Can “Agile” break the Iron Triangle? Can open allocation?

I’ve written a lot about the MacLeod-Gervais-Rao model of the corporate organization, which I’ve dissected at length starting here. This exploration is going to start with many of the same ideas, refined by time.

In the MacLeod model, people in a company are either sorted or self-select in to three tiers, each uncharitably named. The “Losers” at the bottom of the corporation do the grunt work; the “Sociopaths”, typically at the top or on the way up, tell people what to do and take most of the rewards; and the “Clueless” get caught in the middle, working overtime to correct the mistakes of disengaged people below them and the unapologetically self-advancing people above them.

It’s a sound model. It accurately describes many corporations. To be fair, the names are a bit negative, and possibly inaccurate. “Losers” aren’t disliked or contemptible people, but only economic losers who trade their time for a pittance, in exchange for low work demands, low or nonexistent income volatility, and infrequent changes in their job duties and geographic location. They’re selling off their risk because they prefer comfort over upside. “Sociopaths” are the risk-seekers who aren’t afraid to break rules. Organizations need such people in order to survive, but they don’t need many, due to the pyramidal shape of a corporate hierarchy. One rule-breaking maverick is an asset; ten is a problem. Those get rapidly promoted or fired, with not much middle ground. The “Clueless” in the middle are the “true believers” who think (in spite of all objective evidence) that their organizations are meritocracies. Sociopaths (even the good ones) aren’t afraid to cut deals and play politics and grease palms, but Clueless tend to believe that all problems can be solved by “working harder”. Their unconditional work ethic (as opposed to the conditional one of the Sociopath) makes them a natural match for unpleasant tasks and dead-end jobs.

Model vs. reality

Is this depiction of corporate life accurate? Can there be “Losers” in high positions and “Sociopaths” at the bottom? Of course, there are. It’s just rare that it happens, because organizations work against it. Moreover, these traits are hardly immutable. A person might be a “Clueless” in one context and a “Sociopath” in another. The MacLeod model is a generalization and an attractor state. What it describes best are the organizations that have lost most of their purpose for existing, or that never had a vision beyond self-enrichment of a few. (That’s most organizations, at least in the corporate world.) At such a point, self-interest is the dominating motivation of most players, and the idea that there’s a higher mission is just a narrative for the Clueless. Since not everyone can be a leader or be made rich, organizations adapt by evolving toward this state of affairs, which is highly stable. I’ll get to its specific flaws, and its relationship to software methodologies like “Agile” and open allocation, later on. Before doing that, it’s most useful to discuss why this tripartite sorting of people occurs.

The Iron Triangle

Organizations tend to want three things from people:

  • subordinacy (S), which pertains to “Does this person value the organization’s interest above her own?”
  • dedication (D), or “Will she work as hard as she can?”
  • strategy (T), or “Does she work on the right things?”

The most nuanced of these is the first, subordinacy. Of the three Iron Triangle traits, it’s the one that I tend to least value, but in order to discuss it properly, we have to discuss what it is.

I don’t champion the constitutionally insubordinate. In truth, I don’t have much use for such people, the ones who oppose authority simply because it is authority. Sometimes, subordinating is the right thing to do. For example, stopping and waiting at a red light is an act of subordination where the alternative, almost always, is reckless. It’s illegal, and for good reasons, to run red lights. Moreover, while I don’t value one-sided loyalty (i.e. loyalty to a group or organization that will not return it) I do value integrity. Plenty of actions that are insubordinate are also dishonest, toxic, and wrong. All of this is to say that the question of when (in)subordination is a virtue vs. vice is a deep and complicated one. At least for now, I prefer to step away from the larger moral questions and focus on the (typically, morally neutral) matter of an organization’s upkeep.

While subordination and insubordination are matters of action, subordinacy (S+) is one of attitude and personal strategy. (Unfortunately, the adjectival forms of both words, “subordinacy” and “subordination”, seem to be the same word: “subordinate”.) When an act of insubordination is ethically neutral, will the person do it? Will he use his organization’s reputation, without prior permission, to bolster his own? Will he focus most on the tasks that further his career, rather than those that are most important to the organization? Will he assist a third party in negotiation with the organization, in order to have a friend (or, at least, an ally or a favor owed) in the future? These are questions where insubordinacy is ethically neutral. It’s not the noble insubordination of the Civil Rights activists; nor is it the unethical, degenerate sort; it’s the neutral insubordinacy of a careerist who’s figured the game out. The person with subordinacy (S+) will err on the side of favoring the organization, preferring stability over the opportunity for personal gain. The person without subordinacy (S-) tends to favor the interests of people (including himself) for multiple reasons. The charitable view is that the insubordinate favor individuals over organizations because individuals are more likely to have coherent vision and the strategic insight necessary to move society forward. The less favorable view is that they favor individuals because people have a memory, and organizations don’t. If you tell a talented young engineer, while your company is courting him, that he could get $20,000 more just by asking for it, there’s a chance that, five years down the road, he’ll pull you in to his startup as a co-founder. If you favor the organization by not sharing this information, you’ll get nothing in return. In truth, as an S-, I think that both of these views are correct. We favor individual advancement (of ourselves, and of others whom we care about) over organizational upkeep because individuals are more coherent and strategically competent, but also because we won’t waste loyalty on bureaucracies that would never return the favor.

Without further exploring the rabbit hole of subordinacy, let’s return to a question that I’m sure many readers have asked. Why is this set of three traits (subordinacy, dedication, and strategy) called an Iron Triangle? The answer is that an organization gets at most two from each person. To see why that is, it’s useful to examine the eight combinations formed by the absence or presence of each trait. People with zero or one of the Iron Triangle traits tend to be organizationally inert, so I won’t focus on them. At 2 out of 3, we get the MacLeod archetypes. The strategic and dedicated, but not subordinate (or, S-D+T+) become the high-energy creative (or, in some cases, destructive) employees (Sociopaths) who’ll either be promoted quickly or fired. Their more risk-averse counterparts, on the other hand, will select subordinacy over dedication. They have a good sense of what projects are worth working on and how hard to work (or, conversely, how lazy they can be and get away with it) but, if assigned to doomed projects, they’d rather stay in place and slack than put themselves at personal risk by trying to right the ship. Those people, being subordinate and strategic but not dedicated (S+D-T+) become the MacLeod Losers. They might know how to improve things, but they know that there’s more job security in following orders. Finally, those with the unconditional work ethic, the subordinate and dedicated but not strategic (S+D+T-) tend to end up doing the jobs that no one wants. This can advance them into middle management, but they’ll rarely get a decision-making role. They tend to get the responsibility-without-power kind of “management” that is avoided by Losers (it’s too much work) and Sociopaths (it’s a dead-end job) alike. Those are the MacLeod Clueless.

Why is it rare, if not impossible, that an organization gets all three Iron Triangle traits from one individual? It’s a paradoxical arrangement. A person who is strategic will generally not be subordinate and dedicated. Subordinacy means that a person gives up opportunities for personal advancement in order to avoid conflict and appearances of impropriety, and in the interest of organizational harmony and upkeep. Dedication means that a person works much harder, and takes on more of the nasty tasks, than is needed to maintain employment and social acceptability. It’s not strategic to be both. You can earn your place with one or the other, and if you play both games you’re more likely to make mistakes, because they conflict. If you want to maximize comfort and minimize risk and pain, you prefer subordinacy. You become “a nice guy”, and promotions come slowly, if at all. That’s the MacLeod Loser route. If you want to maximize personal yield and advancement, or some higher moral objective (e.g. social justice) that might require fighting the organization, and you don’t mind pain and risk (even the risk of being expelled or fired from the organization) then you favor dedication. You become a MacLeod “Sociopath”. You shake things up, aren’t afraid to make enemies or have others question your judgment (and, even, integrity) and you work hard not because you have a (MacLeod Clueless) desire to clean up others’ messes, but because you want to prove yourself right about something. You’ll either be promoted, fired, or find external promotion inside of a couple years.

Simply put, to be subordinate and dedicated is not strategic, since there is no value in taking on two kinds of self-sacrifice when only one will suffice.

