Jordan B. Peterson on Entrepreneurship, Selling, and Matching Your Job to Your Temperament.
I recently watched this 50-minute video where Rob Moore interviews Jordan B. Peterson, where they discuss the link between psychology and entrepreneurship among other juicy topics.
I found it so insightful that I started taking notes.
A few minutes into it, I quickly realized that you can speak volumes in the time that it takes to write a couple of lines, and that as a result, talks have a lower signal to noise ratio- even if it’s Jordan Peterson doing the talking.
So I spent a few hours spread throughout the weeks to gather all the essential ideas, connect my own points, and cut out the fluff. The end result is this post.
The basic ideas covered are:
- How does psychological temperament link with entrepreneurship? What predicts success?
- Systems that implement dynamic opposition work better.
- Balance between ideas and execution is critical.
- Sell, or starve.
- Make money, then use it for the better.
- Life is suffering- make it meaningful.
How Does Psychological Temperament Link With Entrepreneurship? What Predicts Success?
To analyze business/productive success, you first need to know the proper domains of category. To categorize jobs for example, the simplest conceptual scheme we can employ is a sort of 2x2 matrix- we look at the combination of one’s job type and psychological traits.
1. Simple vs Complex Jobs
There are simple jobs and there are complex jobs.
A simple job is one where once you’re trained, you keep doing what you’re doing. Checking out people at the grocery store is a simple job. Restocking grocery shelves is a simple job. Factory line workers have a simple job.
The best predictor of “success” in these jobs is conscientiousness.
Why? Conscientious people are orderly and industrious. Why? We don’t know- it seems to have something to do with things like disgust sensitivity; Maybe people are conscientious because they get disgusted with themselves if they’re not being useful or doing something productive.
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.
Therefore, if you’re hiring people, you firstly want them to be conscientious- that’s most important- and the second important thing is that they are relatively low in neuroticism(a “negative” emotion), because they’re less likely to be absentee and so forth.
In complex jobs, the demands change on a regular basis- most managerial administrative positions are complex jobs- because you can’t learn the job once and for all.
IQ is the best predictor here, which is three times as strong as conscientiousness.
2. Managerial/Administrative vs Entrepreneurial Types
While the best predictor for entrepreneurial success is IQ, the second one is openness, the creativity dimension. Entrepreneurial types therefore tend to be very open, which sets them with the artists and the political liberal (whose best predictor is openness).
Hence, Managerial and administrative types tend to be conservative, while the entrepreneurial types tend to be liberal.
b) Doing one thing right vs doing the right thing(s)
An entrepreneur is a lateral thinker: hearing one idea triggers a whole bunch of other ideas in their brain, and they’re primarily motivated in pursuing their ideas. However, their downfall will likely be organizational and administrative ability, so it’s often useful for them to team up their counterparts, the managers.
There’s a 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 and worthwhile to do, because those aren’t the same enterprises.
Consequently, most companies are an uneasy marriage of entrepreneurial and managerial types. As a company gets better established, the administrative types tend to dominate, but then this becomes problematic because it gets harder for the company to pivot when the situation calls for it.
Companies thus have to handle the fiendishly difficult task of maximizing their ****ability to execute without also simultaneously bearing the cost of narrowing.
Companies that lose flexibility, eventually fail. Think IBM vs Apple.
(a).(b) = ⏬
If you know what you’re doing, you want to hire a conservative. If you don’t, you want to hire a liberal.
Yin and Yang
We need to understand that every person isn’t for every job, and you might as well match the person and the temperament.
If you know you’re not going to do the paperwork, find someone who will.
There’s something really interesting about the way your brain works: if you want to make really fine adjustments with your finger as you move it to one side, use your finger, and push against it with another finger. Dynamic opposition = extra fine control.
A system works better if there is dynamic opposition. You’d think, “I’d move a lot faster if everything got the hell out of the way”, but not necessarily- you might just crash and burn.
And so, when you partner with people whose traits oppose yours, you combine your strengths and cover each others’ weaknesses. To build something that’s lasting, a tension of opposites is a requirement.
Instituting people around you who will buttress you at your weak points will allow you to win your mental negotiations when it comes to doing hard things. If you’re very open and easily distracted, for instance, you could let someone else manage your schedule.
Agreeable people don’t produce conflict, but disagreeable people tell you what they think. If you become successful, you need disagreeable people to keep your ego in check. People who are manic are always happy when they’re fucking up.
If you want genuine diversity, go for the diversity of temperament, not diversity of ethnicity. People are different because differences are required for success in different circumstances.
Balance is critical.
The fundamental problem of innovation is that most new ideas:
- are stupid, dangerous, and counterproductive.
- aren’t warranted or justified, nor do they result in a productive company.
A small subset of ideas change the world.
And these are are absolutely crucial.
How do you know you have a world-changing idea?
In a dynamic economy, you encourage and let a whole host of entrepreneurs produce their ideas, and you let almost all of them fail. More precisely, you let the idea die instead of them, through limited liability.
Nassim Taleb, author of Antifragile, explains that the economy/system attempts to become antifragile by allowing its (individual) pieces to perish. The restaurant sector is antifragile because the remaining players learn and grow through the mistakes of the less fortunate- by standing on the shoulders of (fallen) giants.
Often, entrepreneurs fail a lot before they succeed. You have to be spectacularly lucky to have your first idea be a success when you don’t know what the hell you’re doing.
A naive entrepreneur thinks, “All I have to do is build a great product”. No, that is about 5% of it.
The product simply doesn’t sell itself.
This shocked the hell out of Jordan when he was building software to help people select better employees, which he couldn’t sell except in very rare circumstances. His assumption was: have a product, validate it by showing it was more effective than other products in the marketplace, and then it would just sell off. WRONG.
