Head count is no longer the hot success indicator, says a Y Combinator partner.
“It’s the right time to hire when things are so busy that you can’t even find a slot in your calendar to do an interview with a candidate,” YC partner Gustaf Alströmer said in an episode of YC’s “Office Hours” podcast released on Tuesday.
He said this is when things are at their “breaking point” and the cofounders must work beyond their regular schedules to keep things running.
Alströmer, who worked as a product lead at Airbnb from 2012 to 2017, added that hiring can take about three months, and founders should look out for early signs.
“An early indicator of that moment is that there’s a specific thing in the company that’s breaking or about to break. It’s either engineering or it’s sales or onboarding,” he said. He added, “You have to be honest with yourself. Are these early indicators, or are they just my hopes that they’re going to be early indicators?”
Y Combinator is a San Francisco-based startup accelerator and venture capital firm that provides seed funding and mentorship to early-stage companies. It has funded over 5,000 companies, including Airbnb, DoorDash, and Instacart.
On the podcast, Alströmer said head count growth should not be confused with startup growth.
“It’s a dangerous thing to start thinking about hiring as a success metric. Hiring is not a success metric at all,” he said. “It’s sort of like a way to not go under or have a functioning company fail.”
He said that many YC startups now say they want to be a billion-dollar company with 10 people.
YC did not immediately respond to a request for comment.
Startup founders and venture capitalists are joining the Big Tech bandwagon of wanting to do more with less, especially in the age of AI.
Across the industry, executives are touting the use of AI agents, which can perform tasks like taking customer service calls or booking travel instead of human employees.
Executives have also highlighted “vibe coding” tools that allow software engineers to write code faster and with fewer human resources.
Tech giants like Intel, Meta, and Amazon are embracing the “great flattening” — cutting middle-level management in favor of more streamlined teams and fewer hierarchy tiers, which they say should lead to less bureaucracy.
In May, Business Insider reported that at least 12 AI startups valued over $1 billion have teams of 50 people or fewer. These include OpenAI’s former chief scientist Ilya Sutskever’s Safe Superintelligence and Magic, which is backed by Google’s former CEO Eric Schmidt and Sequoia Capital.
Alströmer’s idea of keeping things lean with a low head count echoes the memos the CEOs of Amazon and Shopify sent their employees in the past year.
“We want to operate like the world’s largest startup,” Amazon’s Andy Jassy wrote in a letter last September. “That means having a passion for constantly inventing for customers, strong urgency (for most big opportunities, it’s a race!), high ownership, fast decision-making, scrappiness and frugality, deeply-connected collaboration.”
In a memo to employees that Shopify’s Tobias Lütke shared on social media in April, he wrote: “Before asking for more head count and resources, teams must demonstrate why they cannot get what they want done using AI.”
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