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Big companies tend to optimize for business continuity rather than pure efficiency. It is a systems tradeoff. You can hire 5 10X people, but if one of them le

by wenc 9y ago

Big companies tend to optimize for business continuity rather than pure efficiency. It is a systems tradeoff. You can hire 5 10X people, but if one of them leaves (10X invariably do), you would have a harder time replacing, on-boarding, ramping up, culture-indoc, etc. another 10X person, assuming you can find one. In the mean time, this could potentially mean anything from a chaotic breakage of process or severe team reorg. Whereas if you hire 50 1X people, if 5 leave, the system will likely still run at reduced capacity while you backfill if you have good process (not all big companies do, but those that survive in competitive industries tend to). Good process often wins over a concentration of pure talent over the long run.

icc97 9y ago
I don't know about 10x people, but I think startups attract people who like efficiency. People who hate wasting time in meetings. However for big companies meetings seems to be like a drug. The startup I work for that went from 3-30 people over the years was bought by one of 100,000. I keep wanting to have meetings of 2/3 people and the people I come across at the new company love having 6+ people in a meeting.
- Clubber 9y ago
  I like small companies because they let me get things done. "Solve this problem." and I'd solve it. That could mean cleaning up some workflow, or building 5 automation engines. This gets more difficult when you have modules that have more than one person coding on it, because now you can step on each other's toes. Big companies usually have 7-8 people working on a particular module, which requires a lot more coordination. That module is probably spec'd out by another team of a few people who talks to the business teams that will be using it, or talk to a client. These teams all have managers who need to know what's going on, so they have more meetings. When there's a question on the spec, it now involves two teams that must have a meetings to talk. Teams ask questions of other through their managers which leads to more meetings. The original, "Solve this problem," was defined by an upper level executive 5 levels up, based on some grand strategy that I don't know about and won't be explained to me. It turns into a big mess.
mirceal 9y ago
I would tend to agree and rephrase the observation as "the lack of efficiency is due to the added redundancy needed to ensure a higher likelihood of business continuity"
kwindla 9y ago
This exactly. "Efficiency" -- especially the way you measure it if you come from a small-company perspective -- is only one of many metrics. It feels like a really important one, but there's some perspective distortion at work, in my personal experience as a small-company person who has interacted a lot with big company product teams, executives, and contracting departments. Continuity matters much more than output-per-input-hour at large companies. Here's one way to look at it: big companies are large because they have big revenue streams to protect. Startups don't. So the risk/reward calculations look completely different. There's lots of "overhead" in a big company that can fairly be characterized as "systems that have evolved to protect the existing lines of business." For example, the political infighting at a Fortune 500 company over allocating $1M to new a new product R&D project (as opposed to marketing, or maintenance of existing products, or internal IT spend) is shocking to a startup founder in Silicon Valley who is able to raise a $1M seed round to try out a "good idea" relatively quickly, these days. Why are VCs with $25M funds so much more willing to underwrite product development than Fortune 500 executives with billion-dollar P&Ls? Because the VC's downside is limited to $25M. Here's another way to look at it: you could define "efficiency" as "how often does a company of a given size" go out of business. By that measure, big companies are massively more efficient than small companies. Even factoring in the depredations of private equity investors. :-) (This written by one of the above-mentioned startup founders who has struggled to get funding for new products from big company executives.)

by wenc 9y ago

icc97 9y ago

I don't know about 10x people, but I think startups attract people who like efficiency. People who hate wasting time in meetings. However for big companies meetings seems to be like a drug. The startup I work for that went from 3-30 people over the years was bought by one of 100,000. I keep wanting to have meetings of 2/3 people and the people I come across at the new company love having 6+ people in a meeting.

Clubber 9y ago
I like small companies because they let me get things done. "Solve this problem." and I'd solve it. That could mean cleaning up some workflow, or building 5 automation engines. This gets more difficult when you have modules that have more than one person coding on it, because now you can step on each other's toes. Big companies usually have 7-8 people working on a particular module, which requires a lot more coordination. That module is probably spec'd out by another team of a few people who talks to the business teams that will be using it, or talk to a client. These teams all have managers who need to know what's going on, so they have more meetings. When there's a question on the spec, it now involves two teams that must have a meetings to talk. Teams ask questions of other through their managers which leads to more meetings. The original, "Solve this problem," was defined by an upper level executive 5 levels up, based on some grand strategy that I don't know about and won't be explained to me. It turns into a big mess.

mirceal 9y ago

I would tend to agree and rephrase the observation as "the lack of efficiency is due to the added redundancy needed to ensure a higher likelihood of business continuity"

kwindla 9y ago

This exactly. "Efficiency" -- especially the way you measure it if you come from a small-company perspective -- is only one of many metrics. It feels like a really important one, but there's some perspective distortion at work, in my personal experience as a small-company person who has interacted a lot with big company product teams, executives, and contracting departments. Continuity matters much more than output-per-input-hour at large companies. Here's one way to look at it: big companies are large because they have big revenue streams to protect. Startups don't. So the risk/reward calculations look completely different. There's lots of "overhead" in a big company that can fairly be characterized as "systems that have evolved to protect the existing lines of business." For example, the political infighting at a Fortune 500 company over allocating $1M to new a new product R&D project (as opposed to marketing, or maintenance of existing products, or internal IT spend) is shocking to a startup founder in Silicon Valley who is able to raise a $1M seed round to try out a "good idea" relatively quickly, these days. Why are VCs with $25M funds so much more willing to underwrite product development than Fortune 500 executives with billion-dollar P&Ls? Because the VC's downside is limited to $25M. Here's another way to look at it: you could define "efficiency" as "how often does a company of a given size" go out of business. By that measure, big companies are massively more efficient than small companies. Even factoring in the depredations of private equity investors. :-) (This written by one of the above-mentioned startup founders who has struggled to get funding for new products from big company executives.)