I don't think I've ever been more terrified to write a blog post. But it has to be written.
I'll say it: In our Silicon Valley culture, long hours are the broadly recognized measure of someone's value to the company. To most of us, long hours are a signal of productivity, commitment, and future results. This belief is so widespread and embedded into the fabric of work culture that I'm not sure sharing examples would be useful, but I'll share a few recent anecdotes for the skeptics.
A go-to-market leader told me he was pleased with his head of sales: "He's a killer…he works 18-hour days." A founder responded to my email: "Hey Allison, sorry for the slow reply here. Can't remember sleeping 😅." One well-known VC tweeted something along the lines of, "I'm doing my usual routine of emailing my founders on Saturday at 8am to see how long it takes them to respond." I'm pretty sure he was kidding, but the responses to his tweet indicated that many people were totally on board with the underlying philosophy of working long hours, which I think was what caused him to delete his tweet. Our celebrity role models work very hard: Jack Dorsey ran two companies simultaneously for a while. Elon Musk is worshiped by a massive audience, in part for his superhuman work ethic. Enough said.
Some people will be surprised to see me express skepticism of the value of work ethic. I was raised by an immigrant mother whose own mother fled two countries as a refugee, and by a father who achieved his version of the American dream; "hard work" was a core family value. I worked long hours for many years. When I worked in private equity investing, I worked from 9am to 10 or 11pm most days without a break, working 110 hours for three weeks in a row during one deal. I didn't work nearly that hard at Gainsight, but I still worked 60 hours per week on average. Intentionally or not, when I was there, we did have a culture where people worked very hard.
Today, as an investor, I theoretically stand to benefit from my founders and their teams working long hours. But the purpose of this post is to counter that assumption.
I want to clarify upfront that this post is not about the value of work-life balance to individuals. I don't claim to know what number of hours is best for people's well-being. I'm also not entirely sure that working fewer hours is better for people; I know many people who love working long hours and couldn't imagine their lives otherwise. Rather, this post is about whether long hours are valuable to companies.
Short Hours Are the Secret of Top Companies
Last year I met (and invested in) the fastest growing SaaS company ever. They grew from zero to $40M in ARR in 9 months, with 9 employees. The founders work roughly 9am to 5pm and are attentive parents. They don't subscribe to many Silicon Valley values. They think Twitter is a waste of time; it's the home of amateurs who aren't focused on building real businesses.
When I first met the founder of another rocketship company, he told me, "I've worked at a number of tech companies. They all felt like a hard slog. But this company that we're building…I'm almost embarrassed to say, it feels easy."
In my experience with companies like these and others, there are a few reasons to believe that short work hours are a signal of success, when coupled with strong metrics. Short hours + strong metrics may be a sign of:
1. Large, immediately addressable market. You don't have to spend time convincing a small set of customers to buy. Enough people are in the market that you can just onboard whoever is raising their hand. The timing is great.
2. Strong product-market fit. The solution for that great market is also great. Customers buy, adopt, and expand without much involvement from you.
3. Strong positioning. You communicate about your company in a way that helps people easily understand how your product fits in with their current tech stack. You have partnerships and product integrations with the right companies.
4. Limited competition. You don't have to waste your time fighting small battles.
5. Talented team members. They can do the same amount of work in less time and find better solutions.
6. Strong alignment across your team. No work is wasted outside your priorities, and synergies among team members is high.
7. Strong founder. The founder made the decision to focus on this terrific market with good timing and limited competition, had the insight and execution ability to achieve strong product-market fit, and was able to recruit and retain strong leaders, delegate well, and get everyone aligned. All the factors above reflect well on the founder.
Would I want to invest in a company with these attributes? Absolutely! Send them my way.
Conversely, long hours (even if coupled with strong metrics) may be a sign of the following:
1. The market is not large enough right now. The company was started too early and arguably should not exist at this moment. You spend a lot of time trying to convince people that you're worth their time.
2. The product is bad. So you spend a lot of time implementing, integrating, and "driving adoption" (users shouldn't have to be pushed to adopt).
3. Poor positioning. Your stated category may not make sense to buyers. You don't fit into their conception of their problem and their tech stack. So you waste a lot of cycles trying to push your solution onto a market that doesn't get it.
4. High competition. You spend all your time fighting tooth and nail.
5. Not talented team members. They solve situations rather than build systems to reduce future work. And the founder works very hard to compensate for this.
6. Poor alignment. Everyone is running around like chickens with their heads cut off.
7. Poor founder. The founder made the decision to focus on this market that isn't ready or is too competitive, couldn't arrive at product-market fit, isn't a strong communicator, struggles to recruit and retain a strong team, and/or can't align everyone.
