This is a great blog post by VC Ben Horowitz of Andreesen Horowitz. He describes his personal experience in the dangers of aggressive growth and hiring as part of the overall, standard budgeting process. In our experience, the problem in "growth for growth's sake" pursued by so many startups is that "organizational scaling" is never achieved: i.e., growth occurs, but economies of scale within the organizaion remain unreachable.
Here's a great quote from the blog post:
"When I asked my managers what they needed, I unknowingly gamified the budgeting process. The game worked as follows: The objective was for each manager to build the largest organization possible and thereby expand the importance of his function. Through the transitive property of status, he could increase his own importance as well. Now you may be thinking, “That wouldn’t happen in my company. Most of my staff would never play that game.” Well, that’s the beauty of the game. It only takes one player to opt in, because once someone starts playing, everybody is going in — and they are going in hard."
Click here to read the full post:
#organizationscaling #startups #venturecapital #growthcapital