A few thoughts on “Talent”

In Talent, authors Tyler Cowen and Daniel Grossman pull apart how to evaluate, assess, and match potential candidates to the right opportunities. Unlike markets for things like physical goods or equities, the market for human capital is opaque and illiquid. Price discovery occurs during interviews, pitches, offer negotiations, funding rounds. This process works, kind of, but it’s not great. Some people are too good at interviewing/pitching then their real-life working/executing, or vice versa. Some people are overlooked because the talent “spotters” don’t even really know what they’re looking for, they’re just looking for what everyone else seems to be looking for

With Cowen, and economist, and Gross, an entrepreneur/engineer/VC, you can feel their discomfort with the lack of transparency and the unsystematic nature of this “market” and the book is a list of suggestions to help people get better understand both themselves and potential candidates. Chapters with fun suggestions for interview questions help potential talent spotters with ways to "look past the surfaces”, both in candidates and what the talent assessor really needs. A chapter on identifying talented candidates with individuals encourages spotters to “[k]eep an open mind”.

Have only read about 60% so far so maybe our opinion will change, but so far so good!

"Siting bank branches"

Patrick McKenzie summarizes how banks identify and build out branch locations.

• This is a fun article and good reminder that while digital banking has expanded, physical footprints remain very important to some of banks’ most important customers.

• Makes a lot of sense that banks want to avoid local zoning meetings - can be an ugly place, especially for anyone trying to build something new

• And on curb cuts, a minor detail most people don’t think about: “I love the fractal nature of detail here; every detail about the built world was a painstakingly made decision at some point.”

Wikipedia is easier to use than Lexis and Westlaw

Researchers from MIT’s Computer Science and Artificial Intelligence Laboratory (CSAIL) and Maynooth University, Ireland came up with a friendly stress test: creating new legal Wikipedia articles to examine how they affect the legal decisions of judges…

It turned out the influx of articles tipped the scales: getting a Wikipedia article increased a case’s citations by more than 20%. The increase was statistically significant and the effect was particularly strong for cases that supported the argument the citing judge was making in their decision (but not the converse). Unsurprisingly, the increase was bigger for citations by lower courts - the High Court - and mostly absent for citations by appellate courts - the Supreme Court and Court of Appeal. The researchers suspect that this is showing that Wikipedia is used more by judges or clerks who have a heavier workload, for whom the convenience of Wikipedia offers a greater attraction.

Full story here. The researchers suggest taking steps to improve the reliability of information posted to wikipedia, which makes sense. How about improving the accessibility of the law as well? LexisNexis and Westlaw are expensive and, even if you have access to it, just not as easy to use as google, wikipedia etc.

Jitters

The following is from a training we did with CJM Search recruiters and was as joint effort between CJM Search and Silicon Sal, friend of the blog. Anything that sounds wrong or bad is Sal’s; smart stuff’s ours.

Another day and another round of layoffs from tech companies. It’s pretty clear that the tech bull run of the last couple years is slowing down. So what’s actually happening? Not really sure! But let’s stick with what we do know, and then maybe we can branch off and speculate from there:

• Macroeconomic events are driving uncertainty 

  • The war in Ukraine has caused a massive amount of geopolitical risk that previously didn't exist

  • Related to the war in Ukraine, energy costs are rising and supply chains are disrupted, which have driven up cost of doing business across industries

  • COVID is still impacting businesses and workforces, causing labor shortages and other talent disruptions

  • Inflation has been rising rapidly, which also increases the cost of doing business (through higher cost of inputs, labor, etc) - the Fed has also taken unprecedented steps to curb inflation by raising interest rates dramatically in a short period of time

• Financial markets react negatively to that uncertainty

  • Financial markets hate uncertainty, because it drives difficulty in projecting how a business will perform (and thus its fundamental underlying value)

  • The stock market has suffered because of this uncertainty, with technology stocks being hit particularly hard (e.g., Nasdaq down ~25% YTD)

  • Due to the market uncertainty and stock market drop, the fundraising environment for private companies has slowed considerably

