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Comment by sergiomattei | Hacker News Reader

Right on cue, HN armchair experts underestimating the complexity of real world businesses.

Lots of companies overhire for empire building purposes and for tasks that offer marginal or zero value to the company.

I'm sure plenty of people here can attest to the cascade of overhiring that happens to startups all the time.

And that’s fine, every company finds their balance. Usually a year down the road they’ll have a round of layoffs and get closer to their equilibrium.

It seems to take a headcount increase of at least an order of magnitude to turn a product into a business and I have a hard time understanding that.

For example, when Instagram was purchased by Facebook they only had 13 employees and now they have something like 500.

I'm amazed Instagram has only 500. I assume that's because a lot of things like operations, infra, payroll, IT, facilities, and HR are shared with FB?

How do you feel about them having only 13 employees in 2012 when none of the things you listed were shared with FB?

Instagram is a huge, huge product. Hiring 500 people to chase diminishing returns does sound reasonable.

They were also a lot smaller in 2012. And with 13 employees, you can get away with outsourcing a lot of those things.

Or maybe they built a product that could apply filters and share photos and that only took 13 people to make.

Obviously. But even in a company with just 13 people building filters, the employees need to get paid, get health insurance, desks, chairs and computers. Engineers need servers, databases, monitoring, pagers. That's the part that they outsourced then, and now FB manages for them.

Inflating headcount is a topic often discussed by economists. It causes huge inefficiencies but also benefits a bunch of people:

- manages get promoted

- CEOs justify increasing their salaries and bonuses

- allows taking away valuable employees from [potential] competitors

- when the headcount is big enough, companies acquire serious political weight

- often a branch or even an entire company can be used as training/proving ground to select the best employees to work on more valuable projects

Having been down this path several times (small company to acquisition to growth), if you actually sit down during the startup phase and list all of the features/processes that would make your product fully mature, you're looking at a massive project with a lot of people involved. By 'fully mature' I mean it meets the needs of the average customer in your target market.

The sweet spot for a startup is if you can look at that big mess of features and find something actually do-able by a small team that can still meet the needs of some portion of your target market.

When you've achieved that, you can then start filling in the rest of the features that will fill the needs of the rest of your market. This is where the headcount can grow significantly, because even small line items in the feature set could involve a big project, yet still be justified because you have enough potential or actual revenue to justify the team growth. Once you're in this phase, the communication overhead of adding people and teams also forces the creation of meta-teams to support the rest of the teams...and there you have it, you now have a lot of people.

> it meets the needs of the average customer in your target market

In most markets, the average customer is a minority of customers. There is a lot of variety in each niche's demand. Maturity is having market coverage of those niches. Whether that coverage needs to be done by a single company is another question.

they only had 13 employees and now they have something like 500

They are not all engineers. I’ll bet most are account managers looking after big advertising spenders.

Yes but don't underestimate the number of wastefully run businesses either.

IDK, I mean, people are employed. That's a good thing right?

Not really unless it is gainful employment. Toll booth worker is employment, but it isn't gainful employment. It's mindless soul crushing work.

Unionized work sounds pretty gainful. Less chance of getting screwed over.

Anyways, I'd agree that gainful is ideal, but I think most humans prefer to be employed and occupied over having nothing to do.

I'm certain there's at least one toll both worker that loves their job.

What business?

It's a common question for sure.

I wouldn't necessarily pull out "armchair experts" type comments for someone expressing curiosity / wondering what they're all up to.

What was the question even? It was just pure snark. Nothing about their site indicates a Wordpress blog for that matter.

Curiosity / wondering what they're all up to.

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