• Devansh Lakhani

3 reasons why Jeff Bezos’s 2-pizza rule can help a startup succeed

Paytm CTO for Payments Manmeet Dhody revealed that one of the company’s secrets to success was billionaire Jeff Bezos’ ‘two pizza’ strategy. In the early days of Amazon, Bezos instituted a rule - every internal team should be small enough that it can be fed with two pizzas - to make meetings more effective by limiting the number of people participating.

So how exactly does having a smaller, leaner team help?

Employees are more engaged

Smaller teams are often more engaged and feel a greater sense of autonomy. With fewer levels of management to interact with, they can make decisions faster. A recent Gallup report showed that companies in the U.S with fewer than 10 employees scored 42 percent engagement levels while the average engagement level for bigger companies was below 30 percent.

More innovative

In a letter to shareholders in 2013, Bezos highlighted how having smaller, decentralized teams helped spur creativity and innovation. “This decentralized distribution of invention throughout the company – not limited to the company’s senior leaders – is the only way to get robust, high-throughput innovation,” he wrote.

Prevents data duplication

Paytm’s Dhody believes a leaner team can also prevent data duplication since each team is in charge of a particular business domain. “They are the single owners of that domain,” he told Business Insider. “Nobody else in the organization owns that domain, including the data or the services that power it. In my mind, it one of the most efficient organizational designs for structuring teams because it helps agility and prevents data duplication. You don’t have two teams which are gathering the same type of data or servicing the same kind of things.”

But it is important, he cautioned, to have a common data infrastructure and to have data flowing between the various teams. Otherwise, it'll lead to a lot of wasteful expenditure for the company in the long run.

About Devansh Lakhani Director of Lakhani Financial Services, and a Chartered Accountant, he helps start-ups raise funds from his network of investors. He guides and advises start-ups to scale up by providing efficient sales, marketing, team building, and business management strategies. He has executed fundraising by block deals on the stock exchange and conducted IPOs and right issues on the SME platform to the tune of over Rs. 50 Crore. He is currently working with start-ups from various sectors to help them channelize their business models and investments.

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