    • The rise in interest rates also means the "cost of capital" has increased; for the past ~10 years, interest rates have been very low making investing in venture capital a much more attractive investment than say investing in bonds, or steadier, low growth equities - this is no longer the case in today's market

    • Why is that? High interest rates mean that a dollar today is worth a lot more than a dollar 5 years from now. Let’s do that math, just for fun. Where interest rates are 10%, the value of a dollar in five years is $1*(1.10^5) = $1.61. Where interest rates are 1%, the value of a dollar in 5 years is $1*(1.01^5) = $1.05. In a low interest rate world, a tech company's future profits are worth today almost what they will actually be in the future.

• What does this mean for the companies that we work with?

  • Over the past ~10 years (in the frothy, low interest rate times mentioned before), tech companies were evaluated (both in public and private markets) primarily on top-line revenue growth and their ability to gain market share 

  • With the recent market shifts, companies are now being evaluated more heavily on their ability to drive profits and free cash flow in their bottom line (and not just singularly growth)

  • Because of this, companies likely will shift their hiring strategies towards roles that will drive profitable growth

• How long do we think this period will last?

  • No one knows, but it is unlikely to end quickly - most companies are developing plans to "weather the storm" of the next couple years, but the environment could shift again rapidly

Bezos is mixing it up with preservationists to get his new yacht out to sea

Apparently the masts of his new yacht are too tall to fit beneath a historic Rotterdam bridge (via margionalrevolution.com)

Meanwhile our CEO’s new pleasure yacht, assembled earlier today and pictured below, has MULTIPLE folding clam shells, a gem, and will require ZERO historic bridge demolishing.

Matt Yglesias on poaching in the tech industry

One reason that Silicon Valley might have become so successful is the lack of non-competes, allowing for engineers to easily move between companies. Here’s Matt Yglesias on the potential connection between that policy and innovation.

Anja Shortland on EconTalk on why it's really hard to sell stolen art

Shortland explains how a private database of stolen art, the Art Loss Register, has made the notoriously opaque art market a little less so.

Really enjoyable episode, featuring a James Bond-type character, freeports, “anonymous Russian institutions”, an allegedly authentic Turner, and because it’s an EconTalk episode, a reference to Adam Smith.

NYT on Resumes

Part advice, part history. Here’s a bit:

The internet says Leonardo da Vinci wrote the first résumé in the late 15th century. He pitched his weaponry chops — not his artistic services — to Ludovico Sforza, the Duke of Milan. It seems right that Leonardo would have “Invented résumé” on his résumé, but wrong that he met the future patron of “The Last Supper” by applying for the job of entry-level war maker. A Renaissance man and a career changer.

Waze CEO on building a company inside Google

“No one buys technology, you buy a team and a way of doing things.” In other words, “People, ideas, machines… in that order.”

The only person who went to Stanford GSB to be a poet?

Really enjoyed Dana Gioia on Econtalk. Is poetry back? We had Amanda Gorman at the inauguration. Was Vince Lombardi’s thing at the super bowl kind of poetic? Maybe?

Did some googling after listening to this episode and came across this fun story about Wallace Stevens, poet/insurance executive:

At another party in Key West, in 1936, a swaggering Stevens loudly impugned the manhood of Ernest Hemingway. When Hemingway showed up, Stevens took a swing at him, and Hemingway knocked him down. Stevens got up and landed a solid punch to Hemingway’s jaw, which broke his hand in two places. Hemingway then battered him, but later cheerfully accepted his meek apology. They agreed to a cover story: Stevens had been injured falling down stairs.

a very good recruiting email

Happy (belated) Birthday, J.R.R Tolkien!

He would have been 129 yesterday, January 3, 2021. As we shake off the holiday cobwebs and prepare for a challenging next few months, here’s Tolkien on hobbits:

Nonetheless, ease and peace had left this people still curiously tough. They were, if it came to it, difficult to daunt or to kill; and they were, perhaps, so unwearyingly fond of good things not least because they could, when put to it, do without them, and could survive rough handling by grief, foe, or weather in a way that astonished those who did not know them well and looked no further than their bellies and their well-fed faces.

