Inverted placism: a possible future in which Silicon Valley’s a ghetto

I was having brunch with a couple of friends who are lawyers, and we were talking about desirable and undesirable places to live. Seattle (where I may be moving in early 2015) scored high on every list, and one of the attorneys said something to the effect of, “I’d love to live there, but it’s next to impossible to get a job there.” Getting a law job in Seattle is, apparently, ridiculously difficult. This surprised me, because law is even more pedigree-obsessed than VC-funded technology, and where there’s pedigree obsession, there’s placism. Placism, for law, seemed to favor New York and D.C. to the exclusion of all else. There were some attorneys making lots of money in entertainment law (or as divorce lawyers) in Los Angeles, but it wasn’t prestigious to be in a “secondary” market. That seems to be changing, with locations like Seattle and Austin– desirable places to live, no doubt, but not law hubs– becoming very selective, and some moreso than New York.

Ten years ago, in large-firm corporate law (“biglaw”) New York was the place where attorneys wanted to stay as long as they could. Even though the pay wasn’t substantially higher– when adjusted for cost of living, it was invariably lower– the prestige was strong and followed a person for life. The best outcome was to make partner in one’s New York firm. Perhaps 1 in 10 was offered the brass ring of partnership. The next set, those who were clearly good but wouldn’t get partnerships, would move to firms in “secondary markets” and become partners out there. It was acceptable to move out to Austin or L.A. or Seattle, in your mid-30s, if Manhattan partnership wasn’t in the cards, but few planned for it. Law is even more pedigree-obsessed than VC-funded technology, and so placism is pretty major, and the going assumption has, for a long time, been that the best students of the top law schools will invariably end up in New York.

It seems to be changing. More attorneys are considering New York their backup choice, not wanting to put up with the long-hours culture and high rents. It’s no longer considered unusual for top talent to favor other locations, and some of those smaller markets are developing a reputation for being much more selective than New York, the old first choice.

Does anyone care to guess how this might apply to technology?

Silicon Valley isn’t stable

Balaji Srinivasan gave a talk at Y Combinator’s Startup School entitled “Silicon Valley’s Ultimate Exit”. In it, he decried the four traditional urban centers of the United States: New York, Boston, Los Angeles, and Washington, DC. He named that stretch “the Paper Belt”, a 21st-century analogue of the “Rust Belt”. See, all of those cities are apparently run by dinosaurs. Boston is the academic capital, but MOOCs are rendering in-person education obsolete. D.C. is apparently no longer relevant, under the theory that the decline of nation states (which will occur over the next 200 or so years) might as well be concluded to have already happened. New York? All that media stuff’s being replaced by the Internets. Los Angeles? Well, Youtube and iTunes and Netflix have already disrupticated Hollywood, which might as well be relegated to history’s dustbin as well (except for the fact that someone still has to make the content).

Silicon Valley’s arrogance is irritating and insulting. I’m not exactly lacking when it comes to intellectual ability, and on several occasions, I’ve interviewed for a position in the Valley (for the right job, I’ll work anywhere). On multiple occasions it has happened this way: I knock the code sample out of the park, on one occasion submitting one’s considered one of the 3 best submissions. I nail the technical interview. I get the offer… and it’s a junior position because, whatever I accomplished up to this point, I didn’t do it in California. The effect of placism is very real in technology, and it’s strongest in the Valley.

I don’t see this elsewhere. Banks and hedge funds don’t care if you’re from a rural village in China. If you’re smart, they respect it. They have the intellectual firepower to recognize intelligence. What about the Valley? Surely, I’m not saying that the people in the Valley are dumber? Well, it’s not quite that. As individuals, I don’t think there’s a difference. There are A-level intellects everywhere, whether you’re in the middle of Nebraska or in the Valley or on Wall Street. The problem, instead, is that the Valley has a passive-aggressive consensus culture, which means you need to impress several people to get the green light. In New York, it’s typical for an influential person to say, “I like this guy, and those who don’t won’t have to deal with him, but I think he’s fucking brilliant”. In California, that doesn’t happen. This gives intellectual mediocrities (who can, likewise, be found in Valley startups and on Wall Street) a certain show-stopping power (“I don’t think he’s a team player”, “she’s not a culture fit”) that they don’t have, to the same extent, on the East Coast.

For traders and quants, pedigree isn’t all that important. It can get you in the door, but it ceases to matter after that. In the Valley, pedigree matters much more, because recognizing individual excellence challenges the “collaborative culture” and the “laid back” mentality that California is “supposed” to have and, if you can’t bring up a person’s individual firepower, you start defaulting to credentialism and prestige. Not all Stanford grads are geniuses (see: Lucas Duplan). On the East Coast, it’s socially acceptable to say, “He’s fucking stupid and I’m sure his parents bought him in.” That’s a pretty clear “no hire”. In California, you can’t say that! Instead, in the California culture, you end up having to say something like, “Well, his problem-solving skills aren’t what I expected, and I think he’d be unhappy in a technical role, but I guess we can give him a product position and tap the Stanford network.” To me, that’s a “no hire” but, to many managers, that sounds like a ‘yes’.

I had the reverse of this experience when (as part of my consulting practice) I was hiring an engineer for a startup. He was a 20-year-old college graduate, sharp as fuck and probably a better programmer than I was, but socially inept. I said, “he’s brilliant, but would need some mentoring on the social aspect of the work”. To make it clear, I was being as honest as I could be, and my recommendation was to hire him. Unfortunately, my “he’ll need social mentoring” was taken as a passive-aggressive way of saying “no-hire”, rather than a completely honest acknowledgement that a good candidate had (minor) imperfections. He wouldn’t have been hired anyway, nor would he have liked the place, so it didn’t matter in the end. Still, it shocked me that such a minor note against someone (I said, “he’ll need social mentoring”, not “he’s an incorrigible fuckup”) could be taken so far out of proportion.

The point of this digression is that, because people in the Valley refuse to communicate meaningfully, and because of the consensus-driven culture, the rank-ordering of potential candidates that is actually used is the one already furnished. For younger candidates, that’s derived from educational pedigree. For older ones, it comes down to job titles and companies to some small degree, but much more important is location. Placism rules in the Valley.

There’s nothing stable about that, in my view. Academic institutions have lifelong contracts (tenure) with professors and gigantic capital investments, so universities tend to stay put. (Universities that are too prolific with branch campuses, such as NYU having an Abu Dhabi campus, destroy whatever prestige they might otherwise have.) The seat of the U.S. government is, likewise, unlikely to leave D.C. except in event of an unforeseen catastrophe. Hollywood’s geographical advantage (its proximity to a diverse array of terrain types) is still major, because the cost of travel with a film production team is extremely high. New York? New York won’t lose finance (the exchanges are there) and, even if it did, it would still be New York.

That’s something that the Valley, with its arrogant placism, doesn’t get. Let’s say that New York’s financial industry takes a catastrophic dive. We see apartments once valued at $50 million selling for $4 million, and rents dropping to Midwestern levels. And then? Creative people will move in, rapidly, and restore life to the city. New York isn’t beholden to one industry. It will always be New Fucking York. Unless we see a recurrence the 1970s general abandonment of cities by the American population (and, in my lifetime, we probably won’t) the worst-case scenario for it is that it becomes like Chicago: an also-ran city that is, in spite of its lack of “paper belt” specialty, thriving and an excellent place to live.

New York can lose its status as the prestige center of biglaw. It could even lose Wall Street. (That would be a disaster for New York property owners, but the city itself would be resilient.) Silicon Valley, on the other hand, is fucked if the placism of venture-funded technology inverts. That just might happen, too.

Inversion of placism tends to happen when the young and creative decide that the advantages of living in the “prestigious” place are not worth the disadvantages. The rents are too high, the culture is too elitist, and upward mobility is too low. The progeny of well-connected families still end up in the prestigious place (New York biglaw, Valley technology) but the successes of the next generation head elsewhere. Sometimes, they choose another location; others, there’s a sense of diaspora for a while. The Valley could easily lose its singularity. It’s not a great place to live (it’s a strip mall) and it’s far too expensive for what it offers. In truth, everything about it is mediocre except, to some extent, the work; but 95 percent of the work is mediocre (who wants to work in operations at IUsedThisToilet.com?) and getting the other 5 percent requires an advanced degree from a top-5 CS department, or elite connections. A few good people have those and will be able to stomach the Valley, but most good people come from no-name schools (not because the no-name schools are better, but because most people come from no-name schools) and don’t know anyone important out there. In 2010, talented and naive 22-year-olds were willing to move out to the Valley and provide cheap, clueless, highly dedicated labor under the naive (and wrong) assumption that a year at a startup would have them personally introduced to Peter Thiel by the founders. Is that trickery going to work in 2016? I doubt it.

Starting about now, it’s going to become increasingly evident that the talent wants to be outside of Silicon Valley if the same quality of job is available elsewhere. In fact, being in Silicon Valley after 35 will mean one of two things: astronomical success, or dismal mediocrity, with no middle ground. Being in California, at that age, and not being part of the investor community (either as a VC, or as a founder able to raise money on a phone call) will be a mark of shame. If you’re good, you should be able to move to Seattle or Austin, no later than 30, and get the same quality of job. If you’re really good, you can get that kind of job in St. Louis or Nashville. Aside from the outlier successes ($20 million net worth, national reputation) who can make a Silicon Valley residence part of their personal brand, it’ll be the mediocrities who stick around the Valley, still trying to catch a break while ignoring the hints that have been dropped all around them.

By 2020, this will have more of a “diaspora” shape. There won’t be a new tech hub yet. You’ll see talent gravitating toward places like Seattle, Boulder, Portland, Chicago, Austin, Pittsburgh, and Minneapolis, with no clear winner. Millennials are, if not blindly optimistic, attracted to the idea of turning a second-rate city into a first-rate one. By the late 2020s, it will be clear whether (a) new hubs have emerged or (b) technology has become “post-placist”. I’m not going to try to opine on how that will play out. I don’t think anyone can predict it.

Cheap votes

What gives Silicon Valley its current grip on technology? The answer is a concept that seems to recur when aggregations such as democratic elections and markets break down. Cheap votes.

Electoral voting, statistically, can actually magnify the power of a small number of votes. If there are 101 voters and we model 100 votes as coin-flips, the power of the 101st vote isn’t a 1-in-101 chance of swaying the election. It’s about 1-in-13. (Due to the central tendency of the mean, there’s a 7.9% chance that the 100 votes split evenly.) Likewise, the statistical power of a voting bloc increases as the square of its size (in the same as the variance of perfectly correlated identical  variables, when summed, grows as the square of the individual’s variance). What this means is that a small number of voters, acting as a bloc, can have immense power.

Another issue is that many voters don’t really give a damn. Low voter turnout is cited as a negative, but I think it’s a good thing. Disinterested people shouldn’t vote, because all they’ll do is add noise. The ugly side effect of this is that societies generate a pool of cheap votes. Ethical reservations aside, there are plenty of people who care so little about electoral politics that (absent a secret ballot) they’d sell their vote for $100. How much is a vote worth? To the individual, the vote is worth less than $100. But, to many entrenched interests, 500,000 votes (which can sway a national election) is worth a lot more than $50 million.

When you allow vote-buying, power shifts to those who can bundle cheap votes together. That’s obviously a very bad thing for society. Such people tend, historically, to be deeply associated with society’s criminal elements, and corruption ensues. This is one of the major reasons why the secret ballot is so important. Anonymity and privacy in voting are sacred rights, for sure, but we also want to kill the secondary market for cheap votes. There’s no real harm in someone selling his vote to his grandma for $100, but if we allow vote-buying to take place, we give power to some unelected, vicious people who use the statistics of electoral practices to subvert democracy.

Markets are the voting systems of capital allocation and business formation, designed as principled plutocracy rather than a democracy. Of course, just as in democracies, there are a lot of cheap votes to go around. Plenty of middle-class people want to park their savings “somewhere” and watch their numbers go up at a reasonable annual rate, but have no interest in dictating how the sausage is made. They don’t know what the best thing to do with their $500,000 life savings is and, to their credit, they admit as much. So they put that money in bonds or index funds and forget about it. Some of that money ends up in high-risk, high-yield (in theory) venture capital funds.

VCs are the cheap vote packagers of a certain 21st-century question: how do we build out the next stage of capitalism, which requires engagement and autonomy within the labor pool itself to a degree that disadvantages giant organizations? The era of large corporations is ending. It’s not like these companies will disappear overnight, or even in 50 years, but we’re seeing a return to small-scale, niche-player capitalism in which a few small companies manage to have outlier success and (if they want it) can become large ones. VC is the process of taking cheap votes (passive capital) and attempting to influence the formation processes of the nation’s most innovative (again, at least in theory) small businesses.

Abstractly, your typical doctor in St. Louis would rather have more small businesses in the Midwest (his children need jobs, and they may not want to move to Mountain View) than in California, and might prefer his capital being deployed locally. But he has a full-time job and is smart enough to know that he’s not ready to manage that investment actively. So, he parks his money in an “investment vehicle” that has the funds redirected to a bunch of careerists in California who care far more about the prestige of association with news-making businesses (hence, the focus on gigantic exits) than the success of their portfolios. His returns on the investment are mediocre, but his locale is also starved of passive capital, which has all been swept away into the bipolar vortex of Sand Hill Road.

