Delegate or die: the self-employed trap | Hacker News Reader

Delegate or die: the self-employed trap

sivers.org

423 pointsrazin72 comments

To be honest, though, you already had 98% of the delegation problem solved. The biggest hurdle isn't telling employees "here's what we stand for, I trust you to make decisions according to our philosophy". The biggest hurdle is to actually find people you can trust with it. It sounds like you already had a team of competent, skilled people whom you just micromanaged, and then realised they were competent enough to act on their own and let them.

This is trivial compared to actually finding such people (at least for me, I guess).

Actually my hiring policy was ridiculous.

Because I was "too busy to bother", I'd just ask my current employees if they had any friends that needed work.

Someone always did, so I'd say, "Tell them to start tomorrow morning. $10/hr. Show them what to do." And that was that.

To be fair, this was a mail-order CD store, so most of my employees were in the warehouse. But I even did this same approach when I needed a CTO. ("Anyone have a friend who's good with Linux? Yeah? Is he cool? OK - tell him to start tomorrow.")

But maybe that they were friends-of-friends helped with the trust part.

I wonder why hiring isn't done this way more often? Specifically the "friends-of-employees" approach.

I'm guessing it's because, in sivers' case, he didn't really need extremely skilled labour? Or maybe people just try to overoptimise when "good enough" will do very well.

Everywhere I've worked, the first step to hiring a new developer is to ask all the good developers if they have any friends that are also good and interested in work.

It's relatively common for tech companies to try to encourage employees to recommend people, with a ~$500-$2k bonus if you refer a friend who ends up getting hired. Not sure if it's actively taken into account on the hiring-decision side, though, or if it's just seen as a way of getting in more applicants.

The last company I worked for (hot startup in NYC) was offering a $10k bonus for referring a friend. Or at least that was what it was up to when I left, for all I know it could be higher now.

It still beats the cost of a headhunter.

Not just tech companies. Investment banks also. Probably many other industries too. As the cliché goes, "Imitation Is The Best Form Of Flattery".

From my perspective, most referral bonuses aren't big enough to make it worth my while to try to get a friend in the door. When I know that my referral saves them $20k on a headhunter fee, getting < 10% of that rubs me the same way a nickel-an-hour raise would.

Not only that, but some companies' HR departments are best buddies with the headhunters and agencies. As a result, their candidates tend to be preferred (intentionally or not) over the "refer a friend" candidates you refer as an employee. I know it's a serious accusation, but several years ago I had statistical evidence that this was happening at a certain company where I referred more than 20 highly qualified candidates at a time when they were struggling to fill positions.

>some companies' HR departments are best buddies with the headhunters and agencies.

Considering the average quality of the candidates brought in by the agencies, this is the only rational explanation I can think of as to why companies still use agencies.

Then I'm not sure you're the person to be working as a startup employee.

Fair point, and I'd agree. My career goals aren't particularly amenable to most startups, and with a child I have little interest in the risk/reward profile of startups. Further, I have little interest in mixing my personal and professional relationships - that seems like a needless complication for little gain.

That said, my point still stands. $2000 isn't worth it for me to do my company's dirty work and knowingly save them $18000 in the process.

Really? I'd expect a startup employee to be more interested in, ah, 'extracting value' than a regular employee. I mean, you've gotta have /some/ reward for all that risk.

(I mean, it's different if it's a company that wouldn't have paid a headhunter anyhow; but I think the grandparent was objecting to the difference between what you are paying the headhunter and what you are paying the employee, more than the absolute amount you are paying.)

Extracting (appropriate) value, yes, but how and when becomes the issue. If the company is going through a cashflow issue - far from unheard of in a startup - insisting on extracting the full value of your pound of flesh there and then would be counterproductive. Equally one's startup should be increasing in value by more to than the cost of the hire so again it could very well be in your interest as that sort of employee not to extract the full value if to provide the lead for free could permit a far earlier hiring than would otherwise be the case.

eh, if you can afford to pay a headhunter $18K, you can afford to pay your employee little more than a grand. (Most programmers, rightly or wrongly, once they judge a few recruiter-arranged candidates, believe that recruiters bring no value, so the very idea that you are using a recruiter implies waste.)

