When people ask what I do for a living, I typically say that I run my own company. Depending on the audience, I’ll mention that the company is VC-backed, or that I’m the CEO of a consumer-internet startup. Unless I’m asked, I usually don’t get into the details.
In the same conversation, I’m invariably asked, “how many employees work for you?” It’s the kind of question in which the answer is supposed to be an indicator of how successful your company has become. And I’m here to tell you now that it’s not a good indicator.
In the early years of Punchbowl, I hated answering the “how many employees do you have” question. For a really long time, there was only three people associated with Punchbowl. None of us were employees — and we only worked on the start-up part time. A few years later, after we had taken our second round of funding, the team had grown to 12 people. I remember meeting people during this time who were impressed by the number of employees. “Wow, you’re really successful,” they would say. Since it feels great to be recognized as a CEO of a successful startup, I would readily agree.
Here’s the problem with this line of thinking: the number of employees says nothing about how well you are achieving your goals as a company. In fact, the number of employees you have may be holding you back. If you have profitability metrics, then the number of employees adds costs when you may be trying to reduce spending. And the number of employees doesn’t really say anything about your revenue or traffic metrics either.
The truth is that the number of employees says nothing about your success. It only tells you how much time you spend during your day managing other people and dealing with the inevitable issues that come up as a manager. My happiest times as a CEO have been the days after laying off an employee that was problematic or an employee that was not achieving their goals. It’s a great sense of relief when the team is back to the core group of people who commit themselves to excellence and integrity.
Some of the best products and companies were built by a very small group of people. And some of the worst failures in the business world are from companies that have too many employees (to the point where they can’t innovate and change direction easily). So why do some people measure success by the number of employees?
The next time you meet someone who has started a company, resist the urge to ask “how many employees do you have?” Instead, ask them “how do you measure success?” You’re sure to get a much more thoughtful and relevant answer.