“We don’t like their sound, and guitar music is on the way out.” – Decca Records

(Decca Records comment in 1962 on the future of The Beatles.)

The New Hub Model

From Headcount to Leverage

“A jack of all trades is a master of none —
but oftentimes better than a master of one.”

For most of the industrial era, growth meant headcount.

More revenue → more employees.
More employees → more managers.
More managers → more structure.

Scale was measured in payroll.

That equation is breaking.

Today, economic output and employment are no longer perfectly linked. Technology allows companies to grow revenue without proportional growth in staff. Automation, AI, and digital infrastructure have changed the cost structure of scale.

Yet many entrepreneurs still default to the old reflex:

Problem? Hire someone.

Overload? Hire someone.

Growth? Hire quickly.

That reflex is industrial conditioning.

It deserves scrutiny.

I Am Not Anti-People

I am often accused of being anti-employee or anti-HR.

I am not.

I have worked with talented HR professionals. Many were thoughtful, skilled, and genuinely cared about culture.

But structurally, the traditional HR function evolved in an era when labor expansion was assumed to be the primary growth lever.

Recruitment became the default solution.

When an issue arose, the common response was:

“Let’s hire someone to handle it.”

That logic made sense in a factory model.

It makes less sense in a digital one.

The Coming Dilemma

Every entrepreneur now faces a strategic choice:

Do I scale through people?
Or do I scale through systems?

Web infrastructure, automation, outsourcing platforms, and AI have democratized tools that once required departments.

Accounting.
Marketing.
Customer support.
Research.
Distribution.

All can now be augmented — or partially replaced — by technology and flexible contractors.

Hiring prematurely locks in fixed cost.

Technology preserves optionality.

Optionality is survival.

The Old Reflex vs The New Model

In traditional corporate structures, middle layers expand naturally.

More employees require more oversight.
More oversight requires more systems.
More systems require more administrators.

The structure feeds itself.

And when downturns come, the same structure becomes heavy.

Layoffs follow.

The very people hired during optimism become the cost centers during contraction.

That is not a moral failure.

It is a structural one.

The Hub Model

The new entrepreneurial structure looks different.

Instead of a pyramid, imagine a hub.

At the center: a small, high-leverage core.
Around it: specialized contractors, AI tools, automated systems, and on-demand talent.

Flexible.
Modular.
Scalable up or down.

The hub directs strategy and decision-making.

The spokes execute.

This model:

• Reduces fixed overhead
• Preserves agility
• Improves cash flow
• Minimizes cultural drag
• Encourages expertise without bloating payroll

It is not about avoiding people.

It is about hiring intentionally — and only when human judgment truly creates advantage.

A Personal Observation

In one company I worked for, 60 employees were supported by an HR department of six.

Recruitment specialists.
Benefits administrators.
Performance management architects.

Meanwhile, profitability conversations were rare.

Energy flowed internally.

Not externally toward customers or markets.

That imbalance is common in legacy systems.

The Hub Model redirects energy outward.

Toward value creation.

Reprogramming the RAS (Again)

You were likely conditioned to equate growth with hiring.

To equate legitimacy with payroll size.

To equate leadership with managing many people.

That is industrial mythology.

In the current era, intelligence, systems, and leverage outperform sheer scale.

The smartest entrepreneurs ask:

Can this be automated?
Can this be outsourced?
Can this be simplified?
Can this be eliminated?

Only then:

Does this require a person?

And if so — what kind?

The future does not belong to the largest teams.

It belongs to the most intelligently structured ones.

That is the essence of the Hub Model.

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Notice something.

As I began recalling my corporate career, I slipped into the phrase:

“Employees and management.”

That language carries an entire worldview inside it.

Us and them.
Top and bottom.
Decision-makers and implementers.

Hierarchy embedded in vocabulary.

It happens automatically. Even to me.

Years of exposure condition the mind.

The Hub Model rejects that division.

There is no “us and them.”

There is a core group of peers aligned around purpose.

Communication flows horizontally — not top-down.

Responsibility is owned, not supervised.

That mentality requires discipline. It must be reinforced constantly.

