BrightRoll CEO Tod Sacerdoti recently published a totally mis-guided article on How To Compete With Google.
In it, he asserts that in order to compete with Google in a space they dominate, you must have two things (only these two things, Tod? The rest of us have been dramatically over-complicating things, I guess!)
- have a world-class engineering team
- grow this engineering team at a rate much faster than Google’s
I’m with him all the way through “have a world-class engineering team”. Sounds great, and everyone should strive for that. However, the article goes south in three key ways:
- The analysis that rapidly growing your engineering team will ensure success is completely backwards.
- The strategy of beating your biggest competitor by emulating them is fundamentally flawed.
- The tone set by this article is a quick way to turn off the best engineers from wanting to join your company.
Large Engineering Staff is an Effect of Greatness
Unfortunately for all the entrepreneurs who will be fooled by it, Sacerdoti’s analysis is backwards at best. And the assertion, that proactively hiring engineers faster than Google is the best way to make your company successful, is non-sensical and irresponsible.
Great companies have quickly growing engineering teams, no doubt about it. But rapid engineering team growth is the effect, not the cause of their success. It should come as a surprise to no one that great companies are growing rapidly. Full Stop.
In his article, Sacerdoti hand-picks sets of statistics about engineering headcount1 at companies he admires. Then he analyzes two totally conflicting metrics.
- Percentage-growth in engineering team size
- Revenue per engineering head
I’ll tell you what: the quickest way to ruin your market-cap per engineering head is to over-hire engineers ahead of revenue growth and business model success. Ask the thousands of wildly successful companies who tried this approach. What’s that? …Not coming up with any? …Exactly.
Further, in rapidly succeeding companies, it’s not just engineering that’s growing. Run the same analysis on Sales, Accounting, Client Services, and Administration. No one will be surprised to learn that the most successful companies are growing in all dimensions ahead of their less-successful peers.
The truth of the matter is that great companies are growing rapidly. In healthy companies, that growth is a lagging indicator of their product uptake in the market. And anyone who suggests that hiring rapidly is a leading indicator of success has it backwards.
Stop Emulating Giant Entrenched Competitors
Too many startups make the mistake of trying to compete directly with an entrenched industry giant by emulating the way they build products, hire teams, run sales, or promote company culture. Startup leaders do this because it’s easier to be a follower than to dig deep and identify your own path to success. But the harsh truth is that you can pretend to be Google for years, and it won’t make you a great company (no matter how many engineers you coax through the door).
If you insist on architecting your company based on Google’s hiring ratios, the likely outcome you are hoping for is an acquisition by a large company that’s looking for a Google impersonator to plug into their organization. And even that strategy is made more difficult by hiring too many engineers, because the money you need to raise to support an engineering staff of 100+ will price you out of the market for an acquisition by all but the largest tech companies.
BrightRoll may well be hiring at a faster percentage growth rate than Google (but Tod, don’t be too smug about that, when 6 engineers = 10% growth for you). Let’s just hope that they have the product strategy, leadership, culture, and revenue growth to properly support it.
Engineers Don’t Trust This Approach
Finally, if you are in the enviable position to rapidly grow your engineering teams, do yourself a favor and don’t publish articles like Sacerdoti’s. Nothing turns off great engineers like being told they are a commodity, a hiring statistic, a denominator on the CEO’s confusingly quantified strategic plan.
Great engineers want to work on small teams where they can have intellectual control over projects with huge impact. Engineers most admire a company like Instagram, where tight clever engineering can support a great user experience at huge scale with only a dozen engineers.
Growing your engineering staff by 50% year over year will put huge strain on the existing staff, both by de-focusing their attention, and by diluting their equity stake. No one likes the interview process less than developers. And once a new hire is made, the overhead of having to bring that person up to speed is in direct conflict with the pre-disposition of great engineers to put their heads down and productively write code.
If you want your existing team to support you in your hiring efforts, lead with vision and opportunity, and let them come to you begging for more resources to accomplish it. That’s when you know you’ve nailed it, and it’s time to grow.
- He is suspiciously quiet on his actual methodology for calculating engineering headcount based on LinkedIn data. What constitutes an engineer? Are we only counting R&D engineers, or also Sales engineers, Tech-support engineers, QA engineers, and data scientists? [return]