If anyone is curious about what companies in the S&P 500 rank higher in the revenue per employee metric: https://craft.co/reports/s-p-500-revenue-per-employee-perspe...

That kinda revenue with those profit margins are the insane thing. I’m less impressed at revenue per employee generated from oil.

Operating margin is 22%, not bad (better than many, probably most, of the companies on that list) but not insane. Apple is better on both metrics.

Not a far comparison considering the size of some of the companies.

Definetely needs to be weighted.

An example, Murphy Oil Corporation has 1,294 employees...

Also another interesting trend is how many healthcare companies are in that list.

Healthcare is just under 20% of US GDP and 20% of the companies are in healthcare

AmerisourceBergen is a drug distributor / wholesaler, so they have huge revenues bc they sell expensive drugs, but they don't capture much of that (their net income is negative)

Express scripts is a PBM and highly profitable. I don't really know what PBMs do at a useful level of detail, but their profitability has been a subject of debate as pharma companies blame them for high prices. They basically aggregate demand for drugs and negotiate prices on behalf of payers, and make money on their ability to do so

Gilead had one of the best selling drugs of all time, that did $5B in revenue in the first quarter of launch, and $20B+ in the first year I think. Since then rev has declined but still massive

The insurance companies get lots of rev from premiums but margins are low

Biogen and celgene also have one or two drugs that do $5-10B / year

Should note that drugs only account for 10% of health spend. The biggest driver of healthcare costs -- hospital care (30%) and physician services (20%) don't show up in this chart bc they are fragmented industries and also human-capital intensive

> drugs only account for 10% ... hospital care (30%) and physician services (20%)

Were you in a class with Professor Long at Tulane? He has a great, great slide illustrating these and many other facts about the US healthcare economy over the last century.

I was not but would be interested in seeing the slides. Are they publicly available?

Hi, thanks for the link! we're building out more analyses like this, would you be up for a brief chat to share some feedback? thanks, ilya [at] craft.co (founder/ceo)

Any ideas why energy companies have highter RPE than tech? Perhaps they have a larger rate of subcontracting?

The bulk of their cost is capital, not labour.

Do we have a Profits per employee rank for S&P500?

Usually companies grow at a slower rate as they get larger.

Alphabet's growth rate is actually accelerating.

And they're not acquiring this growth, they're generating it organically.

Truly astounding.

It's been said that they created the first self-replicating talent machine. Having worked with them, I believe it.

Could you elaborate on self-replicating talent machine (or link to posts if available)? Does that mean their talent attracts other talent from outside or their culture and process help develop (already talented) people working there into greater heights, or something else?

It sounds really interesting and might benefit others as well.

Laszlo Bock, Google's former head of HR, covered this idea in his book "Work Rules" [1]. It's a good read.

(disclaimer: I work at Google, although I read the book before I joined. I remember initially thinking the book was just corporate PR, but later I had the opportunity to see firsthand how accurate it was)

[1] https://smile.amazon.com/Work-Rules-Insights-Inside-Transfor...

The self-replicating hubris machine seems to be functioning as well.

It also means that their employees aren't being paid as well as they should be. It also means that they are enjoying a monopolistic position.

Usually, when a business is as lucrative as google's, competition arrives. But it seems like tech doesn't work that way.

For example, if a chicken restaurant is making $1.5 million in revenue per employee, then you'd see tons of chicken restaurants pop up to compete. Even the employees, seeing such extraordinary revenue, would quit and open up shop. But for a variety of reasons, tech doesn't seem to work that way.

Is it lack of capital? Lack of opportunities? Lack of tech-oriented people? Lack of entrepreneurs?

> That's crazy

It's ridiculous. It's amazing how profitable large tech companies are. What's even more puzzling is why there aren't more googles/facebooks/etc, especially in other countries like france, germany, britain, etc.

Google has billions of users and has thrown out everything that doesn't scale, like support or customer service. A lot of support and content moderation is done by volunteers (there's a certain hilarity to the way the world's most valuable corporation recruits unpaid labor as if it's some sort of charity) in Google Local Guides or Google Help Center type stuff.

Also, the "cost per employee" can look artificially higher because they contract out so many of the support positions they do have. I think "employees" mostly constitute management, marketing, and engineers?

Who is counted in the 85k number? Are low-wage positions (like janitorial services) considered employees, or are they employed through subcontractors?

Google counts them differently. When I worked there a few years ago, it was 65k FTE, and 65k TVCs (Temps, Vendors, Contractors). TVCs included the shuttle drivers, janitorial staff, etc. but also included some part time / temp "typical FTE roles" like UX researchers.

My guess is that this 85k is just FTE

Subcontractor

That just means their lower margin work is performed by vendors and contractors.

Yes if you don't have any support staff it is easier to reach such numbers.

This is on purpose. If the number of support people is a linear function of the number of users, the business cannot grow past half the worlds population.

Yes I understand it is on purpose, but it is not a useful metric to use when measuring a company.

Many other companies that have more customers than Alphabet manage to have support staff. While I doubt Alphabet cares, I won't use one of their paid services until I can get support.

Seems like a good time for employees to unionize.

Because recenue per employee is dropping?

Ah didn’t realize it was dropping. However, it’s clear there’s a large discrepancy between average employee income and average revenue per employee.

Because perks and satisfaction are on the rapid decline. And salary too. Last year new employees were told that a new policy enacted after they joined would make then ineligible for stock refreshers their first year.