Industrial conditioning runs deep.

I still remember sitting for hours in windowless meeting rooms under artificial light, discussing HR frameworks and performance matrices.

Once, a consultant laid photographs of animals on a table and asked a group of staff:

“Which animal best represents our company culture?”

I don’t remember which creature won.

I do remember how little it moved the needle on customer satisfaction or profitability.

A year later, the company was sold at a fraction of its previous valuation.

Symbolism is not strategy.

I call this phenomenon the Internal Whirlpool.

It’s what happens when a company’s energy spirals inward.

Meetings about meetings.
Processes about processes.
Reviews about reviews.

Meanwhile, customers wait.

The more hierarchical the structure, the stronger the whirlpool.

Layers feed on internal alignment instead of external value creation.

I still see it today:

Managers spending months on appraisals while dissatisfied customers receive delayed responses.

Energy misplaced.

For startup founders, the danger is subtle.

You may leave corporate life physically — but carry the structure mentally.

The reflex to hire early feels responsible.

It feels like growth.

It feels legitimate.

But at the startup stage, cash flow is king.

And cash flow is not “money in the bank.”

It is the timing and rhythm of money entering and leaving the business.

Revenue may be irregular.

Expenses are not.

Hiring adds fixed cost.

Fixed cost reduces optionality.

Spending aggressively in the early stage — particularly on payroll — is one of the most common causes of startup failure.

Often not because the hires were bad.

Because the timing was.

This is not about blame.

Everyone was trained inside a system that rewarded headcount and hierarchy.

But a startup is not a miniature corporation.

It is a fragile organism.

Structure it lightly.

Direct energy outward.

Preserve cash.

Build the hub first.

Add permanent spokes only when leverage demands it.

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A Cautionary Example

A CEO friend of mine read Three Simple Steps and an early draft of this material before launching his first company.

We spoke at length about structure.

He agreed with the principles.

Then he did the opposite.

Within weeks he hired:

• Sales executives
• Product development leads
• A finance director
• An assistant to manage his inbox

He leased a downtown office.

He invested heavily in branding — polished identity, signage, visual assets.

Let me pause here.

Early-stage branding is almost always premature.

Until you understand your customer deeply — how they describe their pain, how they perceive your solution — branding is guesswork.

Wait.

Refine the offer first.

You can redesign a logo later.

You cannot easily recover burned capital.

My friend then hired full-time engineers to build a prototype.

Very quickly, he became a full-time manager of people instead of a builder of a business.

New employees often arrive energized.

But startups are ambiguous environments.

Roles blur. Expectations shift. Compensation anxiety emerges.

Before long, he was mediating pay discussions, resolving team tensions, clarifying responsibilities.

He spent fourteen-hour days inside personnel issues.

Not product refinement.
Not customer discovery.
Not strategic positioning.

Personnel management.

I have a simple rule:

Employees often increase management hours.
Vendors increase flexibility.

It’s not anti-people.

It’s arithmetic.

His finance director had little to manage beyond burn rate.

No profit. No revenue stability. Just loss and projections.

With limited operational work, he quietly began exploring other job opportunities — understandable, but destabilizing.

The engineering team split into factions over implementation approaches.

The lone salesperson sold features that did not yet exist.

The CEO became mediator, negotiator, firefighter.

Not architect.

For new founders, things can escalate quickly.

A startup can resemble fireworks — bright, loud, and chaotic.

But the founder’s job is not to admire the sparks.

It is to control ignition.

The next move was predictable.

He hired an HR consultant to “align culture.”

Two full days of workshops.

Significant expense.

Minimal progress.

Then a full-time HR director.

New systems. New reviews. New frameworks.

More internal focus.

Later, when I asked how he spent his time, he exhaled.

“Meetings,” he said.

Update meetings.
HR discussions.
Interpersonal conflicts.
Compensation negotiations.

Meanwhile, the business fundamentals remained fragile.

He was stressed.

Working long hours.

Missing family milestones.

His marriage strained.

This was not the entrepreneurial freedom he imagined.

Eventually he asked me:

“How did you handle the stress in your companies?”

