Sunday, 14 April 2013

Tech companies compared to oil companies

Most people tend to think of oil companies as evil. They see something like the gulf oil spill and pipeline spills and they brand oil as evil. As a result most people have a negative view towards oil companies.

Tech companies on the other hand change society for the better and most people view tech companies as progressive and sadly "hip". But what if I told you that tech companies were doing something that was equally as destructive to spilling oil over the environment? That destructive force is not hiring enough employees.

Sadly the companies that do hire lots of people, like Microsoft, have a bad image. I blame the fact that the companies that do not hire enough people, the companies that people like actually make vanity products, instead of productive products. That's right instagram and facebook have more in common with cosmetics versus production. Beauty and vanity are like wine. A little bit is a fantastic part of living but too much of it can lead to problems.

If you take a look at this website you can see how much employees the average employee would make at a tech company.

http://www.web-strategist.com/blog/2013/03/18/social-networks-by-revenue-and-employees-facebook-stands-above-all/

Here is the chart.
Company2012 Reported RevenuesEmployeesRevenue Per Employee
Facebook$5,089,000,0004,619$1,101,753
Zynga$1,281,267,0002,916$439,391
Twitter$350,000,000900$388,888
Automattic (WordPress)$45,000,000150$300,000
LinkedIn$972,309,0003,458$281,176
Groupon$2,330,000,00010,000$233,000
LivingSocial$536,000,0004,500$119,111
Yelp$137,600,0001,214$113,344
Tumblr$13,000,000151$86,092
Foursquare$2,000,000100$20,000

You have probably heard that the middle class is being eroded and that the jobs of the past are not here today. Well, it isn't the fact that companies are not making money it is the fact that they aren't hiring enough.

As I have said before, the easiest way for a tech company to be triple bottom line is to hire more people. The only problem with this is that most of these companies don't actually charge money for their products. They have a very asymmetrical route to profit. As a business owner it would be really hard to base employee salaries over this asymmetric route to profit.

The worst part of the situation is that when companies charge money for products they are seen as uncool and usually frowned upon.

One day this bubble will pass and I welcome that day.




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