Shruti Rajagopalan talks to Daniel Gross and Tyler about Identifying and Predicting Talent

Conversations with Tyler is produced by the Mercatus Center at George Mason University, bridging the gap between academic ideas and real-world problems. Learn more at mercatus.org. For a full transcript of every conversation enhanced with helpful links, visit conversationswithtyler.com.

Welcome everyone. It's a pleasure to be here. Hi Tyler. Hi Daniel. So I'll start right away. What is a talent that you think you possess that is underrated by everyone else?

Daniel, I think that's for you first.

Well, pausing before answering a question is definitely a rare skill these days, but I think something that's been helpful for me that I've kind of realized I have, that I think many people have, I don't know if it's totally ubiquitous, is in the process of an interview, which you do in venture a lot, like hundreds and thousands of times a year, being able to sort of build a grid of the person who's talking to you, who they most kind of remind you of, and the outcomes that those people have had is, I think, a pretty important skill. And I think it's a pretty important skill for anyone searching for talent, but certainly in the venture world, that's kind of what you're doing when you meet these early-stage businesses is you're kind of trying to build like some type of search map in your head that's more intuitive than it is rational. It's sometimes a bit hard to explain why X might remind you of Y, but that's a skill I think a lot of people have. The benefit I've had is I got inculcated in this world at a very young age, and so I've had many, many hours of reps, you know, just getting it in and mostly making mistakes, but occasionally getting it right.

I don't think I have the talent of hesitating before answering a question. But I think one thing I'm good at is turning problems into combinatorials and then within my head very rapidly searching for all possible combinations of factors that might somehow fit together and spitting that out in well under a second. I'm not even sure that's an underrated talent, but I think it's a way to think about some of the talents I have. That if it's an area where I can turn it into that, I will typically do quite well. But if it's, say, trying to work the microwave at home, which I cannot turn into some kind of combinatorial, factorial analysis, then I'm way below average at trying to work the microwave at home.

That's true. So Daniel, if you're looking for talent in investing or finance, how does that look different from the talent in the startup world?

Yeah, what makes a good investor is very different from what makes a good founder. And if you were to make a scatterplot of it, some of the attributes are completely diametrically opposed. For example, I think very good investors are the right the correct degree of optimistic but also realistic, whereas founders are too optimistic, which they should be. I mean, at the end of the day, startups are a very funny activity when you think about it from a probability standpoint. Most companies fail. Almost all companies fail. And yet people seem to be seemingly doing this activity over and over. They're jumping off a cliff over and over again. You look over the cliff and everyone who jumped out of the cliff is just on the ground dead, but the people keep on jumping off the cliff. And so founders are kind of, you know, almost too optimistic. But I think when you're evaluating a business, especially at later and later stages, I think optimism can be your enemy. And often you see when a lot of founders later on in life— and I am such a person who started a business, sold it, and then became an investor— you actually have to be able to wear very different kind of psychometric hats. And one of them is this continuum of realism and optimism. And I'd probably say that's, you know, the starkest difference between kind of what makes a good a good startup investor and a good founder. There are probably many others, but that's kind of the main thing that you look for. So—

Who's more likely to drink Diet Coke, the two groups?

That's a good question. Yeah, I'd say both, I think, are pretty likely to be of the— whatever Diet Coke signals. I don't know if some— obviously, here in San Francisco, it's quadruple espresso, $25 coffee. And maybe the rest of America, it's a Diet Coke. But both are, I think, in the people that want more stimulants as opposed to depressants.

And that just depends on the stage at which they're at?

Yeah, I think so. I think stage, location, whatnot. But you know, the bit about— it's very funny that I have the great gift of writing a book with someone like Tyler Cowen on a topic as expansive as talent. And of course, what comes out of it is everyone wants to talk to us about soft drinks. And so, you know, sometimes I feel like we're like Michael Pollan, who wrote a book about dieting or something, and everyone wants to talk about Diet Coke. But yeah, I think it's probably a very common trait across all kind of active people.

Investors need more red wine, don't they? To regulate the mood? Maybe.

Yeah, maybe they're more totally trying to operate their amygdala with opposing drugs, uppers and downers.

But there's some skill to evaluating the wine that reflects skill in evaluating investments more than perhaps startups.

That is probably true. The startup founder would probably be the type that does not care what they're drinking as long as it gets them hydrated and in the right mood. And then the investor definitely has all sorts of theories about the colors and the vintages and the countries and all that.

—may also have to do with disposable income at that stage, right?

Yes, it may also have to do with the fact that wine is not free.

Tyler Cowen, both of us are at George Mason. You've been a professor there for more than 30 years. You've been involved in a lot of hiring decisions. And it's a strange place for more reasons than just that both of us are there. It's a large state school. It's newish. It's not an Ivy League school, but it's had an exceptional economics department. You know, we've had a couple of Nobel laureates. We've had people like you. What is the secret sauce at George Mason that it manages to attract that kind of talent that other schools of comparable level are not able to?

I like to look for people who believe something very strongly. That can't be the only qualification, but other economics departments tend not to do that. They look for people who can execute flawless 90-page papers with every possible robustness check. Now that too is important and useful, but it's not what we do. If you decide you will specialize in people who believe in something and pursue it passionately and want to sit around and argue and talk ideas and read books. You will end up with one of the most interesting economics departments. And we've built a sufficiently strong consensus that we just keep on hiring people who believe things. So they turn out being a little wacky, right? You're selecting for that. But that, in turn, keeps you different.

So how do you know how to screen for that? What's a question you are likely to ask at the AEA meetings that you know that someone is like technically not unsound, but they're also very interesting and they can't game it?

Oh, I don't think you have to ask questions. If they believe in stuff, they will ask you questions. You just have to show up in the room, right? So it's one case where you don't have to agonize over optimal interview questions. And in fact, the way we're supposed to interview now— supposed to, but do— is we're to ask everyone the same questions. And we do. But that doesn't matter. It's not actually a handicap. It would be a handicap in almost any other situation. But you can ask everyone the same questions. And it will just come out. Who believes in something?

So Daniel, at Pioneer, one of the things you have tried to do is gamify the experience, right? So when it comes to gamification, do competitive games work better or do cooperative games work better, you know, to test for ambition and aspiration?

