The other day, a founder asked me about financial benchmarks for a company at his stage. He asked about the optimal CAC/LTV, gross margin, and revenue per employee.

Benchmarks are important. Investors, particularly investors who don't have intimate knowledge of your company, will use them as a guide for how to value your company. There's a temptation for founders to optimize against top-tier benchmarks. But I think that's unwise. Optimizing against benchmarks is actually relatively easy. What's really difficult is knowing what your company needs right now and optimizing against that. That's a lot harder.

‘Revenue per employee’ provides a very simple example of this concept. Top-tier SaaS companies have a revenue per employee of around $300k. It's tempting to chase that number. The problem is that the easiest way to grow your current revenue per employee is to stop innovating. Get rid of all the employees working on stuff that won't impact revenue this quarter or this year. But that's likely not at all what your company needs right now for a variety of reasons.

So, in many cases, you actually don't want to optimize revenue per employee. That might not be what your company needs right now.

The best approach to this problem is to know your metrics and be aware of top-tier benchmarks but to intelligently apply those benchmarks to your business and be able to explain to an investor and your team why that's the right thing for you right now. A great story around why your revenue per employee is lower than a top-tier company because you are thinking about growth 3 to 5 years from now or why your gross margin is low right now because you're overly investing in your early customers, or why your CAC is high because your testing new marketing channels is a lot more impressive than a simple point in time comparison to benchmarks of companies that might need to optimize around something completely different.