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This doesn't quite make sense to me. Or, it makes sense, but not for the reasons presented on the surface. If you're Andreesen Horowitz, you have access to a n

by numair 13y ago

This doesn't quite make sense to me. Or, it makes sense, but not for the reasons presented on the surface. If you're Andreesen Horowitz, you have access to a nearly-unlimited supply of capital. You also have incredible access to information and dealflow throughout the industry. In situations in which you are not capital constrained, the most efficient way to establish a workforce is to acquire it from somewhere else; that's why acqui-hires make so much sense, because you've basically had someone else do the hard (and often completely unpredictable) work of figuring out if people can work together in a successful manner (which, I should note, is different from determination of whether the thing they're working on is successful). If I were A16Z, I would arbitrage my information advantage to secure a high quality engineering team by acquiring a company that had smart people but a lame product; going through a traditional hiring process would be a waste of my time (and since everyone is throwing money at my firm, it would also be a waste of time that could be better spent on figuring out where to deploy my capital). A16Z is rich enough to buy people, if it really wants people, for internal use (whether it is for their own company needs, or for some idea that they want to incubate inside of the firm). And even if they don't want to buy a whole set of people, they have enough wisdom and experience to know that you want to hire within a cohort of successful people rather than randoms (to see this in practice, take a look at Don Melton's post about Eazel alumni ending up at Apple on the front page right now). This tells me that their programming test has more to do with some sort of evaluation of this Hacker Rank service ("tell you what, we will run our own test on the service to see what happens!") or some other sort of analytical adventure. Or, you know, maybe it is really a programming test after all. Maybe they are hoping to find some sort of diamond-in-the-rough engineers who are socially and career-wise disconnected from an existing network. Some sort of "black swan programmer" or something. But I highly doubt it. So basically, if you go through this test, you're helping A16Z evaluate something; that something, however, probably isn't you.

