March 8, 2025
Have you ever heard of “The Talent Trap?”
We’re all familiar with the liquidity trap — where the only way out of a growth plateau is money, but you don’t have that money.
So you get stuck.
What Is the Talent Trap?
The talent trap is the same thing but with people.
→ You need better talent to solve your problems.
→ But better talent costs better money.
→ You don’t have the money.
→ So you do it yourself.
→ But you’re stretched thin, and not nearly as good as an A player.
→ So the problem persists, slowing down growth, keeping you stuck.
And just like that, you’re circling the drain.
Real Examples
In our peer group call yesterday, one entrepreneur talked about this.
“In my case, the person I need is a salesperson. But to hire them, I’d need $250,000. The business can’t sustain $250,000 right now. So I do it myself—but I’m busy, and I’m not as good as they’d be. So I’m stuck.”
Another peer bought a business and walked straight into the talent trap without realizing it.
“The seller had wildly overstated what the team could do. The reality? Everyone needed to go—but the business can’t afford to replace them.”
By the way, the quotes are paraphrased.
Where It Appears
Talent traps happen in sales, operations, finance—everywhere.
Every good business finds a way to break out, but how?
- Offer equity in lieu of salary?
- Grind through the pain until you can afford them?
- Take on growth equity? Or more debt?
Talent Acquisition Challenge
On top of the cash problem, there’s all the other problems with finding and attracting talent in the first place.
- Local talent depends on your local market.
- Perceived risk of working in a small business versus corporate.
- “Who wants to work for a shit-stained printing company in NYC?”
Authenticity Dilemma
This entrepreneur has a hesitancy to “sell the dream” to new talent.
“’Hey, I’m buying other businesses. We’re going to scale. Join the pirate ship, it’ll be worth it. But I don’t like to lie or inflate the story too much. We all know how tough small business is.”
And that’s another challenge—most people don’t want to board a pirate ship.
They want a cruise ship, preferably one with a 401(k) and ping pong tables in the office.
So what do you do here?
If you’re in this guy’s shoes.
What’s your move??
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