For an aside, the stereotype of the non-strategic, terminal middle manager is that he’s a milquetoast with no vision. That type of person certainly exists, but a pattern that is at least as common (and dangerous) is the non-strategic person with too many visions. He overcommits, tries to please everyone (subordinacy) and works really hard (dedication) on an array of stuff that never amounts to a coherent whole. He has “vision” but there is no coherence to it. He can’t focus. If a person is subordinate and dedicated, that person is trying to play two conflicting strategies (for an example of conflict, a person who works too hard will lose social polish and tarnish any “nice guy” gains earned in subordinacy) simultaneously and that is not strategic.

An archetype of a person who seems to have all three traits would be the Protégé. Is that a possible fourth MacLeod category? (Answer: I’d say no.) A person whose career is protected by someone powerful or influential will show all three Iron Triangle traits. The “to be subordinate and dedicated is not strategic” theorem seems broken, in that case. Is it? I would argue that it’s not. This is a case of conditional subordinacy. The protégé has a genuine personal interest in doing right by the mentor, and in keeping long-term, loyalty-based relationships (which do not exist, these days, with corporations) intact. I would argue that, while the protégé will subordinate, it isn’t subordinacy because there is a harmony of interests, and it’s conditional upon the loyalty going both ways. If the upper management’s buy-in to the protégé’s career wanes, he’ll either start to slack (MacLeod Loser) or seek his own interests (MacLeod Sociopath).

What’s wrong with the Iron Triangle?

Is the Iron Triangle a problem? After all, so long as organizations can get each of those desired traits from someone, is it a real loss that no individual will deliver all three? It’s not clear that the Iron Triangle poses a real threat to the organization; in fact, the MacLeod arrangement is highly stable. Moreover, people and organizations adapt somewhat fluidly. A strategic person can consciously choose to favor subordinacy or dedication over the other. A non-strategic person might become strategic with age and experience. No one’s a lifelong MacLeod Loser or Clueless or Sociopath; we evolve as our needs (and the needs of those around us) demand. MacLeod organizations are “iron” because they’re stable on their own terms, like white dwarfs left when a star’s best life is behind it.

So what’s wrong? Why is the MacLeod organization considered to be dysfunctional? Why do, for example, technology companies continually come out with new employee perks and development methodologies in order to create the perception that they’re not MacLeod organizations? Why have the cynical executives in technology removed themselves from official managerial roles and become “investors” at venture capital firms? Why is it desirable that a company move itself away from a MacLeod model, which seems to give most people what they want?

The MacLeod organization’s problem is that its short-term stability hides a long-term trend toward obsolescence. Each of these three archetypes has a fatal flaw. In assessing the fatal flaws of each, we’ll get an understanding of why some technology companies insist on methodologies like “Scrum”, and also on whether a different approach, like open allocation, can solve the Iron Triangle problem.

The flaw of the MacLeod Sociopaths, whom I give the more charitable name of Self-Executive, is that they’re a high-variance set of people. If you want reliable mediocrity, you won’t get it from them. In fact, expecting reliable mediocrity will alienate them. The name of “Sociopath” comes from the fact that some (and, typically, a disproportionate share of those who attain power) are unethical. I don’t actually think that Self-Executive employees are any more (or less) unethical than any other group, but when they are cheaters and liars, they do a lot of damage. The main issue that that set of people has, relative to organizations, is numerical. Organizations don’t need many creative, passionate, decision-making people. In the pyramid-shaped corporation, there are more people with the Self-Executive inclination (probably, about 10% of the population) than there are roles with executive (with “executive”, here, including non-managerial technical or creative leadership) work. Thus, some will be promoted and others will be fired. The stakes are high, so you get in-fighting, politicking, and sometimes even cheating by some highly creative people who aren’t used to being told “No”.

Integrity, in terms of which Self-Executives (or “Sociopaths”) are promoted vs. fired, actually matters. A MacLeod Loser with low integrity might steal office supplies, but a MacLeod Sociopath with low integrity can kill the company. So promoting the “good Sociopaths” (the paradoxical nature of this term is one reason why I prefer Self-Executive) and firing the bad ones is important. Unfortunately, the bad kind tend to be a lot better at office politics.

As for the MacLeod Clueless, whom I’ve renamed to Workhorses, their flaw is that they tend to generate recurring commitments: meetings and processes and rules and additional tasks that seem like good ideas individually but, en masse, make the company incoherent and slow. With that unconditional work ethic, they’re willing to throw their weight behind whatever efforts their superiors consider important. Left to their own devices, they’ll come up with something that will usually provoke a “Huh?” reaction. In the lower ranks, their work ethic endears them to their bosses and they can get promoted, but eventually, that stops. Workhorses never get themselves respected enough to be given high-end work, and their willingness to complete low-end and unimportant work means they get used as garbage disposals by the organization. This isn’t a problem, until they get promoted too high and the Peter Principle kicks in. The issue isn’t just that they generate bad ideas, because everyone who has ideas comes up with some bad ones. (Self-Executives also come up with bad ideas, and quickly abandon them.) It’s that they never flush away bad ideas, so they have a tendency to create the recurring commitments that accumulate and slow down the entire organization. The MacLeod Losers lack the initiative to generate this crap, and Sociopaths avoid it because recurring commitments are career-draining, dead-end pits of suck. It’s the well-meaning incompetents who build such messes up. Eventually, the corporation reaches a level of stagnation at which Sociopaths called “management consultants” are brought in to garbage-collect those recurring commitments.

What’s wrong with the MacLeod Losers? (I would rename them Team-Players.) It seems like a Team-Player should be a model employee. He won’t disobey a direct order. He won’t generate fruitless work. His main flaw is the lack of dedication. He wants to get along with others, not be the hardest-working. If you tell him that his work hours are 9 to 5, he’ll be out the door around 5:10. But what’s wrong with that? MacLeod Losers are actually pretty efficient and productive. That’s part of their being strategic. Efficiently doing what little work they’re directly told to do gives them more time to surf the web, play with Nerf guns, or jockey for a “cool” in-group status that, while it doesn’t correlate to the kinds of status (such as salary and title) that actually matter, gives them a sense of comfort and importance (“I’m the Halloween Party Guy”). Team-Players work efficiently and, while they lack initiative, they’re far from being slackers, since their goal is to maximize comfort. True minimum-effort playing (that is, doing just enough work not to get fired) is actually pretty uncomfortable. You’re just on the bubble, people don’t like you, and every time your manager or expectations change, you have to watch your back. So they don’t go down that far, in effort level. They modulate their work output to the Socially Accepted Mediocre Effort (SAME).

Companies tend to form effort bands based on peoples’ level of work. The negatively productive are in the FUGLY (“Fail Up or Get Lost Yesterday”) band; they’re either already on PIPs, or they have personal connections that’ll lift them no matter what they do. Next is MEME (“Minimum Exertion to Maintain Employment”) and then SAME (“Socially Acceptable Mediocre Effort”) and AWT (“Actually Works There”) followed by HSTG (“Holy Shit, This Guy/Gal”), the last of these being the overperforming level at which a person becomes more likely to be fired (because there are more opportunities for political failure or social embarrassment). In most organizations, the MEME is about 3 hours per week of actual work and SAME is around 10 to 15. The Workhorses/Clueless tend toward AWT and HSTG, and the Self-Executives/Sociopaths will play the full spectrum depending on what they are trying to do. But the Team-Players/Losers are optimizing for comfort. They want to be well-liked and not have their job duties change, and to keep management off their backs. Their avoidance of recurring commitments, over-exertion, and embarrassment to others keeps them out of the AWT/HSTG range, but their desire to be well-liked keeps them out of FUGLY/MEME territory. So they aim for the SAME. And what’s wrong with that? The problem is SAME Drift. The SAME starts out at an acceptable level, at which the company makes more off the Losers’ work than it pays them; but over time, the SAME tends to approach (and can reach) zero as the workload fluctuates. When the workload decreases, MacLeod Losers/Team-Players (being strategic) drop their output, because creating non-essential work for themselves is just a waste. When it increases, those who are willing to take additional work for self-advancement become MacLeod Sociopaths/Self-Executives, leaving the Loser tier (and the SAME) behind. Better incentives will bring people out of the Loser tier and therefore reduce the number of underperformers and their bulk effect, but it will generally not improve the SAME. That matters, because in any organization, most people will be exactly at the SAME.

