As part of writing Stay SaaSy we speak with and advise a fair number of startups, and one of the most common topics of conversation is how many people they should hire.
The most important factor to consider when expanding a team is that the usefulness of incremental hires is not linear. Sometimes an additional person helps a lot. Sometimes they don’t help at all, due to structural overlap or the quality of the hire (and keep in mind that for some roles, quality is much less reliable). The key point is that the utility of a marginal hire varies dramatically depending on role and whether you’re crossing a key breakpoint in terms of team size. The value of a new hire can even be negative.
And there are a few important breakpoints to consider on the journey of growing your team. These might seem a bit obvious, but the important realization is that at these breakpoints hiring decisions are much more important, so if you keep them in mind as hard thresholds you’ll make better scaling decisions.
0-1
Sometimes you just need a single expert on a team who gives you a key capability. There are several different functions where just having one individual will make your whole group much more productive:
- A designer
- A data person – specifically someone who can be in charge of all of your data and systems, and ideally can be a data analyst for a while as well
- A manager of any team that has a large number of team members in the same core function – e.g. a Support team lead, Engineering Manager, or head of sales
- At an early stage startup, a single person for major areas of G\&A such as HR or Finance
- An in-house lawyer
- An Executive Assistant / Chief of Staff, or alternatively a head of operations
For these 0-1 hires, the most important thing to do is not screw it up. A great designer will let you move 10x faster at 10x higher quality; a bad designer will mess up your whole product. A good data person will set up your foundations to scale for years; a bad data leader will set you up for overhauls every 24 months in perpetuity.
1-2
But often, confusingly, adding a second person in a function makes things a lot worse. For example:
- You don’t want multiple designers at an early stage company. They step on one another’s toes and cause confusion, and there is great power in having a single God-Empress designer whose vision is channeled throughout the entire product. Trust one designer to define it all, and use all of the available tools (AI and otherwise) to speed them up.
- Typically you don’t want multiple product managers at an early stage company, both because they’ll step on toes and also because too many PMs inevitably leads to unnecessary busywork. PMs also love to communicate, and once you have 2 of them, they will often systematize their yapping into communication overhead that you don’t actually need. Keep in mind as well that usually a founder is already serving the role of resident PM.
- You typically don’t want overlapping top-level functions – for example, it’s often worse to have both a CMO and a CRO at a startup until you’re so large that either job requires 100% of your focus. Same for a head of sales / head of customer success, or a CTO and a Chief Architect.
In a few other cases, adding another person can make things a lot better. For example, it’s often very helpful to have 2 sales team members (classic post on this), or 2 support team members, because they’ll keep one another honest about pace. Sales and Support are highly dependent upon product-market fit to be successful; as a result, both sales reps failing or both support reps struggling often means that the product is insufficient; whereas only one failing usually points you to what the correct bar should be for that role at this moment in time.
For these types of hires: don’t wait too long to hire your second person, especially if the first one is doing well.
7-10
Most people cannot manage more than 9 people effectively. The canonical advice on how many people you can manage is 7 plus-or-minus 2 (unsurprisingly, 7 is the median amount of items that you can store in your working memory).
Once you cross into the zone of 7 => 10 direct reports for one manager, it’s very common to see things fall apart. Typically, the dominos fall in this order:
- Routine issues get missed – code starts to break, sales follow-ups don’t happen, emails and Slack messages go unresponded to
- The manager’s sanity begins to visibly fray
- Bigger things fall apart: lack of performance management, very upset team members, major incidents, numbers missed
The general rule of thumb: aim to load up all of your managers to their maximum carrying capacity of ~7-10, as each incremental hire will increase velocity, reduce key-person risk, and expand coverage. Past that, tread extremely carefully.
There is a movement going on right now to load managers with significantly more direct reports than before – in some cases that we’ve heard of, 50+. I think that it’s unlikely that advances in AI will be able to dramatically increase the number of direct reports that one person can responsibly manage. Ultimately, even if we have futuristic technology, the neurological hardware that we use for tracking relationships (an essential part of management) is still firmly rooted in 2026 evolution. AI might increase managers’ ideal maximum carrying capacity to 12 or 13; I personally doubt that it will increase it to 50.
140-160
Transitioning from ~140 to ~160 employees takes you across the famous Dunbar number, which sits at around 150 people. In essence, the Dunbar number is the maximum number of people in a group that still allows for family-like cohesion. That is, a group of 149 people can operate as a family while a group of 151 people needs to operate more like a corporation (or an infantry battalion, or a bunch of people on a cruise ship, or a prison). Coordination and communication are very easy below the number; they’re very hard above it.
We can debate the exact scientific reality of the Dunbar number, but I will say two things:
- Psychological science is imprecise and fuzzy by nature. That doesn’t make it wrong.
- Anecdotally, the 150 barrier is extremely real
In very broad strokes, below the Dunbar number marginal hires typically speed you up because they add resources without dramatically increasing coordination overhead. They aren’t free in terms of overhead, but they’re relatively cheap. You can still yell across the office, or text people, and everyone kind of:
- Knows everyone else (important for communication)
- Knows everyone’s job (ditto)
- Knows where they stand (important for cohesion)
- Can stay on track with a plan (important for coordination)
Beyond the Dunbar number, things get crazy and you need to start architecting your organization more like the Navy and less like a sports team.
Generally, my recommendation to companies as they grow past 50 people is to aim for a hiring trajectory that lets them stay below 150 people for as long as they can. This is especially true with advances in AI that give team members more leverage. Past 150 people you are simply going to get less productivity out of each marginal hire, and a team of 149 armed to the teeth with great tools can carry even a fairly complex business very far.
Additionally, once you’ve crossed 150 people, you can and often should hire faster. You’re now fully going to need a heavier structure of internal communications, operations, and other functions to keep everyone rowing in the same direction – you might as well just invest since you’re already incurring the full coordination penalty.