There is a concept from Rory Sutherland of Ogilvy that I love called the doorman fallacy.

The idea is simple. A hotel has a doorman. Someone looks at the role and says, “This person opens the door.” Then they look at the cost of the salary, compare it to the cost of an automatic door, and conclude that the doorman should be replaced.

On paper, this looks perfectly rational.

Same door. Lower cost. Improved efficiency. Another small victory for the spreadsheet.

Except, of course, the doorman was never just opening the door.

He was greeting guests. Calling taxis. Recognizing regulars. Keeping an eye on the entrance. Creating a sense of arrival. Making the hotel feel a little more fancy.

The automatic door may open perfectly. But something has been lost.

That is the doorman fallacy: mistaking the visible task for the full value of the role.

I have seen this mistake many times, but these days I see it most clearly in my work as an investor, advisor, and reviewer of private equity deals.

A model gets built. Costs get categorized. Roles get examined. Headcount gets benchmarked. Synergies get identified, which is often a polite way of saying that someone, somewhere, is about to have a very bad Thursday.

And sometimes the cuts make sense. I am not sentimental about bloated organizations, lazy management, or jobs that exist only because nobody has had the courage to ask what the person actually does all day.

But there is a difference between cutting fat and cutting muscle.

There is also a difference between operational discipline and spreadsheet blindness.

The Private Equity Version

In private equity, this usually shows up under respectable language.

Nobody says, “Let’s make the company worse.”

They say, “We have identified operational efficiencies.”

They say, “There are opportunities to streamline the organization.”

They say, “The business has excess overhead relative to benchmark.”

All of which may be true.

But sometimes what they really mean is:

“We found a few people whose value is obvious to the company but not obvious to the spreadsheet.”

That is where I get nervous.

Because in a smaller company, especially a founder-led one, people often wear many hats. The official job title may say “operations manager,” “customer support,” “finance admin,” or “sales coordinator,” but the actual role is usually much messier and more valuable.

That person may be the one who knows which customer needs a phone call before they churn. They know who needs a payment reminder before the invoice goes to 60 days overdue. They may know which vendor always overpromises. They may know which salesperson is great on paper but quietly toxic to everyone around them. They may know which reports are technically useless but politically necessary because one key client insists on receiving them every Friday.

None of that shows up cleanly in the model.

To be fair, I understand the temptation. I like clean models too. There is something deeply satisfying about finding waste, removing complexity, and watching the EBITDA margin improve. But the problem is that some of the most important value in a business is inconveniently human. It lives in judgment, trust, memory, relationships, and context.

That makes it hard to quantify.

And when something is hard to quantify, mediocre operators often pretend it does not exist.

I Almost Fell for It Too

I would love to pretend I was always immune to this kind of thinking.

Sadly, no.

When my own company started growing, I had my own brief flirtation with the doorman fallacy. As the team got larger, the business became more complex. More people meant more salaries, more meetings, more internal coordination, more opinions, and more chances for someone to create a spreadsheet that made me question my life choices.

At some point, every founder starts asking the same questions.

Do we really need this role?

Can this process be automated?

Is this meeting useful?

Why are three people involved in something that looks like it should take one person and half a sandwich?

Those are good questions. A founder should ask them.

But there is a dangerous version of this thinking where you start seeing people primarily as costs instead of contributors. You start reducing roles to visible tasks. You start believing that if something cannot be measured precisely, it probably does not matter.

That is where founders get themselves into trouble.

Fortunately, I caught myself before going too far down that road.

The company I wanted to build was not a soft, sleepy, everyone-gets-a-trophy operation. We were ambitious. We were numbers-driven. We tracked performance closely. We wanted to win.

But I also wanted people to enjoy working there. Not in some fake corporate culture way, where everyone gets a branded hoodie and a mission statement nobody believes. I wanted people to wake up and think, “I get to work there,” not, “I have to work there.”

That distinction mattered to me.

