"Ben Horowitz is a big fan of tiny teams. On an episode of the A16z podcast, the Andreessen Horowitz cofounder shared how his venture capital firm maintains a lean operation despite being one of the world's largest. "An investing team shouldn't be too much bigger than a basketball team," he said, referring to advice he got from famed American investor David Swensen in 2009. He added, "A basketball team is five people who start, and the reason for that is the conversation around the investments really needs to be a conversation.""
"The VC said he always kept the basketball team size in mind but also knew that the firm had to expand to keep up with how "software was eating the world," his signature phrase. The solution was to split the firm into different investment verticals. To maintain good communication, staff attend other teams' meetings when investment themes overlap. The firm also organizes a two to three-day offsite twice a year, "with not much agenda.""
"Horowitz said that people who join them from other firms say that A16Z has "less politics" than firms with 10 or 11 people because his firm has a culture where politicking is "disincentivized." A16z might have been early to the tiny team trend, but it's catching on fast with VCs and startups across the world."
Investing teams function best at roughly five people to enable conversational investment deliberation. Large VC organizations can scale by splitting into investment verticals while preserving cross-team communication through meeting attendance across teams and biannual offsite retreats with minimal agenda. A culture that disincentivizes politicking reduces internal politics compared with mid-sized firms. Startups increasingly choose to remain small, often under ten employees. Advances in AI and coding tools boost productivity and enable both startups and venture firms to thrive with fewer employees while maintaining investment coverage and operational effectiveness.
Read at Business Insider
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