👋 Hi, it’s CJ Gustafson and welcome to Mostly Metrics, my weekly newsletter where I unpack how the world’s best CFOs and business experts use metrics to make better decisions.

(Note: this post has been updated for an error in the VC return math. I wasn’t properly compounding each year’s returns, understating how efficient firms can be.)

I've long said that Revenue per Employee is the GOAT of SaaS metrics.

If 70% of tech company costs walk on two feet, you’d wanna know how much operating leverage you’re squeezing out of that spend. The simplest way? Stack your topline output (revenue) against your means of production (employees).

✅ Simple – No fancy adjustments, just revenue divided by headcount.✅ Comparable – Works across industries and company sizes.✅ Cuts through the noise – No GAAP tricks or stock-based comp fudging.

I recently got into a debate with a friend: Are venture capital firms actually more efficient businesses than the companies they invest in? (How meta.)

So, I decided to run the numbers (LOL) and find out.

As a baseline, the median public tech company we track is putting out about $400K per employee.

Some outliers:

(You’ll notice that fintechs and marketplaces absolutely RIPPP at scale.)

Initially, I considered using publicly traded investment firms like The Carlyle Group, Thoma Bravo, and Warburg Pincus. But they’ve all become multi-strategy shops, making it tough to isolate their pure tech investing arms from their Quantum Credit Dislocation or Collateralized Synthetic Yield Optimization plays.

So instead, let’s throw some paint against the wall and estimate using VC firms that primarily invest in early- to mid-stage companies—think Benchmark, Index, or Founders Fund-ish.

Venture firms monetize through two main levers:

Management fees are recurring—the closest thing to "ARR" for a fund. Carry is performance-based and only unlocks when they exit investments.

🔥 Takeaway: The VC firm’s carry profit is $4.29 billion.

Before diving into comparisons, let’s pause on something wild:

A fund returning 25% annually (which is really good and not easy to do) actually makes 7x more off carry than management fees over its lifecycle.

Now, this isn’t easy. You could easily throw up a 12% IRR and be in a much less appealing situation due to the impact of compounding.

This clearly explains why some firms prioritize AUM growth (scaling 2% fees on a massive base) while others focus on absolute returns (maximizing carry on high IRRs).

(I digress...)

The most sensitive factor in this analysis is the relationship between employees and AUM.

IRR also impacts revenue per employee, since higher returns generate exponentially more carry.

I’ve laid out scenarios across various staffing, fund size, and return profiles below.

🔥 Takeaway: $8M per employee is more than 24x higher than the median tech company.

🔥 OK, This is getting outrageous.

🔥 Even at mega-fund scale, VC firms crush tech companies on efficiency.

And my ultimate takeaway? No one is beating OnlyFans. With an estimated $31M per employee, it’s in a league of its own. Mic (web cam?) drop.

TL;DR: Multiples are UP week-over-week.

Top 10 Medians:

Revenue multiples are a shortcut to compare valuations across the technology landscape, where companies may not yet be profitable. The most standard timeframe for revenue multiple comparison is on a “Next Twelve Months” (NTM Revenue) basis.

NTM is a generous cut, as it gives a company “credit” for a full “rolling” future year. It also puts all companies on equal footing, regardless of their fiscal year end and quarterly seasonality.

However, not all technology sectors or monetization strategies receive the same “credit” on their forward revenue, which operators should be aware of when they create comp sets for their own companies. That is why I break them out as separate “indexes”.

Reasons may include:

From a macro perspective, multiples trend higher in low interest environments, and vice versa.

Multiples shown are calculated by taking the Enterprise Value / NTM revenue.

Market Cap fluctuates with share price day to day, while Total Debt and Cash are taken from the most recent quarterly financial statements available. That’s why we share this report each week - to keep up with changes in the stock market, and to update for quarterly earnings reports when they drop.

Historically, a 10x NTM Revenue multiple has been viewed as a “premium” valuation reserved for the best of the best companies.

Companies that can do more with less tend to earn higher valuations.

Three of the most common and consistently publicly available metrics to measure efficiency include:

A few other notes on efficiency metrics:

Decreasing your OPEX relative to revenue demonstrates Operating Leverage, and leaves more dollars to drop to the bottom line, as companies strive to achieve +25% profitability at scale.

The most common buckets companies put their operating costs into are:

All of these are taken on a Gaap basis and therefore INCLUDE stock based comp, a non cash expense.