If Tyler and Daniel’s latest book can be boiled down into a single message, it would be that the world is currently failing at identifying talent, and that getting better at it would have enormous benefits for organizations, individuals, and the world at large. In this special episode of Conversations with Tyler, Daniel joined Tyler to discuss the ideas in their book on how to spot talent better, including the best questions to ask in interviews, predicting creativity and ambition, and the differences between competitiveness and obsessiveness.
They also explore the question of why so many high achievers love Diet Coke, why you should ask candidates if they have any good conspiracy theories, how to spot effective dark horses early, the hiring strategy that set SpaceX apart, what to look for in a talent identifier, what you can learn from discussing drama, the underrated genius of game designers, why Tyler has begun to value parents more and IQ less, conscientiousness as a mixed blessing, the importance of value hierarchies, how to become more charismatic, the allure of endurance sports for highly successful people, what they disagree on most, and more.
Listen to the full conversation
Recorded February 24th, 2022
Read the full transcript
TYLER COWEN: Hello, everyone, and welcome back to Conversations with Tyler. What we have for you today is an actual conversation. I’m here with Daniel Gross, who is an angel investor, venture capitalist. He entered the start-up world at a very young age. He ended up working for Apple. He founded a search engine called Cue. He was, I think, the youngest-ever partner at Y Combinator. He now is the founder and CEO of Pioneer, a venture capital firm.
But most importantly for me, he is my very good friend and also co-author of our new and forthcoming book, called Talent: How to Identify Energizers, Creatives, and Winners around the World. Daniel, welcome.
DANIEL GROSS: Thank you so much for having me, Tyler.
COWEN: Let’s start with a simple question. Talk us through what is a good interview question. Pick one and tell us why it’s good.
GROSS: We’re going to get to that in a minute, but I actually had a question on my mind for you, as I sit here and am holding a can of Diet Coke in my hand that I’m going to crack open. I was wondering — Bill Gates, Elon Musk, Lauren Summers, Warren Buffett, John Carmack — all of these people drink Diet Coke. What do you think is going on with that?
COWEN: I think they have habits of nervous energy and more energy than they know what to do with. There’s no series of challenges you can present to them that exhaust all of their nervous intellectual, mental energy, so it has to go somewhere. Some of them might twitch. Some of them just keep on working basically forever. But also, drinking Diet Coke is something you can do. You feel it’s not that bad for you. It probably is really bad for you, and the quantities just get racked up. I’ve seen this in many high achievers.
What’s your hypothesis?
GROSS: Yes, it’s a good question. Of course, many people in America drink Diet Coke, so I don’t exactly know what we’re selecting for, but that would be boring to just leave it there. I do wonder if this amazing molecule we discovered called caffeine is really good, and maybe these very high achievers are just slightly caffeinated all day long.
There’s also something very not neurotic about getting too worried about, is aspartame good for you, bad for you. Regular Coke, Cherry Coke — just drink it and move on. There’s a sturdiness there, and maybe, in fact, it is really bad for you, and the people who manage to be very productive while consuming it are spectacularly good. It’s like deadlifting on Jupiter — there’s extra gravity. Yes, I think it’s an interesting question. I do wonder how much of what we assume when we think about talent — how much of it is innate versus just environmental?
COWEN: I wonder if there isn’t some super-short time horizon about a lot of very successful people, that the task right before them has to seem so important that they’ll shove aside everything else in the world to maintain their level of energy, and as collateral damage, maybe some long-term planning gets shoved aside as well. It just seems so imperative to win this victory now.
GROSS: There is something, definitely, I’m struck by when I meet a lot of the very productive people I’ve met in my life. They seem to have extreme focus, but also extreme ease of focus, meaning it’s not even difficult for them to zone everything out and just focus on the thing that’s happening now. You might ask them even, “How do you do that? Is that a special skill that you have? And what type of drug are you taking?” And they look at you with a dazed and confused face. Anyway, you asked me what is a good interview question.
COWEN: Maybe you gave us one. Say you gave the Diet Coke question to someone who came to you with a start-up. What would count as a bad answer, and why would it be bad?
GROSS: I think in interviews, in general, a very simple thing to look for that I’m still . . . By the way, I should mention a preemptive huge asterisk that I’ll only say once on this podcast, which is, I may say different hypotheses that I have, but they are opinions of a student, not of a master. I’m still learning.
But all of that said, I think sometimes in interviews, and when you meet people in general, there’s just a sense of being asleep or awake. Asleep is someone who doesn’t really even have the idea to think about the world as just like, maybe Diet Coke is something really good. What actually drives that? Someone who’s awake has actually had that thought already.
For me, the rejection of the question would really be the only bad answer, and I think that’s true in a lot of interviews in general. Like this very conversation we’re having — you can tell if people are having fun with each other’s questions and whatnot, or whether it’s monotonous. And someone who locks up and freezes when you ask them if maybe Diet Coke is correlated to productivity — which is a bit of a silly question at the end of the day — just the fact that they’re not having fun with it, I think, is something to look for.
COWEN: What’s another good question? The Diet Coke question I like. What else is good?
GROSS: One thing I think we have both probably learned in interviews is, the best interview questions break the fourth wall of the interview, so to speak, and the characters come out a little bit. It’s the same joy you have when a character breaks on set or on stage. You’re watching some behind-the-scenes footage of something, a blooper reel. In good interview questions, I think, ultimately, we’ll have that property of breaking people out.