The honest answer surprised him.

I structured the companies so that I rarely had to.

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The Conversation

My response to him was something like this:

“What stress? I structured my companies specifically to avoid what you’re describing. I hired contractors and vendors who already knew what they were doing. That allowed me to focus on customers, growth, and strategy — not internal arbitration.”

I had seen what happened in my corporate career.

The moment you hire, you inherit management.

Even with exceptional people, coordination consumes time.

“I knew that if I hired too early,” I told him, “my role would shift from builder to referee.”

He paused.

“But it’s good to hire people,” he said. “Good for the economy. Good for the community.”

There’s truth in that — at scale.

But survival comes first.

Jeff Bezos did not begin with thousands of employees. He started with a small operation, focused obsessively on product-market fit and customer experience. Headcount followed traction.

When you buy a house, you don’t immediately employ a full-time handyman to live in the garage “just in case.” You fix what you can. You call specialists when necessary. You pay for defined outcomes.

Why treat a startup differently?

The Aftermath

A year later, my friend had burned through $5 million of investor capital.

Stress had aged him visibly.

We remained friends.

There was a happy ending — but it required additional investment, which meant equity dilution (we’ll cover that later).

Eventually he restructured.

Finance became a part-time vendor.
Development became outsourced.
Specialists were engaged as needed.

His executive team?

Him.

Today the company is healthy.

More importantly, he is.

His family still teases him about the early obsession phase.

He laughs with them now.

The Real Lesson

Startups do not fail because founders lack ambition.

They fail because fixed costs outrun uncertain revenue.

Cash flow — not revenue projections — determines survival.

Payroll is the most aggressive fixed cost you can assume.

Beyond salary, there are:

• Benefits
• Compliance
• Equipment
• Systems
• Management time

In the early stage, these compound quickly.

This is not anti-employment.

It is pro-sequencing.

Hire when leverage demands it — not when ego or conditioning suggests it.

Guilt-Free, Strategic Non-Hiring

Most of us were conditioned to equate growth with hiring.

To equate legitimacy with team size.

To equate leadership with headcount.

But employment is a macroeconomic issue.

Your startup is a microeconomic organism.

Your first responsibility is viability.

Once the model works — once revenue is predictable — hiring can amplify impact.

Before that, hiring often amplifies fragility.

There are countless articles arguing that economic growth and employment reinforce each other.

At a national level, that debate is complex.

At the startup level, the equation is simpler:

Revenue must precede payroll.

Not the other way around.

The Hub Model is not anti-people.

It is anti-premature structure.

Survive first.

Scale second.

Hire last.

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Rethinking the “Hire = Growth” Assumption

For decades, economists have discussed the relationship between employment and economic growth through frameworks such as Okun’s Law, first articulated in the early 1960s.

In simplified terms, Okun observed a statistical relationship between unemployment rates and GDP growth. When unemployment rose above its “natural rate,” output tended to fall. When employment increased, output tended to rise.

In the industrial economy of the mid-20th century, this made intuitive sense.

More workers → more production → more output.

The model reflected a labor-intensive world:

Factories.
Mining.
Mass production lines.

Automation was limited. Digital infrastructure did not exist. Artificial intelligence was science fiction.

The Structural Shift

The modern economy is structurally different.

Automation, software, robotics, cloud systems, and AI allow output to increase without proportional increases in labor.

Entire industries now scale through code, not headcount.

This does not invalidate Okun’s Law as an economic observation within certain contexts. It does, however, highlight that the relationship between employment and growth is more complex than it once appeared.

At the national level, employment still matters deeply — socially, politically, and economically.

At the startup level, the equation is different.

Your obligation as a founder is not to solve macroeconomic employment policy.

It is to build a viable, cash-flow-positive enterprise.

These are not the same mission.

Release the Guilt

Many founders carry an unspoken assumption:

“If I’m not hiring, I’m not growing.”
“If I don’t create jobs immediately, I’m not contributing.”

That is industrial conditioning.

Hiring is not a moral act.

It is a strategic decision.

You are not compelled to build payroll to validate your ambition.