When I say "long hours" and "short hours," I'm referring to aggregate, cumulative metrics: how much does the entire team work, over time. Of course, there are some weeks when specific people end up working longer hours, and that can be good for a company. A founder might work harder when closing new capital. Deadlines are natural impetuses to work longer hours for a period of time: e.g. sales people might work harder at the end of the quarter than the beginning; engineers might work harder in the lead-up to a new release. The departure of a team member may result in a short-term overload for a couple of other team members, and it's probably good that they're covering the gap. But, for the reasons above, aggregate, sustained long hours can be a sign of fundamental problems.
But I Thought Strong Fundamentals + Long Hours = Success?
For a long time, I thought, why not have the best of both worlds? If we had all seven positive attributes above AND we had a team that worked very hard, we could grow even faster than if we just had those seven attributes. If we work a little bit harder, we can always sell an incremental customer, release a feature a few days earlier, or write one more blog post.
There are many historical examples of companies that have terrific metrics and work long hours. I see a few reasons for that:
Work is religion for many talented people. Many of the most talented people actually want to work long hours, because it's their source of meaning in life and/or because they lack meaning in other parts of their lives. I was that person for most of my life. This bullet point in itself is controversial enough to warrant its own blog post, which I may muster up the courage to write in the future. The point here is that talented people work hard for reasons unrelated to the potential impact of that work on future results.
Many talented people want to work with other talented people. And those talented people may see work as religion. So if you want to work with talented people, you may end up at a company with long hours.
Many talented people see long hours as the way of signaling that they are talented. As discussed at the start of this post, this is a rational belief, because many people interpret long hours as a sign of talent.
Companies with high equity upside often have founders who are religious about work. You can make a high salary by working at a large, stable company with shorter hours. But if you want to make millions quickly, you'll have to work at a company where your equity has a very high upside. Many of the high-equity-upside companies have cultures that value long hours, because the founders and early leadership team members are among the people in the first bullet.
What's not entirely clear to me is that the long hours actually contribute to the company's strong metrics, or that they are a necessary by-product of the company's success.
In my experience, long hours may actually be predictive of poor future results. It may be that the company is achieving great near-term results only because its team is working hard, and not because the company has the strong fundamentals that are required to achieve lasting success. Indeed, I can think of seven reasons (above) why long hours may be a band-aid to address issues that are very difficult to rectify. If that's the case, I wonder whether the strong metrics will endure; might the poor market timing, poor product, or competitive environment eventually catch up with the company and cause poor financial results?
There are other reasons to believe that long hours may be predictive of poor future results, even if the current metrics are strong.
Working long hours is a distraction from fixing bigger issues. This is a psychological problem. We believe we can't control the poor fundamentals of our company, but at least we can control how long we work. Working hard is our way of feeling like we're doing something about a harder-to-fix problem. I'm not a psychologist, but I do think that we sometimes hate ourselves for not being able to fix intractable issues, and we want to punish ourselves, so working long hours becomes a type of masochism. Unfortunately, through this kind of irrational procrastination, we delay solving for strong fundamentals, which is the way to ensure our company generates strong financial results in the future.
It is very difficult (and rare) to work long hours and also work smart. The highest-ROI hour worked is one that was spent building a scalable system, to limit the time spent on an activity in the future. I've met very few people who can do that for 12+ hours per day; humans were just not built for it. The problem isn't the low-ROI hours that follow the high-ROI ones. The problem is that a founder's ability to recognize people is finite, and in rewarding long hours or the incremental win ("one more customer!"), they reduce the emphasis on high-ROI hours. This results in a team that doesn't create enough scalable systems and therefore is less likely to generate strong results in the future.
Certainly, there is negative marginal utility to hours worked at some point. (I can easily recall big mistakes I made when working on private equity financial models at 3am.) But my point is that even if all marginal hours were accretive to company value, they may not be accretive enough to generate top-tier results.
The founder of the fastest-growing SaaS company that I mentioned earlier takes this point one step further, arguing that most incremental work may have negative utility, even if it appears productive. "I think we all intuitively understand that the most productive 30 minutes of our work day are perhaps more valuable than the least productive 5 hours, but have a hard time believing that ONLY doing 90 minutes or an hour of that kind of work might lead to net greater outcomes." For me, this statement provokes deep thinking about even a seemingly light 8-hour workday.
Burn-out is higher than it has ever been. Much has been written about this in the press, so I won't expand on that here. A company that is burning out its employees will have trouble sustaining momentum. That company puts its future results at risk.
