15 ms·

Why big tech companies need so many people

209 points by flurly 4y ago

black_13 4y ago
[dead]
paulcole 4y ago
This guy “climbed the ladder” at FANG companies and fails to realize that people who aren’t programmers exist?
d_burfoot 4y ago
There are a lot of cynical comments in this thread about large headcounts being a result of mismanagement, complexity, and bloat. But there's another, more virtuous and reasonable, answer to this question. Let's say you are an employee at Apple, and you come up with a very small innovation for the iPhone. Something like making it a bit easier to set a wakeup alarm. Or decreasing the download sizes so that new software updates go 20% faster. And let's say, just for argument, that this small improvement corresponds to 1 penny of value for each user. Well, there are 1.5e9 iPhone users. So your $1e-2 contribution per user just created 1.5e7 dollars of value - enough to justify your whole TC for years.
- andelink 4y ago
  Sorry, what is the explanation for large headcounts in your comment? Are you saying hire more people because more people results in more innovation? I’m not following.
twawaaay 4y ago
Oh my, where to start. First of all skips the part why non-tech companies need so many people? There is a number of factors: * selection bias. We are talking about these companies exactly because they are large. There are companies like WhatsApp was before acquisition that only needed couple dozen people. * scale inefficiencies. As the company grows there are various forces that make individual contributor less productive. Try to prepare a large party in your kitchen. Want help? If you add another person it will surely get twice as fast? What about 5th person? What about 10th? As you add more people, people will start getting in the way in various ways or will start working on less valuable goals because the most valuable ones are already well covered. * success breeds problems. While the company is small, cash strapped, it is easy to get everybody focused on a single goal because there is literally nothing else they have cash or people or focus to do. But when the company finally succeeds and they get a lot of cash, there opens a wealth of possibilities but also a perceived necessity to spend that money, invest it in future profits and also to diversify. This causes rapid proliferation of new lines of business and experimentation and each one of those experiments is probably another company. But not as focused because they are not as cash strapped and reliant on efficiency to survive. * strategic growth. Above all, once the company finds success in one area, the next goal to pursue is to avoid death. If they build one product and stay focused on it there is a good chance they will at some point get subverted or the market will dry out. One way to deal with this is to just start doing a lot of things in the hopes some of them will pan out. * emergent effects. Large groups of people are showing emergent effects that are very difficult to battle. Every person has their own motivation and their goal is to stay in employ, get raises, get promoted, etc. All these are more important for most people than the actual good of the company and efficiency. These effects cause departments to grow large unnecessarily (because each manager wants to have as high budget and headcount as possible).
- gruffin 4y ago
  > There are companies like WhatsApp was before acquisition that only needed couple dozen people. But what was its revenue? Was it profitable?
- pixl97 4y ago
  Don't forget government taxbreak to jobs programs. It may be a small factor in the tech world, but cities love giving X% tax breaks as long as the company brings in Y jobs.
  - twawaaay 4y ago
    I don't think companies hire more people due to those jobs programs. I think what typically happens is they use those programs to hire people they would hire anyway AND get a bonus. Or maybe just shift where they hire people.
SanjayMehta 4y ago
A now defunct company had an understanding that any senior director who managed to accumulate 1000 employees/contractors in their org chart would become a VP.
titzer 4y ago
> Better infrastructure means you have undersea cables that enable lower latency video streaming such that users prefer your app over the up and coming app. Uh, this seems like the kind of thing you want to avoid. Long-haul is for connecting data centers, and media should be pushed to the edge with colos? > If you have billions of users using your product per day, you can split those users into 100 different “universes”. Each of those universes can map to a team of 10-20 people This seems like some kind of hallucination written by someone who has not ever seen the internal structure of a 1000+ person product team.
- bobdvb 4y ago
  Correct, although if the content origin is on one continent and the consumers on the other continent, then you do need to shift at least a replica of that content across the ocean (then use a local CDN for national/regional delivery). Google has issues with having a large amount of content that is watched at all ends of the Earth, so they do need significant global transit to handle the fact that someone in India is possibly watching something from Indiana. Seeding the CDNs creates significant overhead and if the content happens to have a relatively low popularity, transactional overheads mean that the RTT of the requests creates artificial overhead (RTT effectively starts to look like wasted bandwidth).
frupert52 4y ago
The reason big companies need lots of people is because if they didn’t have lots of people they wouldn’t be a big tech company. Really, that’s about it
shadowtree 4y ago
Because bigger teams can accomplish bigger things. HN has this understandable infatuation with startup mode, but running a truly global product line of anything with a large customer base is simply a lot of work. Apple can't be run with 5 people, it also cannot be attacked by a 5 people startup. Same for Microsoft, AWS, ... broad massively multi-product companies are very hard to take on if they have their general shit together. Ask Slack how it went against MSFT Teams, a clearly INFERIOR product. Microsoft out-scaled Slack, simple as that. Sustained innovation of a big company is a formidable moat against disruption. Look at big pharma, these companies have been around for 120+ years! Merck was founded in 1891 (from a root company founded in 1668!) and is still a 50bn revenue behemoth. And yes, modern biopharma is big tech.
- analyte123 4y ago
  Many of Apple's products could be attacked by smaller companies, if it weren't for their anti-competitive practices. For example, AirPods get exclusive and superior APIs on iPhones - it doesn't matter if you make a better or cheaper AirPod competitor because you are stuck with clunky Bluetooth pairing. No non-Safari web renderers. Can't backup or transfer files to your iPhone without another Apple product. iMessage, the Music app. 30% fees and no sideloading. The list goes on and on. To think that Microsoft almost got broken up because of bundling IE with Windows.
  - fndex 4y ago
    Anti-competitive practices is when the government prevents other companies to join the market. That is not the case here. Do you really expect Apple to make life easier for their competitors? You're free to use Samsung, Galaxy Buds, Whatsapp and Spotify if you don't like Apple's products.
    - jakub_g 4y ago
      > Do you really expect Apple to make life easier for their competitors? If Google Chrome was using 100% internet bandwidth for downloading Google.com, but 60% for downloading Bing.com, would that be just "not making life easier for competitors", or maybe something more? Apple's behaviors on iOS are this kind of things. Perfect integration with other Apple products via private APIs, basic limited APIs for others
nilayj 4y ago
Other comments give lots of examples of organizational complexity. Here is an example of code complexity: Changing an object from enum to String is trivial to do in a small codebase. Making this small change in a live system like Youtube becomes a 6 month long migration with multiple SWEs working on it, when you have to do it in a codebase with 10s of millions of lines of code. A lot of complexity comes from code size, multiple teams may end up creating duplicating products/services if there is no standardization etc.
- liotier 4y ago
  Telco man here... Lengthening the site identifier from six to ten digits was an 18 months project impacting 120 applicative systems - not even counting the vast grey territories of regexes and office macros. We are powerful, but setting ourselves in motion takes quite a bit of pre-heating !
nudpiedo 4y ago
Somehow indie hackers fail to understand that product and organization complexity do not scale linearly. In spite of being true that hungriness, incentives and other existential features are indeed different, which is also true but comes second to the other point: no startup keeps being a startup after it becomes massive, and many have tried.
nova22033 4y ago
For people using WhatsApp as an example https://www.businessinsider.com/whatsapp-facebooks-22-billion-acquisition-did-102-million-in-revenue-last-year-2014-10 https://www.businessinsider.com/whatsapp-facebooks-22-billio... The numbers are unimpressive. Revenue was $10.2 million 2013. It had a net loss of $138 million in 2013. The bulk of that loss, or $98.8 million, came from stock based expenses. It burned $9.9 million in cash for operating activities in 2013.
charles_f 4y ago
Not listed - cost of bureaucracy, organizing large companies takes complexity (arguably too much of it, and often useless) and that transpires in processes that take time during which people dont produce and therefore require more people. - cost of compliance, big companies are more visible and their footprint being larger means more chances for fuckups. The mechanism by which they compensate is lots of security, privacy, compliance checks that add up to the bureaucracy, and requires more people to achieve anything - cost of limited options. Big companies usually have less options they can pick for. They have standardized software stacks, access to additional software is either blocked or requires time expensive negotiation. - cost of hidden incompetence. It's easier for incompetent people to hide, and they have opportunities to move around. Managers don't like to fire, and in larger companies they will have lower accountability (not my money) and higher opportunity (easy to hide) to overlook incompetence and keep the bad people around until they transfer. (that is, of course, unless the company has forcing functions like stack ranking and quotas to fire people - such as Amazon - which is arguably an entire other and worse problem). These people don't produce anything, or are even detrimental, and therefore require more people
thenerdhead 4y ago
