<story><title>Zynga Lays Off 15% of Its Workforce</title><url>http://techcrunch.com/2014/01/30/zynga-layoffs-2/</url></story><parent_chain><item><author>ChuckMcM</author><text>Its not that weird. They had 200M in revenue last quarter[1] with about 2000 employees. That is about $100K&amp;#x2F;employee, since employees probably cost more than that at the median, its not really a sustainable strategy. Swap out employees who are making more $&amp;#x2F;employee to boost the average and maybe you have a going concern.&lt;p&gt;[1] &lt;a href=&quot;http://investor.zynga.com/releasedetail.cfm?ReleaseID=800274&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;investor.zynga.com&amp;#x2F;releasedetail.cfm?ReleaseID=800274&lt;/a&gt;</text></item><item><author>h2s</author><text>Eagerly looking forward to the explanation for this weird juxtaposition.&lt;p&gt;&lt;a href=&quot;http://i.imgur.com/huUv09m.png&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;i.imgur.com&amp;#x2F;huUv09m.png&lt;/a&gt;</text></item></parent_chain><comment><author>ChuckMcM</author><text>Interesting, so its $100K in revenue per employee per quarter, that is annualized out to $400K&amp;#x2F;employee&amp;#x2F;quarter.&lt;p&gt;Note that it isn&amp;#x27;t that people are being &lt;i&gt;paid&lt;/i&gt; $100K per quarter, it is that &lt;i&gt;the business&lt;/i&gt; generates $100K in revenue per quarter per employee. When you manage a business one generally has a model, generally that model starts with revenue - cost of goods or &amp;quot;gross margin&amp;quot;, in an info business like this I tend to model the Operational expense of &amp;quot;operations&amp;quot; (the folks who run the server, the cost of IP transit service, co-location fees, etc) as the &amp;quot;cost of goods&amp;quot; (basically the amount of money you&amp;#x27;re spending to make the product available for the customer).&lt;p&gt;So you start with that Gross Margin and your business model is the formulae you use to &amp;quot;spend&amp;quot; it. In old school tech companies you&amp;#x27;ll spend x% of your gross margin on &amp;quot;R&amp;amp;D&amp;quot;, y% on sales, z% on customer acquisition etc. And at the end of the trough is your &amp;quot;net profit&amp;quot; which some folks report as free cash flow. So lets say Zynga spends 10% of their gross margin on R&amp;amp;D, then the money available for R&amp;amp;D would be $100K * GM * R&amp;amp;D margin. To work an example lets say Zynga&amp;#x27;s margins are 80%, 100K * .8 * .1 is $8k&amp;#x2F;quarter available for our R&amp;amp;D employee during the quarter. That is not even $3k&amp;#x2F;month or $36K&amp;#x2F;year &lt;i&gt;loaded&lt;/i&gt; cost (meaning their salary, benefits and office space).&lt;p&gt;That is why it is a useful sanity check to see what the revenue per employee is. That helps you understand how healthy (or unhealthy) the business is.  In comparison Apple has 80,000 employees and a quarterly revenue of 57B for a revenue per employee of 720K (about 7x Zynga).&lt;p&gt;I know boring stuff but sometimes it helps when trying to figure out if you&amp;#x27;re making progress or not.</text></comment>
<story><title>Zynga Lays Off 15% of Its Workforce</title><url>http://techcrunch.com/2014/01/30/zynga-layoffs-2/</url></story><parent_chain><item><author>ChuckMcM</author><text>Its not that weird. They had 200M in revenue last quarter[1] with about 2000 employees. That is about $100K&amp;#x2F;employee, since employees probably cost more than that at the median, its not really a sustainable strategy. Swap out employees who are making more $&amp;#x2F;employee to boost the average and maybe you have a going concern.&lt;p&gt;[1] &lt;a href=&quot;http://investor.zynga.com/releasedetail.cfm?ReleaseID=800274&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;investor.zynga.com&amp;#x2F;releasedetail.cfm?ReleaseID=800274&lt;/a&gt;</text></item><item><author>h2s</author><text>Eagerly looking forward to the explanation for this weird juxtaposition.&lt;p&gt;&lt;a href=&quot;http://i.imgur.com/huUv09m.png&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;i.imgur.com&amp;#x2F;huUv09m.png&lt;/a&gt;</text></item></parent_chain><comment><author>meritt</author><text>That&amp;#x27;s $100k revenue per employee in Q3 but employee expense is much lower than that[1]. Probably a median annual salary+bonuses of $100k + 15% in taxes &amp;amp; benefits, we&amp;#x27;re still looking at maybe $30k&amp;#x2F;employee&amp;#x2F;quarter.&lt;p&gt;[1] &lt;a href=&quot;http://www.glassdoor.com/Salary/Zynga-Salaries-E243552.htm&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;www.glassdoor.com&amp;#x2F;Salary&amp;#x2F;Zynga-Salaries-E243552.htm&lt;/a&gt;</text></comment>