Longreads + Open Thread

Longreads

• Tyler Cowen interviews Patrick McKenzie. Self recommending, as they say. Patrick has contributed a lot to how I think about a wide range of topics: hiring, fintech in general, the shadier parts of crypto in particular, and Japan. Since he lived in Japan for two decades, but now lives in the US, he's been able to write eloquently about how Japan was different from the US circa the early 2000s, how the US today is different from the US circa then, and especially how Japan has avoided certain kinds of entropy that America keeps accumulating. On that note, his concept of "the will to have nice things" is a powerful model of Nietzschean Neighborliness. The interview is proof that nothing compounds longer than the habit of asking: "Why does this work the way it does? And could it work better?"
• Conrad Bastable on how violence is downstream from the way we select elites. He starts with the observation that Venetian elites had a higher crime rate than the average person, uses that as a jumping-off point for thinking about how we form elites, spends some time breaking down what's misunderstood about the "marshmallow test" (did you know that after the test, many of the kids who made it through didn't eat the marshmallow, because they wanted to bring it home and show their parents they did a good job?), and then discusses San Francisco's crime rate as a function of shame. This is a great piece, and one that I'll probably revisit over time. Like many such models, what it ends up with is not so much an explanation for why something works poorly, but instead an explanation for the tradeoffs that made that outcome possible.
• Cedric Chin reflects on judo training. A bit of the essay is on the literal question of how you'd train and what you'd eat if you were trying to become a competitive athlete in the next few months. But listing those requirements is the easy part! The uncomfortable part is about the mindset; I'm a fan of cost-first New Years Resolutions, where instead of deciding what goal you'll achieve or even what thing you'll do every day/week/whatever, you focus on what costs you're willing to pay to make those inputs and achieve those outputs. There are some things that are intrinsically worth doing, some that are worth doing because succeeding at them gives you confidence to succeed elsewhere, and other things that are worth doing specifically because failure teaches you so much about your limits. (As a corollary, if you've never learned about your limits the hard way, you aren't really trying.)
• David Sacks discusses The Dark Side of Sales: what happens when a sales team is well-motivated to do almost exactly the right thing, but not exactly the right thing. This is an extended application of Andy Grove's dictum that "[B]ecause indicators direct one's activities, you should guard against overreacting. This you can do by pairing indicators, so that together both effect and counter-effect are measured."
• Manvir Singh writes in The New Yorker about the gradual historical rehabilitation of steppe empires like the Mongols. Steppe/sedentary relations tend to get off to a rocky start when the steppe nomads invade and sack cities, but another thing these empires do is impose a common language, a legal code, and a free trade zone. So, yes, there are losses from war and pillage—but there are also gains from trade! Those gains are probably higher, at least for the survivors, in places that have had a sudden population loss: death and destruction push people back from the Malthusian frontier, so calories produced per farmer (again, surviving farmer) go up, and that means the economy can support more non-agricultural work, which makes trade more sensible.
• In this week's episode of The Riff, Erik and I talked about prediction markets, talent cycles, the corporate headquarters puzzle, and the case for ignoring all presidential race news until a few days before the election. Listen on Spotify/Apple/YouTube.
• And in Capital Gains: the opportunity cost of features, or why it's so expensive for any big tech company to change anything whatsoever about its user interface.

Books

• Advanced Portfolio Management: A Quant's Guide for Fundamental Investors: This is the book to read if you're either working at a multistrategy fund, competing with one, or just curious about how they work. A wonderful blend of theory and practice: sometimes, the author will be explaining the statistical wisdom behind a given approach to diversification, and at other times he'll be dropping insights like the observation that every asset management company has a "stop loss," i.e. a level of losses at which the portfolio manager loses their job—the only difference is between the one a manager sees written into the terms of a contract and the one the manager discovers when they suddenly get fired.Longer subscribers-only review here ($).

Diff Jobs

Companies in the Diff network are actively looking for talent. See a sampling of current open roles below:

• A fintech company using AI to craft new investment strategies seeks a portfolio management associate with 2+ years of experience in trading or operations for equities or crypto. This is a technical role—FIX proficiency required, as well as Python, C#, and SQL. (NYC)
• An investment company using AI to accelerate investment in esoteric asset classes is looking for a fullstack engineer with Python and Typescript experience to build internal tools for ingesting and analyzing data (Bay Area, remote also a possibility).
• A well-funded startup is building a platform to identify compliance risks associated with both human- and AI-generated outputs. They are looking for a frontend engineer with React/Typescript experience to join their team of world-class researchers. (NYC)
• A crypto proprietary trading firm is actively seeking systematic-oriented traders with crypto experience—ideally someone with experience across a variety of exchanges and tokens. (Remote)
• A vertically integrated PE-backed cannabis company is looking for an Excel wizard with a background in supply chain. (Remote)

Even if you don't see an exact match for your skills and interests right now, we're happy to talk early so we can let you know if a good opportunity comes up.

If you’re at a company that's looking for talent, we should talk! Diff Jobs works with companies across fintech, hard tech, consumer software, enterprise software, and other areas—any company where finding unusually effective people is a top priority.

Reader Feedback

Lots of emails, pro and con, on the tech/finance skills conversion piece, but I also appreciated this comment on last week's post on why companies want to own their corporate headquarters:

Owning [their] own headquarters avoids becoming subject to a future monopoly (the building owner, especially if they think that relocating would be very costly for the tenant) for lease renewals & even for negotiating permissions to change the space in unforeseen ways.

A town-sized headquarters can make sense for a lot of the reasons cities exist at all: My 300th-closest coworker isn't directly important to me, but is likely in the top 20 for someone who's in my top 20.

This is a fun point, particularly the second part. (On the first, it's monopoly in both directions: a big lease is hard to replace, but so is a big tenant!) But it would be interesting and fruitful to compare the agglomeration economics of big cities and big companies. Are they scaling in the same way and for the same reason? Or is there a different way they each reach their ideal scale?

Open Thread

• Drop in any links or comments of interest to Diff readers.
• Are there some other behaviors that many big companies engage in that seem irrational?