Small By Design: Why Most Entrepreneurs Should Rethink Growth and Stay Small
Aim to build a business that works for your life, not the other way around.
After several years running a social business in the Netherlands, with a core team of five employees and about 25 volunteers at any one time, I decided to move to New York City. A big part of the reason was the idea that as an entrepreneur in the US you could build bigger things and scale faster than anywhere else in the world.
I still believe this general point is valid. Yet as I’m writing this from my Eastern European hometown - where I’ve recently returned and decided to settle for the long term, I don’t think that scaling up is as valuable a goal as I once thought.
In fact, I think that growing bigger is a bad goal for most entrepreneurs reading this. This essay makes the case that intentionally creating a small by design company built around the idea of making a fulfilling life possible, is a better goal than scaling your business as far as possible.
The Strengths Of A Small by Design Company
Jobs, Gates, Musk, Zuckerberg, Bezos. These are some of the names that come to mind when thinking of leaders who built companies that changed the world. They epitomize success, their organizations hire hundreds of thousands of people across the globe. It’s natural then that we define business success in terms of scale.
At the risk of stating the obvious, that’s not the only way to think about success.
Making your company fit your life and not the other way around is a powerful lever towards a different type of success. This is not some sort of minimalist worldview, nor am I suggesting growth is always bad. I’m merely asking you to consider that growth can have a diminishing return.
Let’s look together at some of the pragmatic advantages of staying small.
Overhead can lead to bad decisions: surrounding yourself with a high-performance team is both a great source of life satisfaction and a key component to business success. But the moment you start to hire employees you become responsible for more than their livelihood. Your decisions must also promote their professional growth, provide meaningful work, and a path to personal career goals. In effect, this means you may undertake projects you otherwise would not just because your people need work.
What I love about my small by design company is that I can set up great teams on a project basis. And usually do this with people of a higher skill level than I could afford on a full-time basis. Many skills are now borderless, both your company and the freelancers have a global market to find each other. As a real estate investor, I get to select a team (architects, engineers, project managers, and myriad other contractors) that is well suited for a particular challenge or project - without the time and resources needed to manage this small army internally. If the next project requires a team of a different size or skill that is easily achieved with no heartache on either side.
Paying people fairly: the average American CEO is paid about 350x more per year than the typical employee, and likely the disparity is significant across the globe. Without jumping into ethics here and whether or not this is justified, what I like about a small by design company is that it greatly improves the status quo. When hiring freelancers and other small companies on a project-by-project basis both sides are free to negotiate the fair pay amount.
In essence, if your pay is subpar the best people will not want to work with you, and when you do agree on payment the other side is usually happy to do the work under the terms agreed. Although not perfect, setting up teams made of independent professionals and small by design companies for every project leaves less room for financial resentment and misaligned incentives. It also opens valuable opportunities to build a higher quality team than your budget or local market could provide.
Small is resilient: like many other industries, real estate is cyclical, so there are times with great opportunities and other times when you’re on the sidelines waiting for something to change. Irrespective of industry, a small by design company will have an easier time staying flexible and adapting through rough patches because there is less need to engage in riskier projects in bad markets.
Even in normal market times staying small gives me the freedom to pursue my interests outside of work. If I want to train martial arts in the middle of the day or go on a 3-month sabbatical in a different country during a slow period all I need to do is close my office door and head out. A small by design business should adapt to your personal goals and is there to make them possible, rather than make more work possible.
From Corner Office to Home Office
I realize a lot of driven entrepreneurs, the types who listen to The 10x Rule on repeat during their 5AM workouts, will scoff at the idea of staying small. Why leave money or impact on the table? I felt the same way for a long time and one principle I found useful to contemplate is what does “enough” mean for me. This is a nuanced idea.
First, because most people would agree there is a point after which more money will make little difference in their life, but haven’t clearly defined it. Second, the goalpost usually moves along with your success as you compare yourself with increasingly more successful people. A small by design company aims to grow just as much as necessary to match your pragmatic “enough”. In turn, you gain the flexibility to enjoy all the other things that make life great: having freedom and independence over your schedule, spending quality time with friends and family, being loved and belonging in your community, learning and exploring the world.
For example, I’ve designed my company and work life in such a way that I never have to use an alarm clock in the morning, I can read and write every day, pursue hobbies extensively, and only work on those projects I am truly excited to be a part of. Taking a lazy walk with my dog in the middle of a sunny workday may not help my bottom line, but it surely makes both of us happy. It means I will make less money than theoretically possible, and probably my name will never end up along the greats. But those things matter a lot less than a journey I enjoy. I like to be challenged and push myself, to reach a state of flow through my work, but on my terms and while living a balanced life.
Ultimately when I decided to move from New York City to my Eastern European hometown what I realized is that aimless growth is meaningless. I prefer to do work on the same streets I grew up on and build something smaller that matters to me.
A small by design company is liberating, not limiting.
