Growing Startups Smarter, Not Larger

In a new book, Stanford professor Robert I. Sutton explains how Silicon Valley startups are wise to sometimes scale up and sometimes slow down.

"There is a time to hit the gas, and there's time to hit the brakes," Sutton told Press:Here. His latest book, Scaling Up Excellence, details how startups can grow wisely rather than just quickly.

Sutton said that many startups are looking to hire the right people that will "scale up" or grow with the company. "They're very clear about hiring people with the same mindset," he said. "Google (in the past) was always slow to hire and wanted to hire those who would scale with the company."

But when asked if this doesn't lead to companies of predominantly white men, Sutton agreed that it's largely true. "A sociologist called it homosocial reproduction," he said. "Basically your favorite person is yourself." 

Despite this phenomenon happening, he said that some companies are finding diverse hires, but "there's not enough."

Another way to make sure your company functions well, according to Sutton, is to make sure teams are no more than six to eight people. Those companies who get larger committees spend much more time on coordination within the group rather than working on issues. A typically good numbers is about four or five per committee -- about the average number for a restaurant reservation, he said.

Other numbers that are important for companies are 11, 20 and 150. Eleven is the number when most startups realize that they can't have single meetings and instead must break up the group into smaller groups to be effective. Around 20 to 30 is when startups stop seeing it as "our company," but rather founding members and employees, and 150 employees is when a startup starts being more of a faceless company.

"No one knows the names of 150 people," Sutton said.

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