When companies get bigger you likely don’t want to use spark to continue building it out
How a startup loses its spark
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Re: How a startup loses its spark
#32The book Loonshots by Safi Bahcall describes this phenomena quite well. There's a "phase transition" of incentives at around 150 people that can be fatal to many organizations. The secret sauce is how a startup goes past this headcount. Ideally many software companies quite honestly don't need more than 150 people!
See Miller’s “Barbarians to Bureaucrats” for a description of the full corporate lifecycle. Barbarian -> builder -> explorer -> administrator -> bureaucrat -> aristocrat.
Re: How a startup loses its spark
#33I disagree - as someone who has started up small companies and worked in megacorps, including FAANG and major banks, it’s entirely possible to build that intoxicating environment anywhere. It’s more about having a dynamic leader who assembles teams into collections of individuals who know precisely why they are there - and are given the work they excel at and the work they don’t the manager ensures someone who does helps them. Then the manager has to make sure the mission of the team is crystal clear in its value to the mission of the enterprise and the enterprises mission on earth. Finally the manager has to relentlessly break down barriers to production and impact.
The arguments articulated are entirely false: ex. N^2 communications. This is reductionist and absurd. No team depends on every team in the org. Their domain is often fairly small and their adjacent teams extremely finite. The exception are “core teams” (which have been my specialty). However a well functioning core team doesn’t have n^2 communication overhead - they act as a concentrator and teams come to them - which is N. N can be large, in which case effective triage is crucial, but so is automation and self service, coherent platforms that are self documented, and some folks on the team that really really enjoy teaching.
I’ve burned out though on building these teams. It’s absurdly hard work on management. But management is supposed to be absurdly hard work. My next gig is as a distinguished engineer at a late stage startup - back to the roots for a while.
Re: How a startup loses its spark
#34> Is this preventable? I think not. If you look closely, all these problems fundamentally come from…
It is preventable.
I built an ISP in mid-90s, a digital agency in late 90s, another digital agency and a streaming CDN (world's first VDN) in 00s, as well as worked as chief architect for cloud at world's largest hedge fund and CTO of world's second largest bank. I'm currently an entrepreneur again, co-founding and building a hedge fund from scratch.
My experiences across these, particularly at the digital agencies (where I got to help hundreds of clients go through growth) and the mega bank (where I got to see how things working when small can also work somewhere global), tell me all the goodness from the initial list can be built into the operating model, with a couple caveats.
These are hard[^1]:
1. No domain versus technology divide. If you hear "The business wants..." or "I need I.T. to..." it's not going to work. At a fintech, for instance, all teams should have both fin and tech on the team, owning their outcomes.
2. No command and control managerialism better suited for piecework than building. No project managers. No scrum-masters. Importantly, and apparently pure heresy: no projects.[^2]
Instead of projects, think, what should we do better?
Instead of controlling for budgets and delivery dates, control for focus (like priorities but mostly about saying "no" to things instead of "yes" to everything with stack ranking) and outcome value (e.g. RoI or RoE instead of hitting dates). Then you can manage the money as investments in teams delivering outcomes, instead of budgets for projects.
Hitting dates well becomes easy and fun/rewarding when you scope using focus instead of pre-defining all (probably imperfect) requirements and you ensure teams are equipped with people (will, skill), and resources (tools, space) to own outcomes. (If people are called resources, run away.)
It is preventable, and I'm happy to talk live with anyone building a work management tool that is interested in our approach.
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[^1]: see wicked problems: https://en.m.wikipedia.org/wiki/Wicked_problem
[^2]: You can do time-boxed work with an outcome. That could look a lot like a project. But the word “project” tends to bring with it a pile of practices that all kill the intrinsic motivation for building things you're proud of.
It's interesting even companies as smart as Linear (the Jira alternative, check out their Linear method pages for a lot of better than usual thinking) don't want to even listen why they should (and could just by allowing renaming a few terms in their tool) support a non-project-centric view of building your company and enjoying doing it.
Re: How a startup loses its spark
#35> Is this preventable? I think not. If you look closely, all these problems fundamentally come from… It is preventable. I built an ISP in mid-90s, a digital agency in late 90s, another digital agency and a streaming CDN (world's first VDN) in 00s, as well as worked as chief architect for cloud at world's largest hedge fund and CTO of world's second largest bank. I'm currently an entrepreneur again, co-founding and bu…
What pile of practices are you trying to avoid? When I see time boxed work with an outcome, that’s the very definition of a project to me. There’s nothing else. I had a weekend project building a desk. It’s timeboxed to the weekend. There’s an outcome. What am I missing?
