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When a company is successful, by which I mean it turns a healthy profit and eventually even enough to go public, it ends up sustaining a lot more employees doin

When a company is successful, by which I mean it turns a healthy profit and eventually even enough to go public, it ends up sustaining a lot more employees doing a lot less than a smaller, leaner company that can’t afford inefficiency. That doesn’t matter much to the successful company, it makes more than enough money to cover the inefficiency, and the inefficiency isn’t causing any real trouble - it just means that a lot of people are being paid either to not produce very much or to produce things that will end up being thrown away. Most executives and high level managers are used to this environment. You don’t actually need to be lean or very effective, you just need to pretend to be and know that whatever the company’s main revenue source is will cover you whatever you do. As long as you can tell a good story internally to justify your position. Turns out that doesn’t transfer well to startups that actually need value out of every dollar spent.

richardw 2y ago
Yeah but when your company gets a real challenge, you find out if you’re filled with builders or comp optimisers.
JonChesterfield 2y ago
A really special failure mode is to hire management from proper grown up companies to implement real processes for your aspirationally-real startup. Serious economic misunderstanding on multiple levels and a popular choice nevertheless.
- hobs 2y ago
  Hah! I have seen and cleaned this up several times now; spend 80% or more of the total lifetime spend of the company in say year 4-6 after you got some basic traction, borrowing like crazy, gain literally nothing, fire everyone involved, start over with skeleton team, rebuild something useful out of the ashes.
  - deleted 2y ago
    [deleted]
- Aurornis 2y ago
  My first exposure to big company management was, ironically, at a startup. They hired their C-level executives from big companies. Those executives hired VPs and extra layers of management who were also from big companies. Very quickly we had a deep org chart where ICs could be 5 steps removed from the CEO even though they hadn’t decided exactly what product we were going to build. Everything was done by committee in increments of the 1-hour recurring meeting once a week. You could be on 10 of these recurring meetings for 10 different projects. The first part of every meeting was a recap of last meeting. The middle part was about 20 minutes of trying to make progress on blocking items while the ex-BigCo managers came up with excuses for why they didn’t do their part yet (usually it was because they had too many meetings). The last 20 minutes was a performative exercise where we decided on action items for the week which we all knew were unlikely to get done. The company went on like this for years after I left until they ran out of extra funds to keep the charade going. The management scattered to other “startups” where I’ve heard they’re continuing to repeat the same games.
  - ldjkfkdsjnv 2y ago
    Honestly, the people that put in these processes are the smart ones. Useless as they are, they do climb the ladder, get good titles, and good pay.
    - mattgreenrocks 2y ago
      Smart? I doubt they like doing those things. If they were actually smart they’d figure out how to set up an employment situation that they don’t mind that also has the pay/status that they want.
    - aleph_minus_one 2y ago
      > Honestly, the people that put in these processes are the smart ones. These people are not the smart ones, but the ones who are really good at doing "company politics" and "playing political games" (which are very different skills from being smart). My personal opinion is that it is rather a sign of smartness to see through all of this. But unluckily the people who are capable of this lack the political power and backing of other people to get "dangerous" for these "ladder climbers" (or if they do become dangerous, it is for the same reasons easy to "get rid of them" (e.g. fire them)).
RandomLensman 2y ago
Conversly, I have seen a fair number of start-ups creating very inefficient setups and processes - having some knowledge on how to do things effectively and efficiently is something that needs to be acquired.
jodacola 2y ago
I’ve had a lot of conversations over my career about this general topic, and I still haven’t been able to answer: If a large, successful company operated extremely cleanly, wouldn’t that increase stock price even further? What are the disincentives to doing so (beyond the need for requiring more from people)?
- thelastgallon 2y ago
  Once a company becomes successful, it attracts the second kind of people in Iron Law of Bureaucracy. https://www.jerrypournelle.com/reports/jerryp/iron.html https://www.jerrypournelle.com/reports/jerryp/iron.html
  - AtlasBarfed 2y ago
    Third, there's people who only value themselves and use the organization as an excuse.
    - y04nn 2y ago
      This is probably the majority of cases, but it is beneficial to the organization, similarly to the Adams's Smith invisible hand.
- throwadobe 2y ago
  It takes effort, requires goodwill, has damaging implications to internal politics and ultimately is not the best way to maximize tenure at C-level roles. Executives are solving for their job, not for the company's success.
- Chance-Device 2y ago
  I’d add to the other replies by saying that this isn’t just pure inefficiency - it’s the ability to try things and get them wrong without dying. Often several things. If one of them works out, maybe they justify the rest - just like investing in startups, ironically. Second, it’s also about redundancy, having more employees covers you from key man syndrome where your operations could be adversely affected by an employee leaving. Even if it means you technically have more employees than you need at a bare minimum. Third, I’d argue that the level of “efficiency” required by a startup simply isn’t sustainable in the long run, unless you want everyone to burn out. Successful companies likely span a spectrum of efficiency, but none of them need to be on the far efficient end like startups do, and that’s better for everyone working there.

richardw 2y ago

Yeah but when your company gets a real challenge, you find out if you’re filled with builders or comp optimisers.

