>> Kevin Kootz: Thank you for coming. My name is
Kevin Kootz and I'm pleased to welcome Megan McArdle
to the Microsoft Research Visiting Speaker Series.
Megan's here to discuss her book, The Upside of Down:
Why Failing Well is the Key to Success.
She argues that America is unique in its willingness
to let people and companies fail, but also in its
determination to let them pick up after the fall.
Failure is how people and businesses learn.
Megan is a Washington, DC based writer and columnist
for Bloomberg View, and she has a BA from the
University of Pennsylvania and an MBA from the
University of Chicago's Graduate School of Business.
She's here to tell us how to harness the power of
failure, and for those who can't get enough of
learning how to harness the power of failure, she'll
be at the -- at another book signing and presentation
at the Town Hall at 8th and Seneca in downtown
Seattle at 7:30 p.m. tonight, but please join me now
is giving her a very warm welcome.
[applause]
>> Megan McArdle: This is a little nerve-racking
because normally I would come to a company and I
would talk about the power of experimentation and
iteration, but I feel like doing that at a tech
company is like trying to teach my grandmother how to
cook. I mean, you guys know this, right? Most
products fail. Most things aren't a good idea, and
the way that you find that out is by trying
something, seeing how it works, and then mostly
finding out that it doesn't, but sometimes finding
out something that does.
So instead I'm going to talk today about why
and why I don't write. And this is not just
for writers, because it's about why we don't
greatly, why we are -- why we hold ourselves
from that sort of experimentation.
I write
a talk
dare
back
So I'll start off by saying this is a really
interesting for me because before I went to business
school, my colleagues at the Economist nicknamed me
Miss Zeitgeist because I seemed to have participated
in every major trend for about the -- from the '90s
to about mid 2005.
I graduated from college with an English degree,
worked for a bunch of startups, all of which went
under very quickly. It looks great on my résumé.
People are really impressed when I say I worked for
three startups, and I have to be like, no, like four
months was about the mean time to failure.
At one point a friend of mine who is an equity
analyst asked me if I would please let him know if
any of the companies he covered made me an offer
because he needed to short the stock.
And what I did actually between the failed startups
and business school was that I was a Microsoft
Certified Systems Engineer. I used to go and
install -- [applause] -- yeah. I used to go and
install big Microsoft networks for banks.
And then I actually installed the first Bloomberg -as far as I know, the first open Bloomberg terminals
in publication, and now I work for Bloomberg and I'm
speaking at Microsoft, so I feel like I've now come
totally full circle and I'm just going to spend the
rest of this talk telling all of the tech jokes that
I haven't been able to tell for the last 15 years.
I have one that's great. Its punchline is my NIC
doesn't have a Mac address. It's hilarious. No one
gets it. I hope there are some engineers in the room
who thought it was really funny.
So how did I end up here? I went to business school
in 2001 having come out of the tech world. In 2000
-- in 1999, rather. I had tried technology,
investment banking, whereupon I learned that there
was no inner investment banker waiting to get out of
me, and having watched the Nasdaq crash from the
lobby of my Merrill Lynch trading group, decided that
what I needed to do was technology management
consulting full time after school.
So I got a job doing this, and the great thing about
business school, business school is a great place for
people who just want to punch all the buttons in the
right order and then have everything come out sort of
guaranteed, like one of those little punch card
computers, right? Like you just punch it in and then
everything goes smoothly, or it's supposed to,
because you did what you were supposed to.
And so I did what I was supposed to. I did on-campus
recruiting, and in October I had a job. So I mean,
talking about senioritis, right? Like this is the
second year of business school is just one long -actually, I took some great classes, including with
Austin Goldsby [phonetic] who was, for a while, the
head of the Council of Economic Advisors.
But I was set. I didn't have to worry. And so I had
a great second year. And then about March or April
of my second year the company called me and said, you
know, business is just a little slower than we
thought it would be, so how about -- you were
supposed to start in October, what about February?
And I was like, okay, February, I can do February.
So I called my mom and said, mom, can I come home?
And I moved in with -- to my parents' spare bedroom
just for a few months, and then 911 happened. And
I'm from Manhattan, so I was actually living there at
the time, and in the supreme irony of my life, as a
libertarian blogger, my father is a lobbyist, so
every time I would make lobbying jokes, he would send
me an email, like, you do know what paid for college,
right?
Among his clients were the heavy construction
industry of New York, and one of his clients was down
at the site, and threw a series of oddly improbable
events, I ended up actually working down at the World
Trade Center site for a year. And while I was there
a started a blog, and I was originally going to
blog -- now, keep in mind, I actually said I wanted
to be a writer when I was eight. So now at the age
of 30 I'm sitting in a construction trailer, living
in my parents' spare bedroom. How did that happen?
I wrote my first book when I was eight years old. It
was in a composition book. It was a novel. It was
not very good. I think it had a hero named Janie.
She was on a bus for a while. But I'd always chosen,
like many students in business school, I had
repeatedly chosen to move away from that because it
was not safe. It was very risky, right? It's about
the most insane thing that you can do is just to
decide that you want to be a writer.
And so I had gotten skills. I had been in tech for a
while. I'd gone to business school. I was going to
go back into tech at a higher level. And then the
management consulting firm called again and said, so
business is a little slower than we were expecting.
You were going to start in February. What about May?
And I was like, okay, May. And I made arrangements
to stay longer at this -- the project working at the
World Trade Center site, and I started a blog. To
this point, I had written a bunch of fiction,
including the worst novel ever written in the English
language. I'm not talking about the one I wrote when
I was eight. Luckily, I had the good sense never to
show it to anyone.
And then I started this blog and I started -- I was
originally going to write about what it was like to
be down at the World Trade Center site, and I then
quickly realized that that would get me arrested
and/or fired.
So instead, I started putting my business school
curriculum up, because it was 2001 and blogs were not
like something your grandmother does in her
retirement. It was actually something new and cool,
and there was no one on the Internet who was writing
about accounting and explaining why WorldCom had
failed and so forth.
So I started doing this, and I got fairly big
traffic. And then the management consulting firm
called again and said, so how about never? Does
never work for you?
And there I was, adrift. It took me another year to
find a job. Actually, I found lots of jobs. I got a
job doing -- pretty soon you're a job doing IT for
the City of New York. Then they had a hiring freeze.
I passed the Foreign Service exam. I got through --
and this is like a multilayered nine-month process.
I went through all of it and then flunked the
medical. I got a lot of jobs, none of which ever
started, and just as I was really at the nadir, I
said to my parents, I think I might want to become a
journalist because I'm getting -- people are asking
me to write articles. I love this. I love this more
than anything else I've ever done.
As you can imagine, my parents were about as thrilled
as all parents are when you announce that you're
going to use your $100,000 education to embark on
freelance journalism, a lucrative and safe career.
I think my dad actually said to me, well, how would
you think about this as a business school problem? I
was like, really? I would project the cash flows and
then I would discount them back because a dollar
today is worth more than a dollar tomorrow. And he
said, please do that.
So I sat down and I did it, and it had about the same
expected value as becoming addicted to crack, but I
did it anyway, of course, which is how more than a
few substance abuse problems have started, no doubt.