> However, most people don’t know I’ve also had experience climbing up the ladder of these large FANG companies, actualizing multiple promotions and saving millions of dollars in the bank from salary/stock/bonuses/benefits/etc. I'm curious how an engineer can save "millions" over the course of a few years by just being at a FANG company? > They pay their best engineers tens of millions of dollars per year. This is the first I've ever heard of such a thing in an IC fashion. Overall the post has a very naive perspective. Why companies need so many people is simple. Peter Drucker would often say that you must "innovate or die". Charlie Munger/Warren Buffet have outlived many companies with only a handful that innovated and are still around today. Clayton Christensen outlines how these companies grow in a sustained or innovative fashion. To reduce to three bullets is why I'd say it is a naive perspective. There isn't even an example of entering new markets or riding innovative waves.
notShabu 4y ago
I have a theory that company growth is due to inability to extend the "family" of core shareholders. E.g. an early employee gets a lot less stock than an early founder despite everyone at this stage doing a lot of work. There is a sharp boundary that distinguishes between those involved in the "process of creation", an "elder" or parental class, and the followers. This process happens a few times so there are multiple boundaries where eldership and sense of ownership falls off dramatically. Individuals that are hired past a certain fall-off point are compensated in ownership units only to be competitive with other companies. E.g. whether it's RSUs or options, the "expected value" of the compensation is around market rate, only the volatility(kurtosis) of the expected outcome differs. Since there isn't a direct sense of ownership over the revenue stream, individuals are motivated to increase compensation by managing larger teams b/c the market rate for someone who can do that is higher. There is less return on effort and more risk to do sth like fight through the org structure to gain the necessary political capital to go all-in on an initiative, even with pocket aces. It's better to work with the org structure and with the ambitions of the individuals you interact w/ daily in the local subtree.
sinoue 4y ago
Fun read. Often times top employers play a zero sum game to lockup talent from a handful of schools. Sport teams will do the same predatory behavior by keeping a lot of talent on the bench instead of having to play against them. This worked well for awhile with Google's revenue outstripping Microsoft and many other competitors by paying top dollar and providing lots of great employee benefits. With the recent 12k employees they cut moral is down and the list of dead Google projects https://killedbygoogle.com/ https://killedbygoogle.com/ will continue to climb. Companies like Open.AI have an opportunity to grab top talent and favorable rounds of investment. Finally we might see some challenge on the monopoly of the big.
rippercushions 4y ago
This post seems kind of naive? A big part of why big tech companies need so many people is because any big company, especially one sitting on piles of money, becomes a target for all sorts of predators and has to defend itself. So it has to have armies of SOX compliance officers (because it's still cheaper than getting sued by the SEC), travel expense auditors (because it's still cheaper than shareholder suits after a VP whoops it up in Vegas and sends the bill to the company), mandatory diversity training educators (because it's still cheaper than getting sued by various minorities), patent litigation departments (because it's still cheaper than losing to patent trolls) etc etc, all of which feel like "bullshit jobs" to the average 3-man startup because the average 3-man startup doesn't face any of these problems.
- ElfinTrousers 4y ago
  Finally! A brave champion for the poor beleaguered corporations!
- richwater 4y ago
  [flagged]
- tdeck 4y ago
  What percentage of a big company do you think falls into these categories? The idea that "mandatory diversity training educators" or "travel expenses audiotrs" are anything but a drop in the bucket is laughable. Also, often roles like these are farmed out to vendors and aren't actually staffed by company employees at all.
  - chasd00 4y ago
    The diversity training and other efforts like that are definitely a thing. my referral bonus for getting a POC hired to a peer position is 5 figures ( and it doesn't start with a '1'). It's taken pretty seriously at big companies.
  - junofan 4y ago
    Google literally has a C-level Chief Diversity Officer. Her LinkedIn claims an org size of 130+.
steve_adams_86 4y ago
Even as an early software developer I used to look at massive companies and think what a waste, you could do this with so much less! Today I realize that was partially a failure to recognize the complexity of what was in front of me. Today I’m thinking about a timeline tool for a game development environment. In isolation it’s not too hard to implement and it’s certainly a solved problem. Flash had it 20 years ago! We should be able to do this in a few sprints, right? However, it needs to understand the way the game engine works, and it needs to integrate with the engine in a way that’ll let engine development carry on fluidly. This would be possible with loose abstractions most likely, but it becomes very difficult to make these abstractions finely tuned for a simple and well integrated user experience. We don’t want users to need to know anything about the engine. The deeper we go there, the more likely we are to tie ourselves to specific implementation details. Hmmm… So we need this timeline to fit loosely but to also be maximally useful where it counts. There are definitely opportunities to make mistakes here and get bound by tight coupling which we really can’t afford. There’s also the question of if the engine or any tooling around it needs to know about the timeline. Should we black box it? Our engine team is small, so any major changes there will be very resource intensive… In fact, that decision is crucial because while it could make timeline development easier, it could prevent us from shipping key engine features! Shit, now it’s a very important decision on how we use the team’s time; it’s kind of mission critical. And that doesn’t begin to touch on how the timeline will fit into the UI, how it’ll integrate with the existing API, and if/what’s missing from the API to make this thing work. Suddenly this thing I could mock up over a weekend is a massive endeavour that’ll consume a significant portion of the company’s resources. If only we had another dozen people to help us make it happen Oh, and we’ve got 4 or 5 other super important features to add and they all kind of overlap and interfere with each other. But we should be able to do this with a couple hackers and a weekend or two, it’ll be easy. Move fast and break it or something. I’m not saying no company is too large! Some are insanely oversized. Even so, sometimes tech is hard. You don’t want to try having 9 people give birth to a baby in a month or anything silly, but it’s easy to become constrained in this field. Ideas get bigger than your feasible outputs very quickly. Unfortunately, a lot of the ideas are good! You need more people to make it real! Then of course you’ve got the weird political side of it. But many companies aren’t necessarily up to that game. Sometimes the product you see is only a piece of what’s in the works. Entire teams could be working on stuff that hasn’t materialized yet.
homero 4y ago
Last one makes sense until you count layoffs which not only does the opposite it gives employees a vendetta against you.
- SystemHacker_69 4y ago
  Layoffs are a necessary consequence of a competitive labor market. Layoffs are not an injustice to be rectified.
  - not_enoch_wise 4y ago
    Get this person a consulting fee, then deploy them to business news channels & podcasts!
- deleted 4y ago
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- deleted 4y ago
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ecshafer 4y ago
This misses two big aspects of software engineering as a whole; the more code you already have the, the longer it takes to add new features, and the more people working on a code base, the long it takes to coordinate. These two aspects mean you need more and more people to move things along. You multiply this with that doing a service in multiple countries is more complex than one.
TulliusCicero 4y ago
> This alternate reality could have saved Yahoo. Indeed this is the exact “blocker” strategy is what many of today’s companies like Google/FB/etc are employing. I don't think this is accurate. I think the main reason to pay people a lot is just to get talent and stop already existent competitors from getting that talent (which is still 'blocking' in a sense). Stopping people from making possible start-up competitors is, I think, a comparatively minor concern.
- scatterhead 4y ago
  Indeed. If former employee startups were the major concern, they wouldn't pay so much. It's financial independence from working at faang that enables lots of devs to leave to start or join startups.
- thakoppno 4y ago
  Agree, wasn’t Yahoo’s fate truly sealed once it settled with Google over Overture patents in 2004?
- ipaddr 4y ago
  Then why do all agreements prevent you from working on your side projects or take ip from them if there was no fear?
  - pas 4y ago
    no reasonable fear doesn't mean they are not abusing their labor market position, also doesn't mean legal is not zealous about this (which is okay at that scale)
- syntheweave 4y ago
  At the same time, it's definitely the case that SV was built on Shockley's "traitorous eight" and its generational successors. Big waves of change erupt in the wake of past layoffs and signs point to the same occurring this time. I think it can be the case both that the big firms don't take startups seriously but also soak up talent that would otherwise form those startups, simply because other competitive dynamics motivate doing so, and the talent in question ends up with a paycheck that diminishes personal motivation.
TulliusCicero 4y ago
Big companies need lots of people because a) being bigger means more technical complexity, more bureaucracy, and more risk, all of which mean each individual employee becomes less productive b) there's tons of features that their products tend to have that a typical user doesn't know about or care about, which people aren't factoring into their estimate of how many employees the company actually 'needs' c) there's tons of aspects of a software product that increase in importance the bigger you are that aren't your core thing, but still need to be taken care of: internationalization, security, privacy, accessibility, etc. Of course the typical HN take is probably "psshhhh, that stuff is important no matter how big you are" but realistically, a small startup is gonna spend less time total on those things than a big mature company, most of the time
- gruffin 4y ago
  And I think B is especially key for large global products. Most users of common apps like Facebook don't see the advertiser side, for instance, or don't know that some features are built for specific countries due to regulatory or compliance reasons.
- deleted 4y ago
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- colmvp 4y ago
