Google’s acquisition of Writely is another data point in support of Paul Graham’s thesis that hiring is obsolete. In a brilliant essay (and really, all of his essays are brilliant), he argues that for the smartest folks in the IT industry, it no longer makes sense to get a job at a big company:
The most productive young people will always be undervalued by large organizations, because the young have no performance to measure yet, and any error in guessing their ability will tend toward the mean.
What’s an especially productive 22 year old to do? One thing you can do is go over the heads of organizations, directly to the users. Any company that hires you is, economically, acting as a proxy for the customer. The rate at which they value you (though they may not consciously realize it) is an attempt to guess your value to the user. But there’s a way to appeal their judgement. If you want, you can opt to be valued directly by users, by starting your own company.
The market is a lot more discerning than any employer. And it is completely non-discriminatory. On the Internet, nobody knows you’re a dog. And more to the point, nobody knows you’re 22. All users care about is whether your site or software gives them what they want. They don’t care if the person behind it is a high school kid.
Graham thinks this model is the future:
I think this sort of thing will happen more and more, and that it will be better for everyone. It’s obviously better for the people who start the startup, because they get a big chunk of money up front. But I think it will be better for the acquirers too. The central problem in big companies, and the main reason they’re so much less productive than small companies, is the difficulty of valuing each person’s work. Buying larval startups solves that problem for them: the acquirer doesn’t pay till the developers have proven themselves. They’re protected on the downside, and they still get most of the upside.