And then just as I was really at the depths, I
interviewed for The Economist and then, once again,
nothing happened. Like months passed before I heard
from them. And I went out to this business school
event, and I'm living in my parents' spare bedroom.
I don't really have any money. I mean, I have a
little bit of money, but I have $1,000 a month in
loan payments, so any discretionary income is kind of
already earmarked.
And so I'm circulating around this event with a glass
of water, and everyone's having babies and getting
married and they have awesome jobs, and I am
unemployed and living in my parents' spare bedroom,
which is exactly as lame as it sounds.
And a guy I didn't know very well walked up to me and
said, so how are you? And I said, I am perilously to
despair. How are you? And he did what about anyone
would do at that point, was he just stared at me for
a really long time and then he kind of sidled away,
like he was afraid to turn his back on me.
And then two weeks after that The Economist called
and offered me a job. And I actually -- when I got
on the phone with this guy, very reserved British
man, a man named Gottlieb, he said, well, actually,
I'm calling to offer you a job, and I said, I'll take
it.
And he said, excellent. You know, we're thinking of
paying you $40,000 a year.
And I was like, you're going to pay me? And then I
realized I sounded like an idiot and it was like,
that's fine, and then I called my boyfriend and I
said I got a job and I started crying. And that had
never happened to me before. I'm not like one of
those people who just, like, they see a bunny rabbit
in the road and they just start tearing up. I was
really -- only ever cried in happiness one other day
in my life and that was on my wedding day, and my
bridesmaid me stop because my mascara was running.
What I realized in retrospect, and the ultimate
genesis of this book bridesmaid was that that
process, that miserable, horrible, terrible,
horrible, no-good, very bad process of feeling really
awful was also the reason that I got to do this
amazing thing that I've now been doing for the last
12 years, because if I had had that management
consulting job that paid six figures, could I have
taken a job that paid a third as much with my
thousand dollars a month loan payments in New York,
by the way, because that's where the job was.
I mean, I was living really lean. You talk about
lean manufacturing. I was eating things for dinner
like ramen and cheese doodle surprise, where the
surprise is that you're 30 years old and still eating
ramen and cheese doodles for dinner.
I couldn't have dared to do it, right? It really is
true that freedom can be another word for nothing
left to lose. And one of the great things about
writing this book is how many people -- so I actually
did a little Web survey, and I looked at what happens
when you type the words "the best thing that ever
happened to me" into Google, and you get some really
interesting results. I mean, actually, the main
result is that there's this song called "The Best
Thing that Ever Happened to Me," and it's number one.
But if you drill down into the results, you see a lot
of things like getting cancer, going to rehab,
getting left at the altar, and not really what you
would think of as what you expect to think of as your
highlight moment, right? But in fact it's actually
true.
Being unemployed for two years or functionally
unemployed for two years was the best thing that ever
happened to me because for -- since the age of eight
until the age of 30 I had been fleeing from the thing
that I most wanted to do because it wasn't safe.
And eventually at the point where I really had
nothing left to lose, I fled back to it and it turned
out that, you know what? Doing something that you
love passionately and are really good at is a good
career move. Surprisingly enough, a better career
move than spending your entire life trying to be
safe.
So the second part of this talk, I'll talk about
that's why I write. So why do I not write? And this
is the dirty secret of writers, is that all writers
really love being about to write and having written.
We don't like the part in between. And so we avoid
it.
Why do we do this? And
worse. You would think
experience you get, and
the more experience you
it's funny because it gets
it would get better the more
in fact, it often gets worse
get.
And for a long time I labored under the impression
that I was the only person who was doing this. The
Atlantic gave me basically a column, but because it's
The Atlantic and their idea of something short is
just 2500-word reported feature every month, which
doesn't sound like a lot, but it takes a lot of time
and takes even more time rolling around on the floor
convinced that you are worthless and are never going
to write anything good again.
And after months of this, I finally got the courage
to walk up to one of my colleagues, who is a great
writer, writes these amazing 10,000 word profiles of
a politicians and so forth, and they're funny and
they're well-reported and they -- like they flow.
Once you start, it's like, Pringles. You just can't
stop.
And I said to him, how do you do it? How do you,
like, do it? Because I'm struggling with this little
dinky 2500-word column every month. How do you do
this?
And he said, oh, it's easy. First I procrastinate
for three weeks, and then I clean my garage. I get
the garage really clean. And then I walk upstairs
and I sit down at my desk and I stare at the wall for
a while. And then I walk back downstairs and I
complain to my wife. Then maybe I go clean the
bathroom and so forth.
And it turns out that we all do this. And almost
every writer I've ever talked to does this.
Even writers who think that they don't procrastinate.
Then they get the big assignment, the one that
they've always wanted to have and suddenly, like it's
like Siberia.
My editor, the editor of this book, told me about the
first book that she got to edit when she started
as -- when she moved up from editorials to assistant
editor. It had been commissioned in 1972. This was
sometime in the early to mid '90s.
The bigger the project, the more likely you are to
procrastinate. So why? Why do we do this? And I
developed a theory over time, which is that we were
too good at English class. Is that success is
actually a problem. When you are trying to do
something new and great, your past success is often
your biggest handicap.
So basically with some exceptions, most writers who
are writing at the professional level, just like most
people who are software engineers who are doing this
at the professional level were pretty good at those
sorts of tasks when they were, like, eight.
Most people who are writing at the professional level
were really good at English class. We were the kids
who turned in, like, a complete YA -- a compete YA
novel when we were in fifth grade. When everyone
else was, like, writing in crayon and big letters to
fill more space, we were the kids who were extra good
at English class.
And what did do? You would think it would mean we
could just go farther and faster. Instead what it
did was teach us this incredibly bad lesson, which is
that success, that being good at something is about
finding work easy.
The problem is when you get to the pro league -- and
you guys are all there, right? Suddenly everyone's
in that class. Every single person is at least as
good as you were in high school and college. They
were all the stars at their college paper. And you
compare yourself to all of these amazing writers who
you've been idolizing, and suddenly, before you write
it, you are like Oscar Wilde and Proust and George
Orwell, just all rolled up into one delicious
package. Everything is in your mind and it's perfect
and it's clear, and then you start writing it.
And the logical holes that you were kind of just
bridging over when you were thinking about it,
suddenly, they open up and you were like teetering on
this precipice of, oh, my God, how am I possibly
going to fill that without falling in.
All of a sudden you're prose, which sounded great
when you were just rehearsing, but the problem is you
were only rehearsing, like, the three hilarious
snippets that you had in your head. You weren't
rehearsing the 9700 words that had to go in between
your three hilarious snippets. Suddenly, it seems
dull and ordinary, and suddenly you're frightened.
And so as long as you hadn't written it, it could
still be good, but the moment that you start putting
it down on paper, it is not as good as what you
thought.
And here is the really sad truth is that like
everyone once in a while gets this piece, you think
about it, it goes out, like, just streams from your
head straight to the paper and it's perfect. It's
sometimes even better than what was in your head.
You're chuckling to yourself as you discover
marvelous new things that you could write.
But most of the time it's not. It's not your best.
It's not even like 85 percent of your best. Maybe 60
percent. So the easiest thing to do is to leave it
undone because as long as you haven't left it undone,
you don't know that it's bad yet. You don't know
that you -- that you didn't have what it takes to do
this.
