Oil/Gas and financial lending companies are making huge profit margin, well above that of the tech companies. But I never heard of them paying tech level wage to regular employees. Within tech companies, Broadcom also surprised me, being a mostly semiconductor company, I thought the margin must be pretty low. But it's actually more than Meta, Google, Netflix, etc. https://www.visualcapitalist.com/profit-per-employee-top-u-s-companies-ranking/
Now try market cap per employee. Tech reinvests profits into growth which is different from oil/gas.
Yes, other statistics would show different things. I see this statistic as operational efficiency and ability to pay its employees.
Most of the pay in tech comes from rsu which is directly tied to stock price and market cap. Cash component is usually tiny. So you can’t look at ability to pay employees without looking at market cap/stock price.
Depends on the energy company. A lot of them offer full remote with “average” pay and to me that’s better than being in tech and forced into an office tbh. Duke energy, Sunnova, and EoG resources all have had recruiters offer me full remote before. Duke paid the highest, then EOG, and then Sunnova. Sun run is Sunnovas biggest competitor and they pay a good amount too full remote
I think gross profit per employee makes more sense because the profit is calculated AFTER paying employees. The profit per employee measures how efficient the company runs but gross profit per employee measures how well the pay can potentially be. From my calculations it pretty much aligns with the top pay company in tech, Airbnb, Meta Netflix are top 3 gross profit per employee.
Gross profit per employee doesn’t mean anything for tech. OpenAI is serving 200 million DAU with 1000 employees.
I don't understand your statement, I was talking about gross profit, you are referring to another metric.
Per employee anything is bullshit. OpenAI made 100b in revenue last 12 months let’s say with 1000 people. Now if they hire 20k more people, do the additional 20k people bring in the same revenue/profit or do they decrease it? Going by this logic, openAI needs to have 2 trillion in revenue because they hired 20k more people. For reference Apples annual revenue is 1/5th of that under 400b Oil and gas assets costs tens of hundreds of billions of dollars to setup and become profitable. A new employee is a cost, has no bearing on the profit/revenue that’s generated from the business that existed before they arrived. Read about the concept of marginal utility in economics
You’re talking about revenue for OpenAI, but are they even profitable? This is about gross profit per employee, not revenue. They’re also heavily backed by Microsoft and venture capital. Even then they seem to still report heavy losses. https://sacra.com/c/openai/
Companies in growth phase are measured by revenue growth. Companies in matured business cycles are measured in profits. Are you saying the 1000 OpenAI employees are responsible for the “loss”? Then they should be less valuable than even MSFT employees because MSFT is profitable? In any case you are making the same point. The effect of additional employees is not linear no matter which metric you consider. Bitter pill for most people in tech because they attribute profits to their employment.
One thing that a lot of people miss is that tech has A LOT of maintenance work. Meaning you need armies of engineers just to maintain revenue. When CFOs force lay off of some fraction of engineers, it seems all ok for the short term because margins go up, boosting the stock price. But this one move increases workload on remaining engineers so much that they cannot work in revenue increasing efforts because they are overloaded with maintenance. When the market turns again, CFOs give the budget to hire more. Execs think that just hiring more engineers will raise revenue again but alas, it takes 12-18 months for them to be really useful - to understand the complexity of the tech stack and deliver something and then for customers to benefit from those efforts. And this is the best case where everything goes well. Worst case, new hires just don't ramp up well or the market changes again. So, profit per employee, while a nice metric, belies the fact that letting go of engineers with context has long term issues for the company.
How about nvidia.. close to 50b in revenue with 20k employees? 2.5 m/employee revenue
Article is comparing net income not the revenue.
Broadcom is probably $750K per employee before VMware acquisition. $15bn for 20k employees based on 2023 financial.
Broadcom’s 2023 rev was $35.8B and with 20,000 employees before VMware acquisition, it’s $1.79M rev per employee
I was talking about net profit not the revenue.
Tech companies have this existential dread that a startup could steal their market at any moment so they pay way over market to suck all of the talent away from entrepreneurial endeavors, even if they have no real work for them. It is a defensive strategy. Oil and gas primarily builds strategic moats via large capital investments like pipelines and rigs that are difficult to reproduce, and exclusive contracts for resource rights. Financial companies absolutely do pay well above market for top talent, and even arguably pay better than the tech companies. They also have some success in building moats via accessing channels for large capital investment. It is easier for a top trader to walk into a financial firm and make a small commission trading with billions of dollars than to fundraiser those billions themselves and make a somewhat larger commission.