Hiring Is Obsolete (2005)
paulgraham.com
paulgraham.com
When starting a startup, employment is also meaningless because if you are in grow fast/fail fast mode, long term employment is not a thing. Your company could end up being acquired, killed, or simply be fizzling out.
A lot of companies are now relying on recruiters and agencies to supply them with what is non essential staff where the person disappearing is less of an issue. This kind of recruiting works great for no-tech startups (any kind of saas or marketplace type company). Lots of buzzwords, but mostly hiring full stack. That kind of company. All they need is generic skills. Hiring is still a problem for actual tech startups that need access to the best and brightest in their fields. You're not going to find those people through some shitty recruiter or head hunter. They are not likely to be actively looking at all, ever. You need to court them and sell them the notion of working for you. Acquihires are a thing for bigger companies but they often backfire when people simply sit out their 2-3 years while they are considering their next startup.
What are those “many places”, other than the US? I don’t know anywhere in Europe where that’s the case.
I suspect this is not true for tech jobs. It can take 6 months for engineers to become productive members of teams, especially ones with large software codebases.
On top of that, almost all cliffs are set at a year for compensation packages, so I doubt people would ditch before getting that.
The difference is quite stark. A senior freelance rate in the Berlin area (where I am) is around 100 euros an hour (properly senior, none of this "I dropped out of college 4 years ago and I'm a full stack ninja that can spell the word computer correctly"). That adds up to about 180K euros a year if you can work a full year (challenging; but not impossible if you are good). I'm actually considering raising my rates at this point. Unlike SFO, you can live like a king for that kind of money in Berlin (think premium real estate in the best neighborhoods, nice restaurants, etc.).
All the jobs targeted at me on Linked sort of peak out at 80-100K. There's a clear mismatch there between demand and supply that is not reflected in salaries. It's a non starter once you charge 100 an hour. Also, you have to wonder what kind of person would settle for that when they can charge nearly double as a freelancer and just take a couple of sabbaticals in between projects without downsides. From what I've seen, a lot of companies continue to ignore Brooke's law and just have a lot of B's hiring C's to compensate for the fact that they can't get A's for a C's salary.
When I'm hiring (which I am currently in the Minsk area), I'm likewise biased to people that are either just starting out and talented or really senior already. If you have the budget, a couple of really good people can outperform a much larger team. Ultimately, you need a mix of both and you get what you pay for. My expectation is to work with people for 2-3 years max before they move on. Currently the company I work for is a US inc but our tech team is in the EU and consists of freelancers. This is becoming more common as paying Bay area salaries for people that in any case act like they are freelancers is a very bad value proposition. For the same reason, a lot of Berlin based startups have teams across Eastern Europe. It's good value for money if you have a tight budget and can't afford the local talent. The price you pay is increased management overhead and dealing with a lot of travel and remote collaboration friction.
People have jobs because they need things that can only be got via human labor. This is not a bigger issue at a root level, it is a basic fact that you are trying to deny.
I dream of a future where everyone has all of their basic needs met through technology, giving people the capacity to focus on doing the things they are naturally good at doing, things they enjoy, all on their on free time with their own free will. If you think about it, technology is nothing more than the rearrangement of resources to create tools which make our lives easier. Progression of technology is just a matter of how much better we get at creating these tools, and we are getting better and better and we will never stop. We will eventually have tools that make it effortless to satisfy all basic human needs. Automation is inevitable.
You are right that people will always have jobs, but the jobs that people have will also always change.
You are one of them: if you were not you wouldn't be reading this forum.
This forum is a particularly bad example to use, considering that it's more-or-less built on technology that is over two decades old (i.e. an online forum.)
I also agree with loh's comment here: "I dream of a future where everyone has all of their basic needs met through technology, giving people the capacity to focus on doing the things they are naturally good at doing, things they enjoy"
It would seem that the current system in place is what's required to get there, but maybe it's just slow to change for good.
All the fantastic gifts and riches in a modern economy you enjoy were made by Someone. You need to participate in and support the system by also making things for others.
> Not everything is jobs
Of course not. But it's something, and it's important!
It is the main factor for the vast majority of people. Anectada: I cannot nor could ever afford to 'live before participating in economy' - I needed place to stay, food to eat and some extra money to not feel like a bum. It takes wealth to enjoy life.
Ten years ago learning to drive a truck meant a long-term stable career, even if it's not the most glamourous. Today, we're discussing the short-term viability of automating that shipping system. Five years ago in Alberta, getting into a trade that was in demand in the oil industry meant a lifetime career with a pretty great salary. Today, the industry is on shaky footing and many will have to retrain.
In software, while it might not be near or certain, there are plenty of discussions about automating most projects since so many of them conform to common patterns and publicly accessible, free code already existing. We don't know any better how large much of the software development industry will be in ten years time. Many of those skills might be as obsolete as some IG "celebrity".
I think OP is at least correct in that you sort of have to weigh these things yourself. Sometimes that life experience in other facets will inform your future more than picking up a skill that is just enough to put you into someone else's employ. It's pretty difficult to know. You can apply any kind of probability measure you want, but the gaps in between any sound reason are just attempting to know the future before it happens.
You're right on average but investors aren't looking for average people to invest in. I was on an accelerator with a very talented founder who had started a company, built it up to something significant, and subsequently cashed out before he was 20. Some 20 year olds are on their second or third business by then. They're exceptions rather than the rule, certainly, but that's exactly who investors should be looking for.
