A quote from Steve Jobs first.

I observed something very early on at Apple, I didn’t know how to explain it then, but I’ve thought about it since. Most things in life, the dynamic range between ‘average’ and the ‘best’ is, at most, two-to-one. If you get into a cab in New York City with the best cab driver, as opposed to the average cab driver, you’re probably going to get to your destination with the best cab driver maybe thirty percent faster… Or a CD player, the difference between the best CD player and the average CD player is what? Twenty percent? So two-to-one is a big dynamic range in most of life. In software—and it used to be the case in hardware too—the difference between the average and the best is 50 to one. Maybe 100 to one. Very few things in life are like this, but what I’ve been lucky enough to spend my life in is like this.

A small team of A+ players can run circles around a giant team of B and C players.

This quote here is VERY important. Whenever something is 10x better or cheaper, better watch out for a huge disruption. A small team of A+ players completely outclass a giant group of B and C players, and can outcompete and completely outmanouver and always win over a group of B and C players, of any size.

Now how to hire the cream of the cream is out-of-scope for this article and can be found at the What You Can Learn From Steve Jobs About Hiring article. Let’s instead focus on the mechanics of how exactly the A+ players almost always outclass B and C players.

Note: this video of a former Tesla employee tells the same tale much more eloquently. A must watch.

A Genealogy Of A Big Company

A company (let’s call the company ‘BC’) hires all sorts of people: the A+ players, the A players, B and C as well. However, usually A+ players can’t stand working with Bs and Cs - they are too slow to understand, too dumb to move quickly, too stupid to recognize an outdated technology when they see one. The company also can’t do anything groundbreaking and the company moves slow (we’ll get to this later on), and so the As grow frustrated and leave the company, leaving the company full of Bs and Cs. Don’t get me wrong: some of the As may decide to stay, to enjoy social benefits, sane working hours and the fact that they can be done with their work in 1 hour, leaving the remainder of 7 hours to slack or do something more productive with their lives. But the As eager to change the world will leave for sure.

In other words, the company will evolve into a company with majority of Bs and Cs. Hence the name BC. On the other hand, a company of As will naturally clean itself of Bs and Cs (since they can’t keep up… or not. Sometimes parasitic managerial bullshit-bingo-type-of-speech people will invade the company and will rip it apart from the inside, downgrading the company to BC. That’s a story for another time though.).

That means that the evolution will usually drive the companies into two states: either they have a majority of As, or a vast majority of Bs and Cs.

A Genealogy Of the ‘A’ Company

The ‘A’ Company is full of smart people. They have grouped around a common vision, understand the big picture and their own contribution towards the common goal.

Since they’re smart they can understand the big picture and can correct their actions so that they contribute towards the vision. They don’t need to be told what to do or that their work is counter-productive or goes the opposite way of the vision - they will figure it out automatically and correct their actions.

They are eager to be productive and they will hate wasting time on endless meetings and/or go through managers to get answers - the fastest way to get an answer or to get someone collaborating is to go directly to them and tell them what you need. Since they are also guided by the vision, they will understand and will be eager to help you.

That’s why Elon Musk’s (the guy which knows how to organize people effectively) 7 rules deter wasting time: cease having useless meetings, drop out of useless meetings, stop using acronyms (since you waste time having to figure out what they stand for), and stop following the communication chain of command (since it’s much faster to talk to people directly).

The ‘A’ company will usually have a technology-based leader. Jobs is right in item 3: a company lead by marketing or sales people will not have a good product and will repulse A players, degrading into a BC company.

The ‘A’ company will have a catchy vision to change the world, since A players won’t settle for anything less (and will leave).

Learn how to get A+ players and how to keep them.

The company’s As are the only asset the company has, and so the company pampers its As and bribes them with benefits, money and shiny hardware. That can also be provided by a BC company; however the benefits and money can only go up to a certain point. You can go much faster when you make your As true believers of your mission and vision. This is something that an ‘A’ company must understand, and a BC company does not (or the vision is some kind of managerial shitty slimy disgusting polished fart).

The best and brightest want to work for Tesla and SpaceX. Study Elon Musk and those companies to figure out why.

A Genealogy of the BC Company

Now let’s take a look at a place where things fall apart. A company full of Bs and Cs.

Naturally, Bs and Cs can’t keep up with As and so they will be 5-10x slower in their work, since they have to frequently Google how to do things, copy-paste stuff from StackOverflow incorrectly, resulting in endless cycles of bug reporting and bug fixing, which makes the entire process 20x slower than As.

The bigger problem is that Bs and Cs don’t talk to each other much. That is because the company BC doesn’t understand the value of a vision (since it can simply command people what to do, or has been built as a hierarchy of officers pushing commands down the rank). The employees have no shared vision, they don’t have to understand the way in which their work contributes to the bigger picture and hence they usually … just don’t. They are effectively putting themselves into small boxes of my-work-vs-not-my-work and don’t care to look outside of that box. Since they don’t peek outside of the box, they will run in random directions, randomly colliding with other boxes or running in completely opposite directions. The company can produce nothing that requires more than one box to cooperate.

In order to fix this situation, a hierarchy of managers is hired, to force the boxes to play along and talk to each other. That creates another gap of performance between As and BCs because all communication now has to go through the managerial layer. Also, managers are not technology-based leaders, and therefore they can’t possibly fanthom on converting the company into As. Once the manager hierarchy is in, it will fight tooths-and-nails when you try to remove them. They will cement themselves into position, disabling any chance of turning the company into A. They will instead pollute the company with stupid slimy team buildings and other shitty corporate practices.

Now, in order to track the performance of Bs and Cs, some bullshit performance-tracking methodology is typically used, forcing Bs and Cs to further waste time filing in forms, erecting goals, having follow-up meetings and covering their asses when something goes south. It also effectively creates punishments for “try-and-fail” causing Bs and Cs to work very cautiously and thus slowly; A company on the other hand punishes “don’t-try” which causes As to run full steam with “try” since “try-and-fail” is completely okay. Also see Elon Musk on why the key to success is failure.

Usually SCRUM is employed, but not the good-parts-only but EVERYTHING, including all of the ‘agile’ / ‘scum master’ driven waste of everyone’s time, further wasting more time.

Conclusion

The BC company wastes so much time it is effectively 100x slower than the A company. But not only that: they frequently try completely mind-numbingly stupid things that would be filtered out by a tiny speck of common sense, wasting more time by running in a completely stupid direction. That’s because in a huge BC structure there is no longer any place for a common sense.

The BC companies live off their past successes and are usually disrupted and bankrupt’ed by an A company. That’s why BC companies buy off startups like crazy - BC historically has shitload of money and the only way for BC to survive is to kill any disruptors, and the easiest way to do that is to buy ‘A’ companies and extinguish them before they grow bigger.

This doesn’t only apply to software: take the Big Auto as an example. All of the Big Auto companies are BCs while Tesla is an A. And now you understand why Big Auto will go bankwupt or merge into something mammoth until 2030. In fact, it has already begun: Stellantis.