code" movement doesn't flop, it won't be a sellers market. Problem solved!
Hmm, that's a suspiciously round number. I'm also curious as to why employees in an industry where labour costs are the majority of your costs, would suddenly be considered such a valuable asset by a business guy.
But I think what he was getting at is the way VC's value a company. More engineers, more valuable for fundraising because of greater ability to deliver, more need for money, and more assets in general. Especially important if the company ends up doing poorly and needs to be acquihired. The more engineers to sell, the less money the investors lose.
Another calculation you can use is that if company makes $X million in revenue, and its value-per-employee is $Y, then an extra employee is in theory worth $Y. Especially in early stages where revenue has potential to scale linearly or even exponentially with every new hire.
Also, from what I remember of running a startup as a techie and talking to a lot of people with MBA's, revenue-per-employee is one of the most important performance indicators for companies.