And happy new year, everybody!

Byrne Hobart on Metis in Big Tech

“An ML-driven approach is only possible at large scale, and scale is only possible through legibility. But it’s the fate of all these legibility-imposers to move past legibility. They impose order on the world, and then they automate the order-imposing process, the order-imposer-refining process, and so on, until the end result is determined by a metis available to nobody.” Essay is here.

Fun Fourth Facts!

Have you ever asked yourself, “How many bites it should I take to finish a hot dog?” Fortunately the National Hot Dog & Sausage Council is here to tell you that it’s 5 bites (7 for a foot-long). Happy Fourth of July!

this is some recruiter shit right here..

pls take a peek at this ridiculousness

Exploiting a remote team's capabilities

We built Checkout to maximize conversion by intelligently prioritizing which payment methods are presented to the customer depending on where they’re located. Whether in Mexico or Malaysia, a company’s checkout experience should feel local and include the payment methods customers are most likely to prefer. One way to more naturally build in local considerations into global products is if they’re built by remote, distributed teams. One member of the Checkout team launched a local push payment method from Singapore and another shipped address collection from Maryland. Given the nature of Checkout, we hypothesize that the more distributed the team becomes, the closer we get to the needs and mindsets of more users.

This is from “Stripe’s remote engineering hub, one year in”. Stripe’s engineering team is now 22% permanently remote.

Book Recommendation: "This Is Not My Hat"

Great book for kiddos —

• delightful illustrations

• an introduction to property rights (it’s never too early!!). Kind of a shorter version of the big boy/little tunic story in Cryopaedia

• a little dark humor for the parents

Part II of a trilogy, but it stands alone well too.

"Does a USB drive get heavier as you store more files on it?"

“When you save data, a binary zero is set by charging the float gate of the transistor, and a binary one is set by removing the charge. To charge it, we add electrons, and the mass of each electron is 0.00000000000000000000000000091 grams. This means that an empty USB drive (which mostly holds zeros) weighs more than a full USB drive (which has ones and zeros). Add data, reduce the weight. However, you would need to weigh more USB drives than exist on the planet together at once before the difference in weight became easily measurable.” From Science Focus, via Marginal Revolution. Emphasis added.

Hope all of our many many readers are staying healthy!

Another book rec: "Boyd: The Fighter Pilot Who Changed the Art of War"

I just read Robert Coram’s biography of John Boyd, an Air Force fighter pilot. It is a phenomenal book. It tracks his early days as a fighter pilot, fighter pilot instructor, researcher/designer for new jet aircraft, and eventually maneuver war theorist. He would eventually become known for saying (among other things), “People, ideas, machines … in that order” and that’s a great framework to evaluate what made him special at each point in his career (with a notable exception for his performance as a husband and father - underwhelming).

• Many fighter pilots struggled to control the F100, especially when it was first introduced, let alone perform well in it. Boyd, on the other hand, turned many of his tactial ideas into maneuvers that neither the Air Force nor the jet manufacturer had considered or thought possible (like “flat-plating the bird” - basically, when being chased, throwing on the brakes, letting the pursuer fly by and become the pursued). He made the machine serve him, instead of the other way around.

• Before Boyd, fighter pilot instruction was mostly one-off tactics and maneuvers taught to be used in specific situations. Mostly instruction was hands-on - practicing over and over again - and giving pilots a feel for what it meant to be a good fighter pilot. Boyd was very very good at these drills - he earned the nickname “40 Second Boyd” because he could beat any opponent in one of these drills in 40 seconds. But more remarkably he was able to articulate that feel and draw up broader, comprehensive doctrine for how to conduct aerial warfare.

