The Secret To Finding Great Talent - Tyler Cowen

There is much more talent to tap into than ever before, but in most parts of the world we are screwing it up. So we require too much seniority for too many different jobs. There is too much credentialism. Our school feeder systems rely too much on homework, and this discriminates against rebellious people. And just in general, we're too slothful and bureaucratized when it comes to choosing talent.

Tyler Cowen, welcome to the show.

Happy to be here.

I've just read a blog post from Mike Solana at PirateWise talking about population collapse. Have you read this one yet?

Uh, no, I have not, but I, I think I've heard that kind of argument before.

So he's got this great, uh, idea. I'm big into existential risk, have been for a long time, and he makes a really interesting argument about the Great Filter, Robin Hanson's thing. He says, from this perspective, Elon's efforts are obvious attempts to eliminate potential filters that threaten a blossoming civilization, like runaway climate change, nefarious artificial intelligence, or being stuck Earth during a cataclysmic event. But among our greatest existential threats, population collapse is unique in that it lacks a noticeable immediate pain for us to rally against. There are no wildfires or smog-filled skies to capture the imagination of our journalists or filmmakers, thus inspiring no individual action. It is precisely because of this attention void that I believe we encountered the true Great Filter. What do you think about that?

I'm much more optimistic than Mike is. We have at least two countries, France and England, if you consider that a country, where fertility has returned to replacement levels. Now, that may or may not last, but I find that very encouraging that it's possible. I think also we will have new technologies that lower the costs of raising children. And just theoretically, there are gains from trade from having more kids. Now, the question is, can people selfishly capture the gains from more children? But I'm convinced that over time, especially if nation-states truly start to shrink become vulnerable to foreign exploitation and capture, that we will find ways to get population numbers back up again. So people freaked out about this in the 1920s. It turned out they were wrong. Eventually they'll be wrong again. Maybe not in Singapore, but for the world as a whole.

What do you think has caused that, at least population slow?

There are things to do that are more fun than having kids. And then you have a number of cultures, uh, South Korea and Italy would be two examples, where the men just don't help out that much on raising the children. So women think, well, I would like to have a child, one is enough, and they stop. It's a real problem, I agree. But ultimately, we know the technology, unlike with some of these other problems, right? The technology is fun and we will fix it.

That's true. It's a little bit easier of a solution than trying to knock an asteroid off course to just get people to do what they've been doing for all of history.

That's correct. Now, you might have the worry that it will disfavor particular regions of the world. So East Asia, for whatever reasons, seems to be especially poor at reboosting fertility. It may be East Asian men are not so keen to help with raising the children. Uh, so if you're East Asian, uh, arguably you should be quite worried. I mean, that's a real concern. But again, for the world as a whole, I think we will have enough volatility in fertility rates that will just manage to keep billions of people on this Earth each and every year.

He's got this really—

For better or worse.

This really lovely quote where he says, uh, demography is not destiny, but it's pretty damn close. And you'll have seen these, um, graphs that are kind of the shape of a pear or a triangle, and it's got the youngest at the bottom and the oldest at the top, and it allows you to see the proportion of how old a civilization is. And what you want is this shape where there's more young than there is old.— and then you get towards some of the East Asian countries, and they start to look a lot like an apple. But obviously, what you can see is, as that continues to move up, that's going to be the shape at the top. So you're going to end up with this inverted triangle shape. It's pretty dangerous.

But keep in mind, we're likely to fix Alzheimer's and dementia to at least some degree. So old won't be as bad as it used to be. And demography makes me feel good about being an economist, because I don't have to think By science is the very worst at predictions. Demography is very poor at predicting turning points. So it's a note of caution, but for me, not a note of deep concern.

Okay. Well, given the fact that we're talking about the hopeful non-implosion of our population, Talent, which is the subject of your new book, is there a crisis of talent at the moment? I mean, objectively, we have more people on the planet than at any time. So there should be more talent to tap into.

There is much more talent to tap into than ever before, but in most parts of the world we are screwing it up. So we require too much seniority for too many different jobs. There is too much credentialism. Our school feeder systems rely too much on homework, and this discriminates against rebellious people. And just in general, we're too slothful and bureaucratized when it comes to choosing talent. We have these big interview processes that process Many thousands of people, ask them all the same questions. They do okay. US does better than most of the world, but we could be doing so much better. And you see this in the history of women, history of minorities. We can do better for virtually all classes of people.

Given the fact that recruitment or finding talent is in the pursuit of trying to be effective for the company, you would presume that companies, if they were following practices that optimize for the wrong parameters, would manage to self-correct, that they would stop doing the thing that isn't finding the most optimal talent and actually start doing the thing that is. Why is it that organizations are holding onto a suboptimal hiring and talent scouting process?

I think the world of venture capital and startups has more or less operated the way you're saying, that there are truly significant returns to finding better talent. And for that reason, I co-authored this book with an actual venture capitalist. But so often human resources departments are not in any direct or even indirect way residual claimants on how well the company does. Their mentalities are quite conservative. They don't want to rock the boat. They don't want to be blamed for bad hires. They don't often know what to do with highly creative hires who might have a rebellious streak in them. So like so much of the contemporary world, we have bureaucratized things far too much., and we try to put forward a less bureaucratized approach to hiring.

Rory Sutherland says that a lot of HR, uh, departments see hiring as a, an organizational and operational problem that basically they're looking to optimize as easily as possible with a set of parameters. Because I suppose what you're saying there is that looking at creativity, personality traits, the way that someone's values come out in the way that they talk, charisma, this is a little bit more messy as opposed to, do you have the correct credentials, if this then that.

That's correct. And you have to ask the rather impolite question of whether organizations are putting their best people into HR. And in fact, many of them are, and that can be somewhat of a change from past practices. But in many, many cases, they're not. They're just putting people who are good enough into their HR departments. And those people then just want to hire other people who are good enough Yeah, I suppose— The value of top performers in a company is much, much more than the value of average performers for most enterprises. And that's something HR departments are not very good at grasping because the value of a top performer in HR is not that much higher. So that's one of the key things where having the mentality of an HR person doesn't necessarily get you that far.