JonChesterfield 2y ago

A really special failure mode is to hire management from proper grown up companies to implement real processes for your aspirationally-real startup. Serious economic misunderstanding on multiple levels and a popular choice nevertheless.

hobs 2y ago
Hah! I have seen and cleaned this up several times now; spend 80% or more of the total lifetime spend of the company in say year 4-6 after you got some basic traction, borrowing like crazy, gain literally nothing, fire everyone involved, start over with skeleton team, rebuild something useful out of the ashes.
- deleted 2y ago
  [deleted]
Aurornis 2y ago
My first exposure to big company management was, ironically, at a startup. They hired their C-level executives from big companies. Those executives hired VPs and extra layers of management who were also from big companies. Very quickly we had a deep org chart where ICs could be 5 steps removed from the CEO even though they hadn’t decided exactly what product we were going to build. Everything was done by committee in increments of the 1-hour recurring meeting once a week. You could be on 10 of these recurring meetings for 10 different projects. The first part of every meeting was a recap of last meeting. The middle part was about 20 minutes of trying to make progress on blocking items while the ex-BigCo managers came up with excuses for why they didn’t do their part yet (usually it was because they had too many meetings). The last 20 minutes was a performative exercise where we decided on action items for the week which we all knew were unlikely to get done. The company went on like this for years after I left until they ran out of extra funds to keep the charade going. The management scattered to other “startups” where I’ve heard they’re continuing to repeat the same games.
- ldjkfkdsjnv 2y ago
  Honestly, the people that put in these processes are the smart ones. Useless as they are, they do climb the ladder, get good titles, and good pay.
  - mattgreenrocks 2y ago
    Smart? I doubt they like doing those things. If they were actually smart they’d figure out how to set up an employment situation that they don’t mind that also has the pay/status that they want.
  - aleph_minus_one 2y ago
    > Honestly, the people that put in these processes are the smart ones. These people are not the smart ones, but the ones who are really good at doing "company politics" and "playing political games" (which are very different skills from being smart). My personal opinion is that it is rather a sign of smartness to see through all of this. But unluckily the people who are capable of this lack the political power and backing of other people to get "dangerous" for these "ladder climbers" (or if they do become dangerous, it is for the same reasons easy to "get rid of them" (e.g. fire them)).

RandomLensman 2y ago

Conversly, I have seen a fair number of start-ups creating very inefficient setups and processes - having some knowledge on how to do things effectively and efficiently is something that needs to be acquired.

jodacola 2y ago

I’ve had a lot of conversations over my career about this general topic, and I still haven’t been able to answer: If a large, successful company operated extremely cleanly, wouldn’t that increase stock price even further? What are the disincentives to doing so (beyond the need for requiring more from people)?

thelastgallon 2y ago
Once a company becomes successful, it attracts the second kind of people in Iron Law of Bureaucracy. https://www.jerrypournelle.com/reports/jerryp/iron.html https://www.jerrypournelle.com/reports/jerryp/iron.html
- AtlasBarfed 2y ago
  Third, there's people who only value themselves and use the organization as an excuse.
  - y04nn 2y ago
    This is probably the majority of cases, but it is beneficial to the organization, similarly to the Adams's Smith invisible hand.
throwadobe 2y ago
It takes effort, requires goodwill, has damaging implications to internal politics and ultimately is not the best way to maximize tenure at C-level roles. Executives are solving for their job, not for the company's success.
Chance-Device 2y ago
I’d add to the other replies by saying that this isn’t just pure inefficiency - it’s the ability to try things and get them wrong without dying. Often several things. If one of them works out, maybe they justify the rest - just like investing in startups, ironically. Second, it’s also about redundancy, having more employees covers you from key man syndrome where your operations could be adversely affected by an employee leaving. Even if it means you technically have more employees than you need at a bare minimum. Third, I’d argue that the level of “efficiency” required by a startup simply isn’t sustainable in the long run, unless you want everyone to burn out. Successful companies likely span a spectrum of efficiency, but none of them need to be on the far efficient end like startups do, and that’s better for everyone working there.