4 ms·

It’s sort of the natural evolution of companies as they grow in size. When they are small, things are just done, but as they grow and as they bring in more peop

It’s sort of the natural evolution of companies as they grow in size. When they are small, things are just done, but as they grow and as they bring in more people, the cost of those resources also grow. The free sodas are a fun example (and here outlined as the wake-up call) but where it really starts is when someone higher up notices the cost of a department that has grown from 5 to 20 people, or something similarly eye raising, and then bring in the E&Y type consultants to help transition into a scalable business. Which simply involves reporting, cost-trimming and looking into efficiency. The sodas are where the rebellion break out, but the seed are sown long before that as the “bean counters” and “process people” slowly begin making business intelligence part of everything because it lets everyone report on everything. You can’t even say that it doesn’t work, because it’s how every major company operates. On the flip-side, it’s not like Coca Cola has really invented anything of worth for like a 100 years. So while bean counters are financially good for investors, they are probably pretty terrible at running our society, because it’s the engineers that actually build things and the founders who come up with the saleable ideas. Anyway, if my career has taught me anything it’s to do your thing. Being part of the transition from startup to enterprise can be a lot of fun as well, so long as you know that you can’t really fight the MBA types and win.

bryanrasmussen 4y ago
>someone higher up notices the cost of a department that has grown from 5 to 20 people, or something similarly eye raising I don't think the soda cost per person would be different for 20 people though, so it seems a weird thing to raise the eyes about.
- ajross 4y ago
  Of course it's not any different. But the focus has changed. When you're an early stage startup, a 0.7% overhead for junk food (made up number, but that's probably not too far off) is a fundamentally negligible thing. It's like 3 days of runway, if that. Basically: who cares, the company will live or die based on products and funding rounds, and you're just trying to make the company not die at this stage. But to an established company trying to make money, 0.7% of revenue is a huge (seriously, huge) line item in a CFO's accomplishment list. Consistent profitability is built on a long, grueling ladder of tiny incremental bean-countings. And to an established company trying to make money, that's where the focus turns. And those are the employees who get rewarded. It's not that either side is "right", it's that they have opposing priorities and that growing companies need to manage that tension and not just give in to the temptation to lock the soda machine.
  - bryanrasmussen 4y ago
    >But to an established company trying to make money, 0.7% of revenue is a huge (seriously, huge) line item in a CFO's accomplishment list. Ok, that seems pretty weird right there, 0.7% overhead of an early stage startup is now 0.7% of revenue even though we agree it is just increasing as the same rate of hires? In other words while each new programmer hired will drink the same amount of soda as the others it should be evident that the percentage of revenue would be decreasing, otherwise they have some serious problems that getting rid of free soda will not fix.
    - kurupt213 4y ago
      Once a company is focusing on saving to profits instead of revenue growth it’s over.
- EnKopVand 4y ago
  > I don't think the soda cost per person would be different for 20 people though, so it seems a weird thing to raise the eyes about. Think of it from the management perspective. It’s not about the soda, it’s about the “we’re giving this middle manager $1million a year to pay for his/her employees now, and we sort of don’t know what we get in return”. In startups nobody has time to think about that sort of thing, you simply do what’s necessary to get stuff done, and, the amounts are smaller. As size grows, so does the perceived need for bean counters. I say perceived because I’ve never personally experienced a company who didn’t go that road, so I can’t say what would happen if you continued to trust all your employees and middle managers rather than start monitoring and structuring them, but I do know that a lot of the business intelligence and documentation systems that I have seen showed little actual value once they got disrupted by covid and everyone working from home.

bryanrasmussen 4y ago

>someone higher up notices the cost of a department that has grown from 5 to 20 people, or something similarly eye raising I don't think the soda cost per person would be different for 20 people though, so it seems a weird thing to raise the eyes about.

ajross 4y ago
Of course it's not any different. But the focus has changed. When you're an early stage startup, a 0.7% overhead for junk food (made up number, but that's probably not too far off) is a fundamentally negligible thing. It's like 3 days of runway, if that. Basically: who cares, the company will live or die based on products and funding rounds, and you're just trying to make the company not die at this stage. But to an established company trying to make money, 0.7% of revenue is a huge (seriously, huge) line item in a CFO's accomplishment list. Consistent profitability is built on a long, grueling ladder of tiny incremental bean-countings. And to an established company trying to make money, that's where the focus turns. And those are the employees who get rewarded. It's not that either side is "right", it's that they have opposing priorities and that growing companies need to manage that tension and not just give in to the temptation to lock the soda machine.
- bryanrasmussen 4y ago
  >But to an established company trying to make money, 0.7% of revenue is a huge (seriously, huge) line item in a CFO's accomplishment list. Ok, that seems pretty weird right there, 0.7% overhead of an early stage startup is now 0.7% of revenue even though we agree it is just increasing as the same rate of hires? In other words while each new programmer hired will drink the same amount of soda as the others it should be evident that the percentage of revenue would be decreasing, otherwise they have some serious problems that getting rid of free soda will not fix.
  - kurupt213 4y ago
    Once a company is focusing on saving to profits instead of revenue growth it’s over.
EnKopVand 4y ago
> I don't think the soda cost per person would be different for 20 people though, so it seems a weird thing to raise the eyes about. Think of it from the management perspective. It’s not about the soda, it’s about the “we’re giving this middle manager $1million a year to pay for his/her employees now, and we sort of don’t know what we get in return”. In startups nobody has time to think about that sort of thing, you simply do what’s necessary to get stuff done, and, the amounts are smaller. As size grows, so does the perceived need for bean counters. I say perceived because I’ve never personally experienced a company who didn’t go that road, so I can’t say what would happen if you continued to trust all your employees and middle managers rather than start monitoring and structuring them, but I do know that a lot of the business intelligence and documentation systems that I have seen showed little actual value once they got disrupted by covid and everyone working from home.