That's interesting. So you're saying that there's power laws that allow the people that are the absolute best within an organization be worth 10 times or 100 times perhaps a normal member, that isn't necessarily reflected in HR, and HR recruits as if it were for its own department, not necessarily for other ones.

That's correct. Now, this doesn't hold for each and every sector. If the job is stuffing donuts into boxes, I'm not sure that the person best at that is 10 times better than the average worker. But if you look at what you might broadly call the ideas economy, creative work, For the most part, it's true that the top performers are at least 10 times better than the average performers.

What's the definition of talent that you've come to settle on then?

In our book, we conceive of talent of people with an energetic spark who have new and creative ideas, who somehow want to change how things are done. Now, that can be a CEO, it can be a tech innovator, but it can be something as simple as the person who's my research assistant. Who does in fact give me new ideas. I run a podcast. I have a sound producer. She's great. She gives me ideas. So there's creative talent at many different levels of the economy. But that's what the book is about. Not routine labor, but creative talent.

What is it about someone that's asking questions or doing things in a different way that helps within an organization? You're right there that the routine labor needs to be able to follow the processes. You don't need everybody to try and revolutionize whatever it is that they've got in front of them. But it's interesting that there is a particular type of person, personality, worker for which this is a real advantage.

I think when you're interviewing those people, you want to get them into normal conversational mode and out of interview mode. So we all have a set of canned interview questions that almost every decent candidate is ready for. They have their canned answers. Everyone is a bit bored at how this process proceeds. At the end of it all, you're not sure what you've learned except, oh, this is another candidate who read those 3 interview books and came more or less prepared, which maybe is fine. It puts them over a certain threshold. But if you're trying to find those people who are 5 or 10x better and you simply ask everyone, well, what was the mistake you made on your last job, right? Everyone's ready for that question by now. So you would just want to engage with people about topics they are passionate in. And see what is their level of detail, what is their level of enthusiasm. Do they impress you with their energy and with their ability to understand cooperative teams in a broad variety of settings just by talking about them? That's what interviews should be doing rather than just mechanics.

How should you set up at the beginning of a good interview? How should you conduct the interview itself?

Well, I think you simply have to be genuine, so You want them to trust you, and the best way for them to trust you is for you to be trustworthy. So maybe share something about yourself, but don't have it be phony. Don't have it be canned. Just talk to them as you would talk to an actual human being. I know that sounds somewhat radical, but very often that is in fact the best way to proceed.

I was around a friend who has been on a bunch of movies and a bunch of TV shows the other night, and he was— one of the guys was asking him, how are you so good at playing these different sorts of roles? Being an actor in various different scenes. And he said, well, the advice is always that he's been given: if you need to walk into a room, pick up a glass, and drink it, you don't act like you walk into a room, pick up an ass— a glass, and drink it. You just do the thing. It's like trying to play that second-order, like, meta role of I'm an interviewer, this is me in interview mode, I must ask the questions like an interviewer asks. You're right, it does begin to already pull you away from whoever the talent is that's actually in front of you.

I want the person to be talking about something I'm interested in because they will sense that I am genuinely interested and that will make them better and that in turn makes me better. So one thing you can do as an interviewer is just develop your own personality and intellect so that you can be interested in a lot of different things that the people you're talking to might care about.

What are some good interview questions that you can ask that might not be, uh, typical? In an interview process?

It will depend on the job, of course. But one I like to ask is simply, "What are the open tabs on your browser right now?" And then get the person talking about them. So, if something's too personal, they don't have to bring it up. That's fine. You're not asking about their personal lives. But let's say they're a Lord of the Rings fanatic and they say, "Oh, you know, the Wikipedia page to something in Lord of the Rings is open." Well, engage them on that. See what you can learn from them. See how they handle that. You get a sense of how they organize information, of how they make decisions of what to follow or not to follow. Do they have 2,000 open browser tabs? Do they have 3? Whatever. You're getting them talking about how they manage some part of their ideas consumption, and very likely that's going to prove useful.

It would be a difficult one for me because I'm a clean freak when it comes to my desktop. So everything would be shut down. It would have been organized into Pocket or a read-later app or something like that. I'm not sure that my answer would be too satisfactory.

Well, that is itself a revealing answer, but I could also ask you, well, what have they been over the course of the last week? Uh, but that says you are extremely well organized in some way, right?

Compensating for all of the other ways that I'm terribly unorganized in, I think. Didn't you have one about conspiracy theories as well?

Uh, Daniel Gross and I have this view that if someone is creative and wondering and innovative, they should be a bit intrigued by conspiracy theories. Now, I tend to think that not that many conspiracy theories are true, but some of them are true. And haven't you ever wondered, like, gee, why did Jack Ruby shoot Lee Harvey Oswald? Isn't there something funny there? So again, it will depend on the kind of job. If this is a cashier at Starbucks, it's probably a misguided line of questioning. But if you're looking for someone who will themselves be asking questions in the course of a job, to see what they think about different conspiracy theories. How do they analyze them? Which ones do they think are plausible? What are their presuppositions?

What about you? What are conspiracy theories that have captured you over the last couple of years?

I think a lot of sports betting conspiracy theories, like, you know, games are thrown crookedly, maybe by referees rather than players, they're more true than is commonly recognized. That maybe reflects a view of mine of human nature, that there's a bit more corruption in institutions than we recognize. I do think someone put Jack Ruby up to killing Lee Harvey Oswald. And I no longer think he was the lone assassin. And most of my life I did. Like I said, I don't believe in many conspiracy theories, but I've seen enough weirdness in the world over the last 5 or 6 years that now I believe in them a bit more. And I also think, while they're probably not space aliens, the Pentagon isn't quite telling us everything it knows about UFOs. Those would be a few examples.

I would agree. The last few years has done, uh, very little for dampening down my conspiratorial nature. I don't know how anybody's really come out of the last 5 years or so without an increase in cynicism or skepticism for the mainstream narrative that we're told about a lot of things.

