Wednesday, July 06, 2005

Paul Graham: Hiring is obsolete

The title links to a May essay by Paul Graham on how smart computer science undergraduates may find jobs in the future. Actually, he's even talking about the present, to some extent. His main thesis is that it's very difficult for companies to evaluate the worth of new, inexperienced employees. Their main solution is to not value them very highly, make them do low-level tasks to start with the assumption that the smart ones will rise to the top (which, if you read Paul's other essays on high school, for example, you'll recognize as wishful thinking, as the really smart ones get bored and tune out or leave), or bypass them entirely for people with experience.

The phenomenon he observes is the purchasing of small startup companies: companies started by new graduates that show interesting ideas, hold valuable technology, and showcase the founders' talents. He notes that, today, startup costs (for software companies, at least) are basically just subsistence for the founders, and that most startups are bought outright when they are fairly new. His conclusion is that they are purchased to access the founders' talents and for whatever technology they've already developed, thus solving the problem of identifying talent (already proven) and developing innovative new products (already done). The premium paid for the startup is then a signing bonus. And even failure can be rewarding. Here's the money quote:

I asked managers at Yahoo, Google, Amazon, Cisco and Microsoft how they'd feel about two candidates, both 24, with equal ability, one who'd tried to start a startup that tanked, and another who'd spent the two years since college working as a developer at a big company. Every one responded that they'd prefer the guy who'd tried to start his own company. Zod Nazem, who's in charge of engineering at Yahoo, said, "I actually put more value on the guy with the failed startup. And you can quote me!"
This interests me because of the idea of undergraduates developing portfolios of their work, which is a formal or informal component of many undergraduate programs. A startup company is essentially a public portfolio of your work. In a job environment that's still somewhat difficult for new grads, this can be a way to stand out, if you've got the wherewithal to live without a paycheck for a while (and an interesting idea wouldn't hurt).

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