Passive investors don’t care, enough, to pull their funding. In fact, it’s rarely individual investors whose capital ends up directly in venture capital. Because of protections (which may not be well-structured, but that’s another debate) that prevent middle-class individuals from investing directly in high-risk vehicles, it’s actually large pension funds and university endowments (increasing the indirection) that tend to end up in VC coffers. With all this indirection, it’s not surprising that passive investors would tacitly accept the current arrangement, which congests Northern California while starving the rest of the country. But is this arrangement stable? I think not. I think that, while it takes time, people eventually wake up. When it happens, San Francisco may still possess its urban charm, but the Valley itself is properly screwed.

3 mean-spirited HR policies that can kill a tech company.

Most companies are short-sighted, stingy, and stupid. Trillions of dollars are lost every year to the simple fact that people wielding corporate power become vicious, petty, and, in some cases, sadistic, operating in ways that are ultimately against the company’s long-term interests. In a typical private-sector organization, you have the checked-out minimum-effort players (MacLeod Losers) and the hapless “true believers” (MacLeod Clueless) who work hard, but lack the strategic insight necessary to truly lead. Most interesting are the moral outcasts (MacLeod Sociopaths) who are either too good, too evil, too lawful, or too chaotic to fall into the “well-adjusted” central category of humanity that organizations have become very good, over the centuries, at making basically happy with subordinate positions. They tend to have an “up or out” dynamic: they take risks that either end their jobs, or bring their promotion. In this set, you have the decent self-advancers (like me) and the indecent self-advancers. Don Draper, in Mad Men, is a decent self-advancer; he’s a deeply flawed man, but his career didn’t come at anyone else’s loss. Pete Campbell is an indecent self-advancer, attempting to use extortion to become Head of Accounts. There are two other sub-categories of the MacLeod Sociopaths worth mentioned. Of those, there are the sadists and the denial players.

Sadists don’t often make it beyond middle management (contrary to the MacLeod Sociopath’s tendency to fail out or skip that rung for upper management). They inspire terror below them and will usually appear to be star performers at their level, because they can easily get people to work hard on their behalf and transfer the credit over to them, but they don’t have the vision to get any further. They also, usually, don’t care to advance any further. Exerting power, watching people squirm, and causing good people to fail out of their jobs is what they enjoy. Making money is not especially important to them.

The fourth category is that of the denial players. Denial players are thus named not in the sense of being in denial (i.e. willfully misled) but because they like denying benefits and permissions to others. They’re “no-men”. Like the MacLeod Clueless, they have a lack of vision and tend to be “true believers”. Unlike them, they understand how the corporate game works. Like the sadists, they enjoy shutting people down and saying “no”, and ruthless cost cutting is something they’re good at. Unlike the sadists, they don’t seem to enjoy causing emotional harm or financial ruin. I don’t even think that they’re bad people. They tend toward the lawful neutral alignment. What makes them dangerous, in fact, is that they honestly believe that they’re doing what is best for the company. Worse yet, they can usually make an objective case for what they’re doing. The reason corporations tend to have absolutely no vision is that there’s no way to form consensus around which vision to support. Get 10 executives in a room, and you’ll have 17 and a half divergent visions for how the company should be using its resources, reputation, and opportunities. One thing they can all agree on, however, is cutting inefficiencies. It’s much easier to build consensus around cutting 15% of the IT department than around establishing a scholarship for a disadvantaged minority (again, which disadvantaged group should the company decide to care about?)

Denial players often break the mold of the Gervais Principle model of the corporate office. The classical MacLeod-Gervais-Rao-Church model says that the disengaged, bare-minimum players (Losers) stick to the bottom, the self-flagellating true believers (Clueless) are destined for middle management, and the constitutionally ill-adjusted (Sociopaths) either end up in upper management or are fired. (Another useful lens for this is D&D’s alignment system. Civil-neutral tend toward Loser status, lawful become Clueless, and chaotic are Sociopaths.) Denial players, on the other hand, can cross the chasm from middle management to the executive suite. Unlike the Sociopaths, they don’t do it quickly and they rarely take risks to get there. They lack the strategic vision to lead, but they have the tactical skill to perform an ugly set of tasks (cutting costs) well, and this is often enough to propel them into decision-making ranks of a corporation.

Typical MacLeod Sociopaths, if they aren’t tapped for better things, will be fired within their first two years. Denial players, on the other hand, don’t have the visible need to self-advancement that makes enemies, and they tend to have the unconditional work ethic of the Clueless, which keeps them from getting flushed out for low performance. Denial players, when they don’t make it into the upper ranks, don’t get flushed out of the organization. They end up in a ghetto for also-ran denial players known as… Human Resources.

I’m not going to come out against or in favor of denial players. Sometimes they’re necessary, but often they’re destructive. They’re not sadistic, but they can be mean-spirited. The difference, as I’m using the terms, between sadism and mean-spiritedness is the motivation of the assailant. A sadist usually operates alone and tries to avoid detection. He knows that his behaviors (such as torturing animals, bullying his peers, or using phony performance issues to tease out subordinates’ health problems in order to fuck with them) are socially unacceptable and he’s happy to perform them alone. People who torture animals don’t do it to gain social status, but because it gives them an innate, perverse, and usually sexual thrill. Mean-spirited people, on the other hand, don’t get an intrinsic joy out of hurting people, but will gladly do it to enhance their social status. They operate in groups, and often justify their nastiness as being for the group’s benefit. Groups are defined by who (and what) they include and exclude, and mean-spirited people tend to push for more exclusion. In companies, they impose and exploit artificial scarcities to the same effect. “We can’t afford to have 5 engineers.”

Having explained the above, it’s time to relate this to the slew of new, sloppily constructed companies often called “startups”, especially if they involve technology. I’ll focus on three terrible HR practices, and why they are so harmful.

1. Pooled leave (“PTO”).

I had a job, at one point in my career, where I was constantly getting colds and stomach viruses. The work was fine, and the environment not especially stressful, but between November and April that winter, I must have had eight serious colds. I’d typically work through it, only to crash hard on Saturday, and sleep for 16 hours. It was pretty dismal to lose half a weekend to that sort of mild, but obnoxiously recurrent, illness.

That company was probably the sickliest place I’ve ever worked. It wasn’t work stress or low morale or long hours that did it. In fact, people were generally happy to work there, and hours expectations were more than reasonable. So what was causing it? A stupid HR policy, euphemistically named “paid time off” (or PTO). In a PTO system, vacation days and sick leave are pooled together, which is another way of saying that sick days are deducted from vacation time. I had a good manager who also disliked the policy, so if I got sick, I could “work from home” and he’d back me. We were allowed to differentiate between “actually working” WFH (you can expect me to pick up the phone) and sick WFH. Others in the company either weren’t as lucky, or weren’t willing to stay at home when they were sick. After all, if a sick day costs you a day of vacation, the reasonable thing to do is to come in to work, even if you feel lousy and won’t be able to do anything.

The result of these mean-spirited “PTO” systems is that people come to work when they should be staying home, and everyone in the fucking office gets sick three times as often! It may be that fewer calendar days are “lost” to absenteeism, but the cost to productivity is immense. In the month of January and February, almost nothing gets done because even the relatively healthy people have developed what is effectively a chronic cold, as one respiratory virus rolls into another. It can’t be good for the company.

Why do HR offices come up with these shitty systems? This theme will recur all over the place. Externalized costs. First, it allows companies to lie about their vacation policies. They can claim to offer “15 days”, the standard, when they’re actually offering a pathetic 11-12 (on the assumption of a person losing 3-4 days annually to colds, flus, and stomach bugs). It’s also a great mechanism for backdoor age (and family status!) discrimination. If the only people you want are 25-year-old males without children, “PTO” policies are a great way to encourage everyone else to leave.

If you’re a cost-cutting denial player in HR, PTO policies look like a great deal. One can have the benefits (in recruiting) of a generous vacation policy, while those who get sick enough that they really can’t go to work get screwed, because they can’t take any vacation. HR departments don’t really care whether people show up to work or not, but they do care about payouts of unused vacation time when employees leave the company. A mean-spirited PTO policy is, in the aggregate, going to reduce that payout by a few days per departing employee. Let’s say that we’re talking about a 1000-person company with 50% annual turnover (if the company pools vacation and sick time, that’s not an unreasonable estimate). On average, departing employees redeem 1.5 fewer days because of the PTO policy. Thus, 750 person-days are saved, or three full-time employees, justifying a substantial bonus for the VP of HR. Is that worth the cost, which is making an entire company substantially sicker? No, it’s not. Again, this is how denial players work. They cut costs on paper, externalize the negatives of doing so (typically, in a subtle and silent way that is hard to attribute to them) to the rest of the company, and thereby justify their bonuses.

2. PIPs over severances. 

There are a number of shitty tech companies (I love technology but I fucking hate the tech industry) out there that will claim to have never had a layoff. On paper, this might be true. Dig deeper, and one finds that during economically difficult times there were “low performer initiatives” that conveniently happened while other companies were laying people off. Another way to say it is that they’ve only had dishonest layoffs.

Investment banks, for example, lay people off honestly. They’re in a cyclical business, and no one hesitates in saying, “This industry had a bad year, and had to let some good people go.” In most of the private sector, it’s well-understood that economic forces will cause jobs to end, and that it’s nobody’s fault. Technology companies, on the other hand, are often so deeply steeped in exceptionalist thinking that a mythology of constant expansion is necessary. Tech companies will post job ads when they have no intention of hiring, to present the image of growth. Every stupid blog post will end with, “We have a rock star team and if you’re a rock star, we’re hiring.” (Economic forces determine whether most applicants, or no applicants, are “rock stars”). The same applies to letting people go. As opposed to layoffs, tech companies claim to be running performance-based cuts. In other words, they’re trashing the reputations of departing employees in order to save their own. How anyone can have faith in these Silicon Valley assholes, given the extreme commonality of this practice, is beyond me.

The psychotic, mean-spirited practice of stack ranking (also known as top-grading) ties into this behavior. The purpose of stack ranking is to turn a layoff (if one is needed) into a SQL query. If there is a total ordering imposed on employees, then it’s easy to cut staff without having to actually think about it. The problem is that stack ranking has chronic negative effects on morale and basic decency within the organization. Layoffs happen even to good organizations, but structuring a company around laying people off is a terrible idea.

Someone who is laid off typically receives a severance, is eligible for unemployment, and will be given a good reference. On the other hand, if a “performance” case is manufactured, that typically implies that there will be no severance (or, at least, the company will try hard to avoid giving one) and no eligibility to collect unemployment. Additionally, the person’s reputation must be damaged, within and possibly outside the company. When you lay someone off, you typically deliver the news and the package on the same day. Running someone through a “performance improvement plan” (PIP) requires isolating and humiliating that person over a period of months. He must be made to fail, visibly, so that transfer elsewhere within the company is impossible. He must be given negative performance reviews that are untrue and, if he appeals the claims, can then be fired for “insubordination”. Almost all PIPs contain factual inaccuracies, and that’s intentional because about 1 person out of 10 people PIP’d will become so angry that they’ll fire themselves on the spot (saving the company a few months’ worth of salary) by insulting their managers, threatening violence, or actually committing it. (This puts the manager in harm’s way, but that’s not HR’s problem.)

Most managers aren’t dicks and, consequently, hate PIPs. Even when they agree that the person needs to be fired (and may have initiated the process) they dislike the effect of the PIP on them and the team. The purpose of a PIP isn’t to improve performance. It’s to grind a person down so that he either quits or can be fired without a fight, saving the cost of a severance. The decision of an ex-employee on whether to litigate or disparage typically comes down to whether he perceives moral superiority over the company. A fair severance and positive reference will leave him feeling good about the company, and unlikely to act against its interests. The purpose of the PIP is to make the employee feel bad about himself. Sometimes, it works and he shrivels up and dies quietly. Sometimes he explodes and does grave harm to the company. It’s a kangaroo court in which the verdict is already decided, but it requires the manager to pretend there is a possibility of improving performance. Meanwhile, the team and manager are forced to deal with a “walking dead” employee who is destroying morale at every opportunity.

The cost of a one-month PIP, to the company, is typically 8-to-1 (and possibly more) when morale factors, expense of management time, and risks are considered. That is, a 3-month severance would be cheaper than the PIP, and an 8-month severance would break even. Not only is that the case, but PIPs don’t often work. If HR doesn’t believe the employee can be safely terminated, the PIP will be ruled “inconclusive” and the manager will have to launch another one. Severance contracts typically include non-litigation and non-disparagement, and leave the employee happy enough to keep the agreement in good faith. PIPs, for a contrast, are paper armor, in a lawsuit. They rarely provide much defense. Wrongful PIPs are just as possible as wrongful termination, so they do little to ameliorate the company’s risk of a lawsuit. In fact, they typically increase the manager’s risk of being sued, because they damage the employee’s internal reputation and, arguably, constitute tortious interference. The theory is that PIP’d employees are less likely to litigate. As I said above, the purpose of a severance is to leave the employee feeling good about the company, and the purpose of the PIP is to leave him feeling bad about himself. I’m not sure how well that holds in practice. My guess is that PIPs slightly reduce the rate at which departing employees sue former employers (because those employees feel defeated and humiliated) but increase, dramatically, the rate at which they win. It’s not hard for a company to fuck up a PIP, and a savvy employee, if PIP’d, can virtually guarantee that the company damages itself in the fight.

