Why Start-ups Are Like Fruit Flies
Mankind's most innovative, large-scale achievements: building the Pyramids of Egypt and the Panama Canal—even putting a man on the moon—were each accomplished with roughly the same number of people: 100,000. Luis von Ahn, the Carnegie Mellon professor who researched these epic projects, makes the observation that 100,000 may well be the practical limit on the number people it was possible to organize, using pre-Internet technology. Von Ahn is fascinated by the question: If we can put a man on the moon with 100,000 people, what can we do with 100 million?
I'm interested in the opposite question: If it took 100,000 people to put a man on the moon 40 years ago, how many would it take today?
The answer is certainly a fraction of that number: Elon Musk's SpaceX company is successfully sending unmanned vehicles into space with fewer than 2,000 employees. And many more of the best-known new companies in the United States today also employ very small staffs. Matt Ridley, author of The Rational Optimist, notes that the size of the average American company is down from 25 employees to 10 in just 25 years.
Most of the national discussion around the current U.S. recession has focused on the negative impact of this radical increase in productivity: our "jobless recovery." I think this is a pressing issue that industry and government need to address. But there is one simultaneous, positive impact on our society and economy from smaller company sizes that we should also include in that debate:
Product evolution and innovation happens faster now than ever before.
Scientists study fruit flies to gain rapid learning about genetic traits specifically because they are prolific, inexpensive to maintain, and adapt quickly to change. You could say the same about small companies today. For example: Years ago, two behemoths owned the photography industry, Kodak and Fuji. But innovation in photo sharing has been driven by the dozens of start-ups like Flickr, Ofoto, Photobucket, Picasa, Shutterfly, and now Instagram, that have launched over the past 10 years. Similarly, photo taking has been revolutionized by software and device companies such as Apple, RIM, Nokia, and Sony. It's my contention that rapid product development and market testing of their products and services—something not possible inside most big companies—is what's created the most value for the photo-sharing public over the past decade. And Kodak declared bankruptcy last week.
There are numerous other industry examples, and I'd welcome hearing from readers about their personal experiences. It's my contention that competition among a large number of small teams to solve important problems gives us, collectively, the best shot at getting to a right answer, the best product and the biggest breakthroughs.
It's my contention that competition among a large number of small teams to solve important problems gives us, collectively, the best shot at getting to a right answer, the best product and the biggest breakthroughs.
Astro Teller, who leads New Projects for Google, told a great story to the Mindflash.com staff recently that made this point brilliantly. A university testing incentives to innovation ran an experiment in which students in one pottery class were told their entire semester grade would be based on the quality of their final piece. Students in another class were told that 90 percent of their grade would be total weight of the clay they fired during the semester, and just 10 percent on the quality of their final piece.
The final pieces created by the second group were incomparably better, because those students learned more, went faster and explored more. The takeaway has to be that in an environment where we reward experimentation and reduce or eliminate the risk of failure, we get better outcomes—sooner.
Now, I readily admit that it's one thing to burn through a lot of clay, and another thing entirely to burn through people. The human and economic cost of assembling and dissolving businesses can't be ignored. But for those with the willingness and ability to try, fail and try again, these technology-driven productivity gains are driving each of us the opportunity to create something truly innovative for the benefit of all.
This was recently confirmed for me by a quick tag-cloud analysis I did of the biographies of about 100 of the country's leading technical, political and thought-leaders.The word appearing most frequently in their biographies? Former.