Private, profitable, and people-first, we’re celebrating our 20th birthday. I’m Natalie Nagele, Co-Founder and CEO of Wildbit. AMA!

[natalie (Natalie Nagele)]

@brendan

Hi Natalie! Huge fan here! So excited to read through all your answers.

I was curious if you could expand on why revenue per employee or profit per employee is a poor metric for success and where you’ve seen it go wrong.

We run Wistia open-book and have a profit sharing program. We don’t talk directly about revenue or profit per employee but it wouldn’t phase me to talk about that with the company. We do talk a lot about how a healthy, profitable business is good for the team and for the community, and this seems like it fits in to that.

Hi Brendan Revenue per employee is a metric we’ve thought about in the past, too. We also do profit-sharing and run open-book with the team. I realize that revenue per employee is a metric designed to counter the VC model of burn and spending more than you make. As a private business we care deeply about profitability, because we have to. Raising funds isn’t an option for us. But lately I’ve been questioning if this metric is truly in support of being people-first.

In my mind a business is simply a tool used to improve the lives of human beings. The owners, the employees, the customers, and the community. Revenue per employee leans very heavily on prioritizing owners, at the expense of the team or your customers. To maximize revenue per employee you really want to focus on optimizing efficiencies. This leads to decisions like hiring fewer support folks (and then customers suffer). Or when you hire fewer engineers and their on-call schedule is brutal because there aren’t enough people to balance the load.

I’ve been thinking a lot about how we can use our business as a tool to maximize positive impact. I’m a big fan of founders paying themselves. Chris and I have always prioritized financial stability as the company grew. We never wanted to be martyrs or find ourselves in a vulnerable position. So I’m not suggesting that as founders you should be putting yourself last.But it is a question of who else are you supporting, other than yourself. If we think of a business as a tool, the most direct impact it can have is by employing more people. Because every person you hire has impact on countless others (their families, their communities, etc). So the question I keep asking myself is, if you run a profitable, people-first business, should you be hoarding cash? Or instead, should you find ways to balance the need for profit while spending those profits in ways that maximize impact.

I sound a bit like a socialist, but I assure you I’m a capitalist (I was born in Russia, so I pinky promise). I just believe in a more ethical way to build these businesses. And in a real way I want to be sure that our business has more impact than just making Chris and I successful.