While it is true that large teams are often less efficient than small ones, for many good reasons given above, there is another aspect to consider: Consistency and survivorship bias.
This only becomes clear when you compare a big company to many small companies rather than just the succesful small companies.
80% of small companies fail in the first few years[1]. This is for a bunch of different reasons, but a significant proportion of the time it is because they have launched a wrong product, or a bad product, or failed to launch a product.
Lets assume that 50% of small companies fail for product related reasons [2] (the other 30% being competition, regulatory etc etc).
We can all think of high profile products from large companies that were still born or cancelled before being launched. If a large company had 50% of its projects fail like this, then it wouldn't survive for long.
To prevent these failure numbers, the large company introduces inefficiencies. Engineers or teams can't run off on their own and develop the 50% of projects which fail. Instead they have to jump through approval hoops so that the failure rate is much much smaller.
So even if an engineer is 50% as productive at a large company, they are actually as productive, on average, when you consider that 50% of engineering time at small companies is ultimately not productive.
As an ecosystem, large companies may not be that much more inefficient than small companies as a whole, they are just optimised for consistency, rather than risk and quick failure. Whereas the inefficiencies of small companies are externalised as failed companies.
The other side of this is that the potential rewards are often smaller - they're making a lot of small bets rather than a few big ones.
[1] my ass, but the close enough for this comment
[2] ibid
This only becomes clear when you compare a big company to many small companies rather than just the succesful small companies.
80% of small companies fail in the first few years[1]. This is for a bunch of different reasons, but a significant proportion of the time it is because they have launched a wrong product, or a bad product, or failed to launch a product.
Lets assume that 50% of small companies fail for product related reasons [2] (the other 30% being competition, regulatory etc etc).
We can all think of high profile products from large companies that were still born or cancelled before being launched. If a large company had 50% of its projects fail like this, then it wouldn't survive for long.
To prevent these failure numbers, the large company introduces inefficiencies. Engineers or teams can't run off on their own and develop the 50% of projects which fail. Instead they have to jump through approval hoops so that the failure rate is much much smaller.
So even if an engineer is 50% as productive at a large company, they are actually as productive, on average, when you consider that 50% of engineering time at small companies is ultimately not productive.
As an ecosystem, large companies may not be that much more inefficient than small companies as a whole, they are just optimised for consistency, rather than risk and quick failure. Whereas the inefficiencies of small companies are externalised as failed companies.
The other side of this is that the potential rewards are often smaller - they're making a lot of small bets rather than a few big ones.
[1] my ass, but the close enough for this comment [2] ibid