Focus on building 10x teams, not on hiring 10x developers

December 17th, 2011

There are a lot of posts out there about identifying and hiring 10x engineers. And a lot of discussion about whether or not these people even exist. At Spool, we’ve taken a very different approach. We focused on building a 10x team.

We believe that the effort spent trying to hire five 10x developers is better spent building one 10x team.

10x matters because of the Economics of Superstars

The “Economics of Superstars” observes that in some industries, marginally more talented people/groups generate exponentially more value [0]

The Economics of Superstars phenomenon requires a distribution channel to move a large volume of goods. For superstar athletes, television enables endorsements and merchandise sales. For software developers, the Internet enables scalable distribution of digital goods.

Finding a way to be 10x better than median can now generate exponentially more value for people who make digital goods.

In software, the superstar is the team, not the individual

In the Economics of Superstars, if an individual has tremendous control over the outcome (points scored in a basketball game), that individual is the beneficiary. So Kobe gets a big chunk of the value he generates for the team, stadium, and advertisers.

Software development, however, is more like rowing. It’s a team sport that requires skill and synchronization. This applies at all scales. On a three-person boat, one person out of sync will stall your boat. As you get bigger, no single developer can impact your team’s performance, so again synchronization is key.

Making your team as efficient as possible is what determines long-term success. [1]

A bunch of 10x people != A 10x team

Most hiring processes assume that if you find a great developer and put them on a great team, the individual and team will do well. Good teams try to nail down “culture fit” but this is usually only based on whether the candidate gets along with the team.

Throwing together a bunch of great developers who get along does not make for a 10x team.

How to Think About Building a 10x Team

Building a 10x team is a different task than trying to make an existing team 10x more efficient. The hardest part about building a 10x team is that who you need next is a moving target because it’s a function of who is already on the team.

The following are the top three non-technical questions we (Spool) ask ourselves when considering a candidate:

  • Does this person extend the team’s one strategic advantage? Successful startups do NOT have world class design, engineering, sales, and marketing all at once. They tend to be phenomenal at one thing and competent at the rest. Eventually they upgrade talent for “the rest.” For example, Zynga first nailed virality with crappy graphics, then later upgraded their art teams.
  • Is there enough shared culture? - Communication overhead will cripple most teams. Hiring people with a common culture is the simplest way to solve this problem. For example, alums of a university tend to use the same  jargon, think similarly, know the same programming languages, etc.. They will communicate naturally and are free to focus on higher order problems. It’s not a surprise that Paypal was mostly UIUC, for example. At Spool we’ve consciously hired mostly Stanford alums because Curtis and I are Stanford grads. Update: I apologize if I gave the impression that we don’t value diversity. As you can read in the comments, we’ve gone out of our way to build a diverse team. But there are many things that don’t impact your success early that you can short-circuit by picking people who have a similar enough background. Goldilocks Principle ftw :)
  • Does this person make other people better? A friend once told me that the best hire he made was a mistake. Had he properly screened this candidate’s technical ability, he wouldn’t have hired the candidate. But it turned out this engineer was so driven that he immediately made everyone else on the team more driven. Just by hiring him, the team became more productive, which far outweighed that individual being an average engineer. It’s sometimes worth trading off some technical ability to get a multiplier for your whole team.

What sorts of people make other people better?

When we were building Spool’s founding team, we looked for people who were technically solid but especially good at making other people around them better. The following are the types of people we identified that do this. There are probably others.

  • The Lead Engineer  sets the technical standard. She will conduct the hardest interviews and will generally work technical magic. She will raise everyone’s technical bar. This is usually what someone says when they mean 10x developer.
  • The Hustler will bend the rules a little when need be, find loopholes in a system, find people you need to find, hack together systems to extract data, and set the standard for just getting things done. She challenges everyone’s thinking about how to get things done.
  • The Little Engine That Could refuses to lose. She manages to do great things through sheer determination. Sometimes she will tell you about this in an interview, but many times you will need to dig into someone’s background to get a read on this. She makes everyone else more driven, focused, and makes them believe great things are possible.
  • The Teacher soaks up and disseminates information. A teacher is constantly learning new technologies or synthesizing large amounts of information. She then distills the critical points and actively shares them with others. She makes everyone more productive almost immediately. This adds up tremendously over the years.
  • The Anti-Pinochio  is willing to call b.s. on anyone, including the CEO. She is great at spotting b.s. and willing to ask questions of anyone. This keeps a team honest and a company transparent. This is different from being an asshole or a heretic.
  • The Energizer Bunny throws herself into a task fully and doesn’t have an off switch. She gets everyone to give 100% and is so enthused that everyone else becomes enthused. She sets the bar for effort and make everyone want to work harder just so they don’t disappoint her. This extends outside work too. She’ll be the first person at the party, the last one to leave, and will make everyone have more fun every day. Happy, enthusiastic teams are productive teams.
  • The Heart – this is the person on the team that everyone misses when she’s not around. She’ll bring cookies in for the office, she will remember birthdays, she will make people feel better when they’re down, and she will make people do great things because she’s just so lovable. People want to come to work to see this person everyday. Just having people look forward to showing up every day is a huge productivity boost.
In the following diagram, each color is a team-member rated from 1-10 on these characteristics. You can see that there’s a big hole with no color. I would gladly say no to a traditional 10x engineer to get one person with tremendous grit/determination on this team.

