[riemannzeta]

I think I basically agree with this perspective, but I might try to add some nuance. As organizations become larger, there is a tendency for them to become less and less efficient. This seems to be linked to the second law of thermodynamics, which applies to information the same way it applies to matter.

One way to address the relative inefficiency of a larger organization is to consume more energy and not worry about the waste on entropy. This works so long as the large organization is growing — i.e., so long as it is able to extract more energy from its environment than it is wasting (in a relative sense) on its internal processes.

The strategies for minimizing entropy within an organization — large or small — seem to boil down to two, which are intertwined: 1) what @pg called "Founder Mode" and 2) alignment around mission and vision. In both cases, the effect is to drive the organization towards a "critical state" in which small details of information picked up at the edges can be shared relatively quickly across the entire organization, allowing every part of the organization to react in alignment to that new information. In the case of 1), this is facilitated by a dictator (i.e., the founder) who everybody willingly submits decisions to when they themselves are unsure of how the founder would decide. In the case of 2), this is facilitated by a shared understanding of what the "right" decision is across the organization in view of the mission and vision, which are clear and crisp enough to answer most questions, even about relatively obscure issues or questions that arise.

The ability to operate at scale seems more or less to be derived from one or both of these. Coase's theory of the firm in The Nature of the Firm can be understood in these terms — that is, 1) and 2) are the mechanism whereby internal management outperforms spot markets in coordinating production.