Talent has more leverage in this market than at any other moment in my lifetime. I have to think that promising shorter hours would help companies attract at least some talented people. At minimum, it could be a differentiator in this market. HBR predicts one example of this kind of recruiting and retention strategy: "To compete in the war for knowledge worker talent, some companies will shorten the work week rather than increase pay." Another example: a friend who is VP Marketing at a consumer company awards her team members' performance with PTO days as opposed to bonuses.
Conversely, I would think that a company with strong metrics + long hours would be at a disadvantage in attracting at least some subset of talented people, compared with a company with strong metrics + short hours. Winning the talent war is key to winning as a company.
So, what does it look like to run a high-performing company with short hours? This seems so foreign to most of us that it's a terrifying proposition. In fact, I'm scared to write this blog post: Will people think that I've lost my intensity and edge?
Let me clarify: intensity is a vastly different concept from long hours.
Introducing a New Concept: Talent Efficiency
Capital efficiency is a common term that VCs use to value businesses. They look at metrics like:
Long-term burn rate = cumulative cash burned, divided by current ARR.
Magic number = current quarter ARR minus prior quarter ARR, divided by prior quarter CAC. CAC = cost of acquiring a customer.
Payback period = CAC divided by monthly gross profit generated by that customer.
Ratio of LTV (lifetime value of a customer) to CAC (cost of acquiring a customer).
At a basic level, these are ROI ratios. What do you get for investing a dollar in a business?
Focusing on these metrics makes sense if capital is constrained. If capital is a scarce resource, we need to make sure we're using it well. But notably, capital is not very constrained right now. Even after a 60% correction in the public tech markets, VCs continue to raise huge funds, and they're sitting on billions of dollars of capital that they have not yet deployed. We've been hearing about VCs pulling term sheets or reducing offers, but many deals are still getting done at very high valuations, and the best companies continue to have oversubscribed rounds. The private tech industry remains flush with cash.
You know what resource is far more scarce than capital right now? Talent.
Founders know this better than anyone. I've seen them go to extraordinary lengths to hire and retain people. Here are some anecdotes illustrating the scarcity of talent:
Company A: Offers an EIR program where top talent can learn entrepreneurial skills at their company and stay for only one year (because they don't hope to retain them beyond that, and figure they could get better people if they just admitted it).
Company B: Built up a list of tech-related Slack communities in small towns across the country to recruit little-known engineers
Company C: Celebrates every new hire by posting a profile of them to Twitter.
Company D, E, F…: Paying sky-high salaries. Says one founder: "Two weeks ago, we saw a product marketing talent with 5 years of experience get 6 offers in 5 days, for a base salary of $270k."
Talent is a scarce resource. And yet, we have no measure for talent efficiency – how well we are leveraging our talent.
Other metrics related to talent have become popular, for example:
Employee engagement score
Days to fill a new role
Net growth in headcount, discussed by Kerry Wang of Searchlight in my conversation with her here
These metrics are useful but insufficient for describing the ROI of talent. I'm interested in metrics like:
Long-term Talent Burn Rate: How many cumulative work hours did it take to arrive at the current ARR?
Ratio of LTV to Hours: What is the ratio of LTV (lifetime value of a customer) to the total hours spent on marketing, sales, and customer success?
Function-specific metrics: When discussing this post, a VC friend of mine thoughtfully suggested talent efficiency metrics by function, such as ARR generated per hour of time spent on a sales cycle, or product usage generated per hour of engineering time.
I would be fascinated to see startup benchmarks of these numbers, and I'd be excited to invest in the top companies by these measures.
Possible Objections to "Talent Efficiency"
I spent a few weeks gathering objections from very smart people about the importance of talent efficiency. Those objections are listed below, along with my responses.
"Isn't capital efficiency a sufficient metric?" Some people might think that capital is a good proxy for talent, because you have to spend capital to get talent. But capital only recognizes the cash spent on someone's salary – not the hours worked, which can obviously flex up or down for a given salaried person. The talent efficiency metrics above measure something fundamentally different.
"We can't measure these talent efficiency metrics." It's difficult to measure these talent efficiency metrics right now because people don't track their hours. In fact, people hate logging their hours. I disliked doing it when I worked in management consulting. And our professional services team at Gainsight despised doing it, too. The logging itself adds to hours worked, and people also believe (justifiably) that they may be unfairly judged by how many hours they work. They also may not remember how many hours they worked. All this leads to inaccurate reporting and disgruntled team members.
But I have a feeling that we could get an accurate estimate of hours worked at a company, based on scheduled meetings and software usage. This seems like a problem that software people could solve.
