Staying small

I read A VC every day. It’s the last thing I do before I go to sleep, as it is early morning in New York.

Today, Fred wrote a piece on hiring and he speaks about the advantages of staying small, which has led me to think about my experiences in small start-ups.

In the two tech companies I’ve started, our largest leaps have been while we were tiny – maybe two or three people.

This leads me to think that the DNA of companies and their products are generally cut in their earliest days when there are just a few people – think Mark Zuckerberg in his dorm room.

Successful products don’t usually change that much over their life. I would say that 80% of a product is built in the really early days, and that 20% of the product changes incrementally over time.

A good example is Google search. Google today is mostly the way it was when it first started – a great search engine.

Sure, they have added features like Google Image search, and they have tweaked their algorithms to deliver more relevant results.

However, the Page Rank algorithm remains at the core of Google, having been built by a small team in a dorm room somewhere in Stanford many years ago.

Another example is Microsoft Word. What features do you use in the most recent version of Word that wasn’t available in Word 95?

The magic of start-ups usually occurs in the founding months and is created by the founding team, with improvements being incremental iterations on a core product.

Small teams can achieve more than large, bureaucratic teams because communication is direct, decisions can be made quickly and things get done fast.

That is why Fred’s post resonated with me. It reminded me to keep my team lean and focused and not to try to get big too quickly. It’s easy to think you need to grow into this big thing, especially after you raise money. However, that is just not the case.

I’d rather take my time to hire right, then hire wrong and have to hire again. If that means staying small for longer, and working harder, so be it.