In Meta’s latest financial release, Mark Zuckerberg called 2023 as the “year of efficiency.”
That is a great title to explain what’s going on, right now, in big tech.
So I went on, and dived into Big Tech financials, to figure who’s “the most efficient big tech player.”
For the sake of it, I’m looking at how much revenue per employee each tech giant made in 2022.
Of course, I want to clarify that this is in no way a comprehensive metric, which explains the whole business, neither it wants to mean anything, rather than guessing which company is able to generate more revenue out of each employee.
If at all, this can give you a bit of context around how each company is able to capitalize on its workforce, while maintaining a business at scale.
And, also how, often, companies, to keep their business model efficient make broad cuts. Thus, by monitoring this metric, you can understand when big tech players might be considering layoffs, as a way to get back their business model efficiency.
Can you guess who wins here?
Apple is the clear winner when it comes to revenue per employee, as the company generated over $2.4 million per employee, in 2022.
With the iPhone still representing a good chunk of the company’s revenue, and with its wide margins, Apple is one of the most effective companies in the world.
Indeed, Apple has figured a model, where it keeps tight control over the design of chips and products, while everything else is mostly outsourced.
The other printing machine is Google, which, in 2022 generated over $1.5 million in revenue per employee.
Considering that Google is the major player in the digital advertising industry (with Google Search, Network and YouTube), that might come at no surprise.
Thus, as you might imagine, the other printing machine is Meta, that in terms of revenue per employee is very close to Google.
Indeed, Meta generated over $1.5 million per employee in 2022.
Meta, through Facebook and Instagram has generated more than $113 billion in advertising revenue in 2022.
I was surprised to see how Microsoft compared to the other big tech players.
And while Microsoft is mostly a software company, its revenue per employee never passed the million dollar mark!
No wonder then, that Microsoft is trying to steal Google’s advertising machine.
If Bing were to become a large digital advertising player, this would enable Microsoft to get a piece of an industry, which enjoys wide margins for the ones that are at the top.
Tesla is a quite interesting case.
As the company is a player in the auto industry, you might expect it to have a much lower revenue per employee.
And yet in 2022, Tesla reported over $600K revenue per employee.
Since the company has been working on scaling up its manufacturing, it has also been radically improving its revenue per employee.
The interesting thing about Tesla is as much of a software company, than an automaker…
You might also be surprised that Amazon only makes over $300K in revenue per employee.
And yet, it’s worth to remind that, while Amazon started as an e-commerce website, in reality, most of its moat is into distribution, in the form of inventory management and fulfilment/last-mile delivery.
Thus, Amazon, to work at its scale, requires massive operations, that are very expensive to run.
Another factor is Amazon employees a massive amount of part-time workers, which lowers up its total revenue per employee. Indeed, we can easily speculate that a segment like Amazon AWS’s revenue per employee might be comparable to that of Apple or Google!
Below is a recap!
Big Tech Efficiency
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