There's another question I very much like to ask, though. It's mainly useful for people who will run or found organizations. And that's the simple question, how ambitious are you? It's actually very hard to fake. And a lot of people simply aren't that ambitious, which might be fine. But then you should know that going into funding them. So if someone wants to start a nonprofit, I'll almost always ask them, how ambitious are you? And just see if they have a detailed answer. And often the best answers, people won't even realize how ambitious they are, but they'll be so enthused about the thing they want to do, you get the sense they're quite ambitious. And then there are people who say, oh, I'm so ambitious, but the whole answer is a big empty sack. So that's another favorite question. Again, at least for founders or leaders.

It's interesting thinking about ambition being British. We're perennially downplaying our ambition. I think that's just part of the way that I've noticed the difference between myself and people since I've been in America.

And I think that reflects a defect in actually British startup culture, that you have so many assets. You have London, you have Oxford, you have Cambridge. And you're becoming significant in the startup space, but relative to those assets, it has been a slow process. And culturally, somewhere like Austin where you live, to me seems better for starting things actually than a lot of England.

I'm finding myself being pulled along, being sped up by the communities that are around me now. But I think I've got this theory that in the UK, Tall Poppy Syndrome is a huge deal, right? That standing out from the crowd, especially when you're younger, is very non-rewarded. Going through school, if you do things differently, if you deviate— I didn't have the accent of the town, the northern working-class town that I'm from in the UK, and that was something that was pointed out throughout all of school. And by my mum slapping me on the back of the hand when I didn't pronounce my Ts or didn't do whatever when I came back from school, I didn't veer off into that. The difference is that when you grow up in the UK, you have a— I wouldn't even say realistic, it's probably a sub-realistic view of what you can achieve and where you should go. Now, the reverse, I think, seems to happen in America. For all that America could be accused of being the worst country in the world with its patriarchy and oppression and so on, there's still an American dream, blue sky vision, helicopter thinking that gets given to young kids. There's a lot of people that are starting businesses here. Now, the advantage of that is that you believe you can do anything you want. The disadvantage of that is that when these kids grow up and the world doesn't deliver to them the life that they perhaps expected, I think a lot of the time that delta between the two is what causes a lot of pain and, and perhaps sometimes claims of corruption, uh, where they might not be quite so valid.

I very much agree with that. I think also England has so many other dimensions of status competition you need to worry about. Well, what prep school did you go to? What is your accent? Did your family own land? How do you fit into a variety of different historical pictures? You know, or is your background one of descent or Catholicism? So you have all these opportunities to achieve status culturally, which mean you are a better cultured country than we are. And many of you speak much better than we do or build better art collections or do other things. There are big advantages to this. But at the same time, the fact that we more or less all go to McDonald's means we're keener to achieve status by, say, earning a lot of money or starting a new company.

Well, that's the thing. When you've got a more established history, there's just more ways to do stuff. There's a richer set of roots that you can dig your hands into and go, "Okay, well, maybe I could go this way, maybe I could go that way," in the UK. Whereas in America, I mean, we've got trees in our country that are older than your entire country. So given that, you think, well, of course people are going to be trying to find that pioneer spirit. I, I definitely think it's still here, and I really like it. I look— I've got this great story, right? So I came out to Austin in November, and I got invited on this really huge podcast, Tim Pool's show, and it was the day of the Kyle Rittenhouse trial verdict.

Oh yeah.

So I'm thinking, okay, this is going to be quite big. Only 3 days before, Rogan and Alex Jones and a bunch of other people had been in the same RV where I was. In the time it took me to leave that door there of the Airbnb that I'm back in, to get downstairs to get picked up by the driver, I had 2 phone calls from people that I'd only met within the space of that 1 week. Hey man, just wanted to let you know that I know that you'll probably be a little bit nervous for tonight, but you're gonna crush it. I'm gonna be watching, the missus is gonna be watching, it's gonna be dope. I was like, oh man, thank you. Yeah, yeah, I appreciate it. Put the phone down. As I put the phone down, another friend who doesn't know that first one rang and basically said the same thing. I was like, this is so nice. It's one of my favorite memories since I've been here, that within the space of a week, people understood something that meant a lot to me. They understood the opportunity. They understood how it mapped into my sort of broader journey and what I wanted to do. And they were then there to ring me and support me. That would have never ever happened in the UK.

That's great. But I would say I'm optimistic about startups, at least in Southern England. I think people from Europe, or sometimes South Asia who want to do things, they will be naturally drawn to the London area.

Well, the other thing that you have is if you've got somebody who has come up through that tall poppy syndrome mentality in the UK and still managed to make it to perhaps within your, uh, vision on your radar of founders, startups, you know that they've probably had to dredge through a fair bit of cultural pushback in order to get there. So that's probably another node of information that is informative at least.

That's right. And it could be a lot of your best founders won't be British at all. But if you think there has to be some startup capital in European time zones, it's hard to see where else it would be when you go through all the other alternatives. Amsterdam is too small. Germany is too verkrampft. Paris is too bureaucratic. Oh, sort of a little bit grumpy and crouched up and not, you know, entirely explosive and innovative.

Procedural.

Yes.

Yeah, okay.

And again, Germany has its own strengths. It's a wonderful country, but it's not going to be the startup capital of Europe.

Have you seen how much Portugal has been pushing to get people to go at the moment?

I was just in Portugal, uh, I think for the fourth time. I had a wonderful experience, but I think ultimately they will become the retirement capital of Europe, which I mean in a very positive way because a lot of retirees are going to do some fairly significant things. But even with their very favorable tax treatment on crypto and other areas, capital gains, I don't think it's big enough or culturally central enough to be a startup capital. But I am bullish on the country. They do many things very well and they're some of the world's least craziest people. And I mean that in a good way, but it's not entirely a good thing for being a startup capital. You want to have some of the world's craziest people along a particular dimension.

Didn't they do— have they legalized certain drugs? Many drugs?

They decriminalized many drugs and that has gone well. It seems to be doing better for them than say, US drug policy. They're not legal for the most part, but you don't get thrown in jail. And they've had modest improvements in outcomes.

It was the first time ever that I got targeted with ads from a country to move there. They were doing this big push for nomadic internet entrepreneurs and crypto people, come and live in Lisbon or Faroé. It's on GMT, so it's the same time zone as London, and we'll give you these tax benefits, and this is how much it's going to cost to live here, and the weather's like this.

