Anil Dash Is the New CEO of Fog Creek Software
joelonsoftware.com
joelonsoftware.com
So at a typical benchmark of $500,000 of revenue per employee they should be making atleast $150,000,000 per year in revenue. I have to imagine that they are making much more than that, given that I've seen valuations of $500 million.
http://www.businessinsider.com/revenue-per-employee-at-apple...
I'm going to give them the benefit of the doubt and assume that they are still very lean and well run, I'm a big fan, but the fact that they do data dumps makes me feel much better.
I've seen too many bankruptcy/wind downs of companies, and one thing you can usually bet on is that once that process starts, the data gets locked up and treated the same as any other asset, which is to say, sold to pay debts. Or put another way, once a company gets into trouble, releasing their data often gets taken off the table as an option.
Again as a reminder to startup employee's, the company was founded in 2008 and hasn't really had any talk about going public or selling, so always make sure you get atleast a market salary from any startup you join as your options even at a well run company could take more than a decade to provide you with liquidity.
EDIT I can't math
Isn't that 150 million a year in revenue? If so, 500M is about right assuming a 3x revenue valuation.
Best advice that I've read here in awhile.
TL;DR is most successful tech companies at scale make > $300k/employee in revenue.
Here's something I saw a while back:
http://www.businessinsider.com/top-tech-companies-revenue-pe...
Also this more recent edition:
http://www.businessinsider.com/revenue-per-employee-at-apple...
and this:
https://www.statista.com/statistics/217489/revenue-per-emplo...
It can vary a lot by industry. A number of recent unicorns are glorified restaurants or retail shops that happen to deliver their product over the web or smartphone. Their revenue/employee numbers are going to be much lower because they don't have any significant proprietary technology to build an economic moat around, and their employees cost less.
Then there's a question of what multiple should be attached to their valuation. That would be driven by growth, margins and customer retention. Since their revenue model is similar to LinkedIn, perhaps their 8X multiple would be correct? That would put the value at $360mm. Given the wide variety of built in assumptions, I'd put it anywhere from $180mm to $540mm.
One other way to get at their valuation... How much would their investors have demanded for their $40mm investment? If it's 20%, then you'd have a $240mm post-money valuation in 2015. Are things going better or worse than their investors would have planned for? I'm not qualified to make this judgement, but if you assume it's the same, then we're at the lower end of the $180mm to $540mm range.
Net - I don't agree with your math, but your conclusions are sound. :-)
I've followed Stack Overflow from before the site hit beta. At the time, Joel and Jeff put out a podcast every week talking about software development and the new "project" they were working on that ended up being Stack Overflow.
It still feels like they had just made their first few hires.
I'm completely blown away they have 300 employees now. The last I had seen they had what looked like half a dozen closed door offices for their developers.
Does Stack Overflow also encompass Stack Exchange or is that a separate entity?
This is really, really cool, and he's a great fit for the job - along with the talented team over there. Super excited about this, personally.
But if Fog Creek Software is tasked with coming up with more products and software-as-services, I would've thought that Spolsky would be more fit for that, even if StackOverflow is the biggest piece of the pie? (I admit to knowing little of how executive structures work though)
Fog Creek probably doesn't lack for smart engineering people, but might benefit from someone who has a wider view on media and society in general - as well as enterprise sales, which Spolsky calls out specifically. Tech people and engineers, on the whole, loathe enterprise sales.
Dharmesh Shah and Brian Halligan at HubSpot spring to mind two guys who you might not ordinarily put together but they've both got a big role, and it's the same kind of deal. Shah is an engineer and a hacker, Halligan is more of an old-school sales guy.
The reason why this is a smart move is the same reason why it is counterintuitive.
Was always a dream to build a company like that, one day maybe.
That said, the tenses and general grammar of the whole sentence don't really hold up to the usual Joel standards and sits very strangely.
Sorry to see that happen, but it does.
"A typical startup is built around a single product, and some theory that people will pay money for that product. This theory eventually become false, and the company goes away."
The link to towerrecordsmovie.com is suggesting that many single-product companies outlive their product's usefulness, such as Tower Records. Tower Records was a large seller of physical music media (CDs, Casettes, Vinyl) which went out of business in the mid-2000s.
The author is suggesting that since Fog Creek is not a single-product company that this does not apply to them.
A lot of the time when a product or service appears to have 'gone away' it's actually moved on to serving a different audience with different needs.
Hopefully one of the early things you'll be focusing on is the diversity of GoMix's technology (including building accessibility in by default) and its community. There's huge potential, and a great chance to address it at a relatively early stage.
It seems like the positions listed here http://www.fogcreek.com/careers are support roles instead of product roles.
So the lesson is that once a company has "made it" they should diversify so that they aren't dependent on a single income stream.
You should totally watch the film, btw. I used to shop at the Watt Avenue store in Sacramento, and the breadth of titles they carried was amazing. Easily five times the product that a store like Sam Goody would carry, and in niches you'd never see anywhere else. If there were such a thing as Celtic Rap, Tower Records would have carried it.
As I understand it, the Dublin franchise became independent of the Tower parent company some years past – or at least they advertised themselves as being “independent”.
Which still makes Fog Creek pretty amazing.
As a counterexample, while I obviously don't know that Kiln would have thrived if it had gone a different direction, I do know that being locked into FogBugz' business model, instead of having the freedom to innovate our own, did ultimately stunt our growth quite a bit. FogBugz charged by the user, and so Kiln had to charge by the user, but this really hurt us. First, our costs scaled by repositories' size and count, not by users (which were basically free for us as such), so our costs didn't necessarily have anything to do with our revenue. Second, charging by the user is a horrible idea for an SCM. FogBugz could reasonably provide a clear separation between tools using its data and people using its data (since the only UI was the website), but in the world of DVCSes, it's really tough to provide the same distinction. Many people happily just used things like TortoiseHg and treated Kiln as a code backup service, so having no-website accounts wouldn't have accomplished much. We ended up forced into an awkward position of creating deliberately hobbled modes of access for tools that would by definition be prohibitively obtuse for humans, or telling people to shell out an extra $15/mo just so Jenkins could talk to the thing. Kiln switching to its own business model while remaining at Fog Creek would've been theoretically possible, but when business decisions that might be good for your new product will hurt your legacy product, that's a really tough argument to make. Having Trello and StackOverflow at their own companies completely avoided that problem.
The downside, of course, is redundancies and frayed vision. In a world where Trello and StackExchange remained at Fog Creek, I can imagine Fog Creek being the productivity company, with all of these tools tightly integrated à la Microsoft Office and presenting a coherent vision of how to develop software. You won't get that if you're spread across multiple companies. And, of course, you can end up in situations where, specifically because of all the reasons I pointed out above, two of your companies are going at each other a bit (e.g. Trello vs. FogBugz), which, even if subtle (those products don't honestly actually compete much), means you're spending at least some money competing with yourself. And, of course, you lose out on being able to easily move employees from one company to another, reusing technology amongst multiple companies, etc.
I'm sure there's more, but those are ones I remember seeing while I was still there.
tl;dr - Gave investors the ability to invest solely in Trello instead of all of Fog Creek.