Title Arbitrage as Status Engineering

How novel titles reshape talent allocation

Over the past couple years, some tech companies have begun refactoring traditional job titles:

Refactoring titles is a form of title arbitrage. Titles are an imperfect signal of how one contributes to an organization. They confer varying levels of status across different groups. Title arbitrage shifts the relative status of certain positions and changes what people want to work on. Some title refactors are simply name changes while others are signals that a company is taking an opinionated view on the world. Many companies also pair this with title deflation, abandoning external leveling schemes in favor of flatter hierarchies with these new designations.

Title arbitrage and deflation represent an attempt to rewrite tech’s status hierarchy and reshape its culture from the top down. In recent years, this has been led by companies attempting to usher in a new era of tech giants, most notably AI research labs and adjacent entities.

Company Motivations

Companies implement title arbitrage and deflation for the following reasons:

1. New titles increase the status of certain jobs that are core to company success.

Certain roles are less sexy than others. Talented people naturally gravitate toward high-status positions and titles regardless of actual fit. New titles increase the status of certain roles and attract talent to roles they would have dismissed under their original labels.

Palantir pioneered the Forward Deployed Engineer (FDE) title. FDEs are critical to the success of Palantir as they develop custom solutions and relay frontier context that gets fed back into Foundry or Gotham. While FDEs are there to nominally serve as a solutions or integration specialist, sending sharp people (1) creates tighter feedback loops for customer satisfaction and (2) signals company strength, as most companies deploy average talent in customer-facing roles. When clients interface with Palantir’s top-tier FDEs, they are left impressed and ask themselves: if the FDE they sent to us is this impressive, how impressive is the rest of the company?

The status of the company and role enabled them to recruit sharp software engineers into technical consultant roles. Palantir was able to recruit out of the more technically-savvy (and likely higher g-factor) FAANG talent pool instead of the management consultant pool. You have to give someone a lot of perceived status to convince competent people to travel to random cities around the world to integrate data pipelines at 2 am.

To be sure, socially engineering smart people to work in customer-facing roles was necessary but not sufficient for the success of FDEs at Palantir. Rather, it is in conjunction with their business strategy and company architecture that enables the creation of software that stays years ahead of what everyone else thinks governments and enterprises need.

2. Fewer labels reduces siloing, allowing talented employees to contribute across functions and naturally shift into new areas of work.

Talented employees are able to contribute in a variety of ways beyond their initial mandate. A “Backend Engineer” gets pigeonholed into backend work, even when their skills would be better applied elsewhere. Most companies strand these engineers in maintenance mode, creating suboptimal labor allocation and attrition risk.

If hired as a Member of Technical Staff (MTS), the worker and the company views them as a generalist technical contributor, not specialists locked into one domain. This makes changing what they work on and potentially switching teams psychologically easier. Talented employees are able to operate fluidly and contribute to high-leverage activities rather than being confined to a single function.

3. Unique titles signal in-group membership, creating a distinct cultural identity.

When a novel title becomes industry meta, the originating company gains lasting prestige, especially from prospective employees. Early adopters capture some of this status as beta, while late adopters appear derivative and unoriginal.

The war for talent is a perpetual, culturally-driven game with constant changes to the equilibrium. Companies perceived as understanding the metagame attract highly talented individuals who are then granted entry to the in-group. Workers’ identities become increasingly tied to the company, becoming stewards of company culture. Elite talent enhances company status, which then attracts even better talent.

4. Title experimentation generates attention from analysts, recruiters, and prospective employees, creating free publicity and an ecosystem around the company.

When a company debuts a new title, everybody is trying to figure out what they really do and how much status to attribute to the role. Companies write day in the life memos, analysts write about it in their newsletter, recruiters scramble to understand the role’s market value, and prospective employees determine how it can fit in the context of their ideal career.

This creates productive ambiguity for prospective employees, the constituents that the company truly cares about: What does this role actually do? Is this the next high status position?

The mystery of the title becomes a selection filter for those willing to bet on undefined roles, self-selecting for ambition and risk tolerance. This enables higher signal targeted recruiting efforts such as TPMs at Google/Meta to attract Stanford students and FDEs at Palantir to draw from a subset of the Ivy League talent pool.

5. Novel titles increase switching costs for employees by making roles difficult to translate elsewhere.

Early Palantir FDEs underwrote the risk of the company itself and their unconventional role. If you wanted to leave, you would have a difficult time explaining to other companies what an FDE is and exactly how you would best fit into a different organization.

You can’t call yourself a Solutions Engineer or technical consultant without undermining the status that made the role attractive in the first place. At the time, Palantir was the only company offering to buy your services while conferring high status and compensation. This creates title lock-in: you’re incentivized to stay at Palantir until the FDE role gains broader recognition and becomes liquid social capital. This serves as a retention mechanism for Palantir beyond equity compensation.

6. Flatter hierarchies foster more collaboration while increasing information asymmetry.

Removing external leveling schemes enables more peer relationships across experience levels. Seniors at tech companies are accepting of this, as they perceive themselves to have risen through merit.

With fewer junior hires overall, those who make it are typically very sharp. The flatter structure encourages seniors to be more welcoming of conscientious and smart junior employees while offering mentorship as peers versus their superior.

Fewer titles and external leveling grades also increases information asymmetry, making it harder for external entities (recruiters, competitors, etc.) to identify and poach talent. Increased information asymmetry regarding compensation and productivity favors the company via higher retention.