So Pioneer is, uh, I mean, principally a website, but it is an online startup accelerator, kind of pre-YC, which I would have to explain in most cities, but not in this one. Yeah. And so there's many ways in where it's kind of different and unique, and one of them is that everyone on the platform gets a score every week for the work that they do. And so you're sort of incentivized to make your score go up. And so kind of the broad idea there is trying to really address a question somewhat related to talent, which is why aren't there more startups? And there's many answers to this question, but one of the reasons why there aren't more startups is, as we were saying earlier, the act of starting a company is completely irrational. And you tend to get a lot of negative stimulus before you get positive stimulus. You know, you start working at a new job, you have a boss, that boss kind of wants to hopefully make it a good experience for you. They tend to like build a map and a game for you, basic game in quotes here, startup doesn't have that. And so, you know, you tend to hear no, no, no, no, no, no, fail, and then finally you might get somewhere. But a lot of people don't crest beyond the J-curve really, and they just drop at the nadir. And so gamification in a way, or some way to make something compelling, you know, ultimately with the goal of basically creating more startups, is kind of the theory behind Pioneer. And someone like how, you know, Peloton gets more people to cycle. And heck, I mean, people in South Korea are literally dying of exhaustion because they're playing video games to death. So like there is something very powerful about that effect, whether it's used positively or, or negatively. Now you ask the question of what creates kind of more goodness, basically competition or cooperation. You know, we think competition broadly is what creates greatness. And like the answer is both, obviously, because competition creates cooperation within small groups that compete against each other. Now, it is true that not everyone who signs up for Pioneer, like, wants to compete on a global leaderboard against everyone else in the world. You know, very good competitors, I think, tend to have— even the best, most competitive people tend to have a predictive model of like, I'm only going to enter games I can win, or at least games where I have like maybe a 40% chance of winning. And so, but I strongly believe whether you want to compete globally or not, everyone wants to improve every single day. And so it's very similar to Peloton in the sense that you can have a score and you could be playing against yourself. I mean, you could just be trying to grow your revenue week over week or the amount of active users you have or any one of, you know, different metrics and KPIs, or you could be competing globally. And I think that kind of affords us all modalities because I really think there are very few people that don't want to improve at least themselves. If not want to compete against others. But of course, every form of competition, I mean, usually will intend some form of local cooperation. And I think it's a very good thing because ultimately, I think a lot of what our free market enables is for people to get excited about the idea of competing, building a better product, trying a new experience. And many of those fail, but occasionally those work and it creates the microphones that we're using, the building that we're in, and the city and world that we live in. So I think both are necessary.

On a day-to-day basis though, you're trying to create a community, right? So does the leaderboard sort of trade that off a little bit because people are just trying to go further up? Does it turn it into a zero-sum game instead of forming a community? It's a good question.

And what we try to do is make the game not necessarily appear zero-sum. So it is true that for every ending week, at the end of the day, if you have a sorted list, someone will be at the top and someone, you know, won't, but there's no direct reward function for being number 1 versus number 2. There is the glory of it, and a lot of our founders love, you know, just send us an and tweet screenshots of, you know, their position on the leaderboard is, you know, whatever. It's, it's great for them, but there's no like direct reward. The guarantee Pioneer gives you is that if you're in the top decile, we will review your application. But like you could be 25th or, you know, 32nd, it doesn't matter. We'll still review your application. And so it just helps us in that case, get a broad sort. And because the game is not that zero-sum, I think people still tend to at least cooperate on non-business related things. And I think on business-related matters, like founders should either merge their companies or like compete and not cooperate. That's totally fine. And so, you know, I think we managed to have best of both worlds, but I do think, you know, when constructing these universes and whatnot, it's quite important for it to not feel necessarily zero-sum. You know, you could go compete with someone on a running track and it really doesn't, like ultimately they're running faster than you doesn't eat away at any of your pie, so to speak. And I think that's important because, you know, like everything, it's a spectrum. And I mean, a lot of these startup communities ultimately, and San Francisco is one. For better or worse. It's basically a giant startup campus. They sort of work because people do, at the end of the day, feel some form of, even if it's not directly related to their business, but some form of kinship with each other. And Silicon Valley lore is obviously littered with stories of the person who let me sleep on their couch, and one thing led to the next. So we have both, I hope.

How much of your time in Israel, like growing up in Israel and sort of watching different kind of experimentation with community building, different kinds of communes, inform how you decided to build the Pineapple Movement?

I'd love to be able to answer yes to your question that that was somehow extremely informative to me. I, you know, I grew up in a, you know, dark secluded corner of Jerusalem right outside the Old City, and so I can't really say I had, you know, the most expansive view. But in reality, the real place I, I experienced growing up is the internet. And many people now like to talk about how, you know, kind of bad social media is and how bad these online communities are. But, you know, that's a very nice thing to say when you're kind of looking out into, you know, the rolling hills of Sonoma and this beautiful world that we live in here today. And look, obviously the place where I grew up is certainly not a third world country, but it's very different and isolating, to be honest. And I think there's I know many people who immigrate to San Francisco and California who feel similarly. And the idea of growing up on the internet does let you see all sorts of experiments. And I grew up in the open source community writing code, and so that, to me, was an interesting example of a very different organizational model than many different companies, where the leadership in some of these open source projects is actually quite undefined. You really tend to see those struggle versus ones that have a defined leader. And I mean, there's an infinite variety of forms of cooperation, but I can't really credit Israel to that. I'd probably really credit the time, 56-kilobyte dial-up internet connection I had.

Speaking of internet connection, so Tyler, you're an early adopter. One of the things that you've done, which is a little bit niche but very fun, is the Ethnic Dining Guide. That's your way of looking at the world through food. You're not so good at desserts. You sort of go straight for chocolate ice cream. You know, that's, that's your go-to move. Is there something fundamentally different about people who write about food or, you know, who are food critics versus people who write about dessert? Is there such a category? There should be, right? Dessert critics?

I don't quite consider desserts to be food. So I think in a town like San Francisco, there will be many dozens, hundreds of places that are quite good. There will be very few good desserts. So in my perhaps backward view, there are excellent desserts at Michelin-starred restaurants, most of all in Europe. There are superb desserts in India, and then there's very good chocolate ice cream. And all other desserts basically are bad, and most chocolate ice cream is not good, including in the city of San Francisco. So the fact that desserts tend to be sweet, right, that was like a decision made in Western cuisine. The French decided to segregate out the sweet stuff and make it separate from the meal. Or say Arabic food, or even food still in Sicily today, the sweets are integrated into the main courses much more readily. Parts of the Middle East as well. When you put all the sweet stuff in one place, it's not going to be good unless it has a very high level of ingredient quality and composition.

So it is a different kind of taste palate for someone to be able to appreciate desserts.

I think so, and I don't cover desserts because I don't live in Kolkata, I'm not covering Michelin-starred restaurants, and chocolate ice cream, there's not really that much to say about. We all know where it's good and it's bad, right? And it's good in Italy, Argentina, Brazil, some parts of the US, most of all the Northeast, very good in France actually, especially Paris, but mostly it's bad. We disagree on many things. We went to Joe's Ice Cream last night, it was just— Awful. You know, I Googled best chocolate ice cream San Francisco. One of the top lists, once you get past the Google ads, it's like, well, Ghirardelli's is listed 3 times in the top 10. What kind of insanity is that? And then Swenson's is in the top 10. And then there's some place called Mocha, which is like not even ice cream. And then there was Joe's, which was horrible. And that was like 5 of the top 10. So the internet has failed us. San Francisco has failed us. Chocolate ice cream has failed us. Some combination of all those things. I'd rather eat, you know, in Israel, in Tel Aviv, there's excellent chocolate ice cream. That's definitely better than in Jerusalem, I think.

Yeah, I don't know what people make of this. My explanation for the bad chocolate ice cream last night was that San Francisco doesn't have enough kids, like not enough people are having enough kids, and, and that's the reason for it, aside from the benefit of torturing Tyler and not getting him good chocolate ice cream. So one of the things I want to learn about is how you've influenced each other. So one is exercise. You both have like different ideas of exercise, both very regular. Daniel, you run marathons, I believe, on every continent, and you've run one in Antarctica. Is that right?

