Quick snippets from our morning read on Monday, 15th February 2021
Today’s morning read by Ben Casnocha looks at hiring appropriately
The More Success You Have, The More You Can (and Should) Hire Appropriately-Rated People
Talent markets tend to be efficient. In a given industry, great people are in high demand and command high salaries commensurate with their value, and bad people are in low demand and receive low salaries.
Of course, there are plenty of inefficiencies. We all know amazing people overlooked by employers for whatever reason. I’ve written about some of the “tells” of underrated people — for example, people who are especially bad at self-promotion, physically unattractive, socially awkward, etc. Auren Hoffman has a great list too of traits that signal underratedness.
Early in one’s entrepreneurial career — as you start companies, recruit people, corral support for your various projects — your only talent strategy option involves “talent arbitrage”: finding underrated people. You don’t have much money or status, so you bargain shop to find deals: people who provide outsize value for their cost.
I believe an important evolution to go through as a talent manager is to recognize when it makes sense to not default to prioritizing underrated people. When you have money and status, you can actually pay what it takes to get people who are “appropriately rated” on the open talent market.
Two reasons why you seek appropriately rated people:
- Lower variance. Talent markets generally rate people accurately. High priced people are more reliably of the quality you expect. “Underrated” people can work out spectacularly from an ROI perspective but in my experience they can backfire more often, too.
- Speed. The more successful you are, the higher your opportunity cost of time. So speed of process becomes relevant. It’s usually faster to partner with or hire people who are appropriately priced vs. scouring the earth for the hidden gem. This is especially the case if you’re hiring within a team and need to convince others of a given candidate’s abilities. Underrated people are by definition not obvious, which includes not obvious to your teammates whose buy-in you seek.
The recruiting strategies of startups vs. big companies illustrate this point. When a startup is looking for an ML engineer, and can only afford to pay the person scraps, they might find the college dropout who’s mostly self-taught but wicked smart and, of course, cheap, because Google doesn’t know he exists. When Google is looking for an ML engineer, they might make offers to all the PhDs coming out of Stanford’s CS department. The Google approach is more expensive, but more likely a reliable (not perfect!) filter for high talent, and certainly a lot faster. This is an imperfect example because what a company like Google needs in terms of talent make-up differs from what a start-up needs (e.g. hustle). But the overall point holds nonetheless, I think.
Read the full article here.
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