Given that PIPs are, in fact, astronomically expensive in comparison to severance payments, why does HR prefer them? Yet again, the theme is externalized costs. The manager and team have to deal with a toxic employee for months. If a termination lawsuit occurs (and they’re actually very rare) the PIP does little to protect the company. Laying someone off with a reasonable severance (enough to cover a typical job search) entails almost no risk. PIPs, on the other hand, increase bulk risk. Even if the PIP might decrease the risk of losing a wrongful termination suit, it increases the risk of the company losing a tortious interference suit. The dollar amounts to the latter are smaller, but the PR risks are no different. PIPs are, in sum, terrible for the company. But they’re great for an HR office that wants to claim that its “low performer initiative” was executed with almost no severance expense.

3. Performance reviews as part of the transfer packet.

One common but destructive practice for a company is to make performance review history a factor in the transfer process. Enron was probably not the first company to make this a policy, but it’s the first one to have publicly admitted to the practice. Hence, performance reviews that are standardized across the company and included in an employee’s packet for internal transfer are known as “Enron-style”. Given the scandalous corporate meltdown for which Enron later became known, it’s hardly an endorsement of the practice, though it remains common in tech companies. What is the effect of this? It creates a general climate of immobility within the company.

Perversely, internal applicants are at a disadvantage to external applicants when they are forced to compete for the same jobs. Hiring an internal applicant means “poaching” from another team, and most managers are loathe to piss off another high-ranking person. External applicants come without those strings. All else being equal, the team lead would rather have the external hire.

Additionally, the most recent piece of data about the external hire is that he passed an interview. That, typically, means that he was in the top 1 to 15% of the applicant pool (depending on how that pool is defined). If performance reviews are available in making the transfer determination (and, though the practice is toxic, in most companies they are) then the internal candidate needs a top-15% performance history to compete with the shiny-new external hire.

A median performer (or, even, a 25th-percentile performer in a good company) isn’t a bad employee and probably should be able to transfer up to a more fitting project, where he might do better. Unfortunately, the issues above are political constants. If the lead of that employee’s target team has access to performance review history and sees median marks, the transfer will most likely not happen. Companies would rather use their best jobs to lure external, shiny-new, talent than to reward internal loyalty. Under the 80th percentile, employees become inflexibly immobile. They’ll only be allowed to transfer when their existing projects are cancelled, and typically they’ll end up on an equal or lesser project. What happens above the 80th percentile? Employees who are getting good marks don’t want to move. If you’re getting promoted quickly and clearly in good standing, why roll the dice?

Consequently, it is an invariable fact that making performance reviews part of an employee’s transfer packet will make internal mobility nearly impossible, except for those who have no incentive to move. The result is that team and group assignments become permanent. At that point, there’s no value in collaborating across the company and, instead, teams start fighting each other for resources and visibility. It gets ugly. It’s the “warring departments” phenomenon and it will quickly reduce a company to mediocrity.

I’ve shown why HR departments like PIPs and pooled time off (PTO) policies, and how these represent ways to “save money” while externalizing costs to the rest of the company, but it might be puzzling why they’d care about this issue. HR departments don’t give a shit about punishing low performers or rewarding high performers or what the hell is going on with internal mobility. It’s not of much interest to them, at least on paper. If we look at what happens above-board, HR shouldn’t have any reason to keep employees immobile. And that’s the correct conclusion. They don’t.

So why do HR offices like making performance reviews part of the transfer packet? Side money. It’s an empirical fact that, when a company makes performance reviews part of the transfer packet, salaries demanded by HR professionals go down by about 15 percent. Why? If an employee’s manager departs or his team is shuttered, the only record of his relationship to that manager is in the performance reviews, and HR can have them changed. A $10,000 payment to someone in the HR office can pay off tenfold, in the long run, if it helps an employee transfer to the “star team”, get better assignments, and be promoted faster. Performance reviews that are part of an employee’s transfer packet are called “Enron-style” for a reason. They generate a huge market for unethical side payments (typically estimated at $2,500 per employee). Just as public officials in corrupt countries can be unpaid and still want the job, on account of bribes, this enables HR professionals (and, really, anyone with access to the performance review database; engineers and DBAs are not innocent in this) to make tens of thousands of dollars off the books, but that also benefits the company (in the short term) because it can pay lower salaries for positions that are in access to the performance review record. In the long term, of course, it’s toxic. What is actually happening, when money is drawn away from the employees– who must pay side bribes to clean their typically not-bad-but-transfer-inhibiting performance histories– is extortion. What else should one call a mandatory “bribe”?

Conclusion

I’ve named just three mean-spirited, denial-focused HR policies that companies tend to develop as they become dysfunctional. These are especially bad in technology companies, because they go against what one needs to do, in the long run, to succeed in technology. These petty wins aren’t useful. No company is going to transform the world for the better, or generate billions of dollars in value, because it succumbs to the “innovation” of pooling vacation and sick time. That mean-spirited penny-shaving helps no one. It just shits on morale. What tech companies need to do, instead, is to forget about winning those petty, zero-sum squabbles of no consequence and, instead, to focus on a long-lost virtue of which I can say that the current tech industry seems to have forgotten that it ever existed: excellence.

Some ways to be bad at hiring

There are some assumptions in corporate hiring processes that sound like “tough love conservatism” but are just wrong. One of them is that false positives (bad hires) are worse than false negatives (passing on good people). While true on paper, this is often used as an excuse to reject good applicants for the slightest of reasons. Currently unemployed? Rejected. Lost social polish at the end of a 7-hour interview session? “Not a culture fit.” Capable of doing the work, but not yet operating two levels beyond it? B player, so pass.

People are mostly context

Over-hiring (that is, hiring people who are more skilled than the role requires) is actually more dangerous than under-hiring. Overqualified, bored people can easily become toxic to an organization and, when they go into attack mode, they have sufficient credibility to make it really hurt. Perhaps unexpectedly, it’s often the mechanisms companies use to catch and remove low performers that turn the over-hires into aggressive morale problems, rather than harmless ghosts who’ll find their way out without noise.

Let’s get into the first misconception about hiring. We’ve all heard that phrase, “A players hire A players, but B players hire C players.” The idea is sound. If you hire mediocrities (B players) you’ll find that they hire truly awful people. The solution? Don’t hire mediocrities. The problem? People are mostly context. (For evidence behind “people are mostly context”, see: Stanford Prison Experiment.) An organization will always have B players. Some people will gain influence within the group and others will be ignored. The output, from people who fall into low status, will be mediocre. If you have 100 people who would be “A players” in most other contexts, you’re still going to have a few people who, for a variety of reasons, check out and start coasting.

If people are mostly context, it stands to reason that some work environments will turn B players into A players, and vice versa. That is the more important question. A company that turns B players into A players will kick ass, and a company that turns A players into B players (as most do) will slowly decline. Companies think they can outguess the labor market and “hire only A players” while offering B-level salaries and work conditions. For the most part, they’re wrong. Believing oneself to be smarter than a market, on a hunch, is a dangerous assumption. Companies can do very little (other than offer more) to improve the quality of people that comes in the door. What they can control is how they evolve once there. Some environments are empowering and improve the people they take in. Others (most) are stifling and artificially limit people.

While they won’t admit it, because it’s not socially acceptable, most corporate executives want high levels of internal competition, whether for promotions or the best projects, and create false scarcities to make it happen. The problem is that this is exactly the sort of thing that creates the checked-out, “B player” attitude among former or potential high-performers. They’re smart enough to see the false scarcity that is restricting their autonomy and career advancement, so when they lose a political fight (there were two A players, so one had to take a dive) they aren’t likely to say, “Man, I really need to step up my game around here.” Either they leave, or they use it as “a recovery job”, which means that they’re essentially coasting.

Is it true that A players hire A players (or, as some say, A+ players) while B players hire C players? It is, but it’s not about innate ability. Rather, it’s about political security. People who expect to be in good standing at the same company 24 months later will tend to hire people better than them, because they view their association with that team as a semi-permanent residence. Those who are insecure will tend to hire people they can control or, worse, “insurance incompetents” who come in handy in event of “low performer” witch hunts or stack ranking. Increasingly, companies strive to have everyone a bit insecure, under the delusion that aggressive performance reviews and micromanagement bring people to their best. It doesn’t work that way. It’s insecurity that begets not only mediocrity, but those sorts of blatantly political operations.

This gets worse, because “don’t hire B players” becomes code for “don’t hire people who are different, have unusual career histories, or might have anything wrong with them”. Forty years old and only a Manager II? Bzzzt! B player, no hire. “A player” becomes code for “people who think, act, and look exactly like me.” This sort of homogeneity imposes artificial limitations on a company’s ability to grow, and tends to foster arrogance rather than improvement.

False negatives are false positives

One irksome claim about hiring that, on paper, appears true, is the claim that “false negatives are better than false positives”. It’s actually blatantly false, and I’ll get to that, but let me make an observation. When a company passes on a good person (false negative) what happens? It has to keep hiring, taking on the risk of a false positive. If it has a fixed number of positions to fill and those must be filled, then the cost of a false negative can be measured in false positives. Let’s avoid the complexity of the truth (people are mostly context) and pretend that there are specific numbers of “good” and “bad” people. Say, there are 100 good hires and 900 bad hires out there. Let’s assume that the existing hiring process has a 50% false-negative rate and a 4.4% false-positive rate, and that job applicants come uniformly from the population. (That’s an incredibly wrong assumption. In reality, the perception of employers that most job seekers are idiots comes from the disproportionate over-representation of low-skilled perennial candidates– and resume spam from unscrupulous recruiters.) Then, out of 100 applicants, there’ll be 5 good people and 4 bad people offered jobs. This means that turning away a good candidate costs the company 0.44 bad hires. A false negative is, in essence, 0.44 false positives! It gets worse, because if we assume that companies hire not to fill positions but to meet specific needs, and use the approximation that only good hires count toward those needs, the cost of a false negative is 0.8 false positives. This is a made-up example; in practice, that number can exceed 1.0.

What about a much tougher hiring process? It’s easy to increase the false negative rate, but hard to improve on that 4.4% false positive rate. Some people have the social and political skills to acquire credentials, make allies, succeed at interviews, and get promoted despite being utterly useless. Increasing scrutiny doesn’t keep them out. In fact, it can give them an advantage. An example of this is seen in reference checks. The “classic 3″ (three references, basic verification) can flush out candidates who lie about their backgrounds or who did really bad things at work, and it’s about as thorough a reference check as one can get without having this counterproductive result. Why? Let’s say that a company does 10 reference checks, some back-channel. This isn’t a basic background verification that 95% of the population will pass, it’s a competitive cavity search. What type of people win? Two types. The first are people who never pissed anyone off. That means they’re B players. There isn’t anything wrong with that. In fact, I’d argue that companies’ prejudice against “B players” leaves them prone to dangerous over-hiring. But that intrusive a reference check is hardly worth it if you just want to hire B players. The second are the wheeler-dealers who charm the powerful and frighten the powerless. Psychopaths. (False positives.) On the other hand, most normal people, if they accomplished anything, will have made enemies and will fail an intrusive, 10-ply reference check. (False negatives.) The reason the “Classic 3″ in reference checking is limited to three checks is that any more scrutiny is dangerously counterproductive. If someone passes a 10-ply back-channel reference check, the odds are thousands to one that he’s had people directly intimidated (either by legal professionals, or by illegal professionals) in order to clean his story.

How expensive are false positives?

The claim that false positives are worse than false negatives is, in fact, dead wrong. This is backed by the claim that it’s somehow hard to fire false positives. I should mention that there are two classes of false positives. The first are those who are unethical, but acquire the trust of the group and don’t seem like bad hires until, often years later, they do something harmful to the organization. Those people are truly toxic, but they’re not caught early (that’s why they can do so much damage) and, given their ability to evade detection in a year of employment, no amount of pre-hire scrutiny is going to catch them. The best way to handle them is not to attract them, but that’s a topic for another essay. The second are the obvious bad hires. They’re brought on and, within three months, it’s clear that they’re not up to the demands of the job. Some can be trained or re-assigned, others can’t.

The “problem”, as often stated, is that it’s “too hard” to fire such people. They’re rarely malicious or blatantly incompetent. They’re just mediocre, and a bit harmful for morale. Cold-firing one might result in a lawsuit or public disparagement by a well-liked (if below average) person. Putting one on a PIP risks turning a harmless low performer into a morale killer. The PIP’s purpose is not to improve performance but to document low performance, but people on PIPs either bring their performance up to a high enough level to “beat” the PIP, but will then slack again when attention is off of them, or (more often) sabotage their manager with the time they have left, and neither is a desired outcome. So, companies end up letting such people underperform for several years. This is the source of the “false positives are more expensive than false negatives” claim, but it’s the company’s fault.

It’s actually easy and cheap to fire someone like that. Write a severance equal to 1.5 to 2 times the expected length of a job search for that level, and include non-litigation and non-disparagement. Quick, easy, and everyone’s happy. The cost of a false positive is bounded, if the company’s willing to do the right thing, cut its losses quickly, and write a fair severance rather than kicking the shit out of morale with a PIP. (Most companies aren’t. The preference for PIPs over severances is a way for HR departments to claim they “saved money” on exit payments, while externalizing the costs to a manager, who has to conduct the PIP’s kangaroo court, and the team.) What about the cost of a false negative? That cost is the negative of whatever that person would have produced, and some people turn out to be extraordinarily valuable, not only in their own contributions but in terms of the people they’ll bring on in the future. Practically speaking, the cost of a false negative is unbounded.

