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Alok's Posts / Startup

Size and Scale – Does employee size count matter?

I am clear about one simple concept.

Actually Crystal Clear about this.

That to massively scale Internet & Mobile oriented digital businesses, you do NOT need major head count (at least to begin with).

What you do need is:

i) A great, unique, inimitable, delightful, amazing CONTENT offering – if you are a content player.

Example – Miniclip.com (games)

ii) Very easy to use, simple, elegant, intuitive, no-brainer services – if you offer services.

Example – Dropbox.

iii) Massively productivity enhancing, never done before, problem solving, simple to implement yet impossible to do yourself services – if you offer enterprise solutions.

Example – Mailchimp, surveymonkey

Simply said, the real delight of your content or service should be such that consumers rush in and begin to flock what you have created – on their own, without a fuss, and then share their delight with friends and peers.

So, let’s not get confused. I’m not talking about ‘viral marketing’ here.

I mean that once you have established a successful offering, then you can decide how to scale it, and at your own terms.

Case 1:  FTV

Fashion TV began its operations as a 5-7 man team! They were so amazingly innovative in their concept of creating a ‘fashion model centric channel’, that all they needed were a few ‘uploaders’ to simply load readymade video footage that was supplied to them by fashion companies. All FTV did was rent a satellite and broadcast pre-supplied canned footage to global viewers!

FTV DID NOT invest in Cameramen or crew or trailers etc etc etc in the begginning. They scaled their business massively with a very small team.

Once they became successful, they expanded into events and parties and God knows what, but slowly and without creating massive head at the outset.

Case 2: Games2win

Games2win started when Dinesh Gopalakrishnan of c2w simply uploaded a couple of games that we owned like Bombay Taxi to the addictinggames.com site.

One thing led to another and soon we knew we had a successful model in creating ‘casual, snacky, web games’ for GLOBAL (Read – NOT INDIAN) audiences.

A year later, games2win was launched as a 3 man team.

A year after that, we were 7 people (I had become CEO, MK was CTO and Dinesh was content head etc) and we got funded by Clearstone. By then we had 50 games online and were drawing in approx 100-200k unique visitors a month in traffic to the site.

Till March 2011, we were 35 people. We had 500 games in the library, 5-6 million Uniques a month in traffic (as per comScore) and 1-2 million mobile game downloads.

Last year in March, Dinesh and I visited the addictinggames.com (AG) office in downtown San Francisco. AG was pulling in 15-20 million uniques a month to its site as traffic (comScore) and had a few million mobile game downloads. 

What shocked Dinesh and me was that the AG office only had 5-6 employees!!

How did AG do it?

AG did not believe in ‘making’ games. They believed that they were game ‘publishers’ and were happy to license games from developers all over the world, even at very expensive prices!

AG had cracked an amazing business model of selecting the BEST games in the world and SHOWING them to their audiences. They had done away with the bother of owning game studios, handling art and creative teams, worrying about testing etc etc.

Their slim team were the best GAMES EDITORIAL TEAM in the world, and they had built a world class business in moving the attention from making games to choosing games!

Take outs:

Scaling a digital business in this age and time comes from:

  • Great CONCEPTS (like Zynga games) that have replicability.

Once Zynga cracked the massive scalability of ‘social behavior’ in games, they then created ‘skins’ called Farmville, FronterVille, etc etc.

Zynga just colored and dressed up the SCALE that had been proven to exist.

Now, if you look at the problem of 1 trick ponies – like an advertising campaign, then you need lots of people all the time to make many 1 trick ponies and then to slaughter them after they have done their 1 trick

  • Great TECHNOLOGY that needs BRAINS not PEOPLE.

We don’t need to go beyond facebook.com to understand this point.

Check out this list (Jan 2011 data) – taken from this pingdom report

Automattic

Automattic

  • Employees: 72
  • Users: There are more than 32 million WordPress blogs.

Automattic is famous for being the company behind the open source blogging software WordPress (WordPress.org) and the hosted blogging service WordPress.com. WordPress blogs are split almost 50-50 between the two, with 16 million blogs hosted on WordPress.com, while 16.7 million are self-hosted WordPress.org installations.

Mozilla

Mozilla

  • Employees: 250
  • Users: All Firefox users. The latest official version of Firefox, 3.6, has so far been downloaded almost 400 million times.

Mozilla is the company/organization behind Firefox, which is one of those open source projects that truly benefits from its surrounding community. As much as 40% of the work on Firefox is done by volunteers.

Tumblr

Tumblr

  • Employees: 18
  • Users: 12 million blogs on Tumblr

Tumblr was one of the big successes of 2010, and the rapidly growing blogging service now hosts 12 million blogs. They’re on a hiring spree to catch up with their growing user base and the strains all that traffic has put on their infrastructure (they’ve had some wobbly times lately).

Twitter

Twitter

Twitter has boosted its ranks significantly in the last couple of years to keep up with its explosive growth, but they still only have a staff of 300. Not that much considering the amount of users the service has.