You are compelled to build value.

If value creation demands hiring — hire.

If value creation can be achieved through automation, partnerships, or vendors — use them.

I have built multiple companies with zero employees — no assistants, no full-time staff — using contractors and outsourced expertise strategically.

That model is not appropriate for every industry. Healthcare, manufacturing, and certain regulated sectors often require employees from the start.

But even in those environments, thoughtful sequencing reduces risk.

Hire when revenue supports it.

Not when culture suggests it.

The Power of the Generalist

If you accept that early-stage hiring should be deliberate and restrained, a natural question arises:

How do you operate without a large team?

You become adaptable.

The phrase “jack of all trades” is often used as criticism — implying superficial skill.

But the full expression reads:

“A jack of all trades is a master of none, but oftentimes better than a master of one.”

Originally, it was a compliment.

It described someone versatile. Capable across domains. Able to adapt.

Startups reward generalists.

In the early stage, you will:

• Sell.
• Market.
• Negotiate.
• Manage cash flow.
• Refine product.
• Solve technical problems.

Not perfectly.

But sufficiently.

Specialization becomes valuable later.

Adaptability is survival early.

Let others use the phrase dismissively.

You will understand its strategic advantage.

The Hub Model Revisited

The Hub Model does not eliminate expertise.

It sequences it.

At the center: a highly adaptable founder.
Around them: specialized talent engaged when required.

Flexible.
Cost-aware.
Cash-flow disciplined.

This is not anti-growth.

It is growth without fragility.

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The Founder as Functional Shape-Shifter

A successful startup founder is not trapped inside a single title.

You are not “just” CEO.

You are whoever the moment requires.

You walk into your office.

You are CEO — setting direction.

Thirty minutes later you are Head of Manufacturing — sourcing a production partner.

An hour later you are Marketing Director — refining messaging with a branding vendor.

In the early stage, versatility beats hierarchy.

A founder who understands every major function — even imperfectly — is more dangerous (in a good way) than a specialist who understands only one.

The Due Diligence Circus

In 2010, when I sold my first company, five suitors entered due diligence simultaneously.

Between them, roughly seventy full-time employees were assigned to evaluate a company that had… no employees.

The irony was not lost on me.

Most of their teams were mid-level managers. Their task was to protect their organizations from risk. Their incentive was to impress their superiors.

So they arrived cautious. Skeptical.

Some clearly unsettled by the structure.

A profitable company.
No hierarchy.
No departments.
No HR.
No org chart.

I could see the discomfort.

They were trained to assess layered organizations with clear reporting lines. A lean hub model didn’t fit their template.

What they saw initially looked fragile.

What they eventually saw in the numbers was undeniable:

• Annual sales over $15 million
• Net profit margins north of 70%
• Minimal overhead
• High operational leverage

The model worked because it was intentionally designed to eliminate internal drag.

The Six-Month Transition

As part of the acquisition, I agreed to remain available for six months.

I received almost no calls.

The vendors continued operating.

Invoices changed names.

Customers experienced continuity.

The structure did not depend on my daily supervision.

That is the power of a well-designed hub.

The Post-Sale Comparison

Two years later, I met the new CEO at a trade show.

They now had 28 full-time employees.

Revenue had grown roughly 20%.

Net profit had dropped to 35%.

Still respectable — but dramatically different from before.

When we discussed the contrast, he smiled and said,

“You got lucky. It shouldn’t have worked.”

I’ve been “lucky” several times since.

Luck, in this case, was structural discipline.

Why the Hub Model Works

You do not avoid hiring because you dislike people.

You avoid premature hiring because:

• Fixed payroll reduces flexibility.
• Internal coordination consumes executive time.
• Early-stage cash flow is fragile.

The Hub Model replaces internal layers with specialized external partners.

You remain the integrator.

They remain the experts.

The Advantages of the Hub Model

1. Immediate Professionalism

Customers expect professional service regardless of your size.

Outsourcing to established vendors allows your startup to deliver multinational-level execution from day one.

No customer cares that you are small.

They care that you deliver.