Because the best people do not stay just because the paycheck clears. They stay because the work has energy, the team has standards, and the environment does not slowly drain the life out of them.

In other words, we still cared about performance. We just did not replace the doorman with an automatic door.

High Standards Are Not the Enemy of Humanity

One of the great false choices in business is the idea that you must pick between performance and humanity.

That is nonsense.

In my experience, the best companies are both demanding and human. They have high standards, but they are not stupid about it. They push hard, but they do not confuse exhaustion with excellence.

I have never understood leaders who brag about creating miserable workplaces, as if making everyone anxious is proof of strategic brilliance.

Congratulations. You turned your company into an emotional airport security line.

That is not leadership. That is just poor management.

A strong culture does not mean low expectations. It does not mean everyone gets to do whatever they want. It does not mean avoiding hard conversations because “we are like a family,” which is usually the sentence people say right before behaving like the worst family imaginable.

A strong culture means people know what matters.

They know what good looks like.

They know where the company is going.

They know they will be held accountable.

And they also know they are not disposable machine parts in someone else’s margin expansion fantasy.

That last part matters more than many investors want to admit.

When people feel respected, they give more than the minimum. They solve problems before they become visible. They protect customers. They help each other. They tell the truth earlier.

You cannot always model that neatly. But you can absolutely feel it when it disappears.

The Question Before the Cut

Before cutting a role, automating a function, or streamlining a team, the question should not simply be, “What will this save?”

The better question is:

Are we removing waste, or are we removing value we do not know how to measure?

That distinction matters because the financial model will always favor what it can count. It can count salary, software cost, utilization, response time, and margin improvement. It cannot easily count judgment, institutional memory, customer trust, team stability, or the quiet competence of someone who prevents problems before they become visible.

This is where a lot of optimization work becomes dangerous. The role looks expensive because only part of the role is visible. The employee looks replaceable because the model only captures the formal job description. The process looks inefficient because nobody has bothered to understand why it exists.

In smaller and founder-led companies, this is especially common. A few key people often hold together far more than their titles suggest. They know the customers, the exceptions, the history, the personalities, the weak spots, and the little landmines that never appear in a board deck.

Remove those people too casually and the company may look cleaner for a while. Costs go down. EBITDA improves. Everyone congratulates themselves on discipline.

Then, slowly, the hidden costs show up.

Customers become less loyal. Employees become less candid. Managers spend more time fixing problems that used to be prevented. The best people notice the change before the board does.

That is the doorman fallacy in its most expensive form.

You saved money on the door.

You damaged the entrance.

Efficiency Is Not the (only) Goal

The lesson is not that companies should avoid optimization. That would be sentimental nonsense.

Bad processes should be eliminated. Pointless meetings should die. Manual work that can be automated should be automated. Roles that no longer make sense should be redesigned or removed. I have no affection for corporate clutter, and I have even less affection for jobs that exist only because nobody wants to have an uncomfortable conversation.

But efficiency is not the goal.

A better company is the goal.

Sometimes a better company is leaner. Sometimes it is simpler. Sometimes it is more automated. Sometimes it is more disciplined. But sometimes a better company has a little more human slack in the system because that slack is where judgment, service, trust, and creativity live.

That is the part many operators miss.

They are not wrong to look for savings. They are wrong when they assume that every saving is an improvement. There is a difference between reducing waste and hollowing out the business.

Good operators know the difference. Mediocre operators call both “efficiency.”

Final Thought

I have become more skeptical of optimization as I have gotten older.

Not because I dislike discipline. I built my company around discipline. We tracked numbers closely, held people accountable, and cared deeply about performance. We were not running a corporate daycare center with better snacks.

But I have learned that a business is a human system before it is a financial system.

The spreadsheet matters. Of course it does. Cash flow, margins, growth, and accountability all matter. Anyone who says otherwise has probably never had to make payroll.

But the people create the value before the spreadsheet reports it.

