New Employees Suck :)

How many times have you asked a company how many employees they have and you almost measure their success just by that number. NOT by revenue, or profits or revenue by employee. Its JUST "by employees." The higher the number with the better. The company with 500 employees MUST be more successful than one that has 50. And of course fast hiring growth can only mean one thing.... things must be going really well.

A few years ago, I remember an entrepreneur I know well said that he will have 2,000 employees by X year. I think it represented something like 10x growth in headcount at the time. People around him seemed absolutely blown away and he was viewed almost as a hero. Should that goal be rewarded? Economic developers probably drooled over the forecast. What about investors? Maybe a different story.

Anyway, I was thinking about this the other day when I had coffee with an entrepreneur that I respect a lot. Their business is going strong, scaling fast and they are still forecasting doubling revenue in 09 to a little over $3m. The great thing is they haven't raised a lot of money and they operate the company with 6 full time employees. The entrepreneur said they only hire someone when it becomes absolutely painful and they absolutely have to. And even then.... they still don't want to.

That story quickly reminded me of an entrepreneur of a really large e-commerce company DJ and I met a year ago. They are profitable, running strong and have created a recognizable brand. Anyway, he told us "new employees suck." Don't misunderstand. He LOVES his employees. But he dreads hiring MORE people which adds more expenses to the business. He prefers a scalable business model which can add revenue without having to add heads eating into their profits.

Comments

[Jeff]

What sucks more: An executive who is responsible for bringing 200K - 1M/year ($100+/hr.) to the company and doing $15/hr. work. Companies are cutting bone and muscle, not just fat.

[Noah Boswell]

Doesn't Berkshire Hathaway only have like 12 people directly employed? Of course all the business they own have more but HQ for Berkshire Hathaway is only like 12. So that wouldn't ad up with your "More is Better".