A really good one that we can’t do now because we just got started in this conversation, but about three-quarters of the way in, just asking the question “How do you think this conversation’s going?” is a bit off-putting. It’s a bit funny, and it breaks the stress or the fixed nature of the conversation that isn’t fun. I always like having fun with that one.
Another interesting one that I learned from a friend of mine is, do you have any good conspiracy theories that you’re liking lately? Which is interesting because it’s unusual, and I find a lot of really good, really productive people are constantly exploring on the fringe and frontiers of all ideas, so you end up with people that have odd theories.
COWEN: I find creativity and interest in conspiracy theories to be correlated, that there’s some innate desire to connect a bunch of different points. A bunch of data is thrown at you, like the JFK assassination or how COVID 19 came to be, and whatever you think the truth is, if your mind is sufficiently restless in the right way, you won’t be content with the regular stories. They seem not very satisfying.
Like, “Oh, Jack Ruby — he simply came along and killed Lee Harvey Oswald.” Now, maybe that’s true. I’m not an expert on this, but if you’re not irritated or pissed off by that event, I think there’s something wrong with you. It’s a sign you’re taking too many things for granted.
GROSS: Do you think that maybe the simple theory there — that’s a bit of a conspiracy theory — is just true, that Lee Harvey Oswald was just operated by Russian agents he met while he was living in Russia?
COWEN: I think there’s some chance of that, and I think there’s room for a hybrid theory where, actually, they trained him. They told him to go back and do terrible things. One of the things mentioned might have been assassinating a president. Maybe they didn’t even think he was up to it, like he didn’t pass their Diet Coke interview questions. The KGB is pretty rough and tough.
Lee Harvey Oswald was, in some ways, apparently, not a very impressive man, but they let him go back, and they’re like, “Oh, you know . . .” It’s like you let people try their start-up, and maybe you’ll never hear from them, and all of a sudden, they wake up one day, and it’s, “Oh, my goodness.” That’s a unicorn from the KGB point of view.
GROSS: It’s very true with start-up companies where — having invested in a lot of early-stage businesses that got big, but also worked at YC. It’s really humbling, in fact, where you’ll meet a cohort of companies at Y Combinator, and you and all of these other partners — who are very, very smart people; many of them are smarter than me — will informally vote on who you think is best, and you’re almost always wrong. It’s almost always the dark horse, and it’s almost always not who the crowd favorite is.
I think there’s a humbling lesson there that you could learn in the opposite direction about the JFK assassination. You think Jack Ruby just strolled in one day and shot him? Or do you think there’s something deeper there?
COWEN: My suspicion is there’s something deeper there, but it may not be a full-blown conspiracy of the sort that would satisfy actual conspiracy theories. The ability of chaos to resemble conspiracy cannot be underrated, I would say.
COWEN: Take these committee procedures, where the dark horse is actually the excellent candidate and ends up being overlooked or not the most popular. How do you think we can improve those processes to spot the effective dark horse more frequently?
GROSS: Well, take a step back. Why are we even here? And why would I even have a shred of an interesting opinion on talent? To the extent that I do, I think it’s because in the venture business — much more so than, I think, almost any other business — you live in constant paranoia of missing out on great talent. You might say, “Well, that’s true in every company.” And it’s true at the Met when you’re looking for someone to play in the orchestra, too. But in the venture business, unlike others, great talent always looks very weird to whatever convention is.
Before Mark Zuckerberg came along, that phenotype of the hoodie sweatshirt and slightly aspie kid was not the common phenotype. Now, of course, there was a phase — 2013, 2014, 2015 — where everyone started looking for that. But then it hit you again with a very weird-looking person, where Vitalik [Buterin] is of a completely different ilk than Zuck. One very much is Julius Caesar, and I think another one — I don’t exactly know how you’d bucket Vitalik — maybe like an early pope.
COWEN: Like a Russian holy saint.
GROSS: Exactly. By the way, not just the person is weirder than whatever the conventional norm is, but the idea is weird, too. Everyone listening to this podcast probably understands Ethereum at this point. That’s kind of priced in. The paranoia that all venture capitalists live in is, of course, the new thing is not going to be Ethereum. The thing that overtakes Ethereum — there’ll be vigor and more exciting — will probably be — I don’t know — it’d be some weird biotech thing, some weird thing that could be artificial intelligence. You wouldn’t even label it that way.
You live in constant paranoia of some type of different market or some type of different person becoming really big and really important. In venture, of course, your errors are errors of omission, not commission. It’s a good old Warren Buffet phrase. You can’t miss. You’re deeply thinking about dark horses.
The entire reason I even have this idea to share with you about YC and whatnot and the selection and the group consensus mechanic there is because there’s deep paranoia. You have this reflexive effect, where now everyone’s looking for the dark horse. Does the dark horse actually change? The system gets a bit dynamic in that way. That’s, I think, the big innovation with venture, is that you’re constantly hunting for people that look different, and you’re rewarded to do so much more, I think, than in any other industry.
You end up learning to appreciate the humility in all of it. Although we are about to publish a book on this topic, and we think we have something to share with the world, I’m still deep in the Dunning-Kruger collapse in this topic. I think the main idea in my mind about the book at a deep level of, I think, the impact it could hopefully have is, actually, to reduce and to bring everyone down into the Dunning-Kruger abyss, where we are now, and realize this is actually a much deeper topic than most people pay attention to.
