The more general the better: why simplifying concepts helps you make better decisions

It’s human nature to desire complexity. The world around us is impossibly complex, filled with systems that are impossible to fully understand (such as the economy). And there’s a natural hunger to feed your ego by assuming that the complicated world is digestable by you in a complicated way, because that means you can handle hard and complicated things, which means you’re smart.

Likewise, people worthy of admiration such as doctors, scientists, and engineers do seemingly complex tasks, so why isn’t it worth trying to emulate how they think? To fit in with the professional class, why not spruce up your words to make yourself seem smarter?

But what if I told you that sticking to simpler mental models and explanations is a much better way to make decisions?

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Why management books won’t help you build a great company

Thousands of books have been written on management theory. And chances are if you’re looking to build a company, you’re looking for the “secret sauce” on how to build a great company. You could in theory spend thousands of hours doing research, but it’s unlikely you’re going to get a great answer. Why? Because building companies require a great deal of context that can break existing “best practices” easily.

Why experience can lead you astray when hiring great people

Say you started a company. Things were going great, you were steadily growing head count, investors kept pouring in money, and revenue grew 100% last year. But that all changed when you listened to your board. Your board advised that as the company has matured, it’s time to bring in executive talent. So you hire a bunch of people from Google, AT&T, and other company’s with 20+ years of experience. The decision turns out disastrous, as a string of bad hires in turn causes the company to tank and you need to liquidate the company within a few years. Executives used to stroking each other’s egos, creating “alignment”, aren’t able to move the company in the right direcion. And hiring from the outside creates resentment within the company, why do a bunch of high-flyers get to take over the company that existing people helped build?

The lesson here seems obvious: executives with a lot of experience will tank your company. Hire promising talent without much experience allows you to protect against the deadly risk of tanking your company this time, right?

And then you go build your next company, with the new principle of hiring junior talent and trying to build them up. You get a lot of hungry, talented individuals right out of school that help moving the company forward. But again, you run into issues. This time, you have a bunch of people who expose themselves to huge blindspots, meaning they don’t know what they don’t know. So these people with big responsibilities are also more liable to make big mistakes. And all of the sudden, you’re stuck in the same place as last company, where the company needs to get liquidated.

When in doubt, choose the concept with a higher probability of being true

The mistake many people make when they make their mental models is that they generalize based on their own experiences, regardless of the predictive power of a concept. Here is a mind map of what this company founder built after he started his first company, with confidence levels on how well the concept really performs in practice.

So in the above case, we’re about 90% confident that to build a great company, we for sure need to build a great product and 90% confident that we need to hire great people. This is because we looked at a bunch of great companies that grew, and all of them so far hired great people, and all of them built a great a product.

However, hiring great junior talent and hiring experienced talent have lower degrees of confidence, because they assume that hiring great people is a given (which has some uncertainty), and that they both need to fit into a particular context, you’ve seen some companies succeed hiring mainly junior people, and some from hiring experienced people, and both seem to have problems based on your own experience.

Only use frameworks that have a high degree of confidence associated with them

You should hesitate when it comes to pattern matching your own experience, or extra context from other situations into new ones. The main reason being that when it comes to complex decisions, they really depend on the specific context on which you are being faced. And that’s why you need simpler, higher level concepts, because you know they have a higher degree of confidence associated with them.

So then how do I hire great people?

Should you hire inexperienced talent, or should you hire experienced talent? It depends. You’re much better off understanding your goals, and once you feel confident in them, you can get more data about what the current context of your business is and make decisions from there. Need to build a marketing team? Hire an experienced marketer who knows how to build a brand. Want to build a business intelligence team? Promote someone who is more junior but has been with the company for awhile, because you can trust them with the company’s data, and business intelligence systems are malleable (ie. they can be built custom without as much mentorship.)


Use simple concepts that have high probabilities of being true as a tool to help you make decisions. The more you add branches to a concept, even if informed by experience, the less likely you can be certain that it is true. This is because the nature of decision making mainly has to do with the current context you’re in. So the next time you’re trying to do something complex like build a company, hesitate to use models or concepts unless you have a high degree of confidence that they will produce results regardless of context. Use this guide to build a great company.

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