4 ms·

Why do you have to go past the 50? Or even past the 5 people in the room? Isn't it just better to keep companies small? Maybe have/work on multiple companies,

• brudgers 10y ago
  In the connotation of 'startup' used in Silicon Valley and among venture capitalists (as opposed to how 'startup' is used in other places and/or by other types of investors), a startup is a company designed and striving to grow to a large size. In that context, startups are a well defined subset of new businesses.
• nine_k 10y ago
  Imagine having 5 important, large-scale customers. You need a dedicated representative per such customer. You suddenly don't have people for doing development.
  • fiatjaf 10y ago
    Imagine you don't want to have 5 important, large-scale customers, since your company only has 5 people? Imagine there are no companies with the need for dedicated representatives, since they are 5-people companies also.
    • douche 10y ago
      Imagine trying to keep the lights on, without those large-scale, price insensitive customers that pay 100x what the smaller customers pay, for approximately the same amount of hassle as any other individual customer.
      • fiatjaf 10y ago
        I get your point, you're saying that large customers are good for your pockets. Ok, go ahead, take your profit, but accept that this is totally off the point of this thread.
    • nine_k 10y ago
      Ever heard of economies of scale? If you like the fact that you can buy computer chips, or clothes, or meat, for their current price and not 100x more, it's because the companies making them operate at huge scales; it takes more than 5 people.
• jasode 10y ago
  >Maybe have/work on multiple companies, have companies interact better with other ones so they can accomplish more, Ronald Coase[1] explains why an integrated large company can be more productive and efficient than interacting individuals (or interacting small companies). Basically, internal transactions (departments) cost less than external transactions (contracts). E.g. there is no way for Apple to sell an iPhone for $500 or Amazon AWS to offer EC2 compute for 1 penny per hour if those 100,000+ employees were split up into thousands of smaller 5-person companies. It seems reasonable that many entrepreneurs have ideas that require more than 5 people to execute. [1] https://en.wikipedia.org/wiki/The_Nature_of_the_Firm https://en.wikipedia.org/wiki/The_Nature_of_the_Firm
  • bediger4000 10y ago
    Basically, internal transactions (departments) cost less than external transactions (contracts). It occurs to me that if we believe this, the USA as a country could make our entire economy more productive by making contracts less expensive. 5 seconds thought leads me to believe that "less expensive" might have a number of things involved, from simpler legal language that doesn't require a lawyer to understand, to a legal system that isn't set up to benefit lawyers, to less intellectual property restrictions, to a less adversarial legal system. Clearly much of this is impossible to implement.
    • daveguy 10y ago
      It's not the cost of the contracts themselves that are so expensive it's the overhead of profit taking by the recipients of each contract. When you hire a contractor you avoid taking on capital expense and internal complexity overhead, but you are generally going to pay 15% or more above what it would cost you to do it in house. You accept this tradeoff with the understanding that people you contract with have to make some profit too. When you are small the complexity overhead can easily draw you off course. Month to month and on demand contracts can be paused rather easily to adjust to cash flows. It's not the cost of drawing up the contract that adds a significant part of the cost. The contract work itself that adds overhead.
• wtbob 10y ago
  > Isn't it just better to keep companies small? That depends on what you're trying to achieve: the bigger the goal you're striving for, the more people you'll need for it. Yes, technology is an amazing lever, but it's not infinitely long: 5 people aren't going to make the next smartphone, electric car or rocket.
  • fiatjaf 10y ago
    How many companies are building rockets?
• billmalarky 10y ago
  Organizations also benefit from economies of scale. Generally small companies move faster and can innovate much faster, large companies can bring those innovations to massive scale. This is why you often see the model of large companies acquiring small companies then scaling the business (think Facebook and Instagram).