And this is exactly the wrong way to think about
writing, because then what you learn, if you kind of
peek into the basement of other writers, it's that
they all did this.
The problem is that when you're in English class,
what are you reading? You're reading this poem, and
as far as the teacher is concerned, it's perfect,
right? All you have to do is figure out exactly what
the author meant, what was he saying here. You read
all of the perfect poems that he wrote. You don't
read the 97,000 drafts that he threw out because they
weren't good.
You don't read the days when Wordsworth kind of
sounded like a Hallmark card than like the poet
laureate of Britain. You only read -- the reason
we're so hard on ourselves -- right? -- is that -there's a great line from Pastor Steven Ferneding.
He says: The reason we struggle so much with
insecurities is that we compare our behind-the-scenes
with everyone else's highlight reel.
I remember going to a seminar with a bunch of English
professors and me. Don't even ask how I ended up in
the seminar. It was on Moby Dick. And we were
discussing the last line. There's a whole chapter on
whaling and how you figure out whether you're allowed
to hunt a whale or not, whether someone else has,
like, staked a claim to that whale. It's actually
much more interesting than it sounds, although, I
guess if you're an economics policy journalist,
anyway, it's much more interesting than it sounds.
But at the end of it there's this great completely
oblique line, because what they're talking about is
the difference between a fast fish, which someone
else has and you can't touch, and a loose fish, which
is fair game.
He says: And what are you, dear reader, but a fast
fish and a loose fish, too.
And there's 45 minutes of people discussing exactly
what he meant. And I sort of raised my hand and I
said, I'm just throwing this out here, but what if he
just got to the end of the chapter and he needed to
end it and he thought it sounded cool?
You would have thought I had been like hick eyes
[phonetic]. After we were done with the seminar,
what if we just went out and murdered some old
ladies? And they were like, that's ridiculous. I
can't believe it. This is Melville that you're
talking about.
I said look, I'm just saying. I'm a professional
writer. It happens. Like the editor wants the
manuscript. You've only got so long that you can
play around with it before you have to turn it in.
and the point is not whether I'm -- maybe I'm wrong
And maybe he -- this was, you know, like the thing he
was thinking about when he started to write Moby Dick
even before "Call me Ishmael.
But the point is that that's how actual work and
actual writing looks. It does not look like
something springing full grown from the head of Zeus
and leaping out onto the page beautifully. It looks
like a work in progress.
It looks like maybe sometimes you just kind of -okay, we're getting on there and move on. And that's
true of all creative work, right? Okay. We're
getting on there and move on.
And that's true of all creative work, right? This is
just not true of writing. I talk about writing at
this point is what I know best, although, if anyone
would like a seminar on like, you know, NT Server 4.0
afterwards. Actually, probably you should get it
from someone who, like, built the server, but I can
tell you a lot of funny jokes about installing them
on trading floors.
So what is it that we can do, right? So now we've
decided we have this problem, which is that success
is keeping us from. Well, how do you change that?
So as it happens, there is a psychologist who talks a
lot about this. She works mostly with children, and
one of the experiments she did, she gave a series of
tests to kids to see how they would respond to a
challenge.
It was really interesting, because there was one
group of people who would react to being challenged,
to doing stuff that they don't know how to do, to
failing by getting really excited and turning into,
like, a Tasmanian devil and going through it and they
would get better.
And then there was another group who would hit a
challenge they didn't like and they would stop. They
would be like, wow, this is really scary. I don't
know what I'm doing. I should probably -- I don't
know -- go mop floors or something.
She's trying to figure out what the difference is
between these two people, and she's looking at all
her data and she's going over and over and over
again, and one day she's talking to one of her
graduate students, she had what she called a eureka
moment.
She said, suddenly I realized that the people who
were changing were people who thought that doing a
challenge you weren't necessarily very good at was a
way to grow. That was how they were learning, and so
they were willing to tackle these new things. And
because that's how they thought of it, they, in fact,
were learning. I mean, it's not just, like, this is
not just motivational speaker-speak. It's actually
true.
How do you learn? You learn by doing stuff and not
doing it very well. I'm sure lots of you in here,
kids, right? How do they learn to walk, right?
Boom. Boom. Right? And about the 80th time,
they're like, oh. And then they fall again. But
they get better and they stop falling so much.
And fundamentally success, we like to think that
there's some grand plan, right? That there's a way
to reason your way out of this. But then look at
something like my favorite example of this, but you
guys I'm sure, can come up with a million, right?
Like New Coke.
A lot of you are young and may not remember New Coke.
But for those of us who are perhaps on the wrong side
of 40, in the early 1980s Coke was really frightened
because they had Pepsi crawling up on their rear, and
Pepsi was doing these Pepsi Jet, take the Pepsi
Challenge, and everyone loved the Pepsi Challenge and
Pepsi always won the Pepsi Challenge, and so Coke
decided they needed to take their 100-year-old
formula and change it.
So they go -- the guy who's in charge of this project
says, I want you to go and do the biggest market
research study ever done. So they go out and they do
the biggest market -- they all come back. Oh, my
God. New formula. People love it. Can't get
enough. It's like sliced bread, but better, in a
jar.
He says, okay. Do it again. So they go out and do
another most expensive market research study ever
done. Comes back. Oh, my God. It's amazing. You
can't believe how much people love this product.
It's going to be the biggest thing since the Space
Shuttle. Oops.
Back. Okay. One more time. Do all these market
research studies, and then they launch this product
and it's a debacle. People hate it. Late-night
comedians are making this like their running joke
every show. People are writing in to be, like, I
hate you. How could you do this to me? I want to
find your children and murder them. Just endless
people hated New Coke. Absolutely appalled.
And the problem, what was the problem? Was it that
they didn't work hard enough? They didn't plan
enough? No. The problem was that you can't ask the
question you really want to ask, right? A realistic
model of the universe is the universe. Right? Since
we can't build that in a box and test it, we have to
make simplifying assumptions. We have to use a
model, and that model can just always inherently go
wrong.
So what did they do? They want to shopping centers
and they gave people samples, blind taste tests.
Here is the problem. First of all, New Coke and
Pepsi are sweeter than Old Coke. People like sweet
things in very small, so if you give people a
drink -- a sample of two drinks, the sweeter one just
generally is going to win because it's sweeter.
Second of all, you want to ask the question, right?
When I put this on the shelves, are you guys going to
buy a ton of it and go home and just guzzle it in
front of the television? That's not a question you
can actually ask until you've done it.
The only question you can ask is if I give you a free
sample of this in a shopping center, are you going to
say you like this better than Pepsi? And they did.
But that wasn't the question they really needed to
know the answer to.
So Coke did something really dumb, which is they bet
the company on this, right? There was no reason you
needed to launch New Coke and remove Old Coke.
But they also did something really, really smart,
which is they listened. And that sounds funny, but
it's frightening how many people -- there's basically
three ways -- when something has gone wrong, when
you've tried an experiment and it has failed, there's
basically three things you can do, right?
You can say, ah, my information -- the information is
incorrect, right? Something, our test isn't right,
and in fact, New Coke is, in fact, the greatest thing
since sliced bread and we just need more of it. We
should just double the production of New Coke because
it's going to be so awesome.
The second thing you can do is say, you know, my plan
is fine. There's something wrong with the universe.
