By James Pethokoukis and Tyler
Cowen

What
is talent, and how do you spot it? The ability to identify talented people and
allocate their unique skills is incredibly valuable in the modern economy. Fortunately,
Tyler Cowen has years of experience spotting talent, and he and his co-author,
venture capitalist Daniel Gross, have compiled their wisdom and research
insights into their new book.

Tyler
holds the Holbert L. Harris chair in economics at George Mason University.
He’s a columnist at Bloomberg Opinion and co-writes the popular economics
blog, Marginal Revolution. A prolific author, his previous
books include Stubborn
Attachments, The
Complacent Class, Average is
Over,
and The New York Times bestseller The Great
Stagnation.
Tyler’s new book, co-written with Daniel Gross is Talent: How
to Identify Energizers, Creatives, and Winners Around the World.

What follows is a lightly edited transcript of our conversation, including brief portions that were cut from the original podcast. You can download the episode here, and don’t forget to subscribe to my podcast on iTunes or Stitcher. Tell your friends, leave a review.

Pethokoukis: In the book, you
define talent as a person’s “creative spark.” Was that definition
obvious to you from the beginning of the book-writing process?

Cowen:
Yes. I co-authored the book with a venture capitalist who funds people doing startups,
and those are people with a creative spark. I’ve hired academics, public
intellectuals, media types. Those are also people with creative spark. So
that’s what the two of us know best.

Don’t you need different types of
talent and different strengths other than “creative spark” to run a
successful organization?

Absolutely.
You need to read other books about talent and hire other kinds of people. But
it is surprising to me how many people in fact have, or can have, a creative
spark. If you think about hiring your own assistant, which is someone maybe not
so high in the hierarchy, but they have to know how to manage you. You hope
they come to you with new ideas. You hope they become something significant
later in life. It’s really quite a few people that our category covers.

Is that talent innate? Can it be
developed? I remember talking to a comic book writer and he said, “I would
create a completely alternate curriculum for a high school. Instead of gym
class, I would have kung fu class. I would have a coding class. I would have
just a more out-there literature class.” Can you create creative people,
or is it innate?

A
great deal of talent can be developed. Look at how many talented individuals
are coming right now from India and South Asia. Far, far more than was the case
40 years ago. It’s the same basic set of people, right? But they have better
education systems, better nutrition, more internet access, and so on. So being
in the right small groups of people and having the right mentors are two things
we can do for people to develop their own talent.

So it’s not just about cognitive
ability. It isn’t just a matter of IQ tests, right?

Energy
is extremely important. Persistence, the ability to work together with other
people, the ability to look at a complex social structure and figure out how it
operates: All those factors are at least as important as intelligence.

Google used to be famous for asking bizarre questions of candidates—“How many golf balls could fit into a bus?” or “Create an evacuation plan for San Francisco”—where there was no right answer. I assume they just wanted to see how you thought about things, and that’s for, I imagine, new employees. But I remember a story about Larry Summers—the economist, director of Obama’s National Economic Council—who at that point was a former Treasury Secretary, and yet when he was going to get a job at a hedge fund (I think it was D.E. Shaw) they asked him to solve math puzzles.

Do you see a value in that? I suppose it’s maybe one thing for a new employee, and Google doesn’t do it anymore, but is there any value to that kind of interview question?

There’s
a very, very narrow set of jobs—some of them do seem to be at quant hedge funds—where
the ability to pose people very specific mathematical questions is of value.
But for the most part, it’s not a valuable interview technique. We steer people
away from it in our book. Again, there’s a small number of places that do it,
maybe find it rewarding. But people skills are more important: knowing whom to ask
a question, a kind of meta-rationality, knowing when you’re wrong. Even the
very best traders—think of them as right 51 percent of the time. . . Well,
that’s in a way an incredible record, but you’ve got to be able to handle that
other 49 percent in some way, not get too big a head, understand what it means
to make a mistake, maintain your emotional equilibrium, and so on. So even for
jobs in quant hedge funds, those are very often the more important talents,
noting you do have to know a fair amount of math, of course. But there are
other ways of selecting for that than asking about golf balls in a Volkswagen.

Is trying to find people with
creative spark the same as people thinking outside the box? Are those the same
thing?

