tomtunguz.com – Constrained by a limited budget while seeking to grow as quickly as possible, startup founders must decide how to balance growing their engineering teams with their sales & marketing teams. To help inform those decisions, I’ve benchmarked the relative sizes of the sales and engineering teams of the 36 publicly-traded SaaS companies from founding to IPO, typically 7 years later.
The graph above shows the average Sales & Marketing allocation in turquoise and Research & Development investment in red. In the early years of these startups, sales and marketing salaries consumed about 90% of revenues and slowly fell to 45%. Engineering commanded 50% of revenue, which also declined over time as revenue increased and more of that revenue was harvested as profit or re-invested elsewhere in the business.
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