Steve Jobs once said that A-players hire A-players, and B-players hire C-players. It's one of the most quoted insights in Silicon Valley, but few people understand the deeper psychology behind why this happens. Max Levchin, co-founder of PayPal and Affirm, has spent years thinking about this phenomenon and has uncovered the hidden truth: it's not about competence—it's about fear.
The PayPal Mafia, as they came to be known, built some of the most successful companies in Silicon Valley. But their success wasn't just about technical brilliance or market timing. It was about understanding how to build teams that actually work, and that starts with understanding the psychology of hiring.
Table of Contents
- The Steve Jobs Insight: A-Players Hire A-Players
- Max Levchin's Deeper Truth: It's About Fear
- The Psychology of A-Players
- The Psychology of B-Players
- The Dangerous B-Player: Fear-Driven Hiring
- Why This Matters for Your Company
- How to Identify Fear-Driven B-Players
- Building a Culture of A-Player Hiring
- The PayPal Mafia Approach
- Real-World Examples
- Practical Strategies
- The Long-Term Impact
The Steve Jobs Insight: A-Players Hire A-Players
Steve Jobs' observation about hiring patterns has become one of the most quoted insights in Silicon Valley, but it's often misunderstood. The insight isn't just about talent—it's about the fundamental psychology of how people build teams and organizations.
Jobs understood that the quality of your team determines the quality of your company. But he also understood something deeper: the people you hire reveal who you really are. A-players want to work with other A-players because they know it will make them better. They seek out challenges, feedback, and opportunities to grow. B-players, on the other hand, often make hiring decisions based on different motivations.
The PayPal Mafia, including Max Levchin, Peter Thiel, Reid Hoffman, and others, took this insight and built some of the most successful companies in Silicon Valley. But their success wasn't just about hiring A-players—it was about understanding the psychology behind why some people make good hiring decisions and others don't.
Max Levchin's Deeper Truth: It's About Fear
Max Levchin has spent years thinking about why some people make good hiring decisions and others don't. His conclusion is profound: it's not about competence—it's about fear. "It's profoundly true," Levchin says of Jobs' insight. "But there should be an asterisk explaining why this is true. And the reason for this is fear."
The fear Levchin is talking about isn't the fear of failure or the fear of making mistakes. It's the fear of being found out. It's the fear that surrounds you with people who are better than you, because then it becomes obvious that you're not as good as you thought you were.
This fear drives some B-players to make terrible hiring decisions. Instead of hiring people who will challenge them and make them better, they hire people who will make them look good by comparison. They become the "tallest mushroom" in a field of shorter ones.
The problem isn't that B-players are bad at their jobs. Many B-players are perfectly competent and contribute real value to their organizations. The problem is that some B-players are driven by fear, and that fear leads them to make decisions that hurt the company in the long run.
The Psychology of A-Players
A-players have a fundamentally different relationship with excellence than B-players. They don't just want to be good at what they do—they want to be surrounded by people who will push them to be even better. This isn't arrogance or competitiveness; it's a deep understanding that excellence is a team sport.
A-players love working with other A-players because they know it will make them better. They want colleagues who will challenge their ideas, point out their mistakes, and push them to think more deeply about their work. They understand that the best way to improve is to surround yourself with people who are better than you.
This is why A-players hire A-players. They're not trying to build a team of people who will make them look good—they're trying to build a team of people who will make them better. They understand that the success of the team is more important than their individual success.
The PayPal Mafia understood this principle deeply. When they started their companies, they didn't just hire the best people they could find—they hired people who would challenge them and push them to be better. This is why they were able to build such successful companies: they understood that great teams are built on mutual respect and shared commitment to excellence.
The Psychology of B-Players
Most B-players are perfectly competent and contribute real value to their organizations. They're reliable, hardworking, and often excel at specific tasks that A-players might find boring or beneath them. The problem isn't that B-players are bad at their jobs—it's that some B-players are driven by fear.
The fear-driven B-player is someone who is competent enough to do their job well, but not confident enough to handle being surrounded by people who are better than them. This fear leads them to make hiring decisions that protect their ego rather than serve the company's interests.
When a fear-driven B-player becomes a manager, they face a choice: hire people who will challenge them and potentially make them look bad, or hire people who will make them look good by comparison. Too often, they choose the latter.
This isn't always a conscious decision. Many fear-driven B-players don't realize they're making hiring decisions based on fear. They might tell themselves they're hiring people who are "a good fit" or "won't rock the boat." But the underlying motivation is the same: they want to be the smartest person in the room.
The Dangerous B-Player: Fear-Driven Hiring
The dangerous B-player is the one who is driven by fear of being found out. As Levchin explains, these people think: "If I have too many B-players or A-players around, I will look terrible and it'll be very obvious that I'm just not that good. So the way to fix this is for me to become a manager and hire a bunch of people who aren't very good at all so that I'll look like the tallest mushroom."
