Choosing the right ladder

I came across this tweet by Aaron Renn last week and found myself nodding along. So I wanted to interrogate why Renn’s story about the importance of choosing the “right hierarchies” seemed to intuitively resonate with me and the work we do here at Angular.

If I’m not mistaken, what Renn is referring to in that tweet is an idea that Tyler Cowen and Daniel Gross introduced in their book Talent: How to Identify Energizers, Creatives, and Winners Around the World, about the importance of finding people who “climb the right hierarchies.”

Here’s the relevant passage:

Knowing how to perceive and climb the right hierarchies is one of the most stringent but also most universal tests available. It requires emotional self-regulation, perceptiveness, ambition, vision, proper sequencing, and enough order in one’s activities to actually get somewhere. Whenever you see signs that a candidate has this skill, look much more closely. If anecdotes suggest cluelessness about hierarchies, give that person a significant downgrade, at least for all jobs requiring ongoing initiative and learning over time.

The way I read this is that everyone is climbing a ladder in life, and choosing the right ladder to climb has a significant impact on where you end up. As a result, if you care about identifying people that will “win,” then you ought to care about identifying people that are focused on climbing the right ladder for whatever goal they’re seeking to achieve.

This is obviously relevant if you’re actively identifying talent in your role (whether you’re an investor backing founders or a founder building your team). But it’s also relevant if you’re a founder trying to figure out the optimal strategy for your company.

Something we say at Angular is that we back founders that have global ambitions for their businesses. What that usually means is figuring out the US market as soon as possible. This isn’t universally true. There are businesses - good businesses - that don’t require focusing on the US from the beginning. But in my experience, those are few and far between. And it’s because of exactly this dynamic that Cowen and Gross have identified.

The US is the market that matters. It’s big and homogenous, meaning you can grow for longer without needing to globalize. Companies are (generally) more willing to experiment with new technology, and have the budgets for it. As a result, yes, the US is the market with the toughest competition. But it’s also the market where you can grow the fastest and compound your learning (and your revenue) to improve more quickly. Once you start climbing the ladder, you’ll either fall off, or you’ll learn how to climb faster. In other words, it’s the market where you’ll learn whether or not you can actually make it.

If you spend your time climbing the ladder in a different market, you might win. But you’ll win at the wrong game. And your competition in the US will eventually show up and, having compounded their learning and revenues for years, clean your clock.

Again, this isn’t always true. Especially for businesses that can still be massive at a regional scale (e.g. neobanks). But, in general, the rule holds.

This core insight is true for ideas as well. If you want to build in a specific industry, you need to be “in the flow” of that industry. If you want to build a core piece of technical infrastructure, you need to embed yourself with people who are on the cutting edge of that technology. In this case, climbing the right ladder isn’t about choosing a market, it’s about surrounding yourself with the people (researchers, technologists, entrepreneurs and customers) that exist within the hierarchy you care about. This is particularly true for areas that are evolving quickly, like AI, where groundbreaking developments are a daily occurrence.

Critically, you can do this from anywhere. We live in a globalized world. You don’t need to be based in San Francisco to build in AI, despite claims to the contrary. But you do need to get plugged into the right conversations. Because if you’re going to play the game, you may as well play it to win.