I was reading Scott Belsky’s latest piece on the premium of originality and the metric of revenue per employee. Something I’d highly recommend you take five minutes to do so. While I do have my thoughts on originality in a time of AI, I’ll probably save that for another piece. For the purpose of this one, I’d love to spend it on the topic of talent in the current AI age.
I was co-hosting a retreat recently. The same one that produced this. Selfishly said, I think it was one of the highest insight per time spent retreats I’ve been apart of. And my friend who invests out of a multi-stage fund was sharing how talent became the new medium to evaluate an AI founding team. During diligence, for each engineer, “would OpenAI/Anthropic/Cursor pay $500K or $5M for this engineer?” Then you have an idea what’s the asset value from a talent perspective.
Similarly so, in a recent 20VC interview, Carles Reina, VP of Sales at ElevenLabs, shared that every sales hire must bring in sales equivalent to 20X their salary. So the more you pay a sales rep or account executive, the more revenue they have to bring in. Which leads me to Scott’s piece.
“A funny thing happens when the ROI (return on investment) of a person goes up: we start deploying MORE people — BUT only in ways that sustain or increase the ROI. Rather than larger organizations within a company, you’ll have MORE smaller organizations. My bet is that companies will deploy more people NOT to scale their existing products and services, but rather to launch new products and services.”
“If every hire makes “revenue per employee” either go up or down, how does that factor into headcount planning? Will we seek to hire more-entrepreneurial people who will come up with new products and services within the company? Will modern forms of compensation provide incentives for brazen agency, rewarding those who realize that they can just DO THINGS and own the outcome — from idea through execution?”
This again reminds me of the bundling-unbundling cycles with each wave of technology and/or business models. At the start, there are all these fragmented businesses solving niche use cases, but over time, as winners emerge, people want a one-stop shop for everything. Although this time, the one-stop shop could just be you yourself.
That’s probably also what makes my buddy Henry’s Lean AI Leaderboard so interesting. Bragging rights not to who has the most employees, but who has the greatest revenue per employee metric. The very definition of small but mighty.
Photo by Prabir Kashyap on Unsplash
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