Companies of the future may be small

More commentary on the article mentioned previously.

One upshot of which is that the companies of the future may be surprisingly small. I sometimes daydream about how big you could grow a company (in revenues) without ever having more than ten people. What would happen if you outsourced everything except product development? If you tried this experiment, I think you’d be surprised at how far you could get. As Fred Brooks pointed out, small groups are intrinsically more productive, because the internal friction in a group grows as the square of its size.

I’ve seen this first-hand, but you need to be careful. Small companies can, of course, be unproductive too. But there are definitely a lot of people doing independent work today. And Internet communications, fast and inexpensive shipping, and better transportation means that outsourcing today is easier than ever before. In fact, it can be a huge time-saver, and not cost too much either– especially when compared with what you get in exchange. There’s definitely a lot more potential in a company of two or three over one person individually. I expect this easily scales up to 10. When you get to be a relatively big company like Google, things change. But if you keep the startup atmosphere, and keep working on exciting new technologies, you get an exponential increase. I really think that, if managed properly (like Google), a company of 1,000 is 100 times better than a company of 10 (note: 10 x 100 = 1,000) =]

Till quite recently, running a major company meant managing an army of workers. Our standards about how many employees a company should have are still influenced by old patterns. Startups are perforce small, because they can’t afford to hire a lot of people. But I think it’s a big mistake for companies to loosen their belts as revenues increase. The question is not whether you can afford the extra salaries. Can you afford the loss in productivity that comes from making the company bigger?

This is a good point. Technology means that there’s less brute-force, repetitive, easy labor. People are going to have to think now. Brains are important. All menial tasks are now done by machines, computers, and off-shore laborers. This is definitely a good thing, no matter what people think…

The prospect of technological leverage will of course raise the specter of unemployment. I’m surprised people still worry about this. After centuries of supposedly job-killing innovations, the number of jobs is within ten percent of the number of people who want them. This can’t be a coincidence. There must be some kind of balancing mechanism.

Exactly my thought. It surprises me whenever I hear of off-shoring. It’s being done because people over there are doing it for less. As long as working conditions are fair and the people have freedom, this is definitely always a good thing. The tasks being offshored are the boring ones, in my humble opinion. The U.S. is where a majority of the technological innovations of te past 100 years have come from, and with the Internet and computing, this trend is set to continue. Umemployment is not a problem. If you can’t find a company to hire you, prove your worth: make your own program, idea, website, product, whatever. I believe everyone has skills they can use, and although being part of a company does help, you can also do some pretty impressive stuff on your own.