(Photo credit) Lately, I’ve noticed a startling paradox in Silicon Valley. I see shitty companies hiring more engineers than they know what to do with, while other, great companies struggle to fill open roles. Now my definition of “shitty” is completely subjective, but I bet you too can name some ridiculous start-ups that no sane engineer should work for. Meanwhile, great companies catering to huge markets, logical business models, amazing user growth, and cash in the bank from top investors, are having a hard time hiring tech talent. What gives?
I call this phenomenon the developer divide. It occurs after a company has cracked a user need and is gaining traction, the VCs have started piling on the cash and the servers are melting from all the users. But there’s one big problem. The company is having trouble hiring engineers to keep up with the torrid pace of growth.
Take Pinterest, the latest toast of Silicon Valley. The company is growing faster than Facebook when it was of equivalent size. Andreessen Horowitz, some of the smartest money on Sand Hill Road in my opinion, just invested in a $27 million dollar round only 5 months after the company closed its series A. The company has umpteen different ways to monetize and few serious competitors. Of course, the company is no sure thing and has plenty of risks ahead, but any investor could make a case for why this company is a good bet. But despite the opportunity, a LinkedIn search reveals the company still employs only 15 people.
The developer divide most often occurs when the company’s product is targeted to a distinctly non-engineer user base. As opposed to companies which build products other engineers use, the developer divide presents itself when technical talent just can’t see why anyone would actually use the service. Pinterest is a perfect case in point. Rural American women are the primary users of Pinterest, and though they use the site voraciously, their interest in Pinterest doesn’t draw dude developers.
But don’t feel too bad for Pinterest. The developer divide is a temporary vacuum that forward-thinking engineers quickly fill. Pinterest joins a long list of great companies, which had difficulty recruiting engineers who didn’t grasp the value the company was creating. Facebook, Zynga, and Yelp, all catered to the non-engineer user and all found themselves in the developer divide in their early days, but no longer. As the world began to realize these companies were on to something big, the divide closed and engineers began wanting in. How many of us wish we would have joined Facebook in 2006, when everyone was calling Mark Zuckerburg a moron for turning down Yahoo’s billion dollar offer?
Time and again, young, great companies explode out of nowhere, only to be written off by those who don’t get it. They write off the company as nothing new and can’t understand the user growth. Skeptics are unable to see the site through the eyes’ of its users and they dismiss the potential for the site to go mainstream. Remember when Facebook was only for horny college kids? With hindsight however, jumping on board during the developer divide would have been a huge, career-making win and cynics are often left with regrets.
So how do you know if a company is in the developer divide?
1. Look for an obvious secret
The developer divide is characterized by a gap in information. The company knows something about their user, which is not obvious to the outside world, but is the key to the business’s success. However, to those who do not know this insight, the company appears to be little more than a novelty. I call this phenomenon the obvious secret. All great web companies started off as toys. It’s the non-consensus companies, those that others write off, but who end up being right about their vision of the future, which produce amazing financial returns and change the world.
2. Look for a new user habit
In the age of infinite ways for users to spend their time and attention, the value created by all successful web companies rests on one thing, the constancy of their users’ habits. A habit is defined as a series of behaviors, which occur nearly involuntarily. It’s the programmed response you have when you hear about a book you want to buy and think of Amazon instantly. It’s the spontaneous craving you have to check Twitter when you have a spare 30 seconds. Getting people to do something they’ve not done before, and getting them to do it regularly, often, and spontaneously, is damn hard. Wiring customers’ brains to habitually use a particular company’s product is the crux of value creation on the web, so look for companies that are creating rabid users of a new behavior.
3. Look for a huge potential market
This is self-explanatory but can’t be emphasized enough. The “big market test” is the first screen investors use to weed out companies and it should be among engineers’ requirements when assessing a new opportunity. Of course, while you could do your own market analysis and compute the company’s TAM, SOM, and SAM, a nifty shortcut is to piggyback on the VC’s hard work. Since institutional investors don’t invest in deals, which go after markets smaller than $1 billion, it’s a pretty good bet to take cues from top name investors on this criterion. Besides, VC’s all have a Roman galley of MBAs working in their basement doing nothing but market sizing, so why do all that hard work yourself?
