https://youtubetranscript.com/?v=jRHcvy30IBI
There’s lots known about what predicts success in different domains across the lifespan, let’s say. The first question is, what are the, if you’re trying to analyze something like business success, or productive success, what are the proper domains of category? And so, if you’re trying to categorize jobs, for example, which turns out to be quite difficult, the simplest conceptual scheme that’s practical, that gets you somewhere, is like a two-by-two matrix. There are simple jobs and complex jobs, that’s the first thing that’s worth knowing, and it’s a continuum really. But a simple job is one where, once you’re trained, you just repeat what you’re doing. So factory line work would be an example of that, or checking out people at a grocery store, restocking grocery shelves, or jobs like that. The best predictors for success in those jobs is conscientiousness, trait conscientiousness. And conscientious people are orderly and industrious, and we don’t exactly know why they are. It seems like it’s associated, oddly enough, with such things as disgust sensitivity. So maybe people are conscientious because they get disgusted with themselves if they’re not useful, guilty, you know, they get guilty if they’re not engaging in productive enterprise. And maybe that’s a marker for a kind of complex social responsibility. Which sounds like the complete opposite of most entrepreneurs I know. Well, that’s the thing, the entrepreneurs are different. So for simple jobs, IQ, intelligence, predicts how fast you learn the job, but not how well you do it once you learn it. And what predicts there is conscientiousness. So basically, if you’re hiring people, you want conscientious people who are, that’s the most important thing. And then the second most important thing is you want people who are relatively low in trait neuroticism, which is a negative emotion dimension, because they’re less likely to be absentee, and so forth. So in complex jobs, complex job is one where the demands change on a regular basis. And so most managerial administrative positions are complex jobs, because you can’t learn the job once and for all. And then the best predictor for complex jobs, the first predictor is IQ. And the second predictor is conscientiousness. And IQ is about three times more powerful than conscientiousness as a predictor. And then, so that’s the first, simple versus complex. And then the second would be, the second category scheme would be something like managerial slash administrative versus entrepreneurial. And the entrepreneurial types, actually, they’re over with the artists. So the best predictor for entrepreneurial success, first is IQ, but second is trait openness, which is the creativity dimension. So entrepreneurial types tend to be very high in trait openness. And so that sets them with the artists and also with the political liberals, because the best predictor of political liberalism is trait openness. So the managers and administrative types, they tend to be conservative. And the entrepreneurial and creative types tend to be liberal. And so if you’re an entrepreneur, you’re going to be a lateral thinker. And so you’ll be the sort of person, if they hear an idea, if you hear an idea, that will trigger off a whole bunch of other ideas. And you’ll be motivated primarily by interest in pursuing your ideas. But your pit, your downfall is likely to be organizational administrative ability. So it’s often useful for entrepreneurial types to pair themselves with managerial and administrative types. Yeah, you are described, it’s like you are describing my soul here. Yeah, well, there’s a tension, there’s this weird tension between doing one thing right, which is what you need to do if you’ve already decided what it is that you’re doing, and scanning the landscape for something new to do that would be worthwhile. Those aren’t the same enterprises. And so most companies are an uneasy marriage of entrepreneurial and managerial types. As the company gets more and more established, the managerial and administrative types tend to dominate. But then that becomes problematic, because it means it’s more and more difficult for the company to shift laterally when it has to, which is, again, I think why so many companies eventually fail. Because they lose the creative head, is that what you mean? Sure, they lose the flexibility. And it’s funny, because they’re trying to maximize their ability to implement, but it’s very difficult to do that without also simultaneously bearing the cost of narrowing. So the thing is, if you know what you’re doing, you want to hire a conservative. If you don’t know what you’re doing, you want to hire a liberal. Right. So that’s a way of thinking about it temperamentally. It’s also a way of parsing out the political landscape to understand, at least in part, why you need conservatives and liberals. Yeah. Well, I mean, I find a business is like a family. And in the past, in my company, I’ve had all under 25-year-old male entrepreneurs. Why did we hire them? Because that’s what we were like. And people, I’ve found entrepreneurs tend to hire versions of themselves at first. Instead of being more self-aware to go, actually, I’m chaotic, disruptive. What I need is order. And like you said, good administrative skills, conscientiousness. So you go through that chaos of hiring people too much like you and having too much male energy or too much creative energy. Then you maybe react and hire a lot of administration and conscientiousness, and then you maybe lose the soul in your company. And then the creator’s trying to drag the company forward. It feels like he’s getting held back by everybody. Well, and it is. It is, but the funny thing is… It’s needed to hold him back, but they’ve got to let him go as well, haven’t they? Well, that’s the problem. The fundamental problem is most new ideas are stupid, dangerous, and counterproductive. And they’re the ones that change the world. Well, they are sometimes. They are sometimes. But there’s a subset of new ideas that, even though new ideas are dangerous and disruptive and often counterproductive and generally don’t result in a productive company, some of them are absolutely necessary and they’re the thing you need to do next. And that’s a very difficult problem to solve because it’s the fundamental problem of innovation. It’s like most innovations aren’t justified or warranted, but some of them are absolutely crucial. So how do you distinguish between them? And the answer is, well, we don’t know. Part of the way that you do that in a dynamic economy is you let and encourage a whole host of entrepreneurs to produce their ideas and you let almost all of them fail, which is kind of painful for the entrepreneurs. But limited company and all those kind of structures are set up to make that