- $25K ARR per person with >40 employees.
- $50K ARR per person with >100 employees.
- $100K ARR per person with >1,000 employees.
There are plenty of independent SaaS businesses that make it past $200K ARR per person with teams of <10.
Which is great for companies aiming to stay small and self-bootstrapped. There's nothing wrong with this model for founders who want to stay independent.
The VC alternative allows companies to grow faster than organic revenue growth might allow. It can take a long time for a 10-person company with $2mm ARR to grow to $2.2mm ARR so they can hire the next person they need. Alternatively, they can take VC money and hire the next 100 people they need without waiting for revenue to get there first.
One model isn't inherently better than the other. The important thing is for founders to decide which type of company they want to be and stick to it. A founder who wants to grow organically is going to have a bad time if they take money from investors who want growth. A founder who wants to grow as fast as possible is going to have a bad time if they're constantly stuck waiting for organic growth to let them make the next hire.
The point is if you’re in a VC heavy space, you often have no choice but to dance along with the music.
This is what I understood it to mean: a startup grows marketshare rapidly with VC money infusion in an easy money environment. But when credit dries up like it did in 2008, the startup could be left hanging as VCs might not fund the next round of their previously star startups as they want to deploy resources to their absolutely top-rung startups. So, even good startups can be left stranded.
That's the feeling I have. Would like to know if my thinking is on the right track.
EDIT: Oh per person, I missed that part. Still though, that puts us at over $50k ARR per person at an org size of 2. However it also makes the comparison completely pointless.
How many of them become billion dollar companies in less than a decade though?
In this case I think the ARR per person is probably more of a proxy for "are you growing fast enough?" rather than the number itself mattering.