Balaji Srinivasan: belief

Transcript context

…My first question, I suppose, is about management. There are amazing achievements from the tech sector, but a lot of them seem to cover software or other services that are very rapidly scalable. To what extent do you think the Bay Area has actually come up with a new and innovative management technique for managing smart people better? Or is it just that you do scalability great? That’s a really good question. I think the most fundamental concept really boils down to equity, which is to say that in game theory — the simplest game, the two-by-two matrix, whether you’re talking prisoner’s dilemma or something else like that — you want to actually have the upper diagonal where it’s a win-win be obviously better for both parties than any other square on the board, certainly the win-lose or the lose-win case. What equity does, it takes that from the two-by-two to the two-by-two-by-two-by-two case, the 2^k case, where even if you have k parties, all of them realize that their highest payoff is from the win/win quandrant— that is to say, when the company exits, that’s what makes them the most money — than anything that would be an off-diagonal, political thing to do, which benefits them at the expense of somebody else. So the most fundamental management technique I think that the Bay Area has pioneered is introduction of equity and company stock options as a given. Say we took Silicon Valley or San Francisco managers and brought them into the healthcare sector. Is there a low-hanging fruit that could be reaped from what you’ve all done here?…

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