Monthly Archives: February 2016

Brain Teasers and Job Interviews

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Once at a party a question arose about why companies ask brain teasers in job interviews. The question circled around to me, since at the time I ran a company that helped companies evaluate job candidates.

It’s funny, because I asked that problem years ago in my Hiring and Selection seminar in business school, and even the professor admitted he didn’t really get it. The professor did say he got one of his first (non-academic) jobs because he solved a problem about how many gas stations are in the U.S.

So why do companies ask brain teasers?

I’ve got a couple of unfortunate answers, and one somewhat (although only somewhat) admirable answer. Probably the true answer varies by case and maybe it’s a mix of these three.

 

  1. Interviewers are grasping at straws. Interviewers may not view interviewing as a key aspect of their job, and so they don’t think much about how to do it well. They mostly look around for some questions they can use to pass the time and give them some interaction with the candidate, even if the questions are not especially predictive of job success. There are lots of brain teasers lying around, so these are easy questions to use.
  2. Interviewers use the types of questions they have seen in the past. Again, many interviewers aren’t well-prepared, so they default to conducting the type of interviews they have seen in the past, instead of designing an interview or assessment from data or at least first principles. Some interviewers may even be particularly good at puzzles themselves, and believe that success on the job is correlated with puzzle-solving ability. Research indicates this is unlikely to be true, but, again, many interviewers are insufficiently well-prepared to know this.
  3. Interviewers use puzzles to measure intelligence. This is the most admirable of the answers I’ve outlined, but it still doesn’t pass muster. There is substantial empirical evidence that mental ability correlates well with job success, across a wide range of jobs. Certainly IQ is not a perfect predictor, or even a great predictor, but it’s one of the best predictors available. And it seems likely that puzzle-solving ability correlates with IQ, although my guess is that the puzzle-IQ correlation is weak. IQ is notoriously complicated to measure (even more so given legal constraints in the hiring process). A brain-teaser, especially one which has never been calibrated and cross-validated against IQ, is unlikely to be meaningfully predictive of job success. It’s a pretty wild double-bank shot. Interviewers would be better off using SAT scores, or better, relying on a vendor who specializes in cognitive tests for hiring.

Those are my hypotheses about why brain teasers show up on job interviews, even though they shouldn’t. Hopefully, over time people will get smarter about hiring and hone in on assessments that are more highly predictive of job success.

Autonomous Vehicle Round-up

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  1. NVIDIA is using their Gran Turismo game engine to power autonomous vehicle simulations.
  2. NVIDIA also beat their most recent revenue forecasts, thanks partly to autonomous vehicle demand.
  3. A UK startup called Immense Solutions is working on intelligence for autonomous vehicle fleets.
  4. UK-based Transportation Research Lab is launching a test environment in Greenwhich.

All in all, it’s a good time for self-driving car enthusiasts at NVIDIA or in the UK.

Moonshots

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Google’s self-driving cars are developed within X, the department colloquially known as “Google’s Moonshot Factory”.

Astro Teller is the head of X (his name was Eric until he changed it to something that suited him more).

Recently, in Backchannel, Teller describes the secret of X as trying to solve huge problems and then killing the solutions (and entire projects!) that don’t work.

It’s a great meditation on the Silicon Valley “fail faster” ethos.

Read the whole thing.

Ride-Sharing Monopoly

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4040181094_dfc9085715_oIn business school we did a case on eBay that was teed up perfectly for the professors to disabuse students of a cherished notion.

The central question was what makes eBay such a successful marketplace? And the intuitive answer is “network effects”. The more people are using eBay, the more the next user wants to join eBay, instead of a competitor.

And the professors loved this answer because it is so easy to pop a hole in it.

Buyers don’t want to be with other buyers – the competition just drives up prices. And sellers don’t want to be with other sellers – the competition just drives down prices.

Instead, the professors argued, it was eBay’s reputation metrics that really drove its success. Buyers and sellers want to transact with counterparties that have solid reputations, and only eBay can provide that.

This is a good and correct answer, but it’s always seemed incomplete to me. eBay has a couple of other strengths:

  1. eBay has a thick market. There is no other market where you can find the Danish Christmas ornament from exactly 28 years ago that you just shattered and need to replace.
  2. eBay has an incredible brand.

The point about branding is especially easy to ignore, in business school and elsewhere, because it is so close to magic. How do you build a good brand? How do you know if you have one? How do you know if one brand is stronger than another brand? How do you quantify when a brand is strong enough to support a monopoly?

Warren Buffett was a famously late in life convert to the power of branding, in all its mystery.

Which brings us to ride-sharing and Uber.

Uber, like eBay, has power in its reputation metrics, in the thickness of its market, and in its brand.

So how do these stack up to eBay?

  1. Uber’s reputation metrics are less important than eBay’s. Uber’s ride-sharing flow is simpler than eBay’s asynchronous process of buying, and paying, and shipping, and receiving, so counterparty reputation matters less.
  2. Uber’s market thickness is more important than eBay’s. If an Uber driver or rider can’t find a match at any given moment, they’re much more likely to give up on the service altogether, than if an eBay buyer or seller can’t find a match.
  3. Uber’s brand is as important as eBay’s. But Uber hasn’t locked up the market yet. Lyft is on their heels. The question is, unlike with online auctions, is there room for two players?

One last note is that while eBay does not have a direct competitor, Craigslist serves as an alternative, albeit a distinct one.

Lyft is much more of a direct competitor to Uber than Craigslist is to eBay, but the existence of Craigslist raises the possibility that two firms could survive in the market.

H/T to Jared Myer and Daniel Pryor’s post in Forbes, which inspired this.