  +1000 Point A: Biggest wake up call for me going from a startup to big tech. Point B: A year into a company, I'd be exaggerating if I said I knew more than 1% of the codebase. So many things the product needs to operate that users don't know exist since no one cares about what's under the hood. Point C: Yep, imagine having users all around the world who enter and send personal data, and who might use assistive technology. At a startup, it was pretty normal to get the minimal amount done to address some of the needs (if at all) whereas at a bigger company there's way more effort to make sure it's done properly.
  - TulliusCicero 4y ago
    > whereas at a bigger company there's way more effort to make sure it's done properly. Yup, can even break this point down into a) have more resources available so allocating people to these things is more practical b) have more users with those needs so spending time on them is more useful in terms of $$$ c) reputational risk of being "that company that doesn't give a shit about disabled people" has increased
AgentOrange1234 4y ago
One reason I’m not seeing here is that big companies have such high communication overhead. It’s incredibly hard to get large groups of people working efficiently toward common objectives. You can choose between heavy bottlenecks or wasteful duplication of effort, and there is constant churn trying to balance the two. Just knowing what is going on and who to talk to becomes important, hard work. Informing other people what you are doing, why, and how it’s going starts to take significant time. On a small team you’ll never even see how much of a challenge this is.
- anonreeeeplor 4y ago
  Hiring more people just makes it worse exponentially
  - underdeserver 4y ago
    Well, not exponentially, but proportional to n^2 where n is the number of people.
  - preommr 4y ago
    “The bureaucracy is expanding to meet the needs of the expanding bureaucracy.” ― Oscar Wilde
NoPicklez 4y ago
I think this is still very narrow minded around why big tech or any large company needs so many people. Not that I know everything, but to expand and to keep in mind none of these areas are actually developing or providing the service your business might be known for. Accounting, large accounting teams are required to manage the various accounting requirements and technicalities required of organisations that are large or have large enough revenue streams that require them to be financially audited by a third party auditor. These teams perform the accounting function of the company but also support the financial audit process required. Of which there is an enormous amount of regulation by governments around the level of internal control of the organisation (see governance, risk and compliance) Governance, risk and compliance, when you become large enough you need to start managing your risk and defining your appetite for risk as company. This is how your board and audit committees who are charged with governance understand how the organisation is managing its risk. Every company of large enough size has to manage risks relating to cyber security, IT, legal, employee retention, product delivery, sales etc etc. Each of these risks needs to be assessed and various GRC departments jobs are to ensure that the organisation maintains an effectively controlled environment to manage its risk in line with its appetite. Balancing the cost of business and the cost of compliance. Large enough companies are required to maintain three lines of defence, which also means you are subject to various external audits. Legal departments, are required once you reach a large enough size to combat the various legal threats you may incur when delivering a product or service. Either legal threats introduced by compliance, breaches or brought on by individuals. Marketing & Communications, you've made a product, you have/want a brand or you're providing a service. This team actively manages this brand, helps build it and markets it to the outside world. They can often also be responsible for clearing, defining and/or managing the internal and external communications that go out on behalf of the organisation. Which is crucial for managing legal risk and maintaining brand. Human resources, required to manage the people within an organisation of such a large scale. This may include talent acquisition and retention into graduate roles and or senior positions. When there are so many people you can no longer manage yourselves nor be able to identify what people's need are nor begin address them. Payroll, who pays you? Internal IT/Cyber, need I say more? Multiply these areas across multiple geographies or jurisdictions in which you operate. You can start to appreciate why companies have so many people.
deleted 4y ago
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cuchoi 4y ago
For any company it makes sense to hire someone as long as they bring more revenue than cost. FAANG have millions of things they could improve to drive more customers.
- 8note 4y ago
  I don't think it does? Theres questions on what else the business could have done with that money, like collect interest. There's also a question on what drives faang valuation. Each person might have to be increasing the average profitability of all the things the company does -- google shuts down profitable stuff because it doesn't move the google sized needle
  - randomdata 4y ago
    In order for someone to be willing to pay you interest they have to have some kind of direction in mind that they expect will return more money than the cost of the interest. If they have a solid plan that is worth investing in, why not pursue it yourself and reap all of the rewards? Management of that might be unrealistic at individual scale, but when you're the size of Google you can go off in all kinds of different directions without much impact.
TheMagicHorsey 4y ago
OP doesn't seem to understand the nature of the regulatory state at all. Anything that attracts scrutiny from the state must comply with a lot of nonsense which consumes huge amounts of labor ... both legal and technical.
- scarface74 4y ago
  And why people who are in favor of more laws to regulate technology don’t seem to understand that regulation usually helps the large incumbents who can afford the cost of compliance. You see this all of the time in finance also.
  - justatdotin 4y ago
    except where the large incumbents have built their business around non-compliance.
    - rconti 4y ago
      But even non-compliance is a form of compliance! You figure out ways to get around the system, or go un-noticed, or risk the legal action.. all in ways that are easier for a big company to stomach than for a small company to risk.
hpen 4y ago
I don’t think anyone is arguing you shouldn’t pay top people top salaries, but he doesn’t even address what he mentions in the opening paragraph: the legions of lazy people doing nothing
- hirako2000 4y ago
  Was reading already a decade ago stories on how keeping disposable headcounts can be done purposefully, so that when the wind blows the opposite way, droppings dead weights has little to zero impact on business continuity.
anonreeeeplor 4y ago
Why are they big? Because they make a lot of money. Why do they make a lot of money? Because big companies are drilled into the woodwork of the governments worldwide, and partners. How are they drilled into every nook and cranny? They hired people to lock onto every nook and cranny. Amazon, for example, has effectively grafted itself to the United States government. If you shut down Amazon, you would probably end the government. That’s on purpose. These companies are so big because they hire to burrow into every corner and tap into the blood supply so they can never be removed.
- everyone 4y ago
  [flagged]
- noisepunk 4y ago
  I was wondering about how Amazon has grafted itself to the U.S. government so looked it up and found that government agencies rely on AWS. Is that what your referring to?
  - wildrhythms 4y ago
    "Public-private partnership" https://en.wikipedia.org/wiki/Public%E2%80%93private_partnership https://en.wikipedia.org/wiki/Public%E2%80%93private_partner...
  - fundad 4y ago
    You know government, the sector that has the same needs as the private sector economy but is one hundredth the size.
    - anonreeeeplor 4y ago
      The government reached nearly half of USA GDP recently. Assertion: False https://tradingeconomics.com/united-states/government-spending-to-gdp https://tradingeconomics.com/united-states/government-spendi...
BurningFrog 4y ago
I miss the "because they can" explanation. If billions are raining from the sky, you can hire armies of people. Every manager wants to expand their "empire", and there is money to hire people, so in the end a lot of people get hired.
- moduspol 4y ago
  There is also a little bit of policy influence. In a vacuum, a company's profits should only be used by that company to expand / pursue other ventures if that company is uniquely in a position to make the best use of it. Otherwise, shareholders would prefer that dividends be paid out, and the shareholders can choose where to invest it. But dividends are taxed, and a company utilizing those profits to expand / pursue other ventures is not. Especially in the tech sector, this means you're essentially leaving money on the table by paying dividends. For shareholders to be able to invest better, they'd need to overcome the taxes they'd pay on receiving those dividends as income, which is very difficult. This allows for a lot of waste in spending that would otherwise not exist. Even if all of those failed ventures and meaningless middle managers reduce the return on that investment by 25% or more, it's still saving money over just paying dividends to shareholders and staying lean.
- anonreeeeplor 4y ago
  Yes
- TheLonelyGecko 4y ago
  Then a lot of people get fired. Then a lot of people get hired.
  - Ditiris 4y ago
    Yeah but what happens next?!?
    - 6510 4y ago
      You cant find people to do real work
httpz 4y ago
Another reason is that companies try to maximize profit, not profit per employee. If a company can 1.5x their profit by doubling their headcount, they would do it even if it seems less efficient because that's what the investors want.
- ozim 4y ago
  No, one of the core company metric for investors is profit per FTE so that is not true that investors want more headcount. Having more FTE makes your company more trustworthy so in B2B market having more FTEs makes it easier to sign on more customers from F500. If you have 10 employees good luck having F500 company taking you as a serious business. Having more headcount is also making company more trustworthy for banks to get loans. So making it easier to get customers and making it easier to get loans for future growth is also coincidentally more worth for investors - but profit per FTE is still important and if you can make loads of money with 10 employees and the same amount of money with 100 - I would invest in the first one.
everyone 4y ago
I'd say it's because bureaucracy naturally expands to fill the space available to it. Whatever amount of money the company makes, exactly enough salaries will be created to use up that amount of money.
netfortius 4y ago
I would like to see some quantitative criteria here, otherwise big == many people.
- nine_k 4y ago
  Big = large sales volume (billions), large numbers or customers (tens of millions) or customers being large companies themselves.
human 4y ago
