Folks who found this article interesting will also appreciate Nathan Altice's book "I AM ERROR" which looks at how the NES's various technical decisions and limitations influenced the NES's lasting cultural legacy. The book contains a surprising amount of technical depth combined with history, business, and sociology. It's really excellent.
“I am Error” is a book from the Platform Studies series, to which the extremely famous and well-regarded “Racing the Beam” also belongs - an awesome analysis of the technical features and restrictions of the Atari 2600/VCS and how they influenced the games that defined the console.
I'm glad I'm not the only one. I was very excited for it after Racing the Beam and I AM ERROR, but the negative tone made me put it down almost immediately.
So how do you hire effectively as a CEO? There are too many areas for you to be knowledgeable, yet you need to be able to hire top talent across a variety of areas.
The method I've found is to ask people I respect a lot, "Who is the best X that you know?" Then call/email them, saying, "I'm the CEO of Y, and I'm trying to find out what a good X looks like. So and so said you're the best she knows. Can I have 30 minutes of your time?"
Do 5 of these, and you'll have a good idea of what someone good looks like. (And those 5 may give you some candidates)
This is very difficult though because things like "organizes the team to hit quota every quarter" can come in many different manners.
You hire CTO and let him do his job. How you hire CTO? You learn intimately how to hire for such positions, what their day to day jobs are, etc. Only then you can evaluate canidate for CTO position.
Indeed - you can even extend this idea to only identify factors less than or equal to the square root - all factors greater than this have a matching factor less than the square root.
Like others have mentioned, I'm very interested in how the author arrived at the ratio of '3'. At the very least this ratio doesn't take into account how capital intensive a company is, since fixed costs seem to be what's left (my understanding could be wrong here depending on which definition of 'margin' is being implied here).
Wouldn't this imply that a company with a lower ratio that is not very capital intensive would have a higher "corrected ratio" than a company which is much more capital intensive (or even simply has a higher cost of capital)?
I know of one interesting story here. Early on in (what would eventually become a very successful) tech company's life, they acquired some collocated space for free thanks to a friend (call him Brad) of an early employee.
Eventually Brad left that particular DC operator, leaving the startup with no inside contact - but the servers stayed up for years to come (and the company was never charged for the resources).
These machines were eventually "replaced" with newer hardware in a nearby facility, but the DC operator has no idea where these old machines are physically located within the facility (thus cannot remove them), so they remain active to this very day, sitting idly by...
This is an existing team who has already shown they can work and accomplish things together. Buying the best individual labor on the free market may not create as strong a whole as just hiring a team outright - this seems like a pretty good economic decision, considering risk/reward.