Anyone with a passing interest in the digital media world has likely noticed a recent spate of layoffs, from niche publishersto large platforms. It seems that within the context of ad budgets being under pressure on numerous fronts, no one is immune. For many months, the drumbeat was (and to some extent still is) all about Facebook and Google eating up every last incremental dollar flowing online. Then Facebook was faced with an avalanche of bad news and the tide seemed to turn against them. However, I don’t believe the recent negative sentiments will hold - at least from advertisers and agencies - and that until there is a true revolt on behalf of users who flock elsewhere, the platforms with the largest and most targetable audiences will inevitably capture the greatest share of the ad revenue pie. That said, as I have written about before, those publishers with the right mix of context, audience and technology will be positioned to do battle with these platforms over the long run. When faced with the kind of pressure this landscape presents, the companies with the healthiest margins and least overhead are most likely to survive while those that have been aggressively hiring or investing in technology or systems will be faced with extremely difficult choices.
Having witnessed several startup evolutions from early stage to semi-mature, I can confidently say that one of the most difficult things to do is to correctly gauge the amount of investment required for anticipated growth. Companies in acceleration phases tend to want to throw fuel on the fire in order to hit that next level as soon as possible. In many cases - especially hyper-competitive industries - this appears to be not only the prudent, but the only option. In the digital publishing world, this tends to mean increased staffing in order to produce more content or sell and support more ad campaigns. The problem is ramping up too quickly and/or not hitting key goals that were assumed possible only if that ramp were to take place. Facing steep losses, this is when companies are forced to enact layoffs and terminate contracts with key vendors that may have led to major internal efficiencies.
I am a proponent of slower, methodical, more organic growth. This is all but impossible once a firm has raised venture capital funding, but there are many more options for firms that choose to add headcount or vendor costs only when absolutely necessary. For any consulting business like ours, it is difficult if not impossible to scale without adding staff, but I have resisted doing so quickly both because of the inherent headaches and because finding talent that is also a good fit is critical. Because we are completely distributed and our clients exist across multiple time zones, finding individuals who not only have the right skillset and background but the discipline to remain productive on a flexible schedule is quite difficult. There is also value in remaining small enough that we can offer a highly personalized level of service.
Last year I read the book Small Giants by Bo Burlingham, which is about companies that have chosen to remain small (this of course being a relative term to the type of business and industry) despite achieving what would widely be considered financial success. From breweries to construction companies to storage businesses, the owners of those profiled often placed a higher value on personal and employee happiness rather than growth for growth’s sake. They were not opposed to growing, and nearly all of them did over time, but they did so methodically and intentionally, frequently pausing deliberately before making key hires our investments. Our business culture lionizes companies with meteoric rises (whether perceived or actual) to the point where nearly every aspiring entrepreneur (even me) yearns to start the next unicorn, but its important to realize that there is no singular right way. Not just for the sake of greater personal satisfaction for owners and employees alike, but because many times it is the least risky and most logical way to march toward an endgame, whatever that may be.
Staying lean doesn’t mean suffering. You may need to be pickier about the type of customers you take on. You may need to be more ruthless about prioritization and say no to things that might have promise but will distract you from your core mission. Practically, there are many options available today for business owners who choose not to build the largest team their financial position will allow for. You can outsource or hire consultants. You can partner with low-cost platforms on which to scale. For several extreme examples, look no further than Elaine Pofeldt’s The Million Dollar, One-Person Business, which is another profile of entrepreneurs and companies that have chosen to remain small, even down to a single individual. The ways in which these entrepreneurs leverage the modern-day tools at their disposal in order to scale is inspirational.
I think every business owner or leader can benefit from spending even a few minutes per month thinking this way. At the very least, if you can establish a cultural philosophy of staying as lean as possible for as long as possible, you will be better prepared when macroeconomic winters do inevitably arrive.