Explaining what is

The silly prejudices that companies acquire, toward the young or the old, toward people with too few or too many jobs, and so on… those seem counterproductive, and they are. So why do companies develop these (evidently untrue) pretenses of never hiring “B players” and keeping a hawk’s watch over “false positive” hires (at the admitted cost of numerous false negatives)? Mostly, it’s to create a narrative. It’s to expand executive arrogance into something that the lower-level players can participate in. I’d argue that organizations actually want to reject quite a few good people, not for intrinsic reasons, but the boost the morale of the grunts on the team. It makes the peons feel like they’re part of an elite squadron and, in truth, this makes it a lot easier to take advantage of them. One might also argue that vicious hiring practices (such as back-channel reference checking) go a step further, by encouraging the slightly disaffected (but still profitable, for the organization) peasants to be terrified of the job search process, in order to keep them where they are.

Erring on the side of exclusivity and, even, elitism has its purposes for the organization’s executives. They want the disaffected to feel that it’s better to be on the bottom of their current organization than to be anyone else. The “we never hire B players” narrative helps offset the cognitive dissonance of inhabiting an organization that won’t do the least to help them, and justifies overt cultural toxicity as “tough love”. That sort of thing can hold an organization together, for a while, when it faces a state of decline. However, is it a sensible way to grow? Does it make the organization better and, much more importantly, does it make for an organization that makes its people better? Probably not.

Street fighting, HR, and the importance of collective action.

Street fights

Street fighting is a topic on which a large number of men hold strong opinions, although very few have been in a true fight. I haven’t, and I hope never to be in one. Playground fisticuffs are one thing, but for adults, street fighting is far too dangerous to be considered anything but a terrible idea. It’s not likely to happen, but a punch from an adult can kill. The exact mechanics by which punches to the face incapacitate aren’t fully understood, but rotation in the neck (constricting blood vessels) seems to be a culprit, and the forces involved in a proper face punch are enough, with the right conditions, rupture blood vessels in the neck and head and end a life. A person falling and hitting the ground can do it, too.

Anything before age 16 doesn’t count. Martial arts sparring doesn’t count. Boxing doesn’t count. Fight clubs don’t count. Those are a lot safer. In a real fight, you typically don’t know your opponent. If he wins, he might kill you (intentionally or otherwise) once you are on the ground. He may have a weapon and, even if he doesn’t, he can kill you with a few kicks or punches. Losing means you’re likely to end up in the hospital (and possibly dead). Winning means you have to appear in court, possibly for murder. Either way, it’s not a good place to be. If there are bystanders, the loser faces humiliation but probably won’t die. If there are none, it is up to the one who wins the fight, and unintentional (or intentional) deaths from punches and kicks happen all the time.

The moral bikeshedding around fistfighting (and the actual physical risks of it) are discussed in this analysis of the Trayvon Martin case. Is George Zimmerman a huge asshole and a probable racist? Absolutely. Should he have followed and harassed a 17-year-old? No, not at all. Is George Zimmerman a good or admirable person? Clearly not. Was Zimmermann in mortal danger during that fistfight? Yes. He was on the ground, being punched, which alone puts his life in danger. (“Ground and pound” constitutes attempted murder in most jurisdictions.) He had a lethal weapon and, if he lost capacity, he’d also lose control of the weapon. Zimmerman’s wrongdoing was following a stranger in the first place– but not firing a gun in “just a fistfight”. When the opponent is a stranger and there is no one to break up the fight, there is no such thing as “just a fistfight”.

Fistfights (and armed confrontations) aren’t like what people see in movies or on television. Some notable differences are:

  • in most, the loser is incapacitated within a few seconds. One punch can do it, and the element of surprise (that is, being the one to start the fight) confers a huge advantage.
  • fighting is exhausting and most people will be winded (and vulnerable) inside of 15 seconds. Fights become remarkably more dangerous at this point, a common cause of unexpected death being falls after a decisive punch.
  • it’s very difficult to get up when grounded, especially if one has taken several blows to the face or head.
  • an incapacitated opponent is easy to kill, either with continual punching, kicks to the head, or a stomp to the head or neck. Most fights are broken up before that can happen, but unexpected deaths (even from a single punch) occur, sometimes hours after the fight.
  • if there are two or more opponents, fighting skill and strength typically won’t prevent a very bad outcome. Two-on-one is dangerous.
  • most untrained people, when attacked, will panic. Between the short duration of typical fights, the incapacitating nature of blows to the face or head, and the effect of surprise, that initial second or two of shock is enough to cause them to lose the fight.

Knowing all this, I also know to avoid getting into fistfights. I might know more than most people about them (because I’ve done my research) but I won’t pretend to have any idea how I’d perform. It’s not worth finding out.

Enough about fistfighting, though. It’s not that interesting. I just wanted to bring it up, because it’s something that men think they know a lot about, and they tend to underestimate the risks. There are a lot of people who think they know what they’d do in George Zimmerman’s position (panicked, mounted, having sustained several punches). Most of them don’t. They haven’t been in a fight since junior high, and those don’t count.

“I would…” Stop right there. You don’t know.

Let’s talk about organizational life, on which I’ve shared a lot of opinions.

Ask a software engineer in Silicon Valley for his opinion on collective bargaining, and you’re likely to hear a negative response. Unions have been targeted for negative publicity for decades and have a reputation for mediocrity and corruption. “I don’t need no stinkin’ union!” Your typical 25-year-old engineer probably hasn’t been fired from a job he wanted or needed to keep (a summer job doesn’t count). He’s probably never faced financial pain or stress on account of a bad job outcome. If he needs to negotiate a severance (or, a more delicate task, an agreed-upon reference) from an employer unwilling to budge, he probably has no idea what to do.

As with fistfighting, most people have an alarmingly precise image of how they’d get out of a bad situation and, for the most part, they don’t know.

“If I were in that grapple, I’d grab his wrist and bite down, then drive my elbow into his balls, then knee him in the head until he gave.” (No, you wouldn’t. You’d be panicked or confused, having taken several punches, and struggling to stay conscious.)

“If I were in a two-on-one fight like that, I would…” (Sorry, but in a two-on-one fight against capable, adult opponents, you’re fucked.)

“If I were put on a PIP, I would…” Same principle. If you’ve never been in a real fight, you don’t know.

Companies have trained fighters on staff, between their attorneys and HR. They have hard fighters who’ll insult and belittle you, and soft fighters who’ll pretend to take your side, while taking notes that can be used against you. If the company wants you in a two-on-one, you’ll face that: your manager and HR, or your manager and his manager. You basically can’t say anything in a two-on-one meeting. They will plan the meeting beforehand together, decide on “the story” afterward together, and (most likely) you’ll have no credibility in court or internally. If the meeting is adversarial and two-on-one, say as little as you possibly can.

In a police interrogation, you’d have the right to have your attorney present, and the right to remain silent, and you really want to exercise those rights. Watch this incredibly convincing video, backed by decades of experience, if you have doubt on that matter. What about a PIP meeting, which comes unannounced? On Tuesday, your boss was congratulating you on your work. You were an employee in good standing. On Wednesday, you’re told in the middle of a 1-on-1 “not performing at your level”. You were ambushed; there was no sight that this was coming. That corner you cut because your boss told you to do so is now being cited as an example of the low quality of your work. Most people think they would immediately fight intelligently, with the same confidence as applied to fistfights. Not so. Between the initial panic (especially if the person has financial needs) and intense emotions related to betrayal, it’s going to be really hard not to shit the bed when under a PIP ambush. And, as with a fistfight, it’s really easy to lose quickly. Raise your voice? You’ll probably be fired “for cause” because of “threatening behavior”. Attempt to amend the PIP’s factual inaccuracies? (There will always be inaccuracies in a PIP and they’re intentional. Those documents are supposed to piss you off because about 1 in 5 will lose his cool, thereby firing himself on the spot.) That might be construed as insubordination.

HR is probably present in meetings with management, from that point forward. The reason put forward to the PIPee is to protect the employee against managerial retaliation, and that’s complete bullshit. HR is there to corroborate management’s version of the story (even if management lies). Nothing that the employee says can improve his case. As with a fistfight, two-on-one means you’re probably done. Avoid it if you can.

In one way, it’s more perilous to be under PIP ambush than in a police interrogation, though. In the latter, one has the right to be silent and to call in a lawyer. In a PIP meeting, the rules aren’t clearly defined. Is an employee who refuses to answer a manager’s question guilty of “insubordination”, allowing termination on the spot? Can the employee be fired for refusing to sign the PIP “until I talk to a lawyer”? (That will be noticed.) Can the employee turn down an “independent” HR party’s meeting request “to hear your side of the story”? (Don’t fall for this.) Is the employee guilty of insubordination if he shares, with other employees, that he’s under a PIP, and voices his supposition that the decision to place him on it was political? At-will employment is complicated and undefined in many cases, and the answers to these questions are, “no one knows”. The company will terminate (once a PIP is shown, the decision has been made and only a change in management can reverse it) when it feels it can do so with minimal risk and cost. Some companies are aggressive and will use anything that is said in a PIP or HR meeting as cause to fire without severance. Now, at-will employment has a lot of serviceable corner cases (despite what employers claim) but is it worth it to launch a lawsuit against a deep-pocketed adversary? For most people, probably not. And lawsuits (again, like fistfights) are another form of combat in which an untrained person has no idea what to expect, and is at a disadvantage. Say the wrong thing, and it will be used against you. Even if you “should” win because you have the space or superior ability, you can lose in seconds.

With PIP meetings, management has had time to prepare, and the employee is ambushed. That unfairness is intentional. It’s part of the design. Same with the two-on-one intimidation. In a PIP meeting, silence will be presented as a non-option. Even though this is illegal, most employers will claim that not signing the PIP will lead to termination (record this conversation on a cell phone if you can; but if you’re not unusually calm, there’s a low chance that you’ll remember to do this). They can bring anyone they want into the room, but you almost certainly won’t be allowed to have an attorney or representative present. It’s unfair, it’s shitty, and you need to have a plan before it ever gets to that. Your best option is to say, “I need to go to the bathroom”. Take time, calm down, and possibly call a lawyer. If you return to the PIP meeting 20 minutes later, so be it. They can wait.

Macho self-reliance

No amount of self-defense training will make it safe to get into a street fight. The odds may improve, but it’s still an inherently dangerous thing to do. Knives aren’t good protection, being much harder to control in a fight than one might think, and inviting other weapons such as guns. Speaking of guns, most people wouldn’t know what to do with a gun in a situation of actual danger. Many would think that, with a gun against four unarmed assailants, they’d be able to emerge the winner. I wouldn’t count on that.

All that said, there are plenty of people (mostly men) who believe that, because of their martial arts training or because they possess a weapon, they can safely go to places, and engage in behaviors, that make fistfights common. They’re wrong. The issue is that people wish to identify with the winner in any conflict. “I would never end up on the ground like that.” They overestimate their performance in the face of fatigue, panic, confusion, or under time pressure. Until something bad happens to that person, many people assume it never will. “I’d never be put on a PIP, because I’m good at my job”. That’s wrong, too. True low performers are usually eased out through other means. PIPs are generally used to sucker-punch a politically-targeted high performer, and they work. Plenty of people shit the bed the first time they see one.

In the world of work, this macho self-reliance is seen in the resistance of many workers to any sort of protection. You hear this one a lot from software engineers: “I wouldn’t want to work somewhere where it’s hard to fire people.” I’m sorry, but that’s a bit ludicrous. It should be hard enough to fire people that the politically unlucky still end up with a decent severance, and hard enough that people who fit poorly with their first project are given at least one more chance.

Let’s talk about the “10x engineer”. That effect is real. It’s not only about natural ability, so it’s not the same people who’ll be “10x” in every single context. Motivation, project/person fit, political position (those who write code and make decisions will always be more productive than those who read code and are downwind of decisions) and domain-specific expertise all apply. To understand why, consider the Gaussian bell curve, which emerges as random variables compound additively. In most human affairs, though, they compound multiplicatively, producing the “fat-tailed” lognormal distribution. Sometimes, there are knock-on effects that produce an even fatter-tailed power law distribution.  (If this all sounds like jargon, the takeaway is, “outliers are more common than one would think.”) Consider a world in which a new employee’s productivity is a function of the outcome of a 6-sided die, like so:


| Die |  A  |  B  |
-------------------
|  1  |   0 |   4 |
|  2  |   9 |   6 |
|  3  |  10 |  10 |
|  4  |  10 |  20 |
|  5  |  11 |  40 |
|  6  |  11 | 100 |

In scenario A, average employees (10 points) have job security, because even at that point, they’re above the mean productivity (8.5 points) of a new employee. Even the noticeably below average employees are OK. On the other hand, in Scenario B, the mean is 30 points, which means that the mediocre ’3′s and ’4′s (10 and 20 points, respectively) should be fired and will be, even if it’s not their fault. In practice, it doesn’t workout quite that badly. Firing average employees is bad for morale, and the “10x” effect is as much about motivation and purpose as it is about the individual. But we can see, from a theoretical basis and considering the convex nature of software development, why tech companies tend to have such mean-spirited management practices. From their perspective, they’re in the business of finding and exploiting 10x-ers (who won’t be paid anything remotely close to their value, because they’re lucky to still be employed) and anyone who seems not to be a 10x-er should be tossed back into the sea.

