Member Brief: The Case For Revenue Per Employee


Unlocked Member Brief: Meta, Google, Amazon, Salesforce, Twitter, Microsoft – but not Apple. What gives? Each of these companies are vital to the retail ecosystem but one measures key results in a way that is most commonly seen in an altogether different industry.

“You’ll hear revenue per employee again, in tech, no one was looking at these metrics at least in the private world, the VC world for at least five years,” Keith Rabois recently said to Elon Musk’s Twitter management.

Whereas growth and market share were once key performance indicators, profitability and efficiency will be the measures of this next five to 10 years. An OKR (objectives and key results) is a strategic framework and a KPI is a measurement within said framework. Brand and SaaS marketing discusses KPIs with endless zeal, but OKRs are rarely communicated with the same energy. I believe that this will change.

For Continued Member Access

Objectives and Key Results (OKRs) are closely tied to human resources but by connecting business development with HR OKRs, organizations can create a stronger, more consistent brand image while also fostering a positive and engaging work environment for employees. Of all of the HR metrics, one seems to be emerging as key to American economic recovery. There’s headcount, time to hire, acceptance rate, employee satisfaction, turnover rate, retention rate, training expenses, and revenue per employee (RPE). The latter is the measure of the hour.

RPE is the metric that has come to define big tech’s layoff narrative. RPE, often ignored during bull market growth periods has become the talking point used to justify right-sizing organizations. Fortune Magazine explained:

In addition to curtailing talent acquisition efforts and building up its people practice, Apple is reducing business travel and delaying employee bonuses. CEO Tim Cook will also take a pay cut of about 40% this year, which he reportedly requested. Altogether, the moves make for a true “doing more with less” strategy.

Apple is efficient in a key sense that many others in big tech will adopt. Here’s an example that reads like a big law firm’s measure of success. Founded in 2006 and headquartered in Amsterdam with around 2,000 employees, Adyen is the best direct ‘comp’ to Stripe. The Information recently explained why Stripe’s private valuation to Adyen’s public valuation:

Stripe spent so heavily on staff and new business initiatives in recent years that its 2022 expenses per employee were twice those of Adyen, even though Adyen’s revenue per employee was higher, according to an analysis by The Information. The expense gap is expected to stay the same this year, although Stripe is expected to do better on revenue per employee.

Even Google Trends reflect the growing reference to the phrase “revenue per employee.” Long a practice in other industries: they say that if you are a law firm partner, you need to consider yourself a business and not an employee. According to The Four Week MBA, Amazon’s primary OKR – RPE – grew by $40,000 between 2021 and 2022. But clearly the objectives were not met; Amazon recently laid off another 9,000. Though, I suspect RPE grew again in 2023 as layoffs continued. Meta’s RPE is set to rise to $1.85 million based on the Wall Street Journal’s revenue and headcount projections.


And this is how companies will be judged. A firm well-known to many in big tech, Wilson Sonsini measures success by RPE. According to data by The American Lawyer, the firm’s RPE and headcount have grown precipitously since 2019. began its March 2023 analysis with:

Wilson Sonsini’s profits per equity partner fell 9.5% as the firm bulked up its lawyer head count to 1,045 lawyers including 266 partners.

In today’s rapidly evolving business landscape, companies are increasingly seeking new ways to evaluate their performance and long-term prospects. Traditional metrics such as revenue, net income, and market capitalization have been widely used for years, but they may not tell the whole story, especially for big tech companies. The comparison between big tech companies and law firms is based on the premise that both types of businesses will be judged by this OKR in the coming years.

The Case For A New Measurement

RPE is a simple yet powerful metric that divides a company’s total revenue by the number of its employees. This ratio indicates how much revenue each employee contributes to the business, offering valuable insights into the company’s efficiency, productivity, and ability to scale. There are several reasons why RPE is becoming an increasingly important metric for big tech companies:

Focus on Efficiency and Productivity

RPE helps measure how effectively a company is utilizing its people, a critical component of any organization. But also, how those people perceive their role in the growth and health of the company. Senior Research Analyst for Yahoo Tom Forte cited the type of role that saw early attrition at Amazon, i.e. ones that didn’t directly impact revenue growth:

So if you look in particular at the March quarter and the June quarter last year, they had about 100,000 attrition between those two quarters, and it was mostly not rehiring someone to replace someone who left at the fulfillment center level.

