With payroll taxes and benefits, an employee is ~2x TC. Since startups underpay frequently, let’s say the average salary was ~150k in TC for early employees within SC. That’s 300k*5 = 1.8 million gone per year. Over two years that’s 3.6M. 1.4M left over for finance, legal, rent, and other expenses is kind of tight and you definitely won’t make it a 3rd without any kind of customers or other financial infusions. That’s why a company has to find some kind of product market fit quickly - you have to show there’s a there there so you could continue growing either through revenue growth alone or raising another round.
2x TC seems high. For one direct example I know of, benefits package (including all the insurances with all premiums paid by the employer) costs around $25k/yr. I feel like at $150k salary, it’s probably like $200k total cost? Payroll tax employers are responsible for seems around 7-8%. $30k benefits, $12k extra payroll tax leaves $8k for equipment and other expenses. That would be about $1M/yr for 5 employees.
I think the 2x number is a rough ballpark that includes total cost of employment (eg HR salaries / outsourced HR etc). It’s entirely possible that this overhead is smaller for startups and it may have shifted over time (this is a rule of thumb I was told by a few people 10 years ago)
Is not an official source, but it seems that it is the case according to this discussion[0], searching in the social media accounts there's nothing, also Sebastian[1] didn't published anything more about Rome since December