On the other hand, like I said, if you can't afford to pay the headhunter, then your employee shouldn't whine about not getting a recruiting bonus. I've personally referred many people who got jobs, and I don't think I've ever gotten more than a free beer out of the deal.

I got done over with this. When I was leaving a job (for geographical reasons) I found a friend, convinced him to apply for my job, and then organised the interview, etc. They gave him the job pretty much on the spot. When I asked for my referral fee, they refused on the basis that I was a 'contract employee'. Nobody of course mentioned this when I was busy organising the interviews. I found out later that the agent who was busy trying to place the job leaned on the HR people to make sure I didn't get the money, because he didn't want to lose out. Yes, I occasionally went to the pub with the HR people also. Well I did him in, I instructed my incoming friend that the agent wasn't to be trusted and so my friend never put another job through him again. The guy probably lost 50k in commission over the next year or two, all because he didn't want someone to get 2k of someone elses money.

Why so many employment agents have to act dishonestly and sneakily, I'll never know. It's as though they think they can control every conversation that happens within the company.

At the risk of sounding like a marketing guy for TopProspect.com (I don't work for them, own any stock etc.), they solve this problem too. You get paid what a head hunter would be paid for recommending a friend who gets hired.

That doesn't make any sense. The primary benefit of referring your friend is to help your friend get a job. I would do it even for free. Someday your friend will return the favor.

Assuming you have friends in the field looking for work, maybe. However, maintaining a barrier between my personal and professional relationships is worth more than a pittance to me. It's worth $500-2000 to me to keep that barrier in my life and avoid poisoning the friendship if the professional side goes sour. I'd rather help my unemployed friend find work in other ways or even loan them money to help keep them afloat while this was going on (and yes, I've done both).

More to the point, my understanding of these referral programs is that companies want to poach talent from other places on the cheap. It's never couched in terms of "help your unemployed friends and get paid" - it's always phrased as "know someone sharp? why not convince them to work for us!" Why should I help them do that? If they offered me some substantial fraction of what they would pay a headhunter for the EXACT SAME SERVICE (actually it's inferior service because I am trained to know who's good - they have no idea), I might be more flexible. $10,000, even after tax, would be enough of a positive impact on my life that it's worth the risk to the friendship. $500 means I'll pass.

I was talking about the second part of the equation, i.e. taking it into account on the hiring-decision side. I know refer-a-friend schemes are common, but I think most companies (including Google?) don't give any weight to the fact that someone referred a friend.

In fact, considering the incentive structure (you get lots of money to bring in friends), companies shouldn't take into account recommendations. It would have to be done differently in order for the recommendations to actually mean something, which I'm guessing is more common in startups than large companies.

It's done in nearly every business too small to hire a head hunting firm or spend 100 man hours conducting interviews.

Contrary to popular belief, most companies, even tech companies, are not google and do not need geniuses and PhD's to write their web apps or stock their shelves.

Most of the time someone skilled who needs money to pay bills will show up and do a job pretty well. This is an old and not-very interesting concept and doesn't lead to blog hits though.

Google still prefers to hire through employee referrals. I guess they figure that friends of geniuses and PhDs tend to themselves be geniuses and PhDs...

The biggest problem you have to watch out for is that good friends aren't always good coworkers. And the fact that someone is a good friend can cause people to purposely overlook things that might make them a bad fit.

So that said, I personally would be hesitant to hire someone solely because they're someone else's friend.

I'd say this is actively encouraged pretty much everywhere. Many places even have bonuses along the lines of: "Refer a friend and get a $1000".

There is a startup that is doing this www.topprospect.com

Second that strategy, I've used it to good effect.

One but though, I also found one guy like that that wanted to bring his friends on board when there was a need for more people and they were simply not good enough and this led to him quitting as well.