As an MBA actually running a medium size business, this article makes my head hurt. I think all these layoffs will be a healthy purge for the better allocation of resources, aka the economy.
moron4hire 4y ago
That doesn't explain the useless engineering theater that these companies engage in, like code review and "readability", that drastically reduce IC velocity. If FAANG supposedly "only" hires the "best and brightest", then why are they so untrusting of their contributions? I mean, I've never worked in a team that large. A big part of that is because I can't imagine asking someone else's permission to write code. If a company can get so big that they can't trust their developers to release code, maybe that company is just too big? Companies like Google are a joke. All the Cap'n Crunch you can eat, but do your job and write some code and get it into production? Can't have that! EDIT: the largest company I ever worked at only had about 300,000 employees.
- dang 4y ago
  We detached this subthread from https://news.ycombinator.com/item?id=34735099 https://news.ycombinator.com/item?id=34735099.
- ethanbond 4y ago
  Writing code isn’t hard, maintaining it is.
  - moron4hire 4y ago
    [flagged]
- TheLonelyGecko 4y ago
  You should try code review, it’s a great tool.
  - moron4hire 4y ago
    I can't see how. If I were to be in an environment where there are multiple developers who can understand even the basic mathematics of geometry and linear algebra too do what I do (that's a tall order. It hasn't happened once in 20 years that I've worked in a company that has had even one other developer that knew anything beyond basic algebra), why would they spend their time telling me how to do my job, rather than just doing their job? If I got something wrong in my code, A) how did the process guarantee that it will be caught? B) why wouldn't whoever found the problem just fix it? It's kind how my children argue over basic things like bedtime. They insist it's only "fair" if one of them turns off the light and the other closes the door. And if the light is already off when they enter the room, then the door closer is going to get pissy and turn the light on to make his brother get up out of bed and turn it off. It's a meaningless exercise developed to give the illusion of control.
preommr 4y ago
Disliked the article because of it's lack of substance. But on this topic, what are companies supposed to do with lots of money? There's way more downsides to paying somebody too much money. Higher salaries past 200k means that people can retire sooner. Paying somebody 10mn is generational wealth - as in it's more money than someone can spend in their lifetime. They're much less likely to put up with bullshit and take important institutional knowledge with them. Also at some point it does become neccessary to hire more people. It's not a good idea for the gap between salaries to be that huge. Paying way above average for labor means a greater chance for a competitor to bridge the gap. And the previous point is important because past a certain point, people are unlikely to work that much harder. If a company pays in the top 5% instead of top 1%, they'll still get lots of people that are willing to work very hard.
- emmo 4y ago
  They could reduce the price of their product.
  - Attrecomet 4y ago
    Hey now, you want them to sell us off cheaply? My life is worth more than a discount bargain on the dataset!
fyzix 4y ago
They incentivize it, Managers get promoted when they have big teams.
ggm 4y ago
One thing is for sure. Google proved you don't need a helpdesk.
VirusNewbie 4y ago
This post is dead on. I didn’t understand it fully until I went to large companies. Google has reinvented every part of the stack for better or worse. Certainly I think git would be fine but it didn’t exist in its current capacity when they built their own source control. But when you operate millions of machines it might actually make sense to have a team hacking on a custom jvm or version of llvm or a custom network stack because single digit percentages point perf increases are tens of millions or even hundreds of millions of dollars worth of value
- 8note 4y ago
  An alternative is that they're lumbering under the weight of all their tech debt, and rather than fix the tech debt, tech companies throw more capacity at it The standard tech company approach to all problems has been to throw capacity at every problem, from AWS to airBnB to Uber
theresistor 4y ago
My view is that the ultra-sized software companies (Google, Meta, Amazon, Microsoft, Uber) have huge headcounts because they have realized something important about software: There's no upper limit to the amount they can produce, and by producing more they're able to provide more and more tailored solutions for more and more hyper-specific use cases, which is needed to acquire and retain users at the kind of scale they deal with. Apple is one notable exception to this, because their product philosophy is one of a centrally designed, "artisanal" user experience.
greesil 4y ago
Can't speak for all of tech, but the amount of design, skills, and technology that goes into a consumer electronics device like a smart phone is truly astonishing. Now release several of these every year. And a laptop or two. And some accessories. And innovate to keep ahead of your competitors, or just to stay relevant. That takes a lot of people with a huge variety of disciplines ranging from analog design, to operating systems, to machine learning.
solalf 4y ago
Reminds me of that famous Oscar Wilde quote they had Leonard Nemoy whisper you in Civ: “The bureaucracy is expanding to meet the needs of the expanding bureaucracy.”
di456 4y ago
It's also been a game of chicken to see who can hire the best talent the fastest and keep them off competitor's patrol. Anything to support growth. But that wasn't sustainable.
pugworthy 4y ago
A great question would be, "Why do big tech companies need so many people?" I've been on projects where if you cut half the people, and kept the right half, you'd be twice as productive. I know this is easy to say, (e.g., "Why can't Holywood make good movies?") but there's truth to it at times.
bryanrasmussen 4y ago
Google with 283 billion in revenue (well 'Alphabet') against GMs 156 billion has 10 thousand fewer employees. In comparison of revenue to size tech needs fewer employees than the major pre-tech companies, which is basically one of the reasons for its great success.
- utopcell 4y ago
  I suspect these two pools of employees get compensated vastly differently.
  - bryanrasmussen 4y ago
    I'm sure they do. But the tech company does not have 'many' people considering their revenue in comparison to the 'non-tech' company. We might even say the tech company has significantly less people when factoring in differences in revenue between the two companies.
joe_the_user 4y ago
All the posts I see so far don't mention what I'd consider the main positive need for many employees in large Internet/tech companies. That is essentially localization. Customizing huge website X to deal with a specific large market Y in way that actually picks a reasonable amount of extra dollars that are "on the table" in that market. IDK, how Facebook or Twitter deals with auto sales, where at least US auto market is a whole different world. Things specific to each country, etc.
est 4y ago
process people needs distribution of responsibilities to lower the risks in promotion.
gyre007 4y ago
I can’t help myself but this post doesn’t give me satisfactory answer on the question the title claims to answer
marhee 4y ago
Because of Price’s law: the square root of number of employees do about 50% of the work (that creates value). So 10.000 emmployees means 100 persons do 50% and 9900 the other 50%. This mean that a team of 4 is the most efficient size. However if you want to scale you must loose efficiency. Because of Price’s law: the square root of number of employees do 50% of the work (that creates value). So 10.000 employees means 100 persons do 50% and 9900 the other 50%. This mean that a team of 4 is the most efficient size. However if you want to scale you must loose efficiency.
- aardvark179 4y ago
  Price’s law is widely quoted in management training and consulting, but it wasn’t a great fit for the data he was originally publishing, and it’s an empirical observation rather than hard and fast fundamental fact. Contributions almost certainly follow some sort of discrete power distribution, but that doesn’t mean you’ll hit a comfortable state at four people where everything has evened out nicely.
  - orthoxerox 4y ago
    But it still works as a rule of thumb: if your department has 100 people and you want to double its productivity, hiring 100 more people won't help. You have to hire around 300 more people if you don't change the way the department works.
- jerrre 4y ago
  wouldn't 1 or 2 be more efficient in this formula? assuming efficiency per employee
jillesvangurp 4y ago
Well as recent layoff rounds seem to suggest, big companies are discovering they don't really need that many people. It will be interesting to see this confirmed in numbers next year but I expect most of these companies will remain profitable, show some growth, etc. It will also be interesting to see if they will cut some more after this. I mean, if this works, why stop? IMHO, the cuts so far are pretty modest and careful. I think Elon Musk is showing with Twitter that you can cut much deeper before it really becomes problematic. Most of these companies are offsetting their lack of efficiency with insanely fat profits. So, they keep on adding people without much consequence. E.g. Google is pretty much printing money to the extent that it almost doesn't matter what they do technically anymore. They actually burn billions on one doomed new initiative after another. Most of these are shut down before any meaningful ROI happens. The money they save with recent layoff rounds is a rounding error compared to their revenue. Their real challenge is finding ways to increase that revenue.
jokethrowaway 4y ago
I don't think the startup model of 99 teams failing and one winning for everyone is suited for FAANGs, because employees have too little skin in the game. That explains why they very very rarely innovate and often acquihire startups and talent in order to innovate. Another big factor you are ignoring is the market. Hiring when the market is strong and firing when it's downhill or when cash is too expensive (eg. see interest rates now) will yield returns just in stock appreciation.
rcarmo 4y ago
I don't think this article has enough substance (or industry awareness) to be on the home page. It is not based on any actual experience on the part of the author, and is just a naive set of opinions. (as a side note, I'm starting to see SubStack as the new Medium -- all I see landing here are fluff pieces to give its authors 15ms of fame)
- pas 4y ago
  15 milliseconds of fame might be reasonable for this piece though :)
MichaelRazum 4y ago
Maybe divide and conquer? It would be a huge risk if, lets say, google core tech would be in hand's of 10 people. Let's assume it is possible. You don't want it, since too much power in few hands.
zonf 4y ago
They don't. Major companies laid off 10-20 percent of their total workforce in recent months. So, they actually don't need that much employee.
dadarecit 4y ago
Protip: they dont.