Culture! (and, uh, firing people)

After all of this, we get to emergent social behavior and game theory, and when humans are involved, we tend to call it culture.

The MacLeod tiers are most pronounced in the lawful-evil rank culture that values subordinacy over the other two Iron Triangle traits. Rank culture is self-consistent and internally stable, because it gives everyone what they want (comfort to Losers/Team-players, mission to Clueless/Workhorses, self-advancement to Sociopaths/Self-Executives). Still, the organization declines over time, due to SAME Drift. If the SAME drops too far, the company will be weighed down by cynical underperformers. By that point, it usually has underperforming and incompetent managers (who protect the incapable below them) as well, and that goes many levels up the chain. It’s ugly, and the most common thing that seems to shock a company out of a low-SAME funk is a serious layoff or restructuring. (In the workplace, promotions and firings are the most important aspects of “the culture”. The rest is distraction.)

Strategically, layoffs are hard to get right. A big layoff provides a shock (that can be desirable or not) but the company can recover, if there’s a well-communicated strategic reason for the change. A series of small layoffs destroys morale; people realize that their jobs are tentative and stop caring. It’s always better to do one big one, but this requires (for the executives deciding whom to lay off) compiling a large amount of knowledge without tipping anyone off to what’s about to happen. The biggest problem with layoffs, as practiced, is that the proper way to do them is to cut complexity as well as people. If you cut people but try to perform all the same operations, you’re just going to burn out an already-shaken team. However, companies usually don’t want to cut complexity because, for every inefficient process or unnecessary recurring commitment they have, there’s usually someone who likes it being there. Also, cutting complexity often means that good people (whose work areas happen to be in unprofitable departments) are let go, and no one likes that. The intended strategy often becomes, instead, to cut people first, in one efficient hack, then move them around in a way that cuts complexity. (The latter part rarely happens, leaving a skeleton crew to do just as much work as the larger set did.) This is cut-then-shuffle is only remotely feasible if the lowest-performing people are the ones let go. However, it’s pretty much impossible, from the top, to identify low performers. Can a company reliably figure out who its low performers are without political corruption? No, not really. But it can generate a bunch of meaningless numbers (or a ranked ordering) and trick itself into believing in them.

This is where “stack ranking” (or “top grading”), originated by Jack Welch, beloved by McKinsey, and now used at most technology companies, comes into play. Stack ranking is a recurring layoff, dishonestly packaged as being performance-based. Microsoft used to give 7% of employees the dreaded “5” rating, and Google’s “2.8/2.9″ (given to 3-5 percent, depending on economic circumstances) had the same effect, but there are many more examples of this. In some regimes, the same percentage on each team gets nicked. More often, it’s based on the macroscopic performance of each division, department and team. This leads to the Welch Effect: in a discretionary termination (i.e. not one forced by business events, such as a plant closing) the people most likely to be let go are junior members of underperforming teams. This is suboptimal because those are usually the people least responsible for that team’s underperformance. I can make 20 different arguments, each in 20 different ways, but the point is that stack-ranking doesn’t actually get rid of low performers. It gets rid of people pretty randomly, pisses a lot of people off, and eventually leads to a rash of political behavior. It certainly doesn’t do the proper job of a layoff, which is to reduce complexity. (It increases complexity, because of all the political behavior and improper favor-trading that goes on.) It does achieve one thing: it shatters the SAME. The MacLeod Losers are shocked either into working harder (Clueless) or getting better at politics (Sociopaths). That sense of equilibrium is gone.

The above is something management consultants love to do, because it creates toxic (and, from above, probably humorous) drama in a company where they don’t have to work. The MacLeod rank culture, in which following orders is enough to keep a person in place, disappears. It’s replaced by the chaotic-evil tough culture (named after Jeffrey Skilling’s proud admission, “we have a tough culture at Enron”). While the rank culture valued subordinacy over the other Iron Triangle traits, the tough culture values dedication. Managers aren’t fully trusted: some percentage of them is usually also thrown out each year, as well. It doesn’t matter much what you’re doing; you just need a reputation for being a hard worker and not a “piker”. Hours get long: 10- and 12-hour days become the norm. Busywork is tolerated because the deluge of unimportant but time-consuming tasks “weeds out the weak”. When someone seems to favor family or outside hobbies over the job, and stops working long hours, the knives come out, even if that person’s more productive and efficient than anyone else.

Typically, a company will vacillate between the lawful-evil rank and chaotic-evil tough cultures. Rank culture is the internally stable but slowly-declining arrangement. When its failings attract executive or shareholder attention, it moves toward a tough culture. Over time, as some people (the new MacLeod Losers) get tired of working so hard, and others (the new MacLeod Sociopaths) figure the new system out, and they realize there is personal benefit in giving protection against it, the organization slides back into a rank culture. The ones who can win control over the harsh, high-stakes performance appraisal of the tough culture (presented as an impartial meritocracy, but as prone to manipulation as a rank culture’s system) will typically be the new holders of rank within a couple of years.

Those two cultures are the ugly cultures I’ve called “evil” because they’re unpleasant to work in, inefficient, and generally deprive shareholders (of a performant organization) as well as non-executive employees (of a decent work-life and of career support). There are two good cultures. The chaotic good culture is the self-executive culture, which favors strategy over the other two Iron Triangle traits. I’ll get back to that. The lawful good culture is the guild culture, which favors a balance in the three Iron Triangle traits. Remember how I said that there was no way a person could have all three traits? Well, I lied, sort-of. I mentioned the protégé concept in order to discuss exactly this. In the idealized guild, all of the new entrants are protégés, and a balance of the three Iron Triangle traits (subordinacy being conditioned on the promise of a great career in the future) is possible. Rather than a pyramid, the shape of the professional structure is an obelisk. The grandmasters and masters tutor the journeymen and apprentices. You don’t have “Sociopaths” and “Losers”; you just have the experienced lifting up the neophytes. Because most or all of the apprentices and journeymen will be promoted, they don’t need to play against the organization in order to have careers, as they would in a pyramidal structure. It’s a nice idea, and it actually works. The problem is that it typically can’t grow very fast. The guild culture is brittle against rapid expansion or contraction, and seems not handle change or chaos very well in general. It also devolves into mean-spirited behavior (see: “big law” and academia) when the guild system’s no longer supported by economic conditions, and when the lack of prospects for the up-and-coming leads to generational conflict. Then, it devolves into a tough culture due to internal scarcity, followed by a rank culture. I don’t think we’re going to see new guild cultures in the 21st century. In fact, we might see some more of the existing ones fall apart.

We’re left with one culture that might work: the self-executive culture. Valve’s open allocation is an example of this. Not only does it encourage (rather than punishing) self-executive behavior, but it seems to mandate it. Just taking orders isn’t a viable career strategy, because it’s not clear who has the authority to give orders. People can’t use “landed on a bad project” to justify mediocrity, because they picked their projects. I’ve written a ton about this already. It really is the only non-imbecilic way to build a software company.

Breaking the Iron Triangle?

We’re now ready to discuss software methodologies.

“Agile” is an attempt to break the “waterfall model“. While there isn’t a guaranteed equivalence, “waterfall” often accompanies a rank culture, because in a rank culture the decisions are made from on high and flow downhill, rarely being opposed or questioned. How do people develop software in a rank culture? By following orders. A few higher-ups make the important decisions, and the halfway-checked-out MacLeod Losers implement. The result is low-quality software and sluggish response to change. In many industries, the creative ossification that follows a rank culture will take decades to slow it down to an unacceptable level. In software, that happens much faster, because programmers tend either to be engaged or useless. So this tendency of rank cultures toward underperformance is more of an emergency. The wrecking ball that is often used to crack a rank culture is often given the name of “Agile”.

