Derisk company for future investors
“Derisk company for future investors”
Founder resourceBuilder <$5m
Why we optimize for Revenue per Employee ($175k+) and why you should too
Why ARR per FTE suits AI companies better than burn multiple, and how FINDMINE hired for talent and kept diversity
Michelle Bacharach · FINDMINE
Published September 6, 2023About this resource
- Format
- Bootstrapped Stage at SaaStr Annual 2023
- Inside
- 4 key moments
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What you’ll learn
Michelle Bacharach explains why FindMine uses revenue per employee to guide hiring and operating efficiency. She compares benchmarks by company stage, discusses talent and geographic flexibility, and shows why ARR per employee can complement burn multiple for compute-heavy companies.
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This Goal Doesn’t Have to Come at
“This Goal Doesn’t Have to Come at The Expense of Diversity!”
Let’s jump into Section 2
“First: what are the Benchmarks? They vary by stage.”
How we became an outlier for ARR/FTE
“How we became an outlier for ARR/FTE”
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Michelle Saastr Slide deck
Michelle is CEO and Co-Founder of FINDMINE, an award winning software platform that uses machine learning to scale product curation for the world's top retailers. As a product and strategy expert, Michelle is experienced in growing companies by launching software, apps and websites to millions of people, putting together joint ventures, and conceiving of new products. Michelle has shared her expertise with thousands of leaders in retail and technology as a speaker at SXSW, the National Retail Federations' Retail’s Big Show and Shop.org, Intel's Shift, Women in Machine Learning and Data Science, and many others.
- Company revenue
- $2.2M
- Team size
- 31
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Each slide with a short explanation of what it shows. Open the slide text for its exact wording.
19 passages
Introduction
Slide text
Why we optimize for Revenue per Employee ($175k+) and why you should too Michelle Bacharach CEO, FINDMINE
Derisk company for future investors
Talk roadmap
The talk moves from reasons to optimize revenue per employee to benchmarks and ways to improve it, then closes with operating considerations such as slower growth and harder decisions as a company scales.
Slide text
Over the next 20 minutes I’m going to show you Ensure A+++ talent Derisk company for future investors ARR/FTE is a much better fit for AI companies than burn multiple First: what are the Benchmarks? They vary by stage Culture that prioritizes autonomy and GSD Be open to any location to get the best talent / $ Who's a growth driver and who's a cost center? It's harder than you think. Growth will be slower, plan for that It gets harder as you grow, not easier Why Optimize Revenue Per Employee? How to Get ARR/FTE Up Considerations
Revenue per employee trend
FindMine’s ARR per employee rose from 166,040 in 2022 to 188,264 TTM, then stood at 171,455 in June ’23. The same table tracks burn multiple and LTV:CAC alongside this efficiency measure.
Slide text
FindMine Labs ARR Per Employee
A distributed team structure
The org chart places the chief executive at the top, with product operations, sales and marketing, and general administration roles beneath. The team includes both remote and location-based roles, with product and operations spanning several levels.
Slide text
FindMine Labs Org Chart
Diversity and team composition
The chart reports that 20.0% of the team identifies as LGBTQ+ and 80.0% as non-LGBTQ+. It presents the revenue-per-employee goal alongside a single measure of team diversity.
Slide text
This Goal Doesn’t Have to Come at The Expense of Diversity!
Pursue efficiency without sacrificing diversity
Ethnic diversity breakdown
This build adds a race and ethnicity breakdown: White 50.0%, Latinx 35.0%, and BIPOC, African American, and AAIP at 5.0% each. The slices show a majority White team alongside several smaller represented groups.
Slide text
This Goal Doesn’t Have to Come at The Expense of Diversity!
Gender breakdown
This build adds the gender split: 45.0% female and 55.0% male. The chart shows a relatively balanced division between these two categories.
Slide text
This Goal Doesn’t Have to Come at The Expense of Diversity!
Reasons to optimize ARR per employee
The slide gives three reasons to optimize ARR per employee: ensure strong talent, derisk the company for future investors, and use a metric it says fits AI companies better than burn multiple.
Slide text
Why Optimize for ARR/Employee I’m going to show you Ensure A+++ talent Derisk company for future investors ARR/FTE is a much better fit for AI companies than burn multiple Ensuring Talent Future Proof Better Metric
Burn multiple as an efficiency signal
The comparison rates a burn multiple under 1x as amazing, 1-1.5x as great, 1.5-2x as good, 2-3x as suspect, and over 3x as bad. FindMine’s table shows 1.6 for 2022, 2.8 TTM, and 1.1 in June ’23.