They’re closely related, but they’re not the same. So a lot of creative spark actually is thinking very well inside the box, or just seeing what the box is, or choosing the right box. There are brilliant people who play chess, but unless you’re, say, in the world’s top 10, your career is probably a big mistake. You might have creative chess moves, but you’re focused on the wrong box. So a lot of what we talk about in the book is, how do you find people who understand what the box is?

Before reading the book, I really thought this was more of an art than a science. Some people are just good at finding those kinds of people. If you ask them how they do it, they may not even know how they do it, but they can do it. But it’s both. Are you satisfied that this is something you could actually learn how to do in a systematic way?

It
is both an art and a science. You can teach people how to do it, but it’s like
art appreciation or music appreciation. Some people are better at it than
others. There are not so many fixed rules for understanding art. Like, “Oh,
the good paintings are the really big ones” or “The good paintings
all have dogs in them.” That’s just silly. If you spend a lot of time
looking at different paintings, talking about them with other intelligent
people who have a highly developed visual or spatial sense, you will become
much better at appreciating art. But like with other talents, there’s immense
variation across individual humans. Not everyone should be doing hiring, right?

For sure. I think everyone would
love, “These are the interview questions you need to ask. If they answer a
certain way on four out of six, those are the people with the creative spark.”
You do write about interview questions, but are there things you should be
looking for other than how they do in several 45-minute interviews with several
people from your company?

It’s going to depend on the job, of course. But for many creative jobs, it’s extremely important to have a sense of, how well does the person radiate energy? And how long will they stick at things? And how do they approach social situations and try to get other people to cooperate with them? Those are not quite universally important, but they’re highly significant in a large number of different avocations. You should ask questions about them. But if you ask people directly, you get lies or stilted or prepared answers. You want to just get people talking conversationally about anything they’re passionate about and just bring out, what’s their command of detail? Or if someone is a big Star Wars fan, ask them “Who’s the best talent judge in Star Wars? Is it Obi-Wan? Is it Yoda? Is it Darth Vader?” No one is prepped for that question, but you’ll get a sense of, have they even thought about this?

In an ideal world, would it be great to take a group of job candidates and bring them out on a camping trip? I think they used to call them Outward Bound or something, and they have to climb ladders and solve problems and that kind of thing.

Well,
there are companies that have done things like that. I haven’t seen formal data
on how well that works. In most cases, I think it’s overkill. You should focus
a bit more on their track record at the actual job skills in question. Now,
sometimes you can’t do that. It might be a new kind of job, or it might be very
young people, but that strikes me, in most cases, as just spending too much
time putting these people together. You make interviewing an arduous process,
and you actually limit the number of candidates you can consider, because they
don’t all have three days for a camping trip, especially the best ones.

Is there a quantitative or Moneyball kind of way of looking at talent where you can run the numbers in some fashion?

For
some jobs, that is significant. For instance, in sports—you referenced Moneyball—you actually have data, even
for people who are doing well in collegiate sports. Typically, they’re taped;
there’s statistics. But for most actual jobs where you’re hiring, if anything I
think there’s too much emphasis on data. So if you’re hiring a young writer, of
course you might ask, “Well, how many people have read your blog?” Or “How
many Twitter followers do you have?” But you’re looking for potential. Everyone
else sees those numbers too. You’re looking for the people who are going to be
better in five years than right now. So just ask them a question, like, “What
is it you do to practice every day?” If they don’t do anything to practice
every day, maybe you’re not going to be that much better. If they have the
convincing, detail-oriented answer about their practice habits, now you’re onto
something.

But I wonder if after the book and the movie—and I love that movie—if the corporate world people started thinking, “Oh, that’s how you need to do it. So these old-fashioned, subjective ways don’t work. We need to figure out a quantitative way.” There’s actually a real example. The Houston Astros at one point several years ago basically got rid of almost all their scouts. They cut them by like three-fourths and decided just to go to videotape and data. Then three years later, in 2020, they started hiring scouts back again, though they still don’t have quite as many as they used to. They found out that they were missing something about these players. Just having lots of high-def video, and there’s more statistics than ever . . . They can gauge the spin and everything on the baseball and their sprint speed. That wasn’t enough.

Look
at the Philadelphia 76ers, one of the most quantitative teams in the NBA. Well,
they stuck with Ben Simmons for too long. Though, he is in a way a remarkable
talent. They got rid of Jimmy Butler, who’s just been phenomenal since he left.
So I think everyone understood the athletic abilities of those players at the
time and now, but the difference in determination and sticking with it has made
all the difference between Jimmy Butler and Ben Simmons. So that’s another case
where the numbers don’t tell you everything. On net, we end up steering people
away from the numbers, noting that in some specialized sectors, sales would be
one example, they’re very useful. “How much did you sell?” It’s not
the only question, but surely it is relevant for assessing a salesperson.