There’s good and bad in Agile, whose stated purpose is to remove the impediments and communication breakdowns that rank-culture/”waterfall” development creates (and that become excuses for slacking). Scrum, to take an example, actually forces the “product owner” to prioritize tasks, which does increase coherency. My problem with “Agile” is that it doesn’t go far enough. Typically, it’s still business-driven engineering, which means that the major problem (the passengers flying the plane) hasn’t been fixed. Saying, “We should still do business-driven programming, but let’s launch something every 2 weeks” is like saying “I want to get shot in the head, but by a buxom blonde who wears an eye patch.” Personally, I’d rather just not get shot in the head. If you’re doing business-driven engineering, then Scrum is very likely to be an improvement; but the most talented programmers would much rather work in an engineer-driven firm.

“Engineer-driven” doesn’t necessarily mean open allocation. Google is engineer-driven (and that explains much of its success) but uses closed allocation. It’s a step in the right direction, but not (I would argue) enough. Now, I’ll admit that it’s quite possible that many “Agile” methodologies are compatible with (a) engineer-driven development and even (b) open allocation. I just haven’t seen it play out that way. When “story points” and “iteration planning” and all that other heavyweight stuff comes out, it just becomes a new structure for routing tickets (generated by the business) to engineers who are presumed to be interchangeable. If there are malefactors in view of this, it can also be abused for performance appraisal and professional extortion. They will become the new holders of rank.

Well-intended engineers and middle managers often like Agile because it shakes up the “waterfall” model of the rank culture. At least in theory, the team “comes together” (in a military’s sense of the word) and becomes a primary driver, increasing (at least) the autonomy (self-executivity?) of the group. The problem is that malefactors (true sociopaths) also like it. They can use Agile’s machinery to create a new tough culture. That’s bad for everyone, because tough cultures settle into worse rank cultures than those they emerged out of. Of the four workplace cultures, tough cultures are the most dysfunctional, because the political behavior they incentivize creates complexity (often long-lasting) while the organization is losing (firing) people. Rank cultures generate slacking and ambivalent zombie-shuffling, but tough cultures encourage land-mine-setting and in-fighting.

I would not go so far as to say that “Agile” methodologies will create a tough culture. At least, relative to the sclerotic dysfunction that inexorably follows from business-driven engineering, there are good ideas in the “Agile” movement. My argument is that they can be used to that end. That doesn’t make Scrum and Kanban and XP necessarily bad, but I would call them dangerous. As soon as fucking “story points” pop up in a performance review, get rid of them or your organization will soon die.

Self-executivity

What makes the self-executive culture so much better than the others? After all, might its rarity suggest that it’s not sustainable? Well, I don’t know enough to vouch for open allocation outside of software. I’m obviously not an authority on how to run hospitals or overseas ink factories. I’ll stick to what I know, and that’s software engineering. Software is convex work, meaning that the difference between nonperformance and mediocrity is smaller than that between mediocrity and excellence (“10x” performance). Not all work is like that. For many tasks, mediocrity is just fine and excellence is not much better, but nonperformance is catastrophic. That’s called concave work, because the input-output curve is concave down.

Concave work is easier to manage. Why? Because a manager wants to (a) maximize average return, but (b) is subject to limits on risk. With concave work, the region of lowest risk (lowest first derivative) is at the high-performance plateau. Thus, removing risks will enhance performance. With convex work, the opposite is true. The low-risk plateau is at zero. High performance and risk are, in that case, positively correlated. You want people to take as much creative risk as they can afford. You often need it if you want to remain competitive.

In a self-executive workplace, where people are trusted (and, indeed, required) to manage their own direction in the company, is the Iron Triangle broken? Well, let’s look at each of the three Iron Triangle traits. Self-executive cultures excel at strategy because they distribute that responsibility (for deciding what is worth working on) to all workers, rather than relegating important decisions to a sheltered few (who are showered in information, almost all of it false, from the rest of the organization). They certainly inspire dedication, as people throw passion and creativity into the process of proving (or refuting) their ideas. Those two traits are covered. What of the third, subordinacy? Is open allocation, designed around the principle of eliminating needless subordination, going to succeed under that lens?

It doesn’t matter. Subordinacy is about how a person resolves conflicts of interest between herself and the company that emerge when the company plays against her personal or career needs. In a self-executive firm, that doesn’t happen. The conflict never exists.

Doing great work ought to be a “double bottom line”, multilateral victory: it helps the company and the individual to do great things. Self-executive cultures don’t quibble with the question of how some unnecessary conflict of interest is handled by a person, which is what subordinacy is about. They render it irrelevant, by trusting people to manage their own careers and creative energies. This removes the focus on subordinacy and redirects it to something far more important, and something that can only be assessed in a person who’s given some real freedom.

What is that more important “something”? Integrity.

Open allocation doesn’t really “break” the Iron Triangle. It renders it meaningless, and that’s good enough.

Cheap votes: political degradation in government, business, and venture capital.

I’ve written a lot about how people in the mainstream business culture externalize costs in order to improve their personal careers and reputations, and the natural disconnect this creates between them and technologists, who want to get rich by creating new value, and not by finding increasingly clever ways to slough costs to other people. What I haven’t written as much about is how these private-sector social climbers, who present themselves as entrepreneurs but have more in common with Soviet bureaucrats, managed to gain their power. How exactly do these characters establish themselves as leaders? The core concept one needs to understand is one that appears consistently in politics, economics, online gaming, and social relationships: cheap votes.

Why is vote-selling illegal?

First, a question: should it be illegal to buy and sell votes? Some might find it unreasonable that this transaction is illegal; others might be surprised to know that it wasn’t always against the law, even if it seems like the sort of thing that should be. Society generally allows the transfer of one kind of power into another, so why should individual electoral power be considered sacred? On theory alone, it’s hard to make the case that it should be. 

I’ll attempt to answer that. The first thing that must be noted is that vote-buying matters. It increases the statistical power of the bought votes, to the detriment of the rest of the electorate. On paper, one vote is one vote. However, the variance contribution (or proportion of effect) of a voting bloc grows with the square of its size. In that way, the power of a 100-person, perfectly correlated (i.e. no defections) voting bloc is 10,000 times that of an individual. 

Let’s give a concrete example. Let’s say that the payoff of a gamble is based on 101 coins, 100 white and one black. The payoff is based on the heads flipped, with each white coin worth $1 and the black coin worth $100. The total range of payoffs is $0 to $200, and the black coin will, obviously, contribute $100 of that. So does the black coin have “half of” the influence over the payoff? Not quite; it has more. The white coins, as a group, will almost always contribute between $30 and $70– and between $40 and $60, 95 percent of the time. It’s a bell curve. What this means is that whether a round will have a good payoff depends, in practice, almost entirely on the black coin. If it’s heads, you’ll almost never see less than $130. If it’s tails, you’ll rarely see more than $70. The white coins matter, but not nearly as much, because many of the heads and tails cancel each other out. 

Both the white and black coins have the same mean contribution to the payoff: $50. However, the variance of the single black coin is much higher: 2500 (or a standard deviation of $50). The white coins, all together, have a variance of 25, or a standard deviation of $5. Since variance is (under many types of conditions) the best measure of relative influence, one could argue that the black coin has 100 times the mathematical influence of all the white coins added together, and 10,000 times the influence of an individual white coin. 

These simplifications break down in some cases, especially around winner-take-all elections. For example, if two factions are inflexibly opposed (because the people in them benefit or suffer personally, or think they do, based on the result of the election) and each has 45% of the vote, then the people in the remaining 10% (“spoilers”) have significantly more power, especially if something can bring them to congeal into a bloc of their own. That is a commonly-cited case in which individual, generally indifferent “swing” voters gain power. Does this contradict my claim about the disproportionate power of voting blocs? Not really. In this scenario, they have disproportionate decisive effect, but their power is over a binary decision that was already set up by the movement of the other 90%. 

Moreover, it’s improbable that the people in that 10 percent would form a bloc of their own. What prevents this? Indifference. Apathy. They often don’t really care either way about the matter being voted on. They’d probably sell their votes for a hundred dollars each. 

In quite a large number of matters, specific details are too boring for most people to care, even if those issues are extremely important. They’d much rather defer to the experts, throw their power to someone else, and get back to their arguments about colors of bikesheds. Their votes are cheap and, if its legal, people will gain power or wealth by bundling those cheap votes together and selling the blocs.