These personalities all play off each other. For example, a Teacher loves working with an Energizer Bunny because there is someone around to soak up all of that knowledge she shares. Or a Hustler and Lead Engineer can combine to uncover a new distribution channel because they iterate fast and are ruthless. As a result of having these people, you get massive productivity gains from complementary personalities and abilities. Combine these with your favorite/appropriate software development methodologies and you’ve got a killer team.

I’m sure there are other people who have techniques for building 10x teams. And the dynamics of what makes for a great team are going to be different across industries and stages of company. If you’re reading this and have thoughts, please do leave a comment. I’d love to incorporate it into our hiring practices.

Footnotes

Thanks to Curtis SpencerChristine TieuAditya Koolwal, Chandra Patni, Daniel WitteShazad Mohamed, Blake Scholl for reading drafts of this and providing input.

[0] – More on the Economics of Superstars

For example, Kobe Bryant is in the 99.999th percentile of ability, while the median NBA player is in the 99.99th percentile. For that small percentile improvement in ability, Kobe Bryant generates millions more in ticket sales, merchandise, concessions, and tv advertising for his team. This pattern repeats every where and is starting to appear with software development teams and startups. If you’re good, you can be Facebook, Google, Dropbox, etc. If you’re not, you can’t get a series A to get off the ground.


[1] Evidence building 10x teams matters more than finding 10x individuals

[2] – “Crazy” offers from Google/Twitter/Facebook/etc.

Historically, engineer/product manager/designer salaries have been relatively constrained (red line below). This is because we lacked an efficient distribution mechanism to take advantage of their special talents, so teams had to be very large to achieve scale and no individual could easily have massive impact.

But we are experiencing the beginnings of a world where the Economics of Superstars applies for small 10x teams because a small team can use Internet distribution as leverage. What is really interesting is that retention packages now are not about the individual. They are about keeping 10x teams together. The people who are really getting great retention bonuses are the people who make 10x teams possible. They are either the leaders in a product or engineering organization that know how to build 10x organizations, or they are the employees who make everyone around them better, or they are key employees whose departure would be seen as a signal that the team is no longer a 10x team. These packages are also a defensive move to prevent competitors from acquiring the building blocks that enable 10x teams. Losing key members of a team will result in other members leaving, and will enable the competitor to aggregate a team that operates like a 10x team. It’s not about the individual; it’s about team dynamics.

Another example from Google is how well they reward great teams and keep them together. Google’s Founder Awards disproportionately reward the best teams internally for exceptional accomplishments.

It seems like we’re moving to a world where a great team of developers can make 0k+/year each. But not by just walking in the front door — it really messes with team dynamics and manager-employee dynamics to hire people with those sorts of salaries. But rewarding a team and keeping great teams together is much easier to justify.

How the Economics of Superstars will play out for 10x Teams

[3] – More on Talent Acquisitions: Talent acquisitions are like record contracts

Startups eliminate the guess work that a large organization has in identifying teams with 10x ability. The startup ecosystem is as close to a meritocracy as we have — no bureaucracy, no legal department, no recruiting pipeline, minimal funding required to get started, etc. If a five-person team manages to build something and get any traction, they’ve accomplished something tremendous.

Identifying startups with 10x teams, is like a scout going through YouTube to find the next great band. If you find raw talent and give it the right platform (publicity, marketing, new instruments), you can turn that talent into something huge. Industries that have recognized their industry operates under the economics of superstars take these bets regularly - think about the English Premiere League, NBA, music industry, film industry, publishing industry, etc. If a bet pays off, you get Ronaldinho or The Beatles. Would you have given the following talented band million/year and have full rights to all of the revenue they generated?

The Beatles before they were The Beatles

(This is The Beatles before they were The Beatles)

Again, because software is complex and you need teams to execute, the value aggregates in the team, not the individual. You rarely see Google hiring random individuals for .5 million over 4 years. Google, Facebook, Twitter, Groupon, etc. are paying to keep teams together and working on the things they’ve developed expertise in. These acquirers understand that it’s about finding 10x teams and giving them the resources of a bigger company. million for four people over 4 years is worth it for many acquirers, because the incoming team has to be marginally better and the result will be exponential value generated for the acquiring company .

Filed under: Entrepreneurship, Google, Ideas, Tech
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