"Are hours the right measure of talent burn?" Someone working long hours might be happier than someone working shorter, but more miserable, hours. This makes sense. I could imagine a talent efficiency metric that compares ARR or LTV with something like the inverse of employee engagement score (misery index?). You'd have to use the inverse, because the point is to measure the spending of a resource. When using the inverse of engagement score, you would be measuring "how many emotional exhaustion points do you spend per dollar of ARR or LTV that you get."
I think this metric would be supplemental to the hours-based talent efficiency metrics, because "hours worked" tells you more than just "are your employees burning out." Per an earlier section of this post, hours expended tell you a great deal about the fundamentals of your company: the size of your market, your product-market fit, your competition, and others.
I'm definitely interested in hearing others' thoughts about how to optimize these talent efficiency metrics. Share your comments below!
"The incremental wins matter." "I want that one additional customer, the product release delivered one day faster, and the one additional blog post." To my point earlier, I don't think it's feasible to create a culture that celebrates incremental wins and also celebrates creating scalable systems sufficiently. But perhaps more importantly, I think you will get far more customers, far faster product release, far more blog posts if you focus your team on making the step-function improvements.
"Long hours drive serendipity." I see that many people participate in the incremental activity because they think that they're one activity away from their next big break. They take the incremental meeting, attend the incremental dinner, read one more article. I do think that "staying in the game" this way is a strong survival strategy: if you stay in the game long enough, at some point, you might score some points. But this post isn't about how to stay alive – it's about how to win an enormous market. By analogy, if your goal was to become rich, would you buy a lottery ticket every day, or would you thoughtfully build a business?
"Long hours drive repetitions, which drive skill-building." This can be true. When I worked in private equity, building one more financial model would materially improve my skill in doing so. The same could be said for closing one more deal as a sales rep, or writing more lines of code as an engineer. For this reason, junior team members, or those who are otherwise at the start of a steep learning curve, might find it beneficial to their career growth to work longer hours. Certainly, their employers will also find it beneficial that these team members are investing in their own skill development. But the cost of this investment is also why startups try to hire people who have "done the job before," or who can learn so quickly that the number of repetitions required to ascend a unit of the learning curve is low. Long hours spent on repetitions is not optimal for the company.
"Founders should work hard, even if their team members shouldn't." The argument is that an incremental hour spent by a founder is more valuable than the incremental hour spent by a team member, because they know more about the market, they are more committed to the business and therefore less likely to burn out from long hours, they are at the locus of information about the company, they are the only one who can do some activity (because of their title, role, insight, etc.), and/or they are more capable than everyone else.
Let’s just assume for the moment that this is all true. That said, founders are similar to everyone else in that they haven't figured out how to surmount the aforementioned practical impossibility of working long hours AND working smart. Moreover, I see founders working super hard as an even worse signal than their team members working hard. First, they are more prone to the psychological coping mechanism of working hard as a distraction from bigger issues. Second, the founder's hours may be an even more accurate predictor of the 7 fundamentals than their team members' hours, because the founder is more exposed to and responsible for the outcome of the size of the market, the quality of the product, the positioning, and the competition, and because the founder has more influence than anyone over the talent and the alignment of the team and whether they are delegating appropriately. Third, founders role-model behaviors for the rest of the company. If they work long hours, everyone else will see that as the definition of success.
When I see a founder working long hours for sustained periods of time, I see a big red flag flapping in the wind.
"Is this an argument in favor of 'balance'?" No – as I mentioned earlier, I don't claim to know how many hours of work is best for people or what level of work-life balance companies should aim for. I'm instead focused on what metrics matter for evaluating companies and individuals, and from that perspective, the ROI of your time is more interesting to me than the total hours worked.
"Best-in-class companies without long hours don't exist." I've invested in at least two of them: the examples mentioned near the start of this post. But the truth is that these founders are bashful about their efficiency; they don't broadcast their shorter hours, probably because they rightfully worry about what that signals in an industry that's obsessed with long hours. My hope is that more of those founders will come out of the woodwork as a result of this post.
"What you're proposing will result in a lazy culture." Gosh, that sounds awful. No, I'm not advocating for laziness. Per my earlier point, I'm advocating for intensity and sharp thinking. I want to see more companies where 80%+ of hours are spent building systems and addressing root causes. I want to see more founders who have decided to start a company because the market is undeniably ready and they're undeniably the right person to serve it, not for the sake of being a founder. I want to see more founders build categories that deserve to exist. I want to see more founders recognize the business value of aligning their team members.
And perhaps in addition, I'd like to see a substitute for work as religion. But that's a conversation for another day.
If you're interested in Talent Efficiency – or Work as Religion – comment below or respond to this email. I'd love to hear from you.
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