Do we have any idea what better
talent acquisition and talent allocation would mean both for companies and for
the economy in general?

Well,
for the economy in general, I would like to see much higher levels of
immigration into the United States. I know people like to say more high-skilled
immigration. That’s fine, but I would just stress the best way to get more high-skilled
people is to let in what are called both high-skilled and low-skilled people.
The history of US immigration has been that we don’t have a skills-based
requirement for general immigration, and we end up taking in a lot of highly
ambitious, often less educated people who do wonderful things. So at the
national level, that’s what I’d like to see.

At
the institutional level, I think we are far too credentialist. We are far too
bureaucratized. We don’t give young people enough chances. If you go back to
the middle of the 20th century, you have American universities like University
of Chicago: the university president, I think, was 28 years old. He did a great
job. That is just impossible to happen today. But we know 28-year-olds can run
great companies, not that most of them can. So we should have a world where it
is possible for a brilliant 28-year-old to be president of the university. That
is not the world we live in.

That’s also not our politics,
which at the national level, seems to have very old, 70s, 80s across the board.
To me, that’s worrisome, if you’re worried about talent allocation.

Maybe,
but it’s a little complex because, if they’re lower energy because of their age,
in politics I might be happy with that. I don’t want our leaders in every case
to be the most rigorous people. So it depends on the alternative. If you need
truly great leadership, look at our Founding Fathers. When they were the Founding
Fathers, they were, almost all of them, below 40. A lot of them were below 30.
So in great moments, you might need that, but I don’t want it all the time
either.

One of the quotes from the book
that’s sort of getting a little internet buzz is the quote, “Personality
is revealed on the weekends.” Not me. My personality on the weekends is
remarkably like my personality in the week, which is a lot of reading and
looking at screens. But what do you mean by that?

That
shows who you really are. When you get home on Saturday, Sunday, it’s what you
really want to do. It is a sign of your motivation Monday through Friday and
how keen you are to improve yourself. So it does reveal your personality, and
for the better. So there are plenty of people who do what they’re told nine
through five, Monday through Friday, and they can be good hires for a wide
variety of jobs, but their leadership potential, their upward mobility, it’s
quite limited. And in our world of ideas, they are very often not the people I
want to be hiring.

You mention personality tests in
the book. Are you confident that’s a real science, looking at people’s
personalities and having them take tests and then using that to gauge hiring
decisions? Are you confident in that there’s actually something real and
important being measured there? And then, naturally, what are the traits we’re
looking for?

I’m
not a big believer in personality tests. I think they have been overrated in
Silicon Valley, amongst other places. People also give misleading answers. But
I think you can learn some basic things from them: a person’s level of openness,
it’s very hard for a dogmatic person to fake being open, so when it comes to
openness, I think the testing works really quite well; how agreeable or
disagreeable a person is, I don’t think that’s a single dimension, the best
innovators and leaders are selectively agreeable and disagreeable. I think
personality theory doesn’t really quite get that right. So I would say it’s of
limited use. It’s a set of concepts you can use with your team to discuss
people. It’s a framework, but don’t take the numbers too seriously. It’s a very
loose science.

Having interviewed people and
hired people, I’ve tried to be aware of what my bias is. My bias is people who
are funny and people who are talkative. With that kind of agreeableness,
particularly humor, I have to sort of catch myself. I’m sure there are plenty
very capable people who are not hilarious. Is your book helpful for helping to rein
in those kind of biases?

We
talked a lot about biases, for instance, that men have about women. Very smart
men tend to under appreciate how smart very smart women are. If women are
agreeable or just nice to the men, the men then tend to overrate the
intelligence of the woman. Women who come across as not entirely friendly, men
tend to think they’re more difficult than they actually are. So that would be
an example where there’s plenty of biases, again supported by some research. We
can overcome them, at least partially. One hopes fully. I think there are many
such examples. Now for many jobs, you want people who are funny. If you’re a
podcast host, being funny really matters. So it’s not necessarily a bias. I
don’t necessarily know whom you are hiring for what, but don’t think of all
your biases as biases.

