A great programmer is ten times as productive as a regular one. Good programmers are rare. That is why they make recruiters a lot of money. If you as a recruiter find a top encoder in your nets you don’t have to work for the rest of the year.
It should not surprise that recruiters are massively hunting on this timid species. The picture above is a true-to-life representation of what my programmers experience when they start up LinkedIn.
Before we make a coarse estimate of the costs that Patreon makes to hire someone, we briefly look at the evolution of recruitment. Tech = recruitment, as we will learn below, but tech has not always been recruitment.
In the remote past, recruitment was not difficult. You just asked someone nicely if he wanted to work for you and if he refused, you drove a sharp object through his heart. At that time, asking nicely often sufficed. You could put all candidates (shown as blue cubes) to work without needing recruiters.
A bit later
When people got more self-determination it became harder to put workers to work. Below you see one blue block fewer. It became a good idea to engage a recruiter (red block) to recruit people.
About till now
With growing economic activity, between a little later than very early and about until now, recruiters got competition from each other. More red cubes. Professions specialized, leading to professional specialists. Fewer blue cubes.
With growing competition between recruiters, it is increasingly difficult for tech to be sure of talent. Patreon illustrates in which direction companies are looking for solace. Patreon buys a can of recruiters who from now on only recruit for Patreon (black cubes). The other customers of Clear Talent must find new recruiters.
The future is easily predicted.
The problem is that the programming champions are increasingly hard to find, surrounded as they are by a growing hedge of thorny recruiters. This makes it necessary to increase the recruitment efforts even more, to appoint even more recruiters, to buy even more recruitment companies…
Do you still see the candidate?
Unencumbered by detailed knowledge of the facts, we can attempt to approach the order of magnitude of the cost per hire that Patreon is willing to accept.
Patreon wants to grow from 300 to 500 employees. So they want to take in two hundred employees. To this end, they take over Clear Talent. They quadruple their recruitment team to 50 recruiters. Every recruiter must hire four people.
I don’t know what Patreon paid for Clear talent, but maybe I will come close with an old rule of thumb. Clear talent has forty employees. An employee costs a hundred grand per year. Clear talent might have had four million turnover. Patreon might have paid twice that, eight million.
You cannot integrate a recruitment company into your own organization and then sell it again. You have to write off the eight million. And you have to pay your brand new stars a salary.
Eight million in advance plus four million salary, divided by four hires per recruiter, amounts to $ 75,000. That is a lot. Let it be twice that amount, then it’s even more.
If the pond is empty you won’t catch more fish with more fishermen. Patreon shows how dependent Big Tech is on recruitment. Tech = Recruitment. But this is a dead end. Luckily, there is an alternative.
Contrary to popular opinion, no super brain is required for most programming functions. You often benefit more from someone with a good education and a lot of knowledge than from a talent. Candidates know that. They increasingly choose employers who make them learn.
The question arises: why doesn’t Patreon just produce talent? Why doesn’t Patreon buy a programming school, instead of a recruitment company?
It would draw in talent. The (deductible) costs shouldn’t be too much of a problem (for $ 75,000 per student you can offer a great program).
Is it true that tech does not choose to educate out of fear that it takes too long? Or do they not take the benefits into account of preventing bad hires? Don’t they know how loyal one half of the employees is, that you have offered an education, and how faithfully you can remind the other half that they don’t have to pay that eduction back if they keep on working for you for a few more years in accordance with their contract?
People sometimes said: Tech = talent. But tech talent has not been in stock for some time. Therefore, tech = recruitment.
But how great would it be if the future returns us to where it all started? How do we ensure that companies let go of their obsession with talent and start educating? How beautiful would a world be where tech = training?