7. Status competition shifts from titles toward projects and internal politics, rewarding those who navigate complex environments successfully.

Everything is a status competition. The best companies channel these competitions in an incentive-aligned manner congruent with company success.

With leveling less transparent, status is more context-heavy and is derived from internal factors including project impact, political navigation, and private compensation negotiation. Accurately assessing these traits is nearly impossible during short interviews, but 12-24 months in a wicked, complex work environment allows star talent to reveal themselves.

Competent managers and directors identify high performers through both subjective signals (who gets asked for advice) and objective ones (who negotiates the highest raises). Without explicit levels, employees who are proactive and productive gain leverage to demand compensation that reflect actual productivity rather than titles. Average workers willingly accept pay disparity (if they are even aware in the first place) when status titles suggest equality while star employees seek to get paid what they are worth.

Worker Incentives

Workers embrace novel titles for a variety of reasons:

1. Being early to a new role can offer a unique opportunity to increase future status and opportunities.

If you’re one of the first people under a new role, you’re betting that the title’s status will appreciate. If the company succeeds and the role proves to be a vital contributing factor, early adopters capture opportunities otherwise unavailable to them.

These opportunities emerge and compound internally and externally. Internally, early adopters shape the role’s culture alongside other founding members. This founding cohort is incentive-aligned and defines what it means to be an FDE/MTS/etc, creating tight networks of ambitious risk-takers. Externally, subsequent broader role recognition can lead to leveraging its status for new ventures from outside parties. This can be starting your own company, VC fund, hedge fund, or co-founding Anduril.

Novel roles also offer downside protection through ambiguity. If the company struggles, shrewd workers can reframe their experience on their resume and interviews as research, product, or customer-facing work depending on what is in vogue. The undefined nature of the role serves as an option on future relevance.

2. Obscure titles signal elite culture fit.

Novel titles serve as an external signal that a company identifies you as top talent. Early hires of new roles are typically filled through warm introductions and existing networks. Landing an undefined role signals you have a strong pre-existing network and you’re trusted enough to navigate ambiguity.

The ambiguity itself also serves as a prestige marker. You’re simultaneously too talented to pass up and too distinctive to fit conventional boxes. To be sure, meaningless titles can also mask insignificant roles, but the market usually sorts out which is which in short order.

3. Novel titles select for traits including curiosity, risk taking, and a meritocratic worldview.

Companies use unconventional roles as filtering mechanisms. Those drawn to these undefined positions tend to be higher in openness, more accepting of a pure meritocracy, and motivated by working with other high performers rather than traditional hierarchies.

Prospective workers are able to more honestly signal their motivations and worldview by pursuing ambiguous roles early. This can lead to more efficient labor allocation and a more earnest administrative equilibrium. Mission-driven organizations have particularly benefitted from this filtering mechanism.

4. Unusual titles can increase compensation leverage for workers.

Even workers who claim to be “post-economic” care about compensation as a form of status beyond utility. Compensation is a primary signal of one’s value to an organization, and becomes increasingly important when other status markers are removed.

Flatter structures with opaque titles create information asymmetry that favors top performers. Without clear level bands dictating pay ranges, productive employees can negotiate based on actual impact rather than title constraints. The ambiguity of a new role not on levels.fyi allows wider compensation variance than “L4 Engineer” in San Francisco.

5. Flattened titles reduces ageism and career ceiling anxiety.

The world runs on experienced and competent professionals who do excellent work. These people may not be interested in becoming a manager or an IC. Visible leveling systems punish this choice by broadcasting career plateaus externally.

Flatter titles solve this by preventing this artificial pressure. Experienced workers can excel at their craft without explaining why they haven’t “advanced” if everyone is under the same external job title.

Coda

Title arbitrage is one of the most scalable levers a company can pull to increase the status of certain roles and attract talent. It costs nothing, works at scale, yet has the ability to reshape labor markets. The design space for title arbitrage remains wide open.

Successful title transformations share three characteristics. They:

• Elevate the status of previously undervalued work critical to company success
• Create productive ambiguity that selects for specific traits
• Establish cultural identities and in-groups as stewards to perpetuate their success

If I were a founder of a tech company, two titles I would consider creating include:

(For now, I’m keeping the rationale and reasoning to myself for now. Email me or drop a comment for any unique title arbitrage opportunities.)

To be sure, survivorship bias obscures the vast majority of title arbitrage attempts that don't work. Worse, most attempts actively dissuade top talent because it signals desperation rather than distinction. Building companies has often been compared to starting a new religion. If that’s true, novel titles are analogous to creating a new sect, and most sects fail.

Furthermore, the half-life of title arbitrage is decreasing. Faster information feedback loops mean novel titles get commodified quicker, diluting their signaling power. This could lead us back toward a counter-signaling equilibrium of title standardization. Additionally, talent acquisition has shifted toward outbound recruiting based on demonstrated work: open source projects, X followings, and Substacks. As individual productivity increases and companies do more with fewer people, title arbitrage becomes a weaker lever for social engineering.

Title arbitrage is just one social engineering primitive for reshaping talent allocation. I am increasingly bullish on other primitives as higher-signal forms of cultural transmission that sustain stable equilibria for longer.

I will explore other primitives in a future post.

Popularity prediction hash: 9bf56010236460d970ff213ccd8c1601a84854791d04250d6d528ad4bf39a2c4

Thanks to SolHando for discussion and comments.