This is how youtube got most of their initial employees. Since all the core people were from PayPal, the first 100 or so people were pretty much all ex-PayPal. It worked out pretty well for them.

friends of employees have been my best hires. My very best employee was a friend of an employee who was looking for work. he ended up being better than the people I had known and worked with in the past.

Random chance, maybe? but I think it works better than people think. I think employees put more thought in to it than we give them credit for when they are asked for recommendations. Don't we all know that one person who is really good but unemployed because s/he isn't very confident?

Didn't work so well for us. My boss ended up hiring someone a team-member recommended off of LinkedIn. The new guy pretty much ended up making the team go bust because of stuff he did with clients. I later enquired with the guy who recommended him if he even knew the guy. Turns out, he was just an arbitrary LinkedIn connection with equally arbitrary recommendations. Sucked big time.

My advice: figure out how well the team member knows the new guy before you decide. Also check if the guy doing the recommendation is doing it because of religion, language, or some other crap. Also, I don't hire team members' wives or boyfriends any more.

"My advice: figure out how well the team member knows the new guy before you decide. Also check if the guy doing the recommendation is doing it because of religion, language, or some other crap. "

seems like good advice to me. My "Best hire ever" was the roommate of someone who worked for me at the time, and, as usual I kinda eased into the relationship, with short and well-defined contract gigs at first. But yeah, it is important to know the motivation of the recommending employee, and to do some evaluation of your own. But in my experience, it's a pretty good place to start.

Yes. The majority of "recommendations" we receive were provided as a polite favor to someone's former co-worker, relative, neighbor, etc. These are rarely better than random applicants, perhaps because they trying to exploit social connections rather than relying on the strength of their work. It's important to sniff out these obligatory "Sure, I'll pass your resume on" recommendations from truly vouched-for "We must hire this person" statements that can be truly valuable.

Also, be wary of recommendations from people who work in a different part of your company. They may think they understand what you do when they don't, and use up your time with unqualified recommendations. Learning how to politely decline can save a bunch of time.

I think this lays bare the difference between a "LinkedIn recommendation" and an in person recommendation. I have only hired though recommendations from great employees so far (and never regretted it). But I always ask people multiple questions to make sure the employee really knows the person being recommended well. "Is he/she really good? What is he/she good at? What is their favorite language?"

Remind me to make more friends in underrepresented genders, social backgrounds and levels of disability, and people I just don't get on with although I know they're great employees. That way if I'm asked to recommend friends, it'll end up being, relatively, equal opportunity.

You sound like an awesome guy to work for! I love your hiring philosophy. No, I'm not joking ;)

Our best hires are friends of our employees. In fact it works so well when we want to hire someone we think of job ads as a waste of time. And there is some explanation to that:

Good employees (and you'll surely have one) have friends on the same level. If your company / environment / team is good then employees are happy and try to convince their friends to join so that they can work together. We have 17 employees and only 3 of them have been hired through job ads.

A tangential thought:

I deeply appreciate the process of selecting the right people for the business. I also think that the idea of "random hiring" has some juice in it for small businesses. When someone goes through layers of interviews and then gets selected, their expectation from the company gets higher. They have a feel that they are the 'chosen one' for the job. But when someone is hired at random, he/she knows she is just filling an open slot. The expectations are low. Such employees can be moulded the way the organization wants him to perform. Also, This is even better than the interview process in one aspect, that it is not enough to prove the worth on the first day, but he/she now needs to sustain the performance level at the job.

I honestly think the current tech bubble will be sunk by how overly picky most startups are these days about hiring

Hiring friends-of-friends seems rather common actually, especially for startups and small companies. (This is the whole reason why people join LinkedIn, right?) From the job seekers' point-of-view, this is "It's not what you know, it's who you know." I'm all for recommendations, but sometimes it seems it's more about networking (i.e. having a good friend refer you) than about your actual skills. There are probably plenty of talented people out there who just don't have the right connections to get jobs.

This is actually how every small company I know started hiring when they've had less than 20 people.

Seems the rule not the exception. At least in my country.