Opera Software

Opera

  • Employees: 757
  • Users: 150 million users across all versions of the Opera web browser (desktop, mobile and other devices).

Opera is only the fifth-most-popular web browser (after IE, Firefox, Chrome and Safari) on the desktop. However, the majority of Opera’s user base is due to Opera Mini, which is very common on mobile phones across the world. Opera is based in Norway, so we’re proud to call them neighbors (Pingdom is based in Sweden).

Wikimedia

Wikimedia

  • Employees: 57
  • Users: Wikipedia has more than 408 million monthly visitors.

Wikimedia Foundation is the organization that operates Wikipedia and several other similar wiki projects. Wikipedia’s content has famously been created by hundreds of thousands of people through the years. There are currently more than 100,000 volunteers who write and edit Wikipedia (and its much smaller sister projects).

Skype

Skype

  • Employees: 500
  • Users: 560+ million (and that was a year ago, the number should be higher now)

Skype, letting you make voice calls (plus chat and video conferencing) over the Internet, has been around since 2003. Although it’s a bit like comparing apples and oranges, the numbers we have seen indicate that Skype is roughly as big as Facebook in terms of users.

Craigslist

Craigslist

  • Employees: 30
  • Users: More than 50 million in the United States each month.

Craigslist, offering free classified advertisements online, has been around since 1996 (it began life as a mailing list in 1995). In other words, it’s a real web veteran, and it’s probably quite a surprise to most to see that they have so few employees. And note that the number of users we mentioned here is just for the United States. Craigslist is also available in other countries.

Conclusion:

Understand that if you are setting up a garment factory that will need 1000 people per shift to create 1000 shirts a day, then HAVE TO START with hiring a 1000 people to begin with.

If your shirts begin to sell well, then you will need 3000 people to work 3 shifts and create 3000 shirts a day.

3000 shirts at $10 per shirt will earn you US$ 30,000 per day.

That’s the way business operates in the real world.

Now, if you and I start a FREE ‘dress up’ game on facebook, that lets young girls dress virtual avatars of themselves and strut around an imaginary world, then you need only the two of us to launch the business.

IF the game explodes and creates a massive viral tsunami for itself, then it’s POSSIBLE THAT:

1 million girls play the game every day, BUT ONLY 3% of them PAY everyday, and that too, just 1US$ for special  dresses.

Well, that will earn the 2 of us – US$ 30,000 per day!!

******

BIG BIG BIG THANKS TO ASHA for editing this post, which was in a really rotten state when I sent it to her!

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10 Comments

  1. a very insightful and inspiring article..cleared my head..especially the last comparison..!!!

  2. I am not sure about the conclusion you set up with a comparison of two different businesses. The rest of the post I agree.

    It takes same amount of resources to make one more shirt. It takes almost nil resources to let another person play a game. That is the reason that internet and mobile businesses can offer free stuff. And freemium models.

    You should emphasis the IF in if the game goes viral. And thePOSSIBLE consequences.

    Another way of looking at this would be say that these two businesses service different levels in the hierarchy of human needs.

  3. Suresh, I think u missed this that already exists in the post:

    ‘IF the game explodes and creates a massive viral tsunami for itself, then it’s POSSIBLE THAT:’

  4. I noted the line ‘IF the game explodes and creates a massive viral tsunami for itself, then it’s POSSIBLE THAT:’ in your post.

    I am only saying that IF is BIG IF

    Another way of making my point would be:

    Expected Value = Payoff x Probability of payoff

    Payoff in Shirt Biz = 30,000

    Payoff is Game biz = 30,000

    Is the probability in both businesses same?

    If probability is shirt biz is 1% , expected value = 3000

    What is the probability in the game biz?

  5. I’ve run a socks business for 9 years (with my dad) that made 30,000 pairs of socks every day. We employed 400 workers in Lower Parel. 

    The business did very well, but nothing like the Zynga’s and 100’s of others who have converted virtual life and entertainment into a real business.

  6. I have seen one of your posts which mention the socks biz. You are eminently qualified to commen on both businesses. No questions.

    I am not saying that payoffs in internet/mobile world are lower. All I am saying is that probability is lower. 

    And, to my outsider view, it might be reversed in the shirt/sock businesses.

  7. Nothing to boast here but we made Agilewiz BPMS & the entire ERP – with many modules like SFA,CRM,SRM,PRM,MRM,FM,QMS etc (ofcourse over a period of the last few years with close interaction with our customers!!) but we did this with a dedicated team of 5 people only!! That’s how product companies scale up & their growth can be geometric!! We do not need SEZs or poor farmers’ large abducted land 🙂

    We have over 1000 forms / reports & processes which are divided vertical / horizontal & geography wise now!!!

    Cheers!
    Akshay Shah

    http://www.iwebtechno.com

  8. Alok, Very inciteful post. No one will want a piece of the real world now. You’re inciting revolution, sirjee….. ::)) 

  9. Superb post with real data and comparisons. 

  10. You might want to update this with the flavour of the day – Instagram: User Accounts: 30 million, Employees: 13, Valuation: $1 Billion!!!!!

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