I was like, "Fair play." For amenities, culture, weather, cuisine, proximity to Europe, time zone, it's perfect. But population is small and just creative spark in people who live there, it's not a big enough country, I guess, is my fear. But it's a great place. I plan on going back. Porto is a true gem also.

Going back to talent, what have you come to believe about the innateness of talent?

Well, there's a lot of evidence from the sciences that many features are, you know, 50% or a bit more genetic. But talent is everywhere. So I don't think you should obsess over thinking about a person's parents. You know, my father didn't go to college. The people whose parents did very well are already most likely to be spotted. You're trying to look for people that the system is missing. So one thing the book argues is don't obsess over genetics. Think about the real-life interactions before you. I like to see people try to write out an idea to evaluate how they think. So I'm a big believer in companies, institutions that have writing cultures and engage them in the moment. And there's places such as South Asia, most of all India, that 30, 40 years ago were really not seen as talent hotspots at all. Today, India has a phenomenal record in tech and with tech CEOs, but in virtually every area. So the value of the English language has gone up. You do want to look at countries and regions where there's good internet access, and that's way more important than some notion of genetics.

The classic idiom of hard work beats talent when talent doesn't work hard. What have you seen about the relationship between talent and hard work?

Well, I think when it comes to intelligence, a lot of smart people in particular, they overvalue smarts in others and they think they're so, so, so smart. There's a lot of evidence in researching the book. I was surprised how strong the evidence is that smarts are not that closely correlated with income. That for a lot of jobs, you probably have to be at some certain level of smarts to do the job at all. But above that level, it's very hard to find big correlations between intelligence or IQ and outcomes. So energy, ability to work well with others, ambition, just the ability to stick with something, durability, what I call the ability to see the right hierarchies in an organization and know which are the right ones to climb. That's something I definitely look for in people. There's so many talented people and they just spend their time playing games, literally playing games, and they don't do anything. And they're energetic, they work hard at playing games, or they play chess, whatever. And they don't go anywhere because they're maximizing along the wrong hierarchies.

How should somebody that is playing a game step back and see the broader picture? What is it that they're missing?

It's very easy to optimize too locally, and we all do this in different ways. You have a peer group and you in some way appeal to that peer group, but the peer group might be people you grew up with, or they could be other gamers. I grew up, you know, as a 10-year-old, 11, 12-year-old playing chess in New York City. My friends were all chess players. A lot of them are still playing, but it's not a great life. And I think just to always be looking around and trying to see one level more, one level higher, one level broader. And this is one of the things you want to get at in interviews. Can people see things other than what is before their eyes at the moment? And I like to ask them about books or plays or movies or TV shows, whatever they want to talk about, and just see, can they see beyond the immediate moment? If they talk about Shakespeare, The Sopranos, Star Wars, whatever their thing is, Jane Austen, just see how much further they can go with it.

Didn't you suggest or ask them to put another act onto the end of a book or see what would happen in Romeo and Juliet if something had changed?

Those are good questions if that's what they know about. There's going to be something they know about, right? You don't have to be an expert in it, but you have to know enough that their answer is at least intelligible to you. So just ask them about that. If they're a Shakespeare fan, ask them, are Romeo and Juliet really in love with each other? So see what they say, see if they've even thought about that.

It's strange for me to think about the correlation between IQ and school grades and resumes and CVs and rote education. Is it a little bit of a difficult situation for somebody that's growing up now who is having to go through this almost a charade, I guess, unless they've got a ton of bravery to then decide to step outside of the school system? Because they're going to think, I want to be a founder in this thing. If I decide to go complete college dropout, 'That's probably a little bit of a high-risk strategy. I've got all of this pressure from parents. I've got all of this pressure from institutions telling me that this is what I'm supposed to do.' That selects for a particular type of rebelliousness that someone who's a little bit more orderly, but perhaps just as talented, who might stick in university, might not be the same. I'm trying to sort of dissect apart all of these different people.

I think it's criminal what we're doing. So I'm advising some young people right now who are applying to Stanford, MIT, Berkeley, and they tell me— and these, these people are not whiners or complainers— they say it takes a full 6 months of their life just to do the applications, the essays, the paperwork, get everything lined up. I think the process, if anything, should be more random. Now, if we could perfect and fine-tune it, fine, but compared to what we're doing now, which is just selecting for a certain kind of— I wouldn't call it mindless effort, but a kind of obedient effort. I would rather just look at people above some level and then randomize. That I would prefer to what we're doing now. We're rewarding homework at every stage of the process and then we're shocked when we get too many conformists.

What do you mean by randomize?

It would be perfectly acceptable if a school such as Harvard said you needed to have, you know, scores or grades or something above a certain level or some basic level of extracurricular activities They would take like 5x the pool they end up choosing, and within that 5x pool, literally randomize, you know, draw names out of a hat. I think it would be better.

Why?

Because they are looking for particular models, which are what their, you know, admissions counselors think are fine, upstanding Americans. And that to me is just a little scary, and it does emphasize homework too much. And having jumped through hoops at various levels. And I think they should admit, you know, more people who are somewhat more like John Lennon or Pablo Picasso.

I'm in Austin at the moment, and there's a lot of Waldorf schools here.

Yes.

And Tim Kennedy, that I was with this week, is the headmaster. I don't even know what it's— what the type of school is. It's even more non-typical than a Waldorf school where, um, the students get to determine their own class structures and all sorts of stuff. They basically put tons and tons of agency on the kids, even at 5 and 6 years old. Um, and I think that that non-typical education early on, you're going to see more and more of that. I think parents increasing— like, I went to university, I did 2 degrees at uni, I got a master's in international marketing, and I learned more in the first 6 months of running my business while I was at university than in the entire 5 years that I spent at uni. So for everybody that does have successful parents, increasingly now outside of institutions, or at least having come through the institutions but resented the academia that they went through while they were doing it because they kind of realized in retrospect it was a little bit pointless, I do think that you're going to see parents encourage kids to take non-typical routes.