This is the real danger of B-players. It's not that they're bad at their jobs—it's that some of them are willing to sacrifice the company's success for their own ego protection. They would rather be the smartest person in a mediocre team than be challenged by a team of excellent people.
The problem with this approach is that it creates a downward spiral. When you hire people who are worse than you, you're not just hurting the company—you're also limiting your own growth. You're creating an environment where you're never challenged, never pushed to improve, and never forced to confront your own limitations.
This is why fear-driven B-players are so dangerous. They don't just make bad hiring decisions—they create cultures that prevent growth and improvement. They build teams that are designed to make them look good rather than teams that are designed to succeed.
Why This Matters for Your Company
The impact of fear-driven hiring decisions extends far beyond individual teams. When B-players hire C-players, they create a culture of mediocrity that can spread throughout the entire organization. This is why understanding the psychology behind hiring decisions is so important.
Companies that are built on fear-driven hiring decisions tend to have several characteristics. They have high turnover because good people don't want to work in environments where they're not challenged. They have low innovation because people are afraid to take risks or suggest new ideas. They have poor performance because teams are designed to protect egos rather than achieve results.
The PayPal Mafia understood this principle deeply. When they started their companies, they made a conscious decision to hire people who would challenge them and push them to be better. This wasn't just about talent—it was about creating cultures that would support long-term success.
The companies that emerged from the PayPal Mafia—including PayPal, Tesla, LinkedIn, YouTube, and Yelp—all share this characteristic. They were built by people who understood that great companies are built on great teams, and great teams are built on mutual respect and shared commitment to excellence.
How to Identify Fear-Driven B-Players
Identifying fear-driven B-players is crucial for building successful teams. These people often exhibit several telltale signs that can help you spot them before they do too much damage.
Fear-driven B-players often avoid hiring people who are better than them in specific areas. They might say things like "we need someone who's a good fit" or "we don't want someone who will rock the boat." They might also avoid hiring people who ask challenging questions or who have different perspectives.
Another sign is how they handle feedback. Fear-driven B-players often become defensive when challenged or when their ideas are questioned. They might avoid situations where they might be proven wrong or where their limitations might be exposed.
They also tend to create environments where they're always the smartest person in the room. This might mean avoiding meetings with people who are more knowledgeable than them, or it might mean hiring people who are less experienced or less capable.
The key is to look for patterns in their behavior. Do they consistently hire people who are less capable than them? Do they avoid situations where they might be challenged? Do they create environments where they're always the most knowledgeable person?
Building a Culture of A-Player Hiring
Building a culture of A-player hiring requires more than just understanding the psychology behind hiring decisions. It requires creating systems and processes that support good hiring decisions and prevent fear-driven decisions from taking root.
The first step is to create clear criteria for what constitutes an A-player in your organization. This isn't just about technical skills or experience—it's about the qualities that make someone a good team member and a good contributor to your culture.
The second step is to create processes that prevent fear-driven hiring decisions. This might include requiring multiple people to be involved in hiring decisions, creating feedback mechanisms that allow team members to voice concerns about hiring decisions, or implementing systems that track the performance of new hires over time.
The third step is to create a culture that values excellence over ego. This means celebrating people who challenge the status quo, rewarding people who take risks and learn from failures, and creating environments where people feel safe to admit their limitations and ask for help.
The PayPal Mafia understood this principle deeply. When they started their companies, they created cultures that valued excellence over ego. They hired people who would challenge them, they created environments where people felt safe to take risks, and they built systems that supported long-term success.
The PayPal Mafia Approach
The PayPal Mafia's approach to building teams was based on a deep understanding of the psychology behind hiring decisions. They didn't just hire the best people they could find—they hired people who would challenge them and push them to be better.
This approach was based on several key principles. First, they understood that great teams are built on mutual respect and shared commitment to excellence. Second, they understood that the best way to improve is to surround yourself with people who are better than you. Third, they understood that fear-driven hiring decisions are the enemy of long-term success.
The results speak for themselves. The companies that emerged from the PayPal Mafia have created trillions of dollars in value and have transformed entire industries. But their success wasn't just about talent—it was about understanding how to build teams that actually work.
The key insight is that great teams are built on trust, respect, and shared commitment to excellence. When you hire people who are better than you, you're not just building a team—you're building a culture that supports long-term success.
Real-World Examples
The impact of fear-driven hiring decisions can be seen in companies throughout Silicon Valley and beyond. Some of the most successful companies in the world were built by people who understood the importance of hiring A-players, while some of the most spectacular failures were caused by fear-driven hiring decisions.