Closed allocation tech companies, one notes, are notoriously awful when it comes to internal mobility. This is a severe ethical issue because internal mobility is promised almost inherently by big companies. It’s the one advantage large companies have over small ones. Yet, most technology companies are set up so that median performers are practically immobile (unless their projects are canceled and they must be put somewhere). Headcount limitations and political intricacies (one manager not wanting to upset the other) arrange it so that middling and even average-plus performers can’t really move anywhere. The fact that there are political externalities to deal with, alone, makes them less desirable to the target team’s hiring manager than a fresh recruit from outside the company. Stars generally are worth fighting a broken transfer system to attain, but they generally don’t want to move, because they have a gravy train they’d rather not stop.

Most software engineers think too logically and will take basically reasonable premises (“low performers should be fired”) to unreasonable conclusions (“performance reviews should be part of the transfer packet”). This allows technology companies to abuse them, taking advantage of their just world delusion and rugged individualism. When very real abuses are targeted toward those around them, they fail to perceive that such things could ever happen to them. “I’m a rock star coder. I’ll never be put on a PIP! If I were, I’d just work weekends and show the boss he’s wrong!” This is like claiming that knowing a couple jiujitsu throws makes it safe to get into bar brawls. It’s just not true.

Do we need unions?

Originally, I said no. When I said that, to be frank about it, I didn’t know what the fuck I was talking about. I got professions right, but I had a defective understanding of what labor unions actually do and why they are important.

I’m not ready to come down on either side of that question. We also don’t want to see the seniority-bound nightmare of, say, the airline pilots’ unions. Also, uniformity in compensation begets mediocrity on both sides and we don’t want that; the good news is that writers’ and actors’ unions seem not to destroy the upside in pay for those people. Hollywood’s labor pool, including celebrity actors, is unionized and hasn’t suffered in quality or compensation for it. Professional structure doesn’t necessarily lead to mediocrity.

However, we need collective bargaining. We need the right of a software engineer to have an independent representative, as well as legal counsel, in the room when in hot water with management (to prevent those “shit the bed” PIP ambush scenarios). We need protection against political terminations, such as for revealing salary information (the general prohibition offices have against that isn’t for anyone’s benefit but their own) or committing the overperformance offenses (doing a job too well, and embarrassing others) typical of engineers. We need to be part of a political body that corporate management actually fears. When we act in good faith against the interests of our employers (say, by revealing abuses of power) we shouldn’t have to do it alone. We also need to have the right to have those contractual issues that are embarrassing to negotiate for oneself (severance, health accommodations, privacy) negotiated for us by more experienced parties. We need automatic legal assistance in questionable terminations, and automatic work-stopping shutdowns (strikes) against any employer who resorts to a negative reference. We need sleazy and unreliable “back channel” reference checking to be abolished, with employers who engage in or allow it being sued or struck into oblivion.

Right now, we get none of this, and it’s a total fucking crime.

That delusional programmer self-reliance (“I know how to handle myself in a fight”) allows employers to isolate “troublemakers” and pick them off, one by one. It allows them to negotiate salaries and conditions down, brutally, due to asymmetric information and broken, reputation-driven power structures in which even six months out of traditional employment can ruin a person’s life. It allows stack ranking and closed allocation, which any labor body with self-respect would fight back against.

Because of our nonsensical self-reliance, when we do fight, it is usually an individual acting alone. Employers can easily ruin the reputations of isolated individuals, and few will protect a person thus disparaged. Consequently, those battles are typically ineffective and humiliating to the fighter. The conclusion of the workers is that management simply can’t be fought. Yet those same people believe that, through hard work or some notion of personal “merit”, they’ll never face political adversity, unfair terminations, or humiliating, destabilizing processes such as PIPs. Like armchair street fighters, they don’t know what the fuck they are talking about.

Collective strength

Street and bar fights are depressing, illegal, stupid, and dangerous. Your average person would have no idea how to respond in a sudden, unexpected assault, and be completely at the mercy of the attacker. Others who could assess the situation would have a chance to interpose, but the victim would have lost the fight by the time the initial shock wore off. The good news is that such things are uncommon. Most people haven’t been in a fight since high school, if ever. Why? In public spaces, attacking another person is dangerous and generally a terrible idea. One might get beaten up oneself, especially if others interpose, and jail time is likely. When it comes to physical violence, there’s an understanding that, while rare, bad actors do exist and that it’s worth it to protect a stranger against an attack, if one can. People will often defend each other, which makes the costs and risks of assault sufficiently high that it’s a rarity.

In the workplace, we don’t see this. When a good employee is served with a PIP or fired, nothing really happens. People live in such fear of management that word of the unjust termination is unlikely to travel far, and even more unlikely to have any effect on the company. Those who oppose a company’s management in any way, no matter how trivial and even if it is accidental, are isolated and embarrassed by the organization. If it really cannot afford the image issues associated with a clearly political demotion or termination, it will simply assign him untenable work, interfere with performance, and render it impossible for him to do a good job, making the eventual outcome appear deserved.

The result is that sudden, unpublished assaults are common in the corporate world, sometimes because a person falls into an unknown political trap and winds up in a management-level grudge, sometimes because the organization must protect unrelated interests, and sometimes for no reason at all. They are rarely talked about. The person is isolated and either goes silently, or is humiliated. Opposition to the organization resulting from his treatment will never happen. In light of the severe (and unreasonable) stigma placed on employees who “bad-mouth” ex-employers, he can’t sue or publicly disparage that company without risking far more than he should ever have to put on the line. No one has the individual employee’s back, and that’s a shame.

Software engineers might be the worst in this regard, because not needing support is taken as a badge of pride, as seen in tech’s celebration of reckless firing, punishing work conditions, and psychotic micromanagement in the name of “agile”. “I don’t need no stinkin’ rights. Two fists are all I need.” That just makes no sense. It renders the individual programmer (a person with skills for which demand is so high that, if we acted collectively, we could really improve things for ourselves) easy to isolate, exploit, and humiliate if he even attempts to get a fairer deal.

The enemy, and this is especially a problem for software engineers, is delusional self-confidence. People feel a lot safer than they actually are, and to communicate the truth of one’s lack of safety is taken as admitting weakness, which allows the bad actors to isolate their targets easily. This prevents non-managerial professional groups (such as software engineers) from acting collectively and overcoming their current disadvantage.

Meritocracy is the software engineer’s Prince Charming (and why that’s harmful).

One of the more harmful ideas peddled to women by romance novels and the older Disney movies is the concept of “Prince Charming”, the man who finds a young girl, sweeps her off her feet, and takes care of her for the rest of her days. It’s not a healthy concept, insofar as it encourages passivity as well as perfectionism in mates. But it also encourages women to make excuses for bad (and often abusive) men. Because the archetype is so unreasonable, men who can make themselves seem to fulfill it are the manipulative and sometimes abusive ones, not genuine good (but flawed) men. I’d argue that software engineers have a similar Prince Charming.

It might begin as a search for “a mentor”. Savvy software engineers take knowledge and favor from multiple people, but every Wall Street or Silicon Valley movie showcases a mentor/protege relationship as the path to success. Meet this magical person, and he’ll take care of your career from there on out. That doesn’t exist for most people, either, and most software engineers learn that around age 25. Their counterreaction is to develop a bizarre self-reliance in which they start refusing help, wanting to work alone, and denigrating those who advance their careers based on “politics” or “connections”. Having too much dignity to wait for a magical mentor to rescue them from mediocrity, they insist on their new Prince Charming, an interpersonal force that will recognize and elevate talent: meritocracy.

The problem with meritocracy is that every organization claims to be one, yet almost all organizations are deeply political. Software engineers are not a subtle breed, so I must imagine that they imagine most non-meritocracies perceive themselves as such, and admit so much, and that’s clearly not true. Oil companies, banks, startups and dysfunctional academic bureaucracies all have this in common: they believe in their own meritocracy. Otherwise, they wouldn’t be self-consistent and stable. “We’re a meritocracy” means nothing. And what is “merit”? Organizations make promotion decisions not to recognize some abstract principle of “merit”, but on what is perceived to be in the short-term, narrow interest of the organization. It’s not what software engineers mean when they use the term merit, but one could argue that political acumen is organizational merit. The people who are promoted in and end up dominating organizations are… those most able to convince organizations to promote them, whether through delivering objective value or by trickery and intimidation. It’s a self-referential, Darwinian sense of “merit” akin to “fitness”. Darwinian fitness is neither a matter of good, bad, or anything other than the ability to self-replicate.

Of course, I know what software engineers mean when they say they want to live in a “meritocracy”. They want important decisions that affect their working lives to be made by the right people. The problem is that the ability to make good executive decisions is almost impossible to measure, reliably, especially on a timeframe that businesses would consider acceptable. Political machinations can happen, on the other hand, in split seconds. Saying something stupid in a meeting can end someone’s career, even if that person is, in general, a good decision-maker. It takes too long to select leaders based on the quality of their decisions, so organizations develop political side games that end up consuming more energy, time and attention (especially at high levels) than the actual work or purpose of the organization. Generally, this side game takes on the feeling of a war of attrition. Nonsensical pressures and busywork are added until people embarrass themselves out of contention, or their health fails, or they leave to pursue better options, leaving one person standing. Software isn’t different from that, with the long hours and posturing machismo and general disregard for health.

By believing in meritocracy, software engineers trick themselves into making excuses for awful companies and bad bosses that hurt their careers, destroy their confidence, and unapologetically exploit them. When they enter organizations, they tend (at least, when young) to want to believe in the self-professed “meritocracy”, and it’s hard to let such an idea go even in the face of adverse evidence. When these engineers are betrayed, it’s practically an ambush.

Older, savvier engineers know that few workplaces are meritocracies. In general, the claim of “meritocracy” is nothing more than a referendum on the leadership of the company. For this reason, it’s only in the midst of an open morale crisis (in which firing the obviously unhappy people isn’t viable because almost everyone is obviously unhappy) that one can admit to the organization’s non-meritocracy.

The expensiveness of it all

Software engineers’ belief in meritocracy costs them money and career advancement. By conflating their organizational position (low, usually) with personal merit, their confidence falls to zero. Computer programming, if marketed properly, ought to be “the golden skill” that allows a person unlimited mobility within industry. However, we’ve allowed the businessmen who’ve colonized us to siloize us with terms like DBA, operations, data scientist, etc., and use those to deny opportunities, e.g. “you can’t take on that project, you’re not a real NLP programmer”. As a class, we’ve let these assholes whittle our confidence down to such a low level that our professional aura is one either of clueless youth or depressive resignation. When they beat us down, we tend to blame ourselves.

Our belief in meritocracy hurts us in another way, in that we justify things being unduly hard on us. We hate the idea of political promotion. Perhaps, on first principles, we should. What this means is that engineers are promoted “confirmationally” rather than “aspirationally”. In HR-speak, confirmational promotion means that they’re given formal recognition (and the organizational permission to operate at the level they have been) once they’re already working at the level signified by the title. Aspirational promotion means that people are promoted based on potential, but this opens the door for a host of clearly political promotions. On paper, confirmational promotion is superior, if infuriatingly slow. (It requires people to blow off their assigned duties and to take unrequested risks.) Engineers, of course, prefer confirmational regimes. And what’s wrong with that?

Engineers don’t like to negotiate, they don’t like politics, and they’re against favoritism. Most have a proud self-reliance that would leave them uncomfortable even if personally favored. They’re also, in general, irreverent toward title as long as they believe they’re fairly paid. To them, confirmational promotion is right. The problem? Everyone but engineers is promoted aspirationally. Engineers need long, completed, successful projects to get bumped to the next level. What, pray tell, does it take to become VP of Product or Senior Manager as opposed to Manager, or to rise on just about any of the nontechnical tracks, in most tech companies? Absolutely nothing. There is no fucking magic there. You have to convince someone to “see something” in you. That is, you have to play politics.

To the engineer’s chagrin, playing politics comes easily for most ambitious people. It sure isn’t rocket science. Getting over one’s own moral objections is, for most people, the hardest part. The result of this is that nontechnical tracks, including management tracks that often cross over engineers, are characterized by easy aspirational promotion driven by favoritism and politics. The “meritocratic” engineering track is clearly much more difficult. There are people over 35, with IQs over 140, who haven’t made “senior engineer”, for fuck’s sake. (At a “mere” 125 IQ, you’re smarter than 97% of the nontechnical VPs at most tech companies.) It’s characterized by confirmational promotion, instead. And this is a point of pride for software engineers: it’s really hard to climb the ladder, because one is competing with the smartest people in the organization, and because while favoritism exists, political promotions are much rarer on the engineering track than on non-technical tracks (largely because promotions in general are rarer).

This is something that software engineers don’t really get. What do job titles actually mean in organizations? Companies will say that “Director” means one thing and “VP” means another, with some jargon about “the big picture” and a person’s responsibilities within the organization. The truth is that they mean very little, other than serving as political tokens that prove the person was able to get them. “Director” means, “he was able to negotiate a salary between $X and $Y from HR”. Not more.

Where it leads

If you ask an engineer whether he thinks he’s ready to be VP of Engineering or CTO, you’ll get a half-hearted, self-deprecating answer. “You know, I might be ready to lead a small team, but I’m not sure I’m at the VP/Eng level yet.” Cluelessly, he believes that “the VP/Eng level” exists objectively rather than politically. On the other hand, if you ask a nontech the same question, he’ll take it without hesitation. Even if he’s terrible at the job, he gets a generous severance (he’s a VP) and will fail up into a better job. The relevant concept here is the effort thermocline, or the level in an organization where jobs stop being harder with increasing rank, but become easier (although, more political). It can be politically difficult to get a job above the effort thermocline, but it’s ridiculously easy to keep it. At that point, one has power and credibility within the organization sufficient that one cannot, personally, fail due to a lack of effort.