COWEN: No, I view our central message in the book as, right now, the world is failing at talent spotting, and this needs to be a much more major topic of conversation. We have our ideas on how to do it better, but if we can simply convince people of that, I will be relatively happy.
GROSS: Yes. I think, to me, proof of this is SpaceX. Look, SpaceX, until fairly recently, wasn’t really doing anything new from a physics standpoint. There weren’t any new physics discoveries that Elon, in a lab in LA, figured out that von Neumann couldn’t figure out. It’s yesterday’s technology. It’s just that he is a better router and allocator of capital to the right talent.
You see this time and time again. Many Elon companies are this. He just manages to put the right people doing the right thing. If you were to try to really explain to a five-year-old at a very basic level, why aren’t there more SpaceX’s, I think it comes down to the right people don’t have the right jobs for human progress. Once you start viewing the world through this lens, it’s really hard to unsee it, at least for me.
COWEN: The new book on SpaceX— it indicates that Elon personally interviewed the first few thousand people hired at SpaceX to make sure they would get the right people. That is a radical, drastic move. You know how much time that involves, and energy and attention.
GROSS: Jeff Dean, who’s probably the best engineer at Google, used to work at Digital Equipment Corporation. I think he was the 10th or 11th engineer Google hired, and he’s basically responsible for the fact that Google Search works.
He did crazy optimizations — back in the day when this mattered — like writing data that you’re going to access a lot on the exterior side of the disc, so it was a bit easier to access. Anyway, brilliant guy, still works at Google. Amazing software engineer. He told me once, while he was just waiting for code to compile, he would just go through a stack of résumés that Google was hiring. This was back when Google had maybe 10,000 people. He still had a pulse on the type of people they were bringing in.
You hear stories like this a lot, but very few organizations do it. The best organizations tend to do it. It really matters. It might matter more — especially in the current market that we’re in — it might matter more than capital, just allocating the right people to the right jobs.
COWEN: One of the interview questions I’ve used quite successfully as of late — it’s a very simple one. It comes from Peter Thiel, I believe. It’s simply to ask the person, “How ambitious are you?” A yes-or-no answer, actually, is fine. If they say no because they think you mean something bland and a little mainstream — they say, “No, I’m not ambitious, but I want to do this.” They say it with great passion and charisma — that’s excellent. If they’re just stumped by the question, they have no idea what they actually want to do — that, to me, is a negative.
They might do fine in some jobs where they don’t have much responsibility, but they’re not going to build something for you. But if they can articulate some ambition and simply know what you mean when you ask them, I find it’s a very hard question for people to fake: that if they don’t actually have the ambition, their ability to articulate it with the requisite energy and detail and focus just isn’t there.
Of course, the great problem one faces in an interview is that people can fake their answers to questions. If you ask them, “Are you conscientious?” Well, you probably care about that, but they’re just going to say yes. Who would say no? Does it mean they’re conscientious? Of course not.
GROSS: Another idea, I think, that we discuss in the book that works pretty well is repeating questions, which is a bit uncomfortable to do, but can work, especially if you’re asking something that the person may not have an answer for, because they’re thinking about it for the first time. That can be a way to get something out of the are-you-conscientious question, which I agree is tough.
COWEN: Here’s a very tough question for you. Let’s say you’re trying to hire not just a talent, but a talent identifier. What do you look for in a person to judge if they’re a good talent identifier?
GROSS: There’s something about being able to do counterparty modeling, which I actually find women, in many cases, are better than men at this — the ability to understand that person’s motives and how they will act and react to an environment, given a particular set of incentives. I think that’s an important thing to tease out in someone who will themselves be good at identifying talent, because it lets you predict, ultimately, if someone has a good simulator. You can predict how that person will react in different places. You can say, “Well, okay, how do I know if a person has that?”
One thing that is predictive of it is having a bank of similar experiences and people that you’ve worked with to fall back on. I think it’s pretty important. Working with a large number of people that are very different is really helpful because, ultimately, in the interview, a lot of what you’re doing — what anyone’s doing subconsciously and consciously — is “What does this remind me of in good and bad ways?” It’s a very potent system in the brain that you just can’t and won’t turn off. A rich bank of experience is important.
Then, there’s a base sense of sensitivity people have to perceiving the small micro-expressions someone might have or the way they hold themselves. I don’t know that everyone takes in reality at that level of resolution, but I think good talent spotters do, consciously or subconsciously. They really see that, and that affords them a much wider canvas to pattern-match on when trying to figure out who that person will be in a particular environment or place.
COWEN: Consistent with that view, I like to talk to people about drama. If they’ve read Shakespeare, you can say, “Well, my hypothesis is that in Romeo and Juliet, Romeo and Juliet don’t actually love each other at all. Does the play still make sense?” Just see what they have to say. It’s a way of testing their second-order understanding of situations, diversity of characters.
Or talk to them about Moby-Dick or whatever movie they might have seen. You need to find something that you share with the person and just ask them about it. Give them a hypothesis and see what they come up with. So, for me, I use culture very often.