Re: How a startup loses its spark
#36Earlier quoted context omitted.
Let me try this exercise: Except more of your users will have jobs because the AI multiplier means new opportunities to provide cheaper services available to more businesses, new companies that weren't economical before will be founded, entire new markets and whole new professions will be created. So your addressable market will exponentially grow. So another bull run? I'm sure we will work it out right.
Do you have an example you're thinking of?
See the last 300 years of recorded history of technological progress.
Re: How a startup loses its spark
#37Earlier quoted context omitted.
Let me try this exercise: Except more of your users will have jobs because the AI multiplier means new opportunities to provide cheaper services available to more businesses, new companies that weren't economical before will be founded, entire new markets and whole new professions will be created. So your addressable market will exponentially grow. So another bull run? I'm sure we will work it out right.
Do you have an example you're thinking of?
I'm currently consulting for a logistics/wholesale company that uses AI to massively cut down on product catalog management and vendor/customer support costs. Their services are now affordable to much more vendors. It's been a month or so in production and they have already onboarded many new SMB vendors who previously didn't have the means to pay for their services - and thus couldn't sell nor ship through my client. The cost of onboarding a vendor has decreased 100x thanks to using AI instead of doing it manually and it's not limited by headcount and personal schedules.
The products of these new vendors are now available to many big customers in a major city (a single one where we are doing a pilot), and the vendors are reporting they are already getting 2 times the volume of orders they used to get. They didn't even have the means to deliver that much product before - now they are able to do it because their logistics are handled for them by my client (economy-of-scale advantages) instead of them DIYing it, and they use the freed time to do more of their main business.
The customers are super happy because now they're getting fresh food produce from local farmers just days after it's been actually produced, which increases the quality of their products (food in restaurants/catering, usually) and they are already getting significantly more positive reviews thanks to that, which brings them even more new business of higher value. And funnily enough, the products they are getting are cheaper than what they got before, even though the quality is incomparable.
AI is a huge win for everybody involved:
- My client is no longer forced to deal only with the biggest vendors.
- The employees who used to do sales/onboarding, vendor/customer support and product catalog management are still doing it, only now they're handling 10 times more products from 3 times more vendors, and focus on special and more interesting cases instead of doing grunt work.
- The vendors have gained more customers than they ever dreamed of, make more money per unit and have much cheaper logistics that they don't need to think about nor spend their time on (we're talking about guys who used to hop in a truck themselves to deliver their stuff).
- The customers are getting much better quality for lower price per unit. There's also much more product categories they can choose from now.
- It's more environmentally friendly and supports the local economy.
Re: How a startup loses its spark
#38[deleted]
Re: How a startup loses its spark
#39I disagree - as someone who has started up small companies and worked in megacorps, including FAANG and major banks, it’s entirely possible to build that intoxicating environment anywhere. It’s more about having a dynamic leader who assembles teams into collections of individuals who know precisely why they are there - and are given the work they excel at and the work they don’t the manager ensures someone who does h…
> The arguments articulated are entirely false
I’d would disagree - I had the exact experience that the autor described. But you are right on this point
> it’s entirely possible to build that intoxicating environment anywhere. It’s more about having a dynamic leader who assembles teams into collections of individuals who know precisely why they are there
I still think it’s related to size and bad incentives. I heard stories of people at FAANG that said that department X is like a startup but Y is soul sucking boredom
Re: How a startup loses its spark
#40The book Loonshots by Safi Bahcall describes this phenomena quite well. There's a "phase transition" of incentives at around 150 people that can be fatal to many organizations. The secret sauce is how a startup goes past this headcount. Ideally many software companies quite honestly don't need more than 150 people!
See also "Dunbar's Number":
Dunbar's number is a suggested cognitive limit to the number of people with whom one can maintain stable social relationships—relationships in which an individual knows who each person is and how each person relates to every other person.
https://en.wikipedia.org/wiki/Dunbar%27s_number
The world scaled past this millenia ago. You can scale your company past it too.