Headcount is flat while revenue grows at Mag7 and AppLovin

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 46:53

   wow, there's actually three distinct chapters that are kind of being told here. Chapter one is the Zerp era, it's COVID, software is everywhere. The only way these companies think they can grow is by hiring more people. So Reflex, big opportunity. Which by the way, made sense because if you grow by producing more code, you need more people for more code. So I think it was completely logical. We got to hire more. Okay. So that's the Zerp era. Then ironically, just as GitHub Copilot comes in, Brad, familiar with the term, the get fit era. This is like, hold on, we need to get fit. We've gotten too big, right? And then you can see stabilization of headcount down in a lot of other companies. Now we're entering the AI era. And I do think it's kind of a provocative question, which is that has Microsoft reached the peak employee? And while they never crossed that

2. 47:51

   threshold ever again. Right. I had conversation with the CFO of a major company recently and they- said, thought experiment. What if our headcount was down 50% in three years, right? Those questions have never been asked for companies that are growing and thriving. And I do think what I get excited about as a public market investor, Philippe, it's not just that we're seeing a reacceleration and top line growth for all these companies. Every one of these companies, literally from Uber, they're growing their top line without growing their headcount, all the way to the largest of the Mag-7, but Apple Oven has done as good a job as anyone.

3. 48:33

   Yeah, tell everyone about this slide you put together. Yeah, so this is another one of my favorites, right? And what this slide does is it will track Apple Oven, a public company run by a brilliant, in my opinion, generational entrepreneur. And it basically looks at two things. One, it looks at the revenue of the company annualized since Q2 2021. So that's the blue line. and second, the employee count over that same period, right?

4. 49:02

   And basically, 2021, big opportunity. I got to hire tons of employees to kind of try and capture it. What else can I do, right? Then realizes, oh my God, my company's gone too big. I've lost control of my culture. We're not innovating fast enough. Too many layers of bureaucracy. We're not set up to capture the opportunity. Right-sizes the workforce. At the same time as AI comes in, now the company's lean and mean, innovates, outcompetes companies like Google and Meta, doubles the size of the company as the employee count is down over 35%.

5. 49:34

   Right. Think about this. We just showed the slide of ChatGPT going parabolic, Google losing page views. Google has 187,000 employees, OpenAI, 2,700. We're not going to be a company of 20,000 employees. He didn't say we're not going to be a company of 187,000 employees, right? He's saying, we're going to leverage our models, our agents, our capabilities, which is exactly what Jensen Huang said to us last year. He said, Brad, I'm going to 3X the company and our headcount may not grow or only grow a little bit. And I said, how? He said, because I'm going to have agents who are reporting to me. I'm not going to have employees who are.

6. 50:11

   By the way, I'll tell you what this made me think of. So back to the app loving slide. So in five years, they doubled the revenue per employee. And now, you know, a company with a high growth rate