GROSS: When you talk about it, what I’m hearing from you is, you almost use it as a way to test. It’s a play as chess for you in a way, where there are different actors, different motivations, and you’re really asking, will the person be able to understand? Could the person extend the play, basically? Could they write another final chapter with their understanding of the intentions of the actors?
COWEN: Shakespeare himself does this in Hamlet, when Hamlet puts on the play before the king to see how the king will react. It’s doubly Shakespearean in that sense.
But just get people talking about drama. I feel you learn a lot. It’s not something they can prepare for. They can’t really fake it. If they don’t understand the topic, well, you can switch to something else. But if you can’t find anything they can understand, you figure, well, maybe they don’t have that much depth or understanding of other people’s characters.
GROSS: One good thing you highlight in the book is this idea, in general, of talking to people about media, drama, movies, music. I think that works because you can learn a lot from what someone says — they’re not likely to make up a story — but it’s also fun, and it is a common thing many people share, even in this era of HBO and Netflix.
Any given week in America — and globally, I actually find at this point — there are 10 shows that people are watching, so it does provide a fun common ground that I think is underused. People come into the interview with all these scripted questions, like what are your greatest weaknesses? But the idea that it might be better to ask someone about Squid Games, I think, is really underrated.
COWEN: What are résumés still good for these days? A very LinkedIn question, right?
GROSS: Résumés are good for understanding how the person wants to be perceived by the broader world. This is helpful for both the obvious things — checking for typos and whatnot — but also what they take pride in their identity. I love asking people sometimes, “Out of what I see on your LinkedIn or your résumé, what are things you are trying to hide? And what do you wish you could feature more?”
Sometimes you have to really unpack that because people might not want to share, on first blush, what they want to hide, but confident people will. You can learn a lot that way.
Another question you can ask is, instead of trying to actually dig into the weak points of the résumé, just ask what the weak points in the résumé, in their opinion, are, because it really gives you a sense. It’s the mirror that that person wants to have. I think the actual content on the résumé may not be as interesting. There are all sorts of things you can read between the lines. For example, a very common thing to look for is a person that has multiple jobs that don’t last long. Obviously there’s something going on there, so you want to hear a good story. But broadly, it’s that person’s perception of themselves.
There’s a theory that . . . I think there’s a book about it that a friend enlightened me to — just the selection of the profile photo on online social media is predictive of some psychometric profiling method. I don’t know if that’s true or not, but the idea itself, I think, makes sense. There’s something pretty deep just about that alone. To me, that’s why the résumé is interesting. It’s a self-portrait.
COWEN: In the quest for talent, do you think we are overvaluing smarts?
GROSS: It depends for what role. I definitely think for the role of founder — the one I specialize in — looking for someone to start a business that has a chance of becoming the next Thermo Fisher or the next Facebook or the next Apple, yes, I think intellect is very much overpriced or overvalued.
I think it’s extremely important and definitely in the mega success scenarios — if this was a kind of Gartner two-by-two, you would have high intellect and high power or energy or ambition, pick your word. But if you had to pick, you actually probably need energy because what you want is multiple shots on goal from the individual. It is really difficult, basically impossible . . . I have not heard a story of someone never having to course-correct, and all their ideas were right from day one. They just launched and got there.
For the most part, you try a lot of things. You spend most of your day getting negative reinforcement from the system until something starts working. The reason most companies fail is, with enough negative reinforcement, the actor stops participating. What you actually want is someone who has a lot of energy, who’s just going to keep on going. People, I think, tend to discount that in favor of intellect.
But in your world, Tyler, is it any different? I could make the case, actually, that in academia, maybe intellect matters much more. You guys are solving real problems versus us just pounding away at keyboards, and you’re trying to make numbers get bigger. Doesn’t intellect matter a lot?
COWEN: Are we always solving real problems? I look for energy and durability in that combination.
Then here’s another thing I look for. I think it’s very important, especially in academia but in many spheres — does that person understand which are the correct hierarchies to be climbing? This may be influenced by my own background as a chess player when I was quite young. I knew a lot of super-talented young chess players — just brilliant people — young kids, full of energy to play chess. But they always were just stuck on the notion that winning at chess was the game they should be playing.
For Magnus Carlsen, that’s true. That’s the game he should have been playing, and he is, still. But for most of those people, if they stayed in the chess game, their lives are miserable. They’re now old. They don’t have health insurance. They’re not top players anymore. Their lives are wrecked, so you can have durability and energy at the wrong thing.
The people who can understand this is the right path to get to some higher point where that higher point actually makes sense — I like to see if a person has that. Also getting them talking about drama, you get a sense of how they organize hierarchies of status or achievement in their minds. Those would be my top things. Along with smarts, energy durability, do they understand the hierarchies they should be climbing?
GROSS: Say you’re looking at a young chess player, and we’re trying to figure out, do you understand that this isn’t everything in life? There are other hierarchies to climb. How much of that do you think is formed based on the environment that they’re in versus being innate?
COWEN: I suspect it gets locked in fairly early, say by age 13 or 14. I’m not convinced it’s innate, but by the time I would meet such people, I think it may be a done deal. One good way to figure out their sense of hierarchies — get them talking about science fiction. Are they interested in science fiction? Well, it doesn’t have to be science fiction, but it ought to be something — and then see how they’ve approached the study of those other things. If they’re not coherent about other hierarchies, that would be one cause for worry, I would say.
GROSS: That’s interesting.
