IT Company Structure

1. Product Companies

In the IT industry, there are a lot of different companies, and there are no clear boundaries. Large companies often do many different things, some of which are definitely IT, others are definitely not. A company is considered IT if it earns most of its revenue from IT products. Or simply if it owns several large, well-known IT products.

Every year, thousands of companies appear, grow, and die (no shame in that). The goal of founders is to make sure the company doesn’t die, but grows big enough so that its stocks become traded on the stock exchange. Why is this needed?

If a company conducts an IPO (goes public), the founders can avoid selling shares (and paying big taxes), and, for example, take a loan secured by shares, keeping the shares themselves. Or they can pay employees part of their salary in cash, and the other part in shares.

You can reward top management with shares for excellent results. You can even buy out competitors with shares — a very profitable way to acquire dangerous but still small competitors. Paying employees with shares is also very advantageous. First, it saves on taxes, and second, it can make you very rich.

2. Modern IT Products

IT companies grow rapidly thanks to investor funding. Investors generally love when companies grow fast. “You might not even need to make a profit — just grow” ©. “Get 100M users, and then we’ll figure out how to monetize them.”

As they say: “Person + technology will beat person without technology,” and “Businessman + investments will beat businessman without investments.” The main thing is growth. Very rapid growth.

3. Modern Development

Companies need to grow quickly, products need to attract users fast, and the team? The team must constantly add new features to the product.

Fifty years ago, when software development was just starting, it was treated like construction. First was the requirements gathering phase, then design, then development, testing, and only after that was the product handed over to clients. It could take 5 years from start to first customer. Now, everything is different.

Modern development is about constant experiments. Large companies are always testing new features. New versions of products are released every month, every week, or even every day.

Facebook outdid everyone by releasing dozens of new “features” every day. Each feature is shown to 1% of users, then automatically studied to see how users react. If users like the feature, it’s shown to 10%, and so on.

Of course, this approach to adding new features requires a completely different approach to software development than before.