The good news in the US is the last 5 years we have so intensified the pace of K-12 experimentation I do not myself pretend to know what the right answer is, but there are many, many, many more experiments, some of that brought on by the pandemic. But if you look at higher education within a given quality tier of university, schools are just competing to be more like each other. So the school rated number 32 will try to be more like MIT in some way rather than just doing its own thing. So it's still massively conformist at the higher ed level. But as you say, K through 12, we've made a lot of breakthroughs. There's a lot more homeschooling. Charter schools, other models, are very bullish about how this is going to play out.

Given the fact that genetics is a big chunk of what we're talking about, even though you've said it's maybe been overplayed in the past, is there an argument that you should meet the parents of a super high importance crucial hire? I mean, it, it is kind of strange to me that a lot of the time you will meet the parents of your girlfriend or boyfriend, uh, even if you only end up being with them for a year or something like that. But meeting the parents of a potential candidate, I don't know, might seem a little bit more strange.

Well, I have a principle when I have young people apply for my fellowships, which are called Emergent Ventures. I asked one very young applicant, I think he was 15, "How did you hear about us?" And he said, "My mother told me to apply." And that was a no right then and there.

Why?

He seemed very smart. Seemed like a hard worker, was in an excellent school. Probably he'll do just fine in life. Maybe he will excel in life. But I felt he was not self-driven, and the value added from his dealing with me or getting money from me would be zero. So the parents who refused to meet with you would be the ones who would impress me in that setting. Again, I'm not— my own personal role, I'm not looking for just people who will do well. I'm looking for undervalued talent that won't do as well if I don't help them. And that is a difference. If you just want people who will do well, just sort of optimizing for parents who have done well and so on, I mean, that's fine, right? That's going to work. Pick out a Rhodes Scholar while you're at it.

That's interesting. I didn't realize that that was one of the things you optimize for, but it makes complete sense. Why do you need to assist somebody that's already probably going to be successful within the structures that exist? Right?

There was another phone call I had. It was with someone in rural Peru, which is not really a hotspot for that much of anything. Uh, one of his parents was absent. He seemed super ambitious, even at age, I think, 16 or 17, spoke excellent English, which he learned mainly through YouTube, found out about my program on his own. May still have some rough patches, but struck me as someone with real potential who really truly wants to succeed, get out of there, go somewhere else, make something of himself. That person I'm keener to help.

That's really nice. That's really nice to hear that people who don't have that obvious route to success are going to be assisted with it. There was something that I saw about the value of talking about drama. There's a very common adage about great minds discuss ideas, average minds discuss events, small minds discuss people. And then I think there's one about podcasters, which is podcasters discuss people discussing events. But yeah, talk to me about drama. What can you learn from asking people to discuss drama?

Well, I think you want to discuss people. Again, it depends on the job. If someone is simply programming from a distance, that may not matter.. But most jobs you're working with other people, but you don't get very far by, "Tell me about an instance where you work together well with someone." Again, you're just testing for prep. What you want to do is get them talking about other people spontaneously. So I try to find out something they're interested in. You know, if it's Star Wars, I'll just ask, "Did Yoda give good advice?" Or, "Who was the best talent scout in Star Wars? Was it Obi-Wan? Was it Yoda? Was it Darth Vader?" I don't really care if I agree with their answer. I care how they show that they've been thinking about it. And that's a way of getting them to talk about people. It's not threatening. Like Yoda doesn't exist, right? You know, you're not insulting someone.

He's not going to be upset.

You can't say Yoda was a fool. But at the same time, if a person is say a Star Wars fan and has never thought about these questions, you figure they're a bit oblivious. Again, for many jobs that will be fine. For other jobs, it's a danger sign.

What was that story about SpaceX's hiring strategy?

Elon Musk, uh, according to the book about SpaceX, was directly personally involved with the first several thousand of their hires, that he knew for SpaceX to work you needed people who actually thought it was important that mankind reach Mars, that, you know, thought these rockets would work and that you could revolutionize space travel. And clearly he succeeded with that project.

There was a conversation I had with a Navy SEAL, Rich Diviny, about a year ago, and he had this really interesting insight. I wonder if you agree with— he said typically companies hire on skills and fire on attributes. So when you sit down with somebody, you look at their resume, you make sure they've got the requisite qualifications and whatever. But most of the time when somebody gets kicked off, they're not kicked off because they don't have— they can't program in C++. They don't have whatever the medical license that they're supposed to have. The issues is that they are unable to work in a team, or they're not trustworthy, or they don't have grit. That to me seemed really interesting, that look at what you're optimizing for on the front end and look at what the problem is on the back end. Those two things don't seem to match up in companies that are hiring poorly.

Strongly agree. And that's an interesting anecdote because I've known a few former Navy SEALs Uniformly, they are super insightful about talent. So their own process to me seems quite fascinating. I've read a number of books about it. That's no substitute for having gone through it, but it seems to me an underutilized source of insight and expertise is Navy SEALs.

I would agree, having spent a little bit of time with some in Austin. They're— yeah, it's interesting thinking about that because it's not just whoever's the best shot. Or whoever can run the quickest mile. It's not objective parameters of success in whatever it is they're trying to do— communications, signals, fighting, whatever. It's very much coordination and being able to keep up the intangibles. And I suppose that it's so bizarre that we've, we've kind of tried to create rules, mostly arbitrary rules, about what we're trying to look for in a person, when what you're doing is having conversations about Star Wars and whether what would have happened if another act in Romeo and Juliet had been added on to the end. That seems more natural in a way, but oddly now it's revolutionary because it's so far away from the typical process.

It seems to me that Navy SEALs understand the importance of practice and improvement. That's something I try to ask people about. And Navy SEALs understand the importance of coordinating your different talents. So they're working together in a way that athletes, say top players in the NBA, understand. But for a lot of normal jobs, we somehow don't think about closely enough.

I've had an idea for a long time. David Perell, who I think you're familiar with as well.

Oh, sure. Great guy.

Yeah, he's fantastic. Good friend. He had a blog post called Think Like an Athlete, and it turned out that the blog post had absolutely nothing to do with what I interpreted the title as, but in classic style, I decided to make my own idea about the blog post without reading it. And it turned out to be a concept that I really enjoyed. I noticed that most—

And he cites me in that. I was the one who put him onto that stuff. I said, "David, you should think more like an athlete. What is it you do every day that's practiced the way an athlete or concert pianist might do?" I really should have read that blog post.

