The Square Root Law and Employee Productivity

3min Snip

00:00

Play full episode

Summary

Transcript

Episode notes

The square root law states that approximately 50% of the output is generated by the square root of the number of employees. This is attributed to the deep knowledge and experience of original employees in startups, leading to higher productivity due to their understanding of the company's operations and history. As companies grow, challenges arise in onboarding new employees effectively to maintain productivity. Exceptional training programs, onboarding processes, and high performance standards can help overcome this challenge. The law underscores the significance of a small number of employees in producing a substantial portion of the output, even as organizations scale up, highlighting the critical role of a focused group of employees in driving innovation and success across different functions like engineering, product management, and sales.

"It turns out the spreadsheet is not actually the business, despite what you may have learned in business school." - Ben Horowitz

Welcome back to "The Ben & Marc Show" featuring a16z co-founders Marc Andreessen and Ben Horowitz. In this second episode of a two-part series, Marc and Ben answer MORE questions about startup building in the post-COVID world.

In this one-on-one conversation, Ben and Marc discuss how startups can think differently about organizational design and talent deployment, unpack the lore around layoffs, and even tackle the future of customer service. They also reveal some unexpected benefits of nicotine and Ozempic. That and much more. Enjoy!

*Watch the FULL EPISODE on YouTube: https://youtu.be/Fw4p85jSfQc

Connect with Ben & Marc:

Marc on X: https://twitter.com/pmarca

Marc’s Substack: https://pmarca.substack.com/

Ben on X: https://twitter.com/bhorowitz

Stay Updated:

Find us on X: https://twitter.com/a16z

Find us on LinkedIn: https://www.linkedin.com/company/a16z

The views expressed here are those of the individual personnel quoted and are not the views of a16z or its affiliates. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors and may not under any circumstances be relied upon when making a decision to invest in any a16z funds. PLEASE SEE MORE HERE: https://a16z.com/disclosures/