Slide text
Burn Multiple vs ARR/FTE for Companies with High Compute Cost (e.g., AI) David Sacks
Benchmarks rise with company scale
The benchmark graphic pairs larger ARR ranges with higher top-quartile ARR per FTE: $100K for $1-$10M ARR, $165K for $10-$25M, and up to $335K post-IPO. FindMine’s adjacent table shows its ARR per employee at 166,040 in 2022, 188,264 TTM, and 171,455 in June ’23.
Set ARR per employee benchmarks
Benchmarking and hiring
The second section turns to stage-dependent benchmarks, setting targets, and how to get there through a results-oriented culture and a wider search for talent.
Slide text
Let’s jump into Section 2 I’m going to show you First: what are the Benchmarks? They vary by stage. Culture that prioritizes autonomy and GSD Be open to any location to get the best talent for your $ What should your target be? How to get there 1 How to get there 2
Funding type changes the benchmark
The chart shows bootstrapped companies with higher median ARR per FTE than equity-backed peers in each ARR band. The gap is visible from $50,000 versus $25,750 below $1 million ARR to $280,596 versus $170,950 above $20 million.
Slide text
Benchmarks depend on who you ask… 2022 Median ARR per Full-Time Equivalent (FTE) by Funding Type
Targets rise with ARR stage
The Battery graphic sets higher target APE ranges as ARR grows: $100-$150K at $20-$50M ARR, rising to over $300K above $300M. Its maturity curve points toward focusing on current and breakeven APE, especially above $20M ARR.
Slide text
And also vary by stage
Build a results-oriented team across locations
Build efficiency through hiring choices
The slide links an outlier ARR per employee to a results-focused culture, openness to geography, and slow hiring. It emphasizes getting the sequence right: establish the culture first, then choose locations, so poor performance is easier to identify early.
Slide text
How we became an outlier for ARR/FTE Prioritize a culture of results Be open on geography - not only #1 first, then #2! Get the order wrong, you might hire the wrong people in the wrong locations, making it harder to catch poor performers early Hire slow. VCs don’t care about this number til it’s too late, but you have to care NOW
Operating considerations
The third section turns to tradeoffs founders should expect: identifying growth drivers and cost centers, preparing for slower growth, and recognizing that execution gets harder as the company grows.
Slide text
And now onto Section 3 I’m going to show you Who's a growth driver and who's a cost center? It's harder than you think. Growth will be slower Prepare for it. Gets harder as you grow, not easier. Things to Consider Slower Growth Difficulty Level
Prepare stakeholders for slower growth
The slide advises discussing slower growth early with venture investors and preparing adjusted figures when a bootstrapped company plans to raise. Its table reports revenue growth normalized for salespeople at 200% in 2022 and 184% for 1H ’23 annualized.
Slide text
Growth will be slower: Prepare for it Have convos early and often with your VCs if venture-backed Figure out how to show adjusted growth figures if you’re bootstrapped now, going for VC soon
Headcount changes the efficiency math
For a SaaS company at $100M ARR, the slide contrasts 500 employees previously with 1,000 now and calculates $100K ARR per employee on average. A cited SaaStr founder says fully burdened employee costs exceed $100K a year, underscoring the sustainability concern.
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Q: How many employees does a SaaS company have at 100M ARR? Previously: 500 Now: 1000 Why? More capital raised! That’s $100K ARR / employee on average “Ultimately though, that’s not sustainable. The average SaaS company employee, fully burdened, costs much more than $100k a year.” Jason Lemkin Founder SaaStr
Recap: measure and manage efficiency
The recap returns to talent, investor readiness, and ARR per employee as a metric for AI companies, then stresses stage-specific benchmarks, autonomy, broad talent geography, slower growth, and greater difficulty as the company scales.
Slide text
Over the last 20 minutes I showed you Ensure A+++ talent Derisk company for future investors ARR/FTE is a much better fit for AI companies than burn multiple First: what are the Benchmarks? They vary by stage Culture that prioritizes autonomy and GSD Be open to any location to get the best talent for your $ Who's a growth driver and who's a cost center? It's harder than you think. Growth will be slower, plan for that It gets harder as you grow, not easier Why Optimize Revenue Per Employee? How to Get ARR/FTE Up Considerations
Thank you
Michelle Bacharach closes by thanking the audience and leaving the talk’s focus on revenue per employee and FindMine’s operating approach.
Slide text
Michelle Bacharach CEO, FINDMINE