We just need basically like the logic of the surge,
right? Iraq is not going well. Let's double it.
And in fact, actually, sometimes it works, right?
Iraq actually did go -- not going well, but did
better after the surge than it had been before that.
The third thing you can do is say my plan is not
working. I should stop. And that's what Coke did.
And when they pulled back and relaunched Old Coke, it
actually turned out that they had reminded people
what they had been forgetting, was that they loved
the Old Coke. And so it actually ended up being good
for the company, but there was no way to tell that
beforehand.
We like to think that there is. But you think about,
if that were true, the best tennis players in the
world would be physicists, right? Because they would
have an elaborate theory of why tennis balls do what
they do, but that's not how tennis work. You learn
to play tennis by hitting a tennis ball, and most of
the time it doesn't go where it's supposed to and
some of the time it does, and you learn that little
feeling of what was I doing.
You actually don't often know exactly what you were
doing, but you know some of the things you weren't
doing, and you kind of, over time, narrow down on to,
oh, this works.
We don't like that, right? We like to think that
success is just a product of being really talented
and of being smart, and so that is what the people -the other group of people that Dweck was looking at
it, they didn't think of being talented as something
you had to acquire through this incredibly painful
and terrible process of trial and error. They
thought of it as something you were just born with,
right they were the kids who were really good in
school.
And it's really true. I mean, teachers can tell
fifth graders as much as they want, that it's all
about hard work, but, like, you know who's doing
their homework leaning up against the locker and who
needs mom and dad to be there for five hours a night,
right? I mean, it's fairly obvious.
So it isn't that there's no difference in talent, but
they're not actually, once you get beyond grammar
school, the differences that matter the most.
Unfortunately, these people internalize that being
smart was about finding work easy, and so they
thought every time they hit a challenge, they thought
of it as like a dipstick, right? You're just
measuring how talented you are.
And of course, what does that mean once you get
beyond the easy challenges? It means that every time
you're measuring, you might find you don't measure
up. So what do you do? You avoid those challenges.
You protect yourself.
There's a phenomenon called self-handicapping, which
actually is really interesting. They did an
experiment, they gave people a test where it actually
wasn't possible to get right answers. It was one of
those sort of cryptic puzzling answers, you know,
triangles that don't really look like anything else
and then you're supposed to tell me which one of the
group doesn't belong, and since there wasn't a right
answer, then they would just tell people they had
scored really well.
And those people didn't really know how they'd scored
because they'd been totally mystified by this test,
which was, in fact, objectively total mystifying.
So what did they do? They gave these people a choice
between a drug that could inhibit their performance
or one that could boost their performance. People,
some of the guys, especially guys chose the
performance-inhibiting drug. They deliberately chose
to take something that would make them do worse.
Why? Because then they'd have an excuse. Because
then -- you remember that kid in high school who got
drunk the night before the SAT? Or the lots of kids
in high school, some of which may have been named
Megan McArdle who didn't try on their work? Because
as long as you haven't tried, you haven't really
failed, right? As long as you haven't tried, well,
it's not really a measure of you. You totally could
have done it if you weren't so busy doing other, you
know, mastering the next level on Super Mario
Brothers.
We protect ourselves. But
that we're also protecting
We're protecting ourselves
outside of what we already
pretty boring.
the problem is, of course,
ourselves from success.
from anything that comes
know how to do, and that's
And in the current economy, it's pretty dangerous,
right? You're protecting yourselves from the kind of
innovation that you need to do to stay competitive.
Even in my field, you wouldn't think that, like,
writing down words in a row, but in fact, my business
is getting disrupted by you guys, frankly, and I'm
not that happy about it. My business is getting the
hell disrupted out of it, and you actually need to be
innovating how you write, who you write for.
The kind of writing that I do, I assume most of you
are not regular readers of my blog, but the kind of
writing that I do where I will do, like, 2400 words
on how the risk quarter, one little portion of
Obamacare works. That's not -- that wasn't a thing
until ten years ago. It wasn't possible.
First of all, you couldn't get the information. I
want to know what the legal language is surrounding
the statute. It's online. I can search it. I can
find commentary on it instantly.
The guys who were reporting on the budget 20 years
ago, literally, they would go on Memorial Day Weekend
and they would camp out in front of the printing
office and you would need -- you would get a seat
close to the printing office, and then your value-add
was that you knew how to read the budget.
Think-tankers were so valuable merely because they
had a copy of the budget, unlike the journalists who
were calling them.
What I do has been totally revolutionized in the past
20 years, and you know what? 2500 words on the risk
quarters in Obamacare, you couldn't write that for a
normal paper, right? First of all, there wouldn't be
the space. But second of all, in an audience of 10
million readers say, in a, you know, a pretty big
sized daily of 1 million readers and a pretty big
sized daily, maybe 50,000 of them might want to read
that and the rest of them would be like -- the
technical term in journalism is MIGO, my eyes glaze
over.
But online, you can get a niche audience, but
constantly you have to be out there doing stuff that
no one's ever done before, and that means that you
have to be willing to tell yourself, okay, I'm going
to try this thing and it probably isn't going to
work, and I might look like a total idiot while I'm
doing it.
The good news is you actually can change this. So in
the middle of interviewing Carol Dweck, I said, I
feel like I can't let this go on any longer because
I'm a total fixed mindset person. I read your book
and now I feel guilty.
And she was like, oh, me, too. And I was so
surprised. And she said, no, I really knew that I
was changing when I heard myself saying, wow, I suck
at this. This is really fun. But it took a long
time.
And so I'll finish off by saying, like, I've now been
asked, because I launched this book Wednesday, last
Wednesday, so you guys are among the lucky early
people who get to hear me talk about it and work out
what I'm going to say in national audience, is that
you can change it.
I've been asked if this is a self-help book. I don't
know if it's a self-help book for anyone else. It's
certainly not like the, you know, five steps to make
your relationship better. But for me, it actually
was a self-help book because I'm a complete fixed
mindset person, and I had this terror. It wasn't
that I wouldn't do it necessarily, but I would
procrastinate and things weren't as good as they
could have been because I would put it off so long
because I was so terrified of doing it wrong.
And I have changed. I have heard myself saying, wow,
I suck at this. This is really fun. So I'll close
with that, is that we can change this, and it is
actually, sadly, as simple as saying to yourself over
and over and over again, I'm going to suck at this.
Giving yourself permission to suck.
It's not that easy to do, but the rewards are fairly
rich. And as a culture and as organizations and
companies, we have to do this, because right now
entrepreneurship is down. People taking risks and
our quit rates are down. People are not taking risks
in our society.
We need to get that back. That's where the economic
growth that's going to come -- is going to come from
that we desperately need. So I'll close there. Open
for Q and A, and -[applause]
Are there any questions? I've just blown you -either I've blown you away with my incredible logic
or I was so boring that no one's ->>: This is outside the scope of your book, but what
about the role of safety nets and people quitting
[inaudible]?
>> Megan McArdle: It is not outside of the scope of
my book. This was just Chapter 1. It's a great
value. It only -- makes a great gift. If you have a
shaky table legs that need propping up.
No, there's a huge role for safety nets, and so -but what you want to think about is how you're
designing that safety net.