I mean, you know, in a city like San Francisco where, you know, it's hard to go out and not see someone running, I don't think it's particularly remarkable to be a runner. But yes, I think we have very different philosophies when it comes to exercise. That is a fair statement.

Okay. The last time I went on a hike with Tyler, he brought his book bag along with a lot of books. So have you influenced each other on exercise at all? Do you talk about it?

Have you changed philosophy? What is your stated philosophy on exercise?

I very much enjoy games of skill such as tennis and basketball, right? And those are exercise. If it's sheer exercise, I'm bored. But YouTube plus Peloton to the rescue, that works for me. Okay, so I very much like Peloton. That's your influence. And Peloton with YouTube is great. So you can watch Magnus Carlsen and pedal away, and Magnus is highly entertaining.

Yeah, that's That's definitely not what I do, but I appreciate the sentiment.

How much do you think the gamification in exercise and the personalized, customized version of exercise has helped you or formed the way you think about running?

Yeah, I mean, definitely it's formed the way our product is built. I think everyone who works on our team is either kind of want-to-be competitive athlete or a want-to-be competitive chess player. And so everyone is, in a way, are getting scores in their hobbies all the time and want to improve. And so that obviously drives product ideation forward. So I think Peloton was an interesting case study and it's an ongoing case study, I guess, that's being evaluated every day in the market positively, but an interesting case study in how much gamification kind of matters at all. It does seem like people are actually quite motivated by whatever leaderboard and power mechanics they have out there. And on the contrary side, they released this thing that totally flopped. I thought it was fascinating that it didn't work. A priori, if I were describe to you here, some type of thing you can use on an exercise bike. And what it does is it responds to the music that you're listening to. And as the tempo of the music increases, you pedal faster. And as the tempo of the music decreases, whatever, it's all synchronized and it's fun. If I was pitching that at a venture firm, I think people would say, "Wow, sounds great." Peloton built this and they launched it and this particular thing totally flopped. So I think people tend to really overcomplicate it. I mean, I think there are psychometric personalities, I imagine like mine, that are are relentlessly interested in improving, and for that, getting a tight feedback loop with any type of numerical score is very good and very simple. I think there are people that don't really care about that and want to watch YouTube and, you know, get the work in and move on. So, but ultimately, yeah, I think it probably helps a certain type of personality.

Tyler, do you think this kind of gamification would have made you a different chess player when you were young?

I think one significant difference between Daniel and myself, Daniel I see as much more competitive than I am, and I think I'm somewhat more obsessive than he is, though he's quite obsessive So the areas I operate in, for better or worse, I'm never asking myself where I am on the leaderboard. For instance, there's no other person where I could tell you how many Twitter followers they have. I just have no idea. But I can wake up every morning, do my thing, practice at it, try to progress, and just relentlessly, endlessly do that forever, as I've actually done now for the last basically 46 years. So that's a kind of obsessiveness. But I'm not competing very much at all, and I don't know what my leaderboards are, and I'm fine with that. You could describe yourself better than I could you, but I think your experience is one of the world of gaming more fundamentally. And I quit chess when I was 15, because in a way I found competing a little boring, actually. Hmm. It wasn't obsessive enough in a funny way. And the thing always comes to an end, whereas what I do now, it never comes to an end. It's like a true extreme of relentlessness. Does that make sense to you?

Yeah, yeah, definitely, definitely. Do you think if you were kind of starting out in the era of, you know, the internet where things are much more interconnected and reflexive, the whole chess thing is just much more in your face, do you think you'd play chess longer?

No, I think I would have quit sooner. Interesting. Because I would have accelerated to the point of frustration and boredom more rapidly and like quit at 13 rather than 15.

So is it because when you were growing up, there was still a chance that humans had against computers while playing chess, and now that's just—

it's over? No, I never thought about that. Computers didn't worry about— there was a chess-playing computer back then called Tinkerbell. People lugged it around to tournaments. It was quite large, like you had to pull on it. It was on a cart. You needed more than one person to pull on the cart. It was a standing joke. You had the option of not playing it, but you knew that if you played it, you would beat it. So very different mentality. At the time, I thought chess-playing computers was a very far-off thing that they would ever be good. Obviously, I was totally wrong. I didn't understand how they would manage to copy intuition in different ways. But I think that kind of Borges' notion of the infinite unending system, you know, the infinite library, is what really appeals to me. And with the internet, I would have found that more quickly, indeed in the internet itself. As I have in a sense now. Ben Casnocha once made to me the interesting point, "I'm the last generation to have lived in both worlds in a significant way, with internet and without internet." And I've lived like 22, 23 years with a lot of internet, and then I lived well over 30 years without any internet at all. And that's just not gonna be a thing anymore. I feel very privileged actually to have grown up in libraries and not the internet, but then to have had the internet.

So one of the things I want to ask you is, since we're in San Francisco and everything is Elon Musk, and we're always talking about what we're going to do when we end up on Mars, how do we screen or select for the first group of settlers? What are the interview questions we should ask them?

That's a great question, by the way. I'll throw out a few ideas while you think. I think the sort of interesting question for Martian settlers is— so I mean, any form of settler, I mean, anyone who wants to do that is saying a lot by self-selecting into it. And that, I think, has been the case for people that have gone to New continents and to settle new nations in existing continents and whatnot. So you're going to get a lot of free selection effect by virtue of the person wanting to be an astronaut, let alone an interplanetary settler. It's quite the LinkedIn. And I think an interesting broader question for that colony will be what's going to keep people together during the hard times. And if you look at successful countries that were settled, there were very strong religious ties that built that lore, that helped create fabric, And look, maybe the conditions will be so harsh that alone will create ties, but I'd sort of be looking and asking for groups of people. I would make no case on kind of what form of religion is the best, but groups of people that are very connected on some very deep level. Because otherwise, I think you can end up with something that sort of blows up. But Tyler, what do you think? Diet Coke drinking?

There's no diet Coke in Poland. Obviously, I'm an American, and I'm personally very influenced by Puritan culture in my country's own background. So I would look first and foremost for religion. But it's a bit like the GMU hires. If you have to ask someone, "Yeah, like, do you believe in some idea?" It's already a bit hopeless. You know, you need to know that they already do before you have to ask them. So in that sense, it's not an internet question. But I think simply whether the person is American is, to me, of critical import for settling Mars. I think Americans are fairly well situated to settle Mars. Pretty high level of trust, frontier mentality, a lot of us are crazy, we're relatively religious, The notion of settling a hostile territory obviously is in our cultural DNA. Israelis, possibly. It's a little more complicated because for Israel it's a bit more about settling a specific place, which Mars is not. Yeah. But nonetheless, there's the sense of braving the hostile elements. Religious Americans and Israelis would be my first cut at it. Yeah. And I would even consider, you know, LDS Mormons who tend to have beliefs about other worlds and that human beings Americans should have some role in colonizing other worlds. That might help. I don't know if that's the strongest LDS belief, but it's not going to hurt any. I want to double down on the Americans and not, say, the Belgians. Nothing against the Belgians. They have amazing chocolate ice cream and french fries and some other things, but I'm not really going to send them to Mars. I'm sorry.

Is there like a screening question? One screening question for me would be like, do they want to have kids? How do they think about it? How many children they want to have and raise them. I think that would be like a key question, right? Anything else we should screen for before we pack them up?

