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Coordination Costs

The Stripe co-founders were candid about their failure to predict where the economy was heading. They also said they overspent on things like “coordination costs.” That’s not a term I’ve heard before, but I suspect it is a reflection of getting too big and too inefficient.

💬 Jessica Lessin

It's a new term to me aswell - BUT recently on LInkedIN there was a meme running around - which used this graphic.

Coordination Costs

It's pretty self explanatory. The formula is that for every person you add to an organisation, the number of potential conversations increases - a lot. If 'n' is the number of people in an organisation, the number of potential conversations is n-1 + n-2 + n-3 .... in other words ...

3 people ... 2 + 1 = 3
4 people ... 3+2+1 = 6
5 people ... 4+3+2+1 = 10
6 people ... 5+4+3+2+1 = 15

And adding 1 person to a 10,000 person organisation adds 10,000 possible new lines of communication.

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