COWEN: You did games early to an intense degree, and you’re probably still really good at games, but how is it you switched out of doing only games?
GROSS: Do you mean video games?
COWEN: All the different games you played. You tell me.
GROSS: I committed the sins of anyone growing up in the 21st century, I guess, which is a lot of video games, and I have a lot of respect for them. I think they’re an incredible accomplishment, actually, of the human species. When you think about it in the abstract to the extreme, there are people in South Korea that are playing video games to exhaustion, to death in some cases.
We’ve managed to create a collection of photons that we’re projecting from screens into people’s phobias, that manage to get them to ignore their most basic evolutionary instincts and just be in flow until they pass out. Obviously, that is bad, but they deserve a lot of respect.
I think a lot about this whole idea of gamification. It sounds childish and silly, but if we take that as a given, that there are these pieces of software that people really yearn to use . . . If I told you, in abstract, I have this alien technology, and no drugs are required, but it’s just a thing on your computer, and people really want to use it, and when they’re not using it, they’re just thinking about using it. You’d say, “Well, that’s impossible. You need a drug for that.” And I say, “No, it’s called video games.”
Can and how would you use that same type of thing in order to make yourself more productive, in order to make productivity software more fun? I think it’s very underutilized. It’s a thought everyone might have but no one really acts on, and it all comes back to talent at the end of the day.
Ask, why isn’t Gmail more fun? Why doesn’t Gmail help you accomplish your goals? Not the simple stupid goals you have for the afternoon of just clear out the inbox, but your actual goals in life. The things you actually want to do. Write a book with Tyler, try to have a little bit more fun in every day. Why isn’t Gmail helping you do that? I think a lot about it. At the end of the day, you might think it comes down to, well, this, that, profit, incentive. A lot of it comes down to talent, and I think game designers are very underrated people in that sense.
By the way, a small sidebar here: software engineers from the gaming industry are extremely underrated, and there’s a nice thread on the internet the other day, about how, effectively, the entire Starlink team who’s building SpaceX’s internet network are gaming engineers.
I think that whole corner of the world is really overlooked by adults who view gaming as somewhat of a pejorative. But it’s a very powerful sphere of human creativity, and I think more of it needs to be brought into day-to-day life. By the way, just in general, when I think about gaming and fun, more of that needs to be brought into day-to-day life. There should be a Michelin guide for having fun. What are the best ways to have fun?
COWEN: Can I have fun by asking you a bunch of questions about tech? And this is just I ask, you answer, because I want to know the answers.
Why do ad companies keep on making their products worse over time?
GROSS: Right. It’s a good question to try and answer deeply. I think companies, when they’re not founder-led, actually become brain dead. As a result, they only maximize numbers that were set in place by the founder before that founder decided to go to Hawaii and retire or, I don’t know, kite surf and whatnot.
Why that is the case, we’ll get to in a minute, but ad companies obviously end up focusing on revenue, which comes from engagement, which comes from eyeballs. They optimize for eyeballs, and I think you’re asking the question, “Okay, why don’t they optimize for enjoyment and eyeballs in the long term over the short term?”
Companies just don’t know how to do that unless they’re founder-led. We ask why, again, unpack that. I think it’s something about, actually, the founder might be the only person that has permission to focus on the long term, even while in the short term it might hurt metrics or revenue or whatnot. And they end up hiring executives that just don’t feel they have permission to question the basics.
You end up with this result where it’s actually very good for start-ups that large companies end up becoming these autonomous planes that fly until they run out of fuel and slowly glide down and crash into the ocean, which is totally what is happening today with Google Search or Amazon search. These products are impossible to use. Everyone’s having the same thought, that they’re impossible to use. Try to buy an iPhone charger on Amazon. It’s like walking through a Shenzhen flea market, and everyone has the same thought that that’s crazy.
Jeff Bezos stopped answering his emails because he’s focused on his Blue Origin mailbox. So it’s just going to continue to get worse until some young start-up will get started and say, “We’re doing better products search.” And they’ll get created, and the cycle will restart, and the founder of that company will become super successful. Then, 50 years from now, they’ll work on their space company, and that company will fail. But anyway, we do these cycles over and over again.
I don’t know if there’s any historical examples of this with the East India Trading Company, but companies without founders become like this. It’s like a toy for kids or something, and the battery pack is removed, and it’s slowly becoming more and more decrepit over time.
It’s a great question to ask, and I’m trying to think now, are there any examples of businesses in corporation history that have been reborn without the founder and have done something to really threaten their profits in the hope of long-term success? Everyone talks about IBM, but I don’t know, maybe in its restructuring days. If there was a risky move ever endeavored by a non-founder CEO, that’d be a good question.
COWEN: How is crypto talent different?
GROSS: Crypto talent seems to be, as far as I can tell — and I sit in all these chat servers, Discord servers — some of your listeners will know — and I just observe what’s going on, so I’m still learning. The internet I grew up on — referred to by some people as web 0, 1, 2, 3, –5, whatever — that internet was significantly more innocent, and so the people that found themselves on these chat servers in say 2002, ’03, ’04, ’05, were really just interested in building things. There was no immediate commercial intent, and it was just about coolness and a neat factor.
