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:

1. 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.

2. 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.

Now, the amount of success necessary to switch from “hire underrated people” to “hire appropriately rated people” can vary based on industry, functional area, etc. To take an extreme: If you’re a tech startup recruiting software engineers, even if you’ve raised a Series C and have breakout success — you might still need to employ a talent arbitrage strategy and hunt for underrated gems, because you’re still competing against enormous Google salaries.

Admittedly, this overall idea may not be earth shatteringly novel: it’s consistent with how humans generally approach consumption as their wealth increases. But it has special importance when you’re on a team or building an organization. The normal “life” pattern is that the broke college kid shops when things are on sale and the rich middle aged adult ignores discounts and shops when convenient. Some billionaires never kick their frugality habit in their personal lives. It can be irrational at times, even amusing, but it’s a personal decision. However, when talent managers fail to kick their “underrated” talent strategy even as their company or team obtains greater and greater power, it can be detrimental to the success of their overall organization. They’re missing out on reliably high quality people and they’re likely moving too slowly.

Bottom Line: “Talent arbitrage” of targeting underrated people is a necessary strategy in the early days as a talent manager. As you get more and more successful though, it makes sense to relax into the wisdom of the market, and cultivate a habit of hiring appropriately rated people.

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A somewhat related, somewhat unrelated idea: I remember in my youth thinking I’d never spend more than X dollars on a piece of clothing or a meal or whatever. I simply could not understand why someone would spend $120 on a pair of jeans or $300 on a dinner. Now that I’ve had some outrageously expensive meals and few other expensive goods or experiences, I can see the appeal. I’m not just talking about the signaling benefits of conspicuous consumption. I’m talking about genuine appreciation for a product or service or experience that’s absolutely world class in quality.

Sometimes the attributes that makes a product, service, or experience world-class are subtle. The marker of a luxury hotel is usually not a flashy lobby; instead, it might show up in how the cleaning staff cleans and organizes your toiletries during housekeeping, and in a hundred other ways like that.

Is there a similarity here with “high end” talent? Do really expensive talent sometimes possess characteristics that are harder to appreciate from afar, but once you’ve worked with “the best” you realize just why these sorts of people are paid so much? In the same way that high end food and drink tend to stand out in subtle ways, the traits of high end talent may also be more subtle than something as blunt as years of experience. I’m thinking of traits like poise, emotional stability, genuine humility, a hard-to-describe “it” factor that causes other people to want to follow him/her, etc…

(Thanks to Auren Hoffman for reading a draft of this post.)

Book Reviews: Killing Commendatore and Americanah

I’ve read more fiction in 2020 than in any other year in recent memory — maybe the escapist urge amidst all the insanity that’s going on in the world.

Fiction is good any year, of course. I recently came across this Marilynne Robinson quote in the New Yorker profile of her this week: “All literature is acknowledgment. Literature says this is what sadness feels like and this is what holiness feels like, and people feel acknowledged in what they already feel.”

Two recent longer novels I read:

1. Americanah by Chimamanda Ngozi Adichie. A wonderful, engrossing story about two Nigerian immigrants to America and the UK. A love story. A story of assimilation. A story about national identity. The plot is easy to follow, the ideas raised are deep, and the sentences are often gorgeous. I loved it. Separately, I want to learn more about why the Nigerian diaspora in America is so successful.

Some Kindle highlights from Americanah:


She did not tell him this, because it would hurt him to know she had felt that way for a while, that her relationship with him was like being content in a house but always sitting by the window and looking out.

Kosi led the way around the room, hugging men and women she barely knew, calling the older ones “ma” and “sir” with exaggerated respect, basking in the attention her face drew but flattening her personality so that her beauty did not threaten.

There was something immodest about her modesty: it announced itself.

Ifemelu told her about the vertigo she had felt the first time she went to the supermarket; in the cereal aisle, she had wanted to get corn flakes, which she was used to eating back home, but suddenly confronted by a hundred different cereal boxes, in a swirl of colors and images, she had fought dizziness. She told this story because she thought it was funny; it appealed harmlessly to the American ego.

Her mother asked breezy questions and accepted breezy replies. “Everything is going well?” and Ifemelu had no choice but to say yes.

There was something in him, lighter than ego but darker than insecurity, that needed constant buffing, polishing, waxing.

It puzzled him that she did not mourn all the things she could have been. Was it a quality inherent in women, or did they just learn to shield their personal regrets, to suspend their lives, subsume themselves in child care?

With his close friends, she often felt vaguely lost. They were youngish and well-dressed and righteous, their sentences filled with “sort of,” and “the ways in which”; they gathered at a bar every Thursday, and sometimes one of them had a dinner party, where Ifemelu mostly listened, saying little, looking at them in wonder: were they serious, these people who were so enraged about imported vegetables that ripened in trucks?

Fred mentioned Stravinsky and Strauss, Vermeer and Van Dyck, making unnecessary references, quoting too often, his spirits attuned across the Atlantic, too transparent in his performance, too eager to show how much he knew of the Western world. Ifemelu listened with a wide internal yawn.


2. Killing Commendatore by Haruki Murakami. My sixth Murakami novel over the past decade. See my reviews of: Norwegian Wood; Colorless Tsukuru Tazaki; 1Q84; Kafka On the Shore. I also read half of the Wind-up Bird Chronicle. I usually recommend Norwegian Wood to people who haven’t read any Murakami. Colorless Tsukuru Tazaki is lesser known but equally good IMO.