So in order to make failure happen, you need to lower
the cost of failure, right? Like I was just talking
about lowering the psychological cost of failure, but
there's also the actual cost of failure in terms of I
can't make my mortgage and so forth. But I you need
to do it smartly.
So I have a chapter on employment, which is I think
the greatest crisis facing America right now. The
greatest crisis facing most modern economies right
now, and one where you really see this the most
starkly.
So that Europe's approach to this is unemployment
feels terrible, which it does. Is it the worst thing
that can happen to you in a modern democracy short of
death or dismemberment, so let's make it hurt less.
So they have generous unemployment benefits that last
a really long time and replace a really high portion
of your salary, and what you see then is that they
also have extremely high unemployment rates.
And so what do they do when that happens? They say,
oh, well, we'd better make it harder for workers -for companies to fire people because we're getting
all this unemployment. And that doesn't improve your
unemployment rate. In fact, what it means is that no
one wants to hire workers. So you've seen this
bifurcation in a lot of European economies and
elsewhere where everyone over the age of 50 has it
great and then everyone under the age of 30 basically
can't get a permanent full-time job. And that's an
enormous loss to human capital.
So how do you think about -- failure should hurt,
right? It should feel bad because the reason we
don't keep doing whatever it was we were doing that
didn't work is that it feels bad. But it should feel
bad in a kind of specific way, which is that it
should feel bad, but it should not be crippling.
What they've done is made it feel good to be
unemployed, and it still doesn't feel good. People
still report being completely miserable.
If you have -- if you're divorced, if you lose your
spouse, if you're widowed, so forth, after about five
years your happiness level is about back where it
was. Actually, widows, funnily enough, like a little
higher. But people who are unemployed are basically
almost as sad as they were the day they lost their
job.
So it's not -- and that's in Germany. It's not like
in America wherever they're all like bankrupt or
whatever.
So how do you think about a good safety net that
doesn't encourage too many people. What is a
rational short-term decision? Because job search is
really terrible. It's basically saying, hey, want to
reject me?
And everyone's like, yes.
So how do you help people to help themselves while
not falling into the -- well, not falling into the
pit?
The thing where America does this really well is
actually bankruptcy, and we don't usually think of
that as a safety net. It's like a really good safety
net program.
If you get yourself in trouble with debt, as many
Americans are prone to do, because we have the
deepest and richest and most widely available credit
markets in the world, we say, you know what? You can
walk in and be like, can't pay and the judge is like,
okay, your debts are gone, and you take down your
credit report and then you leave.
And Europeans can't believe this. Nowhere else in
the world is this true. Literally, I report on this
for The Economist and, like, I took some doing to
convince my colleagues that I was not having them on.
For this book I was interviewing an expert. It was a
guy, expert on Russia, completely unrelated, just in
the -- randomly in the middle of the interviews
starts making fun of the American bankruptcy system
for being too lax.
But actually, it's great because if you look at -America has a really neat little natural experiment.
Our bankruptcy law is federal, but the exemptions are
determined at the state level. So you can actually
look and see what happens when one law with different
generosity levels, and it ranges from, like, you can
exempt $3,000 of home equity to, like, buy a $5
million McMansion and it's totally shielded from
creditors.
And it turns out that the more generous exemptions
you have, the more entrepreneurship you get.
For two reasons. So one reason, because people look
at this prospectively and they say, oh, well, at
least I won't lose the house and the kids will have
somewhere to sleep.
But it's also because if you don't let people move
on, you've taken someone who had the daring and the
gumption to start a business, who presumably learned
quite a lot about this, and this is the thing that's
great about America's tech industry, right? It's
like, oh, yeah. Your business failed. Great. We
want to hire you, right?
That's not a thing that happens in Europe. I mean,
it does occasionally, but like Europeans in general
are like, what's wrong with you? Why would you go do
something crazy and then clearly you couldn't even
make it work. Why would I want you working for me?
You take someone who knows a lot of valuable
information and you shackle them to their old debts.
And one of the people I interview in the book is a
Danish entrepreneur who has been struggling from a
debt from a business that he started in the '80s and
that went sour in 2001. Still trying to pay off that
debt. It's still basically as big as it was the day
that he had to lay off six employees. And laying off
six employees is Denmark was a catastrophic event for
him that he's still struggling with today because the
amount of payments he had to make were so large to
cover their severance.
So it's actually a good -- we want to think of more
systems like that. So what do you do now when
unemployment is elevated? Our answer was to be more
European, but it does look like evidence from North
Carolina where they just cut off extended
unemployment benefits and now some other macro
studies are showing that it does look like we
increased unemployment that way.
Again, because when you look at surveys of job
searchers about their day, they report the worst
thing they do is look for a job. And so it what
happens is you get -- you lose a job and you're
really intensely looking for a job for a couple
weeks, and then every time you're looking for a job
you get anxious and worried and rejected and it feels
terrible until you stop, and so you just have no
choice.
And unfortunately, because their résumés are aging -and this is disastrous in the current economy -- we
helped people to make a bad decision. How might we
have helped them to make a good decision? One way is
the way Denmark does where they say, look, we're
going to replace a lot of your income, it's called
flex security, but you have to retrain. You can't
sit around and say I want to be a steel worker and
I'm just going to wait until they reopen steel
working in my small area.
Another way we might have done it is to hire them
directly. We could have just said to the government,
look, instead of unemployment benefits, we're going
to give you a job. It's not going to be a great job.
It's going to be something you show up, you work 40
hours a week, we will pay you some basic income
check. Doesn't compete with a private sector job,
but hey, we get something for our money and also they
get somewhere to go and leave the house, because
depression is a huge point, huge problem with people
who are unemployed, and also skills loss, and really
basic loss, like reading and math, like basic
arithmetic, not physics.
Something about being unemployed really hurts human
capital. Or we could have done something like what
I've been pushing recently, we could have said to
employers, hire somebody who has been long-term
unemployed. For every month that they've been
unemployed, we give you a month off their payroll tax
on both sides, worker and employer. It's basically a
50 percent wage subsidiary for hiring the unemployed.
We could have tried harder to keep people connected
to the labor force, and instead, we did the opposite.
And that's how you always have to be thinking about
these policies. Are we helping someone feel well or
are we helping them feel badly.
Disability is a really bad program. Not for people
who, you know, have lost legs and so forth, but for
people who have back pain and low skills. It's a
really bad program. It takes them out of the labor
force permanently and puts them on really, really not
very high incomes.
So that's how I would like to see us approach our
safety net. Yes, a safety net is vital. Letting
people know that they can recover from a failure is
vital to keeping, both on a personal level of
American citizens we don't want to be, you know,
stock impoverished and destitute, but also on an
economy-wide level, but it has to be done right. It
has to be always thinking about are we encouraging
someone to move on or are we encouraging them to get
stuck. So it was a really long -- yes.
>>: You wrote something a while ago, you were a
terrible investor and you should stop that, and I was
struck by that title, but how would you think about
reconciling that which, you know, you could argue
[indiscernible] don't try to go get alpha, you're not
going to go get it with the idea of proactively, you
know, seeks higher risk type failure, high reward
scenarios?
>> Megan McArdle: Well, I'll start with I think
there's alpha in some markets. So, you know, a
friend of mine is -- invests in micro caps, tiny,
tiny little -- right? There's alpha there, because
they're not liquid and they're -- you have to do
quite a lot of legwork.
