“There’s nothing wrong with staying small. You can do big things with a small team,” Jason Fried, founder of 37signals, famously said in his 2006 SXSW keynote address.
In 2006, that flew in the face of founder goals. Then, headcount was a status symbol. Founders bragged about how many people they had on payroll. Investors equated growth with hiring sprees. And the assumption was simple:
🔹 More people = more output
🔹 More output = more growth
Today, the narrative has flipped.
Now, the flex isn’t “We hired 100 people last quarter.” It’s “We hit $10M ARR with a team of five.”
The best businesses aren’t just growing revenue—they’re growing efficiency. They’re going for lean growth.
And it’s not just startups. Midsized and enterprise companies are adopting this mindset too. The shift isn’t about shrinking teams for the sake of it—it’s about designing businesses that operate leaner, move faster, and are more profitable.
In all honesty, I love this shift. I’ve seen small, efficient teams run circles around larger, disorganized or disinterested ones. That’s why I’ve always kept my team as lean as possible. For years, I felt like I had to justify that decision. But now? The market is proving the point for me.
So what changed? Let’s explore.
The 3 Drivers of Lean Growth
This shift didn’t happen overnight. It’s the result of three major trends reshaping business:
1. Capital Efficiency Is the New Growth Formula
Funding isn’t what it used to be. The last decade was fueled by cheap capital—investors poured money into fast-scaling startups, prioritizing growth at all costs over profitability.
That era is over.
The “grow fast, exit faster” mindset created a house of cards—companies built for acquisition, not sustainability. Here’s why this approach collapsed and why we’re seeing a shift toward lean, profitable growth.
Growth at all costs led to weak, fragile companies
When capital was cheap and abundant, startups didn’t need to focus on profitability. Instead, they focused on growth metrics that looked good to investors. Many companies scaled too quickly, burned too much cash, and lacked a strong foundation.
WeWork is a good case study. After raising $12B+ from SoftBank, it scaled aggressively, overpaying for leases and subsidizing membership prices to fuel growth. When its IPO filing exposed financial instability, the company was forced to downsize and restructure—kicking off a four-year freefall from $47B to bankruptcy.
This created a startup “bragging rights” culture
For many founders, a fast exit was the ultimate goal. They wanted a massive funding round to validate their leadership, a high-profile acquisition for prestige (not to mention a personal cash-out), and a unicorn status headline on their resume.
But many of these companies weren’t built to last. They grew by acquisition, which led to inflated valuations and overhiring. Bloated operations meant customers weren’t being served, and internal inefficiencies made it nearly impossible to find or fix the issues stunting their growth.
Cheap capital created zombie companies
It was an era of free money, so VCs threw cash at anything that moved. Many startups never reached profitability and were never able to survive on their own. When funding dried up, they had to close their doors.
Investors woke up to the sustainability problem
For years, the VC model was to flood startups with money, scale aggressively, and exit. But when the economy turned, capital tightened, and IPOs stalled, the flaws in this model became painfully obvious.
Today’s VCs want growth, not big ideas. Founders are expected to build sustainable brands from Day 1.
- Investors now favor companies that hit revenue milestones without excessive burn.
- Bootstrapped founders are proving they can outlast well-funded competitors.
- Even mid-market and enterprise companies are prioritizing lean operations and profit margins over unchecked expansion.
This shift has worked its way into startup operations. Growth isn’t about hiring more people—it’s about doing more with the people you have.
📌 Example: Basecamp’s founders made headlines by capping their team at 50 people, despite being a multi-million-dollar SaaS business. They don’t chase scale for the sake of it. They optimize for efficiency.
2. AI + Automation = A Leaner, More Powerful Workforce
A decade ago, hiring more people was the only way to scale. If you needed more output, you needed more hands.
Today, technology gives small teams the power of much larger ones.
- AI writes, designs, and even makes strategic recommendations.
- Automation eliminates repetitive tasks.
- No-code tools let non-technical teams build solutions without engineering.
Businesses that used to require dozens of employees can now be run by a lean team using the right tech stack. And while that sounds suspiciously like tech is replacing people, that’s not the case.
The goal isn’t to replace people—it’s to amplify them.
📌 Example: Air.ai, an AI-powered sales platform, built an AI sales team that can hold 30-minute sales conversations indistinguishable from humans. They’re proving that a company’s revenue potential isn’t tied to how many people it hires.
3. Agility Beats Bureaucracy
Big teams slow things down. More people mean more meetings, more stakeholder approvals, and more internal friction. (So we can finally stop wasting time in “this could have been an email” meetings!)
Today, speed is a competitive advantage.
To gain that speed, the best companies aren’t just reducing headcount—they’re flattening hierarchies and streamlining execution.
- Decisions are made faster when fewer people are involved.
- Teams move quicker when they’re empowered to execute without red tape.
- Small teams innovate faster because they can pivot without bureaucracy.
📌 Example: Stripe ran for years with an intentionally small team, despite their massive valuation. The company’s leadership believed that too many people diluted focus and slowed progress. The result? Their agility helped them easily outpace competitors.
What This Means for Founders & Growth Leaders
So what’s the takeaway?
This shift isn’t about shrinking teams. It’s about optimizing for revenue, efficiency, and execution. It’s about real growth instead of the appearance of growth.
Here’s how to build a thriving business with a lean growth mindset:
1. Design for Revenue First, Then Scale
Old mindset: Grow the team first, figure out revenue later.
New mindset: Prove revenue first, then hire strategically.
This is where my bottom-up go-to-market (GTM) approach comes in. By focusing on revenue first, you can more easily prioritize the marketing and sales motions that make a bottom-line impact. It’s also easier to survive economic and market shifts.
Instead of hiring based on growth projections, founders and marketing leaders can scale based on proven revenue. The key is to:
- Focus on profitability before expansion.
- Build a business that can sustain itself without external funding.
- Grow intelligently, not reactively.
📌 Example: Kit (formerly ConvertKit), an email marketing SaaS, bootstrapped to $30M ARR with a small, remote team. They focused on customer value first, hiring second.
2. Leverage Technology Before Hiring More People
Before adding headcount, ask, Can this be automated? and Can AI or software handle this more efficiently?
In many cases, it can. Today’s companies:
- Use AI & automation to remove bottlenecks (without over-relying on them).
- Empower existing employees with better tools, so they can be more effective.
- Hire strategically—not to fill gaps, but to drive growth.
📌 Example: A small agency using AI-powered content creation tools can match the output of a team 3x its size—simply by optimizing efficiency. And yes, this is possible without sacrificing quality.
3. Build a Culture of High Impact, Not High Headcount
What’s more valuable—50 people doing mediocre work or 5 people doing world-class work?
The best companies today focus on:
- High-impact hiring (fewer, stronger contributors)
- Cross-functional agility (small teams that wear multiple hats)
- Outcome-driven work (focusing on results, not hours worked)
📌 Example: Zapier scaled to $140M ARR with only 350 employees, prioritizing efficiency, async work, and automation over unnecessary expansion.
Lean Growth: Smaller, Smarter, Stronger
The old playbook—hire fast, raise capital, grow at all costs—is being rewritten.
- The best companies today aren’t just growing revenue. They’re growing efficiency.
- They’re not hiring for headcount—they’re hiring for high impact.
- They’re not just “doing more with less”—they’re doing more, smarter.
The question isn’t, “How big is your team?” It’s “How well does your team execute?”
The best founders and growth leaders aren’t cutting costs out of necessity. They’re building for efficiency from Day 1.
Is this the new growth formula for successful businesses? More revenue. Smaller teams. Smarter growth.