I think there's probably a lot of physical stamina that would be necessary. Just good old, like, can you do 10 push-ups or whatnot? Like, I think it's probably non-trivial physically to get to Mars, let alone settle it. So that'd probably be an important one.

People who are careful with airlocks would be high on my list. Yes. But just not making very stupid mistakes. Yeah. Yeah, with physical items. Yeah. So people who are bad at operating their vacuum cleaner, I wouldn't take to Mars. Yeah. Certain type of almost like a carpentry skill, that would be very useful. Even though you don't need them to build things, maybe the robots do that, but you don't want them really pressing the wrong button very much.

Yeah, you need a kind of MacGyver skill.

Yeah. But it's also a little bit like selecting your condo association board or something, right? You don't want really annoying people, for instance. Or like people who just want to be contrarian for the sake of being contrarian. I mean, it's sort of also the same way you hire for tenure in an econ department. You're going to have lunch with these people the rest of your life.

Weren't the Puritans somewhat annoying? Like, my intuition is you actually would want a lot of annoying people.

Ned Flanders from The Simpsons, basically.

Yeah. Yeah. That friction would somehow keep them going. Yeah. And it's the people who don't argue with each other who could end up very badly off track. On Mars, that you need people who are arguing every day, I think.

Yeah, I think you didn't ask, like, are we going, or just they going? We want them to, like, set—

Well, I'm not going anymore after the answers you guys have given me. All these annoying carpenters who know how to run a vacuum. I'm fine on Earth, chocolate ice cream aside.

I don't find space that interesting. Aliens I find interesting, but just to put me somewhere empty where most prices are infinity, You know, I'll say no to that.

Coming back to the talent market, do you think, Tyler, it is in disequilibrium or there's some kind of market failure or there's different kinds of talent markets and some are in disequilibrium, some have a failure? This book sounds like there is disequilibrium in the talent market and a lot of the suggestions that you have given can kind of push it towards that equilibrium.

I think there's massive market failure in most parts of the talent market, but it's worth asking which parts work very well. And I think actually many parts of gaming doesn't cost that much to access. Not that everyone in the world can play games, but really a considerable number of people can. Performance can be measured. There's leaderboards. It's sort of obvious how well you're doing. If you want to learn, there's a lot of ways you can learn and get better. I think chess is a pretty efficient market, especially now that many more people in India and China are playing. Well, you play with computers. You can become as good as quickly as you're able to. But when it's intangibles, I think there's a common situation where, when the time comes to make a hire, you feel rather stuck. But ex ante, hardly anyone is doing all the right things in terms of, you know, investing in pre-existing networks, honing their own abilities, making themselves sufficiently inspiring, sort of figuring out how to attract the talented people to come to them. Those are the more difficult tasks. Not like you sit on your throne and 3 candidates show up, and you point to the one, and you're only going to get so much better at that. You can get better at that, but I don't view that as the way to think about the market failure. In most general terms, if you find a great person, you make them a lot better, but they capture a lot of that value. So you underinvest in doing that. That's the fundamental problem. So whoever first spotted Elon Musk has basically no share in Elon's riches. You could say, well, Peter Thiel at some modestly later stage spotted Elon, and, you know, Earned some money from spotting Elon, but that's the actual problem. You can help people a lot and get nothing for it.

How much of the sort of insights in the book have either of you managed to implement in your own organizations?

Well, when you write a book with the title Talent, you certainly walk into every interview you do in your life realizing that guy's thinking he's chatting with the guy who wrote a book called Talent. So you pretty much want to be on point in the interview. So I think, look, we obviously already experienced some heightened awareness around an act which most people I think are not sufficiently focused on, which is the interview itself. And so that only increases, I think, after something like the book comes out. I think we have always kind of been trying different interview questions. I mean, the book is really just like a cut from a very long list that keeps on growing. And so I think we'll— we continue to kind of iterate on that over time. But I'd say the biggest shift in my thinking in talent as a byproduct of working with Tyler has been on the value of things like energy and sturdiness and industriousness over raw intellect and IQ, which I don't think is properly— certainly wasn't in my mindset a couple of years ago, and I still don't think is kind of in the global mindset. And we're certainly not saying that horsepower and IQ don't matter. They certainly do. But there is a clearing bar at which point for most roles, I think people tend to overvalue it and kind of don't realize the logarithmic nature of the curve. Curve and assume it's kind of linear. But I actually think more early than many people realize, you sort of want to switch to caring about just how vigorous and how energetic that person is. I think that might be because, I'd be curious if you'd agree, that it's because for most tasks, doing gleans far more information than thinking. Exactly. Yeah. And so you'd rather have someone that will just do much more. Their learning rate should be much higher.

I mean, speaking for myself, I hired you, right? Tyler Cowen. So you are in academia. I think in academia there's quite a few people who are significantly undervalued. You can't wait too long or they're just totally ruined. But if they're given freedom to operate and actually do things, there's already, you know, reasonable positive selection for smarts, right? And there's some people who really are thirsty to do things and run things and create and make a difference. And those people are trapped in academia because a lot of them can't see a way of supporting themselves doing a different thing. So if you can set up structures where they have that support, you can just find a lot of people who can become like 50, 100x more productive by simply not just being academics all the time. Your exhibit, whatever, I don't know what letter, but that's you. You run, you know, Emergent Ventures India, and you identify people in India and give them support and get them going with their own startups and projects and intellectual endeavors. And that's like phenomenally way more productive. And like, are you smarter now than then? Well, probably somewhat, but that's not the difference. The difference is this ability to see like there's a difference you can make and really want to do it and be in a structure that allows that to happen. So this is an example of how like the market for talent can be way more efficient, not by like 2x, but by like 100x or more in many, many cases.

Yeah, but I actually use the insights in the book for what I do. So I'm asking you the same question.

But you did it before you read the book too.

So I'm asking you if you do the same, like outside of EV, is it easy to bring insights like this to like a university system, the way we hire? I mean, not just in econ at George Mason or at Mercatus, because these are institutionally kind of set in their ways.

Talent issues I think about all the time. I said before, I'm an obsessive person. If I'm waiting in line for my chocolate ice cream, whatever, I'm thinking about like, how's the staff organized? Who's doing a good job? Why? Why not? It's sort of pointless in a way, but you can't help but do it. And it's some form of practicing, is just to always be on and processing and thinking through like, how is this working and why? And I find that useful, but I know it's weird. Like, does it make a person happy? I'm not unhappy doing it. It's part of being obsessive.

Fair. Daniel, how do you think this interview or conversation is going?

Oh, thank you for asking. I say it's going well. I appreciate the questions are very colorful. They're better than some of the questions we've gotten. I think no one has to date asked us how to screen for human Martian settlers. So I've been enjoying it. What about you? Better than I thought.

Oh, that's good. Yeah, I had this whole secret plan when they were plugging the mic. There were some loose wires. And I was like, it'll come in handy if things are going badly. Yeah, so, so we're all still here. How do you think about immigrants and talent? So the more specific question is, how are immigrants different from children of immigrants? Is there anything that differentiates them? I see a lot of differences in the Indian community, but I'd like to know more from, from how you think about that.

Tyler Cowen.