Nontechs, except for clueless people in their 20s who haven’t figured out what they want to do, go into work with one purpose: to get promoted beyond the effort thermocline. That’s not to say that they’re all unambitious or lazy. They’re just realistic about how the game works. Even if you want to work hard, you don’t want hard work to be expected of you. If you’re an SVP and you show up for work every day and put in an honest effort, you get credit for it. If you’re a worker bee, you get nothing for your 8-or-more hours per day. It’s just what you’re expected to do.

Above the effort thermocline, promotion is political, and people stop pretending otherwise. When you get “into the club”, you’re permitted to speak frankly (and hear frank speech) about how the organization actually works. The issue with the engineer’s mind is that it clings to a belief in right and wrong. It’s moralistic. It struggles to accept what people really are. Engineers don’t want to contend with the basic fact of most organizations, which is that they’re politically corrupt and dysfunctional, because most people are lazy, greedy, and weak. I’d likewise argue that this is connected to the low levels of acquired social skills in people like software engineers. It’s not a neurological disability for most. They never learn to read cues beyond a subconscious and juvenile level, because they hate what they see, which is that humans are mostly defective and that many are horrible.

Engineers don’t like the concept of the effort thermocline, or of political promotion in general. As much as they can, they’d refuse to have it within their ranks. I’d tend to side with the engineers. Who wouldn’t, from first principles, prefer a meritocracy over a political rat’s nest? The business responds by turning off political promotions for most engineers– while the rest of the organization continues to get them. The result is that, while they start off well in terms of pay and occupational dignity, engineers are being surpassed by the nontechs (who gleefully accept political promotions and feel none the worse for it) by age 30 and, by 40, are undervalued and way underpaid relative to their worth to their companies.

Engineering tracks in organizations are notoriously title-deflating, in comparison to the rest of the business world. Most software engineers would be appalled by how little talent and work ethic are required to become a non-technical VP at even the most esteemed tech companies. Many of these people are lazy (11-to-3 with 90-minute lunches) and just plain dumb. And by dumb, I don’t mean programmer dumb (understands the theory behind neural networks, but has never put one in production) but actual shame-to-the-family, village-idiot stupid. You know how towns in the Midwest used to bus their “defectives” to San Francisco in the mid-20th century? Well, so does the corporate world, and they end up as nontechs and upper management in tech companies.

Conclusion?

Meritocracy is the Prince Charming of the software engineer. It doesn’t exist. It never has, and it never will. Some have asked me to comment on recent HR issues occurring at open-allocation technology companies. The only thing I can say is that, yes, open-allocation companies have serious political issues; but closed-allocation companies have those same issues and more. Open allocation is strictly superior, but not a panacea. When there are people, there is politics. The best an organization can do is to be fair and open about what is going on, and hope to achieve eventual consistency.

Every organization defines itself as a meritocracy, and most engineers (at first, until they are disillusioned with a company) will tend to believe it. They aren’t stupid, so they don’t believe their companies to be perfect in that regard, but they (cluelessly) tend to believe that meritocracy is a core value of the leadership. Almost never is that the case. “We’re a meritocracy” is code for, “don’t question promotions around here”.

The Prince Charming delusion of meritocracy is dangerous because it leads people to make excuses for bad actors. Every company has to lay off or fire people, and frequently these choices are made with imperfect information and under time pressure (one large layoff is less damaging to morale than several small, measured, layoffs) so often the wrong people are let go. A self-aware organization understands this and lets them go gracefully: with severance, outplacement assistance, and positive reference. A delusional “meritocracy” has to cook the books, create psychotic policies that impede internal mobility for everyone, and generate useless process in order to build phony performance cases. In practice, just as many people are let go as in established (and less delusional companies) but their reputations have to be demolished first, with bad project assignments and hilariously disingenuous “performance improvement plans“. Personally, I’d rather see the honest, times-are-tough, layoff than the tech company’s dishonest “low performer initiatives”, much less the permanent (and destructive) rolling layoff of stack ranking.

The biggest casualty, however, of the typical engineer’s head-in-sand attitude toward political promotion is that they never stop happening to everyone else. Engineers just make themselves ineligible. Engineers want promotion to be confirmational (that is, resulting from demonstrated merit) rather than aspirational (that is, based on potential and, therefore, subjective, personal, and political). The problem with this is that, after 10 to 20 years, most engineers haven’t been able to demonstrate even 20% of what they’re capable of. They kept getting crappy projects, were never allowed to finish anything, were rushed to produce work that broke under strain, and their lack of finished accomplishment (due to political forces often not their fault) left them ineligible for promotion to more senior roles, but too old to even pretend in the junior roles (hence, the age discrimination problem). After that gauntlet of false starts and misery, they’re still answering to nontechnical people and executives who had the benefit of aspirational, political promotion. By refusing to play politics and believing in the false god of meritocracy, they deprived themselves of the full spectrum of causes for advancement. Politics, however, went on regardless of whether they believed in it.

This false meritocracy is very clever when it comes to reinventing itself. Few expect a large company like, say, Alcoa or Exxon-Mobil to be a meritocracy. Engineers have figured out, as a group, that “big companies” become political. The response? Startups! Venture capital! The actual result of this has been to replace well-oiled and stable (if inefficient) corporate non-meritocracies with the mean-spirited and psychotic non-meritocracy of the VC-funded ecosystem and the feudalistic reputation economy that the leading investors, through collusion, self-dealing, and note-sharing, have created. The cheerleading of intellectually charismatic figures like Paul Graham and Marc Andreessen has managed to create a sense of meritocracy in that world, but belief in those idols also seems to be waning, and I’m proud to say that I contributed to that loss of faith.

If meritocracy is impossible, what should we do? As individuals, we need to learn to fight for ourselves. It’s not undignified or desperate or “pushy” to look out for our own interests. It’s what everyone else is doing, and we should get on board. As a collective, we need to have honest introspection on what we value and how best to achieve it. Perfect meritocracy within any organization is impossible. It is good to strive for that, but bad to believe it has been achieved anywhere. Eventual consistency and technical excellence are achievable, and we should aim for those.

Before we do anything, though, we need to learn how to fight for ourselves. Bringing frank knowledge to the good, in that fight, is what I’ve been striving to do all along.

The right and wrong way to lie in business, Part 2

In the previous essay, I opened an honest discussion of the ethics and practice of lying in business. I argued that it is better to tell one large-enough lie than a hundred small lies, and that the best lies are those to establish social equality in spite of an existing trust-sparse environment. That is, you lie to flip one’s bozo bit to the “off” position, but not to go any further and certainly not in an attempt to establish superiority over the other party. I also argued that one should aim to lie harmlessly. People who spread malicious gossip ruin themselves as much as their targets. They become, figuratively and literally, bad news. Now I’ll cover a third principle of lying in business: own the lie.

3. Owning the lie.

Lies, even ethical ones, can be corrosive to relationships. People have a visceral aversion to being lied to. When you lie to someone, you’re making the statement that you don’t believe the person can be trusted with the truth. In reality, most people can’t be trusted with the truth. The truth is too complex, they’ll only understand it partially, and often conclude against you based not only the truth but on their own superficial, limiting prejudices. However, it’s not socially acceptable to tell people that you can’t trust them with the truth. You can’t just say, “I’ve inflated my job titles because we barely know each other, and I’m afraid that you’ll write me off if you know that I was only Director, not a VP”. This means that you never want to be caught lying to someone. It’s less damaging if you tell the lie to a group that they happen to be a part of.

Lying to someone is corrosive because people take it personally. This means that, when you decide to lie, you have to be comfortable telling the lie to everyone. Moreover, you have to act, going forward, as if the lie were true. There’s a saying in creative writing, most often applied to poets, that the bad ones borrow and the good ones steal. Incompetent people lack the originality to deviate from a found gem, so they replicate it in a way that is overly literal and clumsy. The adept creators, on the other hand, know that very little in the world is entirely original, so they willingly take ideas from disparate sources and merge them in a way that is uniquely theirs. A similar rule applies to lying in business: steal, don’t borrow. If you’re going to lie about something, you must be prepared to continue lying about it until the end of time. People are unable to detect truth in others, so they fixate on consistency (which is hypocritical, because human beings are deeply inconsistent) instead. The result of this is that, for any lie you intend to tell, you must make sure it is consistent with existing written facts, and live in a way that continues to be consistent with it.

Things that are inconsistent put people ill-at-ease. For example, Wall Street has a negative reputation among the public and, while some of that’s earned, much of it’s not. People hold a negative view of markets in general, and a large part of that is that they appear inconsistent. The “fair value” of a corporation can rise or drop by a billion dollars in a day for no apparent reason. (More accurately, there is a trade-off between availability, efficiency, consistency at a given time, and consistency across time. Markets favor the first three and abandon the fourth.) To people who want everything to be “fairly” priced, it seems like something shady is going on. How can it be that the “fair value” of something changes so erratically? In reality, nothing shady is (at most times) going on; it’s just that the platonic “fair value” doesn’t exist. To the general public, however, this feels like inconsistency, and hence there are complaints about “price gouging” when market forces drive the price of gas to $4 per gallon.

Of course, there are bad things that happen on markets. There are manipulators, dishonest schemes, and moral hazards pertaining to risk (especially when derivatives are used) all over the place. Markets also do a great job of local optimization (what is the best price for butter?) but fail at achieving equally important global targets, such as avoidance of poverty and social breakdown, enforcement of human rights, protection of the environment, and universal healthcare. Much that happens on Wall Street deserves to be despised, and I don’t intend to claim otherwise, and much of the American corporate system is far from a free market anyway. I simply purport that the visceral dislike humans have (and have had, for centuries) for market mechanics has little to do with the actual abuses, and is more a result of an overreaction to their obvious (but not morally objectionable, since supply and demand do change, sometimes rapidly) inconsistency. Something that is constantly changing (such as a claimed “fair price”) is distrusted. That applies to human beings as well. An intelligent person changes his views when they discover new information, or just because they think about a problem in a different way, but a politician whose ideology evolves is called a “flip-flopper”.

So what does it mean to own a lie? Many people, when they tell a lie for the first time, get petty enjoyment out of it. “I got away with it!” Don’t fall for that petty “rush”. It’s actually really easy to get away with most lies. That’s why the consequences for being caught are often so disproportionate to the offense. Many companies, at least by their outward claims, hold a zero-tolerance policy toward lies on resumes because, in fact, 95 percent of those lies are never caught, requiring the penalty for those who are caught to be at least 20 times the possible gain. (Moreover, in that other 5 percent, those are usually people who are going to be fired anyway, and put under re-investigation because the company wishes to renege on a contractual executive severance, or to somehow extort the caught liar.) Getting away with a lie is actually the typical, default, outcome. It shouldn’t be celebrated. One definitely shouldn’t take in the petty thrill of “getting one over” on someone. Some people get addicted to that thrill and become the purveyors of small or harmful lies: the blowhards and gossips. That’s useless, because it’s so easy to get away with lies.

When you decide to lie, to improve your career or reputation, you’re not “getting one over” on anyone. You’re taking a non-truth and making it true. You will forever act as if it were true. The people you’ve lied to haven’t been defeated or bested. You’ve had no win against them. You changed the truth independent of them. You, then, told that truth to them. You related to them as equals, not as if they were gullible inferiors.

If the above sounds vaguely psychotic, it’s not my intent. Yes, if you’re going to use a lie, you must own it. For example, if your lie is that a previous employer placed you in its high-potential program, you have to stop complaining about that company and how unfair the place was. It’s best to convince yourself that the lie was true, because it has become the new truth. Now, if one began owning delusions, one might tend toward (if not psychosis) pathological narcissism. That’s clearly not good. Instead, I would argue that one should only tell ownable lies. That restricts the scope of what one can lie about, which is generally a good thing. Lying is somewhat of a surgical art. You have to change one aspect of “the working truth” without creating inconsistencies or having too many side effects on unrelated “working truths”. It’s far from easy to do it right.

I initially said to “lie big”, and I stand by that. By “big” I mean effectively and tactically. The social costs of lying (even if not caught) are severe enough that one should not lie without an agenda. A hundred small lies become impossible to keep up. That one should usually lie harmlessly, and restrict oneself to ownable lies, push downward on the scope of reasonable lies and keep a person from lying too big. Some people lie about the college they attended. That’s a terrible idea. Faking a four-year experience, to one who has actually had it, is pretty much impossible. If the lie can’t be owned, then don’t tell it.

What is the truth? How can it be “modified”?

The concept of truth is much more complicated than people like to admit. “It is 39 degrees in New York City.” Is that a true statement? As of 8:16 am on April 6, 2014, it is objectively true (at least, according to The Weather Channel). At other times, it will be false. There is nothing about New York that makes it inherently 39 degrees. That’s a property of it at a given time, and the world on April 7 will be nearly indistinguishable (apart from trusted written record) from one in which New York’s temperature was a different number. “In Inception, Cobb dreamt the entire thing.” Is that true? People debate it, and while I’d rather not spoil the movie, I think the evidence points a certain way on that. But is it a fact? No, it’s a conclusion one draws from presented fiction. There’s a book (I won’t name it, because that would spoil it) where the titular character discovers that she’s a character in a book, written for a woman (call her Helen) who’s “real”. Of course, Helen’s also a character in a book, so “Helen is real” is not a truthful statement about reality about intent. The author intends her to be real within a universe that is fictional. Ah! But can anyone other than the author speak to intent? And couldn’t that author truthfully (or, at least, consistently) represent his intent in myriad ways?

