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Comment by maukdaddy | Hacker News Reader

They're not really drawing implications in that article. Profit(or revenue)/employee does provide a fairly decent, albeit rough, measure of efficiency. I think it's an interesting metric that more companies should look at. If that metric starts declining while your hiring is increasing, then it might be a good sign that you're becoming too large and bloated.

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"Dividing revenue by employee gives us a better look at which companies are the most efficient. And that’s what you see in the chart at the top of this post."

craigslist's numbers are misleading here. Sure, they're extremely efficient by the above metric, because they were lucky enough to become a de-facto standard marketplace. I challenge anybody to find another example of a software company with 30 employees that is nearly as successful.

MSFT revenue per employee is $631k, between eBay and Facebook.

Source: http://www.wolframalpha.com/input/?i=microsoft+revenue+/+num...

(PS. Do I deserve extra karma for posting this cool WolframAlpha link ? :)

How is CL misleading? They make a shitload of money with very few employees. Saying they were lucky isn't even relevant to the argument. Based on revenue per employee, they are fantastically efficient.

MSFT was "lucky" enough to become the de-facto standard in their market, yet they aren't as efficient as CL.

Efficiency? More like profit margin. Labor intensive industries can be very profitable, provided the scaling is efficient.

No.. efficiency. Your margin is relative to your total costs, of which employees are generally not even a large fraction. For instance take a site like Photobucket, they have a relatively small headcount (~150'ish I believe, most of which are not developers). Their cost drivers are infrastructure and bandwidth which I imagine is in the millions/month.

This is a (very) rough measure of how efficient you are in terms of generating revenue. Craigslist is a big site, if they only have 30 employees (as cited above) than I have to imagine they have huge parts of their day-to-day operations automated. That's efficiency.

"Efficient in terms of generating revenue" (per employee), sure, but that isn't the usual definition of economic efficiency. In particular, there's no real reason, when looking at a company's efficiency, to look at only a raw count of employees, and not take into account things like how much those employees cost, and what your non-employee costs are. A company with half the employees but orders of magnitude more infrastructure costs and lower profits, on the same revenue, isn't more efficient, even though it would rank better on this metric.

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