I agree with the importance of delegating, but perhaps the work-at-home, not getting any questions after two months was also related to a major employee problem Derek mentioned somewhere in another post: employees began to feel as if he was too distant, they were doing all the work, etc, etc.

If I recall correctly, there was mutiny brewing among the employees and was the main reason he decided to sell the company.

This doesn't take away from what I think is great advice in this post, but maybe those employee issues were inevitable side effects from the super-delegation approach.

Yeah - different lesson, so different story.

I learned, the hard way, that over-delegation can lead to abdication.

Derek, you've been a huge inspiration for me, but I remember hearing you say at a conference that your employees started to hate you a while after working remotely -- to the point that you shutoff the website for a few hours to realize you needed to sell the company.

Do you have any thoughts on what can be done to keep rappore up amongst employees in the office while still working remotely?

NOTE: sorry I don't remember where you said it, might've been towards the end of your lessconf presentation http://b.lesseverything.com/2010/2/3/derek-sivers-speaks-at-...

I'm not Derek, but as a remote-working team member for a business that has many other remote-working team members, this is a similar problem I've been trying to solve by encouraging use of a private twitter-like network through Status.net (free) or Yammer (paid).

It provides that ambient awareness of what coworkers are up to / thinking about, gives you an easy way of soliciting helpful but non-essential feedback without adding to email overload, and allows for realtime information sharing. It's potentially a good substitute for in-office community when that's not an option.

Good to know. I know some other companies (e.g. Facebook) use IRC as another way to keep folks communicating.

I've been in a position where I've practically been a one-man software team for half a decade, but my boss has basically told me I can't work remotely even though a couple other senior folks do. I've tried helping ease the fear of me not being there by creating canned responses for other coworkers to follow, and getting a support system in place. New plan now though is to bleed a little, find a new job, and opt to not work remotely ONLY if I'm going to gain a good mentoring/apprenticeship experience from the people I work with.

Yeah, that's a different story I'll figure out how to properly tell some day as a lesson in what NOT to do. I'm still trying to extract some lessons from that and think what should have been done differently.

But if an employee has low morale, (whether working remotely or not), I'd only suggest this:

Is there another job inside the company they'd rather be doing? If so, help them do that. If not, let them know it's time to go!

Many people will need a push out the door, for their own good, if they're in a rut. Give them clear warning, of course, in case they're in a temporary rut, let them know that this low-morale rut may cost them their job.

But if they're still in a funk after months, you've tried to help but it's not helping, and it's hurting business, then let them go.

I had to fire a few people in this situation, including my VP!, and most told me a year later that it was the best thing for them. That they really were in a rut and needed to be pushed.

I learned about this at one of my old corporate employers. One of our local contractors was ostensibly doing very well, and I presume he was making a lot of money, but when he wanted to go on vacation, he couldn't leave for over eight months because of his obligations that he had to personally fulfill for clients. Seeing this and thinking about the futility of being self-employed in the name of freedom but running your business such that you are more trapped than a normal "working-for-the-man job" in almost every sense, I decided I would always delegate aggressively when I had the opportunity to do so in my own businesses.

What's the point in having millions of dollars if you have never the time to enjoy any of it? Also, a company that is overly dependent on one individual is unable to ever exceed the capacity of that individual; he becomes a bottleneck that slows (usually to a complete stop) the growth of the whole company. In a few years when he finally cracks, the whole thing goes down with him.

I'm glad Derek found this out before it all collapsed; many business owners don't.

What did you do to keep the manual clear and organized enough to be useful? Many companies I've worked with have an internal wiki for information like this, but things seem to go south pretty quickly and it becomes hard to distinguish stale content from relevant content.

Actually, the new people learning it would clean it up.

If they found anything hard to understand, we'd apologize and ask them to make it easier to understand for the next person.

Since they had just felt the pain of it being unclear, they were in the best position to fix it.

Next time I'll have this problem I'll probably start using something like http://www.mindquilt.com/ I see so many questions getting asked each day and so much knowledge getting dispersed, tools like this could really make a company go faster imho.