You should never lie in a way that contradicts an objective fact. This should be obvious. Don’t cook the books; you will probably get caught. The good news, for those who need to lie, is that most human behavior and judgment (especially in business) is based on pseudofacts, which are much more manipulable. “Erica is good at her job.” “Stanley was formally recognized as a high-potential hire.” “Andrea does not get along well with the team.” “Jason was only promoted because he’s the boss’s favorite; Jason must have something on him.” All of those sound like factual statements, but are completely subjective.

Great minds discuss ideas, middling minds discuss events, and base minds discuss people. (Most minds are base, and great minds are base some of the time.) Ideas stand alone on their own merit and can be debated from first principles. The extreme of this is mathematics, where things are objectively true (within a specific formal system) or not. Even “controversies” within mathematics (e.g. the Axiom of Choice) pertain not to whether the axiom is valid mathematics (there is a valid mathematics with Choice, and a valid one without it) but to the subjective question of which of these equally valid mathematical frameworks is more useful and deserves more study. As for events, those stand in for facts in a more parochial but also more applicable way. “2 plus 2 is 4″ is a factual theorem that is always true, everyhwere. “The temperature in New York at 8:16 am was 39 degrees” is an event, or a piece of data, relevant to one place and point in time. We can reason about why the seasons exist, in the realm of ideas, and such explorations have informed humanity’s understanding of the solar system and, eventually, the cosmos; but if we want to know what to wear for a trip, we’re better off with empirical data (events) pertaining to the weather we can actually expect. Further down the line, we have the business world, still driven by emotion far more than by data. There, judgment of people (the ultimate bike shed) outweighs anything else, and one should do whatever is necessary (lie, intimidate, cajole, bribe) to make sure the relevant parties come down on the right side.

In the realm of ideas, a lie is an objective falsehood like “2 plus 2 is 5″. One should assume that those will always blow up, making the liar appear foolish. However, in the realm of events, lies can be inserted relatively easily. “At 8:16 am on April 6, 2014; the temperature in New York was 60 degrees.” That’s false, but it could conceivably be true. New York, in April, has cold days and warm days. Nothing contradicts it (although there are other, more reliable, readings that would call it into doubt, since New York isn’t known for microclimates). Even with that written record, it’s theoretically possible (if unlikely) that one observation point recorded a valid 60-degree reading while the rest were around 39. All that said, the realm of events has got to remain mostly truthful. Let’s say that the world of mathematics is 100% truthful. Events that are recorded as true in various databases (climate, physics experiments, business) are probably true 99.9999% of the time. Occasionally, there’ll be a ridiculous reading. When it comes to people, especially in business, it’s mostly non-truth that we call “reputation”: social-status-biased judgments that, while full of exaggeration and rumor, are used because they’re the best proxy we have. Not quite lies, not quite truth. Bullshit would be a good technical term. Most of the information we use to judge other people in the business world is bullshit: non-verifiable, non-truthful non-lies. “Sam left because he couldn’t hack it.” “Teresa wasn’t a team player.” “Bill was the obvious leader of the group.” “Mark only wanted to work on the fun stuff.” These statements are utterly subjective, but it’s their subjectivity (and their bullshittiness) that makes them so powerful. People are viscerally drawn to those of high status. Merit is something we invent because we want to believe we’re more than animals, and that our decisions are made from more of a high-minded place than they actually (for most people) are. Status is what humans judge each other by, and it’s almost all bullshit. Sam (above) left because his lack of pedigree had his superiors dropping low-end grunt work on him. Teresa’s high intelligence intimidated those around her and she was saddled with the “not a team player” epithet. Bill claims he was the leader of the group, and the rest were too meek to oppose him. Mark was an objective high performer but disliked for his political views, and “only wanted to work on the fun stuff” was the only charge that could stick, in the effort to damage his reputation. All of that stuff, above, is judgment of people (complex organisms, simplified with labels like “not a team player” or “high performer”) given false objectivity. One lies because one needs to fight it, and to “correct” unfavorable judgments of oneself.

False events and the new truth

To lie effectively, one has to operate in the realm of events, which is the world of middling (and practical) minds. In the realm of ideas, it is hard to lie, because bad ideas usually end in some sort of contradiction or failure. The judgment of people can’t be addressed directly, because it’s not socially acceptable to discuss, directly, what people are actually trying to figure out. Let’s say that you’re under attack. I’ll use, again, the case of a negative reference when seeking a job. Your ex-boss is saying that you were a poor performer and that he wouldn’t hire you again. What is the best counterattack?

  • A. “Well, he’s a jackass.”
  • B. “That’s because he’s a child molester.” (Assuming that’s a lie.)
  • C. “You know, that’s funny, because three months after I left, he called me begging to re-join his team. He even offered me a 20% raise.” (Assuming that’s a lie.)
  • D. “He never liked me, because I’m a Red Sox fan and he’s a Yankees fan.” (Assuming that’s a lie.)

The answer is, of course, C. But why is it C? Let’s eliminate the other three. Answer D violates “lie big”. It’s a small lie and it’s just not believable. There might be a few people who are so vested in sports fandom that they’d ruin someone’s life over it, but they’re rare and typically don’t acquire organizational credibility such as a management position. It’s a small lie. When you use a small lie as “the explanation” for something negative in your past, you lose credibility, because even if you may not have deserved the hit against you, you’re showing a lack of insight into what happened. So strike D, that’s a no-go. Answer B violates “lie harmlessly”. It’s understandable that one would be angry when facing a negative reference, and wish to ruin that person’s reputation and life. That might be a worthy project in its own right. However, the practical need at the moment is to recover from the accusation of poor work performance, not to damage the one making the claim. “He’s a child molester” doesn’t answer the question. It raises more questions. (How do you know? Why haven’t you reported him?  It’s too big of a lie, way too harmful, and doesn’t help you. His being a pervert doesn’t invalidate his accusation against you.

We’ve stricken the two obvious bad answers. What about Answer A, which is arguably the only truthful answer (non-jackasses don’t ruin their ex-subordinates’ careers, so I can call A “truthful” from first principles) among the four? Aside from the general prohibition against “bad-mouthing” ex-employers– that’s a prohibition that might not apply here (negative references put you squarely into atypical territory, and when you have to choose between your reputation and an ex-employers you always favor yours)– why does “he’s a jackass” fail you? You’re addressing judgment of people directly– too directly, in fact. That’s not socially acceptable, because gossip is so low-minded. You have to make it look like you’re discussing objective events. If you don’t have any, make some up.

Most of the judgment-of-people bullshit (to use the technical meaning of bullshit, which is a non-truthful non-lie, neither true nor false because the claim is of such low value that its truthfulness is undefined) can be subverted with the insertion of non-truthful events. Bad reference from an ex-boss? Repeat again: “three months later, he begged me to rejoin his team.” Bad performance review interfering with internal mobility? “I accidentally upstaged him in a meeting with his manager by having an idea that his boss really liked. He tried to take credit and, being loyal, I actually let him, but his boss still attributed it to me.” Fired from a previous job? “I left on amicable terms, and my manager has repeatedly said that the door’s still open.” Ex-boss said you’re “not a team player”? “Man, he told me not to work so hard because it was making the rest of the team insecure. I thought we were past that, but I guess not.” You can almost always recover from a smear, even when cloaked in false objectivity, by inserting non-truthful events (verbal conversations, with no record, are the best) into the stream. When you do so, you’re not “telling a lie”. You’re changing the truth. Those conversations, even if they never happened physically, now did happen. You make it a fact that your ex-boss begged you to rejoin his team, and your choice to remain with your new job (your professionalism) is actually why he’s smearing you. This makes the explanation for his smear against your performance much simpler than the complex array of things (typically, a months-long story that caused bad things to happen to a good person) that actually happened. It’s a mind-fuck, I won’t deny it. That’s why one shouldn’t lie often.

Ethics, past and future

I’ve put forward that there are good and bad liars. A “bad liar” could be the ineffective kind or the unethical kind. The ineffective ones are the blowhards. They may or may not get caught in specific lies, but they fail to achieve their desired effects. Seeking to elevate their social status through non-truth, they undermine their own credibility and become laughingstocks. Those who strive to achieve social superiority through lies usually end up that way. It’s much better to lie just enough to establish equality and basic credibility– that is, to overcome the prejudices that emerge in a trust-sparse system. Doing this requires that one’s lies simplify. The problem with blowhards is that they’re so in love with their own (exaggerated or outright made-up) stories that they litter the “claimed event stream” with complexity and lose credibility.

Let’s step away from the blowhards (really, they aren’t that interesting) and ask a higher-minded question. What differentiates the ethical liars from the unethical ones? This is a subjective matter (I’m sure not everyone will agree with my definition of ethical) but I think the crux of it is that ethical liars focus on fixing the past: making it simpler and cleaner so it goes down easier. They’re manicuring their own reputations and removing some hard-to-explain bad luck, but not trying to mislead anyone. On the other hand, fraudsters intend to deceive about the future. Con artists want their targets to believe in high-impact future events (specifically, financial returns) that simply aren’t going to happen. Ethical liars are making it easier for counterparties to make the right decision for both parties, and using non-truth to overcome the pernicious, lose-lose, inefficiency of a trust-sparse world. Often, simplifying non-truths about the past are necessary to overcome embarrassments that, trivial as they are, might disrupt the trust needed to build a future that is properly coherent and (paradoxically) more truthful than what would emerge if those non-truths weren’t there. Unethical liars, on the other hand, want their targets to make what are, for the target, wrong decisions. That is, I think, the fundamental difference. Ethical liars simplify the past to make the future truthful. Unethical ones want the future to contain even more untruth (specifically, untruth that benefits them).

It is bizarre that, in the judgment-of-people theatre of business, the best way to achieve truth is (sometimes) with a strategic lie. I don’t know how to resolve that dissonance. It’s probably connected to quite a few of the deeper philosophical questions of general human politics. That’d take at least another essay to explore.

Until then, go forth, beat the bad guys, and lie carefully.

The right and wrong way to lie in business, Part 1

There’s a New York Times article entitled “The Surprisingly Large Cost of Telling Small Lies”. According to it, the best strategy for success in business is never to lie. Not surprisingly, few people can get through even a short conversation without telling a lie. I don’t disagree with the premise that honesty is often the best approach to forming a genuine, long-term relationship. However, it wouldn’t be honest for me to give the advice that one should never lie in business. In fact, there are times when it’s the optimal approach, and even cases when it’s ethically the right thing to do.

It’s rare that someone will say, under his or her real name, that people should lie on their CVs or have peers pose as ex-managers on reference calls or otherwise misrepresent their prior social status. I won’t exactly go that far. If the purpose of your lie is to turn a truthful 90th-percentile CV into a pants-on-fire 99th-percentile one, you should usually spare yourself the headache and not lie. If you have an ex-boss who hates you and has cost you jobs with negative references, you probably should have a peer fill in for him. These are judgment calls that come down to a case-by-case basis, and I don’t think the general problem has a simple solution.

What I can offer are three principles for lying in business: lie big, lie harmlessly, and own the lie.

1. Lying big

By “lie big”, what I really mean is, “lie effectively”. The lie has to be big enough to matter, because unskilled and small lies will drag a person down with unanticipated complexity. You can easily paint yourself into a corner. We just don’t have, as humans, the cognitive bandwidth to keep up ten unrelated lies at the same time without becoming utterly exhausted.

The cost of a lie isn’t, usually, being caught. Perhaps 99% of the lies people tell to inflate their social status are never explicitly caught, but they can do damage on a subconscious level. Social interaction is a real-time problem, and the psychological overhead involved in keeping up a network of lies is often detectable. The lies themselves aren’t detected, and the conscious thought, “he is lying”, probably never occurs. However, the liar appears less genuine. Astute people will find him “fishy” or “sketchy”. He might seem like he’s trying too hard to impress people, or that he’s a “politician”. Nothing formally sticks to him, but he doesn’t warm hearts or earn trust. That is the most common case of the person who lies too much: never caught, but never really trusted. He’s a blowhard, full of himself, and probably doesn’t have the best motivations.

That, above, is the logical endpoint of too many lies. How to people get to blowhard status? Small lies. Pointless, minuscule lies that inflate the liar’s status but in a meaningless way, like cheating at a golf game. In sitcoms, these “white lies” blow up in some hilarious way and are resolved inside of 20 minutes (“oh, that Jack!”) In real life, they tend to just accumulate. People don’t like confrontation, and it’s more fun to egg the liar on anyway, so they prefer not to call the blowhard out on his shit. They’d rather watch him make a fool of himself. The only people who’ll do that for the blowhard are his best friends; but some people are so addicted to the petty thrill of tiny lies that they alienate everyone and have no friends. Then, they’re past the point of no return.

One big lie that achieves a strategic effect is infinitely superior to the cognitive load and social upkeep of a hundred little lies toward the same effect. Make the lie count, or don’t lie.