The only thing investors need to remember is that age isn't an indication of anything very interesting. People will have amazing ideas and the drive to execute them at 20, 30, 40, 50, 60, 70 80...
Even if they are serial entrepreneurs. Once you have the right social network, it doesn't really matter what you do, you will succeed. Anyone who was a friend of Mark Zuckerberg during its growth phase could have been a serial entrepreneur and millionaire many times over even without trying. Heck, the artist who painted their wall made hundreds of millions.
Age is simply not a good metric for choosing who to invest in. It doesn't correlate (or inversely correlate) with any likelihood of success.
I think that you are partially right however, age isn't an indicator but combined with other metrics is an indicator. I'll take a 20 year old who has tried and failed over a 20 year old who has tried and succeeded. My gut tells me the former has learned far more. But those are generalizations, everyone is different, the failure case could actually be ineptitude and they haven't learned anything.
The risk associated with backing a founder who has failed at something is a lot higher than backing a founder who has succeeded in a previous startup. You can't just ignore people's experience and assume that failing at something counts for more than successfully running and exiting a business.
There's loads of evidence that people succeed in their second venture after a successful exit more often than founders succeed in their first startup. Investors are very sensible looking at someone's track record.
Lots of founders are extremely aware of their shortcomings and the luck involved - leading appropriately as a result.
Poll: In your opinion was is far easier to gain traction and scale in the early 2000's compared to now?
Feels that way to me. For example, I had a basic website on a billion dollar industry and we were page rank 1 for years for that industry keyword with zero extra effort.
Looks like it was but a lot of goodwill has been burned since. PG writes "On the Internet, nobody knows you're a dog. And more to the point, nobody knows you're 22. All users care about is whether your site or software gives them what they want. They don't care if the person behind it is a high school kid." But today every sane person would ask "Why should I depend on your service? Where is the guarantee that you won't go out of business or get acquired in six months with your service sunsetted?"
I’ve also experienced a number of cases in my own work where pretty great services were passed over for exactly those reasons. As somebody who has founded startups in the past, this makes me sad because it means my next attempt will be much tougher (and it’s already hard), but on the other hand, I’ve also learned that I don’t really want to run a venture backed startup anymore and would rather run a smaller lifestyle business that’s in it for the long term. I suppose it comes down to how that’s communicated to the potential customers.
Or store passwords in plaintext then lose them.
> What's an especially productive 22 year old to do? One thing you can do is go over the heads of organizations, directly to the users. Any company that hires you is, economically, acting as a proxy for the customer. The rate at which they value you (though they may not consciously realize it) is an attempt to guess your value to the user. But there's a way to appeal their judgement. If you want, you can opt to be valued directly by users, by starting your own company.
I wasn't expecting Paul Graham to recite orthodox Marxism. This paragraph is only missing the word "exploited", because he's effectively saying that young good workers are undervalued because a large employer makes more money from them than they are paid.
> Buying larval startups solves that problem for them: the acquirer doesn't pay till the developers have proven themselves. Acquirers are protected on the downside, but still get most of the upside.
The downside of this is of course that the "downside" flows to the not-chosen workers. It's effectively like doing a trial shift, except instead of just a day you have to spend six months on building a business. And during that time, how do you fund your food and rent?
> The math is brutal. While perhaps 9 out of 10 startups fail, the one that succeeds will pay the founders more than 10 times what they would have made in an ordinary job.
So .. what happens to everyone else?
Sure, I like the message that young people should go out in the world, try things, be imaginative, and try to find an employer that will value their skills. And that it's easier than ever to disintermediate the economy. But it needs to come with a recognition of how that's actually funded on the day to day level, and which people are and aren't going to be able to succeed in that environment.
> So .. what happens to everyone else?
You end up with a society where 90% are destitute and 10% are rich?
At the very least, if the employer strictly loses money on all employees, the business shouldn't be sustainable (if it depends on employees, and they're not just a frivolous "inefficiency" economically speaking).
There is also this idea that a company, or a firm is a miniature socialism and the compensation structure is flattened in relation to the real value produced. Funny that this type of thinking kind of forces us to use some notion of value not directly tied to market, since the labor you do when working for yourself (and presumably, taking money for that directly from the market) is not the same labor you would do for an employer. The latter also provides you with a host of things (accounting, infrastructure...) that you would have to organize yourself if you weren't working for them. This doesn't even account for more financial stability and fixed work hours that you should get under enforced labor laws. So there is definitely value you get from an employer apart from the monetary compensation, if we are to compare that with the theoretical scenario of own business.
No, the point was that at a big company you get paid the average value of the work your and your peers does, while when you work for yourself you get paid the value you yourself does. This means that for strong performers going alone is better, and for weak performers going to a company is better. Nothing exploitative here, just natural consequences of scale and imperfect productivity measures.
I'm not sure about this. Performance and value depend on the environment. Some organizations can provide the infrastructure to uplift workers' performance but some people work better in a self-directed situation.
[EDIT] point remains, your wage is the cost of having that work done by labor in the market, unrelated to the value (return on investment, say) it provides, except that same value puts a de facto cap on the wage. If capital can get a 10% return paying $20/hr, they'll do it. If they could find a way to do the exact same thing but pay $10/hr, they would. "Value" remains constant.
"Investing in people" wasn't even a new idea in 2005. It's totally obvious once you get over post-enlightment drivel like individuality and innate rights, and focus on what's real: people are matter, matter can be owned, ownership can be fractional, (...Ayn Rand died for our sins...)