Nelson Bighetti and Operational Efficiency

An abundance of cheap capital the last decade has led tech companies to over hire, especially the last two years. The focus is now on operational efficiency, not growth at all costs. Metrics like Revenue per Employee are becoming more important.

If you watch the television series Silicon Valley, then you know and love Nelson Bighetti, commonly referred to as Big Head.

Nelson epitomizes many workers in tech companies today – competent enough to maintain a low level job without bringing any exceptional skill(s) to their role. Lots of people just existing inside the company due to the fact companies have over hired.

Like Big Head, many spend time working on their version of a potato cannon, something making zero impact to move the business forward.

Growth at all costs mindsets led to the wrong strategic thought process, that more people equals more growth equals success.

The nature of technology is leverage. Taking a look at history we can see large teams (or lots of capital) are not a requirement to achieve strong outcomes:

• WhatsApp - 55 employees at the time they were acquired for $19B
• Instagram - 13 employees at the time they were acquired for $1B
• BuiltWith - $14M in revenue per year with 1 employee
• Figma - less than 80 employees at $400M+ valuation
• Craigslist - ~50 employees and generates around $1B per year in revenue
• Zoho - crossed $1B of ARR without any investment
• Basecamp - no out outside investment and ~$10M ARR
• Tesla - the Autopilot AI team, it’s about 150 engineers, and they’re outperforming teams that they’re competing against that are 3,000 engineers.
• and the list goes on

It's really unfortunate that layoffs have to happen. In good times like the last few years, it's really easy to get undisciplined. Operational efficiency is hard. The good news is hard times create the biggest opportunities.

More pain ahead. Good luck out there.