Revenue Per Employee Is Skyrocketing

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2:41Eric Siu:20 ,000 people, yeah. So ARR per FTE has skyrocketed, meaning annual revenue, recurring revenue per full-time employee has skyrocketed, right? So the graph that we're looking right now, the charts that we're looking at, is when you look at ARR FTE by percentile. Okay, so I'd recommend that if you're watching this, yeah, you probably should be watching this. But when you look at, you know, 2018, okay, if you are a 90th percentile company, meaning you're like top 10%, your ARR per FTE was close to 400K, which is already really high, okay? Then you go through the years, 2019, it goes down. 2020, it goes down, right?

3:16Eric Siu:It's closer to 200K or so. And in 2023, okay, guess what? 2022, I think ChatGPD comes out, right? 2023, it goes up to 400K. 2024, it goes up above 400K. And then now, 2025, it's closer to about 750K or so, right? And then you look at the general sizes. Let's not even pay attention to that. But the point is, if you're a top 10 % company, the ARR per FT is going up. And same thing with top 75%, right? So, sorry, top 25%, 75 percentile, right? So closer to 400K. So it's kind of crazy.

3:47Neil Patel:It's kind of crazy. You need less people to get stuff done. I'm assuming they're mainly talking about software companies. Yeah.

3:53Eric Siu:I was at a poker game earlier this week with a few entrepreneurs, and one of the entrepreneurs was like, I thought the stuff last year, when people say people are gonna lose their jobs, I thought that was overblown. But him and his spouse, they are on Cloud Code all the time on their couch. They don't even watch Netflix anymore. So they're now on a throuple, okay? Because Cloud Code is in there.

4:11Neil Patel:They're now on a what?

4:12Eric Siu:Throuple, couple, couple, so you have three people in a relationship. Throuple.

4:17Neil Patel:Oh, because Cloud is the third one?

4:18Eric Siu:Yeah, yeah, yeah, yeah. So, but he's like, oh, I can see it now. I'm like getting confused on this one, Noah. Well, he gets it. He got it immediately. So, but my point is -

4:27Neil Patel:I wonder why, Noah.

4:29Eric Siu:So my point is like the people that were kind of naysayers kind of seeing now, he's like, oh, like some of these people like have moved on. He's like, oh, I don't need to replace these people, right? So my point of that is like, okay, 90th percentile are doing 700K revenue per employee. I think we're going to see it go higher and higher over time. And that's both, this is why when I started the year, I came in both really angry, but also really excited, right? Really excited where it's like, oh, I'm going to help my team get better at this stuff, right? But on the other side, the anger piece is like, damn, we're so screwed if we don't get on top of this, right?

5:00Eric Siu:So it's like a mix of both. It's weird. You're a father. You would know. You want to protect them, but at the same time, you're scared for them. So what do you think about the FTE skyrocketing?

5:12Neil Patel:You mean the revenue per FTE skyrocketing? Yes. Yeah, I think it's a glimpse of the future. I think you're going to see it for more industries into software or tech businesses that have reoccurring revenue. And it makes me, as a father, really question the education that my kid is going to get. Because if they just go through the traditional ways, I don't think they'll be needed into corporations. Corporations will just remove them. Do you know? Yes. Or not even hire them, but you get what I mean.

5:44Eric Siu:But do you know back in the day, like a long time ago, how kids jumped from 50th percentile to 99th percentile when it came to education? Parents left them on their own and let them figure things out? No, dude. That's what our parents did. I don't know about you. I don't know. Yeah, that's what my parents did. Okay, maybe it did turn out well for us, I guess. But it's one-on-one tutoring. Because back in the day, people couldn't afford one-on-one tutoring. But now everyone's going to be able to afford one-on-one tutoring. You know what I mean? So you're saying back in the day,

6:13Neil Patel:they did one-on-one tutoring to really get their kids.

6:15Eric Siu:Yeah, like you think about like the aristocrats back in the day or even like when we were growing up, let's say even the 30s, the 50s, the 80s, right? That's when we were growing up. But I think a lot of this stuff is much more accessible now. And, you know, I don't want to get into kind of philosophies on the future here, but I think everyone's going to be okay in the long term. Because if you think about it, right? Again, this water bottle cost me 40 bucks. I think it's going to get, the robots are going to be making it. I think it's going to deflate to like, you know,$4 or so. And then the$1 or so.

6:42Eric Siu:So everything's going to become cheaper. And then there's going to be a level of universal, you know, basic income for everyone. So I think everyone's going to be okay.

6:48Neil Patel:Yeah. So my son was at a play date less than a week ago, last weekend. So we're almost. Play dates with a bunch of kids? One on one. So it was another kid and then it could be with a bunch of kids, but this play date was just with another kid. Yeah. So this other kid is a little geeky and nerdy. And my son is as well. and they got along so well. Randomly, they started talking. One started talking about optical illusions. How old's your son again? My son's four. So the other kid's same age. And then my son's not into optical illusions, so he's learning about them. This is cool. So then he starts talking to the other person about animals and facts and - Blue whales?