So, what are some good reasons to lie? This is going to sound completely fucked-up, but the best reason to lie is to earn basic trust (a technical term that I’ll define later). Now that I said something that sounds obnoxious, let me explain why it’s not. People lie, most of the time, for one basic reason: social status modulation. This establishes a taxonomy of lies that gives us four categories: (I) up-modulating status to equality, (II) up-modulating status past equality, or to superiority, (III) down-modulating status to equality, and (IV) down-modulating status to inferiority. I’m not going to focus on down-regulation here. Type III lies are usually harmless omissions, justifiable as social humility, and Type IV is sycophantic and rarely useful. So, let’s focus on the upward lies: types I and II. Type I lies are to establish equality, and those I recommend. If you’re an entrepreneur dealing with an investor who’s never been fired, then you’ve never been fired (even if you have). Type II lies are the lies of the blowhard. Avoid those. Once you are lying just to seem smarter, better, or more connected than the people you are lying to, you’re going to come under a hundred times more scrutiny. If you only lie to establish equality, the level of scrutiny is much lower, because to scrutinize your claims is to assert superiority, and people (even in positions of power) generally aren’t comfortable doing that.

So, the best reason to lie is to up-regulate one’s status to equality, and not beyond it. People who fixate on superiority become small liars. Rather than lying strategically, they’re so focused on being dominant at everything that they lie even when the stakes are petty, and eventually make fools of themselves.

That said, when is it right to lie? Examine your past, your job history, and reputation. Are you a social equal with the other party, and would you expect him to feel that way? You need not be more accomplished; he might be older or just luckier. You need not be richer. You do need to be a social equal. Figure out what that means in your given context. Next, are you looking to form a long-term friendship or a “weak tie”? If the former, try to avoid generating new lies. If you’re interested in forging genuine friendships, honesty really is the best policy. Weak ties have different rules. A weak tie is a tacit understanding of social equality and credibility. It’s only about what I’ve termed “basic trust”. You don’t get a lot of time in which to form (or not form) it. You’re going to be judged superficially. It’s not enough to be a person of merit; you have to look like one.

A theme that continually recurs around the question of honesty is complexity. Small lies generate a nasty complexity load. Even though you won’t be caught on specific lies– because if you’re a known blowhard, no one cares– you’ll start to lose your general credibility (basic trust). Astute people can practically smell the smoke of an overheated mind. Complexity is the devil. In software, it’s a source of bugs. In data science, it’s a source of “over-fitted” models with no predictive power. In politics, it’s a source of exploits and loopholes. In social interactions, it’s a source of general enervation. People throw their hands up and say, “I can’t figure this shit out”, and it’s just lose-lose. When you want them siding with you, they back away slowly.

So when is it the absolute right strategy to lie? Sometimes, the truth is too complex for people to handle. The lie might be simpler, and this might favor it, especially under the superficial judgments that form (or break) weak ties in business.

Take the biggest disappointment of your career, dear reader. Chances are, there were multiple contributing factors. Some were your fault, some weren’t. There were probably months of warning signs along the way. This setback or disappointment will be different for everyone, so let’s come up with a model example: a two-year-long “hero story” that still leads to a negative outcome, such as being fired. On the social market where weak ties are formed, are most people willing to hear a story that complex, and expend the cognitive energy necessary to come down on the right side? Nope. They hear the words “I was fired” and the “bozo bit” goes into the on position. Everything else becomes a story of a weak or unlucky person trying to justify himself. In these cases, it’s better to present a simple lie that goes down easy than the complex truth. It might even be more socially acceptable. For example, “bad-mouthing” an ex-employer is usually more disliked than telling a bilaterally face-saving story (that is, a lie).

This importance of weak ties and simplicity to the heart of it, which is the (above-mentioned) notion of basic trust. Basic trust doesn’t mean that a person is trusted in all things. Would you, as reader, trust me with a million dollars in cash? Probably not. However, you’re reading what I am writing, which means you trust that what I have to say is worth your time. Basic trust is the belief that someone is essentially competent and has integrity. The person is worth hearing out, and treating as a social equal. This is more bluntly termed the “bozo bit”, or “flipping the switch”. If the bozo bit is “on”, that person’s input is ignored. If it’s “off”, that person will usually be treated as a social equal, regardless of differences in rank or wealth.

Organizations can be trust-sparse or trust-dense, and tend to “flip the switch”, collectively, at once. Elite colleges are trust-dense, insofar as students generally trust each other to have valid intellectual input. Some people may lose that trust (because there are idiots everywhere, even at top schools) but new people start out with the bozo bit in the “off” position. There’s a basic trust in them. Most companies become trust-sparse at around 50 people. The way one can tell is to examine its attitude toward internal mobility. Formal performance reviews are already a sign of trust-sparsity, but when those become part of the transfer packet, the organization is stating that it only considers managerial input in personnel decisions. Trust sparsity is the rule, and non-managerial employees (i.e. those who haven’t been vetted and placed on a trusted white-list) have their bozo bit “on”. At a later point, organizations become trust-sparse even within the managerial subset, and begin requiring “VP-level approval” for even minor actions. This means that the organization has reached such size that even the managerial set exhibits trust sparsity, and only a smaller subset (those with VP-level titles) are trusted by the organization.

Trust sparsity is unpleasant, but something one must contend with. If you cold-call a company or send a resume without a personal introduction, you have to prove that you’re not a loser. One might find high-status arrogant people with shitty prejudices (“I don’t hire unlucky people”) abhorrent. Abstractly, I might agree with that dislike of them. That doesn’t mean they’re never useful. I wouldn’t want to have a meaningful relationship with a hiring manager who thinks anyone with a less-than-perfect career history is a loser, but he is a gatekeeper, and I might lie for the purpose of using him.

When should you lie in business? There is one good reason. You lie to “flip the switch” on your bozo bit. It’s that simple. In a trust-sparse organization, or the world at large, it often takes a reasonably big lie to achieve that. Lying by saying that you earned “Employee of the Month” in July 2007 won’t do it, because that’s one of those small lies that really doesn’t mean anything; you need affirmation that your previous company considered you a genuine high-potential employee. (You were placed in the semi-secret “high-potential program” and had lunch once a month with the CEO.) So lie big. Make the lies count, so you can make them few, and keep that complexity load down. Massage your past and reputation, if needed. Change a termination to a voluntary departure. If it suits your story, back-recognize yourself as a leader or a high-potential employee by the organization where you last were. Flip that bozo bit into the “off” position, establishing social equality with the other party. And lie no more than that.

2. Lying harmlessly.

It is my reckless honesty that has me speaking on the rectitude of certain classes of lies in business. Good lies are those that get past peoples’ prejudices to establish basic social equality and form useful “weak ties”. I do not advocate being unethical. If you make a promise you can’t possibly deliver, you’re doing the wrong thing and deserve the punishments that fall upon you. If you claim to be a licensed doctor and you’ve never set foot in a medical school, that’s job fraud and you deserve to go to jail. That’s not what I’m talking about.

If you massage dates on your resume to cover a gap (remember that a simple lie can be better, socially, than a complex truth) then that’s ethically OK; you’re not doing anything wrong. (Still, don’t get caught on that one. Many in business have Category 5 man-periods over even the smallest resume lies. Best to keep lies out of writing.) If you falsely claim to been in the top bonus bucket during your analyst program, because the private equity firm to which you’re applying won’t interview you otherwise, you’re doing no wrong. They deserve to be lied to, for having such a shitty prejudice.

Lies that hurt people are more likely to be caught than those that don’t, and most lies that hurt people are flat-out unethical. Avoid that kind. Your goal in lying should be to make yourself win, not to have others lose.

In a trust-dense setting, one should never have to lie, and one generally shouldn’t lie, at all. It’s lies that bring the organization or subculture toward trust-sparsity in the first place! On the other hand, trust-sparsity admits opportunities in which one can lie while causing no harm to anyone. In trust-sparse settings, people are assumed to be low-status idiots (“bozos”) unless formally recognized otherwise, with accolades such as job titles and managerial authority, and they’re almost never given the opportunity to prove otherwise. If a person of essentially good character and ability can use strategic non-truths to establish credibility, and lies no more than is necessary to do that, then no harm was done. In fact, it can be ethically the right thing to do. The person simply took ownership of his own reputation by inserting a harmless non-truth. This “flipping one’s own switch” is subversive of the general trust-sparsity, but trust-sparsity is goddamn inefficient at any rate, and society needs this sort of lubrication or else it will simply cease to function. This is why, in the MacLeod analysis of the organization, so-called Sociopaths (who are not all bad people, but generally political and willing to employ the forms of dishonesty I uphold) are so necessary. Without lies, nothing gets done in a trust-sparse world.

The problem is that people often do lie harmfully. There are two major kinds of harmful lies. The first is a false promise. This ranges from outright job fraud (claiming a capacity one does not have) to the sympathetic but reckless, but not consciously dishonest, optimism of the typical entrepreneur. I am in no way advocating promises that one cannot keep. Rather, I’m advising people to bring their reputation and status to where they belong, but not past that point. Don’t claim to be a surgeon if you’re not. The second (very common) kind is the lie to hurt others: rumors invented to disparage and humiliate. In addition to being generally unethical and toxic, they’re almost always counter-productive. No one likes a rumormonger or a bearer of bad news, even when that news is believed to be truthful.

Occasionally, one is in an adversarial situation where lying about another person is required. An example would be a bad reference. It’s best to avoid bad references by having peers substitute as ex-managers, but one might get caught in the blue, betrayed unexpectedly or nabbed by a “back channel” reference check. (Note: subvert back-channel reference checks by faking a competing offer and imposing time pressure. If you ever face a back-channel reference check, you failed in getting the offer fast enough.) In that case, my advice is: discredit, don’t humiliate.

You might be very angry when you find a negative reference. You have the right to be angry. You’ve been sucker punched. You might be tempted to say, “That’s because I caught him sleeping with his secretary.” Don’t do that! (At least, don’t sabotage his personal life while looking for a new job; keep your projects separate.) You’re better off with a lie to the effect of, “That’s funny, because he asked me to come back three months after I left. I declined respectfully, but he must be bitter.” That discredits him, but it doesn’t embarrass him any more than is necessary to do the job. You can’t appear to enjoy delivering news that makes someone look bad. With the affair with the secretary, you’re reveling in your ex-boss’s (made-up) demise. With the latter, you’re painting yourself as a top performer (even your ex-boss recognized it) and leaving the other party to connect the dots (that the bad reference is an artifact of the ex’s bitterness).

Also, one must always assume that, when lying about another person, that person will learn of the lie. So “discredit, don’t humiliate” is an aspect of a more general principle, “intimidate, don’t frighten”. You want your adversaries to be intimidated. Timid people shrink from action. They’ll shut the fuck up about you and let you focus on better things (like selling yourself, not justifying yourself in light of rumors). Frightened people, on the other hand, are humiliated, angry, and unpredictable. Even though fright is more of a psychic punishment than timidity, having severely-punished people on the stage is not good for you.

Lies (or truths) that destroy people tend to have enough kinetic energy to boomerang. Even the people who had the news first, unless they’re investigative journalists and the news is truthful, will be hit hard. Negative rumors are best avoided in all contexts: don’t start them, don’t spread them, and don’t even hear them in public. That is the general rule. There are (very rare) times when it is best to break it, and those involve frank combat. In frank combat, you don’t seek to humiliate or frighten your enemies. You have to destroy them, before they destroy you.

Competition is not enough to justify lying harmfully. If the only way to win among multiple candidates for a promotion is to lie harmfully, it’s probably worth passing on that round. (Maybe the other candidate actually is a better fit for the role.) If someone’s legitimately outperforming you and you lie harmfully to bring her down, you’re committing a grave wrong. It’s a much better use of the energy to befriend and learn from her. Jobs are short, but careers are long, and a rival in one bardo is often a great friend in the next. Good-faith competition is not frank combat, and the rule of “lie harmlessly” (or, better yet, not lying at all) still applies. Frank combat exists not when you are being outperformed in good faith, but when your reputation is being attacked. You didn’t choose war, but it chose you.

In frank combat, the best policy is still to lie with minimal harm, but not to shrink away from force if you need to use it. If a stun gun will work, use it instead of the revolver. Only use lethal force if the assailant won’t respond to anything else. The guideline of “discredit, don’t humiliate” applies when it can, but some people just won’t accept that they’ve been discredited (i.e. shut the fuck up) until they’re down for the count. That is a rare case, but it’s the one in which nasty, negative rumors might be the best way to go. Even then, there’s a subtlety to it. Not only must the rumor be believable, but you have to deny it in the public. Negative rumors, most of the time, aren’t so devastating because people actually believe the non-truths. Rather, it’s because they lower the target’s status, generate complexity (leading to people, as discussed above, just giving up rather than rendering judgments) and paint the person as one who “fits the mold” for the rumor, even though you, personally, haven’t taken a stand and won’t call it true.

All this said, frank combat is quite rare and always best avoided. Like a bar fight, no one wins. There’s pain, there’s losing, and there’s losing big. Winning at frank combat is like winning an earthquake. Go out of your way to avoid it.

Most ineffective liars don’t intentionally put themselves into frank combat. The problem of harmful liars is that, like the small liars, they enjoy the petty win over the other person and lose sight of the one valid purpose of lying in business: to flip one’s own “bozo bit”. Unless someone is calling you a bozo, you gain nothing by setting his “bozo bit” back into the “on” position, and you make the world worse (trust sparsity). People who lie harmfully contribute to trust sparsity, also known as discord, and Dante has them in the Eighth Circle of Hell for a reason.

(Part 2 will come out later this week.)