I'm a big fan of immigration for countries that can manage it. For me, that definitely includes the United States. I think immigrants bring more energy. There's plenty of data They do startups at higher rates, but immigrant parents often are in difficult positions. They come without networks, they're starting all over. Immigration can be much harder for men than women. There's a literature on this, because if the woman is raising children, her position in the family more or less remains intact, but the man is starting all over again and very likely is underplaced in some significant way and spends quite a few years just working to achieve like like a decent middle-class income. But if you see persistence within families, whether you think it's, you know, genetic or upbringing or social, cultural, whatever, but I strongly believe in persistence in families. The children of the immigrants will start off like usually in decent enough schools, often in the suburbs, could be Northern Virginia, could be Ontario. They'll develop sort of normally North American networks. They'll be completely fluent in English in a very useful way. And it can just be full speed ahead. They're still not taking prosperity for granted. Their parents often are, you know, kicking their butt like, "You've got to succeed," which is useful, though not always happiness-inducing. It's just a general group of people I'm extremely bullish upon. And I think there's a lot of good reasons, both sort of intuitively, but that also show up in plenty of actual data and research studies, why we should be bullish on immigrants and try as a nation to take in more immigrants than what we're doing right now.

To what extent is the kind of positive effect of immigrants true of people that immigrate within the United States?

I don't think it's very true anymore. I think it was a long time ago, say people who went to California, people who settled Utah, but now to move across the United States, there's always internet, supermarkets are the same. There are definitely different things politically, but if you're a dentist who lives in Denver rather than Columbus, Ohio, It doesn't feel that brave to me. Like, fine, maybe there's some very modest positive selection.

It's weakened considerably. It's quite weak, I think.

Maybe people who never move. But if a person only moves once and not that far, I don't feel that's negative selection. Yeah. Like, I grew up in New Jersey, moved to Northern Virginia, which is like, what, 4-hour car trip away? It's not really such a brave thing to do. I moved to more trees. But still, that seems fine, a marker. Yeah.

So an interesting thing that I see in the Indian diaspora is sort of the first generation immigrants, especially probably the ones you're familiar with in the Bay Area, they are not very risk-taking and entrepreneurial in the sense of they're not doing startups and stuff like that, but they're very good at doing very well in big tech firms and sort of, you know, like very good at navigating a particular system. It's the next generation sort of, you know, American-born from Indian families who end up being very, very entrepreneurial. Is that a good way of thinking about all children of immigrants, or there's something funky going on with the Indian immigrants? Mostly children of immigrants just aren't that risk-taking?

I think there's something interesting going on with Indian immigrants in particular. If you look at the executive leadership bench in tech, there's massive overrepresentation of Indian immigrants or children of Indian immigrants. And I don't really know, I don't know if you have a view, but there's something interesting going on there. I think that's an interesting effect someone ought to study. Certainly with startup founders, which is maybe the area I'm most studied in, you tend to see first-generation immigrants. But these are people that come to the United States usually not out of sheer desperation to have some basic form of economic success because they were somewhat suppressed in their origin country, but more people in search of some sort of spiritual belonging that they believe they found in whatever technology they're working on. They look much more like religious migrants, I think, than your typical immigrant. I'm trying to make it. The founders, at least that I meet, that come out to San Francisco, and some of them actually are American, just immigrating from Iowa to SF, obviously many of them international too. The best ones are not necessarily that worried about making a buck tomorrow. They're technical, they found an interesting scene, and they want to belong. I think it's actually quite different from not the kind of immigrant persona of, you know, we took our whole family into the US, we have two, you know, screaming, crying babies, and we're just trying to survive. I think those people, for very obvious reasons, are very risk-averse.

I'm strongly of the view that right now is a kind of golden age for the Indian diaspora and also India. So, if you look, say, at Florence during the Renaissance, or you look at Central Europe in the early decades of the 20th century, you see remarkable, truly remarkable levels of achievement that don't happen before, don't happen after. You know, it's not some kind of genetic thing, but somehow everything is coming together just right. And I think part of talent is to realize when you hit these motherlodes, and then to figure, well, we're just going to try to do a lot here, as much as we possibly can. So investing in, you know, potential mathematicians in Hungarian high schools in 1916 was a really good thing to do. You don't even have to be that good at picking talent So today, for whatever reason, I do think it's India, possibly South Asia more broadly. I see the potential for parts of Nigeria kind of joining that club. It's further away, maybe still contingent, but for whatever reason, right now something remarkable is happening. Combination of level of aspiration, internet is good enough, enough people with enough English fluency, some kind of underlying flexibility of worldview. That I think has made Indians relatively well suited, say, to be CEOs in American companies in a way we might not have expected, say, 30 years ago. So I think something extraordinary is going on, and it won't last forever. And it was not the same, say, 40 years ago. Maybe it started 20, 30 years ago, but now we're seeing it all blossom. So to me, it's very exciting.

I would agree. EV India is a lot of fun. For those of you who are investing or thinking of investing in India, There are a lot of low-hanging fruit. A lot of the people that we pick for EV India, if they were in the United States or Canada, they would have been in incubator programs and accelerator programs and magnet schools and Thiel Fellowship or something like that. But none of that exists in India. The scouting or the incubation infrastructure doesn't exist. So actually Tyler Cowen and I are in competition usually, and I get far better quality of applications, a higher average and low variance. Than the ones that Tyler gets from the rest of the world. But that's my simple explanation for what's happening in India. So one of the things that both startups and economics departments have in common is failure. I mean, startups, it's fairly obvious, but in economics, you know, most people who start their PhDs don't finish, or even the people, you know, the sorts that Tyler is hiring as professors in the econ department, they may stop publishing or they may give up at some point. Is this a good way to screen for who will handle failure well, or at least better than the others in the running?

I think in science we've allowed institutions to evolve to the point where people have options of not failing at all. So science ought to be more like startups. Like, most ideas do fail. Even published research papers in top journals. If you ask researchers who really know, and they're willing to speak honestly with you, like, what's the chance that paper is actually true? You'll get answers like 20%, 30%. You don't get answers of 50%. But we've created this veneer or cloak of, if you do all the right things in terms of process, we'll sort of all pretend to take this paper seriously. You'll get tenure somewhere, maybe not at Harvard or MIT, but like at some tier 1 research university. And you'll be given all these bureaucratic duties. And you have to referee a lot of papers and hire other people. And it's the self-replicating thing that insulates people from truly failing, but also means that fewer people than ever before pursue true success. And I think it's an example of gross talent misallocation. And it is a better lifestyle if you become an academic, and if you work hard enough and you're smart enough, you can't fail. But we're doing ourselves a gross disservice, and I think a lot of our sciences are badly out of whack. For this reason, and they should become more like startups again. But structures tend to ossify, and academia certainly is no exception to that. Yeah.

