Revenue per Employee

About this episode

Dave Kellogg and Ray Rike discuss the significance of revenue per employee in modern business, tracing its historical roots and implications in the age of AI.

Dave "CAC" Kellogg and Ray "Growth" break down one of the oldest productivity metrics in business and explain why, in the age of AI-native software, it has never mattered more. This episode covers the full arc from Frederick Taylor's factory floors to Cursor's $3.3M per employee, with the rigorous definitional discipline the Metrics Brothers are known for. What We Cover: The metric's 100-year history. Revenue per employee traces its roots to scientific management in the late 1800s, gained traction as a Wall Street efficiency screen in the 80s and 90s, and became a standard signal of business model quality in M&A diligence. The core math is simple: annual revenue divided by headcount. What is not simple is how you define the denominator. FTE vs. employee: why the definition matters more than the formula. The E in FTE stands for full-time equivalent, not full-time employee, and that distinction drives real measurement decisions. How do you count a part-time contractor? What about 200 offshore developers on a third-party vendor's payroll? Ray and Dave walk through the practical choices, including why offshore headcount is almost never counted on a 1:1 basis and why that decision…

People in this episode

Hosts: Dave Kellogg, Ray Rike

Topics covered

• productivity metrics
• revenue per employee
• AI-native software
• business model quality
• SaaS benchmarks
• FTE vs employee definitions

Keywords

• revenue per employee
• productivity metrics
• FTE
• business efficiency
• SaaS companies
• benchmarking
• AI-native software

Mentioned in this episode

Organizations: Cursor, Benchmarkit, SaaS 100

Books & works: scientific management

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