So why is vote-selling illegal? It causes democracy to degenerate (enough that, as we’ll see, many organizations eschew democracy altogether). The voters who have the most interest in the outcome, and the most knowledge, will be more inclined to vote as individuals. Though they will correlate and may fall into loose clusters (e.g., “conservatives”, “liberals”) this will tend to be emergent rather by intent. On the other hand, the blunt power of an inflexible voting bloc will be attained by… the bought votes, the cheapest votes, the “fuck it, whoever pays me” set. The voting process ceases to reflect the general will (in Rousseau’s sense of the concept) of the people, as power is transferred to those who can package and sell cheap votes– and those who buy them. 

Real-life examples

Official buying and selling of votes is illegal, but indirect forms of it are both legal and not uncommon. For example, over ninety percent of voters in a typical election will give their vote, automatically, to the candidate of one of two major political parties. These candidates are usually chosen, at this point in history, through legitimate electoral means: the party’s primary. But what about the stages before that, as incumbents in other offices issue endorsements and campaign checks are cut?

Effectively, the purpose of these parties is to assume that cheap-vote congealment (and bloc formation) has already happened, tell the populace that it’s down between two remaining candidates, and make the voters feel they have a choice between two people who are often quite very similar in economic (in the U.S., right-of-center) and social (moderately authoritarian) policies while differing on superficial cultural grounds (related to religion in a way that is regional and does generalize uniformly across the whole country). The political parties, in a way, are the most legitimate cheap-vote aggregators. They know that most Americans care more about the bike-shed difference between Democratic corporate crooks and Republican corporate crooks– the spectator-sport conflict between Springfield and Shelbyville– than the nuances of political debate and the merits of the issues.

The vote-buying process is more brazen in the media. While expensive and thorough campaigns can’t turn an unlikeable person into a winner, they can have a large effect in “swing states” or close matches. There are some people who’ll be swayed by the often juvenile political commercials that pop up in the month before an election, and those are some of the cheapest voters. The electioneer need not even buy their vote directly; it has already been sold to the television station or radio show (a highly powerful cheap vote aggregator) to whom they’ve lent their agency. 

This is one of the reasons I don’t find low voter turnout to be distressing or even undesirable, at least not on first principles. If low voter turnout is an artifact of disenfranchisement, then it’s bad. If poorer people can’t get to the polls because their bosses won’t let them have the time off work (and Election Day ought to be a day off from work, but that’s another debate) then that’s quite wrong. On the other hand, if uninformed people don’t show up, that’s fine. I don’t get involved in civic activities unless I know what and who I’m voting for; otherwise, I’d be, at best, adding statistical noise and, at worse, unwittingly giving power to the cheap vote sellers and buyers who’ve put their preferred brand into my head. 

All this said, cheap-vote dynamics aren’t limited to politics. In fact, they’re much more common in economics. Just look at advertising. People vote with their dollars on what products should be made and what businesses should continue. A market, just like an election, is a preference aggregator. The problem? No one knows all of the contenders, or could possibly know. As opposed to a handful of political candidates, there might be twenty or two hundred vendors of a product. Quite a great number of them will buy not based on product quality or personal affinity but on reputation (brand) alone. Advertising has a minimal effect on the most knowledgeable (Gladwell’s “Mavens”) but it’s extremely powerful at bringing in the cheapest votes, the on-the-fence people who’ll go with what seems like the least risky choice. 

Venture capital

Maybe it’s predictable that I would relate this to technology, but it’s so applicable here that I can’t leave the obvious facts of the issue unexplored. 

Selection of organizational leadership almost always has a cheap-vote issue, because elections with large numbers of indistinguishable alternatives are where cheap votes have the most power. (A yes/no decision that affects everyone is where cheap votes will have the least power.) Most people see the contests as wholly external, because all the credible candidates are (from the individual’s point of view) just “not me”. Or, more accurately, if no one they know is in contention, they’re not going to be invested in the matter of which bozo gets the tallest stilts. As organizations get large, the effect of this apathy becomes dominant. 

Therefore, it’s rare in any case that selection of people will be uncorrupted by cheap vote dynamics, no matter how democratic the election or aggregation process may be. While some people are great leaders and others are terrible, it’s nearly impossible to reliably determine who will be which kind until after they have led (and, sometimes, it’s not clear for some time afterward). If asked to choose leaders among 20 candidates in a group of 10,000, you’ll see nuisance (by “nuisance”, I mean, uncorrelated to policy) variables like physical attractiveness, charisma, and even order of presentation (making the person who designs the ballots a potential cheap-vote vendor) take a disproportionate effect. This is an issue in the public sector, but a much more egregious one in the private sector, given the complete lack of transparency into the “leadership” class, in addition to the managerial power relationships and the general lack of concern about organizational corruption. 

Corporations (for better or worse, and I’d argue, for the worse) eliminate this effect by simply depriving employees of the ability to choose leaders at all: supervisors and middle managers and executives are chosen from the top down, based on loyalty to those above, and the workers are assumed to be voting for the pre-selected by continuing to work there. The corporation cheapens the worker’s vote, in effect, by reducing its value to zero. “You were going to sell your vote anyway, so let’s just say that the election happened this way.” Unless they can organize, the workers are complicit in the cheapening of their votes if they continue to work for such companies and, sadly, quite a large number do. 

There are people, of course, who are energetic and creative and naturally anti-authoritarian. Such people dislike an environment where their votes have already been cheapened, bought for a pittance, and sold to the one-party system that calls itself corporate management. The argument often made about them is that they should “just do a startup”, as if the one-party system of Silicon Valley’s venture capital elite would be preferable to the one-party system of a company’s management. By and large, it’s not an improvement.

In fact, the Silicon Valley system is worse in quite a large number of ways. A corporation can fire someone, but generally won’t continue to damage that person’s reputation, for fear of a lawsuit, negative publicity, and plummeting internal morale. This means that a person who rejects, or is rejected by, one company’s one-party system can, at the least, transition over to another company that might have a better one party in charge. There is, although not to the degree that there should be, some competition among corporate managers, and that generally keeps most of them from being truly awful. On the other hand, venture capitalists, with their culture of note-sharing, collusion, and market manipulation (one which if it were applied to publicly-traded stocks instead of unregulated private equities, would result in stiff prison sentences for all of them; alas, lawmakers don’t much care what happens to the careers of middle-class 22-year-old programmers) frequently do damage the careers of those who oppose the interests of the group. Most of the VC-era “innovations” in corporate structure and culture– stack-ranking, the intentional encouragement of a machismo-driven and exclusionary culture, fast firing, horrendous health benefits because “we’re a startup”– have been for the worse. The Valley hasn’t “disrupted” the corporate establishment. It’s reinvented it in a much more onerous way. 

So how do the bastards in charge get away with this? The Silicon Valley elite are, mostly, the discards of Wall Street. They weren’t successful in their original home (the corporate mainstream) and they aren’t nearly as smart as the nerds they manage, so what gives them their power? Who gives up the power that they win? Once again, it’s a cheap vote dynamic in place. 

Venture capitalists are intermediaries between passive capital seeking above-normal returns and top technical talent. There’s a lot of passive capital out there coming from people who want to participate, financially, in new technology development. Likewise, there are a lot of smart people with great ideas but no personal ownership of the resources to implement them. The passive capitalists recognize that they don’t have the ability to judge top talent from pretenders (and neither do the narcissistic careerists on Sand Hill Road to whom they trust to their assets, but that’s another discussion) and so they sell their votes. Venture capitalists are the ones who buy those votes and package them into statistically powerful blocs. Once this is done, the decision of a single venture capitalist (bolstered by others in his industry who’ll follow his lead) determines which contender in a new industry will get the most press coverage, the most expensive programming talent, and sufficient evidence of “virality” to justify the next round of funding. 

