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The trick Max Levchin used to hire the best engineers at PayPal (firstround.com)
83 points by jkopelman 820 days ago | 50 comments



How long is Max Levchin going to milk the Paypal story. For crying out loud, it was 12 years ago - an eternity in the industry. How come all these great ideas didn't work for the next 12 years he has been trying to build other companies.

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He's trying: https://affirm.com/jobs

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Interesting, thanks. I thought Max Levchin was trying to get you pregnant. Just announced yesterday at D11.

http://allthingsd.com/20130529/max-levchins-new-plan-to-get-...

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Pregnancy or e-payment. Clearly it's a 50/50 hedge bet.

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So all the best engineers on the market just happened to have gone to school with Levchin, and all the best business types on the market just happened to have gone to school with Peter Thiel.

What an amazing coincidence!

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Well they did go to Stanford and UIUC. Arguably the best school for business and the birthplace of the browser, and one of the best comp sci schools in the country.

I think the point is that he hired people he knew.

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this is what they call meritocracy.

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If you could show that either university is not meritocratic in their application process, you would have a point.

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http://www.amazon.com/Rise-Meritocracy-Classics-Organization...

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Thank you - I had a look at the book description and I don't see how it makes your point (regardless of whether the author is an authority on the subject)

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Universities aren't as meritocratic as you might think. I really liked this book, http://www.amazon.com/Price-Admission-Americas-Colleges-Outs... I don't know if I agree with everything, but the realization that the majority of admissions at elite schools are to people who are in some way "hooked" is pretty shocking.

Also, the last Stanford graduating class was a fifth legacy students. http://www.stanforddaily.com/2009/12/02/legacies-a-fifth-of-...

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A-players hire A+ players!

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everyone think he is A player (guilty as charged), but cruel reality is majority is C players hiring hopefully better than that (C+,B).

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> diversity of thought slows you down

What a fascinating idea. I suppose if you don't know whether you're going the right direction you might as well try to get there as fast a possible.

I worked for a while with a bunch of former video game developers at a non-game company. They got an amazing amount of work done, but they also just did what they wanted without discussing it. They just assumed that everybody would naturally agree with them so they didn't see any problem with sending a note to the rest of the team that said, "We've changed the signature of most of the UI method calls. The build now has 5,000 errors. Please make changes to your code."

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Given the PayPal story, which started with the company being encryption software to beam money between Palm Pilots, that couldn't possibly be what Max meant. They definitely didn't "know whether [they were] going in the right direction."

What he means, I think, is that at an early stage startup the cost of coordination is very high. When you have 5 people working together you almost want a hive mind. If part of everyone's mutual understanding includes how, when, and why to change course then the cost of potentially sticking with the wrong thing for too long is far outweighed by the cost of coordination.

Your example is the opposite of what I take him to mean, viz., in a small team where everyone understands how to operate independently and has a deep, mutual understanding then nobody's going to introduce a breaking change that leaves the other 4 people flat footed at a critical time.

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He's putting his own cognitive narrative on a singular event. A few things change (they dont connect with elon, they dont give up on the palm pilot as a focus, etc) and the story ends radically different, to negative effect. Truth is, sometimes, if you bust your ass in the right place at the right time, shit goes marvelously to your favor. Or not. Either way.

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> We've changed the signature of most of the UI method calls. The build now has 5,000 errors. Please make changes to your code.

I feel a build should actually compile before committing changes. If you make a change that create 5000 build errors, you better get to fixing 'em or revert that change.

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It says "At an early-stage startup", not that this is a sustainable practice.

Also the premise is "everybody smart they knew". Changing method signature for no reason is not that smart. :)

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"Hire everyone you know at Stanford." NEAT TRICK. Also "ignore diversity of thought," and apparently diversity of almost everything else. Absolutely stupid.

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"The object of business is to keep your buddies working, even if they're fuckin' idiots."

--Roseanne Barr

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Is there any value in diversity for its own sake?

If I'm trying to build a rocket to go to Mars, give me the best people, not the people that would look best in a university recruiting photograph.

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There is. But racial diversity has nothing to do with it.

The more diverse the backgrounds and thought patterns are of people on a team, the more likely they'll think of and consider solutions and paths that might not have been considered otherwise -- or see pitfalls in them.

If you're building a rocket to go to Mars, you absolutely want as much diversity in your engineering backgrounds as possible (assuming everyone already meets the engineering requirements in the first place).

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Have you ever worked with someone that really gets the way you think? It's refreshing. The communication overhead is very low.

