The most underrated metric in business
How to spot bloat, an unclear value prop, and a culture of busyness.
If I could ask only one question before investing in or joining a company, it would be:
How much revenue do you make per employee?
Not valuation. Not head-count. Not funding raised.
Revenue divided by number of people.
It’s deceptively simple, yet it exposes a company’s core truth:
A business defined by differentiation and efficiency, not by the number of people on payroll.
1. The myth of more
Start-ups worship head-count. “How big is the team?” is a leading question. Bigger teams feel like progress.
More roles. More projects. More meetings.
But more people doesn’t mean more value.
Low RPE (Revenue per Employee) is a warning sign:
pricing power is weak
operations are bloated
differentiation hasn’t clicked
growth is masking inefficiency
2. Metrics that cut through the fog
RPE slices through vanity metrics. It shows:
Craft: A $2M ARR team with three engineers and one marketer is doing something right.
Focus: Are they building a product or just adding layers of coordination?
Demand: Customers renew, refer, and rave without discounts.
These teams are run by a few doing meaningful work, not many doing busywork.
You can’t manufacture that with capital.
3. Optionality and durability
High-RPE teams survive downturns.
They don’t overhire. They move fast. They hold cash.
They say no more than they say yes.
Upside compounds. Downside stays capped.
4. A tale of two models
Airbnb generates about $1.6M in revenue per employee.
WeWork struggled at roughly $140K before its crash.
Same ambition. Similar global reach. Very different fundamentals.
Cost-heavy models punish RPE from day one and rarely recover.
Other high-RPE operators worth studying:
Nvidia: $3.6M
Netflix: $2.8M
Apple: $2.4M
Robinhood: $1.3M
Goldman Sachs: $1.15M
These companies have pricing power, product pull, and scalable models.
Not all growth is equal.
RPE makes that obvious.
Benchmark data by Blair Enns.
5. What this means for builders
Hire slow. Charge based on value delivered.
Before every hire, we should ask:
Will this raise our revenue per employee or drag it down? If it does drag it down, it better have a very compelling reason.
High RPE forces discipline.
A new compass
More and more founders are tracking RPE and it’s one I often look at while building Sarwa. I wish I used it earlier. It’s a compass for creating a truly differentiated investment platform, not just another brokerage.
If the ratio slips, we tighten the plan. If it climbs, we earn the right to add muscle. Simple.
Because when RPE is low, it doesn’t feel like you’re building a great business. It feels like you’re running a charity. The answer isn’t just to cut costs.
It’s a signal that something deeper is off:
pricing, positioning, or the product’s reason to exist.
If RPE is broken, capital just hides the symptoms. Build something so differentiated people gladly pay for it. We don’t need more capital. Ask: Is the team too big? Are you pricing based on value or costs? Is the product worth paying for?