Sivers,

I'm in the process of doing this exact thing myself. I'm creating on average 5 training videos a day since my business is pretty much all web and information based.

I've already started being a lot more productive. One thing that I hadn't thought of was having them create the training themselves.

The first draft of these videos are fairly crude as it's mostly a brain dump and I'm figuring out the best way to explain what is in my head. This means sometimes I spend 15-20 mins to create a 5 minute video or 2 hrs to create a 22 min one (example from yesterday) when you take into account retakes and editing.

I could just create a crude one and just have them create the clean version after they learn it. It would save me at least an hour a day. Not too shabby. Thanks for that.

Mel

Do you script your dialog or roll free?

First draft is always free roll. For 2nd (and usually final draft), I create an outline which I use as a visual inside the video itself. This part is just inside Textmate with the font size increased to like 20px or something gigantic. The narration is always on the roll but I usually remember the phrasing from the first draft and only tweak what needs changing.

Not a lot of love on HN for Tim Ferriss, but his first book "The 4 Hour Work Week" is a great discussion of the self-employed trap.

It seems like the author built a good system for operations that required little of his time, so he could focus on innovation. It's interesting that in order to delegate operations, he had to build a system (or manual in this case) to train people and keep standards consistent.

Derek - I'm curious how you handled innovation. Was it by yourself? Or did you have a team for that?

The innovation was really just me.

It was usually just looking at places where our operations were very un-optimized or ineffective, and figuring out a way to do it better.

That better way usually meant me programming some new aspect to the site, or our in-house intranet systems that ran everything. But sometimes it led to a whole new public-facing feature.

Examples:

http://cdbaby.org/stories/04/02/14/3035318.html

http://cdbaby.org/stories/04/12/31/3116514.html

http://cdbaby.org/stories/06/07/31/4461455.html

In retrospect do you think you could have innovated better with a team? Or would it have just distracted you?

I'm a natural introvert. I prefer to work alone.

It seems the 1% inspiration --> 99% perspiration ratio is kept, this way.

But really it's just that I like being alone.

I really like the advice about asking your employees to keep a manual where answers are kept. Way better than trying to start with some sort of comprehensive statement of principles.

This level of communication is hugely important not just to employers but employees as well.

I want to know that my boss trusts me enough to let me make these sorts of decisions.

Bad managers will not bother to rise to this level of communication - or in some cases will purposefully withhold it in order to maintain their dominance.

Great advise. And I too recommend The E-Myth Revisted by Michael Gerber; it's definitely a great book and can really help to establish in one's mind the right way to go about working on your business and not in it, a key distinction.

One important thing in delegation, I find is to not fix things yourselves, even when they would be easy to fix for you. Explain the theory behind it and let them fix it themselves, next time they do it better.

Also, if you over-delegate, make sure you have properly consolidated power at the top. When your employees get too independent, they start to get ideas about creating their own company or they start refusing to take instructions.

Love this idea. I build my entire business around it: http://www.fancyhands.com

My experience is that this applies to "normal" management as well, not only self-employed. A manager of a team above some size can't possible know and control everything. Either he finds a way to delegate, or his team will be disfunctional.

This is a technical problem. In companies the same questions get answered forty times. I finally gave up and spent a weekend writing an app that fixed the problem for me.

Hire smart people and let them do their job. If you can, after a few weeks break in period turn them loose and step back unless a serious problem arises.

Micromanagement = Macrofuckups

How does the "micropreneur" achieve this?

Is it the cheap personal assistant?

Most things seem too technical for that, and I wouldn't want to be obliged with hiring one for so many hours each week.

Dereks post are invariably excellent..

Im sure Im not the only person expecting him to publish a physical book with all these articles in one place.

Title?

I read somewhere "If you are the candidate of work it is difficult to delegate".

This seems a better explanation of "process" than attempted here http://news.ycombinator.com/item?id=2131105

No need to read the article. The title is all you need to know!

hmm, this smells kind of familiar. Some of it is almost a direct quote from page 110 of "4-hour workweek". Good advice for sure, but I question the originality.

Reply on news.ycombinator.com