How to optimize for growth
In this economy, most people are lucky to find one job. But a select few have multiple offers of interesting opportunities. If you are one of those people, picking the right opportunity can be difficult and stressful. Here are some easy heuristics to help you make the best decision.
First, let’s think about what you want to get out of a job. Very few people are trying to maximize their short-term compensation. If you are trying to do that, no need to read further. Just take that job at a top hedge fund (or, better yet, get drafted by the NBA). But read on if you are trying to maximize growth, learning, and long-term success.
Long-term success requires massive growth. Most smart people out of college grow an average of 10% per year. Which means they are roughly twice as effective 7 years after graduating college. That makes sense as most 29 year olds make double what they did their first job out of college. But growing at 10% per year is way too slow if you want to accomplish great things. You should be aiming to grow at a rate of at least 25% per year for your first few years out of school (like all things, your rate of growth (the second derivative) will slow over time).
To grow quickly, you need a job with the following criteria:
- You’re surrounded by people who are smarter than you
- You have an opportunity to fail
- The company has a history of giving massive responsibility to people that look like you
Find a company where at least 30% of the people are smarter than you
You will grow the most through the people who surround you, so make sure those people are really impressive. Because people tend to hire those they know, many of these people will likely be your colleagues for the next 30 years. So pick your colleagues wisely. One simple heuristic to determine how smart the people are at the company are is how selective they are in hiring. You want to pick a company that has a really hard (and often long) recruiting process where you need to meet a lot of people, complete a project, and have some grueling interviews. While not perfect, at least you know that everyone else the company hired went through the same process.
Opportunity to fail
You grow the most when you have a 33-66% chance of failure. To improve, you want to be in a position where success is not guaranteed. When success is difficult to attain, people push themselves much harder. Too often, people (especially recent grads) are put into jobs that they will definitely succeed at. I will not improve my tennis game playing against by 22-month old daughter. If you are playing chess, you’ll learn the most playing people within 100 points of your score (in the chess Elo ranking, a 100 point difference means a 2-to-1 advantage). And while definite success initially feels good, it doesn’t help you grow. You should find an organization that will give you projects where there is a high chance of failure.
Opportunities for massive responsibility
Assuming you are an ambitious person that wants to have continued growth, you want the opportunity to be promoted and to be given continuously greater responsibility. The companies that are most likely to promote you quickly have a history of doing so and are experiencing high growth. Find people that joined the company with a similar profile that you have and see if some of these people were given outsized responsibility in the company. If your abilities warrant it, you can also be given the chance. But if you have a hard time finding people, there will be little chance the company will look to promote you quickly.
These three criteria are heavily weighted towards the selection of start-ups (fast growth companies with under 200 people). And it is not an accident that the very best grads over the last few years are choosing start-ups over traditional choices like Goldman Sachs, Microsoft, and McKinsey. In fact, so many great people are joining start-ups that traditional employers have been forced to massively increase salaries to attract students with the promise of short-term compensation.
But not all start-ups are created equal. Look for the ones that have a really hard interview process, where they give you an opportunity to fail, and have examples of people just a few years older than you that have been given outsized responsibility.