209 points by flurly 4y ago

black_13 4y ago

[dead]

paulcole 4y ago

This guy “climbed the ladder” at FANG companies and fails to realize that people who aren’t programmers exist?

d_burfoot 4y ago

There are a lot of cynical comments in this thread about large headcounts being a result of mismanagement, complexity, and bloat. But there's another, more virtuous and reasonable, answer to this question. Let's say you are an employee at Apple, and you come up with a very small innovation for the iPhone. Something like making it a bit easier to set a wakeup alarm. Or decreasing the download sizes so that new software updates go 20% faster. And let's say, just for argument, that this small improvement corresponds to 1 penny of value for each user. Well, there are 1.5e9 iPhone users. So your $1e-2 contribution per user just created 1.5e7 dollars of value - enough to justify your whole TC for years.

andelink 4y ago
Sorry, what is the explanation for large headcounts in your comment? Are you saying hire more people because more people results in more innovation? I’m not following.

twawaaay 4y ago

Oh my, where to start. First of all skips the part why non-tech companies need so many people? There is a number of factors: * selection bias. We are talking about these companies exactly because they are large. There are companies like WhatsApp was before acquisition that only needed couple dozen people. * scale inefficiencies. As the company grows there are various forces that make individual contributor less productive. Try to prepare a large party in your kitchen. Want help? If you add another person it will surely get twice as fast? What about 5th person? What about 10th? As you add more people, people will start getting in the way in various ways or will start working on less valuable goals because the most valuable ones are already well covered. * success breeds problems. While the company is small, cash strapped, it is easy to get everybody focused on a single goal because there is literally nothing else they have cash or people or focus to do. But when the company finally succeeds and they get a lot of cash, there opens a wealth of possibilities but also a perceived necessity to spend that money, invest it in future profits and also to diversify. This causes rapid proliferation of new lines of business and experimentation and each one of those experiments is probably another company. But not as focused because they are not as cash strapped and reliant on efficiency to survive. * strategic growth. Above all, once the company finds success in one area, the next goal to pursue is to avoid death. If they build one product and stay focused on it there is a good chance they will at some point get subverted or the market will dry out. One way to deal with this is to just start doing a lot of things in the hopes some of them will pan out. * emergent effects. Large groups of people are showing emergent effects that are very difficult to battle. Every person has their own motivation and their goal is to stay in employ, get raises, get promoted, etc. All these are more important for most people than the actual good of the company and efficiency. These effects cause departments to grow large unnecessarily (because each manager wants to have as high budget and headcount as possible).

gruffin 4y ago
> There are companies like WhatsApp was before acquisition that only needed couple dozen people. But what was its revenue? Was it profitable?
pixl97 4y ago
Don't forget government taxbreak to jobs programs. It may be a small factor in the tech world, but cities love giving X% tax breaks as long as the company brings in Y jobs.
- twawaaay 4y ago
  I don't think companies hire more people due to those jobs programs. I think what typically happens is they use those programs to hire people they would hire anyway AND get a bonus. Or maybe just shift where they hire people.

SanjayMehta 4y ago

A now defunct company had an understanding that any senior director who managed to accumulate 1000 employees/contractors in their org chart would become a VP.

titzer 4y ago

> Better infrastructure means you have undersea cables that enable lower latency video streaming such that users prefer your app over the up and coming app. Uh, this seems like the kind of thing you want to avoid. Long-haul is for connecting data centers, and media should be pushed to the edge with colos? > If you have billions of users using your product per day, you can split those users into 100 different “universes”. Each of those universes can map to a team of 10-20 people This seems like some kind of hallucination written by someone who has not ever seen the internal structure of a 1000+ person product team.

bobdvb 4y ago
Correct, although if the content origin is on one continent and the consumers on the other continent, then you do need to shift at least a replica of that content across the ocean (then use a local CDN for national/regional delivery). Google has issues with having a large amount of content that is watched at all ends of the Earth, so they do need significant global transit to handle the fact that someone in India is possibly watching something from Indiana. Seeding the CDNs creates significant overhead and if the content happens to have a relatively low popularity, transactional overheads mean that the RTT of the requests creates artificial overhead (RTT effectively starts to look like wasted bandwidth).

frupert52 4y ago

The reason big companies need lots of people is because if they didn’t have lots of people they wouldn’t be a big tech company. Really, that’s about it

shadowtree 4y ago

Because bigger teams can accomplish bigger things. HN has this understandable infatuation with startup mode, but running a truly global product line of anything with a large customer base is simply a lot of work. Apple can't be run with 5 people, it also cannot be attacked by a 5 people startup. Same for Microsoft, AWS, ... broad massively multi-product companies are very hard to take on if they have their general shit together. Ask Slack how it went against MSFT Teams, a clearly INFERIOR product. Microsoft out-scaled Slack, simple as that. Sustained innovation of a big company is a formidable moat against disruption. Look at big pharma, these companies have been around for 120+ years! Merck was founded in 1891 (from a root company founded in 1668!) and is still a 50bn revenue behemoth. And yes, modern biopharma is big tech.

analyte123 4y ago
Many of Apple's products could be attacked by smaller companies, if it weren't for their anti-competitive practices. For example, AirPods get exclusive and superior APIs on iPhones - it doesn't matter if you make a better or cheaper AirPod competitor because you are stuck with clunky Bluetooth pairing. No non-Safari web renderers. Can't backup or transfer files to your iPhone without another Apple product. iMessage, the Music app. 30% fees and no sideloading. The list goes on and on. To think that Microsoft almost got broken up because of bundling IE with Windows.
- fndex 4y ago
  Anti-competitive practices is when the government prevents other companies to join the market. That is not the case here. Do you really expect Apple to make life easier for their competitors? You're free to use Samsung, Galaxy Buds, Whatsapp and Spotify if you don't like Apple's products.
  - jakub_g 4y ago
    > Do you really expect Apple to make life easier for their competitors? If Google Chrome was using 100% internet bandwidth for downloading Google.com, but 60% for downloading Bing.com, would that be just "not making life easier for competitors", or maybe something more? Apple's behaviors on iOS are this kind of things. Perfect integration with other Apple products via private APIs, basic limited APIs for others

nilayj 4y ago

Other comments give lots of examples of organizational complexity. Here is an example of code complexity: Changing an object from enum to String is trivial to do in a small codebase. Making this small change in a live system like Youtube becomes a 6 month long migration with multiple SWEs working on it, when you have to do it in a codebase with 10s of millions of lines of code. A lot of complexity comes from code size, multiple teams may end up creating duplicating products/services if there is no standardization etc.

liotier 4y ago
Telco man here... Lengthening the site identifier from six to ten digits was an 18 months project impacting 120 applicative systems - not even counting the vast grey territories of regexes and office macros. We are powerful, but setting ourselves in motion takes quite a bit of pre-heating !

nudpiedo 4y ago

Somehow indie hackers fail to understand that product and organization complexity do not scale linearly. In spite of being true that hungriness, incentives and other existential features are indeed different, which is also true but comes second to the other point: no startup keeps being a startup after it becomes massive, and many have tried.

nova22033 4y ago

For people using WhatsApp as an example https://www.businessinsider.com/whatsapp-facebooks-22-billion-acquisition-did-102-million-in-revenue-last-year-2014-10 https://www.businessinsider.com/whatsapp-facebooks-22-billio... The numbers are unimpressive. Revenue was $10.2 million 2013. It had a net loss of $138 million in 2013. The bulk of that loss, or $98.8 million, came from stock based expenses. It burned $9.9 million in cash for operating activities in 2013.

charles_f 4y ago

Not listed - cost of bureaucracy, organizing large companies takes complexity (arguably too much of it, and often useless) and that transpires in processes that take time during which people dont produce and therefore require more people. - cost of compliance, big companies are more visible and their footprint being larger means more chances for fuckups. The mechanism by which they compensate is lots of security, privacy, compliance checks that add up to the bureaucracy, and requires more people to achieve anything - cost of limited options. Big companies usually have less options they can pick for. They have standardized software stacks, access to additional software is either blocked or requires time expensive negotiation. - cost of hidden incompetence. It's easier for incompetent people to hide, and they have opportunities to move around. Managers don't like to fire, and in larger companies they will have lower accountability (not my money) and higher opportunity (easy to hide) to overlook incompetence and keep the bad people around until they transfer. (that is, of course, unless the company has forcing functions like stack ranking and quotas to fire people - such as Amazon - which is arguably an entire other and worse problem). These people don't produce anything, or are even detrimental, and therefore require more people

thenerdhead 4y ago

> However, most people don’t know I’ve also had experience climbing up the ladder of these large FANG companies, actualizing multiple promotions and saving millions of dollars in the bank from salary/stock/bonuses/benefits/etc. I'm curious how an engineer can save "millions" over the course of a few years by just being at a FANG company? > They pay their best engineers tens of millions of dollars per year. This is the first I've ever heard of such a thing in an IC fashion. Overall the post has a very naive perspective. Why companies need so many people is simple. Peter Drucker would often say that you must "innovate or die". Charlie Munger/Warren Buffet have outlived many companies with only a handful that innovated and are still around today. Clayton Christensen outlines how these companies grow in a sustained or innovative fashion. To reduce to three bullets is why I'd say it is a naive perspective. There isn't even an example of entering new markets or riding innovative waves.