There is not alpha in the broader stock market.
There's too many people looking for that.
Part of it is that, you know, I mean stocks are
actually in a way a good example. It's a random
walk, right? You can't predict tomorrow's stock
price from today's stock price. The best guess is
actually today's stock price. It's going to move in
some random fashion around that.
And I do think of myself that way. You know, when I
was looking for a job, I was not very planned about
it. You know, I was doing freelance journalism. I
also had a small business, technology consulting
business on the side and I was doing some other small
business consulting, and I had, you know, backup
plans H, I, and J if those things didn't work out.
Fundamentally, I do actually believe in serendipity.
And so when people come to me and say I'm unemployed,
what do I do? -- and a lot of people write in to
journalists who write about unemployment right now -I say leave the house.
I'm less focused on like -- because I can't tell you
what -- you know, I don't know you that well, et
cetera. What I can tell you is that whatever's going
to happen is not going to happen in your bedroom. So
go get a job at Wal-Mart. Go volunteer. Go do
something. Start a blog. Have a hobby. I don't
care what it is. Leave your house. Be doing
something that is not passive. As long as you are
doing something active, there's an opening for
something to happen.
And I think that that's generally true. Like how
many entrepreneurs have I talked to -- I'm sure you
guys have talked to a lot of them, right? -- who say,
yeah, we thought we were going to do this one thing
and then six months later it turned out that we
actually had a business raising, you know, artisanal
organic chicken. Who knew? Seemed like laser
pointers were good, but chicken was actually where we
ended up.
And there's a surprising number of those things as
people who discover that what they thought they were
going to do didn't work.
So one of the guys I talk about in the book, Jim
Manzie, owner of Applied -- Productive Technologies,
who thought out starting that they were going to
build these giant massive servers and put them on the
client so the client could run tasks. Then it turned
out they had a little Web test module, and they were
just at the client kind of demo'ing it and testing
things, right?
They would go into the server from the client site
just to sort of look at stuff and so forth, and the
client was like, so why can't we use that Web
interface? And they're like no, no, no. We do giant
servers on site.
And finally, finally, after they were really kind of
running out of money and the client kept saying, no,
we would really like the Web interface part, he
realized that what he was going to be doing was
software service. But he did not start off thinking
that at all.
That's a fairly minor adjustment, but there have also
been some fairly major adjustments of people who were
in completely different businesses than they thought
they were getting into.
Ray Kroc -- right? -- was selling milkshakes and then
the next thing you know, he's franchising McDonalds.
And it's kind of related, but not really where he
thought his life was going.
So I generally, I think that planning is important
but it's limited. And ultimately, the universe is
going to come in and be like, yeah, life is what
happens when you're making other plans. So I don't
think that you should ever count on your brilliant -on your brilliance to generate alpha anywhere, right?
It's great if it happens, but always hedge, right?
And this is like -- if you read me, you know. I
always tell people, do not -- there's basically two
life strategies, right? Put all your eggs in one
basket and watch that basket, or hedge. Always
hedge. Always have at least one exit strategy.
>>: So is there a point that after you
so many time, you know, you just figure
very good at this? Just go back and do
safe? Is there a point that, you know,
just say, no, that's not.
try and fail
out am I not
something
you would
>> Megan McArdle: Well, I mean, I think "safe" is a
relative term. There's a bunch of questions embedded
in there. I'll try to answer all of them.
I think "safe" is a relative term. In some ways
there's nothing as dangerous as safe, right? When
was I in my most dangerous point? When I thought
that a Chicago MBA was a guarantee of a good job and
I didn't really have to do much except show up.
And similarly, like when was the US economy at its
most vulnerable? When everyone thought they had find
a guaranteed way to make money by buying houses.
So, you know, when you think that you have found
something that can't go wrong is when you are most
likely to say get yourself a new job, not invest in
new skills, not maintain contacts outside, and then
have that company fail and have you be stranded.
And that's the story we're hearing a lot right now,
right?
That said, other half of that question, when do you
quit. Good question. I have several chapters on
this, because it's really important, right? The
essence of failing is not just if at first you don't
succeed, try, try again, because doing the same thing
and expecting a different result is crazy.
So how do you know when it's time? The first answer
is that you go in assuming that failure is on the
table, right? And that means by starting, do not
bet, do not bet the house on anything, but then you
go in saying, you know, we know that there's a high
probability this might not work out and we have
benchmarks for that.
And you don't necessarily have to be like, well, if
it hasn't worked in three months, we shut it down,
right? But you have to say, if it isn't working
after six months, okay, do I know why it's not
working? Because if I know why it's not working,
then maybe I can say I can fix it. But if it's I
just -- or I might be -- I know why it's not working
and this doesn't seem to have a revenue model, and we
can't seem to find one and probably that's going to
be the end.
I was talking to an entrepreneur the other night who
said, you know, got this great project. Revenue's
difficult, right? Audience is easy. Revenue is
difficult.
The main thing is to, first of all, to be watching
for it; and the second thing is not to do what
orienteers call bending the map, where you have a
plan and you're checking your benchmarks and you're
not where you wanted to be, and so you start saying,
you know, maybe this rock is actually that rock there
that doesn't really look much like the rock on the
map, but I don't know, it could be, right?
You start telling yourself that even though you kind
of suspect you're lost, that no, you start convincing
yourself that you're not. And that is the most
dangerous place to be in, right? Because now you're
going to get yourself more lost, because you don't
know where you are and you're going somewhere else
where you have -- you really have no idea, right?
The safe thing to do when you get lost is to stop and
backtrack. It's difficult, and you need an internal
constituency for that.
The thing I like to think about is a person on the
team that I call Dr. No. Everyone's had -- I am
actually, I will confess, I am the -- I was this
person. Everyone hated me. I'd be like, this is not
of going to work. Let me enumerate the 97 ways that
your plan is not going to work. And it's really,
that person is so irritating. And I know that when
I'm not being Dr. No and it's someone else who's
raining on my parade, I'm really irritated.
But that person is super valuable because that person
is going to tell you -- you don't have to let them
stop what you do, but they're going to tell you all
of the ways that this could go disastrously awry.
You're going to have a long list of all the holes you
need to plug.
And then you need auditors. You need a person. Not
just, you know, or you designate yourself that role.
Someone has to be designated the role of really
saying is this working. What's not working. How is
this not performing the way we expected.
And we don't like to do that, right? We're all
excited. We're all getting to yes, and it's hard to
be like, I'm the person who' in charge of putting the
brakes on this. And often it's the CFO, right? Like
he's the guy who's like, we don't seem to have any
revenue.
But you need that. You need those constant checks,
and then if it's not working, you have to be willing
to cut your losses. Do not double down, right? Do
not say the universe is fine. My plan is fine. The
universe seems to have a problem. Let's just do
twice as much and hope that that works, even though
that's the most common reaction.
>>: From your experience of stories that
[indiscernible] probably -- there probably would have
been some moments where -- when you were crying and
failing, it would have been easy to say quit. So
what made you go an extra mile till you found, you
know, the traction again to follow.
