Price's Law and Its Impact on Hiring and Retaining Talent
The phenomenon that impacts all teams, yet is rarely discussed openly.
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Hiring, Scaling, and the Impact of Price’s Law
He scaled Procore over 8.5 years from $10m to over $900m+ in revenue, the team from 30 to 1,500 people, and took it public on the NYSE. He served as Executive Vice President of Sales and Chief Revenue Officer.
On the outside, they were crushing it. On the inside, Dennis Lyandres was having feelings of failure.
When there were 100 people at the company, about 15 people were disproportionately epic. Once they hit 500 people, the number of disproportionately epic individuals had only increased to a maximum of 30 people.
Dennis thought his "hit rate" for hiring exceptional individuals was dropping, creating feelings of failure. Turns out that when he spoke with other leaders, this was normal.
Why? A phenomenon called Price’s Law - let’s get into it.
Price’s Law
Price's Law states:
"the square root of the number of employees in a company do about half the work"
Meaning, it’s actually a small fraction of people drive half the productivity.
Let’s do the math:
In a 10-person company, about 3 people (square root of 10) are responsible for 50% of the output.
In a 100-person company, 10 people will be doing half the work.
In a 1,000-person company, it’s just 32 people.
So, in larger teams, the ratio of high-output individuals doesn't scale at the same pace as headcount, making it seem like fewer “rockstars” are emerging.
This means as your company grows, finding and retaining these key individuals becomes even more critical. These are the people driving the work that truly moves the needle.
Programming the retention of key people
The mission: find and retain your key people.
While not widely discussed, some revenue leaders are creating programs that formalize incentives to support the retention of these key people.
Steve Jobs notoriously had such a program, which was called “T-100.”
Four key program areas emerge:
Connect them with leadership regularly.
Build cross-functional relationships by introducing them to other high performers.
Challenge them with the toughest problems.
Ensure their compensation and career growth reflect their contribution.
At a certain scale this doesn’t make sense, but once your company hits around 100 people, considering formalizing this process can.
While it’s normal for a small number of individuals to drive the majority of the work, recognizing and empowering them can have a disproportionate impact on your company’s success.
Tips for hiring the best people from top operators
“I think the over-rotation towards domain expertise or hiring someone just because they were at a hot company is misguided. What matters is hiring someone with the growth mindset who has seen scale.”
- Dennis Lyandres (previous CRO, Procore)
“We test for grit, we test for collaboration, we test for growth mindset...that means folks are very team-oriented, eager to embrace change.”
- Elizabeth Pemmerl (CRO, GitHub)
“You need people that are aggressive, people who have that can-do mentality. But I think the people that also can bring substance really stand out.”
- Matt Breslin (CRO, Upland)
“Hire folks that challenge you, not somebody that you know more than.”
- Noah Marks (SVP & Head of Commercial Strategy and Operations, Diligent)
“Top talent wants to go where things are buttoned up and streamlined. They want to be where they can make a contribution, move the needle, and do better in their own right and in their own career.”
- Ralph Barsi (VP of Sales at Kahua)
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Leandra Fishman is the Chief Revenue Officer at Apollo.io, a leading go-to-market solution for sales and marketing teams. Apollo.io is one of the fastest-growing companies in SaaS, with 9x ARR growth since 2021 and currently valued at $1.6 billion. Leandra brings over 30 years of experience to Apollo.io. Most recently, Fishman was the CRO at Intercom, which during her tenure ranked No. 35 on the 2022 Forbes Cloud 100 List with over $200 million in annual revenue. Previously, as the SVP of Sales and Success for SendGrid, she led the company through a successful IPO and helped double its market cap in its first year as a public company. As an executive consultant, she has executed projects ranging from developing sales and marketing strategies for startups to creating business plans and serving in an advisory role for venture capitalist firms and board members.
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✌️ Scott