Look, there's kind of classical answers to your question of, you know, how do you look for stories early on in someone's life, a failure and whatnot? And all that stuff is true. There is, I think, a great emotion to be on the lookout for in an interview, in particular when assessing founders, is fear. And sometimes you meet people and you just get their kind of naked ambition is so large and vast that I don't feel fear for my life, but I definitely feel a little bit of fear being in the room with them. And I think that's a very promising sign when one feels that emotion. And that I think is a good proxy towards, you know, will the person handle failure? I think a lot of the best founders I've had the pleasure of working with don't even really experience like setbacks and failure the same way most people do, or the degree of badness of the news for something to register in their mind as a true failure is much higher than it is for most people. A lot of bad news is immediately misinterpreted as great news. Oh, market's down, great. A lot of talent will be fired and we'll be able to hire them, or creative destruction and whatnot. So I think a lot of that comes out of just a general sense of vigorousness and vitality that I think is somewhat correlated with this sense of ambition too. So I think about that a lot. Generally, I think about, reflexively, I try to think about how I feel when I interview someone. And I imagine actually everyone's doing that. Some awareness to the process is quite helpful though.

Yeah, resilience is, is somehow hard to test for, right? It just needs to be observed. It's one of those things you can figure out fairly quickly. I just don't know if there's an interview question to figure it out.

Yeah, I mean, one of the reasons founders, I think, who are not strictly economically motivated and are motivated by some deeper belief are better is the underlying barometer of what they're going to be resilient about is much greater than the local game of like, oh, This fundraising round fell through. There's a much deeper game going on is basically, oh, I never felt like I ever fit into anywhere in life. I've now gone around, told all my friends, family that I'm doing this company thing. So I'm doing the company thing. The company thing cannot fail. And every single great startup has had these dark moments of death or near death. And obviously everyone's talking about SpaceX, famously failed 3 launches, couldn't fail the 4th, but every startup has that narrative. And so you often need someone that's powered by a deeper reserve currency than dollars in order to see through that.

Is your office messy or neat? And when you walk into someone's office or workspace, do you judge them one way or another on how talented they are depending on how messy it is?

You know, Steve Jobs famously said— someone asked him that question and he said, you know, everyone says organized desk is an organized mind, but most desks that I've seen that are organized are empty. So would you say an empty desk is a what mind? He famously had a very messy desk. So I do think Zoom has created this kind of— although it has reduced the amount of entropy or information you're getting from someone in an interview, I think everyone here can probably attest that a Zoom interview is not as enticing, exciting, revealing, or interesting as a real-world interview, but it does reveal other information. Net, you're still getting less, but you're suddenly getting this new interesting information of the background, where they are. There's The cat's wandering around. Okay, that's interesting. And I don't know that all of our mental models built around decades of calibrating on real-world interviews where you don't get that information now suddenly have to be readjusted to that. And so I think it's a good question. Generally, the desk is a reflection of the conscientiousness, I think, of an individual. I think for some roles, conscientiousness, to the extent it moves at a continuum that pulls down openness, which which the big psychometric theories would disagree with you, meaning they would say the Big Five aspect scale are totally independent of each other. But you do really sort of wonder, the person who's hyper-conscientious, who really dots every I and crosses every T, it's exceedingly rare, I think, to find someone that is really, really conscientious and also really open. And so I kind of do tend to believe that they kind of affect each other a bit more than we realize. And so I think that can be a revealing thing in either direction. I mean, I don't know that you would necessarily want I don't want, say, your product designer to have the most organized desk that, you know, to Steve Jobs' parlance, is also quite empty. I don't know that I would want to see my accountant have an incredibly disorganized desk with all sorts of returns and Post-its and, you know, papers flying around. So much depends on the role. What about your co-author?

And Tyler, you know why I'm asking you this question.

I like the messy desk. Now, I'm biased, to be clear. But when I see the desk isn't messy, it just looks to me like there's an input that's not being used. That there's a lot of slack in the system, and that the person tolerates slack without thinking, "Well, how can I put this desk to better work?" And then I get suspicious, well, what other inputs is there a lot of slack on? Their own labor, their own effort, their own intelligence? I don't know. I do know some very successful people with very neat desks, but it rubs me the wrong way. And I think of the messy desk as quite organized, of course. There's like, what's the average quality of organization? Versus what's the total amount of organization that went into this event of the desk. And the messy desk is going to have more total organization almost always, even if the average quality has higher variance.

There'd be an inefficiency in the symmetry required of a perfectly organized desk, meaning like everything can now only fit into squares, which means you have less total space, sort of like a bin packing problem. That's right.

And to me, it's also a sign—

Yes, then there's the floor, which Tyler Cowen uses very well for the packing problem.

But there's a sign they're not using the physical dimension somehow in their thinking. And I'm a big fan of the physical dimension. Yeah. Sort of thinking with your body, thinking with what you put on the floor, sort of filling out like every computing device available to you. Space is a computing device, and if you're not using space, your computer is lying there passive, fallow. Who wants that? Me.

Now I know what you think when you walk into my office because there's nothing nothing on any surface. It's pretty neat.

But I assume at home it's some huge sprawling mess, right?

No? Shh. Yeah, and I don't walk into Tyler's office because there's no room to walk into and the door doesn't fully open and other such things. No, the one thing that Tyler's office does reveal is the obsessiveness. It's like everything that is being read or worked on in that moment is right there. So it is very much like a picture of what you're doing at that time.

And it's like a test for people, like how will you react to this unbelievable mess, and you'll see things that don't even seem like they should belong in an office, like a voodoo flag. So you see a voodoo flag in an office, and what does the person say? What do they think? That's useful too, right? Do they even notice it? I'm always interested in people who don't seem to notice the mess at all. The repeat visitors, like, may not notice it anymore, but people who go there for the first time and talk to me like I'm a normal human being, that's fascinating. It's like, what's with them?

I don't think anyone talks to you like you're a normal human being, but it has nothing to do with the mess in your office. One of the things that I'm curious about is a lot of us are looking for good mentors. What is a good way to figure out if someone will be a good mentor, especially long-term? Is there a way to interview for a good mentor?

I grew up outside of Silicon Valley and I was very interested in tech and there weren't really— I mean, my father taught computer science for a living, so, you know, He didn't really teach me how to code, but he set up a home with a lot of coding books and that was the only thing to read. So that was what I did. But that aside, I remember a time before YouTube. So I'm old enough to say that, but I'm also young enough to say that I remember once YouTube came online, I just never stopped kind of watching content and lectures on it. And so I find it sort of interesting. A lot of people here want the best real-world mentors, but we do have this amazing product that I think 50 years ago, people could barely dream of where we have effectively an infinite amount of content from the world's best teachers, investors, mathematicians. And for me, when I was running my business, it was actually very helpful in specific ways, like you learn specific tricks, but also in ways that just like watching very charismatic leaders talk is definitely a great thing to do the night before you have your all-hands. And so I think that the amazing thing about the reality we live in today is, yeah, you can interview literally millions of mentors on YouTube, YouTube for free, basically anywhere in the world. And I found for me, that was a huge thing. Silicon Valley in particular, obviously it's a very porous place and people are generally very helpful to each other. And so you tend to have, I wouldn't call them mentors, but people who take a step of goodwill based on limited information they have on you, they go out of their way to help you. And someone did the same thing to them. And in many ways, I wouldn't be here without someone taking a bet and funding me. And now I'm kind of trying to pay it forward to others. And Those things kind of come into your lap. I do worry a little bit when I meet people who are overtly searching for mentors for the sake of finding mentors. I'm sort of wondering, whatever you're looking for, I don't think that's quite going to satisfy it. And to the extent one wants just good mental models of what does a really good salesperson look like, or what does a really good math professor look like, that's available online in unlimited fashion. So Tyler, I don't know if you have a different view, but—

If you want to find good mentors, I would say focus on yourself. Don't focus too much on finding the mentor. So if I'm thinking of someone I might usefully mentor, they would in turn, you know, teach me things. But I would wonder, well, is this person as curious as I am? Something like that would be a starting point. And I do figure they can't fake that. And they can't even like set out to become more curious. There's something a little forced about that. But if they actually are very curious and just allow that to grow, they will end up in a position where maybe I will end up having a connection with them. So for it to happen organically and figure out what your strengths are and let those blossom and then just be out there. But again, don't try to force the mentoring thing too much because potential mentors can sniff that out and that to them is very boring. Someone who wants to be mentored is like the most boring thing you can imagine. Someone who wants to learn something can be very interesting, however.