>> Megan McArdle: Well, for one thing, my parents
really wanted me out of their spare room. And I'm
actually not kidding about that. Families are like
the best form of safety net when they're working
right, because on the one hand, they really love you
and they don't want you to feel bad, but on the other
hand, they're going to, like, if you're not doing
enough, they're going to kick your butt to get out of
the spare bedroom. And they can kind of titrate that
as needed.
When my husband -- literally two weeks after we moved
in together my husband lost his job. And he wasn't
my husband then. He was my boyfriend. I guess I'm
now telling all of Microsoft that I lived in sin,
but -- so two weeks after we move in together -- we
were friends for a while. We actually hadn't been
dating for that long and he lost his job, and I was
like, okay, well, we're going to make a drop-dead
plan. We're going to figure out like this is when -at this month we break the lease, et cetera, and then
I encouraged him to go play video games, because this
is -- video games are really -- by the way, if you're
ever in the emergency room or something, video games,
take your iPad and or your Android or your Microsoft
tablet and [laughter] -- I'm actually looking at one
of your cool Microsoft touch screen thingies. I
forget the name of the company. I'm sorry. I was
just looking at it the other day and considering
buying one.
But take your tablet or your phone and play games,
because video games are great. They occupy exactly
the part of your brain that otherwise would be
freaking out, and so they're actually a really good
way to short-circuit anxiety. And they actually use
them now and they're doing studies and using them in
pediatric emergency rooms and so forth because
they're really great at this. They're really good at
shortcutting anxiety because it occupies the part of
your brain that otherwise would be like, so when
we're homeless.
But here's the thing, and like he tells that story
and he said that that was when he knew he was going
to marry me. But I could also watch. We both do the
same thing. He's also a policy journalist, and so I
knew who he should be talking to and I knew what he
should be doing.
I could see him freelancing. I could see his pieces
running, and I, like, had he not been working double
time to get a job, we would have a very different
conversation about his. But as it was, he had, you
know, he had an Xbox. He played a lot of video
games, and now he, like, reviews video games and
plays Xbox all the time, so it created a monster.
But the point is that in a family, you can do that.
It's harder to do, like, as a government.
The main thing I think was that I have -- I am a bit
like a Tasmanian devil. Like when things go wrong, I
just kind of go into freakout mode, and that has its
downsides, but the upside that is I will just do a
lot of stuff. Much of it doesn't work, but some of
it does.
And the people that I knew, because I watched,
obviously, in 2001, right? I was in tech. I think
the nadir of my life in tech -- and this does have a
point -- my storytelling is somewhat discursive, but
was walking into a recruiter who, in 1999, had been
calling me, like, every three weeks and being like,
please leave. I'll double your salary, right?
And then I walked in in 2000 and I was so desperate
to get a job, I was trying to go back to doing what I
did, which, you know, installing networks in 2001 was
also not a hot field. And this giant office, there's
all these desks and only three of them in one corner
are occupied. And the guy was like, I don't have a
job for you. I don't have a job for my
brother-in-law. I'm not even going to have a job for
me pretty soon. So you should go find a banker and
get married. That's like, but they've been laid off,
too.
The people I saw who recovered, some people just, you
know, they got laid off and they just found another
job, like, really quickly. But the people who kind
of got down into the pit with me -- there were a lot
of us -- there were basically two kinds of people.
There were people who were, like, I need a plan and
I'm going to have this really elaborate plan. I need
to figure out what I'm going to do the rest of my
life, and those people didn't get up because they
were too busy trying to find the perfect thing.
And the people who moved on were the people who just
kept moving. They were just -- like in the book I
talk about this, about unemployment, you can think of
it as sort of a dark room. You don't know where the
exit is. The only thing you can do is just keep
circulating.
The people who sit down because it's dark and scary
just get stuck. And that's ultimately it, is I have
many flaws as a person, but like, when something goes
wrong, I go Tasmanian devil and eventually find a way
out.
>>: Yeah. So you said something earlier about, you
know, finding this career that that's something that
you love and that you're really good at. So I feel
like oftentimes we have this tradeoff between seeking
out opportunities for growth in areas that are
already your strength as opposed to chipping -- like
growing in areas that are currently [indiscernible]
and, like, chipping away at those.
So I'm wondering if you have a thought on, like,
certain scenarios and if one makes more sense than
the other, or, like, does one typically yield a
greater return or sort of like that's a big tradeoff,
and I'm curious as to your thoughts.
>> Megan McArdle: It is a tradeoff. And you do have
to think about it strategically, and there's never
going to be just like one perfect can answer. But
there are some things that I'm just not good at,
right? Like I played basketball in high school and
aside from being tall, there's nothing about
basketball that I'm good at. I'm very good at being
tall.
I'm slow. I can't jump, et cetera. Like that is not
an area -- it's great if you play basketball
recreationally, but there's not an area where, like,
I ever should have invested a great deal of my effort
because there was never any shot that I was going to
be good at that.
And you see people like that. Like I had a friend
who's like, I really need to grow my management and
so forth, and he's like an amazing engineer and he
hates being around people. It's like, why are you -why do you want to move into management? You love
what you do now. You don't like sitting in meetings
all day. The job description -- he was like, but,
you know, that's growth.
Like growth comes in many areas. You should actually
identify things that are just deal breakers for you
either because you hate them, but if you genuinely
just hate something and it's not just like, I have to
suck this up as part of, you know -- like everyone
has parts of their job that they don't like.
But if it's genuinely, like, when I think of doing
this thing all day, it fills me with dread, no matter
how much of a growth opportunity it is, you should
not -- not spend too much time trying to grow that
skill.
At the same time, you know, like I hate talking on
the phone. I literally -- I've never gotten on a
phone call without developing an exit strategy
immediately. And this is a weird thing about
bloggers. We all hate talking on the phone. There's
like a few exceptions, but every blogger I know of
goes to enormous lengths to avoid talking on the
phone, like not activating their voice mail so that
it's not actually possible to contact them that way.
But you know what? I've got to get on the
phone. And that's something that, like, you actually
can get better at. I got better at making myself
make phone calls and make lots of phone calls and sit
on the phone with people and keep asking them
questions and so forth. Those are things where you
say, you know what? I don't like this, but I really
like that part, and that's the way through.
And then you sort of strategically grow that. But if
the destination is somewhere where you don't really
want to be, then it doesn't make sense to -- no
matter how much -- like, no matter how standard that
may seem, find a way that does not involve getting to
a destination you don't want to be at.
>>: How do you think this fits in with, like,
schools and grades? Because I feel like maybe a lot
of kids decide to take classes that are easier,
maybe, because they're scared of grades holding them
back from higher education than opportunities later
on down the road?
>> Megan McArdle: Chapter 1. No, this is
seriously -- I'm developing into -- despite the fact
that I'm obviously a product of it, I'm developing
into a seriously deep critic of the whole obsessive
credentialism. It's created two bad things. So on
the one hand, the fact that there's now this funnel
that seems to basically only run through higher
education at a selective college, right?
So for poor kids, they're like, it's not that they
can't do it, but it's like they're like Nadia
Comaneci. They have to hit a perfect ten. If they
got any points knocked off, they're just not going to
make it through that next challenge.
On the other hand, what does this do to upper middle
class parents? And I watch my friends doing this
now. I watched -- it's particularly bad in New York,
which is where -- in New York City where I grew up,
but it's getting better. It's the same now in
Washington. I know it's the same in San Francisco.