As programmers, we (sadly) can’t do much to prevent pension funds and municipalities from erroneously trusting these Bay Area investor celebrities who couldn’t tell talent from their own asshole. I’ve said enough, to this point, about that side, and the cheap-vote buying that happens between passive capitalists and the high priests who are supposed to know better. In theory, the poor returns delivered by those agents ought to result in their eventual downfall. After all, shouldn’t people lose faith in the Sand Hill Road elite after more than a decade of mediocre returns? This seems not to be happening, largely because of the long feedback cycle and high variance intrinsic to the venture capital game. Market dynamics work in a more regularized setting, but when there is that much noise and delay in the system, capable direct judgment of talent (before the results come in) is the only reliable way to get decent performance. Unfortunately, the only people with that capability are us, programmers, and we’re near the bottom of the social hierarchy. Isn’t that odd?

So let’s talk about what we can do. Preventing the flow of capital from passive investors into careerist narcissists at VC firms who fund their underqualified friends is probably not within our power at the present time. It’s nearly impossible to prevent someone with a completely different set of interests from cheapening his or her vote. Do so aggressively, and the person is likely to vote poorly (that is, against the common interest and often his own) just to spite the regulator attempting to prevent it, just as a teenage girl might date low-quality men to offend her parents. So let’s talk about our votes.

VC-funded companies (invariably calling themselves “startups”) don’t pay very well, and the equity disbursements typically range from the trivial down to the outright insulting. Yet young engineers flock to them, underestimating the social distance that a subordinate, engineer-level role will give them from the VC king-makers. They work at these companies because they think they’ll be getting personal introductions from the CEO to investors, and join that circuit as equals; in reality, that rarely happens unless contractually specified. They strengthen the feudal reputation economy that the VCs have created by giving their own power away based on brand (e.g., TechCrunch coverage, name-brand investors). 

When young people work for these VC darlings under such rotten terms, they’re devaluing their votes. When they show unreasonable (and historically refuted) trust in corporate management by refusing to organize their labor, they are (likewise) devaluing not only their political pull, but the credibility and leverage of their profession. That’s something we, as a group, can change. We probably can’t fix the way startups are financed in the next year; maybe, if we play our local politics right and enhance our own status and credibility, we’ll have that power in ten. We can start to clean up our own backyards, and we should. 

Sadly, talent does need access to capital, more than capital needs talent. The pressing needs of the day have given capital, for over a century, that basic supremacy over labor: “you need to eat, I can wait.” But does talent need access to a specific pool of capital controlled by narcissists living in a few hundred square miles of California office park? No, it doesn’t. We need money, but we don’t need them. On the other hand, if the passive investors who provide the capital that fuels their careers even begin to pay the littlest bit of attention, the VCs will need us. After all, it’s the immense productive capacity of what we do (not what VCs do) that gives venture capital the “sexiness” that excuses its decade-plus of mediocrity. Their ability to coast, and to fund suboptimal founders, rests on the fact that no one is paying attention to whether they do their jobs well, the assumption being that we (technologists) will stay on their manor, passively keeping our heads down and saying, “politics is someone else’s job; I just want to solve hard problems.” As long as we live on the VCs’ terrain, there is no way for passive investors to get to us except through Sand Hill Road. But there is no reason for that to continue. We have the power to spot, and to vote against, bad companies (and terrible products, and demoralizing corporate cultures) as and before they form. And we ought to be using it. As I’ve said before, we as software engineers and technologists have to break out of our comfort zones and (dare I say it?) get political.

Silicon Valley may not be fixable

I’ve come to an upsetting conclusion about Silicon Valley. There’s always been a hold-out hope that I’ve had that it could be fixed, and the balance of power restored to where it belongs (lifelong technologists and engineers) rather than where it currently resides, and categorically does not belong (managers, investors, non-technologists). Traditional business culture, focused on power relationships and emotions and influence peddling, has invaded the Valley and created a rash of startups with mediocre products, terrible treatment of talent, and little respect for users, employees, or technology as a whole. The result has underperformed from a return-on-investment perspective, but remained in force because it makes the well-connected exceedingly rich (at the expense of average workers, and of passive investors).  

This is disturbing because, while there are many in Silicon Valley who think that they are ready to rule, that is proven false by some humiliating, and public, failures of that ecosystem. For one thing, the real winners, in the Bay Area, aren’t technology people but landlords. The housing situation in San Francisco alone is sufficient to prove that “nerds”, at least of that stripe, aren’t ready to rule. 

We’ve also seen a hard-core Damaso Effect. The highest-status people in the Valley aren’t lifelong technologists, but people who failed out of the corporate mainstream, and are bossing nerds around as a second act. Passed over for MD at Goldman Sachs? Go to California, become a VC partner, and boss nerds around. Bottom 5% of your class in business school, untouchable even by second-rate management consultancies? Congratulations, you’re now the VP of HR at a well-funded, 100-person startup.

If the highest positions in the Valley are reserved for people who failed out of the dominant, old-style, “paper belt” culture, then we’re not going to see much innovation or “nerdiness”. Indeed, most of the winners in this crop are well-connected, full-blooded douchebags like Evan Spiegel and Lucas Duplan, who couldn’t even code themselves a better haircut. The unsettling but faultless distinction of being the last genuine nerd to succeed in the Valley probably goes to Mark Zuckerberg.

The new Valley isn’t one where underdogs can succeed. It’s not a place where land is cheap and ideas flow freely. Instead, it’s where highly productive and often creative, but politically disorganized, people (“nerds”) are treated as a resource from which value is extracted. The dominating culture of the Valley now is that of resource extraction. Economically, the latest incarnation has more in common with Saudi Arabia than with what Silicon Valley used to be. The only difference is that, instead of oil being drilled out of the ground, it’s hours of effort and creative passion being mined from talented but politically clueless (and usually quite young) software professionals, who haven’t figured out yet that their work is worth several times what they’re paid to do it, and that the importance of their skills ought to command some basic respect and equity. 

All this said, I’d like to step away from the name-calling and mudslinging. This isn’t some high-minded rejection of those impulses, because I love name-calling and mudslinging. I just want to take a more technical tack. It is fun to pillory the worst people (and that’s why I’m a faithful reader of Valleywag) but, nonetheless, their mere existence shouldn’t prevent the good guys (“nerds”) from succeeding. And, of course, the tribalism that I sometimes invoke (good nerds versus evil businessmen) is, if taken literally, quite ridiculous. There are bad nerds and there are good business people, and I’ve never wanted to imply otherwise. What’s distressing about the Valley is that it so rarely attracts the good business people.

In fact, the bad reputation of business people in the Valley, I think, stems largely from the fact that the competent ones never go there, instead working on billion-dollar Wall Street deals. This makes it easy for a young programmer to forget (or to never know) that they exist. The competent, ethical business people tend either to stay in New York and climb the finance ladder and end up running hedge funds, or deliberately downshift and run smaller “lifestyle” businesses or elite consultancies. Either they win the corporate game, or they leave it, but they don’t half-ass it by playing a less competitive but equally soulless corporate game on the other coast. It’s the inept and malignant ones who tend to find their way out to the Valley, attracted by the enormous “Kick Me” sign that each generation of young software engineers has on its back. 

The degenerate balance of power in the Valley attracts the bad business people, those who can’t make it on their home turf. Meanwhile, the talented and scrupulous ones tend to avoid it, not wanting the association. If the worst students out of Harvard Business School are becoming startup founders and venture capitalists and building nerd armies to build toilet check-in apps, then the best students from those programs are going to stay far away from that ecosystem. 

So why is the balance of power so broken, in the Valley? I think the answer is its short-term focus. To put numbers to it, let’s note that a typical Valley startup requires a business co-founder (who’ll become CEO) and a technical one (who’ll become CTO). The business co-founder raises money, and the technology co-founder builds the product and team. The general rule with founder inclusion is “Code or Contacts”. If someone’s not packing either, you can’t afford the complexity and cost of making him a founder. Both seem important, so why does the “Contacts” side tend to win? Why can’t “Code” people catch a break?

Let’s look at it as a bilateral matching problem, like dating, and assign an attractiveness level to each. For the purposes of this essay, I’m using a 10-point rating scale. 0-2 are the unqualified, 3-4 are the hangers-on, and 5-6 are average among the set (a fairly small one) of people equipped to found startups at all. 7-8 are the solid players of evident high capability, and 9-10 occur at a rate of a few per generation, and people tend to make “Chuck Norris” jokes about them.

