The Minimum Revenue per Employee for Startups and When to Go Multi-Product

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Startups need to aim for a minimum revenue of $300,000 to $400,000 per employee to build a sustainable business model with economies of scale. Historically, successful software companies like Adobe, Microsoft, and Intuit achieved $1 million in revenue per employee. In 2021, the revenue per employee for unicorns hit a low of $100,000, illustrating a significant decrease in efficiency. Public SaaS software companies are now operating at $300,000 to $400,000 per employee, with examples like HubSpot at 310 and Cloudflare at 400. It's crucial to reach this revenue range to ensure profitability and scalability. Startup founders must assess their product's profitability, gross margins, and scalability to bridge the gap to the ideal revenue per employee. Going multi-product is a strategic decision for startups, typically recommended when reaching around $10 million in revenue.

Episode 571: Sam Parr (https://twitter.com/theSamParr) talks to Jason Lemkin (https://twitter.com/jasonlk ) talk about the 7 rules of building a $100M business.

Want to see Sam and Shaan’s smiling faces? Head to the MFM YouTube Channel and subscribe - http://tinyurl.com/5n7ftsy5

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Show Notes:

(0:00) Jason Lemkin’s first million

(4:19) The rules of getting to a 9-figure exit

(5:32) Rule 1: New minimum is $400K per employee

(7:58) Rule 2: Go multi-product

(9:40) Rule 3: Your second product must be bigger than your first product

(11:05) Cheat code: Double your prices

(13:48) Rule 4: 30% of your revenue is international

(15:43) Rule 5: Localize your product

(19:05) Cheat code: Remove friction

(22:42) Rule 6: 100% net revenue retention

(29:01) Business models that won’t get you there

(33:38) $100M conferences

(39:35) Rule 7: Don’t raise double digit millions

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Links:

• Saastr - https://www.saastr.com/

• HLTH - https://www.hlth.com/

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• Hampton - https://www.joinhampton.com/

• Ideation Bootcamp - https://www.ideationbootcamp.co/

• Copy That - https://copythat.com

• Hampton Wealth Survey - https://joinhampton.com/wealth

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Check Out Shaan's Stuff:

Need to hire? You should use the same service Shaan uses to hire developers, designers, & Virtual Assistants → it’s called Shepherd (tell ‘em Shaan sent you): https://bit.ly/SupportShepherd

My First Million is a HubSpot Original Podcast // Brought to you by The HubSpot Podcast Network // Production by Arie Desormeaux // Editing by Ezra Bakker Trupiano