notShabu 4y ago

I have a theory that company growth is due to inability to extend the "family" of core shareholders. E.g. an early employee gets a lot less stock than an early founder despite everyone at this stage doing a lot of work. There is a sharp boundary that distinguishes between those involved in the "process of creation", an "elder" or parental class, and the followers. This process happens a few times so there are multiple boundaries where eldership and sense of ownership falls off dramatically. Individuals that are hired past a certain fall-off point are compensated in ownership units only to be competitive with other companies. E.g. whether it's RSUs or options, the "expected value" of the compensation is around market rate, only the volatility(kurtosis) of the expected outcome differs. Since there isn't a direct sense of ownership over the revenue stream, individuals are motivated to increase compensation by managing larger teams b/c the market rate for someone who can do that is higher. There is less return on effort and more risk to do sth like fight through the org structure to gain the necessary political capital to go all-in on an initiative, even with pocket aces. It's better to work with the org structure and with the ambitions of the individuals you interact w/ daily in the local subtree.

sinoue 4y ago

Fun read. Often times top employers play a zero sum game to lockup talent from a handful of schools. Sport teams will do the same predatory behavior by keeping a lot of talent on the bench instead of having to play against them. This worked well for awhile with Google's revenue outstripping Microsoft and many other competitors by paying top dollar and providing lots of great employee benefits. With the recent 12k employees they cut moral is down and the list of dead Google projects https://killedbygoogle.com/ https://killedbygoogle.com/ will continue to climb. Companies like Open.AI have an opportunity to grab top talent and favorable rounds of investment. Finally we might see some challenge on the monopoly of the big.

rippercushions 4y ago

This post seems kind of naive? A big part of why big tech companies need so many people is because any big company, especially one sitting on piles of money, becomes a target for all sorts of predators and has to defend itself. So it has to have armies of SOX compliance officers (because it's still cheaper than getting sued by the SEC), travel expense auditors (because it's still cheaper than shareholder suits after a VP whoops it up in Vegas and sends the bill to the company), mandatory diversity training educators (because it's still cheaper than getting sued by various minorities), patent litigation departments (because it's still cheaper than losing to patent trolls) etc etc, all of which feel like "bullshit jobs" to the average 3-man startup because the average 3-man startup doesn't face any of these problems.

ElfinTrousers 4y ago
Finally! A brave champion for the poor beleaguered corporations!
richwater 4y ago
[flagged]
tdeck 4y ago
What percentage of a big company do you think falls into these categories? The idea that "mandatory diversity training educators" or "travel expenses audiotrs" are anything but a drop in the bucket is laughable. Also, often roles like these are farmed out to vendors and aren't actually staffed by company employees at all.
- chasd00 4y ago
  The diversity training and other efforts like that are definitely a thing. my referral bonus for getting a POC hired to a peer position is 5 figures ( and it doesn't start with a '1'). It's taken pretty seriously at big companies.
- junofan 4y ago
  Google literally has a C-level Chief Diversity Officer. Her LinkedIn claims an org size of 130+.

steve_adams_86 4y ago

Even as an early software developer I used to look at massive companies and think what a waste, you could do this with so much less! Today I realize that was partially a failure to recognize the complexity of what was in front of me. Today I’m thinking about a timeline tool for a game development environment. In isolation it’s not too hard to implement and it’s certainly a solved problem. Flash had it 20 years ago! We should be able to do this in a few sprints, right? However, it needs to understand the way the game engine works, and it needs to integrate with the engine in a way that’ll let engine development carry on fluidly. This would be possible with loose abstractions most likely, but it becomes very difficult to make these abstractions finely tuned for a simple and well integrated user experience. We don’t want users to need to know anything about the engine. The deeper we go there, the more likely we are to tie ourselves to specific implementation details. Hmmm… So we need this timeline to fit loosely but to also be maximally useful where it counts. There are definitely opportunities to make mistakes here and get bound by tight coupling which we really can’t afford. There’s also the question of if the engine or any tooling around it needs to know about the timeline. Should we black box it? Our engine team is small, so any major changes there will be very resource intensive… In fact, that decision is crucial because while it could make timeline development easier, it could prevent us from shipping key engine features! Shit, now it’s a very important decision on how we use the team’s time; it’s kind of mission critical. And that doesn’t begin to touch on how the timeline will fit into the UI, how it’ll integrate with the existing API, and if/what’s missing from the API to make this thing work. Suddenly this thing I could mock up over a weekend is a massive endeavour that’ll consume a significant portion of the company’s resources. If only we had another dozen people to help us make it happen Oh, and we’ve got 4 or 5 other super important features to add and they all kind of overlap and interfere with each other. But we should be able to do this with a couple hackers and a weekend or two, it’ll be easy. Move fast and break it or something. I’m not saying no company is too large! Some are insanely oversized. Even so, sometimes tech is hard. You don’t want to try having 9 people give birth to a baby in a month or anything silly, but it’s easy to become constrained in this field. Ideas get bigger than your feasible outputs very quickly. Unfortunately, a lot of the ideas are good! You need more people to make it real! Then of course you’ve got the weird political side of it. But many companies aren’t necessarily up to that game. Sometimes the product you see is only a piece of what’s in the works. Entire teams could be working on stuff that hasn’t materialized yet.

homero 4y ago

Last one makes sense until you count layoffs which not only does the opposite it gives employees a vendetta against you.

SystemHacker_69 4y ago
Layoffs are a necessary consequence of a competitive labor market. Layoffs are not an injustice to be rectified.
- not_enoch_wise 4y ago
  Get this person a consulting fee, then deploy them to business news channels & podcasts!
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ecshafer 4y ago

This misses two big aspects of software engineering as a whole; the more code you already have the, the longer it takes to add new features, and the more people working on a code base, the long it takes to coordinate. These two aspects mean you need more and more people to move things along. You multiply this with that doing a service in multiple countries is more complex than one.

TulliusCicero 4y ago

> This alternate reality could have saved Yahoo. Indeed this is the exact “blocker” strategy is what many of today’s companies like Google/FB/etc are employing. I don't think this is accurate. I think the main reason to pay people a lot is just to get talent and stop already existent competitors from getting that talent (which is still 'blocking' in a sense). Stopping people from making possible start-up competitors is, I think, a comparatively minor concern.

scatterhead 4y ago
Indeed. If former employee startups were the major concern, they wouldn't pay so much. It's financial independence from working at faang that enables lots of devs to leave to start or join startups.
thakoppno 4y ago
Agree, wasn’t Yahoo’s fate truly sealed once it settled with Google over Overture patents in 2004?
ipaddr 4y ago
Then why do all agreements prevent you from working on your side projects or take ip from them if there was no fear?
- pas 4y ago
  no reasonable fear doesn't mean they are not abusing their labor market position, also doesn't mean legal is not zealous about this (which is okay at that scale)
syntheweave 4y ago
At the same time, it's definitely the case that SV was built on Shockley's "traitorous eight" and its generational successors. Big waves of change erupt in the wake of past layoffs and signs point to the same occurring this time. I think it can be the case both that the big firms don't take startups seriously but also soak up talent that would otherwise form those startups, simply because other competitive dynamics motivate doing so, and the talent in question ends up with a paycheck that diminishes personal motivation.