The issue you have with crypto is that you still have those people, but they’re clouded by maybe two-orders-of-magnitude more people that are just in it for a quick buck. I don’t exactly understand why, but the human psyche, as far as I can tell, really gets confused and degraded when it comes to making money fast. To some extent, I think this is why we regulate lotteries and gambling. It’s because the human brain of the average person gets really confused by this thing.
Maybe a better way of saying it is, the average scammer is much more intelligent than the average customer in these dynamics. And so you end up with these odd effects where you get a lot of people that are just in it for a quick buck and that person . . . By the way, a lot of people have this pejorative view of crypto, like it’s a bunch of people in it for a quick buck, backed by maybe a hundred Vitaliks — really brilliant engineers that are just trying to make something work.
I take a different view, which is, I respect that energy. It’s a mercantile energy someone can have of just effectively wanting to participate in a Ponzi scheme. It’s not a very productive use of their talent, but they have something deep there. I’d say you still have the bedrock of curious people that you had, say, in the early internet days. But you have this giant icing layer, this molasses of hustlers — the people that were previously trying to flip homes during the 2008 housing boom.
In that sense, it is actually very different, and you can take your spoon and go all the way through the icing and just hit the core part of the cake, and it’d still be fine. But I think the icing part is full of air, as whipped cream usually is.
COWEN: In which part of the world do you think tech talent is still the most underpriced?
GROSS: We’re obviously having this discussion today, as there’s some action unfolding in Eastern Europe and in Ukraine. That is definitely a part of the world that is still underpriced. I think that’s somewhat of a novel statement because a lot of people are excited about it now, but there are extremely capable engineers there. A variant of that question, I think, is also interesting, which is, how is that top tech talent different from country to country to country?
I will say this: One thing going on for America — and I don’t know how much of it is formed once you are in California drinking the whatever, lithium we have in our water; I don’t know how much of this is formed by the environment — but there is something special about the top American talent, in particular, that’s extremely rare to find anywhere else in the world, which is a sense of aesthetic and taste.
You could really meet the best software engineers in Moldova, in Ukraine, in Israel, in China, and they’re not going to have the same degree of taste and finesse that software engineers out here in California will have, or New York or whatnot.
I would like to believe it’s a uniquely American thing that you get either by being born here or coming here. And I think it exists in some other areas of science and might explain a little bit why all the breakthroughs and discoveries seem to happen predominantly in the United States, and a lot of the fast follows seem to happen in China. But there’s something about aesthetics, and I think, when looking at founders, actually, that matters quite a bit.
I learn a lot by the quality of the home page of a very early-stage start-up because that is signaling to me that that person understands that looking good is important and knows how to make something look good. That’s a huge, huge difference.
The actual IQ — if you had to give me an algorithm, and you had to optimize it and whatnot, and you had people participate from every single country in the world — sure, you’d see some differences. Maybe some countries would be higher up, some lower, but I don’t think the bands would be that large. The difference on taste and design, the US would have a giant leapfrog.
COWEN: We wrote this book together. Again, it’s called Talent. What is the user guide for Tyler Cowen?
GROSS: I would say reply to emails very quickly, and always be interesting.
COWEN: How do you mobilize Tyler Cowen, or is that also how you mobilize him?
GROSS: Tyler, you sit at an information superhighway. There could not have been a better time, I think, for you to be living, given your goals. The internet is an amazing product. I envision you, basically, sitting at your keyboard. In my mind, I visualize that you have a lot of monitors. I realize that you actually don’t, and it’s just a straightforward laptop, but I think it would be befitting to visualize nine to ten monitors, like Steve Cohen’s trading setup.
You’re just getting information and synthesizing it. That was a lot of the process of writing this book with you. It’s very easy to get access to you. I think it’s a great blessing for you that the internet exists. You are probably in the top decile of people taking advantage of the internet.
COWEN: What is it you want to ask me? I’ve asked you a bunch of things.
GROSS: I appreciate that question in itself. How have your views on nature versus nurture changed over time?
COWEN: I have moved in the direction of thinking parents are especially important. I don’t just mean as giving you their genes, but just giving you an environment in which you feel you can succeed in some way. If you don’t have that, I find that very hard to overcome. My estimation of the importance of that phenomenon has increased, having written this book. I value IQ less than I used to.
There was one study we talked about in the book. They looked at the CEOs of top Swedish companies. Now, to be clear, these are not necessarily founders, but they’re CEOs. Their IQs are at the 83rd percentile, which means ahead of 83 percent of the rest of the Swedish population, on average. Now, that’s pretty good. That’s smarter than average — 50 percent would be average — but it’s not 99 percent.
If you had asked me before the research, I would’ve said, “Well, I think that number is going to come in somewhere around 95 percent. They’re just going to be much smarter than other Swedes.” It’s 83 percent, and if you take smaller companies, the number gets lower yet. That’s caused me to decrease the weight I put on IQ or smarts.
Conscientiousness I view as a bit more of a mixed blessing. Clearly, for many jobs — I suppose most jobs — you just outright want conscientiousness. It’s positively correlated with wages. But for people who are more creative achievers — like the Diet Coke habit, it’s not entirely conscientious. Maybe you want that they still throw their cans away where they ought to go.
But people can be conscientious about the wrong things. Like, “Oh, I can’t work late tonight. I have to get home and feed the cat.” Well, if you need to feed the cat, I get that, but it means you haven’t arranged things in a way we are understanding what are the correct hierarchies for applying your conscientiousness. That kind of insight I hadn’t really thought through well enough. Those would be a few examples.