7:28Neil Patel:Blue whales or how fast they are. Like if I asked my son, what's the bite force of a blue whale? He's like, the blue whale doesn't have a bite force. It's not like a shark. So he called you an idiot. He's like, yeah, pretty much. He's like, it just opens his mouth. And then, you know, Krill and other types of - We didn't know any of this stuff when we were four years old. Yeah. And then both the kids started talking about math and then their love for math. So they're like, do you know what the square root of 64 is? It's not hard for an adult to know. This is easy. But you're talking about four-year-olds, right?

7:56Neil Patel:Four-year-olds, I didn't know that. Yeah, I didn't know that out of four. So they both knew the answer. then they were talking about other uh you know math things like uh you know division multiplication uh you know my son i don't know the answer to it but he's like do you know one plus two plus three plus four plus five plus six plus seven plus eight plus nine plus ten and then he's like do you know one times two times and he's going with this right and the other kid knows a lot of this stuff but A lot of this is enabled because you could, I can't say AI, but the reality is Eric and I didn't grow up in a privileged household.

8:35Neil Patel:We grew up in a privileged household when it comes to love, but not financial. So our parents couldn't provide a lot.

8:43Eric Siu:I would say our parents were middle class, right? And was your mom driving a lot of it?

8:48Neil Patel:Yes, but my parents weren't middle class when I was younger. They were middle class when I was high school or later. Okay, so we're the same. But my kids grew up in a very different world. So they have chess people that come every single week. I just say they're privileged. Yeah, they're privileged. My financially privileged, at least. We have chess tutors, one-on-one baseball coaches to make them better, one-on-one gymnastic coaches.

9:17Eric Siu:One-on-one Brazilian Jiu-Jitsu.

9:19Neil Patel:One-on-one Brazilian Jiu-Jitsu. Yeah, every day. He just got his gray belt yesterday.

9:23Eric Siu:What level is gray belt? Is that his second, third? Yes. Okay, that's great.

9:27Neil Patel:Kids have different belts than adults. Gracie Jiu-Jitsu.

9:30Eric Siu:Yeah, yeah, yeah.

9:30Neil Patel:Yeah. So I think to get a gray belt, it's like 40 or 50 classes. Yeah. That's awesome. That's a lot for a kid. Yeah. So they have everything. One-on-one tutors if they want to learn more, read more, talk about, you know, stats and data. Dude, we take them to the museum. I think it was in Pasadena or by USC where you can see Space Shuttle Endeavor. I think was that Pasadena? I forgot which part of LA it is.

9:55Eric Siu:JPL is Pasadena.

9:56Neil Patel:Yeah. Right? So it's like they're able to get the one-on-one stuff. But the reason I bring this up is I totally agree with you in which if people had one-on-one help and it's adapted to what they love and are passionate about, they're going to learn so much better and they're gonna excel in it. And same with marketing. If you look at you and I, we were connecting with other marketers who are amazing that we're doing this stuff that we're doing, but before us and their version of it for their time because the channels are different. And we learned a lot from those people. It's like one-on-one training and education.

10:35Neil Patel:And I do believe it's one of the best ways to learn. And AI has now enabled it where a lot of people have access to this.

10:41Eric Siu:I honestly think, so watch, then we can move on from this, but I think I wouldn't be surprised if your son or your daughter, like your son starts a business by age six, because I do think with all the AI stuff now, like, because at age nine, I already had a website, like selling MP3s, right? And I was like reviewing MP3s, right? Had I not gotten involved with gaming, I probably would have been all in on business starting at age nine. I just didn't have the guidance. I didn't know how to double down on that, right? You start at age 14 or so, right? Yeah, 15, I think. Yeah, but you were selling CDs to start with, right?

11:08Eric Siu:And so if we had all this stuff, probably age six or seven, we probably would have been going already.

11:12Neil Patel:My son has been trying to start a business now for two to three months. He actually has a really good idea. There you go. My wife will kill me if I say it, so I won't. But it is actually a really good idea. I was shocked that he came up with it. Is it a rated X idea? No, no, it's not rated X. The way you're saying it is like such a... It's a good idea. It's related to snacks. Okay. Okay. So, but outside of that, he's obsessed with money. So he's counting money. Where do you learn that from? No, but it's gone too far. every day. I need$20 from your wall. That's a reflection of you. And then he counts.

11:45Neil Patel:And then he makes you count his money with him and then all the quarters. And it's like, it just takes forever. And every day he negotiates, I got a gray belt. And before this class starts, if I get the gray belt, are you going to give me at least a hundred dollars? No. A hundred dollars. He's like, okay, 50. If you give me 50, I'll try really, really hard. I'm like, the gray belt, you want to gray ball but don't you want to be proud of me if you want to be proud of me you wouldn't want me