Why Do Large Firms Hire Poorly? Pricing!

by Adam Juda on Wednesday, June 17, 2015

Twitter has been aflutter with a tweet by Max Howell (warning: foul language). Despite being the author of a very popular piece of software, his application for employment was rejected by Google.

His belief is that Google's hiring practices are broken. His work should be sufficient to demonstrate his abilities.

My belief is that Google's system of hiring is working properly. Even if I were to assume that Mr. Howell is brilliant, creative, hardworking and willing to work for a tiny salary, I would still not change my view. The problem is not Google's - it's his.

Max's tweet indicates that he believes himself to be an outlier - someone with skills and abilities far beyond those of the average developer. Unfortunately, when a company grows as large as Google (more than 55,000 employees), it can no longer look for outliers. The price of such searches would become astronomical. How can a firm possibly create a repeatable process for finding outliers when outliers are not guaranteed to share anything in common?

Instead, large firms are pushed to manage their costs (and their risks) by relying on less expensive standardized procedures to find almost certainly good rather than possibly exceptional hires. This approach is, by design, intended to weed out anyone who doesn't fit a narrow mold. Following a repeatable script is far cheaper (both in terms of time and money). As such, selecting for uniformity, rather than for excellence, becomes the preferred strategy. It's an unavoidable fate, hinted at by the life cycle of the firm.

As Paul Graham famously suggested, startups can (and should) do things that don't scale. They can afford to see applicants as unique. They can afford to look for outliers. Large companies can't. They must do things that scale. That means that each potential employee must be treated like a replaceable cog, because a replaceable cog is the only thing that the firm can afford to hire at scale.

Of course, such a focus on conformity bodes poorly for the long-term health of the firm. Over time, the organization will become myopic and brittle. It will become unable to change or adapt. Ultimately, it will be overtaken in a wave of creative destruction brought forth by younger, smaller firms that can hire based upon factors other than uniformity.

Groucho Marx once remarked that he wouldn't want to join any club that would have him as a member. I'd strongly advise outliers to look at the world in the opposite manner. Why would an outlier ever want to join a firm filled with conformists? The price for such an action would be far too great.

Looking for an outlier to help you with your monetization strategy? Look no further and send me a note or pick up a copy of my book. It answers the age old question: What should I charge for my software?