Anyway, it's something that stuck with me, and it turns out that I landed pretty close to exactly what he was talking about. So few people treat their chosen pursuit like athletes do, the same level of rigor around their conditioning, their mindset, their recovery, their sleep, their nutrition, their hydration, their performance, their game talk, their strategies, their tactics, everything. Nobody really seems to take— maybe, uh, top-level, um, musicians like classical musicians and stuff like that, perhaps some chess players and stuff, but the degrees of separation and the lack of a linear line from your inputs in terms of your preparation and your outcomes in terms of your performance, they're so messy. I have a podcast with you today. It's very difficult for me to work out whether this podcast is objectively better or worse than the one that I did yesterday. It's very difficult for me to work out if I'd gone to bed half an hour earlier, if that would have improved, if I'd had another glass of water earlier on today, if I'd optimized my nutrition. The line is so blurry. Whereas if it's powerlifting, 300 kilos on a barbell is always 300 kilos. You have a very objective measure of your performance as you go up, as you peak, so on and so forth. And increasingly to me, I find that— that was one of the most romantic ideas that I've heard ever since I read that and then spoke to David about it. It was one of the most romantic ideas that I heard because I thought, well, I really like the idea of committing myself to one thing as hard as I can to see just how good I can become at that. And that was what inspired me to start working with a diction coach for the podcast. So I worked with a diction coach to improve my pronunciation and work on some speech defects that I had, and then he worked on my delivery. And then I started to work with a comedy coach because I wanted to work on my humor so that my timing could be better. I thought, this is great, but it's rare.

I go see a lot of stand-up comedy, in part for this reason, but I once interviewed economist Larry Summers I went back, I looked through a lot of his work, a lot of Larry on YouTube, and he struck me as one of the few economists who over time, his answers to the same questions get better. Not a question of agreeing with him or not, but he just expresses it better or he changes his mind. He explained in my interview with him that he consciously sets out to think through his answers, which ones were not so good, how can I improve them for the next time? For weeks, months, maybe years, he'll be thinking about How can I make this answer better? It sounds so trivial, but the percentage of even top economists who do that, I promise you, is quite small.

It's the same for everyone. I find this on the show, that especially if you've listened to somebody speak for a good while beforehand in preparation, as you ask a question, you can begin to see if this person's going to tumble into the same canned answer that they typically give, or if they're going to honestly assess what they think about that question right now. I see this in myself as well. It's very easy to give the answer to common questions that people always ask you because it's easier. It's the path of least resistance. Whereas if you go, "Okay, well, what do I think about that question with me right now with my feet stood here in this time and space?" That's right.

Navy SEALs seem to get this as a general mentality. Not that they spend their time answering questions, but they do other things. And, uh, very top chess players, concert pianists, some athletes, Navy SEALs— there are some of the people I've tried to learn from. Stand-up comics— what's interesting about them, I've met a number of them, they're not funny when you spend actual regular time with them. When they are funny on stage, it's an extreme devotion of practice. Most of them are not intrinsically that funny, and that was a revelation when I saw that.

That's interesting because that's not my experience with the ones that I've spent time with. Now, that just might be my selection bias or yours, but the ones that I spend time with, they don't seem to be able to switch it off. I go out for dinner with them and they're just constantly— I don't know whether they're playing a little bit of the entertainment role just purely for my benefit. I don't know. But yeah, that's not my experience.

And one of them who's very well known said to me he won't take material on television until he's tried it out with live audiences maybe 40 times and modified it, improved it. This would be one of the very best-known stand-up comics. 40 times is a lot. If they say it's, well, 5 times, 8 times, okay. But 40 times from someone at the top of his profession, that to me was really striking.

I've seen Rogan perform twice in Austin, and the way that they do it is they make you put your phone into one of those special sacks. You may have been to a show like this before, and it locks, and you gotta give it to them at the end of the night. Uh, no recording allowed, no heckling from the crowd allowed. And his set, um, from the first time that I saw him in November to the second time that I saw him in mid-April, uh, was structurally very, very similar, uh, but in terms of delivery was, was quite different. And you think, well, it's like, it's the same story, it's the same joke, but just iterating night after night what works, what doesn't. It is, it's like the split testing for life, I suppose.

He, Rogan in particular, has perfected something. I'm not sure how to describe it, but people who think that Rogan or some other top performers just randomly got to the places they're at, you know, MrBeast or PewDiePie, no, you may or may not like what they do, but they have perfected something through extreme practice and diligence and trying to figure out what works and what doesn't.

The thing is with those guys, they're the common denominator amongst all of their successes. And this is why, no matter what people think about him, Logan Paul, as far as I'm concerned, is a media master. That guy has nailed every single thing that he decided. Now, he's been involved in some NFT projects that are a bit dodgy, uh, but apart from those ones, his ability to deploy his personality and to understand how he's positioned, to understand how people see him— there's this— did you ever see when he got invited on Is it— is MSNBC, is that the business channel in America?

Yes, but I need to watch him. I don't know about him at all. Where should I start?

Oh, God. Just have a look on YouTube and see what the algorithm serves you as a few short clips. That would be interesting. Have a look as well at the MSNBC interview that he did. It was around about 2 years ago. So, Logan Paul goes on to MSNBC. It must be when tax returns have just been released or something. —so his net worth had been made public somehow. I don't know how that works in America. And they were asking him about his business and about his strategies. And he had this— it was called the Challenger Games, which was like influencers and YouTubers doing sporting events against each other. And that was his next big thing. And it was maybe a week or a couple of weeks away. And he was competing in it, but also running it. And this lady's having a conversation with him, and she's trying to— desperately trying to drag the conversation back to business. Immediately starts talking about the fact that he's got pink eye because he's pretty sure that one of his housemates rubbed his ass on his pillow. Then he's saying that he's pretty sure he's the fastest man on the planet. He can't wait to prove to the world that he's the fastest man on the planet. And he's doing it in like a really charming, really funny way. And the lady that's trying to have this conversation with him is trying to hold it together, struggling. It's really funny. And then sure enough, the internet lights up. Logan Paul starts trending on Twitter saying, this guy's a complete idiot. He's been invited on to talk about finances. He doesn't have a clue. And then about a week later, he tweeted the change in his Google search volume and the revenue that he made from his YouTube channel from all of the people that had searched for him, bought his stuff, and watched his videos. And he was like, who's the idiot now?

