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by emjaygee
4217 days ago
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Revenue per employee is certainly interesting but isn't comparable to the topic of discussion. It would be very interesting to see what the run rates for each of these enterprises is. I suspect you could compute this from the annual statements. It would be even more interesting to see it broken down by employment category. Amazon's 132,600 employees probably includes a large number of pickers and packers diluting the comparison, whereas Oracle's, Microsoft's and Google's staff are predominantly technical. |
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Sure it is. A startup's burn-rate is almost all in staff. If you have 10 employees, then your yearly burn rate is going to be not that far off the FBR for those 10 employees (~$2.5m/yr), unless you're in some very capital intensive business (hardware manufacture or something).
But 10 employees working on a photo sharing app or whatever is ~$200k/mo. Your hosting fees, etc. are unlikely to be more than a few percent delta off of that.
Yeah, yeah, I'm sure there is this or that exception. But in your revenue model for your company you'll need to build all that in. For example, if your hosting fees cost another $100k/mo for whatever reason, and it's growing 5% a month, you better figure that in.
If you're making a physical doodad, and your upfront capital costs are $1m and the per-unit manufacturing costs are $10/item you better figure out how to cover the manufacturing costs, as well as recoup the upfront costs + marketing + sales staff + shipping + expected returns before thinking of the extra over the per-unit sales as profit.
Too many startups discount these things or write them off. They make a doodad for $10/unit, then sell it at $100/unit then congratulate themselves on the $90/unit profit they're making. Then they run out of business because they forgot that they're spending $50/unit on marketing and $50/unit on shipping, support, returns, warehouse loss, etc.
The problem is that the question "Is My Startup Burn Rate Normal?" is a bad question. You shouldn't really be comparing your burn rate to anybody else's. You should be comparing your burn rate to revenue and profit goals and adjust accordingly.