The Magical "10x Employee"
Employees can add incredible value or be sneakily destructive
High-growth companies live or die by their people, but we struggle to understand who the “right” people are. Having the right people is critical for hyper-growth companies given how fast things must move.
Hiring managers know they need great people and everyone is looking for that magical “10x employee” the can make a huge difference to the company’s success.
People frequently talk about the “10x Engineer” - an engineer so good they are 10x better then average. While I don’t love the term or how frequently it is improperly used, I do believe certain employees (not just engineers) can have an outsized impact.
The problem is defining what a great employee/leader (or “10x employee”) looks like.
And forget about whether someone is a 10x, 5x, or even a 1x hire…..high-growth companies often hire people who are sneakily destructive to the business. So how do we also avoid those?!?!
What is a “10x Employee"?
Paul Graham (famous VC and entrepreneur) once said, “I can be tricked by anyone who looks like Mark Zuckerberg. There was a guy once who we funded who was terrible. I said: ‘How could he be bad? He looks like Zuckerberg!’”
Pattern matching can work, but you need to be able to distinguish between the qualities that actually drive success from their other quirks.
Then there are people who believe silly things like the below…. Sorry folks, but apparently if you are not using a black background on your laptop then you are probably a dumb dumb.
Misconceptions of the “10x Employee”?
It should have never been about lines of code produced, activity generated, or any other vanity metric. 10x employees consistently add real value to the business. How that is measured is dependent on the role.
Being a 10x employee does not mean they are 10x more productive in everything. It might mean they are 10x, 50x, or 100x better in certain things that really matter for the business. For example, a “10x engineer” might code at the same speed as an average engineer, but they are 50x better at prioritization, finding the right tools, and solving problems that really matter.
Solving problems that people care about is what actually matters.
Some relevant quotes that I came across:
"It's not the will to win that matters—everyone has that. It's the will to prepare to win that matters." - Paul "Bear" Bryant
"An hour of planning can save you ten hours of doing." - Dale Carnegie
"Give me six hours to chop down a tree, and I will spend the first four sharpening the saw." - Abraham Lincoln
Role of AI on “10x Employees”
Artificial intelligence magnifies the difference between 10x engineers and everyone else. When everyone can code 100x faster the difference between the slowest and fastest coder approaches zero. But code writing speed isn’t what actually made someone a “10x engineer”.
AI won’t make everyone a “10x engineer”…it will expose the fakes and shine a light on the real ones.
This same concept applies to most other roles as well.
10x Employee Qualities
A 10x-er at one company won’t necessarily be a 10x-er at another company. A lot of hiring managers get this wrong.
Different things matter for different roles, company stages, industries, etc to be a great employee. Below are some things I think about for high-growth software companies:
Don’t chase the cool brand names. Someone who only worked at large public companies is likely not the best fit for a startup.
Hire for what you need over the next 18-24 months
Don’t over-hire. Similar to the above point and one of the more costly mistakes.
Clearly define what you are looking for and what an A+ hire looks like. Otherwise, you may just hire the best talker (especially true for execs).
Direct and relevant experience is powerful, but also don’t over-index on it
Experience with your stage and growth profile
Knows how to build a team and spend efficiently/appropriately
Folks will follow them to their new companies
Many companies let their new and inexperienced managers build teams without properly training them on how to make great hires.
These companies spend a tiny amount of training/time on building out the company’s most expensive line item (people costs). People costs can easily be 70%+ of a software company’s total expenses. Besides the cost of employees, bad employees can be incredibly destructive (especially executives).
Swapping out low performers
Low performers can come from:
Original bad hires
Become low performers from things like:
Company outgrows them
Bad attitude when things are tough
Gets tired and complacent
No matter how great you are at hiring you will hire some low performers. Hiring slow and firing fast in high-growth companies is almost always the right answer. Take the time to hire the candidate with the highest chance of success, but move on quickly when they don’t work out.
Low performers bring everyone down.
Almost everyone lowered their hiring standards over the past few years given the tight labor market. But there is a lot of great talent available right now with all the tech layoffs, hiring freezes and a lot of earlier-stage companies likely going out of business soon. It’s probably a good time to swap out lower performers….
Just make sure you do it in the right way.
Cloudflare CEO said the below on their most recent earnings call:
While the idea is not wrong, I don’t like how he described it. He also said the following:
If we're honest with ourselves, we saw a lot of our success with our enterprise customers because our products were so good and solved real problems that every big company faces. That allowed many on our sales team to succeed largely by just taking orders. When the fish are jumping right in the boat, you don't need to be a very good fishermen
This is both insulting to the sales reps who aren’t being fired, but REALLY insulting to the reps being fired. Be careful to not destroy the company culture/morale in the process of swapping out lower performers.
Everything mentioned above is exponentially true the more senior the hire. The destructive power of a bad executive can slow down a company 12+ months (or even kill a company) because they:
Make bad hires
Overspend to try to compensate for their bad leadership/expertise
Lead their department (or company) in the wrong direction
Distract the company
There are many other things a bad leader can screw up, but the magnitude of the impact from a bad exec can be incredibly high.
Example: Consider a VP of Sales who joins an early-stage company selling to SMBs and builds out a team of the wrong type of sales reps. The new VP came from Oracle and brings on several great sales reps from Oracle that loved working with her.
All of these people were probably great at Oracle….but a startup focused on the SMB market is a totally different ballgame and might be something the brand name VP of Sales can’t handle.
If the reps and sales struggle then questions will come:
Do we have product market fit?
Are we selling to the right segment?
Are we pricing too high?
Must be a pipeline problem. Do we need a new marketing leader?
Do we need to just spend even more in sales for pipeline?
Is it just the tough macro environment?
Once the above doesn’t work…do we need a new VP of sales?
Once you finally take action and fire the sales leader, find a new one, and the new VP of Sales ramps up…. you have easily lost one year. That’s one year of lost sales opportunities, excessive spend, distraction, etc.
For early-stage companies, this might be enough to kill the company.
People are a company’s most expensive resource. They can be incredibly powerful to a company’s success or they can be sneakily destructive.
I hope everyone finds magical 10x employees for all their roles!