Building a company from the bottom up is an interesting journey. At each rung of the ladder you raise a bit more money, hire a few more employees, and hit a few more milestones. In the early days especially you have to place really tough bets. By definition you don’t know if those bets are going to pay off, and the difference between winners and losers in the company building game are how many bets win, and how many lose – the company that wastes the least amount of their resources on their way to profitability, wins.
It’s ironic then that we use number of employees or the amount of capital raised as a measure of how successful we’ve become. Sure it’s a proxy for progress I guess. But if you really start to think about it, the number of employees or the amount of paid-in capital are the denominators of what really shows how successful a company is or can be, especially in the tech-driven world of high-growth, venture-backed, hair-on-fire, company building.
Operating leverage ought to be central to the metrics we pound our chests about.
A couple years ago I gave our ops & tech team a simple goal: As we scale the network beyond a billion transactions per day, I want to see the amount of money (fully loaded – meaning people and all) spent to serve a result decrease. That’s hard to do. Especially when you consider the sheer size; increased complexity; international footprint; need to monitor 24×7; collect, store and manage the data; etc. etc. Other metrics like this include:
- Revenue per employee
- Pageviews per employee
- Costs per revenue dollar
- Revenue managed per sales person
All investors value growth, obviously. Smart investors value growth and operating leverage.