You’d expect 10s to match with 10s, 4s with 4s, and so on. Of course, externalities can skew the market and push one side down a notch. In a typical college environment, for an example, women are more attractive to older men (including graduate students and professors) and therefore have more options, and thus more power, than their same-age male counterparts. Mature women simply have no interest in 18-year-old men, while older men do frequently pair off with young women. That power dynamic tends to reverse with age, to the point that women have a justified grievance about the dating scene later in life; but in college, women hold all the cards. 

What does it look like in technology? I’m a Technology 8 and, realistically, I couldn’t expect to pair with a Business 8. It’s not that the Biz 8 is rarer or better than the Tech 8. It’s just that he has more options. Technology people are rated based on what they know and can do. Business people are rated based on connections and what they can squeeze out of their pre-existing relationships. A Business 5 would be a typical graduate of a top-10 MBA program with the connections that implies. A Business 6 has enough contacts to raise venture funding, on reasonable terms, with a product. A Business 7 can raise a Series-A without a product, is frequently invited to lunch with CEOs of large companies, and could become partner at Sequoia on a conversation. What about my at-level counterpart, the Business 8? He’s probably not even in venture-funded technology. He likely has a personal “search fund” and is doing something else. 

The Business 8s and 9s have so many options outside of the Valley that they’re almost never seen there. In fact, a genuine Business 8 who entered the Valley would likely become the most powerful person in it. On the other hand, Technology 8’s like me aren’t nearly as rare. In fact, and it seems almost tautological that it would be this way, Tech 10s and 9s and 8s are found predominantly in technology. Where else would they go?

In a weird way, the Tech 10s are in a disadvantageous position because they have to stay in the industry to remain Tech 10s. The typical Tech 10 works on R&D in a place like Google X, and there aren’t many jobs that offer that kind of autonomy. If he leaves that world, he’ll slide down to Tech 9 (or even 8) status in a few years. The technical co-founder’s major asset requires continual work to remain sharp, and at the 7+ level, it’s pretty damn competitive. The business co-founders asset (connection) is much less perishable. In fact, the weird benefit of connections is that they get more powerful with time. College connections are taken to be much deeper than professional ones, and prep-school connections run deeper still. Why? Because connections and pedigree are all about nostalgia. Blue blood runs deep and must be old; otherwise, it won’t be properly blue. For all of our mouth-honored belief in progress as a technological society, we’re still run by people who are inflexibly backward-looking and neophobic. It’s no wonder, one might remark, that Silicon Valley’s greatest contribution to the world over the past five years has been a slew of toilet check-in apps. 

The Tech 8s and 9s and 10s are generally funneled into technology, because few other environments will even let them maintain (much less improve) their skills. On the other hand, the Biz 8s and 9s and 10s are drawn away by other and better options. Alone, this wouldn’t be that devastating. On both scales, there are more people at each level than at the ones above it, so the absence of the Biz 8+ might have the Tech 8-10s pairing with Biz 7s and the Tech 7s pairing with Biz 6s. Fine; they’ll live. A Biz 6 or 7 can still open plenty of doors. Speaking as a Tech 8, I’d be happy to pair with a Biz 7 as an equal partner. 

Unfortunately, the advantage of business co-founders seems to be about 3-4 points, at any level. That’s what you way pay for their connections. If you’re a Tech 6 and you pair up with a Biz 2-3 co-founder, you’ll probably split the equity evenly (but raising money will be extremely difficult, if not impossible). Pair with a Biz 4, as a Tech 6, and you’ll probably get a third of what he does. If you pair with a Biz 6 co-founder, you’re likely to get 5%. It’s unfair, and unreasonable, but that’s where the market seems to have settled. Why? Removal of the Business 8+ from the market is not, alone, enough to explain it. 

I’ve explained that the business people have up-flight options into other industries. They also have down-flight options when it comes to picking co-founders. If a Tech 8 turns down a Biz 8 to work with a Biz 6, then he’s saying no to someone with millions in VC funding that is essentially already-in-hand, in order to work with someone who might be able to deliver Sequoia after 6 months of work on the product. The Biz 8 is so trusted by the investors that the Tech 8 will probably get a raise to take the founder job; if he works for the Biz 6, he’ll end up working for free for half a year. What, on the other hand, happens to a Biz 8 who turns down his Tech-8 counterpart for a Tech 6? 

The answer is… (crickets) nothing. Investors simply don’t care about the difference. The Biz 8 could pair with a Tech 3 or even another business guy and, while the technical infrastructure of company would be terrible, it wouldn’t really matter. In the Valley, technology is just made to be sold, not actually used. Why hire a Tech 7+ who’s going to make annoying sounds about “functional programming” and “deep neural nets” when you can just hire another VC-connected salesman? Why worry about building a company “for investors” when, with more-connected people involved, you can always just get more investors to pay back the early ones? 

At any chosen level, the business co-founder can choose a tech co-founder 2 to 4 points below him and not lose very much. Strong technical leadership matters if the business is going to last a long time, but these companies are built to be sold or shot dead within four years, so who cares if the technology sucks? To the Biz 8, a Tech 4 willing to take a terrible equity split is a good-enough substitute for the Tech 8. The same doesn’t hold for the Tech 8. Expecting a Biz 4 to handle the VCs is just not an option for him. Even if a Biz 4 or 5 is able to get venture capital, and that itself is unlikely, he’ll probably still be eaten alive by the investors, resulting in terms like “participating preferred” that will emasculate the entire company. 

What all this means is that the business co-founders are more essential because not only are they rarer, but because these businesses don’t last long enough– and aren’t built to last, either– for poor technical leadership to really matter. In such a climate, the leverage of the Tech 7+ is incredibly weak. The value offered by a genuine Tech 8 in the early stages is crucial to a company if one takes a 5- or 10- or 20-year-view, but no one does that anymore. No one cares beyond the sale. The perverse result of this is that technical talent has become non-essential on its home turf. As a result, more power accrues every month to the vision-less, egotistical business guys running the show in Silicon Valley, and lifelong technologists (“nerds”) are even more of a marginalized class. 

I’d like to say that I know how to fix this, how to kill the next-quarter mentality and drive the invaders back out of this wonderful territory (cutting-edge technology) where they are most unwelcome, but the truth is that I don’t know what to do. The short-term mentality seems to be a permanent fixture and, in that light, I don’t think that talented technologists are ever going to get a fair shake against influence peddlers, manipulators, and merchants of connections. I’m sorry, but I can’t fix it, and I don’t know whether it can be fixed. 

How the Other Half Works: an Adventure in the Low Status of Software Engineers

Bill (not his real name, and I’ve fuzzed some details to protect his identity) is a software engineer on the East Coast, who, at the time (between 2011 and 2014) of this story, had recently turned 30 and wanted to see if he could enter a higher weight class on the job market. In order to best assess this, he applied to two different levels of position at roughly equivalent companies: same size, same level of prestige, same U.S. city on the West Coast. To one company, he applied as a Senior Software Engineer. To the other, he applied for VP of Data Science.

Bill had been a Wall Street quant and had “Vice President” in his title, noting that VP is a mid-level and often not managerial position in an investment bank. His current title was Staff Software Engineer, which was roughly Director-equivalent. He’d taught a couple of courses and mentored a few interns, but he’d never been an official manager. So he came to me for advice on how to appear more “managerial” for the VP-level application.

The Experiment

His first question was what it would take to get “managerial experience” in his next job. I was at a loss, when it comes to direct experience, so my first thought was, “Fake it till you make it”. Looking at his résumé, the “experiment” formed in my mind. Could I make Bill, a strong but not exceptional data-scientist-slash-software-engineer, over into a manager? The first bit of good news was that we didn’t have to change much. Bill’s Vice President title (from the bank) could be kept as-is, and changing Staff Software Engineer to Director didn’t feel dishonest, because it was a lateral tweak. If anything, that’s a demotion because engineering ladders are so much harder to climb, in dual-track technology companies, than management ladders.

