All entries for Saturday 28 May 2005
May 28, 2005
Paul Graham is a programmer/author who has become well known for his work on Bayesian spam filters and his lucid writing. His latest essay, entitled Hiring Is Obsolete, asks why people leaving university tend to go straight into paid work, joining traditional graduate schemes, without giving thought to business opportunities of their own. Graham states that firms undervalue the talents of the best graduates due to large variation in ability and the lack of a proven track record.
It's hard to judge the young because (a) they change rapidly, (b) there is great variation between them, and (c) they're individually inconsistent. That last one is a big problem. When you're young, you occasionally say and do stupid things even when you're smart. So if the algorithm is to filter out people who say stupid things, as many investors and employers unconsciously do, you're going to get a lot of false positives.
Most organizations who hire people right out of college are only aware of the average value of 22 year olds, which is not that high. And so the idea for most of the twentieth century was that everyone had to begin as a trainee in some entry-level job. Organizations realized there was a lot of variation in the incoming stream, but instead of pursuing this thought they tended to suppress it, in the belief that it was good for even the most promising kids to start at the bottom, so they didn't get swelled heads.
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.
As talent isnít valued correctly, Graham suggests that new graduates should be actively looking for potential business ventures; opportunities which will yield rewards far greater than any starting salary in the long run as well as signalling oneís industriousness and ability to work hard to any future employers. Being a programmer, Graham cites negligible start-up costs as a reason why the task is easier than it would have been 10 years ago. The plethora of web based businesses is evidence of this. For such a business, time is the main sacrifice. For anyone else, business premises, inventory and staff make the task much more difficult and more expensive (though far from impossible). The article is thus best suited to CompSci students, or those with a penchant for coding.
Still, it made me think. Iíve always wanted to run a business eventually but have never thought twice about going straight from university into the arms of a firm which sees me as merely one of 500–1000 grad students who may or may not prove profitable. The vast majority of people who say theyíll simply spend a few years gaining experience, building up capital before setting up on their own eventually succumb to the comfort of security, the certainty of a guaranteed income. With capital available from banks, credit cards and family, knowledge available from books and the internet, perhaps itís better to take business risks much earlier on in life as Graham suggests Ė even if I can't program a television.