Now, as the Valley froths with angel investor money and soaring engineer salaries, great software developers find themselves in an envious position. Many tech professionals can write their own ticket, either within an established company or by starting their own businesses. However, missing out on joining great companies confronted with the developer divide, that fleeting opening when few see the scale of the opportunity, can be a costly and regrettable mistake.
Note: I have no affiliation or investment in any company mentioned in this post.
Top Consumer Psychology Articles
- The New Norms of Business: Interview with Nathalie Nahai
- Can We Regulate Social Networks To Curb Addiction—Without Making Them Suck?
- So, You Want To Become a Great Product Manager? [Q&A with Jackie Bavaro]
- Will Clubhouse be a Habit or Has-Been?
- The One Fitness App That Hooked Me For Good
- Here’s How Fortnite ‘Hooked’ Millions
- How Apps Can Shape Your Future Self
- How Netflix’s Customer Obsession Created a Customer Obsession
- Want to Design User Behavior? Pass the ‘Regret Test’ First
- How to Trigger Product Usage that Sticks
- How to Get People to Help Each Other, Online and Off
- Here’s How Amazon’s Alexa Hooks You
- How to Use Psychology to Make Persuasive Video
- How to Use Personality Science to Drive Online Conversions
- The Unbelievable Future of Habit-Forming Technology
- The Secret Marketing Power of Evolutionary Psychology
- Don’t Ask People What They Want, Watch What They Do
- How Cognitive Biases Can Help (and Hurt) Your Business
- What Most People Don’t Know About Behavioral Design
- How to Start a Career in Behavioral Design
- Your World is Full of Placebo Buttons (and That’s a Good Thing)
- How to Build Technology that Feels Like a Friend
- 3 Pillars of the Most Successful Tech Products
- Here’s How to Ethically Manipulate Other People
- How Two Companies Hooked Customers On Products They Rarely Use
- How to Hook Users in 3 Steps: An Intro to Habit Testing
- Die Dashboards, Die! Why Conversations Will Reinvent Software
- The Secret to Sending Emails and Notifications That Work
- How to Win Your Competition’s Customers
- Hooked for Good: How Habit-Forming Products Improve Lives
- Good Products Start With Good Questions
- Human + A.I. = Your Digital Future
- Why ‘Assistant-As-App’ Might Be the Next Big Tech Trend
- People Don’t Want Something Truly New, They Want the Familiar Done Differently.
- 4 Ways to Win Your Competitor’s Customer Habits (Slides)
- Here’s Why You’ll Hate the Apple Watch (and the Important Business Lesson You Need to Know)
- The Secret Psychology of Snapchat
- The Psychology of Notifications: How to Send Triggers that Work
- How Technology Tricks You Into Tipping More
- Building Community Starts with Understanding People
- When Persuasion Becomes Deception
- Mastering Pricing Principles
- A Handy Behavioral Design Toolkit
- Onboarding Matters – Getting Users Engaged in your Product
- The Limits of Loyalty: When Habits Change, You’re Toast
- Dual Process Theory: Is Your Product the Elephant or the Rider?
- 4 Ways to Use Psychology to Win Your Competition’s Customers
- Web Psychology – The Science of Online Persuasion
- Developing User Empathy with Design Sprints
- The Real Reason “Stupid” Startups Raise So Much Money
- Understanding the Psychology Behind Game Design
- The Psychology Behind Why We Can’t Stop Messaging
- How to Do Effective User Research
- Context Driven Design (The “Context Effect”)
- The Psychology of a Billion-Dollar Enterprise App: Why is Slack so Habit-Forming?
- Writing Copy for Your Reader’s Brain
- Designing Habit-Forming Products
- Framing Reward is as Important as Reward Itself
- Games, Play, and Motivation
- How Scarcity & Impatience Drive Irrational User Behavior
- Should You Listen To Your Users or Your Data?