2. Scalable Flexibility

Vendor contracts can expand or contract with volume.

This protects cash flow.

If demand slows, you reduce scope.

If demand spikes, you scale.

Payroll does not flex this way.

3. Expertise Without Overhead

Vendors live and breathe their function.

They invest in training, compliance, systems, and infrastructure.

You leverage that expertise without building it internally.

4. Focus on Growth

When you outsource execution, you free cognitive bandwidth.

You focus on:

• Customers
• Strategy
• Product refinement
• Opportunity

Not HR disputes or performance reviews.

5. Operational Templates

You do not need to invent every process.

Good vendors bring proven systems.

You customize.

You don’t construct from zero.

A Lesson from Minnesota

Earlier in my career, I worked inside a traditionally structured organization.

Talent was uneven. Exposure was limited. Change was resisted.

It wasn’t malice.

It was conditioning.

When we supplemented internal teams with external specialists from more competitive markets, execution accelerated dramatically.

It wasn’t about geography.

It was about exposure to different standards.

The lesson was clear:

External expertise often outpaces internal inertia.

That experience sharpened my conviction in the Hub Model.

Independence from Approval

Entrepreneurship requires an unusual kind of independence.

Not recklessness.

Not arrogance.

Independence from needing universal approval.

Some people will prefer traditional hierarchies.

Some will believe scale requires visible headcount.

Some will equate structure with legitimacy.

Your job is not to satisfy their expectations.

Your job is to build something that works.

The Core Principle

Managing employees requires ongoing supervision, coordination, and emotional energy.

Managing vendors requires clear contracts and performance standards.

One absorbs your time.

The other multiplies it.

Choose deliberately.

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The Hub Model Blueprint

Design Your Company Before It Designs You

Step 1: Define the Core

At the center of the Hub is you.

Not as manager.
Not as supervisor.
As integrator.

You are responsible for:

• Vision
• Product-market fit
• Cash flow awareness
• Strategic decisions
• Final accountability

Write this clearly:

My Core Role Is:

If it’s vague, your structure will be vague.

Step 2: Identify Essential Functions

Every business — regardless of size — has these functional needs:

• Product / Service Creation
• Marketing
• Sales
• Finance & Accounting
• Customer Support
• Legal / Compliance
• Technology / Infrastructure

Now answer honestly:

Which of these MUST be done internally by me right now?

Circle them.

Then list the rest under:

Potential Vendor Functions:

If something does not require your unique insight, it does not belong in your calendar long-term.

Step 3: Apply the Hiring Filter

Before hiring anyone, run this sequence:

1. Can this be eliminated entirely?
2. Can this be automated?
3. Can this be outsourced?
4. Only if none of the above work — hire.

Write one current responsibility you feel overwhelmed by:

Now run it through the filter.

What is the leanest solution?

Step 4: Stress Audit

Employees require:

• Supervision
• Motivation
• Conflict resolution
• Legal structure
• Cultural management

Vendors require:

• Clear contracts
• Clear deliverables
• Clear expectations

Be honest:

Where does most of your stress come from?

People management?
Or execution gaps?

Write it down:

Step 5: Cash Flow Reality Check

Payroll is fixed.

Vendors are variable.

Ask yourself:

If revenue dropped 30% tomorrow, what expenses would suffocate you first?

If the answer is payroll, you understand the power of the Hub Model.

Step 6: Design Your Ideal Structure

Imagine:

• No unnecessary meetings
• No ego-driven headcount
• No layers
• No internal whirlpool

Sketch your structure:

Center: YOU
Around you: Specialist Vendors

List 3 roles that could exist as flexible vendor relationships instead of employees:

Step 7: Freedom Calculation

If you reduced internal management by just 5 hours per week:

That’s 260 hours per year.

That’s over 6 full workweeks reclaimed.

What would you do with that time?

• Build?
• Think?
• Create?
• Rest?
• Strategize?
• Be with family?

Write it:

The Hub Model Principle

Grow revenue first.
Build leverage second.
Hire last.

You are not building payroll.
You are building value.

Structure determines freedom.

Design wisely.

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