from Hacker News

Why do startups hire so many people?

by amerf1 on 1/28/22, 9:27 PM with 27 comments

• by katzgrau on 1/29/22, 10:22 PM

  As someone who bootstrapped, every now and then I'm happy I wasn't smart/convincing/well-networked/on-to-something-hot enough to raise a round (lord knows I tried).

  Because I had no money, I had to make money and then hire slowly. 10 years in and 10 employees later, I know this venture would have been over long ago if I landed that lead investor.

• by jdauriemma on 1/30/22, 1:02 AM

  Truly a useful question and a great answer. A nit I’d pick with the respondent regards the so-called force-multiplier of the five-or-so founders. Productive founders are a typical feature of funded startups but their productivity can be attributed not just to their hustle but, crucially, to the nature of greenfield development. It’s way faster for anyone, regardless of how many “x’s” they have, to grind out an MVP from scratch than it is to ship features while maintaining a product that is used by real customers in production. Series A+ startups must necessarily slow down their pace-per-person, it’s an eventuality. This need not have anything to do with hiring “bozos” (eyeroll) or some of the other dismissively-mentioned roles.

• by don-code on 1/29/22, 10:31 PM

  While I get and agree with the spirit of the answer, there's one major piece I take issue with:

  > Well, what kinds of people work for 1% of a post-A startup? Average people (and below).

  The people hired in the A round have no doubt been selected, _and_ self-selected a startup, for their ability to work at the mentioned 20x force multiplier. A 100-person company (let's call that late series B) is running, using the article's own numbers, at a 2-4x force multiplier, and a C-or-later startup with 200 or more people is running at perhaps even a 1.5x force multiplier.

  Yes, there will be individuals who bring the force multiplier up, and individuals who bring the force multiplier down, but ultimately, the people in the organization are _above_ average if the organization's force multiplier is greater than one.

  Also considering that founding engineers are sometimes some of the first to leave (especially as non-startup culture becomes entrenched), we can't as easily argue that the original 20x engineers are carrying the (0<n<1)x engineers.

• by pedalpete on 1/29/22, 11:42 PM

  I was speaking to a VC a few weeks ago about a start-up which is always pointing to how many employees they have, and I was asking "why is this a number they promote?" Why is it so important to them.

  His response was that the number of employees they have is used to show government how much support they are putting into the ecosystem, how much the government earns in income tax from the employee base, how much money gets pumped into the local economy due to the thousands of employees they have. Demand for housing, transport, how it supports the local coffee shops and restaurants, etc etc. These figures are then used to get government grants. So in many ways, it's a form of free capital.

  At the same time, it isn't like the company just hires anybody they can, and throws the money away, but I had a friend who worked there, and he said the work was kinda interesting, but they had sucked up so many amazing engineers, everyone felt like they were working under the level at which they'd be challenged.

• by freefaler on 1/30/22, 11:01 AM

  VCs optimize for high risk/high growth startups. However for a person investing his time it may be worth to keep more control of the business and greater share of the profits in the future. Would you rather own 1% of 100M business and thus be a minority shareholder, or 50% of 2M business and be in control. Financially you may fare better in the smaller business. And after a certain amount of money in the bank, health, time and controlling your day to day life gets more important than "selling to Google" or "managing the board" (an euphemism for my new boss is the board).

• by rileymat2 on 1/29/22, 11:25 PM

  I find something about unsourced numbers in this answer and many blog posts uncomfortable. Maybe they are right, but maybe they are just made up to be convincing, but ultimately wrong.

  For a while blog posts would include an unsourced hand drawn curve that looked like data to prove their point, but was completely made up

• by drunkenmagician on 1/30/22, 12:34 AM

  In my experience, which has mostly been with startups outside of the US, is that US startups tend to want to scale up more quickly, and have a tendency to hire for roles that are not currently essential before they are needed, and generally hire more staff. It seems to be a more ‘US’ centric approach

• by 908B64B197 on 1/30/22, 1:08 AM

  Capital is incredibly cheap. Better to ship and crash fast than linger around. Also timing is everything. Hiring a few extra devs to get to market sooner is almost always the correct bet (at least here in America).

• by fouc on 1/29/22, 10:21 PM

  Seems like the answer mainly boils down to: because of VC funding

• by Silhouette on 1/30/22, 12:55 AM

  So the TL;DR is: because the founders and investors are too cheap to hire a small number of additional very good people instead?

  The real question is why. Surely it is obvious that if you expect employee #1 to work for well below market salary and maybe 1% equity, you will never be hiring the kind of 20x individuals described in the piece here. But in the entire software industry, has no-one considered diluting the founders' equity and offering 5% or even 10% to bring on someone else of the same calibre (assuming the founders are both that good and open-minded)?