Pros and cons: When a high-growth company opts to stay lean

Photo credit: Pixabay

This is a Discuss post, where we feature short but insightful opinions from the Asian tech community on startup, entrepreneurship, and tech topics. Got a topic or question to suggest? Drop us an email or leave a comment.

Some high-growth companies are hiring fewer people even if they have the resources to build larger teams. For example, the project management platform Basecamp recently announced record revenue figures—and a hiring freeze. What are the pros and cons of such decision? Should all startups consider it?

We reached out to two experts to take a closer look.

Editor’s note: Answers have been edited for clarity.

Sian Tan, operating advisor at Monk’s Hill Ventures and co-founder of Finaxar

Some high-growth startups are operating with leaner teams because of the “internet glue.” All of us today, regardless of geography, speak more or less the same professional language and possess complementary technical skills. This has opened up opportunities for startups to access a globally independent workforce through the gig economy.

Moreover, tools such as Jira and Slack have evolved to such a degree that true global collaboration is now commonplace. More efficient processes mean faster turnaround times using smaller teams. Startups can now also be extremely selective when forming their teams. Ignoring immigration politics for a second, why would one choose a full-time local employee over a remote one when the local may cost four times as much and not have as solid a work ethic?

Leaner teams also mean more effective management and the ability to stay flexible with lower burn. But with a small team, startups will need to choose the right battles to fight. There is not much leeway for errors or bad luck in your choices.

This is difficult because it will rely on the experience of the team. But ask yourselves these questions:

• How lean do you think you can you go and yet fulfill your annual targets?
• Do you have the right processes to go lean in the first place?
• Do you have the tools to monitor these processes globally day to day?
• Do you have the right tools to hire from a global workforce? Mettl is a great tool that helps us with this.

Hardware startups are constrained by this (some more than others), but software startups should do it. Here’s a caveat: If you are a company that has an extremely large war chest to fight a battle of domination and take losses year on year to capture market share, good for you. But most startups aren’t like this, so think about your future and decide wisely. There is no formulaic answer as to whether all startups should run leaner as they grow.

Let’s discuss