Thu Jun 30 14:56:31 PDT 2011

Company Growth

A while back (on 10/26/2009 to be precise) I wrote a short note where I made a mistake which no self respecting climatologist would ever make. I posted three predictions which could be tested. The article was Companies and Bacteria, contained predictions as the number of employees in one year's time at Google, Yahoo, and Accelrys. The predictions were, Google: 21,640; Yahoo: 13,960, Accelrys: 242.

Aside from marvelling at the immense number of decimal places I had decided to include, I came to wonder recently how the predictions faired against the cruel realities of corporate America, the recession, and so on. Hence, I looked up the figures.

Google, in Octorber 2010 had 23,331 employees, 'up from 21,805 full-time employees as of June 30, 2010', according to their 2010 Q3 earnings report, posted here. So the prediction of 21,640 wasn't too bad.

Yahoo, in October 2010 had 14,100 employees versus the prediction of 13,960. So, again not a bad prediction.

Finally, Accelrys in October 2010 had complicated its picture substantially by acquring Symyx. The deal resulted in a reduction in force of approximately 80 employees, according to this report. Prior to the merger, Accelrys had 358 employees. So, if we assume that half of the reduction in force occurred at Accelrys, they were left with 318 employees, versus the prediction of 242.

All in all, not too bad a set of results. Probably better than a linear projection could have achieved, anyway. (Though obviously, like a good climatologist I won't be making the mistake of testing this immediately). But, in general I would suspect that the growth form of a bacterial colony and a company would be similar, and so when making a prediction as to future company sizes, the logistics function seems reasonable. Even if the predictions are not perfect, they provide insights into what will happen. In the case of Accelrys, the declining but cash rich company obfuscated the situation by acquiring another software company. This helps to mask the decline in the basic markets served by Accelrys and conceivably could give the company a petri dish jumping means of avoiding its bacterial fate. Perhaps it can jump the species barrier altogether and start to grow!

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