Inside Instagram, engineers frequently discussed a thought experiment: if half the company vanished, would things improve? They often concluded "yeah, maybe." This reveals a deep-seated belief among product builders that organizational bloat, communication overhead, and excessive code were creating more problems than the extra headcount was solving.
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CEO Ryan Cohen revealed that GameStop went from over 1,400 corporate employees to just 400, yet became more productive. He argues large corporate teams create bloat, perverse incentives, and delegation of work. The radical downsizing improved focus and business results.
Reaching the 1,000-employee milestone wasn't a celebration for CEO Arvind Jain. Instead, it sparked panic about becoming a bloated, slow "big company" and highlighted the immense challenge of maintaining alignment and prioritization at scale.
As startups hire and add structure, they create a natural pull towards slower, more organized processes—a 'slowness gravity'. This is the default state. Founders must consciously and continuously fight this tendency to maintain the high-velocity iteration that led to their initial success.
Intentionally assigning fewer people to a project than seems necessary forces extreme focus on the highest priorities. Overstaffing is "poison" because it breeds politics, encourages work on non-essential tasks, and creates cruft that slows the entire company down.
According to the 'dark side' of Metcalfe's Law, each new team member exponentially increases the number of communication channels. This hidden cost of complexity often outweighs the added capacity, leading to more miscommunication and lost information. Improving operational efficiency is often a better first step than hiring.
Founders often start scrappy out of necessity and dream of lavish resources. However, once successful, many realize that small, lean, and scrappy teams are more effective. This creates a paradox where the most successful entrepreneurs intentionally revert to the resource-constrained mindset they once tried to escape.
Gamma's CEO resists the pressure to scale headcount aggressively, arguing that doubling the team size does not guarantee double the speed. He believes a smaller, more agile team can change direction faster, which is more valuable than raw speed in a rapidly evolving market.
When the Instagram Stories project was churning, leadership made a counterintuitive move: they significantly cut the team size. This resulted in clearer ownership, less communication overhead, and faster decision-making, allowing a tiny core team to build and ship the massive feature in just a few months.
Drawing from experience at big tech, Surge AI's founder believes large organizations slow down top performers with distractions. By building a super-small, elite team, companies can achieve more with less overhead, a principle proven by Surge's own success.
The public example of X operating with 85% fewer staff created a powerful meta-narrative influencing founders to build leaner. As a result, the median Series A company team size has dropped from 25 employees in 2021 to a projected 15, a significant shift toward capital efficiency over hiring.
