How many employees do you have?
Unfortunately, the answer to that question will be how many people judge your achievements as an entrepreneur.
Tell them you have a couple of full-time people, and they may look down on you as a “wannabe” entrepreneur. The same person may judge a ten-employee company as a quaint pastime and only really be impressed if you tell them you have hundreds of staff.
As a founder, you’ve probably experienced this bias. Perhaps you’ve even been tempted to inflate your headcount by including contractors and part-timers to make your company sound more significant than it is.
However, evaluating your business based on its payroll is not a particularly revealing way to assess what you’ve built. Instead, estimate how much business value you’ve credited per employee in your company. That can be an enlightening way to evaluate how efficient your company is at turning human capital into the financial kind.
For example, at this writing, Apple has a market cap of around $2.8 trillion and 150,000 employees, meaning they have created a staggering $18.6 million of business value per employee.
Tesla has a market cap of $915 billion generated by about 70,000 employees, or roughly $13 million in value per employee.
Alphabet (parent company of Google) has a market cap of $1.88 trillion and about 150,000 employees, or around $12 million of business value per employee.
UK-based Unilever has a market cap of around $132 billion U.S. dollars and about 150,000 employees, meaning they’re trading at around $880,000 per employee.
In contrast, General Motors has a market capitalization of $78 billion on the backs of roughly 155,000 employees for a modest $500,000 of business value per employee.
Value Per Employee in Smaller Companies
Value per employee applies to smaller companies too. Take a look at the fantastic story of Rafael Zimberoff, who started ShipRush.
ShipRush helps businesses streamline their supply chain and reduce transportation costs by automatically importing orders, comparing carrier rates, printing shipping labels for all major carriers, and tracking through final delivery. ShipRush integrates with a raft of e-commerce companies, marketplaces, and payment and accounting sites, including Amazon, Big Commerce, eBay, Etsy, Magento, QuickBooks, Rakuten, Shopify, and WooCommerce.
Zimberoff recently went to sell his 12-employee company for a whopping $17 million, or the equivalent of more than $1.4 million per employee—a fantastic accomplishment with a dozen staff.
Next time someone asks you how many employees you have, tell them proudly knowing it is not the number of employees that matter as much as the value you create together.