GROSS: What do you think of neuroticism? Is neuroticism good, bad?
COWEN: I think for the very highest level of top creative achievers, you want to look for some neuroticism. You see this most clearly in musicians and artists, the very greatest ones. You read their biographies, and you’re like, “What? He or she did that?” And they’re weird. They can, in bad ways, be abusive, but there’s some way in which seeing the world so differently just makes them be off.
That said, for most jobs, you want it in some kind of check, but there’s a whole host of jobs where neuroticism is just a positive. Say you want someone who works in a nonprofit, and in essence, their job is to go out and complain about social injustice. They’re going to be underpaid. That person’s probably going to be pretty neurotic. They probably need to be. They’re underpaid. They’re satisfying their neuroticism. Let’s run with that, thinking about how the context matters, but don’t consider it an unalloyed negative, would be my key point there.
GROSS: That seems to make a lot of sense.
It does seem like, at least now, from where we sit, the winds of COVID have slowed a little bit, but let’s assume remote work is here to stay. Let’s buy that narrative for a moment. Does that change how you think of what to look for in interviews at all?
COWEN: I think there’s a whole class of people who feel more confident when they’re over Zoom. There’s no actual physical confrontation. It’s much easier to turn away your eyes. It’s, in general, not clear where you’re looking. Obviously, there’s a kind of excuse built in for certain types of poor performance. “Well, you weren’t fully charismatic.” “Well, it was over Zoom.” Those people can become more charismatic. They might confide more, share more of themselves, be more open, be more creative.
Just to think through, when you’ve discovered one of those people, maybe it’s a bit like being in confession with the priest, where you don’t see the priest and the priest doesn’t see you. Therapist’s couch — you don’t look the therapist straight in the eye in a lot of cases. That sometimes fosters more openness. To realize that the distance of the medium can be your friend.
You also learn just how much some people — and a lot of them are truly talented — but they rely so much on the physical presence of their body to generate charisma. That is itself a valuable skill, but I’ve learned how much I used to confuse that skill with skill in general, and it’s quite different. These people can’t do that over Zoom. They just have to say something that’s pretty good, and they’re not all that great at it. That’s a big thing I’ve learned, how to think better about charisma.
GROSS: Very interesting. Yes, you could imagine the perfect person for Zoom sales, the salesman with the highest conversion rate, and the salesman for real-world highest conversion rate. There’s a Venn diagram there of attributes that definitely are overlapped, but there are things that are distinct that are interesting. Obviously, it might not be that simple.
COWEN: Handshakes also. We’re both men. You go to shake hands with the women. It’s not clear what the convention is, what the handshake should be like. There’s a clear standard with other men, and if the man matches that standard, at least you know they’re good at prep, good at a certain kind of conformity, good at learning particular things. But the handshake from a woman — it’s just a confusion. Obviously, it doesn’t exist over Zoom, and that’s better, I think.
GROSS: If you had to give advice — earlier, you were just talking about charisma. How does one become more charismatic, hypothetically?
COWEN: You have an essay on this, right? First, let me say what I understand to be your theory. You need to take role models of other people and run them through your mind on a very regular basis. Not copy them — that makes you too mechanistic. Have those be live, vivid examples for your emotional imaginings of the entire world. They don’t have to be people in your field, but just live in their worlds. It could be Winston Churchill. It could be George Orwell. It could be Paul McCartney, Magnus Carlsen. That, over time, will make you more charismatic.
The approach I think you don’t like — and I agree with you on this — is when you read a book and it says, “To be charismatic, smile. Make eye contact.” The actual charismatic people I know often don’t do those things. They have their own weird setup which defies description and indeed is weird. The weirdness makes them charismatic. Someone who tried to follow all those, I suspect, would only clock in at like a 6.5 on charisma. They’d be fine, but you wouldn’t actually be drawn to them if you had pretty fussy standards for charisma. What do you think?
GROSS: I very much think you’re right. Asking someone charismatic how to be charismatic — someone truly charismatic — if you asked Bill Clinton, who, regardless of what you think about politics, does have natural charisma, I think it’d be like asking von Neumann, “How do you multiply five-digit numbers in your head?” It obviously comes easily to them. Someone like me, who’s just trying to learn and certainly doesn’t have that natural gift — the idea of not trying to necessarily copy, but to just load that person’s cartridge into your mind is helpful.
I think a lot of people — certainly my parents — viewed TV as a pejorative. But to the extent that you can really grow up today on YouTube, watching the most charismatic people at all times — that’s got to have somewhat of a positive effect if you can intelligently osmose, not exactly copy, but emulate what they’re doing.
COWEN: I think just learning to channel your own enjoyment and be willing to let it show. I’ve been a teacher, professor most of my life. The way you teach people well — of course, you have to explain it properly — but it’s for them see that you care. Even bad students are such a wonderful audience for understanding if you don’t care. They sniff it out so quickly and so smartly that you are sunk right away.
GROSS: Yes, almost everyone seems to have a System One talent detection thing or mood detection thing. You always sense it, like in a meeting. Someone comes in who’s always effervescent and bubbling and happy and laughing, and you really feel the mood change. It’s important to try and be that type of person because, I think, all humans really pick up on that extremely quickly.