TulliusCicero 4y ago

Big companies need lots of people because a) being bigger means more technical complexity, more bureaucracy, and more risk, all of which mean each individual employee becomes less productive b) there's tons of features that their products tend to have that a typical user doesn't know about or care about, which people aren't factoring into their estimate of how many employees the company actually 'needs' c) there's tons of aspects of a software product that increase in importance the bigger you are that aren't your core thing, but still need to be taken care of: internationalization, security, privacy, accessibility, etc. Of course the typical HN take is probably "psshhhh, that stuff is important no matter how big you are" but realistically, a small startup is gonna spend less time total on those things than a big mature company, most of the time

gruffin 4y ago
And I think B is especially key for large global products. Most users of common apps like Facebook don't see the advertiser side, for instance, or don't know that some features are built for specific countries due to regulatory or compliance reasons.
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colmvp 4y ago
+1000 Point A: Biggest wake up call for me going from a startup to big tech. Point B: A year into a company, I'd be exaggerating if I said I knew more than 1% of the codebase. So many things the product needs to operate that users don't know exist since no one cares about what's under the hood. Point C: Yep, imagine having users all around the world who enter and send personal data, and who might use assistive technology. At a startup, it was pretty normal to get the minimal amount done to address some of the needs (if at all) whereas at a bigger company there's way more effort to make sure it's done properly.
- TulliusCicero 4y ago
  > whereas at a bigger company there's way more effort to make sure it's done properly. Yup, can even break this point down into a) have more resources available so allocating people to these things is more practical b) have more users with those needs so spending time on them is more useful in terms of $$$ c) reputational risk of being "that company that doesn't give a shit about disabled people" has increased

AgentOrange1234 4y ago

One reason I’m not seeing here is that big companies have such high communication overhead. It’s incredibly hard to get large groups of people working efficiently toward common objectives. You can choose between heavy bottlenecks or wasteful duplication of effort, and there is constant churn trying to balance the two. Just knowing what is going on and who to talk to becomes important, hard work. Informing other people what you are doing, why, and how it’s going starts to take significant time. On a small team you’ll never even see how much of a challenge this is.

anonreeeeplor 4y ago
Hiring more people just makes it worse exponentially
- underdeserver 4y ago
  Well, not exponentially, but proportional to n^2 where n is the number of people.
- preommr 4y ago
  “The bureaucracy is expanding to meet the needs of the expanding bureaucracy.” ― Oscar Wilde

NoPicklez 4y ago

I think this is still very narrow minded around why big tech or any large company needs so many people. Not that I know everything, but to expand and to keep in mind none of these areas are actually developing or providing the service your business might be known for. Accounting, large accounting teams are required to manage the various accounting requirements and technicalities required of organisations that are large or have large enough revenue streams that require them to be financially audited by a third party auditor. These teams perform the accounting function of the company but also support the financial audit process required. Of which there is an enormous amount of regulation by governments around the level of internal control of the organisation (see governance, risk and compliance) Governance, risk and compliance, when you become large enough you need to start managing your risk and defining your appetite for risk as company. This is how your board and audit committees who are charged with governance understand how the organisation is managing its risk. Every company of large enough size has to manage risks relating to cyber security, IT, legal, employee retention, product delivery, sales etc etc. Each of these risks needs to be assessed and various GRC departments jobs are to ensure that the organisation maintains an effectively controlled environment to manage its risk in line with its appetite. Balancing the cost of business and the cost of compliance. Large enough companies are required to maintain three lines of defence, which also means you are subject to various external audits. Legal departments, are required once you reach a large enough size to combat the various legal threats you may incur when delivering a product or service. Either legal threats introduced by compliance, breaches or brought on by individuals. Marketing & Communications, you've made a product, you have/want a brand or you're providing a service. This team actively manages this brand, helps build it and markets it to the outside world. They can often also be responsible for clearing, defining and/or managing the internal and external communications that go out on behalf of the organisation. Which is crucial for managing legal risk and maintaining brand. Human resources, required to manage the people within an organisation of such a large scale. This may include talent acquisition and retention into graduate roles and or senior positions. When there are so many people you can no longer manage yourselves nor be able to identify what people's need are nor begin address them. Payroll, who pays you? Internal IT/Cyber, need I say more? Multiply these areas across multiple geographies or jurisdictions in which you operate. You can start to appreciate why companies have so many people.

deleted 4y ago

[deleted]

cuchoi 4y ago

For any company it makes sense to hire someone as long as they bring more revenue than cost. FAANG have millions of things they could improve to drive more customers.

8note 4y ago
I don't think it does? Theres questions on what else the business could have done with that money, like collect interest. There's also a question on what drives faang valuation. Each person might have to be increasing the average profitability of all the things the company does -- google shuts down profitable stuff because it doesn't move the google sized needle
- randomdata 4y ago
  In order for someone to be willing to pay you interest they have to have some kind of direction in mind that they expect will return more money than the cost of the interest. If they have a solid plan that is worth investing in, why not pursue it yourself and reap all of the rewards? Management of that might be unrealistic at individual scale, but when you're the size of Google you can go off in all kinds of different directions without much impact.

TheMagicHorsey 4y ago

OP doesn't seem to understand the nature of the regulatory state at all. Anything that attracts scrutiny from the state must comply with a lot of nonsense which consumes huge amounts of labor ... both legal and technical.

scarface74 4y ago
And why people who are in favor of more laws to regulate technology don’t seem to understand that regulation usually helps the large incumbents who can afford the cost of compliance. You see this all of the time in finance also.
- justatdotin 4y ago
  except where the large incumbents have built their business around non-compliance.
  - rconti 4y ago
    But even non-compliance is a form of compliance! You figure out ways to get around the system, or go un-noticed, or risk the legal action.. all in ways that are easier for a big company to stomach than for a small company to risk.

hpen 4y ago

I don’t think anyone is arguing you shouldn’t pay top people top salaries, but he doesn’t even address what he mentions in the opening paragraph: the legions of lazy people doing nothing

hirako2000 4y ago
Was reading already a decade ago stories on how keeping disposable headcounts can be done purposefully, so that when the wind blows the opposite way, droppings dead weights has little to zero impact on business continuity.

anonreeeeplor 4y ago

Why are they big? Because they make a lot of money. Why do they make a lot of money? Because big companies are drilled into the woodwork of the governments worldwide, and partners. How are they drilled into every nook and cranny? They hired people to lock onto every nook and cranny. Amazon, for example, has effectively grafted itself to the United States government. If you shut down Amazon, you would probably end the government. That’s on purpose. These companies are so big because they hire to burrow into every corner and tap into the blood supply so they can never be removed.

everyone 4y ago
[flagged]
noisepunk 4y ago
I was wondering about how Amazon has grafted itself to the U.S. government so looked it up and found that government agencies rely on AWS. Is that what your referring to?
- wildrhythms 4y ago
  "Public-private partnership" https://en.wikipedia.org/wiki/Public%E2%80%93private_partnership https://en.wikipedia.org/wiki/Public%E2%80%93private_partner...
- fundad 4y ago
  You know government, the sector that has the same needs as the private sector economy but is one hundredth the size.
  - anonreeeeplor 4y ago
    The government reached nearly half of USA GDP recently. Assertion: False https://tradingeconomics.com/united-states/government-spending-to-gdp https://tradingeconomics.com/united-states/government-spendi...

BurningFrog 4y ago

I miss the "because they can" explanation. If billions are raining from the sky, you can hire armies of people. Every manager wants to expand their "empire", and there is money to hire people, so in the end a lot of people get hired.

moduspol 4y ago
There is also a little bit of policy influence. In a vacuum, a company's profits should only be used by that company to expand / pursue other ventures if that company is uniquely in a position to make the best use of it. Otherwise, shareholders would prefer that dividends be paid out, and the shareholders can choose where to invest it. But dividends are taxed, and a company utilizing those profits to expand / pursue other ventures is not. Especially in the tech sector, this means you're essentially leaving money on the table by paying dividends. For shareholders to be able to invest better, they'd need to overcome the taxes they'd pay on receiving those dividends as income, which is very difficult. This allows for a lot of waste in spending that would otherwise not exist. Even if all of those failed ventures and meaningless middle managers reduce the return on that investment by 25% or more, it's still saving money over just paying dividends to shareholders and staying lean.
anonreeeeplor 4y ago
Yes
TheLonelyGecko 4y ago
Then a lot of people get fired. Then a lot of people get hired.
- Ditiris 4y ago
  Yeah but what happens next?!?
  - 6510 4y ago
    You cant find people to do real work

httpz 4y ago

Another reason is that companies try to maximize profit, not profit per employee. If a company can 1.5x their profit by doubling their headcount, they would do it even if it seems less efficient because that's what the investors want.

ozim 4y ago
No, one of the core company metric for investors is profit per FTE so that is not true that investors want more headcount. Having more FTE makes your company more trustworthy so in B2B market having more FTEs makes it easier to sign on more customers from F500. If you have 10 employees good luck having F500 company taking you as a serious business. Having more headcount is also making company more trustworthy for banks to get loans. So making it easier to get customers and making it easier to get loans for future growth is also coincidentally more worth for investors - but profit per FTE is still important and if you can make loads of money with 10 employees and the same amount of money with 100 - I would invest in the first one.

everyone 4y ago

I'd say it's because bureaucracy naturally expands to fill the space available to it. Whatever amount of money the company makes, exactly enough salaries will be created to use up that amount of money.

netfortius 4y ago

I would like to see some quantitative criteria here, otherwise big == many people.

nine_k 4y ago
Big = large sales volume (billions), large numbers or customers (tens of millions) or customers being large companies themselves.

human 4y ago

As an MBA actually running a medium size business, this article makes my head hurt. I think all these layoffs will be a healthy purge for the better allocation of resources, aka the economy.