- Emotional Engagement – Designing with the Heart in Mind
- A Free Course on User Behavior
- It’s Not All Fun And Games: The Pros and Cons of Gamification at Work
- Product Psychology: The 3 Things Everyone Should Know About
- Getting Traction: How to Hook New Users
- Designing for Behavior Change Book Review
- The Sneaky Trick Behind the Explosive Growth of the Kardashian Game
- How Successful Companies Design for Users’ Multi-Device Lives
- The Link Between Habits and User Satisfaction
- What Triggers The Best Word of Mouth Marketing?
- What Tech Companies Can Learn from Rehab
- The Secrets of Addictive Online Auctions
- Teach or Hook? What’s the Real Goal of Online Education?
- Using Mind Control to Raise Startup Cash
- How To Build Habits In A Multi-Device World
- How To Cope with Your Insane Jealousy Of The WhatsApp Deal
- Why Do Fads Fade? The Inevitable Death Of Flappy Bird
- You’d Be Surprised By What Really Motivates Users
- Nostalgia: A Product Designer’s Secret Weapon
- How You Can Help Users Change Habits
- Is “Lean Startup” Right for Your Idea?
- Hunting for Habits: Keying in on smart design to make a product irresistible
- Are Companies Too Obsessed With Growth? How to Measure Habits
- Refresh: The App a Secret Agent Would Love
- Angel or Devil: Who’s Really Investing In Your Start-Up?
- In 10 Years, We Won’t Use Personal Technology
- 4 Simple Things I Did to Control My Bad Tech Habits
- “Yes, And”: The Two Words that Created a #1 App
- From Laid to Paid: How Tinder Set Fire to Online Dating
- What if In-App Purchases Came to Real Life?
- Hooking Users One Snapchat at a Time
- How To Save Your Startup From The “Spotlight Effect”
- Bible App: Getting 100 Million Downloads is More Psychology Than Miracles
- How to Boost Desire Using the Psychology of Scarcity
- Marketplaces & The Curse of the Network Effect
- Today’s Behaviors, Tomorrow’s Startups
- Venture Capital and The Superstitious Investor
- The Future is Driven by Interface Changes
- Why Business is Addicted to Habits
- Viral Loops Or Viral ‘Oops’?
- Making a Marketplace
- What Killed Turntable.fm?
- What You Don’t Know About Human Intuition Can Hurt You
- Designing to Reward our Tribal Sides
- New Video – “Hooked: Building Habit-Forming Products”
- How Technology is Like Bug Sex
- Ways To Get People To Do Things They Don’t Want To Do
- The Network Effect Isn’t Good Enough
- Mass Persuasion, One User At A Time
- How Investment Drives Engagement (Slides)
- Getting Your Product Into the Habit Zone
- Where Have The Users Gone?
- Infinite Scroll: The Web’s Slot Machine
- Designing User Habits Video
- Psychology of Sports: How Sports Infect Your Brain
- This is Your Brain On Boarding: How to Turn Visitors Into Users
- User Investment: Make Your Users Do the Work
- Behavior by Design Video
- When Designing for Good Is Bad
- Stop Building Apps, Start Building User Behaviors
- The Next Secrets of the Internet
- User Growth and Engagement: A Hacker Metric
- Spotting the Next Facebook: Why Emotions are Big Business
- The Billion Dollar Mind Trick: An Intro to Triggers
- Why Everyone Hates I.T. People
- Hooking Users In 3 Steps: An Intro to Habit Testing
- Abolish The Reference Check
- Variable Rewards: Want To Hook Users? Drive Them Crazy
- How to Design Behavior (The Behavior Change Matrix)
- How To Design For “Normals”
- The Hook Model: How to Manufacture Desire in 4 Steps
- User Habits: Why Startups Must Be Behavior Experts
- What Is, and Is Not, Your Product’s Job
- Pinterest’s Obvious Secret
- Personalized eCommerce Is Already Here, You Just Don’t Recognize It
- Where is the Web Going?
- The Developer Divide: When Great Companies Can’t Hire
- Being a Quitter Makes You a Good Entrepreneur
- Behavior by Design
- Why You Should Run Your Business Barefoot
- Are you a Startup Star, Wacko, or Wannabe?