I’m puzzled by a repeated Internet startup pattern:
One or two founders build an application or a website.
Website/app catches on. VCs invest money.
Company grows to employ dozens of people, without much improvement in the product.
You could read this as meaning that the founders were great programmers, who then hired average programmers. Or it could mean that the product is only a small fraction of the value of a company, and the other people do graphic design, public relations, marketing, advertising, business deals, accounting, and managing.
(It’s surprising that companies that developed much of their software product with a few people frequently go out of business having dozens of people on their payroll, when you’d think they could just fire those people to become profitable. Do VCs make companies grow too fast?)
A bit of both, I expect. However, you do neglect the legacy code effect; two great coders writing a new system that basically works can happen amazingly fast, while a larger team doing maintenance and enhancements on an existing code base takes a lot longer.
And yes, they probably make them grow too fast. The anecdotes I’ve read about life inside a startup suggest that most VCs are actively harmful to companies at every point except while signing checks. However, it may very well be a rational strategy for the VCs, because a lot of dead startups and one huge success makes them more money than a handful of moderately successful companies and no smash-hits.
I’ve seen this pattern with growing teams within large companies. I believe there is some research on the phenomenon in the software engineering / project management literature that suggests the rapid decrease in communication efficiency as team size increases beyond a fairly small number of individuals is the root cause of the problem. Companies or teams that grow slowly can sometimes adopt new methods to efficiently coordinate larger and larger groups so that total productivity continues to increase even as average productivity per individual declines but an all too common failure pattern is that total productivity actually declines as the team or company grows.
I’m puzzled by a repeated Internet startup pattern:
One or two founders build an application or a website.
Website/app catches on. VCs invest money.
Company grows to employ dozens of people, without much improvement in the product.
You could read this as meaning that the founders were great programmers, who then hired average programmers. Or it could mean that the product is only a small fraction of the value of a company, and the other people do graphic design, public relations, marketing, advertising, business deals, accounting, and managing.
(It’s surprising that companies that developed much of their software product with a few people frequently go out of business having dozens of people on their payroll, when you’d think they could just fire those people to become profitable. Do VCs make companies grow too fast?)
A bit of both, I expect. However, you do neglect the legacy code effect; two great coders writing a new system that basically works can happen amazingly fast, while a larger team doing maintenance and enhancements on an existing code base takes a lot longer.
And yes, they probably make them grow too fast. The anecdotes I’ve read about life inside a startup suggest that most VCs are actively harmful to companies at every point except while signing checks. However, it may very well be a rational strategy for the VCs, because a lot of dead startups and one huge success makes them more money than a handful of moderately successful companies and no smash-hits.
I’ve seen this pattern with growing teams within large companies. I believe there is some research on the phenomenon in the software engineering / project management literature that suggests the rapid decrease in communication efficiency as team size increases beyond a fairly small number of individuals is the root cause of the problem. Companies or teams that grow slowly can sometimes adopt new methods to efficiently coordinate larger and larger groups so that total productivity continues to increase even as average productivity per individual declines but an all too common failure pattern is that total productivity actually declines as the team or company grows.