Matt Wallaert

Supported by Greenhaven Road Capital, finding value off the beaten path.

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Matt Wallaert joined Barry Ritholtz to talk about designing good behaviors. I liked it.

Behavior matters, said Wallaert, and it’s something fixable. Take lines for example. They’re too long. But what does that mean? “It’s not that people are in line are too long but that it feels too long.”

Feelings. Interpretations. Expectations. It’s the gray area of our gray matter we call psychology. Behavior designs are a tool. One we could use more often. Rory Sutherland said, “It’s always more acceptable to spend money on infrastructure than to spend money on psychology.”

Sutherland proposes that it feels like cheating to use psychology. Is that what behavior design is, a Konami code?

I don’t think so.

Looser than the laws of physics, our biases affect us too. We value things we own more than identical ones we don’t. We like a deal, we love a steal. We emphasize size, sometimes too much. Wallaert wants us to account for these things like a pilot accounts for a crosswind. Sometimes the force will be a gust, sometimes persistent, and sometimes absent.

1/ See it to believe it. Part of the reason for issues around women’s employment is the see-it-be-it problem. “If I never see a female scientist as a little girl,” Wallaert asked, “how will I ever have the opportunity to think, oh I might be that?”

This was the case for Felicia Day. “I’d always wanted to write. But in order to try something in life, you probably have to be exposed to someone who makes you think, Whoa. I want to be cool like them!”

Anastasia Alt said similar things:  “It was very possible to be successful as a trader where the environment was one where people didn’t necessarily look or think like me,” but, ” it meant a lot to me to normalize the presence of women in these roles.”

Comedians – like Judd Apatow and Joe Rogan – make this point time and again. Oh, I didn’t know that was possible until I saw [insert name here].

2/ Talk to your customers. When Wallaert was at Microsoft they wanted to understand why Bing searches in schools were lower than expected. Their first idea was, as many adults do, to bemoan the younger generation.

“The marketing department decided that kids aren’t curious enough and planned to run a campaign around encouraging curiosity in kids. I said, let’s go look and we go into a classroom and see kids are plenty curious enough. One of the tenets of behavioral science is to go look at how people are behaving.”

Not talking to customers was a common misstep among failed startups. Scott Fearon wrote “I was mixing up what I liked with what my customers wanted,” and this personal lesson became an investing premise. Patrick Collison reached out to his customers and realized his initial idea was actually much better than he realized.

3/ Empower flight attendants.

“I had tweeted at Alaska and Virgin to put in their employee app a way that makes it much easier to give someone free food or miles on the spot when something bad happens. United today said ‘we’re going to do that.'”

Good organizations have one of two structures.

  • The Boss spends some of her time out of the office talking to the people who use their product. This is why Melanie Whelan spins. It’s why Intelligent Fanatics travel. It’s why Andy Grove wrote, “We need to expose ourselves to our customers.”

Or.

  • The Boss empowers employees, as Wallaert suggested. Jocko Willink did this in the military. Warren Buffett said to “hire well, manage little.”  Ray Kroc wrote, “It has always been my belief that authority should be placed at the lowest possible level. I wanted the man closest to the stores to be able to make decisions without seeking directives from headquarters.”

4/ Work worth doing.

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Much of this portion of the interview reminded me of the book Shop Class as Soulcraft. One quote from a good book:

“When you do the math problems at the back of a chapter in an algebra textbook, you are problem solving. If the chapter is entitled “Systems of two equations with two unknowns,” you know exactly which methods to use. In such a constrained situation, the pertinent context in which to view the problem has already been determined, so there is no effort of interpretation required. But in the real world, problems don’t present themselves in this predigested way; usually there is too much information, and it is difficult to know what is pertinent and what isn’t. Knowing what kind of problem you have on hand means knowing what features of the situation can be ignored. Even the boundaries of what counts as “the situation” can be ambiguous; making discriminations of pertinence cannot be achieved by the application of rules, and requires the kind of judgment that comes with experience. The value and job security of the mechanic lie in the fact that he has this firsthand, personal knowledge.”

5/ Argue well. Toward the end Wallaert says he loves Oregon because, “you can vehemently disagree about something and still come to dinner on Friday night.” Not to overstate things, but that’s genius. Really. Erik Weiner’s wonderful book Geography of Genius has few conclusions (among many great stories) but one is that great ideas are forged. Athens had symposia, Florence had workshops, Edinburgh had ‘flying’, Calcutta had the adda.

Good ideas swan from arguments. Adopted by Jeff Bezos and Charles Koch who said:

“A critical part of our management philosophy is building a challenge culture. We find this is one of the biggest problems in aquisitions we make, in many of them if you challenge your boss it hurts your career. Here if you don’t challenge your boss …(because you see a problem in what’s being done)…if you don’t challenge you’re not really doing your job.”

 

Thanks for reading, I’m mikedariano.

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