more safe, aren’t they? Right, right. Yeah, well, those are… This is something that’s massively underappreciated, I would say, on the liberal left end of the political spectrum, is people just don’t understand how absolutely revolutionary the idea of a limited company is. Because what a limited company allows is a limited company allows your idea to die instead of you. And that’s a big deal. Otherwise, no one would take the risk, would they, of creating anything? That’s right. No one could bear the risk. Because if you failed, it would wipe you out permanently. It’s like, well, who the hell is going to take that risk? And so the fact that limited liability is one of the unbelievable tech… I can’t believe that we ever invented it. That’s like an innovation that we all just forget about, isn’t it? Jesus. And it’s such a merciful innovation. It’s like, you mean I get to fail and no one’s going to kill me? No one’s going to throw me in debtor’s prison? It’s not going to hang around my neck for the rest of my life? I can actually take a risk? So because the other thing you see often with entrepreneurs is that they fail a lot before they succeed. And so, I mean, you have to be pretty damn spectacularly lucky to have your first idea when you don’t know what the hell you’re doing be a spectacular success. Or maybe it’s a good idea, but you weren’t ready and you’re more ready. Or the marketplace isn’t ready. I mean, that’s the other thing that people don’t really understand is because if you’re a naive entrepreneur, you think, well, all I have to do is make a great product. It’s like, no, that’s about 5% of it. And that shocked the hell out of me when I started building software, for example, because we assumed that we developed software to help people select better employees and we never could sell it except in very rare circumstances. But we assumed that if we had a product that was validated, we could show that it had the effects that we wanted and that it was more efficient than other products in the marketplace that selling it would be easy. It’s like, well, that’s just so wrong. Selling and marketing things is impossible. I love it when people say, oh, the product just sells itself. It’s just one of those things which are like, you’ve not been in business a very long time. Yeah, because you’ve got market forces, you’ve got your skill set. You could have a great product. You’re just not ready to sell it because you haven’t got enough experience. Well, and you don’t know how to price it. And you don’t know who to talk to to sell it. You can spend your whole life, especially if you’re selling to companies, which is virtually impossible, talking to the wrong people. And it feels like work and it really is work. But you never end up contacting a real decision maker. And then you can’t tolerate the excessive delay. Like you think, well, I’m going to go sell this product to a big company because they can obviously provide me with a massive contract. It’s like, yeah, but there’s a relationship between the size of the company and the delay in the implementation. And the delay can be years. And this happened to us all the time. It was very painful. We’d get right to the point of signing with a large company and there’d be an internal management transformation. And the person that we were dealing with disappear. It’s like, oh, no, it’s like, now what? We actually had that happen with a really big company in New York. We were right on the verge of signing a contract for use of this self-authoring program that we designed, which helps people plan their lives. And the week that we were ready to sign the contract, the CEO resigned. Gone. Two was probably a year of sales and marketing work just evaporated. And you don’t get paid for any of that. You get no reward for getting 364 days down the 365 days. You certainly don’t. Well, and it’s also really easy for one of the things that tech incubators do really badly, I think, is they do lots of things really badly, generally speaking. But one of the things they do that’s very counterproductive with the people that they train is they emphasize the development of the company, but they don’t force their entrepreneurs to find customers. Because your first customer is the most difficult thing you’ll ever do as a business person, in my experience, to find someone who will actually pay you that first time. That isn’t your mom. Yeah, that’s right. That isn’t a family member. That’s an actual customer. And the other problem that people face when they’re trying to sell a new product is one of the ways that people decide whether they’re going to buy something is whether or not, A, they know anyone else who’s already bought it, or B, if there’s other people in their domain that are already using it. And if your sales pitch is, well, no, this is new and revolutionary, you think, well, that’s a wonderful sales pitch. It is like it is if you’re talking to someone who’s entrepreneurial and risk taking and interested in revolutionary ideas. But if you’re talking to a middle manager in a company, the last thing that person wants to hear is, well, you could be a risk taker and introduce this into your company. The person’s thinking, I don’t want to put my job or reputation on the line for your product, even if it is revolutionary, in part because if it succeeds, I probably won’t be rewarded for its success. So when we were selling our employee selection software, for example, we ran into, we were academics, and so there were lots of things we didn’t know about business. And one of the things we ran into, which was so funny, we talked to the people who were doing the hiring and they had a certain budget, which was usually lower than because they had virtually no budget for hiring, weirdly enough. So what we were charging for the product, which was still extremely modest, exceeded their budget. Said, well, look, you’re going to make a 250 fold return on this. That’s pessimistically, it’s 50. Realistically, it’s 250. And the upper end was more like 500. So it’s a no brainer to implement this. It’s like, well, we’re budgeted on the cost side. What do you mean? Well, if we hire more productive employees, we won’t be rewarded for that. We’ll just be punished for spending more money the other way. I thought, well, we can’t even talk to you because I’m trying to sell you something that will benefit your company. But for you as the decision maker, there’s nothing but risk in implementing the new process. So that just blew me away. It’s like, oh, I see. The hiring budget and the productivity budget aren’t associated. So that’s like a fatal impediment to our sales process. So that was, well, we learned lots of things about it. And I came out of the whole enterprise with way more respect for people, especially for people who do sales. Jesus, that’s such a brutal job.