Time to cut the Internet Bureaucracy.

I am frequently struck by how Internet businesses seem to grow staff numbers on an exponential basis. Employing new people - preferably MBA types and under 35 - in endless non-jobs with little or no impact on the creation of new and exciting areas.  

Yahoo! are a interesting example.  Anybody who comes into contact with that organisation can see that at least 50% of their 15,000 staff could be made redundant and the underlying business would not suffer.  They are hugely overmanned and it seems that the management is either too inexperienced to see how to change things or view a the number of direct reports relates to the bonus they can demand.

Take Google, they now employ over 20,000 people worldwide.  The only business line that is really driving the revenue of the business is the original search business and the associated AdSense revenue.  Today the product is much the same and just as brilliant as it was when I met with Brin and Page when the company had just 7 employees back in 1999.  I suspect that percentage of today's 20,000 employees directly involved in that search and AdSense business line is fewer than 10% of the total workforce.  A friend of mine was telling me about a meeting he recently had with Google.  A recently appointed Director spent 45 minutes trying to explain precisely what her roles and responsibilities were within the company.  Anyone who takes 45 minutes to communicate such a basic aspect of their job is probably trying to desperately cover up the fact it is a non-job.  The same stories can be found in Yahoo!, Microsoft, and eBay.

The major Internet business have frequently fallen into the same trap that ultimately caused the demise of major telcos, steel companies and car manufactures back in the 1980s.  They failed to understand their markets and had grown into huge bureaucracies. This recession maybe a good time for the major Internet businesses to look critically at their businesses and start to cut the deadwood and also look to fund the brightest of their exiting alumni to start new businesses and generate real dividends.