That is why the doorman fallacy is such a useful warning. It reminds us that the visible task is rarely the whole job. It reminds us that some value is relational, contextual, and cumulative. It reminds us that the most expensive mistakes often begin as perfectly reasonable cost savings.

So yes, optimize.

Cut waste. Improve margins. Simplify operations. Automate the boring work.

Just make sure you understand what you are removing before you remove it.

Because sometimes the doorman is not really there to open the door.

He is there to make the place worth entering.

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For a long time, I thought scale was the goal. More revenue, more customers, more people – all of it pointing in one direction:

Bigger is better.

When I was a member in EO, there was always this quiet expectation in the background: grow or sell.

Nobody said it outright, but it was there. If you weren’t pushing for more, you were somehow playing a smaller game.

I bought into that for years. And I got good at it.

But somewhere along the way, I started noticing something that didn’t quite add up.

The Reality Check

What really started to change my thinking was observing other companies. A friend of mine runs a company doing around $10 million in revenue.

On paper, it looks great. From the outside, most people think he’s crushing it.
Solid top line, large team, growing business, plenty of activity.

But when you look a little closer, it tells a different story.

He barely breaks even.

There’s constant pressure. Payroll, overhead, coordination, all the moving parts that come with a business of that size. A lot of effort goes into keeping the machine running, but very little of it actually turns into meaningful profit. And he’s one mistake, one lost customer, or one unexpected expense away from running at a loss.

And you start to ask yourself a simple question:

What exactly are we scaling here?

Revenue? Yes.
Complexity? Definitely.
Stress? Without a doubt.

But profit? Not really.

That’s when I realized: scale without profitability is meaningless.

The Default Answer

What struck me over time is how quickly “scale” becomes the answer to almost every problem.

If growth slows, the instinct is to push harder. If margins are thin, the assumption is that more volume will fix it. If the business feels stuck, the solution is usually framed as “we need to get bigger.”

It’s rarely questioned.

I remember sitting in EO forums where the conversation would inevitably drift in that direction. Not explicitly, not as a rule, but as a shared understanding: you either grow, or you position yourself to sell. Standing still – or worse, choosing not to scale – felt like a lack of ambition.

That never quite sat right with me.

Because it assumes that scale is the only logical destination. That bigger is always better. That the goal is to maximize the size of the business, regardless of what that does to everything else.

But once you’ve seen what scale actually brings with it – the complexity, the pressure, the fragility – you start to wonder whether that assumption is true.

Or whether we’ve just repeated it long enough that nobody challenges it anymore.

The Missing Middle

What took me a while to realize is that there’s a middle ground most people don’t even consider. It’s not about refusing to grow. And it’s not about building something just to sell it.

It’s about building something that is right-sized.

I came across the idea in a book called The Big Enough Company, and it immediately resonated. It articulated something I had been feeling for a long time without putting words to it.

The goal doesn’t have to be maximum scale.

The goal can be a business that actually works for you.

A business that is large enough to be meaningful, but small enough to remain understandable. A business that generates real profit instead of just revenue. A business where you’re still building something, not just managing an increasingly complex system.

Once you see that option, it’s hard to unsee it because it reframes the entire question.

It’s no longer “How big can this get?”

It becomes “How big should this be?”

What I Care About Now

These days, I’m thinking differently about how I want to live and work.

I’m still interested in building. That part hasn’t changed. I still enjoy solving problems, designing systems, and putting something useful into the world.

But I pay a lot more attention to what the business actually gives back in return.

I care about whether it produces real profit, not just revenue that looks good on paper. I care about how complex it becomes as it grows, and whether that complexity adds value or just creates more moving parts to manage. I care about how much control I have over my time, my decisions, and the direction of the business.

And I care about whether the whole thing makes sense.

There’s something very appealing about a business that is simple, profitable, and understandable. One where you know exactly how it works, where the margins are clear, and where growth doesn’t automatically introduce chaos.

That doesn’t mean I’m against scale.

It just means I don’t chase it blindly anymore.

Final Thought

I’m not against scale.

