I worked for a small company that fired half the employees (10->5, mostly marketing/sales execs) and absolutely nothing changed. Our revenue actually increased over the next year, not to mention gross sales not paying those salaries. We were originally going to replace them but decided to wait it out for a full year because we realized we didn't need them.
They were all expert busy-workers, who used to try hard when they first joined but got lazy about 2yrs in and started phoning it in. Startups and small businesses have no time for those types of people.
The other massive expense VC-backed companies waste money on are high-paid consultants (and lawyers) from the big business corporatey world.
It is also convenient for them to feel like they are contributing to the local job numbers
It is convenient to villify people that accumulate value amongst a small number of people
Regardless of your thoughts if you have money and are aiming to make more of it, the leaner operation is the one to do it
Which was really a pittance.
I acknowledge hindsight is 20/20, but it's interesting to see posts here lamenting that startups hire too many people, when selling for much too little is surely a more grievous financial mistake.
Or to put it another way, if they had 75 engineers when they sold for a billion, the tragedy would still not be that they had too many engineers.
They probably saw the risk in FB or Snapchats or w/e competing with them. It was just photos with filters at that point. Not a massive social network like it's become.
Not every startup can pull this off, but template designs—particularly for web are great and cheap now. Custom UI controls waste money in development and design.
How many designers does an early stage startup really need? 1, 2, 10, 20, 50? How many SREs do you need when your site is just a handful of AWS instances? How many sales people do you need when your product isn't ready for sale yet?
Each employee fully loaded in the bay area is what like $150-$300K? 20 people like that will chew through your Series A before you know what happened.
Bad (for startups) deals get done when you start running out of runway. Once you're out of runway, you'll sign a 4x liquidation preference at a low valuation because it gets you an infusion of cash now. Now the VCs own you.