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Why do startups hire so many people?

quora.com

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Re: Why do startups hire so many people?

#11

Post by jokethrowaway »

Silhouette wrote: post #9

So the TL;DR is: because the founders and investors are too cheap to hire a small number of additional very good people instead? The real question is why. Surely it is obvious that if you expect employee #1 to work for well below market salary and maybe 1% equity, you will never be hiring the kind of 20x individuals described in the piece here. But in the entire software industry, has no-one considered diluting the f…

You would be approximating a cooperative. You just have a lot of founders.

I'm trying to go in a similar direction with my company. The idea is to consult under the same brand and create small passive revenue streams together (apps, websites, books, streaming). Earning are split based on the people working on it. The brand may help sell the individual consulting. We help and support each other and share costs.

I've seen startups with a lot of founders and generally all the problems started once they had VCs, funding and pressure to grow faster than it's reasonable.

Re: Why do startups hire so many people?

#13

Post by dafelst »

civilized wrote: post #5
katzgrau wrote: post #3

As someone who bootstrapped, every now and then I'm happy I wasn't smart/convincing/well-networked/on-to-something-hot enough to raise a round (lord knows I tried). Because I had no money, I had to make money and then hire slowly. 10 years in and 10 employees later, I know this venture would have been over long ago if I landed that lead investor.

So apparently you weren't forced into hypergrowth by VCs in the way this article says you would be? Why not?

"Bootstrapped" typically implies self-funding, so most likely no VCs were in the picture.

Re: Why do startups hire so many people?

#15

Post by gumby »

rileymat2 wrote: post #6

I find something about unsourced numbers in this answer and many blog posts uncomfortable. Maybe they are right, but maybe they are just made up to be convincing, but ultimately wrong. For a while blog posts would include an unsourced hand drawn curve that looked like data to prove their point, but was completely made up

The numbers are just examples. This is a qualitative explanation and it rings true to me.

Re: Why do startups hire so many people?

#16

Post by Silhouette »

jokethrowaway wrote: post #11
Silhouette wrote: post #9

So the TL;DR is: because the founders and investors are too cheap to hire a small number of additional very good people instead? The real question is why. Surely it is obvious that if you expect employee #1 to work for well below market salary and maybe 1% equity, you will never be hiring the kind of 20x individuals described in the piece here. But in the entire software industry, has no-one considered diluting the f…

You would be approximating a cooperative. You just have a lot of founders. I'm trying to go in a similar direction with my company. The idea is to consult under the same brand and create small passive revenue streams together (apps, websites, books, streaming). Earning are split based on the people working on it. The brand may help sell the individual consulting. We help and support each other and share costs. I've s…

You would be approximating a cooperative. You just have a lot of founders.

That is essentially what I was suggesting, yes. This kind of arrangement doesn't seem unusual in many other industries, yet in software it seems very rare, even though the potential for 5 or 10 top class people to outperform 50 or 100 mediocre contributors or basically any number of juniors is higher than many other fields. It has always puzzled me that we don't see it more often.

Re: Why do startups hire so many people?

#17

Post by civilized »

dafelst wrote: post #13
civilized wrote: post #5

Earlier quoted context omitted.

So apparently you weren't forced into hypergrowth by VCs in the way this article says you would be? Why not?

"Bootstrapped" typically implies self-funding, so most likely no VCs were in the picture.

Right, but the article claims that you'll be pressured into VC-fueled hypergrowth because, if you don't take the VC cash, they will throw boatloads of money at a wannabe competitor who will then start... if not successfully competing against you, at least annoying you.

Re: Why do startups hire so many people?

#18

Post by rileymat2 »

gumby wrote: post #15
rileymat2 wrote: post #6

I find something about unsourced numbers in this answer and many blog posts uncomfortable. Maybe they are right, but maybe they are just made up to be convincing, but ultimately wrong. For a while blog posts would include an unsourced hand drawn curve that looked like data to prove their point, but was completely made up

The numbers are just examples. This is a qualitative explanation and it rings true to me.

Without data it could be completely false. And the same applies to everything I am saying!

What seems to happen is small companies do not have the same requirements as big companies (and in these companies that aspire to be big fast). I18N, Scaling, Accessibility, Security, the list goes on and on. So they "appear" more productive by feature, but some of that would be dead in the water with the same team with a big customer base or regulatory concerns.

A team of one could write twitter in a weekend (how productive is that!), and it will be fail whales as far as the eyes can see under the same load requirements. (Not modern twitter, the more basic first versions)

It could also be my own bias, but I have never been at a company where the founding team was great technically, maybe that is because I am in the midwest, so it is not ex-googlers with deep technical knowledge. But it has always been a guy who could get barely get the job done or a friend of a friend who could code, but had a great idea/niche.

Re: Why do startups hire so many people?

#19

Post by dghlsakjg »

Silhouette wrote: post #16
jokethrowaway wrote: post #11

Earlier quoted context omitted.

You would be approximating a cooperative. You just have a lot of founders. I'm trying to go in a similar direction with my company. The idea is to consult under the same brand and create small passive revenue streams together (apps, websites, books, streaming). Earning are split based on the people working on it. The brand may help sell the individual consulting. We help and support each other and share costs. I've s…

You would be approximating a cooperative. You just have a lot of founders. That is essentially what I was suggesting, yes. This kind of arrangement doesn't seem unusual in many other industries, yet in software it seems very rare, even though the potential for 5 or 10 top class people to outperform 50 or 100 mediocre contributors or basically any number of juniors is higher than many other fields. It has always puzzl…

There is a very loose correlation between software quality and success. Well written, useful software doesn't guarantee success, nor is it even necessary in many cases. Combine that with highly talented software makers earning some of the highest salaries in the world, and you get your answer. As far as I can tell Quibi had incredible infrastructure and programming, and god knows it had the funding. But a 100% uptime and the ability to stream to millions on launch day didn't mean anything because the product was not wanted by consumers.

In some other industries the competence of the contributors is much more closely tied to the success of the company. Software is not like this. That's why you might see docs, lawyers and stock-brokers entering in partnership; those professions have the quality of work tied directly to outcome.

Re: Why do startups hire so many people?

#20

Post by [deleted] »

jokethrowaway wrote: post #11
Silhouette wrote: post #9

So the TL;DR is: because the founders and investors are too cheap to hire a small number of additional very good people instead? The real question is why. Surely it is obvious that if you expect employee #1 to work for well below market salary and maybe 1% equity, you will never be hiring the kind of 20x individuals described in the piece here. But in the entire software industry, has no-one considered diluting the f…

You would be approximating a cooperative. You just have a lot of founders. I'm trying to go in a similar direction with my company. The idea is to consult under the same brand and create small passive revenue streams together (apps, websites, books, streaming). Earning are split based on the people working on it. The brand may help sell the individual consulting. We help and support each other and share costs. I've s…

[deleted]
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