Small is a size, doing more with less is a skill

In October 2008, with the credit markets in freefall, Sequoia Capital gathered the chief executives of its portfolio companies and told them to cut costs, extend their cash and plan for a long downturn. Greg McAdoo was a partner at the firm then, and his line reads like a correction to the way that advice was often heard. Plenty of companies responded by shrinking. Fewer changed how they worked.

The distinction is real. Being small is a headcount and a budget. Doing more with less is a ratio: output per person, revenue per dollar spent, features shipped per week. A ten-person company can have a terrible ratio if half the team is waiting on the other half. A fifty-person company can have an excellent one.

By the end of 2010 the tools for a good ratio were cheap. Rented servers from Amazon Web Services replaced hardware purchases, open source replaced licensed software, and a few engineers could run a service used by millions. Sequoia’s own portfolio included companies built that way, where a handful of people did work that a decade earlier would have needed a department; McAdoo backed Airbnb when it was three founders operating from an apartment.

The idea has limits. Some businesses need scale before they work at all: manufacturing, logistics and anything regulated tend to require capital and people early. Pushing them to be lean can simply starve them. Lean habits can also cut the wrong things, such as customer support, security or the time a team needs to think. Those savings show up on this quarter’s budget and cost more later.

It is worth noticing too that “more with less” is a phrase managers use when announcing layoffs. Said to employees who have just lost colleagues and inherited their work, it means something different from a founder choosing tools that multiply a small team’s reach. The first is a cut. Only the second is the skill the line describes.