I’ve spent decades building and scaling businesses, and I understand exactly why it’s attractive. Growth feels like progress. Bigger numbers feel like validation. It’s an easy story to tell yourself – and to others.

But I’ve also seen what sits underneath it.

Scale brings complexity. It introduces pressure. And if you’re not careful, it creates a business that looks impressive from the outside but doesn’t actually deliver what you thought it would.

That’s why I don’t chase it by default anymore.

These days, I’m far more interested in building something that works. Something that produces real profit, stays understandable as it grows, and doesn’t turn into a machine that needs constant feeding just to keep running.

If that business scales along the way, great.

But it’s no longer the goal.

It’s just one possible outcome.

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What Does “Culture by Design” Mean?

For us, culture isn’t about ping-pong tables or casual Fridays. It’s about fostering an environment where people genuinely enjoy coming to work and are empowered to do their best.

Here’s what “culture by design” looks like at Tomco Capital:

• People first. Always. Not profit, not product, not revenue.
• Work to live, not the other way around. We believe personal life comes first—our work should support and enhance it, not dominate it.
• Location and time independence. Team members work when and where they feel most comfortable, whether that’s at a coffee shop, on a pool deck, or at home.

We don’t track hours, count keystrokes, or obsess over “clocking in.” Instead, we measure progress toward goals. Responsibilities are delegated, not tasks. People are trusted to experiment, make mistakes, and learn. And when challenges pop up, we address them directly with honesty and transparency.

The Pitfalls of Default Culture

A culture by default is what happens when leaders ignore the importance of culture. You might see:

• A team burnt out by unrealistic expectations.
• Toxic behaviors that spread unchecked.
• A disconnect between the company’s stated values and its daily operations.

We’ve seen this firsthand. For example, some customers have tried to exploit our generous trial offers or demanded custom solutions without wanting to pay for them. These unreasonable demands put unnecessary stress on our team. Instead of bending to this pressure, we chose to part ways. Difficult customers can disrupt a healthy culture just as much as a poorly aligned team member.

How We Built a People-First Culture

Here’s how we intentionally designed a culture that works for us:

1. Define Your Core Values

Our culture starts with clear values:

• People come first.
• Work is flexible, but progress is always tracked.
• Transparency and trust guide all interactions.

Every decision—whether it’s hiring, taking on a new customer, or developing a product—is measured against these principles.

2. Hire for Cultural Fit

We’ve built a hiring process that works: Interview for skills, hire for experience, and keep for culture. Skills can be taught, and experience is valuable, but a bad cultural fit can derail an entire team. One negative attitude, one disengaged team member, or one unappreciative customer can infect your business quickly. We cut these issues out fast.

Want to learn more about our approach? Check out our blog post: How I Built a Top-Notch Team for a Small, Unknown Company.

3. Lead by Example

As a leader, I measure every business decision against its potential impact on our team. I’m fiercely protective of our morale and culture. Whether it’s a new policy or a customer request, if it doesn’t align with our values, we say no.

4. Maintain Flexibility with Accountability

We allow our team to prioritize life’s challenges without micromanaging. Need to take an afternoon off for a doctor’s appointment? No problem. Want a long lunch with a friend? Enjoy. Our team knows they’re trusted to get the job done on their own terms. Progress is tracked through clearly defined metrics, ensuring accountability without sacrificing flexibility.

Scaling Culture as You Grow

Maintaining culture during growth is one of the hardest challenges. Here’s how we handle it:

• Reinforce culture constantly. We take time for “non-business” activities like virtual happy hours, silly lunch-and-learn sessions, and celebratory gifts for birthdays or anniversaries.
• Instill culture in leadership. As our team grows, managers and leaders play a critical role in carrying our culture forward. They set the tone for new hires and ensure alignment across the team.

