David Sacks on the "middle management" problem in startups

An excerpt from the "All-In Podcast"

In their most recent episode of the All-In Podcast, David Sacks explains a lot of what has gone wrong at startups over the last decade:

Let me tell you the problem that builds up in these companies: it’s that everybody wants to become a manager.

You can’t just come at this problem and say we’re going to increase the number of reports that each manager has from five to ten.

That doesn’t work because let me tell you what happens: every individual contributor who’s a star thinks that their career advancement requires them to manage a team.

So what happens is that you take that star IC and create a team around them.

That person then hires five people to manage, and they stop working and start managing.

Maybe you get 20% more production out of that six person unit than you would have just out of that star, but you’re spending five times more money.

It makes no sense, and the problem is that it cascades…

So, that IC becomes a manager, they hire five people. Then of those five people, one of them says, “well, I want to be a manager” and all the organizational pressure is to build more and more teams, and more and more layers…

Sound familiar?