A newspaper that only had a few dozen employees would be doing great today. But they have hundreds or thousands of employees because that was an appropriate scale twenty years ago. When I started my first web combany fifteen years ago, the idea that you could be successful with six or ten employees was crazy, but today many of the most successful companies have not many more than that. That’s 15,000 fewer employees than eBay has.
It’s tempting to get bigger. But is bigger better? In many cases, it’s worse, particularly when you can leverage reliable systems that are cheaper and faster and more stable in the outside world. If you can make your product better by assembling it yourself, you should. But if that action makes it worse, why do it?
Is your organization too big? Too small? Just right?
From David of 37signals:
Popular perception holds that companies must always be growing or they’re dying. There’s either up or down, win or lose, success or failure. I think that’s a harmful dichotomy that leads to the death of perfectly viable companies in their quest for constant growth.
Not all companies are meant to have thousands of employees or a billion-dollar market cap. Some companies are meant to be just 10 people or 5 people or just one guy. That’s what their product, niche, or technique is capable of sustaining and there’s absolutely no shame in that. Finding your natural size should be a triumph, not a capitulation.
These are wise words, but then again, 37signals operates a touch ahead of the curve from everyone else. He has a point that good companies have a critical mass point, where they provide something niche that no one else is willing or equipped to provide, and they find meaning in being at that point, generating good revenue, and fulfilling their niche without worrying about numbers going up, only that the books are coming out well.
It’s been said before that companies focusing on pure profitability instead of marketshare as a primary goal will actually gain marketshare faster. I think that meshes well with David’s notion of company size.