Walk the Walk

Unfortunately in the world we live in, there are the few that truly create value and then there are the many that prey off the value creation of these few.  One of my favorite movie scenes — from the classic “Hustle and Flow,” about a struggling Memphian (Djay) who enlists the help of a music producer (Keyes) to reinvent himself as a rapper, captures this idea pretty well.

People often ask how my company (Ubiquiti Networks) is able to achieve leading public market profitability and growth metrics while only employing upwards of 100 employees.  The answer is simple:  when you have a team of individuals who “walk the walk,” you can run circles around competitors with massive teams of employees who are resolved to “talk the talk.”

Although Ubiquiti’s operating expenses are far less than other technology companies, it is not because we are shy about spending.  In fact, on an individual basis, our compensation levels are often significantly higher than standard market ranges.  It is our ability to know where to spend which results in our unusually high return on R&D investment and unusually low operating expense metrics.

To illustrate this, below is a diagram showing distributions of engineers as a function of their value contribution.  For the engineer types I classify as “talkers,” I believe they often contribute negative value contribution to a company.   The “walkers” on the other hand, will always have at least some positive value contribution.  And, if they are “superstar” types, they can deliver phenomenal value contribution and return on investment.  At Ubiquiti, we focus on hiring these specific types while being as disciplined as possible in scaling our R&D teams.  I also believe it’s just important to avoid the wrong hire, as it is to get a great hire.

 

If you can find, recruit, and build small teams with a high concentration of these types of hands-on engineering “superstars”, the results can be awesome – including the potential to disrupt markets and challenge much larger competitors.

6 Responses to Walk the Walk

  1. Andy Ellwood July 8, 2012 at 7:21 pm #

    Robert,
    Thanks for the wealth of knowledge you’ve shared thus far on this blog. Was referred to this post by a friend who thought I would appreciate it and he was right.
    Please keep them coming.

    Best,

    Andy

  2. Don Houser July 11, 2012 at 11:22 pm #

    Great post. This reminds me a lot of a comment Steve Jobs made in his Robert X. Cringely interview:

    “I observed something fairly early on at Apple, which I didn’t know how to explain then, but have thought a lot about it since. Most things in life have a dynamic range in which average to best is at most 2:1. For example if you go to New York City and get an average taxi cab driver versus the best taxi cab driver, you’ll probably get to your destination with the best taxi driver 30% faster. And an automobile; What’s the difference between the average car and the best? Maybe 20% ? The best CD player versus the average CD player? Maybe 20% ? So 2:1 is a big dynamic range for most things in life. Now, in software, and it used to be the case in hardware, the difference between the average software developer and the best is 50:1; Maybe even 100:1. Very few things in life are like this, but what I was lucky enough to spend my life doing, which is software, is like this. So I’ve built a lot of my success on finding these truly gifted people, and not settling for ‘B’ and ‘C’ players, but really going for the ‘A’ players. And I found something… I found that when you get enough ‘A’ players together; when you go through the incredible work to find these ‘A’ players, they really like working with eachother. Because most have never had the chance to do that before. And they dont work with ‘B’ and ‘C’ players, so its self policing. They only want to hire ‘A’ players. So you build these pockets of ‘A’ players and it just propogates.”

  3. Ricky N. July 25, 2012 at 6:33 pm #

    This post somehow reminds me of this interview :) http://bit.ly/Qk6GXF

  4. Carolina Violet July 27, 2012 at 4:52 am #

    Inspiring blog. Btw great movie pick!

  5. Mechelle August 7, 2012 at 12:12 pm #

    “Unfortunately in the world we live in, there are the few that truly create value and then there are the many that prey off the value creation of these few. ”

    You hit the target! Nice blog post.

  6. Patricio September 6, 2012 at 1:00 pm #

    Thank you very much for sharing this message with us, I am a fan of yours you are a role model for me but unfortunately that tens of thousands of people have come to power your success, but equally we tried again and again, and again thanks for greetings Share this post with us.

    Patricio

    Buenos Aires – Argentina.

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