A blind man stands at the edge of a busy street clearly wanting to cross. Other pedestrians crossing stop and ask him if they can help. To each he asks "can you see?" and when the pedestrians answer that "yes, I can" he sends them on their way without crossing. Eventually, a pedestrian answers that "no, I can't see because I am also blind". The bind man quickly grabs the hand of this pedestrian and ushers them towards the road. "great, I feel much more comfortable crossing this road with someone who I have so much in common with!"
We are all blind to something. Nobody knows everything or has such a diverse set of skills that they can look at a problem from all the angles at once. This is why diverse (I will define exactly what I mean by that world in just a second) teams are more creative, adaptive, and successful than homogeneous ones. But in the investment world, this homogeneous approach is what persists: The folks who must make the decisions assemble blindly homogeneous teams to help them make those decisions. The result is predictable... failure.
By diversity, I am specifically interested in discussing a diversity of personality types. Recently, I have had a lot of exposure to the inner workings of the investment and business development circles of CO. I have met a ton of really smart people from a wide array of background who have been extremely generous with their time and assistance and I don't want to in anyway undercut the help we have received. But what I have noticed is that this group of people all have the same basic personality type and it is occurring to me just how easy we humans slip into this pattern and how detrimental it may be to the system they run.
Here is an example, the folks at the top of the investment community are rarely engineers and scientists. Instead, these are usually MBAs and Lawyers turned investors. These folks are not dumb, but the ones that can convince LPs to give them loads of cash generally are a certain caliber of extrovert. To some these folks seem arrogant while to others they just appear confident. But at the end of the day, they are human and like our blind man at the street, are more comfortable with people they can empathize with. As smart people, they know they need help from technical people, and they are naturally attracted to people they feel more comfortable around.
Think about your circle of friends. Are you really that different? For me the answer is barely. I am attracted to other fairly introverted people who tend to have a similar level of confidence and my group of close friends reflects this. How many times have you seen a group of dude-bros and thought "why do those people always find each other?". Its because the idea that "opposites attract" is completely incorrect. People feel want to feel comfortable and they way you do that is find people who approach problems in the same way.
This is great when you are deciding what movie to go to on a friday night, but it is not a super great way to setup a team to make the call on who you invest money in. When extrovert MBAs rely on technical extroverts, they hurt their chances of investing in real break-trough technology because of the biases of the technical extrovert.
In general, technical extroverts need to intuitively and publicly understand something. While they are often very well versed in existing technologies and have impressive recall of technical figures, they tend to be very uncomfortable with the idea of unknowns and will err on the side of things being negative rather that indeterminate. These are not per-say bad qualities to have, but they are not helpful in a pitch room. Worse, technical extroverts can be extremely off-putting to technical introverts who possess many of the opposite qualities: comfort with the existence of unknowns and an ability to intuitively navigate through them while staying optimistic, a long-term and more private approach to understanding a problem, and a lack of the immediate technical recall that the introverts enjoy.
There is no right or wrong personality type. Technical extroverts are exceptional incremental builders. Their intuitive knowledge and rapid recall means quick jumps to the next incremental step. But technical extroverts don't make good investment advisers because by the time a technology has been developed to the point where a technical extrovert will be comfortable saying they like it, the value of investing in it is gone. Someone else has already taken the risk and will reap the reward.
So investors, remember, this is your job. These people don't need to be your best friends, instead, you need to be a team that is going to make the best decisions it can. So next time you are trying to find that person to talk to about an idea, try looking for someone who you specifically don't want to be friends with. Someone who could actually help you make a good decision.
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