Picking metrics to measure the Innovation Economy

At Craft, we aim to cover the full range of activity across the “Innovation Economy.” And while venture-backed Startups attract a huge proportion of the attention and buzz today, we think it’s also important to pay attention to the Innovative activities happening at large and established companies.

At Craft, we aim to cover the full range of activity across the “Innovation Economy.” And while venture-backed Startups attract a huge proportion of the attention and buzz today, we think it’s also important to pay attention to the Innovative activities happening at large and established companies.


Take Amazon for example. It would be hard to argue it isn’t an Innovation powerhouse. It is also 20 years old, employs 117,000 people and lists approximately 10,500 job openings today across its 16 Divisions and 170+ teams (not counting 80,000 seasonal workers taken on for the holidays). They’re pushing the frontier on everything from Logistics to eBooks to Online Video, but that’s no Startup.


Outside of Core Tech, if you look at Barclays, in the past couple of years they launched Pingit - one of the most successful P2P money transfer apps in the UK and 2 major social/community platforms: “Life Skills” and “Digital Eagles.” That’s Innovation to.


For the beta launch of Craft, we have selected 400 public companies that play in the major industry sectors we are covering. In total these 400 companies employ 18 million people, have $7 Trillion in annual revenue and $15 Trillion in market value.


We have been debating what metrics to look at in public companies to help compare their value and outlook. If you look on a Google Finance page for any of these companies, you’ll see a 1-day share price graph along with Intra-day prices, Trading volume, Beta and many other indicators that are valuable to stock market traders, but not very helpful for a professional deciding which company to join as an employee.


Many large companies grant some portion of compensation in equity (typically Restricted Stock Units or “RSUs”). So we want to help someone assess, for example: would I rather have Microsoft stock or Samsung stock, Google stock or Amazon stock? For that reason, we’ll show a 5 year share price graph (or longest time available if the company went public more recently), at least as a starting point to orientating towards where the share price might go in the next several years - because that’s the timeframe that effects an employee.


Another metric you’ll see on Google Finance is the Price/Earnings ratio which has always been a staple of public company valuation. But in Innovative activities, profits are often years away, as companies experiment, spend on R&D, and try to open new revenue streams and secure position in new markets, all before thinking about making profit. Amazon is of course a great example of that, ploughing all its profits back into the company to drive further growth.


So on Craft we’re going to show a different metric: Revenue per Employee. Historically, this metric has been used in advertising agencies, but we haven’t seen it generally elsewhere.


We think it’s a nice way to evaluate companies in general and compare how much top line business each member of the team is driving.


Maybe it’s a bit reminiscent of a metric that Facebook was very proud to promote in its early days: Page views per Engineer (the numbers were always in the billions).


Among the 400 public companies we’re covering initially, the median revenue per employee is $343,000, and the highest is a whopping $3.7m, at Insurance giant Prudential. We will also be looking at Market value / Revenue.


We want to measure and evaluate the long-term prospects and innovative strength of Public companies, just as much as Startups and Scaleups.


What other metrics should we be looking at?

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