Message for founders, especially important in the hard times to come.We focus so much on the products we build for our custome...

Message for founders, especially important in the hard times to come. We focus so much on the products we build for our customers, well culture is what we build for our employees. It’s not some annoying thing we have to babysit (every founder has felt this if their company reaches a certain size whether they’ll admit it or not), it’s a product we invest in and monetize like any other. It has its own COGS, logistics, and P&L, even if harder to quantify, and if we want to be a company that prides itself on great offerings to the market we are shortsighted and hypocritical to neglect the internal market that precedes the external one. If our team members feel they matter less than our customers we end up with a business that at most gets the attention it buys and at least gets a fraction of that, while if they know they are an equally valued stakeholder they will care about us too and give a little more. To quantify the value of that extra, pretend you have a hundred employees that all give 1 unit of attention for 1 unit of pay. The net attention paid to your business then is 1 to the 100th power: (1)^100 = 1 In other words you get exactly what you pay for… 1 in, 1 out. And that’s the best case scenario that assumes perfect integrity from every employee. And what if they all give 1% less than their contract asks for (still enough to not get fired)? That’s .99 to the 100th power. (.99)^100 = .37 1 unit in, .37 out. 63% loss of efficiency that worsens as the company grows. I’m guessing that’s pretty standard for most companies. Now instead imagine you get an extra 1% from each person because they know you care and it’s not just a transactional employment agreement. That’s 1.01 to the 100th power. (1.01)^100 = 2.7 1% extra multiplied across 100 people equals 2.7X leverage… 1 in, 2.7 out. 170% efficiency gain that increases as the company adds to headcount. .37 vs 1.0 vs 2.7. Which formula is going to win in a down economy? Obviously this is unscientific math, an illustrative heuristic of the difference in the work when people really care. But I’d argue you can get a lot more than an extra 1% when people know you care and in a great culture the multiplier could be more than 2.7 across 100 people. If this all sounds too good to be true I get it. It’s scary to bet on things that are hard to quantify. But consider that: 1. most companies don’t really invest in culture so don’t know what they’re missing (thanks Milton Friedman), and 2. most that do haven’t gone deep enough to win over employees recruited from companies that didn’t. Plus, there’s more to life than just economics… taking care of the people who take care of you is just being a decent person. There’s no “decency permit” needed to be a founder and of course that’s a good thing - the last thing we need is “decency police” enforcing another layer of regulations. Unless it’s on ourselves. P.S. if you agree with this please share. Let’s get the message out! ????????????????

Message for founders, especially important in the hard times to come.We focus so much on the products we build for our custome...


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Message for founders, especially important in the hard times to come.

We focus so much on the products we build for our customers, well culture is what we build for our employees. It’s not some annoying thing we have to babysit (every founder has felt this if their company reaches a certain size whether they’ll admit it or not), it’s a product we invest in and monetize like any other. It has its own COGS, logistics, and P&L, even if harder to quantify, and if we want to be a company that prides itself on great offerings to the market we are shortsighted and hypocritical to neglect the internal market that precedes the external one.

If our team members feel they matter less than our customers we end up with a business that at most gets the attention it buys and at least gets a fraction of that, while if they know they are an equally valued stakeholder they will care about us too and give a little more.

To quantify the value of that extra, pretend you have a hundred employees that all give 1 unit of attention for 1 unit of pay. The net attention paid to your business then is 1 to the 100th power:

(1)^100 = 1

In other words you get exactly what you pay for… 1 in, 1 out. And that’s the best case scenario that assumes perfect integrity from every employee.

And what if they all give 1% less than their contract asks for (still enough to not get fired)? That’s .99 to the 100th power.

(.99)^100 = .37

1 unit in, .37 out. 63% loss of efficiency that worsens as the company grows.

I’m guessing that’s pretty standard for most companies.

Now instead imagine you get an extra 1% from each person because they know you care and it’s not just a transactional employment agreement. That’s 1.01 to the 100th power.

(1.01)^100 = 2.7

1% extra multiplied across 100 people equals 2.7X leverage… 1 in, 2.7 out. 170% efficiency gain that increases as the company adds to headcount.

.37 vs 1.0 vs 2.7.

Which formula is going to win in a down economy?

Obviously this is unscientific math, an illustrative heuristic of the difference in the work when people really care. But I’d argue you can get a lot more than an extra 1% when people know you care and in a great culture the multiplier could be more than 2.7 across 100 people.

If this all sounds too good to be true I get it. It’s scary to bet on things that are hard to quantify.

But consider that:
1. most companies don’t really invest in culture so don’t know what they’re missing (thanks Milton Friedman), and
2. most that do haven’t gone deep enough to win over employees recruited from companies that didn’t.

Plus, there’s more to life than just economics… taking care of the people who take care of you is just being a decent person.

There’s no “decency permit” needed to be a founder and of course that’s a good thing - the last thing we need is “decency police” enforcing another layer of regulations.

Unless it’s on ourselves.

P.S. if you agree with this please share. Let’s get the message out! ????????????????