Judging Progress of Companies based on Team Size
I get asked all the time about the size of our team. From clients, fellow entrepreneurs, potential investors to potential employees. I see a pale of gloom descend on their face as soon as I say we are 5 people or less. We have never been more than 5 people at any point of time in our brief history. I wonder why it is such an important question. For most people it seems, it is a sign of progress.
Now, I don’t know what the right answer is. Progress is not necessarily directly proportional to Team Size. Or is it?
Someone recently told me that a large team shows intent for growth and scale. Someone else I spoke to said that since no one discloses revenues, one way to figure whether a company is doing well is to see the number of employees on the office floor. If there are many people then it is a proxy for revenue/funds, it means the company has a lot of money. This becomes very important for potential employees. There is yet another argument which talks about building redundancy in the system. Especially, if people keep getting poached as they do these days with unlimited VC/PE money flowing in the Indian market. I think there is some merit in all the arguments above.
However, I think we tend to miss the important metric of productivity in our discussions. Often 10 people can do a better job with a product or a service than 100. With the kind of technology at our disposal why do you need to employ more people? About 2 years back, when I ran this company alone with part-time interns, my friend and entrepreneur Kenneth Serrao would repeatedly point out that team size isn’t a very relevant metric at all. At the same time, he would never miss out on an opportunity to hire a good guy. Quality triumphs over quantity at any time of an organization’s evolution.
The really good argument in favour of hiring more people is to get specialists working on parts of your business who will add to your marginal profit rapidly. In almost all other cases I believe you can either automate or outsource.
If you track the evolution of team sizes of some of the hot technology companies in the world over the last 15 years, the numbers are noteworthy. For e.g.
Google had only about 1000 employees 5 years after inception and 2292 employees at the time of its IPO on June 30, 2004
Twitter has 3600+ employees
Netflix even today has only about 2000 odd employees
TripAdvisor has just over 2000 employees
AirBnB has 1600+ employees today. 3 years after starting it they had 130 employees worldwide.
Uber has 1000 employees worldwide
Evernote started in 2007, still has less than 500 people and is valued at well over 1 Bn Dollars.
Whatsapp had 55 employees when it was sold to Facebook for 19 Bn Dollars.
Instagram had 13 employees when it was sold to Facebook for 1 Bn Dollars.
We have scores of Indian start-ups who already have hundreds or thousands of employees with little revenue and without any visibility on profit. The amazing thing is that Indian employees boast of spending 14-16 hours working in office. Is it because we are less productive? Or is it that we do not leverage technology well enough? Or is it simply just that labour is cheap in India?
I think there is a genuine skill problem that we have. We may have aptitude but aptitude alone cannot do much. I have met 3 entrepreneurs here in Germany and Netherlands who have specially traveled to India looking for developers. All 3 of them say they were disappointed. Apart from usual issues of not delivering on time or cutting corners, most developers just weren’t aware of how quickly the world was moving. One of them said he felt he was deliberately cheated. So skill, attitude, exposure, communication – everything could still be a problem.
What do you think?
The author is the Creator of InsideIIM.com. You can read all his stories on ankit9doshi.insideiim.com