gcb0 13y ago
Rich people are cheap. Why acquihire someone who knows how much they can ask if you can pay close to nothing to that test website (it's a genetic service) and get a clueless buy competent nerd that will be glad to work alone on a project for peanuts? That's why we're poor and they have "unlimited capital"
- coffeemug 13y ago
  Smart rich people are the opposite of cheap. They have more money than time, know it, and are perfectly happy to trade one for the other. Building organizations is expensive, unpredictable and takes a long time. Buying organizations is more expensive in the short term, but also far more predictable and much faster. So if you have more money than time and need an organization to get something done, buying one is far more rational than "paying a clueless but competent nerd peanuts". I'm not saying a16z is doing that here, btw. I'm just saying that you're wrong.
- numair 13y ago
  There are a lot of stupid rich people in this world, it's true. It's also somewhat of a dirty little secret that some of Silicon Valley's most successful VCs are stupid rich people. The team at Andreesen Horowitz, however, are not among these stupid rich people. If anything, they have disrupted the standard operating procedure among their peers by outsmarting them, and the nature of how they have outsmarted their peers is strongly connected to an appetite for attaching high valuations to small groups of really smart people. Their organizational M.O. has been the exact opposite of bargain-bin talent hunting, which is why this whole Hacker Rank thing comes off so weird to me. I want to be clear that I don't think A16Z is up to anything evil. Just something sneaky (which is fun!). These are smart people, and for them to publicly engage with the hacker community in this manner is indicative of some sort of really smart hypothesis being tested.
  - deleted 13y ago
    [deleted]
pskittle 13y ago
Not to sound offensive , but you're not A16z. 1.<< A16Z is rich enough to buy people>> No one is rich enough to buy people , unless well if you're talking about criminals. 2.Most good engineers will tell you , that money is NOT the primary motivator for them to build great products.( So aqui-hiring won't work) 3. As for Hackerrank--> that's what they're supposed to do - find people with good technical skills.
- bulte-rs 13y ago
  Perhaps you're not technically buying a human being; but everyone's allegiance has a price. I'll retract my statement if someone shows me real evidence that they've turned down a 500 (ok, perhaps 50 should be enough) million dollar job offer.
  - pskittle 13y ago
    Yes every allegiance has a price , however What you're suggesting from what i understood is that A16z would pay 50 million dollars to a new hire. With them being in the VC business , i think they know that , such amount of money can possibly invested in growing their portfolios. I don't have any evidence of any engineer being offered such exorbitant salaries , however this gets close. http://www.businessinsider.com/a-google-programmer-blew-off-a-500000-salary-at-startup--because-hes-already-making-3-million-every-year-2014-1 http://www.businessinsider.com/a-google-programmer-blew-off-... If you can find a reputed VC firm like A16z , whose looking to do what you propose (please post a link)
    - bulte-rs 13y ago
      (Late reply: better late than never) Ok, it's somewhat of a hyperbole. 50M for a single hire is extremely exorbitant (after all, we're not european soccer players), but consider being offered a salary 5 times your current pay. I'm loyal to my employer as hell, even though he only pays me around 45k (euros, yes, i should get more ;) and I'd like to think I'm 'morally gifted', so I wouldn't consider quitting my current job when someone offers me double... 3 times plus, is a different story, I'm scratch my head at least twice.
nostromo 13y ago
I think you're reading too much into this. Sometimes a programming test is just a programming test. If I were to guess, they're building an internal dashboard and DWH to crunch numbers on their investments (or perhaps potential investments). This test appears to focus on that skill set. Yeah, they could probably buy a company, but that would be overkill. They're VCs, they're supposed to be selling companies at a premium, not paying premiums. ;)
balajis 13y ago
:) I assure you that we are going to be hiring engineers through this process.
oroup 13y ago
Even Andreessen is unlikely to be structured such that spending millions of dollars at a time on things that don't make returns is a sensible thing to do. You have to understand the way capital inside venture funds is usually allocated - it's not just one big checking account. A common way to describe the economics of a venture fund is "2 and 20" which means that the fund takes 2% management fees per year (across a 10 year fund lifetime) and takes 20% of the returns or upside. So, in a hypothetical $300m fund with this arrangement, 80% of the money is reserved for making investments that provide returns. Every time an investment is made, a capital call takes place where the LPs are asked for the money. The other 20% of the fund goes to management fees - 2% per year although it's not uncommon that these fees be non-linearly distributed, IE 3% in the early years and 1% in the out years when (presumably) new funds are also throwing off management fees. So your $300m fund really generates $500k / month in management fees. (Probably paid annually or quarterly.) Enough for some very comfortable salaries, ample support staff, great office space and a travel budget but not enough to really start throwing dollars around millions at a time. Now of course Andreessen has a reported ~$4B under management but I'd be surprised if they're really generating north of $6M in management fees per month. As fund size grows, management fees may come down (since it doesn't take 10x the effort to write checks 10x as large) or a fund as confident as Andreessen (and in as strong a position) might make a "1.5 and 30" deal where they take fewer dollars as management fees up front but get a larger percentage of the upside. Note, I know absolutely nothing about what's really happening inside Andreessen, this is a purely hypothetical story against what is considered "typical" in the industry. (In the US.)
mathattack 13y ago
Remember that VCs have money to spend on acquisitions for their investors, not for themselves. It's very rare to see VCs acquire talent for themselves. It's usually personal network based hiring. What makes this unique is that it's a talent test first - groundbreaking in an industry that normally hires based on personal connections. The real question is "What problems will these folks be solving?"

by numair 13y ago

gcb0 13y ago

Rich people are cheap. Why acquihire someone who knows how much they can ask if you can pay close to nothing to that test website (it's a genetic service) and get a clueless buy competent nerd that will be glad to work alone on a project for peanuts? That's why we're poor and they have "unlimited capital"

coffeemug 13y ago
Smart rich people are the opposite of cheap. They have more money than time, know it, and are perfectly happy to trade one for the other. Building organizations is expensive, unpredictable and takes a long time. Buying organizations is more expensive in the short term, but also far more predictable and much faster. So if you have more money than time and need an organization to get something done, buying one is far more rational than "paying a clueless but competent nerd peanuts". I'm not saying a16z is doing that here, btw. I'm just saying that you're wrong.
numair 13y ago
There are a lot of stupid rich people in this world, it's true. It's also somewhat of a dirty little secret that some of Silicon Valley's most successful VCs are stupid rich people. The team at Andreesen Horowitz, however, are not among these stupid rich people. If anything, they have disrupted the standard operating procedure among their peers by outsmarting them, and the nature of how they have outsmarted their peers is strongly connected to an appetite for attaching high valuations to small groups of really smart people. Their organizational M.O. has been the exact opposite of bargain-bin talent hunting, which is why this whole Hacker Rank thing comes off so weird to me. I want to be clear that I don't think A16Z is up to anything evil. Just something sneaky (which is fun!). These are smart people, and for them to publicly engage with the hacker community in this manner is indicative of some sort of really smart hypothesis being tested.
- deleted 13y ago
  [deleted]

