Small team is incredible. And this totally strikes me and I can’t agree more since I had the privilege working on such teams before:

“There’s nothing more fun than having a very fast moving team where everyone’s rolling in the same direction. That feeling of power, and that feeling of excitement, and that feeling of energy.. There’s nothing like that in my life, before and after.”

Eric Schmidt said in the Tim Ferriss Show

When you think of why a company is the size it is (company size of 5 v.s. 500 v.s. 50,000), an interesting question might be raised: what decides if a large group belongs to a company internally, or should that group be external like a service provider?

Aside from some obvious reasons (e.g. enough capitals to do so), one theory from the economist Ronald Coase is that the limitation comes from the transaction costs – if external transactional costs outweigh internal transactional costs, it’d be done internally; and vice versa. So it is also possible that the external transactional costs are high at a given time in the history, but could completely change to the other way around, because of the “API economics” invented during the information age. For example, you might not need to build a dedicated engineering team within your company to develop payment technology, since external companies like Stripe can provide a much powerful and easy-to-use payment API. Everything becomes “plug-and-play”.

Another well known issue on a bigger group is efficiency – process is created and is inevitable – to make sure everything comes together consistently. But process is what you follow when you don’t have a better idea. And things get worse when there are too many people wanting to influence every decision. The progress becomes stagnant..

Also, in terms of Psychological safety, the scale of the team matters because proximity and intimacy matter.

“With my family, I’m a communist. With my close friends, I’m a socialist. At the state level of politics, I’m a Democrat. At higher levels, I’m a Republican, and at the federal levels, I’m a Libertarian.”

Naval Ravikant

In a bigger group, people tends to feel less psychological safety, and it’s challenging to be authentic. Eugene Wei explained one of the biggest challenges for Facebook, as asocial media, is it runs into the diseconomies of scale. By nature humans are very good at maintaining different identities for different groups. Very few of us have cultivated an identity for that entire blob of everyone we know. But as the Facebook’s newsfeed munches all things together. It’s a situation one might encounter in the real world only a few times in life, perhaps at one’s wedding or funeral, but now it happens to be the default mode on Facebook’s news feed.

The most interesting systems, like cells in a human body, are those that are cross-connected in ways that allowed parts to be interdependent on each other – not hierarchical.

(to be continued..)