A higher RPE ratio implies that the company is generating more income with fewer employees, indicating a more efficient and productive business model. As Amazon begins to show, they’re willing to explore whether or not they can accomplish “more” with fewer cost centers.

Attraction and Retention of Talent

Talent is a critical resource in the tech industry and companies need to ensure they can attract and retain top talent to maintain their competitive edge. A higher RPE ratio suggests that the company is utilizing its workforce effectively, which can lead to increased employee satisfaction and loyalty. This, in turn, can help attract new talent and reduce turnover, contributing to the overall health and growth of the company.

Scaling and Growth

As tech companies grow, they often face challenges in scaling their operations efficiently. RPE can help identify whether a company is maintaining or improving its productivity as it expands. A consistent or increasing RPE ratio during periods of growth suggests that the company is successfully scaling its operations, which is essential for long-term success. Barron’s recently published relevant numbers:

Apple generated around $2.4 million in revenue per employee in its latest fiscal year and has averaged around $2.1 million on the same metric over the past five years, according to FactSet. That far outstrips Facebook-owner Meta (META), which generated $1.35 million in revenue per employee in 2022—below its five-year average of $1.5 million.

This gives us a uniform means of comparing companies regardless of their status as a public or private company.

Use in eCommerce and Retail

RPE can serve as a valuable benchmark for comparing companies across the tech industry. The Information framed this public vs. private tech company conversation as such:

An unfavorable comparison to Adyen is a surprising turn for Stripe, a startup brand that became a near-holy name in Silicon Valley. Its early rapid growth and exposure to the fast-expanding e-commerce market helped the payments firm raise more than $2 billion from some of venture capitalists’ biggest names over a dozen years. After it raised money in early 2021 at a $95 billion valuation, it was one of the most highly valued startups in the world.

In comparison, Adyen raised just $200 million as a private company, although it raised  hundreds of millions when it went public in its 2018 initial public offering. Its current market capitalization is about $44 billion.

By evaluating this metric, investors, analysts, and other stakeholders can gain a clearer understanding of how well a company is performing relative to its peers, which can help inform strategic decisions and investment opportunities.


Shopify was ahead of the curve in discussing the potency of this measure in retail. RPE is the key metric for assessing the health and prospects of big tech companies, but can be used to assess brands as well.

If you’re looking for real-life examples of how brands calculate RPE, let’s take data from 2PM to calculate the average revenue per employee popular retailers make. Knix: has 127 employees generating an average revenue of $70.5 million per year. That comes out to $555,118 revenue per employee. Boll and Branch: has 116 employees generating an average revenue of $80.8 million per year. That equates to $696,551 revenue per employee. Everlane: has 309 employees generating an average revenue of $361.2 million per year. That equates to $1.68 million revenue per employee.

By focusing on efficiency, productivity, talent attraction and retention, in addition to scaling, RPE provides valuable insights into a company’s performance that traditional measures may not capture. It also emphasizes the importance of efficient profit-seeking. As the tech industry continues to evolve and face new challenges, RPE will play a crucial role in helping companies navigate the competitive landscape and achieve long-term viability.

By Web Smith | Edited by Hilary Milnes with art by Alex Remy and Christina Williams

Memo: Brand-Proofing In The Post-SVB Age


Profitability in online retail is no longer a journey, it’s a race. The SVB crash, while minimally impactful on many companies in direct-to-consumer or retail technology, will still accelerate brands’ and software companies’ need to reach a form of sustainable profitability moving forward. The past few years have been a slog for many, personally and professionally. First, the pandemic, then the crypto crash, and now this.

While the SVB contagion has yet to spread like the 2008 meltdown, the assets involved reached near 2008 numbers, with more fallout to come.

World War I and the Spanish Flu pandemic inspired creators like Ernest Hemingway to publish their first works. Hemingway followed with The Sun Also Rises, a pioneering, modernist novel shortly after. The Civil Rights movement inspired some of the greatest musical acts of the past century. Sam Cooke, Nina Simone, Bob Dylan, and Gil Scott-Heron’s music filled the radio waves. Each were inspired by their interesting times. And the Great Recession of 2008 inspired creators of another kind. Companies like Venmo, Uber, Pinterest, and Instagram navigated the interesting times of a formative decade. [2PM]

The most interesting times inspire the greatest creativity; brands will need to employ that creativity to survive macroeconomic headwinds. Tough times can actually produce tailwinds if handled directly. Here is a rundown of five changes that we foresee and how brands can proof themselves with the hopes of turning a headwind into a tailwind.

