Dear Leaders,

A few decades ago, I heard Bill Gates give an interview about Microsoft’s success. People think Microsoft is a technology company, he said, and we are. But we’re a recruiting company first. We’ve perfected the art of recruiting.

I was a kid then, but that comment always stayed with me – like something we hear that deeply challenges a core belief and we suspect it’s correct without quite knowing why. The most valuable software company on earth, and its founder is telling you the core competency is not code, but hiring.

He went on to explain the arithmetic. Think about what a bad hire actually costs you: the search, the interviews, the onboarding and training, the long stretch where you slowly confirm what you suspected early on, then the firing, the severance, and the restart –  except now a year has passed, the role is still vacant, and the work that role was supposed to produce never really happened.

Brad Smart, who has assessed thousands of executives and wrote the book Topgrading, studied mis-hire costs across more than fifty companies and put the figure at five to twenty-seven times the person’s salary. Smart sells the cure, so discount the number if you like. Cut it in half. The math is still ugly. Tony Hsieh estimated that his cumulative hiring mistakes at Zappos cost the company well over $100 million – and that was his own scorecard.

When I ask a leadership team to estimate the cost of a mis-hire they remember, the first number is low. When they talk it through together, the number rises. It never goes down.

So, what’s an A player?

The cleanest definition I’ve found comes from Brad Jacobs, who has built eight back-to-back, multi-billion-dollar companies and describes the test in his book, How to Make a Few Billion Dollars. Imagine the person walks into your office and resigns. If your honest reaction is relief – you were probably going to let them go anyway – that’s a C player. If your reaction is inconvenience – you’ll need to replace them, but you’ll manage – that’s a B player. If your reaction is quiet panic, that’s an A player.

Run your leadership team through that test. Picture each person, one at a time, resigning tomorrow morning. Notice what your stomach does. That reaction is more accurate than your performance reviews.

But a gut reaction is only a diagnostic. Before we permanently file everyone into three buckets, we should define what is actually in them, because the labels hide as much as they reveal.

In my work I rarely meet a clean A or a clean B. What I meet are composites. The brilliant strategist who destroys morale. The extraordinary salesperson who cannot manage. The engineer everyone depends on who cannot delegate. A CEO will send me a senior leader who is an A in vision and results but a C in exactly one behavior – giving direct feedback, delegation, follow-through, executive presence. The average grade hides the only information that matters: which specific capability is bottlenecking an otherwise exceptional person. We isolate it and work on it deliberately. The executive doesn’t suddenly become a different person; the bottleneck simply stops distorting everything else they already do well.

That is what an A player actually is – not simply someone who produces. Research keeps finding the same cluster of traits: driven and resourceful, consistently high-performing across jobs and bosses, trusted by peers, humble rather than egomaniacal, and – tellingly – surrounded by other high performers. Notice how much of that list is about something other than raw output. An A player can still have a weak spot. The weak spot does not define the whole.

A B player is competent and reliable, but usually not uniformly so. They do the job as defined, hit reasonable expectations, and may have more upside than their current performance suggests. There is nothing inherently wrong with a B player. Often it is not a permanent category, but a diagnosis of where targeted work is needed.

A C player produces less than they consume – in output, in management attention, in the morale of everyone adjacent to them. Sometimes the person is in the wrong role. Sometimes a specific weakness has been ignored for too long. And sometimes the gap is not coachable. Leaders need the judgment to tell the difference. That is what keeps standards from turning into labels, and labels from becoming excuses.

Many executives treat carrying Bs and Cs as an unavoidable reality of scale – and a team of mostly As as a lottery outcome, something that happens to companies with better luck, better brands, and deeper pockets. Jacobs treats it as a target. “My goal is to have every position in the company filled by an A player. Inevitably we’ll have some Bs, but we don’t want any Cs at all. We’re a C-free zone.”

