
Ratio Of Engineers To Sales People In Billion Dollar SaaS Startups - lukedeering
http://tomtunguz.com/saas-spend-allocation-benchmarks/
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kken
This posting is spectacular in quality compared to what we usually get to see
here.

1) It uses proper graphs for information display. Note the box plots with
quantiles, and properly scaled axes. And the first plot which denotes the
confidence intervals.

2) Actual numeric data is shown in tables.

3) The source data is avialable.

Well done! More of this, fewer "Infographs" plz.

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beambot
On that first graph, for year one the percent of revenue spent on the team
(using the means) exceeds 100%...? The mean for R&D is ~50%; for S&M it's 90%.
How does that work? Is this due to fundraising?

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smilliken
Exactly, these companies aren't profitable yet.

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mmanfrin
Unrelated to content: please, please, _please_ do not add on select-actions
like the tweet button that appears after selecting text. I habitually select
text as I'm reading, and I know there is a significant group of people like me
who do the same. Having a button appear on selecting text is sincerely
annoying.

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onedev
Yeah that was incredibly annoying.

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dpcheng2003
Warning: Some generalizations and hyperbole...

It was typically true that engineers have high leverage, productivity and
scale, whereas sales people do not. When traditional enterprise software was
sold, it was done primarily through the "hunter" sales model and sales people
were compensated accordingly to bringing in big deals. Sales grew revenue,
which meant that if you hired more sales people at an established company,
you'd have more revenue. This is why in the 1990s, if you met a tall white guy
at a bar in San Carlos driving a nice car, he was probably an Oracles sales
person (a bit of hyperbole).

The nature of enterprise sales is changing, not just because it's gone to
SaaS/subscription. One of the key changes in the last few years is the growth
of measurable analytics in marketing. You see, marketers and sales people are
not the same. In the old days, marketers couldn't measure the impact of their
marketing investments. There were loose correlations between marketing and the
leads they generated for sales. But now, because of analytics derived from
marketing software, you can actually draw conclusions on which marketing
campaigns were the most effective from impression to conversion.

What does this mean for this post? 1. I think we're going to see fewer sales
people per engineer. We likely won't see a huge growth in R&D spending; we
will see less dollars spent on expensive sales people. 2. Marketers will
become more hybrid product-sales-analytics people (like growth hacking), which
means there's a great opportunity for data-driven commercially-focused
engineers to transition towards this greenfield area in marketing.

TL;DR: Selling enterprise software has changed so the ratio of sales:engineers
will go down in the next 10-15 years.

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allochthon
Interesting writeup.

 _First, these ratios aren 't a recipe for success, just data to inform
decisions. Each business is different because of the industry they serve, the
go-to-market strategy and the particularities of their customers acquisition
processes._

I wonder how much of the prioritization on spending fed back into the success
of these SaaS companies, and how much of it was due to prevailing trends in
management theory that influenced the course of the startup as it was given
funding and ramped up? In other words: how much of the ratio of spending on
developers v. sales and marketing was data-driven, and how much based on fad?
I get the sense that there is a bit of an echo chamber in the tech industry
that can influence what businesses do when they receive angel funding and VC.

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Jormundir
I actually really like the graph in the article because I think it portrays
the value of engineers. They're expensive up front, but if they use good
programming practices, the work keeps paying dividends again and again over
time without a whole lot of additional investment.

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epa
Nice information, but what would be more useful is to add a line showing gross
profit. We would amuse that profit would be low in the first few years and
then increase as the years pass, showing the decline in the money spent on
engineers and sales staff. Although it would be interesting to see if gross
margin is falling 20+ years in, as sales staff focus is increased.

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mattbarrie
Your median revenue numbers look wonky

