The secretary problem is one of mathematics' most elegant solutions to a universal challenge: how do you know when to stop looking and commit?
Peter suggests interviewing 37% of your candidate pool without hiring anyone, then hire the next person who's better than everyone in that first group. It’s a pretty universal tactic, whether we’re talking house hunting, car buying, getting roofing quotes, or even picking a spouse!
There are two critical limitations to this, though. First, you need to know the total number of options, whether that's 100 candidates or 25 houses on the market. When that's unknown, you convert to time-based constraints.
The second limitation: the secretary problem only applies when you lack expertise. When Jon or a real estate agent has seen "5,000 of these," they can make absolute judgments, not just comparative ones.
Peter draws from a current predicament in which a Nicaraguan candidate has been asking for what seemed high compensation. Should he have paid based on her country's cost of living, or on the value she'd bring?
Jon pushes back on the entire concept of salary budgets. He argues everything should be discussed as trade-offs.
Peter admits his biggest mistake wasn't the salary negotiation. It was failing to sell the opportunity itself, assuming the candidate knew who he was and what Crane represented.
Key Topics:
(04:00) Interview 37% Without Hiring, Then Take the Next Best Candidate
(06:49) Time-Bound vs. Quantity-Bound: When You Don't Know the Pool Size
(11:01) Why Employers Settle Too Quickly (And Peter's High Bar for Hiring)
(13:12) You Have to Be Worthy of Great Talent
(18:00) The Geographic Salary Dilemma: Nicaragua, Philippines, and Relative Pay
(23:18) "What's Your Budget?" Is the Wrong Question
(28:11) Life as Optimizing Around Trade-Offs
(37:44) Peter's Biggest Hiring Mistake: Not Selling the Opportunity
(40:04) Have Team Members Sell Candidates on the Reality of Working There
Stay connected for more insights and strategies by following:
Jon: @MatznerJon on X and at lazyleverage.beehiiv.com
Peter: @pslohmann on X and at peterlohmann.com