Reduced access to funding and capital:

One of the primary consequences of the SVB crash will be a reduction in available funding for startups and businesses, including DTC brands. SVB and other similar financial institutions often provide loans, lines of credit, and other financial services to help these companies grow. With a crash or significant financial disruption, these resources might become scarce, making it more challenging for DTC brands to secure the necessary funds to expand their operations, invest in marketing, or develop new products.

SVB was the largest venture debt lender, regularly offering the best rates to a riskier class of business. Many of these companies will have difficulty finding comparable terms. Another impact is the decreased valuations that will result as traditional venture firms gain more leverage as financing options shrink.

The declining access to capital brought about by the demise of SVB and the chill it’s brought to the venture debt space will mean VCs have more leverage to drive down valuations.

Stripe’s valuation is the most significant marker here. Once privately valued at $95 billion, the company recently raised $2 billion at a $55 billion valuation.

Decline in consumer confidence:

As the SVB contagion continues to materialize, a significant financial crash could lead to a decline in consumer confidence and spending, which will have an outsized impact on modern brands. A contagion is typically described as an “initial shock” that propagates across global markets for securities, savings, and loans. This often happens without relationship to the “patient zero” bank. This correlates with consumer spending crashes.


As consumers become more cautious with their spending, they might cut back on purchases of non-essential items. This decline in consumer spending could lead to lower revenues and slower growth for these businesses. So far, the contagions spread seems to be mitigated as well as possible. From the Northlines:

The rescue was necessary to preserve the Silicon Valley ecosystem, as Larry Summers described in a conversation with the Economist magazine. Secondly, as he sensed, it was to stop what could be a “21st Century contagion”. A failure would have consequences for a large group of players.

Credit Suisse’s firesale acquisition by UBS is the latest example of this phenomenon. And First Republic Bank is down 42% despite a $30 billion infusion as consumers still lack confidence in the bank’s long-term viability.

Increased competition:

In the face of reduced funding and declining consumer confidence, DTC brands will find themselves facing increased competition, both from other DTC companies and traditional retailers. As businesses scramble to secure their share of a shrinking market, they might be forced to lower prices or offer promotions to entice consumers, which could further squeeze profit margins.

As a result of the challenges mentioned above, modern retail brands will need to place a greater emphasis on cost-efficiency and profitability. This could involve cutting operational costs, streamlining supply chains, and finding innovative ways to reach customers with minimal marketing spend. This will mean that more retail brands will pursue lean business models by reducing SKU count and focusing solely on core products while focusing marketing spend on products with the highest margin. A recent McKinsey study adds:

Some plan to cut the number of annual collections, while others are focusing on creating streamlined brand narratives, imposing demanding efficiencies, and introducing tighter cost discipline. In all cases, identifying whether a product is a statement piece, a margin driver, or something else, and baking these perspectives into the planning process, is key.

In the long term, this focus on efficiency could help modern brands become more resilient and better prepared for future market fluctuations.

Shift in investor priorities:

In the aftermath of the SVB crash, angel investors and venture capitalists will become more risk-averse and shift their priorities towards businesses with proven track records and strong fundamentals. This could make it more difficult for unproven brands and retail technologies, particularly those in their early stages, to secure funding. In response, early stage companies will need to demonstrate their ability to generate profits and achieve sustainable growth to attract investment. I found this quote helpful in a recently published report by India’s The Telegraph:

Start-ups would have to cut out fat and focus on profitable lines of business to stay afloat. The impact on employees will be high in the form of delayed joining, low investment in new skill building, and fewer opportunities for global projects.

Early business models will matter more than ever and investors will make faster decisions on which businesses they feel are worth keeping afloat through traditional venture capital.

Importance of brand loyalty and customer retention:

In a challenging market environment, modern brands will need to focus on building brand loyalty and retaining customers to maintain revenue streams. This could involve investing in customer service, personalization, and targeted marketing efforts to nurture existing customer relationships and encourage repeat purchases. By fostering strong connections with their customer base, retail technologies and brands could better weather the storm of the slowly spreading SVB contagion.

