“You know what’s the difference between like, IC8s, IC9s and other regular ICs?”

They get paid a lot more?

“Yea they make like- they make millio-- I don’t even know how much they make a year. But it’s a lot. But it’s that they can write well. Like they’ll be writing about a subject I don’t even begin to understand, but by the time I read their post, I feel like everything is crystal clear”

Communication is everything. Politicians convince. Designers show. Engineers explain.

If the only difference between a “good” and “great” employee was their work output, you could find a output/cost function and just hire more “good” employees.

Parabola

  |    
O |  
u |              *
t |         *         *
p |      *   ^-- Optimal!
u |    *                   *
t |   *                     *
  + -----------------------------
        Cost for employee

But that’s not what makes an employee great (and hiring x employees also doesn’t scale). Employees bring three things to a company:

  • Overhead
  • Additive impact
  • Multiplicative impact

Let’s look at these individually. But first, a log function:

Log function

  |    
O |  
u |                         *
t |                *
p |          *
u |      *
t |   *
  + -----------------------------
             Employees

This log function is why consultancy companies are both very profitable but unscalable

Overhead is why big companies move slow. When you have one employee, the company is working at 1x output. When you add a second employee, you don’t go to 2x output; that’s because of overhead. You’re closer to 1.8x. Third employee, 2.5x.

Additive impact is how much work an employee delivers. If you hire the best artist, your output might go up more than 1x for this employee.

But multiplicative impact is the multiplier an employee gives to their peers. Multiplicative impact is why CEOs make 1,000x more than juniors for the same level of effort. Multiplicative impact is the only way to fight overhead.

So why do companies like Meta pay their IC7s $1M/year, or their IC9s $3M+/year? Because Meta has 60,000 employees, and hiring anyone except those who bring multiplicative impact gives you the next Broadcom.

I need to write more posts.

“Exactly! That’s why I want to get into blogging. I used to blog a lot but I don’t as much anymore”

Every Friday. Let’s do it!

And so, it begins. Before midnight every Friday, I’ll be putting up something here, and I will do it as long as I can (and trust me, I can do streaks for a long time). Here goes! 🎓