Introduction
How valuable is experience in a professional setting? For years, organizations around the world—both for-profit and non-profit—have primarily focused on hiring people with a certain number of years working in a given role. Similarly, investors are likely to favor entrepreneurs who have prior experience in the industry in which they are starting a company. The main argument for this preference states that people who have performed well in a specific role or industry have a higher chance to succeed in the future. The logic behind this rationale posits that one’s accumulated knowledge in a specific industry or role leads to intimate understanding and unique insights about the problems in the space, and makes them better prepared to successfully overcome the challenges that may arise in the future.
However, this school of thought ignores the fact that a lot of skill sets are transferable, and that one can often succeed without prior knowledge of a specific industry or experience in it.[1] Abilities such as communicating clearly, strategic thinking and creative problem solving can be applied across a variety of roles and industries, even if a person has had no previous exposure to a given position or space. This is especially true for entrepreneurs who create disruptive innovations that often end up replacing the incumbents, creating new markets, or vastly expanding existing ones.
The Value of Experience Is Not Constant
The common rationale around using experience to evaluate talent is that the time a person has spent in a specific space or role would equip them with intimate understanding of the way this industry functions, which would enable them to make better decisions, once they find themselves in a leadership position. While for most of human history this has held more or less true, the last twenty years have brought about technological change that has significantly altered many industries.[2] Best practices that worked within a given industry ten years ago are unlikely to function just as well nowadays. In fact, they may have become obsolete due to technological changes. The rapid pace of disruption means that the experience someone has in a certain domain is likely becoming less valuable, as their industry is bound to change at an accelerated rate going forward. However, transferable skills will remain highly relevant. This means that individuals with the ability to think critically and innovate could easily apply their talents across different industries, instead of spending their careers in a single vertical industry.
Discovering Problems and Inefficiencies is not Proportionately Related to Experience
Given that the world is changing quite rapidly, the relevance of one’s experience does not hold steady. In fact, those who have grown up in a specific industry are likely to follow practices they have learned throughout their careers without questioning the very rationale behind the established norms. This often leads to a lack of innovative solutions because incumbents may not notice certain problems or deem them impossible to solve. It is no coincidence that some of the most innovative companies of our time have been started by people who had no prior experience or knowledge of a given space. Jeff Bezos (founder & CEO of Amazon) and Katrina Lake (founder & CEO of StitchFix) had never worked in retail, yet both of them have created multi-billion-dollar companies. Steve Jobs was a college dropout with no engineering experience, yet he created one of the most iconic companies in recent history—Apple. Elon Musk had never made cars or rockets but has managed to create the first mass-produced electric car at Tesla and the first-ever reusable rocket at SpaceX. The list goes on and on.
As these examples show, people who have little or no industry experience oftentimes have an advantage when it comes to spotting problems and inefficiencies in a space. Moreover, since they are unburdened by prior norms of what can and cannot be done, they are better positioned to successfully solve challenges that were previously deemed impossible by industry experts.
Why Industry Novices Are So Innovative
Since most industry experts are less likely to question established norms, they will most likely incrementally improve existing processes. The reluctance or inability to self-disrupt one’s business is quite often the root cause behind large companies falling behind smaller, more agile competitors.[3]
In contrast, industry novices are unencumbered by the knowledge of how things are and have always been done. Their curiosity and naivety lead them to approach industry problems with fresh eyes and ask uncomfortable questions about the “why” behind established norms. The capacity and courage to question existing assumptions usually lead industry newcomers to the root cause of problems and enable them to see more clearly why certain practices were put in place. Instead of reasoning by analogy and gradually improving upon existing processes, they are likely to tear down existing models and suggest radical changes that would alter the industry or the company’s business, often creating or unlocking new markets in the process. This kind of first principles thinking is behind some of the most innovative technologies the world has seen, such as personal computers and reusable space rockets—things that industry experts once considered impossible or absurd.[4]
Why Experience Depreciates in Value
Industry-specific experience becomes much less relevant, giving way to creativity, drive, and ability to continuously reinvent oneself. Technological innovation is transforming industries at a rapid pace and the widely established norms and assumptions are being replaced by new, more innovative solutions. Keeping up with these changes is necessary for every professional who desires to stay relevant and advance their career. Embracing the new direction and innovative practices that come with it usually requires letting go of methods that were previously considered the gold standard. This is especially true for entrepreneurs and early startup employees whose jobs consist largely of inventing innovative solutions that disrupt the status quo.
As industries continue to evolve, the most important skill one could have would be the ability to acquire new skills quickly and effectively. This is further emphasized by the fact that technology will likely make many jobs obsolete, while giving rise to occupations that none of us can currently imagine.[5] Forward-thinking entrepreneurs and innovators will therefore seize the opportunity to create new markets, which in turn will generate demand for more roles that are currently non-existent. This is a trend that we are already experiencing—a large portion of present-day jobs did not exist ten years ago—and one that will only accelerate going forward.