COWEN: Now, you’re an avid runner. You run marathons. In a week, you ran a marathon, what, on every continent or close to it?
GROSS: I paced a friend. I didn’t do all of that. He did all seven continents. I just did three marathons back-to-back, but yes, I like running.
COWEN: Why do you think so many highly successful people are drawn to mastering feats of endurance?
GROSS: Running in particular, and cycling, I guess, and swimming — maybe the triathlon sports. First of all, they’re very numerical. There’s a sense every day of numbers that you can work on. That’s nice. A lot of these people are competitive, not necessarily globally, but just with themselves. They want to improve. There’s a digit you can work on every single day, and that’s very helpful and gives a sense of purpose. To a high-achieving person, that’s kind of crack.
You could say, there are other numbers you could optimize for. You could try to optimize for the number of hours you sleep. The challenge with that is the effort involved in that. If you really wanted to sleep perfectly every night, it’s not about difficulty in pushing through, which is what high achievers always want to do. It’s a bit more about relaxing and taking it easy.
With running and cycling and swimming, you end up in these dynamics where you have these high achievers at the highest level, much higher than me. The main thing coaches do to these people is slow them down, not accelerate them because they really get pleasure out of just persevering and pushing through. I like that.
For me and for a lot of other folks, there’s this idea — like your idea earlier that you can learn a lot about how to find good personalities by reading plays — you can learn a lot about mental fortitude by just putting yourself through a physically demanding experience and pushing through. I think it’s a very helpful thing to do.
The correct amount — a lot of athletes overtrain — but once a week, really putting yourself in a physically demanding situation seems to be physically, obviously, very healthy. But psychologically, it’s good to know that you can push through.
COWEN: Let me ask you a question that we both should answer, and you tell me if you want to go first or second. What do you think is our main disagreement, if only of emphasis, when it comes to identifying talent? We’ve written this book, worked together on this problem for years. We agree on a lot of things. What’s the residual disagreement? And how do we boil it down to a relatively small number of dimensions? I can go first if you want.
GROSS: You should.
COWEN: This is what I think it is for me. I’m not sure of this, but I think you are both more concerned with and much better at identifying competitiveness in people. I think I am more concerned with identifying obsessiveness in people. I have a comparative advantage in identifying people who are obsessive, but not necessarily extremely competitive. It’s perhaps because I’m a bit that way myself.
You have this different emphasis, and it also relates to your interest in contests of endurance, which have a kind of competitive element to them. I have obsessive desires to collect all this information, but there’s not really a benchmark for it. I have no idea how many books I’ve read. It’s not really compared to how much some other person has read. It’s just this obsession. This competitiveness-versus-obsessiveness distinction is one thing that strikes me, not quite a disagreement, but a difference in emphasis. I think, given what you do — venture capital — you should have the emphasis you have, to be clear.
GROSS: Yes, that is very interesting.
Here’s a question for you, maybe to find another way we disagree. If you have to fill the pie chart, if you have to award points in terms of, in talent, what matters most — you have three categories. You have nature. You have nurture, say, the first six years, seven years or so. Then you have environment, meaning not the way your parents treat you, but just the food you eat and the air that you breathe. Tell me how the pie chart looks between those three buckets.
COWEN: I don’t think that the food or the air matters that much as long as you’re in a livable situation. What I put really a lot of weight on are, who are the really smart, energetic people or role models you were exposed to in something like ages 12 through 16? That, I put a great deal of weight on.
And I put a great deal of weight on how old you were when you first started to try to do something in some area. You don’t even have to have succeeded, but you tried at something. If you tried at something at 14, to me, that’s a big plus. If you first tried at something later on, again, it would depend on the context, but at least, I want to start thinking about why it took the person so long.
What you’ve inherited, quality of parenting, but I don’t think it ends at six. I think those years, 12 to 16, give or take, I really put a great deal of stress on. I don’t know that we disagree on that, but that would be my answer.
GROSS: I think if we were to define the buckets a bit more simply — nature, nurture broadly and who you’re around or whatever, and then just physical environment — what I’m hearing from you is, between those last two categories you’d stack rank, effectively, the nurture effect. I’d probably put the environment effect ahead of that.
I really think, and this theory is definitely not mine — there are all sorts of researchers on Twitter that are expert at this — but I think a lot of what is driving American mood today or conversation today is a byproduct of lithium we put in the water or plastics we consumed from when we were children. I think that might be one aspect of it where we might swap, not that it really matters that much, but it is a difference.
COWEN: Here’s a way I would put it. I would say, I look for signs that the person, at an early age, tried to get nature and nurture working together in some multiplicative fashion. That brings the question a bit away from nature versus nurture. If they made a decision at age 13 to get nature and nurture compounding each other, then I’m very impressed. Does that make sense to you?
GROSS: I think that makes sense. I would probably say that I agree with that, but I think, ultimately, the mitochondrial efficiency that that person has is a by-product of the nutrition they got early on in life. It might actually be the one driving that, but we can agree to disagree there.
COWEN: We’re about out of time. For our listeners and readers, here is my book with Daniel: Talent: How to Identify Energizers, Creatives, and Winners around the World. Daniel, it has been an enormous pleasure and honor to have written this book with you. Really, just a wonderful experience in my life, and honored to have you on Conversations with Tyler.
GROSS: Same here. Every conversation is a joy, and I hope to have many more.