I often hear that too much talent
has gone to Wall Street. Do you agree with that criticism?

I
don’t think there’s any simple way you can show that with actual evidence. If
someone becomes a quant in a hedge fund and is highly successful, obviously
they’ll earn a lot of money. How good would they have been at the next best
thing, other than being a quant at a big tech firm? I don’t feel I have a very
solid answer to that question, but it reminds me a bit of chess players. There
are some phenomenal chess players I’ve known, and they’re not also fantastic at
doing other things, even though they are highly intelligent and you have to
work hard to become a top chess grandmaster. So I would be agnostic on that,
but people simply assume it’s a huge problem. I think they have this limited
notion of talent that if you drain that particular bunch of people away from
the economy, all the rest of us are stupid and feckless. And we’re hopeless,
and we can’t run a decent furniture factory in Cincinnati or something. I’m
pretty skeptical there. I’m still waiting to see the core evidence.

What do you think motivates the
talented? Is it building something, accomplishing something? Is it money? Any
thoughts?

All
of the above in a bundled package. I sometimes say, if you’re looking for
drummers, well, you could look for someone who wants to be the greatest drummer
in the world. That’s a pretty strong ambition. Maybe that’s a positive sign. But
most of all, look for someone who loves to drum. That’s the person who will
become the greatest drummer in the world.

You mentioned earlier all this global
talent, which because of globalization and the internet has sort of come online
in a way it hasn’t before. But what about in an advanced economy? Do you think
there are a lot of “lost Einsteins” out there that we’re missing, even in the
United States or in other rich nations?

Well,
right now, I’m not sure we have any found Einsteins. Particle physics is
puzzling us. We haven’t solved it. Here’s a simple example at a very ordinary
level: A few weeks ago, the state of Maryland decided that there were plenty of
Maryland state government jobs you can get without a four-year college degree.
That was obviously a good decision when you look at how those jobs are
described. They still might end up hiring a lot of college grads, but it’s more
opportunity. It’s more fair, more upward mobility. Other states have yet to
follow. We need to do that. It’s just status quo bias. It’s not that we’re all
convinced you need a college degree for these ordinary jobs. So there’s just so
many margins in our economy. We’re too credentialist, too sluggish, too status
quo oriented. And we can do a much better job allocating talent, whether or not
we find a new Einstein.

Tyler, I’m not against a good
gimmick. You have a couple pages with sample interview questions. I’m just
going to ask you one: Which of your beliefs are you most likely wrong about?

Well,
if you ask what I would consider my intelligent friends and peers, the belief
of mine they make fun of the most often is I think there’s a very good chance
that the Navy UAP—or UFO, we used to call it—that data actually represents
alien drone probes that have been sent to us. I think it’s well below 50
percent, but I think the chance is 10 percent or maybe a bit more. They all
think I’m wrong. They’re pretty smart, so that would be my pick.

What do you think the typical
hiring person, big company, small company, will get most out of your book?

They
will get a framework that will cause them to think about their own decision-making
processes for the rest of their lives. Daniel and I do not pretend to have the
answers for every sector, every job, every kind of company. But we do have a
generalized framework for thinking about intelligence, personality, energy,
durability, and many other features of human beings. And that I think will
stick with people.

Then to flip it around, what will
the person seeking a job get out of the book, fundamentally?

They
will understand their own talents better, first of all, but they’re also looking
for talent in other people. If you’re choosing a boss, you want a talented
boss. You don’t want a crummy boss. So everyone’s in the market for talent,
whether you’re hiring or being hired. If anything, it’s more important for the
younger people being hired.

My guest today has been Tyler
Cowen. His new book, co-written with Daniel Gross, is Talent: How
to Identify Energizers, Creatives, and Winners Around the World. Tyler,
thanks for coming back on the podcast.

Thank
you very much. It was a great pleasure.

James Pethokoukis is the Dewitt Wallace Fellow at the American Enterprise Institute, where he writes and edits the AEIdeas blog and hosts a weekly podcast, “Political Economy with James Pethokoukis.” Tyler Cowen holds the Holbert L. Harris chair in economics at George Mason University. His new book, co-written with Daniel Gross, is Talent: How to Identify Energizers, Creatives, and Winners Around the World.

The post How to Identify and Allocate Talent: My Long-Read Q&A with Tyler Cowen appeared first on American Enterprise Institute – AEI.