I always love discovering new people like this, so I will check him out.

He's a serious guy. Uh, going back to the talent thing, it seems to me that there's two—

we never left the talent thing, to be clear, but go on.

Going directly back to it. There's— it seems like there's two, two elements here. Um, first you need to be able to source talent, and then you need to be able to assess talent. Yes. What about the sourcing?

Sourcing is often the most important problem. So if you think of yourself as some kind of genius sitting in a chair pointing at people and making choices, it's a very limited understanding of how talent search works. I think most institutions, they don't put enough time into developing their soft network of who are their contacts and who is looking for them. So, the way to do well at talent is to have talented people looking for you, right? Not you looking for talented people. There's many more of them than there are of you. So, there's a whole chapter of the book on how to use scouts to find more talented people. But also, how do you encourage talented people to be looking for you? And in so many sectors, that is 80% or 90% of the problem. Not you sitting in a chair and pointing, "You are talented. Come, we hire you." Yes, that's part of it, but who shows up at your door and why?

Thinking about how scalable it is for people to want to come and work for you versus you having to pick people off with a sniper rifle, it's like, do you want to be the magnet that's attracting all of the different iron filings together, or do you want to have to pick them apart individually one by one by one? What are some of the ways that you can become more magnetic with regards to trying to get people to like the idea of coming to you?

Again, it depends on your sector, but to have some kind of public presence where you are in some way impressive, it's going to attract people. So Peter Thiel is one of the people who has been best at this. Peter does a lot on YouTube, other public venues. I know many people strongly disagree with Peter's views, but that's not my point here. Peter radiates something when he speaks, and some intensity and seriousness of purpose, and it's also not too accessible. I think that's key to Peter's appeal. It's not too simple to make sense out of. There's its own terminology, its own worldview, uh, maybe even ideas in there that a lot of people are just turned off by. So you have to get through a lot of filters to get Peter. And then the people who come up to Peter, you know, after his talks, after his YouTube recordings, That's a great source of contacts for Peter. And he's one of the masters of kind of sending out the bat signal in just the right way. So he's a good person to learn that from. Someone who's, I think, a tremendous CEO, a great talent, but he's not a bat signal kind of person would be Mark Zuckerberg, who has done a great job with, you know, now Meta, formerly Facebook, hiring other talented people. But Mark is not out there in the same way, so that would be a contrast.

I moderated the discussion with Peter Thiel at Palmer Luckey's house about 3 weeks ago for Alex Epstein's new book, and I was struck by what you mean. It's not leet speak inner lingo, but it is kind of a part of a particular type of thinking, a mode of thinking that some people are going to get and some people aren't. And what's interesting about The suggestion that you're making there is that by it requiring a little bit of work for people to get to, to understand, it creates a sense, not group dynamics of like in-group, out-group, but like I am a part of a movement because we have a particular type of worldview that is represented in the language and that the work that it takes to get yourself there, to be able to understand the concepts that Peter's talking about, It suggests prestige, it suggests aspiration, uh, and, and gravitas.

And what Peter can do is take a topic and show you there's some angle that he has thought more deeply about than you have. And most people don't see that because they haven't thought deeply about it enough themselves. But the people who do see, oh, Peter has this different perspective that whether or not I agree with it is deeper than mine, You're selecting for people of some depth and determination. And Peter, yes, he is articulate and quick, but they're not the dimensions he specializes in. There are people more articulate or quicker than Peter, but this new perspective, this more intense layer of depth, he might be number one. And that's the bat signal you have to pick up. And it's hard. I think it's hard on purpose.

I think that you're right as well. He had this great insight Tyler Cowen, about— we're talking about environmental catastrophe and climate change. He said that the people who are extreme optimists and extreme pessimists horseshoe around to cash out at the exact same position. That the people who believe that we're going to be able to fix everything and the people that believe that we can't do anything about it cash out at the exact same position. And that's not difficult to get. That's completely obvious and it's staring you in the face. And as he was saying it, I'm thinking to myself, 'Oh my God, how have I never— I've thought about this for a long time, read both of Alex's books. How have I never considered the fact that both of those people at the extremes, they're not far apart from each other. They've actually looped back around and they're basically in the same position.' That is Peter, exactly.

Very good example. He understands the dialectic in a way that is unusual. Well, he's partly not American, of course. He was born in Germany. Maybe that's appropriate. But he understands dialectical thinking better than Maybe anyone else I know.

What about convincing people to join your cause or to buy into the movement that you're doing? We've spoken about how Peter can kind of attract talent, but it's not just attracting them, it's getting them to believe and getting them to buy in and getting them to want to be motivated to come and do the stuff for you. They have this talent, they've got the characteristics and the traits and the attributes that we're looking for, but then they need something more to get them to be— to deploy that in the direction that you want them to?

You need to offer people an attractive small group of immediate peers, or maybe sometimes not so small group. The big winner in recent times on doing this is the Effective Altruism movement. And again, put aside whether you agree or disagree, they are right now attracting so much talent, the rest of the world doesn't even realize it. That the percentage of, say, top teenage talent I speak to who are interested in effective altruism It is off the charts. So they are winning on that dimension. And there's the sense now that if you in some way join effective altruism as a movement, those are your peers and they are your peers. They've done phenomenally well. Kudos to them. It's an interesting one.

