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Alternate Title: Google and Facebook — Number of Employees and Annual Revenues

Addendum to: Would DEC Still Exist if Non-Competes Didn’t?

The data presented below was collected while preparing the previous post: Would DEC still Exist If Non-Competes Didn’t? That post was already getting long, and this data seemed to distract from the previous post’s primary observation. However, the data is very interesting on its own.

The fact is that both Google and Facebook are thriving in an environment that precludes non-compete agreements. Therefore, especially given the previous discussion of DEC and HP history, you could conclude that companies in regions without non-competes thrive, or at least have a better chance of thriving.

The previous post noted that the absence of non-compete agreements allowed Facebook to hire employees away from Google and other area companies, that being able to do so was very beneficial for Facebook at a critical period in the company’s growth, and that losing those employees was not overly harmful for Google.

This doesn’t mean that losing employees is unimportant to Google. Of course, Google wants to keep its employees. Losing employees for whatever reason is not good, and losing employees to Facebook under some of the rumored circumstances can be very troublesome.

The rumored bidding wars to retain or to attract particular employees are not healthy for either company or for the regional economy. Fortunately, such bidding wars don’t scale, and are not sustainable.

More strategically important to both Google and Facebook are their overlapping revenue models. Both companies derive the bulk of their revenue from advertising, which depends on attracting user traffic to their respective sites, which depends on having useful, attractive, and engaging sites. Herein lies the basis for healthy competition between the companies — emphasis on the word ‘healthy’.

The next two charts show how Google and Facebook are thriving. Google was founded in 1998, went pubic in 2004, and reports on its fiscal year ending December 31. Facebook was founded 6 years later in 2004, is not yet public, thus the estimated performance numbers in the charts come from informal sources rather than SEC filings.

Chart 1 shows the number of employees worldwide in Google and Facebook. Google has more than 10 times the number of employees than Facebook. A company of Google’s scale has employees and major facilities in many locations. Facebook is just beginning to establish other significant offices (e.g., Seattle WA, Austin TX). Google executives have stated they plan to hire more than 6000 new employees in 2011, which is equivalent to hiring roughly 3.5 to 4 Facebooks.

Click on chart to see full size.

Chart 2 shows the annual revenue for Google and Facebook. Google has more than 10 times the annual revenue compared to Facebook. Google has a very healthy trajectory and growth in revenue year over year. It will be interesting to see formal financials from Facebook as they prepare for an IPO.

Click on chart to see full size.

Both Google and Facebook are doing dramatically well. In all likelihood, regardless of other factors, neither would be doing anywhere near as well or be able to exist at all in a region that enforced employee non-competes agreements.

Notes and References

1. Facebook hiring Googlers.

Facebook Stealing Googlers At An Alarming Rate, Nick Gonzalez, TechCrunch, Nov 21 2007.

Google Making Extraordinary Counteroffers To Stop Flow Of Employees To Facebook. Michael Arrington, TechGrunch, Sep 1 2010.

Facebook vs. Google: A Showdown of Paradigms, New York Times, September 27 2010.

Google Offers Staff Engineer $3.5 Million To Turn Down Facebook Offer. Michael Arrington, Nov 11 2010.

2. Google employee and revenue numbers come from SEC filings S-1 and 10-Ks.

Google will hire at least 6,000 workers in 2011. Mike Swift, San Jose Mercury News, January 25 2011.

3. Facebook reports that they have 2000+ employees. c. March 2011.

Seattle Engineering Office open for business, August 12 2010.

Facebook says it’s ready to hire in Austin. Kirk Ladendorf, Austin American-Statesman, March 12 2010.

One Response to “The Absence of Non-Competes Fosters Innovation and Growth”

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