What We’ve Learned

Over the years, I’ve learned two key lessons about culture:

1. Be decisive. If it starts hard, it ends hard. When a team member, customer, or policy doesn’t align with your culture, it’s better to address it immediately. Dragging it out only causes further stress and disrupts the team. This principle is one of my 12 Rules for Business Success—a framework that has guided my decision-making throughout my career.
2. Culture isn’t optional. If you don’t intentionally design your culture, you’ll end up with one by default—and it likely won’t serve your goals.

Advice for Entrepreneurs

If there’s one piece of advice I can give, it’s this: Spend an extraordinary amount of time and effort on building your culture. The rewards? A healthy business, a happy team, and a company where people say, “I get to go to work,” instead of, “I have to go to work.”

Culture is everything. Design it wisely.

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A few months back, I saw a familiar name pop up in my LinkedIn messages – Thomas Michael wanted to know if I could jump on a quick call. 

Thomas and I have worked together since 2018, and I’ve always loved working for him/ respected his entrepreneurial endeavors. It was a very welcome surprise to see that he wanted to connect again. I was in between projects so his timing was perfect. I went into the call with an open mind, unsure of what he wanted to chat about. 

Thomas unveiled some of the ideas he’d been cooking up since he sold his company, and it took me all of about 2 minutes to say, OMG I’M IN. Since then, we’ve been in full-fledge, nitty gritty, Silicon Valley tv-show, start up mode. 

I can’t reveal tooooo much, but this blog will highlight a few of the projects we’ve been working on over the course of the past few months. 

While we’re still working out all of the details, I will say, I think the end result will be a game-changer. 

Tomco AI

Thomas and I are both fascinated by all things AI-related, so working on projects supported by AI has been challenging, eye-opening and downright cool. 

Our first big project together was simply creating content. I’ve always gravitated towards content creation and more creative projects, so I was excited to start to learn about leveraging AI for marketing copy and blog creation. While I still feel strongly that creative flair and editing should come from humans, I have been AMAZED by the capabilities of AI for writing projects. 

We played around with prompts and wording to ensure that AI was able to deliver the type and caliber of content that we were going for. And once we had that down, it was an AI-palooza of new blogs, website copy, social media posts. It really is an art, and Thomas has been great in sharing his expertise to get me up to speed.

While I know AI is available to everyone, it’s been fascinating to watch someone learn its capabilities and limitations, and how to leverage that into real-life applications. I have not yet mastered the AI art form, but I’m sincerely enjoying the learning process. 

PS: I know I’ve talked a lot about AI blog content creation, but this blog is written by a plain old boring human – me! 

In addition to blogs, Thomas and I have spent countless hours creating AI templates. Again, I won’t get too into the weeds, but learning how to work with AI and create templates has been incredibly interesting. 

We’re set to release soon and I’m excited for you to see what we’ve come up with! 

ERPlingo

Some of you reading this may have already chatted with me about ERPlingo, but let me just say this: we are updating it continuously and I truly believe it will redefine how we work with and learn SAP applications. 

We have developed an AI-powered SAP solution that allows SAP users to search millions of SAP error messages, transaction codes and keywords/terms and get answers to their questions in seconds.

Additionally, we are working on training an SAP coach that puts intelligent SAP support within the reach of every SAP user. I am very excited and optimistic about the effect it will have on the SAP community. 

At this stage we’re looking for beta testers, so if you’re reading this, reach out and we’ll get you set up on the site! We’d love to hear thoughts, feedback, critique, love, etc. 

And this is just the first rollout, so keep checking back in to see what we’ve updated! 

What’s next?

What’s next you may be wondering! 

Well first and foremost, Thomas and I will be having our first in-person meeting. Shockingly, after more than 5 years of working together, we have never actually met in person. A mixture of Thomas and I both having wanderlust and a global pandemic has made our past meet ups impossible. That’s why I’m really looking forward to actually seeing him IRL. 

Additionally, we’re working on official rollouts of both websites and working on getting our first 100 customers. After that, we shall see! 

Every day new ideas come out, so stay tuned. 

Cheers,

Claire
Director of Strategy
Tomco Capital Corporation

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