I can only presume that it is getting to be the same
here, where a trader I know took his three-year-old
daughter into an interview for a very exclusive
preschool, and you've really got to get into a good
preschool, because if you don't, getting into a good
kindergarten is hard, and then if you're not in a
good kindergarten, entrance to an excellent grade
school program, it's really going to hamper your
ability to get into a good high school, and obviously
if you can't get into a good high school, it's
basically over.
So they said what are her aspirations? And he was
like, we're trying to get her to stop eating gum off
the street. He's from Long Island. Like this is not
a thing.
But that system, right? And it's happening in
schools, too. It's particularly absurd in New
and Washington, but it is -- it's turning into
same thing everywhere, which is that the sense
we can't let them fail at all, right?
public
York
the
that
Because if we have to hover all the time, because if
they get knocked off, if they get bad grades or they
don't -- then we had better, so we'd better make sure
that they're taking classes they can get an A in and
we'd better be there making sure that they don't
anything, like get suspended, nothing that's going to
go on their record.
When I was a senior, one of my teachers, who had
taken a dislike to me -- and I'm sure I was
immanently dislikeable as a teenager, but she tried
to sort of unfairly lower my grade. I'm not going to
go into the really tedious details, but just take it
as written because I eventually won the dispute that
she was in the wrong.
And my parents were like, well, this is
first semester of senior year. It's the last grade
of college, and they're like, gosh, that's too bad.
You know, one of the things you really need to learn
is how to get along with authority, so you'd better
figure this out.
And like, that's unthinkable now that a
parent would do that, because the stakes are too
high. And so instead, like did you all follow the
Harvard cheating scandal? I know we all seem like
we're very far off on the east coast, like with our
crazy little Ivy Leagues and, you know, snow, but so,
you had 125 -- however many it was -- kids who
professed to be unable to understand that when they
were given a test where the instructions were
somewhat confusing, that said at the bottom do not
discuss this with anyone else, that that meant they
weren't supposed to email each other about it, right?
But they had been so sheltered their whole life.
The number of people in my Twitter feed under the age
of 25 who seemed to think that those kids had the
right of it was shocking to me.
And so this whole system seems to me to be a complete
disaster. It's breeding kids who -- and you know, I
was really skeptical of all the trophy kid stuff
because geezers have been complaining about the kids
these days forever.
And in fact, I think millennials work harder than my
generation certainly did, and they're way more
focused. We were just total screwups, Generation X.
God love us. But they're raised in this environment
where there's always someone telling them exactly
what to do and exactly what the next step.
And I've talked to managers who have hired multiple
generations and who aren't saying this because, like,
they're like, no, millennials are terrible, but
Generation X, awful of, hated you.
But it's this very specific thing of needing a
phenomenal amount of structure and needing to be told
exactly what the next step is, and that is not the
way the real world works, and I think it's setting
everyone up for just very, very bad, very bad things.
,All the way from the elites down.
So anyway. Sorry. That was my extended wrap of -like this is half of Chapter 1, because I really do
feel strongly that this intense focus on pushing kids
through this very one, very narrow gap is immensely
destructive and not how we used to be.
American education has always been very good at
helping people re-enter and giving people
opportunities. I mean, you guys know better than
anyone, right? A college dropout founded your
company. It's getting harder.
>>:
So how do you fix that?
>> Megan McArdle: That is the $10,000 question.
Part of it is that we stop acting like -- I mean,
like they're now requiring college degrees for
bartenders. I mean, like, I majored in drinking,
too, but Jesus. Like, it's feeding on itself. And
people really have to stop, take -- instead of
filtering 90 zillion résumés through Monster for
exactly the five things that you've set up, like,
remember that there are -- that humans are
multitudinous and different, and that five
credentials that you can hit on a résumé search, I
mean, like technology is actually making things
worse, but I think we could make a decision.
And I actually think that companies that do decide to
go in a different direction are going to have some
alpha. They're going to have some, like, a
competitive advantage because they're going to be
picking up the people who are undervalued, but I
don't think it's happened yet.
>>: If you were the head of an HR department in
Microsoft and you were looking at résumés of
candidates, marketing job, engineering job, what are
the things you would look for to find good people?
>> Megan McArdle: I wouldn't look for college -- I
wouldn't look for elite degrees. Honestly. And
like, look, I went to an Ivy League school. I went
to a top five business school. It's not that I think
that people who did these things are somehow unworthy
of -- I just don't think it should be much of a plus
or a minus because the fact is that, like, my husband
went -- graduated from the University of North
Florida, and he's an amazing writer, and thank God I
have him as my editor, because without him, I would
be seriously hosed.
And, you know, like one of the smartest guys I know
graduated from, I think, Northern Iowa. I would say
eastern Iowa and I don't think there is an eastern
Iowa. I mean, I think there's an eastern part of
Iowa, but there's not a university there.
And he said in Washington it's just rampant, and he
said he could always tell people he wasn't going to
like because they'd be like, where did you go to
school? And he would say, oh, you know, Northern
Iowa, and they would just -- like their eyes would
glaze over. They would just start looking around the
room for someone else to talk to, because God knows,
somebody who went to a state college couldn't
possibly have anything interesting to say to us.
Right? I mean, this is absurd. This is just
completely ridiculous.
So I would just put a lot less -- yes, educational
credentials for people who are like engineers and
need to make bridges stand up and so forth, but for
most of us, like the best -- when I was in tech,
right? The best guy I knew had been a religious
studies major at Swarthmore, and he said the best guy
he knew was -- had been -- had operated a camera
store for a while, was an orthodox, and he said one
night, I don't remember what the problem that they
were trying to solve, but I did love the description
of this guy sitting there and, like, the seconds are
ticking down to sunset on a Friday, and this guy is
just like, okay, I'm just going to have to rewrite
this on the fly, an assembler. So he's like writing
machine code to fix the problem, and like, finish
his, like, three seconds before sunset and he's like,
got to go and runs down the stairs, and had like -I'm not even sure had gone to college.
Like everyone in tech, when I was doing IT, everyone
had those guys. One of our great -- one of our great
guys working on, like, the routers and the networking
equipment had been a porter at one of the offices
that my consulting company served, and then he
started running cable for us, and then the next thing
you know -- I mean, like we all have those people,
but even in tech, right?
It's increasingly, no, you want to see the -- so I
would take that stuff off, because I don't think that
tech has changed so much that suddenly those people
aren't valuable and amazing workers anymore.
The things I would look for actually is the people
who've tried something completely different and
discovered that this is what they want to do.
Because, first of all, those people are passionate,
right?
care.
They're here because they actually really
You can say, oh, well, they're dilettantes and so
forth, but cruising along now, right? It's not like
we all die at 40. The people who've kind of wandered
into this and then stuck with it for ten years are
the people who really care about this. They're the
people who really want to be here. Not the people
who just kind of started doing this when they were in
college and never stopped.
So I would look for more failure. I would look for
more nontraditional. I would look for more people
with imagination and the people who hit a wall
somewhere else and, like, turned around and ended up
here. Those are people who are actually, when you
hit a wall, going to be the people you want to have
in the room. But, you know, on the other hand, maybe
there's reasons people don't make me their HR
director, so -- any other questions? Okay. Well,
thank you very much.
[applause]