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Thursday
May172012

hiring: creating market share



Create a Dominant Market Share - one of the things that I took notice of was Google's move to develop a lot of their tools in Python.  


Curious, I thought.  Why would they do that?  At the time Python was a new(ish) language, although growing quickly in popularity.  Then it hit me.  They were going for a dominant market share in a specific talent pool. If you can get in on a new talent pool trend, the benefits can come back ten-fold.  

Here’s the strategy.  Get the first luminaries in the field, then as that language grows in popularity you are labeled as the de facto place to go if you want to code in that language.  Then hiring get 10 times easier.  

Brilliant.  

In 2005, when we founded Powerset, we realized Ruby was the new Python, so we went after some A-level people in the Ruby community.  The top two we went after were first, Kevin Clark (a 20 year-old wiz-kid who we were trying to convince to quit school) and second Tom Preston Werner (now the founder of GitHub).  

We got both of them, and within a matter of months, we had one of the largest Ruby teams on the planet.

Anyone who wanted to code in Ruby knew about Powerset simply from the Ruby meetups which were dominated by either Powerset or Twitter people.  

We then did the same thing in the field of computational linguistics.  At one point we estimated that of the 200 or so people that really understood computational linguistics in the world, we had about 40 of them.  

What’s the benefit?  Once we knew we had this level of talent market share penetration, we had almost a guaranteed worst case scenario that most startups would dream about.  We knew that our talent pool was so strong, that even in the event that we just ran out of money, one of the big three search engines would simply buy us for our team.  

At that time we knew that a talented engineer in a tough to get tech was worth about $1.5 million per head.  Thus, I knew with relative assurance that since we were going to hire at least 70 people with our Series A money, that our worst case scenario was about a $100 million exit.

If anyone is paying attention, you are now saying, wait a minute!  Didn't Powerset sell for $100 million to MSFT?  .... Yup, we nailed our worse case scenario!

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