Tyler, you're a very good mentor, and I think that has something to do with how generous you are. How do you rate generosity on the scale for a good mentor?

I don't know that I'm generous. I think of myself as pretty selfish. And like, people I mentor in some ways mentor me, and I learn from them. And I'm like always trying to think obsessively, how can I learn from them? So I'm open to the notion of kind of selfishly a bit exploiting them, and like for me to stay in touch or like stay vital.

Tyler, you run an organization that gives out money to people around the world. Yeah. How would you square that with the idea of you purporting to be selfish? Hypercritical. First, it's fun.

Yeah. Second, it is a source of social capital, which is very valuable. I'm not paid at the margin to do it, but I learn really an incredible amount and I get some sense of where the world is going. And that to me is exciting. I feel I have a higher, like, living standard than just about anyone I know.. And I know a lot of people with like very high net wealth. I don't really think of them as richer than I am in terms of like time usage, memories I have, like art, music, consumption of desserts, whatever. I think of myself as like wealthier than them in human capital terms for the most part. So I'm pretty selfish. All right. And I think I'm good at it, at being selfish.

Well, for me, it wasn't the fact that you give money away. It's the time. I mean, it's an extraordinary time investment, both in EV and everyone So as the EV family grows, more and more time is spent solving their problems and helping them figure their life out.

But people are fun, right? And I certainly have enough time on my own, locked in closets reading books and the like. So I'm not giving that up. If anything, I still have too much of that and should spend more time with people.

Well, here's your chance. Here we are, right? Yeah. So I think this is a good time to hear some questions from you. If you have any, you can just come up to the mic. There's one on either side, and just state your name and ask your question. We also have questions on the iPad, I believe.

Hi, Owen Evans from Oxford. So I'm going to give a science fiction type scenario that maybe has some relevance to talent. So imagine that, say, half of all people had an identical twin, and some people have like 10 identical twins. So we're in this very different world, and talent identification in some sense is much easier. What kind of impact would that have on, say, startups or like maybe other spheres where talent is important?

I think there's somewhat less information contained in identical twins than many people in the Bay Area would suppose. I think maybe like America as a whole might underrate the role of genetic factors in talent, but the people who think about it at all, I think, tend to overrate significantly how much it matters.— and there are plenty of identical twins with like very different outcomes. There's quite a few of them, wow, they're both law partners in Cincinnati. But at the highest levels, those very small differences, it's like a multiplicative model. You need to have like 8 or 9 very definite things go to an A or A+ level for you, and it might happen for you and not for your identical twin. So I think at the highest levels of achievement, identical twins do not contain a lot of information and they would not be that useful in talent search. And I wouldn't go around like, "Oh, like, did someone clone Bill Gates?" Sort of like an identical twin. Whereas, like, the 8-year-old who was the clone Bill Gates, I want to support that person with some VC money. It's still a better-than-average bet, obviously, but that would not be my obsession. Absolutely not. There's some weird confluence of environment and genes and circumstance that maybe you know it when when you see it, but ex ante, trying to predict that by looking at any one of the factors, I don't think you'll get very far. Hi, Andy. Hello. Nice to see you again.

I'm Andy. From Emergent Ventures, one of the many.

You talk a lot about energy and vigor. I'm really struck by that. And it makes me wonder, where do you think that comes from? Why is it so variable?

Why is it so different between people? How plastic is it? That's an awesome question, isn't it? You know, there's all those, like, toy studies about gait, you know, walking gait and all other health telemetry with people generally correlates with longevity and whatnot. And I don't know that anyone's run the regression on that and income, but I think it would be interesting. I don't know. I mean, I think sort of is energy plastic? Tyler, I don't know if you'd have a different view, which I think is an awesome question. It's sort of a bit of a nature-nurture biology-esque question. There is some basic mitochondrial factory thing going on that seems more efficient in some people than others. And so I think that just leads to more hours in the day of work, more chances taken, If you assume the batting average is roughly even, there's just a higher chance of home run. But when you read the interviews of Paul McCartney or the documentary and he's just like, George Harrison is like, "Again? We have to go again?" He's like, "10:00 PM again?" And there's thousands of those stories, Steve Jobs, whatnot, of just people that are more shots on goal. And so I think that sort of must compound. Tyler, do you think energy's plastic?

I've never read a serious research paper on this question, but my intuition is that energy and that kind of vitality is one of the most heritable of characteristics. I'm not saying you will be a copy of your parents, but whatever was plugged into you at birth is what you have. And if I think of myself or the other people I've known their entire lives, which is not that many people, but I just don't see that much change. And the way I am, my sense is I was that way at 3 or 4, at age 2 I don't remember. My mother always told me that. Always kind of antsy, wanting the next book, something. And I just don't think it's something I taught myself. Once you're that way, learn how to use your environment to make yourself better at that and get the genes-environment interaction going. And that is very much something you learn rather than something you're born with. How to like multiply your interaction effects. But that core something or other— Paul McCartney was composing songs at age 14. He's finishing up a tour now, he's 80. He doesn't need the money, puts out an album every 2 years, takes on massive projects, art, books, everything. Incredible. You just read biographies of Paul, it just clearly seems he was born with it.

Why do you think human core body temperature is dropping? You know, in 2018 there was a famous study put out by the United States, I think military army, that captured human core body temperature longitudinally over time, and the US core body temperature at least is like dropping. Now you could say it's some type of odd measurement effect, thermometers have changed since the 1930s or whatnot, but to the extent that's like an odd proxy towards energy—

I think we are declining in energy as a country, putting immigrants aside, which is going to be a complex story of its own and may not be the same from all other places, but the country to me seems to have much less energy than even it did earlier in my lifetime, just anecdotally. So I worry about that.

Hi, I'm Spencer. What, if anything, do you think we're doing wrong at a national level with our talent evaluation of politicians? Where are we going?

You're closer to DC than me, so—

I don't know where to start with that. I would just say, in my basic view of politics, the main problem usually is the voters. Not always, but typically it's the voters. I think we were talking about this before in the green room. I think senators as a whole are actually fairly impressive. It doesn't mean I agree with what they do or say or changes they push for.. But just as sort of raw studies in talent, they seem to me pretty good. I live right outside of Washington, D.C. I know or have met really very large numbers of people in politics, chiefs of staff, military agencies, people on the board of the Fed. I think our talent in those slots is pretty good, not perfect, but that is not our national problem in my opinion at all. I can name plenty of individual politicians politicians who I think are just absolute train wrecks. But again, I would think in terms of the main problem being the voter. I think our political system does better at bringing in some talent than you would think. And it's striking to me if you live in the D.C. area, in how many families, almost every family, there's some notion of like doing national service that I actually find strikingly absent in the Bay Area. Maybe in the whole US, it's weakest here and strongest where I live. But that sense of obligation to national service, it kind of actually works, I think. And US government still has done a whole bunch of things properly. We did Operation Warp Speed. That would be one example. We had a lot of talent there. The economist heading it, Michael Kremer, Nobel laureate, one of the very best economists alive on planet Earth. And he was running that side of Operation Warp Speed. Well, how'd that happen? Like, we're doing something right. But at the end of the day, you know, the voting inputs, I don't know, I really do worry.