A Better Way to Evaluate Talent and Ability
If experience depreciates in value as the world changes, how should innovative leaders assess talent? The authors believe that passion, intrinsic drive, and adaptability are the best determinants of business and entrepreneurial accomplishment. Based on our experience and observations, a person’s motivations—defined as one’s inner sense of purpose and reasons for choosing a specific career track—provide solid indication of their chances to succeed, especially in roles that require a high level of initiative and innovative thinking.[6] That is why founders who start a company in order to solve a problem and create the future they would like to see, are usually the ones who end up making a substantial difference in the world. Similarly, early startup employees need to be highly driven, adaptable, and committed to the company’s mission in order to thrive in the rapidly changing environment of a young business. However, current best practices for evaluating talent are optimized to predict success mostly based on prior experience in a given industry or role, and rarely take into consideration the reasons behind a person’s professional choices. While past accomplishments explicitly show that someone has previously succeeded, they fail to explain how and why one acquired their skills or chose a certain career path. In addition, the assumption that a person can only perform well if they have worked in the same role or industry before fails to account for the fact that most skills are transferable. The qualities that define a top performer, such as work ethic, strategic thinking, creativity, and personal motivations, are not confined to one specific domain. Individuals who exhibit these qualities and have a demonstrated track record of success are likely to learn quickly and thrive in new roles and spaces that utilize their existing skills.
Over the course of our startup journey the authors have had the pleasure of working with many talented people—both fellow entrepreneurs and early startup employees the authors hired—and have noticed that the people who deliver exceptional results often may not be the ones with the most experience. When the authors hired a candidate based on their past experience alone, they observed that such employees were often outperformed by their less experienced counterparts. The authors attribute this tendency to the fact that an individual’s career choices often may not be fully aligned with their internal drives and interests. A person is much more likely to deliver superb results if their motivation comes from within than they would if they picked a career based on external markers, such as money or status, which still dictate the career paths chosen by a disproportionate amount of the population.
The authors have discovered that evaluating talent based solely on past accomplishments does not suffice and can often cause startup leaders and investors to overlook talented individuals. A better approach would be to uncover the “why” behind a person’s past professional choices and understand the contexts in which these choices were made. People in leadership positions need to rethink the talent evaluation process by incorporating assessments that deliver a more qualitative understanding of each candidate’s passions and intrinsic motivations in order to predict success more accurately. For example, the authors always ask candidates what they would like to achieve within their lifetime. An unusual question like this typically reveals what a person values the most, whether they are driven by a desire to create or artificial status markers and what is the true nature of their long-term goals.
While this applies to all roles that require a high level of initiative, it is especially true in an entrepreneurial context. A deeper understanding of the rationale behind an entrepreneur’s decision to start a new venture can offer some insight into the probability of a company’s success in the long run. Similarly, when a company pivots—a change in direction designed to help reach product-market fit faster[7]—this can provide valuable insight into the company’s long-term trajectory. In both cases, an entrepreneur should be motivated by a desire to solve a problem about which he or she deeply cares and has oftentimes experienced first-hand. Founders who strategically adjust their company’s direction and then execute towards solving the original problem are more likely to survive and find product-market fit. On the other hand, founders who pivot solely based on market size and capturing market value often find themselves demotivated and burned out because they end up working on a problem that does not carry enough meaning for them. Therefore, a founder’s reasons for solving a problem are what enables them to get through the hardships of starting a business and ultimately enables their company to succeed.
Getting Outside the Box
Breakthrough innovation rarely stems from industry norms.[8] That is why the founders of widely successful startups typically dismantle best practices within a given space in order to create new markets or serve a previously underserved customer segment. A startup’s greatest assets are its people because they choose how to deploy its scarce resources in a way that would benefit the company the most. Both startup founders and employees need to be exceptionally passionate about their work, able to question the status quo and disregard commonly held “wisdom.” However, most talent evaluation processes tend to favor people whose past accomplishments are in-line with industry standards.
For investors looking for outsized returns, funding startup founders with industry experience may seem like a safer bet, but it rarely pays off. Similarly, startups that optimize for hiring “expert” employees may make it more difficult to maintain an innovative culture. While in industries like biotech and medical devices such a pick would likely be the best possible choice, the truth is that most verticals do not require this level of subject matter expertise. For instance, a marketer who got their start designing campaigns for enterprise software could easily utilize his skill set in a consumer-focused role. The key to remaining competitive is investing in people with fresh ideas who are not afraid to go against the status quo. Such people usually have a deep sense of purpose and will stop at nothing to realize their vision and create new breakthroughs. No matter if they are recent graduates or seasoned executives, they tend to have the capacity to look beyond self-imposed industry limits and come up with unique solutions to the problems they encounter. Identifying such individuals can be done by asking questions that reveal their motivations for choosing a specific career path, acquiring a skill or solving a problem and the approach they took to achieving their goals. The answers will divulge much about each person (e.g. whether they love their work, if they are an independent thinker, etc.) and their internal drivers, making it easier to predict success and place the right bet than simply assessing their resume.
Intrinsic Drivers Matter More than Experience
Is experience really the gold standard in a world that is rapidly changing? With the current pace of technological innovation, industry-specific and job-specific experience is quickly becoming obsolete. In the long run, it is the motivations and passions of an individual that keep them relevant throughout changing times by helping them innovate and continuously reinvent themselves and the world around them. Startups and investors that seek to earn and maintain leadership positions in the market need to prioritize finding people whose motivations are deeply aligned with the work that they do. Relying solely on experience to assess talent can make companies less innovative and cause investors to miss out on many lucrative deals.
There is a large pool of exceptional people from non-traditional backgrounds who could create unparalleled value. They are not hard to find, as long as leaders are looking for the right indicators. In fact, the founders and early employees of companies like Apple, Airbnb and Amazon had unconventional backgrounds, yet redefined the way we live. What they had in common was a deep sense of purpose, coupled with the unrelenting desire to solve interesting problems and defy the status quo. Such people thrive in uncertainty and are not discouraged by challenges or setbacks. They have the ability to regularly question their own assumptions in order to discover the truth and continue innovating. Investing in them would not only produce large returns, it will be good for the future of humanity.