Understanding the SVB contagion’s potential impact on modern retail brands can provide valuable insights for businesses looking to navigate further financial disruption. By considering the five points and focusing on cost-efficiency, profitability, and customer retention, the retail industry can position itself for success in a market landscape influenced by heightened price sensitivity, an increase in “utility purchases,” and general uncertainty.

Brand-proofing in the post-SVB age will produce some of the most durable brands since the Great Recession of 2008. While the number of banks impacted will not resemble 2008’s fiasco, the assets under management does reflect similar levels of damage. It’s best to operate with principles that reflect the potential for SVB’s crash to influence our economy in similar ways over a longer-term.

By Web Smith | Edited by Hilary Milnes with art by Alex Remy

Resource: The History of The Bank Run


Within three years of the bank’s founding, the first to ever issue banknotes, its illiquidity issue became the first of many examples throughout history. A greater irony is that just 1,213 kilometers away from the Stockholms Banco, the first speculative bubble in history came and went: Tulipomania. Speculative bubbles and bank runs share similar dynamics.

A bank run occurs when a large number of customers withdraw their money from a bank at the same time, usually out of fear that the bank may become insolvent or fail. This phenomenon has a long and complex history, dating back centuries and occurring in many different forms around the world.

Though both events occurred within 25 years, the Stockholms Banco fiasco is commonly associated with current events. Whereas tulipomania was forgotten (outside of niche financial circles), the origin of the bank run was not. Stockholms Banco was a Swedish bank established in 1656 by a Latvian-born entrepreneur and financier named Johan Palmstruch. He is credited with the introduction of paper money to Europe and it quickly became the largest bank in the country. In 1668, however, the bank experienced a major crisis when it was discovered that its reserves were insufficient to cover the notes it had issued.

A recent report by Economic Times shares the notion that many bank runs are just self-fulfilling prophecies. The article began with perhaps the first in history.

Since his deposits were short-term and loans long-term, he began issuing credit notes to customers which could be exchanged for metal coins. That is said to be the first paper money to be used in Europe. His bank ran into a problem when Sweden issued lighter copper coins and a large number of his customers lined up to withdraw their old, heavier copper coins which were worth more in metal. That led to the collapse of his bank. He was jailed and his bank was later transferred to the Swedish government

Sound familiar? As news of the bank’s troubles spread, customers began to demand their deposits back in the form of gold and silver coins, which the bank was unable to provide. This led to a mass withdrawal of deposits, as customers lost faith in the bank’s ability to honor its obligations. The crisis at Stockholms Banco was eventually resolved through a combination of government intervention and private sector support. The Swedish government stepped in to provide additional funds to the bank, and wealthy merchants and other individuals also lent money to the bank to help it meet its obligations.

While Stockholms Banco is often cited as an early example of a bank run, some argue that similar events had occurred earlier in history. For example, there is evidence to suggest that similar crises occurred in the Italian banking system as far back as the 14th century. It remains an important case study in the history of financial crises and the role of government and private sector actors in resolving them. The lessons learned from the crisis at Stockholms Banco have helped shape the development of modern banking systems and regulations, and continue to be relevant to financial policymakers and practitioners today. However, in the United States where regulation is a sine wave of sorts (more and less, more and less), periods of bank runs happen more often than they should.

A Western History: 1866, 1907, 1929, 2008, 2023

Samuel Gurney of Overend, Gurney and Company:

When a panic exists a man does not ask himself what he can get for his bank-notes, or whether he shall lose one or two per cent by selling his exchequer bills, or three per cent. If he is under the influence of alarm he does not care for the profit or loss, but makes himself safe and allows the rest of the world to do as they please.

In the 19th century, the rise of modern banking systems in Europe and America brought about new forms of bank runs. One of the most famous of these occurred in 1866, when the Overend, Gurney & Company bank in London, which was considered one of the most stable and prestigious financial institutions of its time, suddenly collapsed. This is event was as (or more) impactful on England’s economy as the Bear Stearns collapse was on the American economy. The failure of Overend, Gurney and Co. inspired writers like Walter Bagehot who frequently referred to the Overend collapse in his 1873 book Lombard Street.

The good times too of high price almost always engender much fraud. All people are most credulous when they are most happy; and when much money has just been made, when some people are really making it, when most people think they are making it, there is a happy opportunity for ingenious mendacity.

Unsurprisingly, Karl Marx often cited the Overend collapse as one of the many negatives associated with capitalism. And like the Bear Stearns collapse, no one at Overend was held legally accountable. The bank had been heavily involved in risky investments, and when a series of financial crises hit, it was unable to meet its obligations. As news of the bank’s troubles spread,the bank run ensued.