You think you’re going to sell to big companies because they can provide you with massive contracts, which is true, but there’s also this relationship:
The size of the company is proportional to the delay in implementation.
You can spend your whole life selling talking to the wrong people and it feels like work- and it really is- but you never end up contacting a real decision-maker, and eventually, you can’t tolerate the excessive delay. So you quit.
Once, Peterson’s team was on the very verge of signing a contract for use of a self-authoring program with a huge company in New York.
And then it happened.
The week that they were ready to sign the contract, the CEO resigned. A year of sales and marketing work. Gone.
Sell straight to the customer. It’s more rewarding- you can change someone’s life. You have more consumers, and you’re always in touch with the decision maker, so you learn very quickly through short feedback loops. Yes, Big companies absorb all capital, but they fail. They get so large that they are forced to move at a snail’s pace, so they make themselves extinct. They have rules upon rules that will force you to restart your product from the ground up.
Sell, or Starve.
One of the terrible things that tech incubators do is that they emphasize the development of the company but don’t push their entrepreneurs to actively find customers.
Finding your first customer- someone who is not your mom who will pay you- is arguably the most difficult thing you’ll ever do in business.
Selling is hard when you’re new to the game because people decide to buy your product by seeing if:
a) other people in their domain are already using it
b) they know someone who already bought it
If your sales pitch is “my product is new and revolutionary” and you’re talking to a middle manager in a company, that’s the last thing they want to hear. They’re thinking: “That’s cool, but I’m not putting my job and reputation on the line for your product, even(especially) if it is revolutionary.” Why so?
Because if it succeeds, they probably won’t be rewarded for it, but they will pay the price if it fails them.
Here’s an example.
Jordan was selling his employee selection software and talking to the people who were doing the hiring.
At minimum, the software would make them a 50-fold return; realistically, 250; and at best, ~500. So it was a no-brainer to implement this.
However, what Jordan’s team was selling- despite being reasonably priced- exceeded their infinitesimal budget. The hirers explained that they’ll just be punished for spending more money on the outset. As decision-makers, there was nothing but risk for them in implementing something that would benefit their company.
Jordan thus learned that the hiring budget and the productivity budget weren’t associated- a fatal impediment to his sales process.
It may be a popular trope to be contemptuous of salespeople, but we’re not giving the devil his due. Sales is a brutal job. You not only need to be extroverted and assertive but also possess a constituency of iron to be able to tolerate “no” as a default answer- a combination that is unbelievably rare and unbelievably valuable.
The line between communication and sales is very blurry. What people actually don’t like is badly targeted ads, which advertising people are trying to solve.
But if you have done something brilliant and nobody knows about it and no one ever will, then that’s even more of a catastrophe than never having done it at all, because then you have to suffer with the fact that no one knows about your creation. You have to conjoin the ability to produce creatively with the ability to communicate- and sales and marketing are an integral part of that.
Most people don’t sell out because they never have the damn opportunity. If you’re not selling out because nobody wants what you’re doing, that’s no moral victory. The man who cannot climb a tree will boast of never having fallen out of one.
Confusing your ignorance of something important with your moral purity is a big ethical mistake. You will pay for it.
Make money, then use it for the better.
Art schools are worse offenders because they don’t even teach you how to commercialize their ventures, i.e., how to feed yourself.
If you’re a visual artist, you’re competing not only with contemporary artists but also dead ones, who are well established and have a hefty body of work that is still being exchanged in the marketplace. If you don’t have another job, you probably will be banging your head very hard.
Thus, developing contempt for the business side of things as an artist/entrepreneur is a real mistake. It’s already virtually impossible for you to monetize your product; if you add contempt to this impossibility, you can be sure you’re going to starve.
Everything has a price- and there’s a real advantage to that.
For one, it helps you value your work in a cooperative endeavor.
It also puts a “limitation” on you. Creative people usually have more ideas than they have time to execute them. How do they decide which one to pursue? Well, one helpful way to sort through them is to gauge each idea’s commercial viability: scrap the ones that won’t make you a single penny, or at least lower their priority.
Maybe you’re guilty about making money. True, the love of money is often said to be the root of evil. But whether or not generating money is evil depends largely on what the hell you’re going to do with it. Maybe your guilt stems from your desire to avoid being greedy. That’s okay! Good rule!
But you can support your family, reinvest into the community, and do so much more if you spent it thoughtfully. The profitable artist doesn’t have to buy the cheapest paints and brushes and canvasses. The profitable creator can buy new cameras, new editing software, new gear- all of which will help her create better content for others. Without profit, you can’t reinvest into infrastructure for growth and everything else.
If you happen to be one of those people to whom money is disproportionately flowing because you’ve started to become successful and you’ve hit that acceleration point where you’re getting more because you already have some, i.e. your money starts making money, then the ethical requirement isn’t to be guilty about the fact, but to think, “How can I use this money that I have been bequeathed in the most responsible manner possible?”.
Epilogue: Life is suffering- make it meaningful.
You need a meaning to sustain you through life and most of that meaning is actually to be found. It’s in the adoption of responsibilities that most people find the fundamental meaning in their lives that is really worth knowing.
You might ask: Well, why should I be responsible? The answer is: you need to do something meaningful, because otherwise life’s suffering will make you bitter, and bitter is only where you start- the end can be far worse.
It’s useful for people to have an articulated and consciously developed vision for their lives- a plan- because then you’re not buffeted around by the winds of fate to quite such a degree. You also need a plan because you need goals, and you need goals because it’s in the pursuit of valued goal that almost everyone finds positive emotion- and that’s a really useful thing to know! What that also means is that:
The nobler your goals, the higher the probability that you will be in deeply engaged while you’re pursuing them.
That is the justification for deep philosophy.