Apple under Steve Jobs is a perfect example of A-player hiring. Jobs was known for hiring people who would challenge him and push him to be better. He surrounded himself with people like Jony Ive, who could challenge his design decisions, and Tim Cook, who could challenge his operational decisions. This created a culture of excellence that produced some of the most innovative products in history.
On the other hand, companies like Enron and Theranos are examples of what happens when fear-driven hiring decisions take root. These companies were built on cultures of fear and ego protection, where people were afraid to challenge the status quo or point out problems. The results were catastrophic.
The key difference is in the culture that these companies created. Companies that hire A-players create cultures of excellence, where people are encouraged to challenge each other and push each other to be better. Companies that hire based on fear create cultures of mediocrity, where people are afraid to take risks or suggest new ideas.
Practical Strategies
Building a culture of A-player hiring requires practical strategies that can be implemented in any organization. These strategies are based on the principles that made the PayPal Mafia so successful.
The first strategy is to create clear criteria for what constitutes an A-player in your organization. This isn't just about technical skills or experience—it's about the qualities that make someone a good team member and a good contributor to your culture. These criteria should be specific, measurable, and aligned with your company's values and goals.
The second strategy is to create processes that prevent fear-driven hiring decisions. This might include requiring multiple people to be involved in hiring decisions, creating feedback mechanisms that allow team members to voice concerns about hiring decisions, or implementing systems that track the performance of new hires over time.
The third strategy is to create a culture that values excellence over ego. This means celebrating people who challenge the status quo, rewarding people who take risks and learn from failures, and creating environments where people feel safe to admit their limitations and ask for help.
The fourth strategy is to create systems that support long-term success. This might include mentorship programs that help new hires integrate into the culture, feedback systems that allow people to learn from their mistakes, or recognition programs that celebrate people who contribute to the team's success.
The Long-Term Impact
The long-term impact of fear-driven hiring decisions extends far beyond individual teams or departments. When B-players hire C-players, they create a culture of mediocrity that can spread throughout the entire organization and ultimately determine the company's fate.
Companies that are built on fear-driven hiring decisions tend to have several characteristics that make them vulnerable to disruption and failure. They have high turnover because good people don't want to work in environments where they're not challenged. They have low innovation because people are afraid to take risks or suggest new ideas. They have poor performance because teams are designed to protect egos rather than achieve results.
The PayPal Mafia understood this principle deeply. When they started their companies, they made a conscious decision to hire people who would challenge them and push them to be better. This wasn't just about talent—it was about creating cultures that would support long-term success.
The companies that emerged from the PayPal Mafia—including PayPal, Tesla, LinkedIn, YouTube, and Yelp—all share this characteristic. They were built by people who understood that great companies are built on great teams, and great teams are built on mutual respect and shared commitment to excellence.
The Bottom Line
Max Levchin's insight about fear-driven hiring decisions reveals a fundamental truth about building successful teams and organizations. It's not just about hiring the best people—it's about understanding the psychology behind hiring decisions and creating cultures that support excellence.
The key insight is that great teams are built on trust, respect, and shared commitment to excellence. When you hire people who are better than you, you're not just building a team—you're building a culture that supports long-term success.
The PayPal Mafia's success wasn't just about talent—it was about understanding how to build teams that actually work. They understood that the best way to improve is to surround yourself with people who will challenge you and push you to be better.
The choice is yours. Will you build teams that are designed to make you look good, or will you build teams that are designed to succeed? The answer to this question will determine not just the success of your team, but the success of your entire organization.
Key Takeaways
- Fear drives poor hiring decisions - B-players who are afraid of being found out will hire people who make them look good by comparison
- A-players hire A-players - They want to be challenged and pushed to be better
- B-players can be valuable - Many B-players are competent and contribute real value, but fear-driven B-players are dangerous
- Culture matters more than talent - Great teams are built on mutual respect and shared commitment to excellence
- Systems prevent fear-driven decisions - Create processes that support good hiring decisions
- Long-term thinking is crucial - Fear-driven decisions create cultures of mediocrity that hurt long-term success
- The PayPal Mafia got it right - They understood that great companies are built on great teams
- The choice is yours - Build teams that make you look good, or build teams that succeed
Remember: The people you hire reveal who you really are. Choose wisely.
This article is based on Max Levchin's insights about hiring psychology and Steve Jobs' famous observation about A-players and B-players. The PayPal Mafia's approach to building teams has been studied extensively and has influenced countless companies in Silicon Valley and beyond.
Sources and further reading:
- Max Levchin's insights on hiring psychology
- Steve Jobs' observations about A-players and B-players
- The PayPal Mafia's approach to building teams
- "The Lean Startup" by Eric Ries
- "The Hard Thing About Hard Things" by Ben Horowitz
- "Good to Great" by Jim Collins
- "The Innovator's Dilemma" by Clayton Christensen