London School of Economics Commencement Address

Chairman, Director, esteemed Faculty, Staff, proud parents, family and friends, and most important, the LSE graduating class of 2018: it is an honour to be here with you today.

As I reflected on how I might make good use of your valuable time, I was minded of the University motto, expressed in Latin, which means “To Know the Causes of Things”. That’s a wonderful aspiration because it’s not an easy task. I’m not referring to the challenges that arise from receiving manipulated information, like today’s hot topic of Fake News. Even if all information received was verifiably true, the world is a complex place and understanding the causes of things requires great minds, great effort, and great institutions like the LSE to inspire great thinking and great effort.

The complexities of sorting through cause and effect impact our ability to understand our surroundings and make good decisions that might improve the world around us. And as we leave university, we move from learning about cause and effect primarily from our studies to learning about it primarily from our experiences and from others’. And if we draw incorrect inferences from past experience, we can make poor decisions while being convinced we are making the best possible decisions. The world is a complex place.

So, at the risk of drawing incorrect inferences from my own past, I’d like to offer you a few observations from my post-LSE career that I hope may be of value to you as you move forward in life.

  1. As your career evolves, the human mind will play tricks with you on the relative role of skill vs. luck. There’s a natural tendency to attribute positive events to skill, and not to good luck, as the rejection of luck enables us to take more pride in our success. By the same token, we might over-attribute to luck (or the lack of it) when things go badly, as this spares us an honest assessment of what we might have been able to do differently. When I was in banking, it was often the case one would hear about the loss to a trading book arising from an error of communication with a client, a model error, or an error in the back office. I never heard of a positive surprise to a trading book that occurred because of good luck. Good luck went underreported, and positive surprises to P&L were always due to trader skill. That’s because, in the first instance, traders report their own P&L.So, be honest with yourself in assessing the contribution of luck to your own life. An appreciation for the role of luck will give you more humility when things go well and will boost your morale when things don’t. Moreover, maintaining a balanced self-assessment helps you deal compassionately with others less fortunate than you.
  2. Reorient your mindset towards failure. In the classroom, failure has a negative connotation that doesn’t apply equally outside of university. Let’s be honest. No matter how difficult a class is, to fail that class probably means you didn’t show up, you didn’t pay attention, you didn’t study, or something like that. Those are all pretty negative things – and the final grade is …. final.Beyond the classroom, failure can occur for good reasons and have more positive consequences than the failing classroom grade. Many great discoveries have been made from events that were regarded initially as mistakes. In entrepreneurship, one makes strategic decisions intended to maximize the likelihood of success. If things don’t work out as planned, those decisions could still have been the best ones (but you suffered bad luck), or maybe there were better decisions than those taken. Luck vs. skill again, but in either case, failure isn’t final.As an entrepreneur, failure is more akin to “experimentation”. When an experiment doesn’t work out, it gives you the opportunity to reflect on why it didn’t. You then approach the problem differently, maybe gain a new insight, adjust and try again. This “trial and error” process allows us to learn from mistakes and improve. In my current business, we devoted three months to a strategic initiative, which, at the end of the day, didn’t work out. But the failure of that initiative opened our eyes to another direction which we hadn’t seen at first, and maybe wouldn’t ever have spotted but for the failure of the first idea. It turned out our second idea was far superior to the first, failed one.So, now that you have graduated, re-orient your mindset towards failure.
  3. Finally, your future careers may include the opportunity to hire people. That’s both a privilege and a great responsibility because it enables you to make a big contribution to someone else’s life. If you are in this fortunate position, try to hire people who aren’t so similar to you. Now before I get disturbed glances from the advancement and alumni teams at LSE, surely one of your most valuable assets in graduating LSE is the personal network you gain by having studied here and that is a network will pay dividends for many years.But there is downside if you only hire talent that shares bullet points with your own resume. When I was in banking, there was always a lot of hiring. What I saw across the bank was a tendency to prefer the candidate who either shared the same passport as the hiring manager, the same native language, or who went to the LSE (if the manager did), or Ecole Polytechnique (if the manager did), or wherever. It may seem hard to believe that I could grow up in a country of 330 million people, move to the UK, and not really stand much chance of interviewing candidates who were from my country, or from my former universities. But it was true. And it turned out to be a gift forced on me by circumstance. I wasn’t a better hiring manager than my colleagues, it’s just that I couldn’t be swayed by the unseen biases that influenced my colleagues because the pool of available talent couldn’t tug on my biases. So, in case your hiring environment doesn’t insulate you from your biases, try at least to be self-aware of them, and bring others into the hiring process to gain viewpoints and expose preconceptions. In the long-run, you will build better teams, you will learn more from people with differentiated experiences, and you will jointly be more successful. And Minouche, don’t worry, an LSE Ph.D. from this year’s graduating class started working with our firm last month.

LSE class of 2018 — CONGRATULATIONS and best wishes for the future. I look forward to learning of your successes and the failures that led to them.

Thank you

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