pskittle 13y ago

Not to sound offensive , but you're not A16z. 1.<< A16Z is rich enough to buy people>> No one is rich enough to buy people , unless well if you're talking about criminals. 2.Most good engineers will tell you , that money is NOT the primary motivator for them to build great products.( So aqui-hiring won't work) 3. As for Hackerrank--> that's what they're supposed to do - find people with good technical skills.

bulte-rs 13y ago
Perhaps you're not technically buying a human being; but everyone's allegiance has a price. I'll retract my statement if someone shows me real evidence that they've turned down a 500 (ok, perhaps 50 should be enough) million dollar job offer.
- pskittle 13y ago
  Yes every allegiance has a price , however What you're suggesting from what i understood is that A16z would pay 50 million dollars to a new hire. With them being in the VC business , i think they know that , such amount of money can possibly invested in growing their portfolios. I don't have any evidence of any engineer being offered such exorbitant salaries , however this gets close. http://www.businessinsider.com/a-google-programmer-blew-off-a-500000-salary-at-startup--because-hes-already-making-3-million-every-year-2014-1 http://www.businessinsider.com/a-google-programmer-blew-off-... If you can find a reputed VC firm like A16z , whose looking to do what you propose (please post a link)
  - bulte-rs 13y ago
    (Late reply: better late than never) Ok, it's somewhat of a hyperbole. 50M for a single hire is extremely exorbitant (after all, we're not european soccer players), but consider being offered a salary 5 times your current pay. I'm loyal to my employer as hell, even though he only pays me around 45k (euros, yes, i should get more ;) and I'd like to think I'm 'morally gifted', so I wouldn't consider quitting my current job when someone offers me double... 3 times plus, is a different story, I'm scratch my head at least twice.

nostromo 13y ago

I think you're reading too much into this. Sometimes a programming test is just a programming test. If I were to guess, they're building an internal dashboard and DWH to crunch numbers on their investments (or perhaps potential investments). This test appears to focus on that skill set. Yeah, they could probably buy a company, but that would be overkill. They're VCs, they're supposed to be selling companies at a premium, not paying premiums. ;)

balajis 13y ago

:) I assure you that we are going to be hiring engineers through this process.

oroup 13y ago

Even Andreessen is unlikely to be structured such that spending millions of dollars at a time on things that don't make returns is a sensible thing to do. You have to understand the way capital inside venture funds is usually allocated - it's not just one big checking account. A common way to describe the economics of a venture fund is "2 and 20" which means that the fund takes 2% management fees per year (across a 10 year fund lifetime) and takes 20% of the returns or upside. So, in a hypothetical $300m fund with this arrangement, 80% of the money is reserved for making investments that provide returns. Every time an investment is made, a capital call takes place where the LPs are asked for the money. The other 20% of the fund goes to management fees - 2% per year although it's not uncommon that these fees be non-linearly distributed, IE 3% in the early years and 1% in the out years when (presumably) new funds are also throwing off management fees. So your $300m fund really generates $500k / month in management fees. (Probably paid annually or quarterly.) Enough for some very comfortable salaries, ample support staff, great office space and a travel budget but not enough to really start throwing dollars around millions at a time. Now of course Andreessen has a reported ~$4B under management but I'd be surprised if they're really generating north of $6M in management fees per month. As fund size grows, management fees may come down (since it doesn't take 10x the effort to write checks 10x as large) or a fund as confident as Andreessen (and in as strong a position) might make a "1.5 and 30" deal where they take fewer dollars as management fees up front but get a larger percentage of the upside. Note, I know absolutely nothing about what's really happening inside Andreessen, this is a purely hypothetical story against what is considered "typical" in the industry. (In the US.)

mathattack 13y ago

Remember that VCs have money to spend on acquisitions for their investors, not for themselves. It's very rare to see VCs acquire talent for themselves. It's usually personal network based hiring. What makes this unique is that it's a talent test first - groundbreaking in an industry that normally hires based on personal connections. The real question is "What problems will these folks be solving?"