During the summer of 1907, two small-time Wall Street bankers conjured up a plan to acquire the stock of the United Copper Company at a cheap price and drive up its price. The scheme failed, and the company’s stock plunged.

The Panic of 1907 is often cited as one of the most significant bank runs in the country’s history. This crisis was triggered by a combination of factors, including a sharp decline in the stock market and rumors of impending financial failures. As customers began to withdraw their money from banks, the government intervened to restore confidence and prevent further runs. One of the most famous interventions was made by J.P. Morgan, who personally lent millions of dollars to several banks in order to prevent them from failing.

After The Panic, there was unanimous agreement around the need for a central bank. Morgan and his peers wanted a private central bank and progressives wanted one under the control of the federal government. President Woodrow Wilson established the Federal Reserve in 1913 after agreeing with the progressives.

The Great Depression of the 1930s brought about a new wave of bank runs as customers lost faith in the banking system as a whole. Banks at the time were highly leveraged and often made riskier-than-typical loans. And when the stock market crashed in 1929, many banks were unable to meet the demands of their customers. As news of bank failures spread, customers across the country began to withdraw their money, leading to a mass exodus of deposits from the banking system. This crisis eventually led to the creation of the Federal Deposit Insurance Corporation (FDIC), which guaranteed deposits in participating banks up to a certain amount and helped restore confidence in the banking system.

On June 16, 1933, President Theodore Roosevelt signed the Banking Act that created the FDIC. In 1934, Congress officially insured deposits up to $2,500 ($50,641 adjusted for inflation).

Since the Great Depression, bank runs have become less common in developed countries, thanks in part to increased regulation and the establishment of deposit insurance programs. But in recent years, the rise of digital banking and fintech startups has also raised new concerns about the potential for bank runs in the event of a cyberattack or other disruption to the financial system. Additionally, regulation is along its down cycle in that proverbial sine wave analogy. In a recent deep dive on the FTX fiasco, I explained:

Crypto is largely unregulated, and investments were essentially bids on digital-first infrastructure and the idea that it could replace more traditional (and to some archaic) ways of building and transferring wealth. At the same time, the parallels between this crypto crash and the 2008 crash are strikingly similar.

In March 2008, a bank run began on Bear Stearns, a bank that financed long-term investments by selling “asset backed commercial paper” (short-maturity bonds), making it vulnerable to panic. Industry rivals began a public campaign against Bear Stearns, citing a lack of ability to make good on obligations. In just two days, a capital base of $17 billion was down to $2 billion. The bank filed for bankruptcy the next day. Wilson’s Federal Reserve decided to lend money to Bear Stearns while JPMorgan Chase acquired the bank as part of a government-sponsored bailout. In the coming weeks and months, 25 banks failed. This includes Washington Mutual and IndyMac. 

And here is where several of the largest banks stand with respect to exposure to bank runs.


Each era of bank run resulted in some form of government regulation. 1907 led to The Federal Reserve, 1929 birthed the FDIC, and 2008 led to the Dodd-Frank Act. Signed in 2010, the measure was set up to increase regulation. But in 2018, in an effort to bolster activity in the sector: President Trump scaled bank some of the landmark act, reducing some of the regulations and requisite “stress tests” on local and regional banks. Objectively speaking, this directly influenced 2023’s bank run on Silicon Valley Bank. By Politifact:

Silicon Valley Bank CEO Greg Becker was among those who sought lighter regulations for smaller banks as the rollback bill was being crafted. At the time the bill was passed, Silicon Valley Bank had about $40 billion in assets.

SVB’s customers withdrew over $42 billion on the first day of the bank run, reaching a withdrawal volume of $4.2 billion per hour. Previously, the largest bank run in history was 2008’s run on Washington Mutual, totaling $16.7 billion over 10 days.

The history of the bank run is a complex and multifaceted one, spanning centuries and continents. As the banking industry continues to evolve and new risks emerge, it is important for regulators and financial institutions to learn from the past and to consider the origins of America’s banking regulations. It’s also important to understand the history and its precedents. History suggests that the resulting regulations with return us to stress tests on smaller banks and, perhaps, an increase to $1,000,000 or more in FDIC coverage.

By Web Smith | Art by Alex Remy and Christina Williams