• Between assembling this doctrine and getting his aeronautical engineering degree, he gained his key insight that jets, given a particular speed, altitude, Gs etc, have a particular number of options - accelerate or decelerate, climb or descend etc. Every moment a fighter jet has an opportunity to improve its position relative to its adversary, so the better pilot knows (i) every potential option that he/she has at any given point and (ii) every potential option of the adversary (this is a very non-technical explanation and I might also be wrong but this is my understanding of it). Moreover, all of this could be quantified, for every plane. He called this “Energy-Maneuverability Theory” (EM)

• EM allowed Boyd to further refine his tactical ideas but identifying the optimal conditions for American and enemy Aircraft. EM also highlighted how much worse American fighter jets were then their Soviet counterparts. Until EM, the Pentagon’s guiding principle for designing aircraft was “higher, faster, and farther” - maybe good qualities for a bomber but not a fighter.

• So what if you designed an aircraft backwards from EM principles? Boyd and some of his colleagues/mentees (the “Fighter Mafia”) tried to do this, with some success - they receive a lot of credit for improvements in the F-15 and F-16. And relatedly, a member of the Fighter Mafia was an important mind behind the A-10, a close air support plane still beloved by A-10 pilots and the ground troops they support. (a google search of “A-10 memes” supports this)

• Boyd retired as a Colonel and did what many former service members do - read a ton of military history. But it was not a leisure activity - it consumed him. He was looking for an EM-level insight into ground war generally. This research led to “Patterns of Conflict” - a sprawling hours-long brief (Coram makes a lot of his briefing skills) that analyzes warfare from the Roman legions through the late twentieth century. Here’s a written copy - it is dense and hard to read but it lit some serious fires especially in the Marine Corps where its ideas on maneuver warfare (as opposed to attrition warfare) and people-first approach formed the basis of MCDP 1 - Warfighting. The Marine Corps still teaches Boyd’s ideas today (some directly credited, like OODA loop, but others, the doctrine of maneuver warfare generally, less so) and his ideas are everywhere. If you’ve seen “Generation Kill”, you’ve seen a Marine channeling Boyd - “tempo, tempo, tempo”. “Patterns of Conflict” got a mixed reception in the Army. The Air Force did not care for it at all.

• Boyd’s mentees in the Pentagon also shook things up. Franklin Spinney made the cover of Time magazine for his reports on military budget overruns. Jim Burton was the subject of an HBO movie for his work in reforming weapons testing procedures. Did you know the Army tried to field their new Bradley fighting vehicle, an armored personnel carrier, without ever shooting enemy weapons at it to test it out? And then when Burton insisted they do it, they used weaker-than-Soviet Rumanian weapons and filled the Bradley’s fuel tanks with water? And, per Coram, “When early tests detected large amounts of toxic gases inside the Bradley, the Army simply stopped measuring the gas.” Generally unimpressive and anathema to Boyd’s ideas about making machines that serve the warfighter, instead of the other way around.

Coram calls Boyd the greatest military theorist since Sun Tzu and in my underinformed opinion he’s probably right. But the title of this book is a little misleading - Boyd didn’t change the art of war - he rediscovered it. It had been buried by the atom bomb, the Strategic Air Command, interdiction bombing, and Pentagon bureaucracy.

Book Recommendation: "Abducting a General"

If you’ve read enough news about killing a general, you might enjoy Patrick Leigh Fermor’s first-hand account of a very different tactic. During WWII, Leigh Fermor was a British special operations officer on Nazi-occupied Crete. His work with Cretans to resist German occupation included the kidnapping of General Kreipe, the commanding officer of German forces on Crete, whom they smuggled off the island, into a boat and to Egypt. But “Abducting a General” is less of a war memoir and more, like Leigh Fermor’s other works, a travel book. His descriptions of Crete - its people (their culture, language, tenacity etc) and the geography - are spectacular and his range of references/allusions are good fodder for wikipedia deep-dives. Here for instance, is a passage about Crete’s Mount Ida:

It is the island’s crown and the impartial sanctuary of everyone in flight from justice or injustice and its mythological aura is deepened by the Himalayan remoteness and by the awe that hovers over Mount Sinai on Cretan icons. All my sojourns have been strange; none, though, as strange as these, huddling with the General and a volume of Baudelaire or Xenophon between us in the mountain’s heart, while below us in a ring his army prowled like the troops of Midian.

Interesting guy, interesting story. Worth checking out, I think.