I've been thinking throughout this conversation, trying to draw a parallel between what I do, which is this show. This is the primary project I'm working on at the moment. And I think that the, the talent that I'm mostly looking to attract now is guests. I think that I'm trying to find people who have interesting things to say, who understand what I'm trying to achieve on the show, and who want to come and tell the audience something that they don't already know in a new, interesting, innovative way. And I was trying to think about soft networks and getting people to join the cause and stuff like that. And I would say that there's certainly some of the dynamics that we talked about today that map onto that, where I've gone and spoken to— Dwarkesh is a great example, one of your, uh, padawans and a mutual friend of ours. And, um, he— every time that we sit down, we're constantly bouncing ideas off each other. Oh, I've got to introduce you to this guy. Oh, I've got to introduce you to this guy. I went for pizza with him on Tuesday, and I mentioned that you were coming on the show. And I got home and I had 3 different YouTube videos in my iMessage. He's like, "You gotta watch this, you gotta watch this, you gotta watch this." None of them were his. He's not shilling me his own content. He's thinking hard and deep about that. It's very, very nice when you've got something that is a movement that people care about, they understand what you're doing, and then they start to do stuff on your behalf that helps you get to the place that they know that you want to get to.

And those could well be the people you spend the rest of your life working with in some way. Not all of them, maybe just 2, 3% of them, but they become your collaborators.

Is there a difficulty in seeing talent in people when they can't see it in themselves?

Well, I mean, there's— it's always a difficult thing to spot talent, right? But if you get a person talking, there are plenty of people who don't have enough confidence, but are quite significant as talents. And I find this especially frequently in women. For whatever sociological reason, there's a confidence gap between men and women. There are plenty of men who have way too much confidence and a large number of very smart women who don't have enough confidence. So the confidence problem in part becomes a gender issue, and especially in the world of podcasting. But you can be a super successful and super talented man and still be quite poor at spotting talent in women. And that's really something a lot of people ought to work on more. And Daniel and I have a whole chapter on that in the book.

I learned about the daughter effect last week. Have you heard of this?

Yes, of course. And I have a daughter. I agree with the daughter effect. If you don't have a daughter, it sounds a lot less plausible. But I agree that if you have a daughter, there are things about women you understand that you have not learned from you know, wife, girlfriends, whatever, sister.

It's really quite striking. It's funny. It is interesting. And I think, is it 5% that the people who work underneath somebody that— a boss that has a daughter get paid on average— females get paid on average 5% to 10% more?

I don't remember the number, but there is a noticeable effect.

That's an interesting one. Everybody should be mandated a daughter by the government. Everybody that's in a position of power, that would fix that problem.

I now have a granddaughter, so this is a source of joy to me.

Oh, so the people are owed 15 to 20% now, is that how the way it works?

Well, I wonder if there's a granddaughter effect, right? Uh, I, I've never seen a paper on that.

Talking about confidence and charisma and stuff like that, a lot of the time charisma can fill in a lot of cracks where maybe talent or hard work, um, doesn't. What— how important is charisma? And then how can you avoid being seduced by charisma so that you look past some of the things that people perhaps are lacking with?

For many leadership positions, charisma is highly significant to get other people to work for you and to care. Most positions are not leadership positions, so don't be fooled by charisma when you don't need charisma.. But if someone say wants to start a nonprofit, which almost always is underpaying its workers, right, by the nature of the nonprofit sector, they had better have some decent charisma or their chance of succeeding is not that great. So it's going to be highly sector-specific. But if it's about a product, if it's like a furniture factory in Cincinnati, Ohio, charisma still matters, but it's an entirely different story.

I heard you and Daniel have a discussion about the difference between obsessiveness and competitiveness. What's that?

Well, my take on the matter, and I'm not sure if Daniel agrees, but he is more competitive than I am, but I am more obsessive than he is. So a lot of my work as a writer, public intellectual, academic has been fairly solo. I think I'm pretty unusual that I don't compare myself against peers that often. Like, there's no person out there where I know how many Twitter followers they have. I do a lot of things that I don't measure, but just keep on doing them for years, decades. That's a form of obsessiveness. Competitiveness is you're in a sector and there are actual identifiable companies you're competing against and you have to beat them. That's never been what most of my projects are like. Some of them have a tinge of that, but mostly they're about obsessiveness over the decades.

Do you think they cash out in a similar way?

When you say cash out, what do you mean?

The way that they manifest in performance, somebody that is competitive and somebody that is obsessive. Do you think that they end up performing in a similar sort of way?

Oh, no, very different ways. So if you're looking for projects that will make money, you're probably better off with the competitive person. If you're looking for projects based around ideas that will have impact and may or may not make money, you might do better with the obsessive person. Just to give an example.

Yeah, it's— I would say I would probably put myself in the obsessive rather than the competitive category. Um, I wonder whether that's a function of being an only child, uh, and working in solitude for forever. I suppose it probably is. Yeah, yeah, I think that's probably a byproduct of it. How, how easy do you think it is to fix somebody with bad values? Let's say that you find someone who's an unbelievable talent that ticks all of the boxes except for they really, really struggle at working in a team or they're a little bit toxic as a personality or something like that. How fixable is that? Or are those sort of malignancies that you just can't get past?

It's usually not fixable. There are very, very few cases I've seen where that works. With some people, simply getting married or having children or aging Helps quite a bit. But your ability to fix it, I would say, treat that as close to zero.

I saw a study a long time ago about what happens when you introduce one bad apple into a group. You may have seen this. And basically, they were asking, does the person rise— does the performance of the underperformer rise up to the level of the high-performing group, or does it drag the performance of the group down? And it seemed pretty reliably to be that the entire group's performance gets damaged by just one person because that person is dragging their feet. Everybody else feels resentful of them. Everybody starts downregulating their work output to match that person. Then there's infighting amongst everybody because they know that they're not doing as well, and it all stems from one person in a small group.

We say in the book, just never hire toxic people, not if they have to work with others.

Tyler Cowen, ladies and gentlemen, uh, if people want to keep up to date with What you do, where should they go?

On Twitter, I'm @TylerCowen. My new book co-authored with Daniel Gross is called Talent. I write a blog at Marginal Revolution, and I have my own podcast, Conversations with Tyler. Chris, it's been a real pleasure. I hope we get to meet someday.

Me too. I appreciate you. Thanks, Tyler. Take care. What's happening, people? Thank you very much for tuning in. If you enjoyed that episode, then press here for a selection of the best clips. From the podcast over the last few weeks, and don't forget to subscribe. Peace.