moron4hire 4y ago

That doesn't explain the useless engineering theater that these companies engage in, like code review and "readability", that drastically reduce IC velocity. If FAANG supposedly "only" hires the "best and brightest", then why are they so untrusting of their contributions? I mean, I've never worked in a team that large. A big part of that is because I can't imagine asking someone else's permission to write code. If a company can get so big that they can't trust their developers to release code, maybe that company is just too big? Companies like Google are a joke. All the Cap'n Crunch you can eat, but do your job and write some code and get it into production? Can't have that! EDIT: the largest company I ever worked at only had about 300,000 employees.

dang 4y ago
We detached this subthread from https://news.ycombinator.com/item?id=34735099 https://news.ycombinator.com/item?id=34735099.
ethanbond 4y ago
Writing code isn’t hard, maintaining it is.
- moron4hire 4y ago
  [flagged]
TheLonelyGecko 4y ago
You should try code review, it’s a great tool.
- moron4hire 4y ago
  I can't see how. If I were to be in an environment where there are multiple developers who can understand even the basic mathematics of geometry and linear algebra too do what I do (that's a tall order. It hasn't happened once in 20 years that I've worked in a company that has had even one other developer that knew anything beyond basic algebra), why would they spend their time telling me how to do my job, rather than just doing their job? If I got something wrong in my code, A) how did the process guarantee that it will be caught? B) why wouldn't whoever found the problem just fix it? It's kind how my children argue over basic things like bedtime. They insist it's only "fair" if one of them turns off the light and the other closes the door. And if the light is already off when they enter the room, then the door closer is going to get pissy and turn the light on to make his brother get up out of bed and turn it off. It's a meaningless exercise developed to give the illusion of control.

preommr 4y ago

Disliked the article because of it's lack of substance. But on this topic, what are companies supposed to do with lots of money? There's way more downsides to paying somebody too much money. Higher salaries past 200k means that people can retire sooner. Paying somebody 10mn is generational wealth - as in it's more money than someone can spend in their lifetime. They're much less likely to put up with bullshit and take important institutional knowledge with them. Also at some point it does become neccessary to hire more people. It's not a good idea for the gap between salaries to be that huge. Paying way above average for labor means a greater chance for a competitor to bridge the gap. And the previous point is important because past a certain point, people are unlikely to work that much harder. If a company pays in the top 5% instead of top 1%, they'll still get lots of people that are willing to work very hard.

emmo 4y ago
They could reduce the price of their product.
- Attrecomet 4y ago
  Hey now, you want them to sell us off cheaply? My life is worth more than a discount bargain on the dataset!

fyzix 4y ago

They incentivize it, Managers get promoted when they have big teams.

ggm 4y ago

One thing is for sure. Google proved you don't need a helpdesk.

VirusNewbie 4y ago

This post is dead on. I didn’t understand it fully until I went to large companies. Google has reinvented every part of the stack for better or worse. Certainly I think git would be fine but it didn’t exist in its current capacity when they built their own source control. But when you operate millions of machines it might actually make sense to have a team hacking on a custom jvm or version of llvm or a custom network stack because single digit percentages point perf increases are tens of millions or even hundreds of millions of dollars worth of value

8note 4y ago
An alternative is that they're lumbering under the weight of all their tech debt, and rather than fix the tech debt, tech companies throw more capacity at it The standard tech company approach to all problems has been to throw capacity at every problem, from AWS to airBnB to Uber

theresistor 4y ago

My view is that the ultra-sized software companies (Google, Meta, Amazon, Microsoft, Uber) have huge headcounts because they have realized something important about software: There's no upper limit to the amount they can produce, and by producing more they're able to provide more and more tailored solutions for more and more hyper-specific use cases, which is needed to acquire and retain users at the kind of scale they deal with. Apple is one notable exception to this, because their product philosophy is one of a centrally designed, "artisanal" user experience.

greesil 4y ago

Can't speak for all of tech, but the amount of design, skills, and technology that goes into a consumer electronics device like a smart phone is truly astonishing. Now release several of these every year. And a laptop or two. And some accessories. And innovate to keep ahead of your competitors, or just to stay relevant. That takes a lot of people with a huge variety of disciplines ranging from analog design, to operating systems, to machine learning.

solalf 4y ago

Reminds me of that famous Oscar Wilde quote they had Leonard Nemoy whisper you in Civ: “The bureaucracy is expanding to meet the needs of the expanding bureaucracy.”

di456 4y ago

It's also been a game of chicken to see who can hire the best talent the fastest and keep them off competitor's patrol. Anything to support growth. But that wasn't sustainable.

pugworthy 4y ago

A great question would be, "Why do big tech companies need so many people?" I've been on projects where if you cut half the people, and kept the right half, you'd be twice as productive. I know this is easy to say, (e.g., "Why can't Holywood make good movies?") but there's truth to it at times.

bryanrasmussen 4y ago

Google with 283 billion in revenue (well 'Alphabet') against GMs 156 billion has 10 thousand fewer employees. In comparison of revenue to size tech needs fewer employees than the major pre-tech companies, which is basically one of the reasons for its great success.

utopcell 4y ago
I suspect these two pools of employees get compensated vastly differently.
- bryanrasmussen 4y ago
  I'm sure they do. But the tech company does not have 'many' people considering their revenue in comparison to the 'non-tech' company. We might even say the tech company has significantly less people when factoring in differences in revenue between the two companies.

joe_the_user 4y ago

All the posts I see so far don't mention what I'd consider the main positive need for many employees in large Internet/tech companies. That is essentially localization. Customizing huge website X to deal with a specific large market Y in way that actually picks a reasonable amount of extra dollars that are "on the table" in that market. IDK, how Facebook or Twitter deals with auto sales, where at least US auto market is a whole different world. Things specific to each country, etc.

est 4y ago

process people needs distribution of responsibilities to lower the risks in promotion.

gyre007 4y ago

I can’t help myself but this post doesn’t give me satisfactory answer on the question the title claims to answer

marhee 4y ago

Because of Price’s law: the square root of number of employees do about 50% of the work (that creates value). So 10.000 emmployees means 100 persons do 50% and 9900 the other 50%. This mean that a team of 4 is the most efficient size. However if you want to scale you must loose efficiency. Because of Price’s law: the square root of number of employees do 50% of the work (that creates value). So 10.000 employees means 100 persons do 50% and 9900 the other 50%. This mean that a team of 4 is the most efficient size. However if you want to scale you must loose efficiency.

aardvark179 4y ago
Price’s law is widely quoted in management training and consulting, but it wasn’t a great fit for the data he was originally publishing, and it’s an empirical observation rather than hard and fast fundamental fact. Contributions almost certainly follow some sort of discrete power distribution, but that doesn’t mean you’ll hit a comfortable state at four people where everything has evened out nicely.
- orthoxerox 4y ago
  But it still works as a rule of thumb: if your department has 100 people and you want to double its productivity, hiring 100 more people won't help. You have to hire around 300 more people if you don't change the way the department works.
jerrre 4y ago
wouldn't 1 or 2 be more efficient in this formula? assuming efficiency per employee

jillesvangurp 4y ago

Well as recent layoff rounds seem to suggest, big companies are discovering they don't really need that many people. It will be interesting to see this confirmed in numbers next year but I expect most of these companies will remain profitable, show some growth, etc. It will also be interesting to see if they will cut some more after this. I mean, if this works, why stop? IMHO, the cuts so far are pretty modest and careful. I think Elon Musk is showing with Twitter that you can cut much deeper before it really becomes problematic. Most of these companies are offsetting their lack of efficiency with insanely fat profits. So, they keep on adding people without much consequence. E.g. Google is pretty much printing money to the extent that it almost doesn't matter what they do technically anymore. They actually burn billions on one doomed new initiative after another. Most of these are shut down before any meaningful ROI happens. The money they save with recent layoff rounds is a rounding error compared to their revenue. Their real challenge is finding ways to increase that revenue.

jokethrowaway 4y ago

I don't think the startup model of 99 teams failing and one winning for everyone is suited for FAANGs, because employees have too little skin in the game. That explains why they very very rarely innovate and often acquihire startups and talent in order to innovate. Another big factor you are ignoring is the market. Hiring when the market is strong and firing when it's downhill or when cash is too expensive (eg. see interest rates now) will yield returns just in stock appreciation.

rcarmo 4y ago

I don't think this article has enough substance (or industry awareness) to be on the home page. It is not based on any actual experience on the part of the author, and is just a naive set of opinions. (as a side note, I'm starting to see SubStack as the new Medium -- all I see landing here are fluff pieces to give its authors 15ms of fame)

pas 4y ago
15 milliseconds of fame might be reasonable for this piece though :)

MichaelRazum 4y ago

Maybe divide and conquer? It would be a huge risk if, lets say, google core tech would be in hand's of 10 people. Let's assume it is possible. You don't want it, since too much power in few hands.

zonf 4y ago

They don't. Major companies laid off 10-20 percent of their total workforce in recent months. So, they actually don't need that much employee.

dadarecit 4y ago

Protip: they dont.