I'd love to hear 2 or 3 anecdotes from the 2 of you on like specific moments in which you've really made a difference in somebody's ambition or aspiration. You talk about that at the back end of the book, and I'd love to get a couple of case studies of like how you did it, how you zipped in there.

I think it's important not to self-deceive. I've had like really quite a large number of people I know, some of whom are in this room, tell me I made a big difference. I'm quite convinced they're sincere, but I'm not sure they know. And I think there's something quite useful to just being obsessive and continuing and almost not trying to figure out too much. There's some odd ways in which I think our society is too data-driven. And just keep on trying to do it and repeat and try to be a good example. And if you're trying too hard to measure your marginal product, you'll maybe end up conforming too much. Or doing too many things that are measurable. And at the margin, maybe the way to have an impact is to not worry too much about measuring your success. I don't think that answer can work for everyone, but it's how I've approached the problem. I sort of feel, without measuring it, that it's worked pretty well for me.

I think, I think that is a very good philosophy. I mean, oddly, I think the simplest thing— I don't know about E.V., but certainly I find I've done over the course of my career that people seem to say has been useful for them— is just either funding or at least encouraging people to move to Silicon Valley, ideally if they're in tech, but even just to a new city. They tend to like mispropagate that at me, like, oh, you did cause— but it's actually, I think, like, well, first of all, anyone hopefully would have nudged them at some point, but it's really just that movement and that immigration pattern is, I think, really important.

Shruti, what's your answer?

I don't have a very good one. So one of the answers that people give me when I talk to them and tell them, oh, you received the EV grant in India, is they say, oh, you believe me, like, not believe in me, but they can't even believe that someone actually trusts them with the money and, like, really trusts the story that they are selling to me and so on. And the first thing they say is, "I won't let you down." So that's, like, the only thing I can pinpoint, like, a moment when I feel like something is changing here. I don't think I'm responsible for it. I think it would have happened anyway. Someone else would have given them funding or believed in them. But pretty much almost all of them say that. I mean, that tells you more about how broken things are in India than about me, right? But I can't think of that as a tangible thing where my faith in someone is somehow such a big signal to them that, you know, even if it's marginally higher self-belief, it's worth it. Hello, my name is Riley.

Tyler Cowen, you had a conversation with Marc Andreessen and you asked why Peter Thiel could spot talent so well. And he countered that there's this concept of the bat signal. You know, he throws up the bat signal and people come. And you have your own bat signal. I know you have your own bat signal. There's a portfolio of ideas through your blog, all your books. With Pioneer, it might be this egalitarian aspect to gaming, whatnot. I'm curious, what components of that bat signal do you think are the most effective? People come to you and they say, "Oh man, I really love this about your portfolio.

I really love this about Pioneer." I think the bigger and more globalized, more networked the world gets, the higher the returns to the bat signal. Bat signals are still one of the most underrated ways to be effective. That we have some kind of weighted average of how effective they were in the past, and we apply the weighted average. But their importance is just rising very, very sharply, I think, even over the last 5 years. So I think the world likes some kind of authenticity in bat signals. So, like, don't think too hard about your bat signals, maybe. Now, if they're bad to begin with and you don't think too hard, I guess they'll stay bad. But, like, that's great, because then more people like my bat signal. And maybe like they should be coming to me. I don't know, I try not to overthink the bad signal. And if I write a blog post, like I was working on a post earlier today, like what's the difference in the 18th century Scottish Enlightenment and Irish Enlightenment? Like that makes no sense as a topic. Like maybe someone in Ireland will read it, like okay, but there's no way you could come up with an argument that that's what I should be sending out as my bad signal. But like that will be the bad signal.. And I actually think it's fine.

The one thing I'd add to that is the best people are ones that view you as a way to gain advantage for themselves. And so they're not attracted to like you as the bat signal because they like want to be near you. They're going to step on you to get somewhere else. And that's great. I think it's important nuance that some people miss when they set out their bat signals.

I would say Tyler's bat signal is not the difference between Irish and Scottish Enlightenment, though that's interesting. I think it's consistency. I just recently found out that he's blogged every single day on Marginal Revolution for 19+ years. So I think that's the bat signal, right?

That's part of it, yeah. And no day has that been hard. I think it gets to the authenticity point. There's no day where I've said, "I have to blog today or I'll break the streak." Hey, I'm Josh.

Thank you for speaking. This is an awesome conversation. One big topic in SF especially is on automation. Are there any parts of the talent process that you think could be automated? Obviously, you know, ATS is a thing. And with the rise of automation, maybe it's pretty industry-specific, but are there any changes in how people seek talent that will come as things get more and more automated? I run a company that, you know, principally has, I think, for our little corner of talent, meaning venture, tried everything under the sun in order to automate it. I think you can, like many processes, you basically split things into two. There's basically the spam filtering process of basically weeding out people that don't make any sense for us for whatever reason, like what they're working on is non-economic or they don't have the qualification. That you can probably do with software. There's a second step of it of basically, okay, so imagine this is Gmail, right? So you've got rid of the spam, but now it's like you got to pick what in the inbox is important. That's a much harder task. I'm sure it can be done in software, but I think it's it's a bit more nuanced. And the really tricky thing in venture in particular is regressing on success is pretty hard, not just because the data points are pretty sparse, like what great founders look like. Maybe you have 10,000, which is not that helpful machine learning scale, but also because everything changes all the time. So the psychometric makeup of a great founder in say 2015 SaaS era is someone like Frank Luddy who started ServiceNow is basically be a sales machine, started a sales empire. It's very different from who's going to be a very good founder, say, working on transformer models, who's going to be much more like Woz than Steve. Everything kind of is shifting constantly. So it's tricky. Yeah, I assume a lot of automation can be done for that first step. I think for the second step you could, but the final thing I'd say is, I guess in venture in particular, you are rewarded so aggressively for making the right calls that you will be able to always afford the salary for people to review it. And you're penalized, of course, very aggressively by errors of omission, not commission. So I think you're going to always end up with an economic model where you can have people. This is obviously very different if you're McDonald's and whatnot and you're trying to figure out, okay, who's going to be able to flip burgers a year in. But I don't know enough about that field to opine there.

Thank you. Thank you for attending. Thank you, Tyler. Thank you, Daniel.

This was fun. Thank you, Shruti.

Thank you, Shruti.

Thanks for listening to Conversations with Tyler. You can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. If you like this podcast, please consider giving us a rating and leaving a review. This helps other listeners find the show. On Twitter, I'm @TylerCowen, and the show is @CowenConvos. Until next time, Until next time, please keep listening and learning.