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Wow, this really hits the nail on the head in regards to the small company I work for. Expanded rapidly from 30-40 to 120 in two years. The higher-ups have failed to address some core issues (with some refused on principle, such as an aversion to stronger organizational structure due to not wanting to seem "corporate") while still pursuing pet projects and spending freely (of money and others' time). Communication is also a massive issue - half the company (within the current structure) knows what's going on, the other half have to either do their own investigative work or wait. Would fine with me if you're a much larger company but at 120 or so it seems pretty silly and hypocritical to their "anti-corporate" ethos. Will be interesting when/if we hit Dunbar's number.

I've worked at 3 startups. Every single one of them has (or had) the problems you describe.

Is there some known principle that governs this, something that could be named along the lines of Parkinson's Law or the Peter Principle?

I don't remember the source but I read about there being several inflection points in terms of team size where communication overhead changes suddenly...IIRC the first one is 8: beyond this you start needing to have 'managers' (their title may be different), i.e. people responsible for organization & team communication rather than directly making the product/sales/etc.

Anecdotally I noticed that even with 5 people you usually have someone starting to act as adhoc part-time manager, and this role quickly become too much for a part time responsibility as the team grows.

after a certain size not every person can be answerable to the big boss, you need an actually structure.

you don't need to create a middle management structure from the get go, just have a chain of command.

Lots of startups / young companies are run by people that never had a formal business school thing - they don't have the history lessons besides other successful startups and whatnot that explains why 'traditional' management (with multiple layers etc) is the way it is.

Any project with more than one team already has a middle management structure of sorts - you've got the CEO / CTO, then the team leaders (scrum masters, or just whoever's the loudest). There's your middle management layer already.

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