Killing Commendatore is vintage Murakami. The pace is slow here. The language mostly lovely. Descriptions unfold in detail — houses, cars, people. Murakami captures the ennui of his characters. Surrealism abound: Talking spirits, portals that transport you to a different world, and so on. In his descriptions of female characters, there’s an obsession with breasts that’s extreme even by Murakami standards (known as he is for attempting to channel a Japanese male obsession with breasts, which is how a friend explained it).

From a review of the book that captures the intention of this novel pretty well:

….[it] express the truth that despite how rational and stable we may be, our lives are actually out of our control. We do not choose whom we love, or who will love us, or who will hire us, or any of the most important aspects of our lives.

And not only are we not in control, there is much more going on than we can see, know, or understand. That so much that happens is inexplicable seems miraculous. Murakami writes, “There are channels through which reality can become unreal. Or unreality can enter the realm of the real.”

By writing about metaphors and ideas, by ringing bells underground and animating two-foot-tall men, by having the desperate desires of others intrude on the simplest of plans and a whole lot else, Murakami is reminding us that the world is more enchanted than we might think. And an enchanted world is a wonderful place to live.

Special shoutout to the voice actor of the audiobook version of Killing Commendatore, Kirby Heyborne, as he was spectacular. He nailed the different characters’ voices; it felt like you were really listening to a movie. At 700+ pages, this one is probably 200 pages too long. But if your mood is right, you can settle in and enjoy this one. Especially if you have a long road trip ahead of you.

What I’ve Been Reading (September, 2020)

More books.

1. Three Women by Lisa Taddeo

A gripping, hard-to-put down narrative nonfiction close up account of three women and their romantic and sexual desires. Taddeo followed the women for years, inhabiting their worlds and writing about their intimate desires — their lust, their crushes, their actual dalliances and relationships, and in the case of one of the women, a relationship that became the center of a criminal investigation of rape. There are a lot of interesting issues explored in this book related to a woman’s sensual desires and how she both rules and is ruled by them.

There’s so much detail and literary flourish you’d think it were a novel. At times it seems hard to believe it’s non-fiction, and I suspect Taddeo took some liberties with how she portrayed some of the details. (Especially the sex scenes which are so detailed as to count as genuinely X-rated.) If you look beyond this point, you’ll find a lot to think about. And if you want to go really deep on how Three Women relates to various waves of feminism, there are various high brow reviews of this book already published that explore this dimension in more depth than I ever could.

2. The Library Book by Susan Orlean

A pretty interesting historical recap of an event I knew nothing about: the massive fire of 1986 that burned down huge swaths of the LA Public Library. I didn’t end up finishing -it – I think I meandered into a different book about halfway through and didn’t feel compelled to re-visit it — but I enjoyed the parts I read. And in the capable writerly hands of Orlean, there are many beautiful sentences, for example:

In Los Angeles, your eye keeps reaching for an endpoint and never finds it, because it doesn’t exist. The wide-openness of Los Angeles is a little intoxicating, but it can be unnerving, too—it’s the kind of place that doesn’t hold you close, a place where you can picture yourself cartwheeling off into emptiness, a pocket of zero gravity. …

Just then, the sliding door to the kitchen opened with a raspy screech, and her father stepped outside. He was a tall, beefy man with a big belly and a friendly, reddish face and silvery hair that stuck out straight, as if it were a quiver of exclamation points. …

Sometimes it’s harder to notice a place you think you know well; your eyes glide over it, seeing it but not seeing it at all. It’s almost as if familiarity gives you a kind of temporary blindness. I had to force myself to look harder and try to see beyond the concept of library that was so latent in my brain. …

The temperature reached 900 degrees, and the stacks’ steel shelves brightened from gray to white, as if illuminated from within. Soon, glistening and nearly molten, they glowed cherry red. Then they twisted and slumped, pitching their books into the fire.

3. The Mastermind: Drugs. Empire. Murder. Betrayal by Evan Ratliff

A real life thriller, exquisitely told, about one real life criminal mastermind who ran a vast organized crime operation shipping prescription pills and eventually all sorts of weapons and drugs and illegal paraphernalia. Entertaining and informative on crime rings in the age of a global internet.


Other books: The essay collection Trick Mirror by Jia Tolentino didn’t grab me. Figuring by Maria Popova had a stunningly good opening chapter but I lost the plot after that; I may try again.

Podcast Interview on the Full Ratchet About Village Global

I recently did an interview on The Full Ratchet podcast and described the story of Village Global and got into a bunch of detail on our strategy and thesis.

Questions Worth Pondering

“Lives are lived in parallel and perpendicular, fathomed nonlinearly, figured not in the straight graphs of “biography” but in many-sided, many-splendored diagrams. Lives interweave with other lives, and out of the tapestry arise hints at answers to questions that raze to the bone of life: What are the building blocks of character, of contentment, of lasting achievement? How does a person come into self-possession and sovereignty of mind against the tide of convention and unreasoning collectivism? Does genius suffice for happiness, does distinction, does love? Two Nobel Prizes don’t seem to recompense the melancholy radiating from every photograph of the woman in the black laboratory dress. Is success a guarantee of fulfillment, or merely a promise as precarious as a marital vow? How, in this blink of existence bookended by nothingness, do we attain completeness of being?”

— from the opening chapter of “Figuring” by Maria Popova