So: A players wherever possible; B players only where necessary, and watched closely;  C players removed quickly once identified – not managed around, not given a fourth quarter to turn it around. He has now run that standard through eight companies, in industries as glamorous as waste hauling. Ask him his edge and he won’t say strategy or capital. He’ll say he hires exceptionally talented people who think big, and refuses to keep the ones who don’t.

Which means a team that is not mostly As is a choice. Companies justify the choice as loyalty, or a tough hiring market, or recruitment fatigue. Some leaders make it with open eyes – they know what the standard costs them and they pay for it deliberately. That is a defensible choice. What isn’t defensible is calling it unavoidable.

Human capital is the highest-leverage lever in any business. Even in the age of AI, humans decide which tools to buy, how to deploy them, and what strategy to run – the lever above the lever is still a person, and that is a letter of its own. Compromise on the quality of your people and you dilute the intelligence directing every technology, process, and strategy in the company. You can accept a lower standard on your team. Just know it’s a deliberate decision to leave enterprise value on the table.

Steve Jobs used to warn about what he called the “bozo explosion”

The underlying logic goes like this. Great people like working with other great people. Managers who want to be the strongest person on their team hire slightly below their own level, and those hires eventually become managers and do the same.

A players hire A players. B players hire C players. C players hire D players.

Every bad hire you make is not just one compromise; it is the start of a hiring chain, and those  chains compound.

In astrophysics, the event horizon is the boundary around a black hole beyond which nothing can escape its gravitational pull. Once an object crosses that boundary, the gravity is so overwhelming that there is no force capable of bringing it back out.

Companies have one too. It is the tipping point where you have hired or promoted so many poor fits that recovery becomes mathematically and culturally impossible. That tipping point is the Bozo Event Horizon.

Once a company crosses it, the culture becomes self-reinforcing. Politics beats competence. Conformity beats independent thinking. Process beats judgment. Your A players leave because they no longer want to work there, and the remaining managers hire even more people exactly like themselves. The spiral eventually overwhelms every other advantage your company has: strategy, capital, technology, brand.

Preventing the company from crossing the Bozo Event Horizon is one of the CEO’s highest-leverage responsibilities. It begins with the people you choose to put in positions of influence.

The impact of an executive is asymmetric. A director who mis-hires costs you a team. An executive who mis-hires costs you a division, because their bad hires make their own bad hires. The right executive doesn’t simply add to the organization; they multiply it. Their standards propagate downward, their hires lift the average, and their decisions compound in your favor while you sleep. Because an executive’s output isn’t tasks. It’s decisions and hires.

Your CFO might object: A players cost more. They do. They know what they are worth, and usually you’ll need to pay it. But the difference between an A and a B in complex work is not 10 or 20 percent – and salary is visible while value is not. Try to save $50,000 by hiring the B instead of the A, and you may pay for that decision many times over: in the work that never happens, the projects that move slower than they should, the extra hours spent checking and correcting, and the top performers who conclude the environment no longer matches their pace. In practice, it is almost impossible to overpay an A player in a critical role.

This leaves us with the practical challenge: what do you do with the B and C players you already have?

Focus on three things. First, sharpen who you place into critical roles. Second, give promising but uneven people targeted help on the one or two behaviors holding them back; that is where composites become opportunity. Third, reduce the number of true C players before the culture pays for your reluctance – and decide within a quarter whether the gap is coachable, structural, or a matter of fit, because those are three different problems and only the first is solved with patience.

None of this means every person can be made into an A. Keeping a chronic C in a role where they will never excel is not neutral. Doing nothing is also a decision. It simply hides the bill by spreading it out over time.

Most strategic decisions today last a quarter. Most capital investments last a few years. Executive hires often last a generation. They don’t simply make decisions; they decide who gets hired next, what gets rewarded, and what excellence looks like. Long after they are gone, the organization still resembles their judgment.

That is why hiring is not an HR process. It is the mechanism through which companies reproduce themselves. Over time, companies become the people they repeatedly choose.

Choose carefully.

Onward,
Hamza