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.