Based on what what’s app, Netflix, Instagram has been able to accomplish with relative small HC, latter for sure. Netflix has highest revenue per employee amongst all biggies!
Question for economists: Can you think of a way to tell whether headcount is more a cause or an effect of revenues? I've always suspected it's more the latter than most people think.
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Depends on the phase of startups lifecycle.
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Coase's theory of the firm, basically. Firm will expand adding less and less profitable activities as long as they still outperform other investment options.
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I mean, that's basic micro. What Coase added to it is basically the insight that there's such a thing as management overhead and that's why firms don't all grow into ginormous natural monopolies.
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Productivity =! # of people, specially as tech is implemented for productivity increase.
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Do, it’s more of a result than the cause.
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If it's more the latter then after hostile takeover should see profits go up as a result of new owners firing lots of employees.
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Look at revenue alongside num of employees graphs of many succesful startups might give you an idea
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Seems like a question for
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Remembering Econ 101, there are 4 factors of production: land, labor, capital, entrepreneurial activity. Also remembering, the brand new Nobel laureate
@paulmromer, the output is (to simplify) a product of all these factors. So, holding other things fixed <continued below> -
, initially, headcount is the cause of revenue, but as revenue increases, in the next stages of production, more people are hired, and they are cause of the next period's revenue, but an effect of the previous period's revenue. So, it's both. Dynamic system, you know.
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