Quartz, a news startup, was four years old in late 2016. It had been built flat, with few levels of management and decisions made by consensus. For a long time that worked.
Then, within a single year, its staff rose above 150. The cofounder Kevin J. Delaney described what followed in a column that November.
People got stuck. “Too often, our staff was stalled because it wasn’t clear who was responsible for moving a decision forward.” Employees wanted more feedback and career development than managers in the flat structure had time to give. Knowledge of the company’s strategy, norms and values wasn’t reaching everyone, and the improvised way it had always handled internal communication was showing its limits.
These weren’t just the leaders’ complaints. Staff raised the same issues in anonymous internal surveys. Some of the concerns had come up before, Delaney wrote, but “they really came to a head as the company reached 150 people.”
He went looking for why, and found the Oxford psychologist Robin Dunbar, who has argued that people can keep up personal relationships with only about 150 others. “There is no question that the dynamics of organizations change once they exceed about 150 or so,” Dunbar told him. “The Hutterites deliberately split their communities at this size in order to avoid having to have both hierarchies and a police force. Keeping things below 150 means you can manage the system by peer pressure, whereas above 150 you need some kind of top down, discipline-based management system.”
Others had seen the same thing. Facebook’s chief product officer, Chris Cox, said he had talked to many startup chief executives who found that after passing that number, “weird stuff starts to happen.” Patty McCord, Netflix’s former chief talent officer, had a name for it: “the stand-on-a-chair number.” When a leader climbs on a chair to address everyone and someone shouts that they can’t hear, it is time to rethink how the company talks to itself.
Quartz’s answer was more structure. It streamlined its leadership so that fewer people had clearer responsibility for each part of the business. A 10-person operating committee of top managers began meeting weekly to share how the company was doing and to decide things that cut across teams. The company wrote down its own history to give every new employee, held all-hands meetings more regularly, and pointed to its mission, rather than the early sense of tribe, as what should shape its culture from then on.
By the time Delaney wrote, Quartz had about 200 employees and planned to grow well beyond that. He didn’t claim to have solved it. “It remains an ongoing challenge,” he wrote, “to add structure without crimping the creativity, speed, and individual empowerment responsible for our success to date.”