It seems I spend a great deal of my time trying to communicate things I already know with people of "diverse" thinking styles.

Don't worry about people being robotic clones of each other. It almost never happens. There is diversity enough without seeking out more blatant diversity.

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I've learned an awful lot from people who think very differently than me. They make me reconsider my assumptions and quite often lead to a better solution.

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> Is there any value in diversity for its own sake?

I don't know. How would you test that hypothesis?

My unfounded speculation is that, like genetic diversity helps produce a healthy and robust organism, so does diversity of perspective make an organization more fit to respond to a variety of conditions.

That may or may not be of value, depending on the goals of the organization.

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Give me capable people from a wide array of backgrounds and watch them attack problems from their own unique angle.

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A team is more than the sum of the players. An important part of doing good work on hard problems is avoiding thinking in circles. Diversity of thought, if not necessarily skin, is good for that.

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Less diversity of thought increases the chances that everybody shares the same blind spots. It's a simple monoculture argument.

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Diversity value is inversely proportional to how well you understand the problem at hand. If you're building a rocket to mars, you probably need fewer psychologists than mechanical engineers. If you're an advertising agency, the situation is likely reversed.

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If you're building a rocket to Mars, you'd better have at least a few psychology types to anticipate (and prevent) miscommunications that result in a units-conversion error that blows up the shiny engineering thingie.

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Right, because no startups have come out of Stanford and every successful was so because of their commitment to 'diversity' from the start.

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Diversity in this context seems to be programming language specialty which is completely reasonable when getting something off the ground. The whole school thing strikes me as weird though. Maybe if you're dealing with really green engineers stuff like that matters.

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I think it's more than that. Open this lecture from Peter Thiel and ctrl+f "hoops" http://blakemasters.com/post/21437840885/peter-thiels-cs183-...

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That's funny since I have a league 'hoops' game tonight. Exercise and other focus helps amazingly with my work. Weight lifting is another place where I come up with all sorts of solutions to work problems.

The whole paragraph from the lecture just struck me as a nerds revenge/jealously since here was a guy who was as smart as them and a jock. What could they possible lean on then to think themselves superior!?

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Wow. That's so terrible I had to double-check to make sure it wasn't satire.

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> "The whole school thing strikes me as weird though."

Weren't Levchin and Thiel both just out of school themselves? Who else would they really know?

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"strongest technical teams in silicon valley history"?

So much for the guys who invented the silicon transistor, the microprocessor. the Macintosh team must have been small fries.

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TLDR: Cronyism works well if all your college bros are top talent.

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OR: survivorship bias lets you make all sorts of unfounded claims.

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Post hoc ergo propter hoc.

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this thing worked once for him. that's not a valid sample. all these great stories out of startups that were plain lucky to be in the right place in the right time. it wasn't technology that made paypal big - who gives a shit how they hired coders?

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This is one of those 'success has many parents'. Most of these stories are semi-made up after success.

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Success is like failure: it only exists backwards in time.

Generally we take a hammer and beat the messy chaos of reality until it resembles the monomyth.

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190+ IQ's. Now I understand why slide was such a triumph in the myspace Picfeed Battle of 2006.

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Seems like a number of comments are missing the good here. A quick summary of my takeaways:

- Ability to leverage talent to speedy outcomes is the competitive advantage of startups. Lean heavily on this.

- Startups habitually underestimate their ability to attract top talent. Don’t submit to this line of thinking, or at minimum work to prove your hypothesis of impossibility.

- One should be ruthless in early shaping of company culture. Certain things are absolutely necessary to get right -- this is one.

- The things that scare away second tier talent can actually attract top tier people. Like focusing product development on your ideal user, one should focus hiring energies on ideal hires.

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All of which is summed up by the comments about people from one particular university.

Point by point: Easy to leverage people you went to uni with Easy to attract top talent, if you went to uni with it Ruthless? If you mean selecting from a single know talent pool, sure. You'll probably scare away 2nd tier talent, if you a already populated with your mates from a top uni.

OK, those are bitter and twisted replies, but being British, I know all about closed shop universities and mates giving mates jobs. Old School Tie we call it. Have a look at our government....

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What is paypay? Am I the only one that noticed that?

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No, I'm a proofreader. I wondered the same thing.

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There are no tricks in this story, just a philosophy that he believed in, and strictly adhered to.

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"One crazy trick. HR managers hate him!"

Let's stop looking for crazy tricks. Generally, there aren't any.

Some stuff is simple, some stuff is complicated.

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