Everything in Bill’s “management résumé” was close enough to true that few would consider it unethical. We upgraded his social status and management-culture credibility– as one must, and is expected to, do in that world– but not his technical credentials. We turned technical leadership into “real”, power-to-fire leadership, but that was the only material change. We spent hours making sure we weren’t really lying, as neither Bill nor I was keen on damaging Bill’s career to carry out this experiment, and because the integrity of the experiment required it.

In fact, we kept the management résumé quite technical. Bill’s experience was mostly as implementor, and we wanted to stay truthful about that. I’ll get to the results of the experiment later on, but there were two positive side effects of his self-rebranding, as a “manager who implemented”. The first is that, because he didn’t have to get his hands dirty as a manager, he got a lot of praise for doing things that would just have been doing his job if he were a managed person. Second, and related to the first but far more powerful, is that he no longer had to excuse himself for menial projects or periods of low technical activity. As opposed to, “I was put on a crappy project”, which projects low status, his story evolved into “No one else could do it, so I had to get my hands dirty”, which is a high-status, managerial excuse for spending 6 months on an otherwise career-killing project. Instead of having to explain why he didn’t manage to get top-quality project allocation, as one would ask an engineer, he was able to give a truthful account of what he did but, because he didn’t have to do this gritty work, it made him look like a hero rather than a zero.

What was that project? It’s actually relevant to this story. Bill was maintaining a piece of old legacy code that took 40,000 lines to perform what is essentially a logistic regression. The reason for this custom module to exist, as opposed to using modern statistical software instead, was that a variety of requirements had come in from the business over the years, and while almost none of these custom tweaks were mathematically relevant, they all had to be included in the source code, and the program was on the brink of collapsing under the weight of its own complexity. These projects are career death for engineers, because one doesn’t learn transferrable skills by doing them, and because maintenance slogs don’t have a well-defined end or “point of victory”. For Bill’s technical résumé, we had to make this crappy maintenance project seem like real machine learning. (Do we call it a “single-layer neural network”? Do we call the nonsensical requirements “cutting-edge feature engineering”?) For his management résumé, the truth sufficed: “oversaw maintenance of a business-critical legacy module”.

In fact, one could argue that Bill’s management résumé, while less truthful on-paper, was more honest and ethical. Yes, we inflated his social status and gave him managerial titles. However, we didn’t have to inflate his technical accomplishments, or list technologies that he’d barely touched under his “Skills” section, to make a case for him. After a certain age, selling yourself as an engineer tends to require (excluding those in top-notch R&D departments or open-allocation shops) that you (a) only work on the fun stuff, rather than the career-killing dreck, and play the political games that requires, (b) mislead future employers about the quality of your work experience, or (c) spend a large portion of your time on side projects, which usually turns into a combination of (a) and (b).

Was this experiment ethical? I would say that it was. When people ask me if they should fudge their career histories or résumés, I always say this: it’s OK to fix prior social status because one’s present state (abilities, talents) is fully consistent with the altered past. It’s like formally changing a house’s address from 13 to 11 before selling it to a superstitious buyer: the fact being erased is that it was once called “13”, one that will never matter for any purpose or cause material harm to anyone. On the other hand, lying about skills is ethically wrong (it’s job fraud, because another person is deceived into making decisions that are inconsistent with the actual present state, and that are possibly harmful in that context) and detrimental, in the long term, to the person doing it. While I think it’s usually a bad idea to do so, I don’t really have a moral problem with people fudging dates or improving titles on their résumés, insofar as they’re lying about prior social status (a deception as old as humanity itself) rather than hard currencies like skills and abilities.

Now, let’s talk about how the experiment turned out.

Interview A: as Software Engineer

Bill faced five hour-long technical interviews. Three went well. One was so-so, because it focused on implementation details of the JVM, and Bill’s experience was almost entirely in C++, with a bit of hobbyist OCaml. The last interview sounds pretty hellish. It was with the VP of Data Science, Bill’s prospective boss, who showed up 20 minutes late and presented him with one of those interview questions where there’s “one right answer” that took months, if not years, of in-house trial and error to discover. It was one of those “I’m going to prove that I’m smarter than you” interviews.

In the post-mortem, I told Bill not to sweat that last interview. Often, companies will present a candidate with an unsolved or hard-to-solve problem and don’t expect a full solution in an hour. I was wrong on that count.

I know people at Company A, so I was able to get a sense of how things went down. Bill’s feedback was: 3 positive, 1 neutral, and 1 negative, exactly as might have been expected from his own account. Most damning were the VP’s comments: “good for another role, but not on my team“. Apparently the VP was incensed that he had to spend 39 and a half minutes talking to someone without a PhD and, because Bill didn’t have the advanced degree, the only way that that VP would have considered him good enough to join would be if he could reverse-engineer the firm’s “secret sauce” in 40 minutes, which I don’t think anyone could.

Let’s recap this. Bill passed three of his five interviews with flying colors. One of the interviewers, a few months later, tried to recruit Bill to his own startup. The fourth interview was so-so, because he wasn’t a Java expert, but came out neutral. The fifth, he failed because he didn’t know the in-house Golden Algorithm that took years of work to discover. When I asked that VP/Data Science directly why he didn’t hire Bill (and he did not know that I knew Bill, nor about this experiment) the response I got was “We need people who can hit the ground running.” Apparently, there’s only a “talent shortage” when startup people are trying to scam the government into changing immigration policy. The undertone of this is that “we don’t invest in people”.

Or, for a point that I’ll come back to, software engineers lack the social status necessary to make others invest in them.

Interview B: as Data Science manager.

A couple weeks later, Bill interviewed at a roughly equivalent company for the VP-level position, reporting directly to the CTO.

Worth noting is that we did nothing to make Bill more technically impressive than for Company A. If anything, we made his technical story more honest, by modestly inflating his social status while telling a “straight shooter” story for his technical experience. We didn’t have to cover up periods of low technical activity; that he was a manager, alone, sufficed to explain those away.

Bill faced four interviews, and while the questions were behavioral and would be “hard” for many technical people, he found them rather easy to answer with composure. I gave him the Golden Answer, which is to revert to “There’s always a trade-off between wanting to do the work yourself, and knowing when to delegate.” It presents one as having managerial social status (the ability to delegate) but also a diligent interest in, and respect for, the work. It can be adapted to pretty much any “behavioral” interview question.

As a 6-foot-1, white male of better-than-average looks, Bill looked like an executive and the work we did appears to have paid off. In each of those interviews, it only took 10 minutes before Bill was the interviewer. By presenting himself as a manager, and looking the part, he just had an easier playing field than a lifelong engineer would ever get. Instead of being a programmer auditioning to sling code, he was already “part of the club” (management) and just engaging in a two-way discussion, as equals, on whether he was going to join that particular section of the club.

Bill passed. Unlike for a typical engineering position, there were no reference checks. The CEO said, “We know you’re a good guy, and we want to move fast on you”. As opposed tot he 7-day exploding offers typically served to engineers, Bill had 2 months in which to make his decision. He got a fourth week of vacation without even having to ask for it, and genuine equity (about 75% of a year’s salary vesting each year).

I sat in when Bill called to ask about relocation and, honestly, this is where I expected the deal to fall apart. Relocation is where so many offers fall to pieces. It’s a true test of whether a company actually sees someone as a key player, or is just trying to plug a hole with a warm body. The CEO began by saying, “Before getting into details, we are a startup…”

This was a company with over 100 employees, so not really a startup, but I’m going to set that aside for now. I was bracing for the “oh, shit” moment, because “we’re a startup” is usually a precursor to very bad news.

“… so we’ll cover the moving costs and two months of temporary housing, and a $10,000 airfare budget to see any family out East, but we can’t do loss-on-sale for the house, and we can’t cover realtor fees.”

Bill was getting an apology because the CEO couldn’t afford a full executive relocation workup. (“We’re just not there yet.”) For a software engineer, “relocation” is usually some shitty $3,000 lump-sum package, because “software engineer”, to executives, means “22-year-old clueless male with few possessions, and with free storage of the parental category”. On the other hand, if you’re a manager, you might be seen as a real human being with actual concerns about relocating to another part of the country.

It was really interesting, as I listened in, to see how different things are once you’re “in the club”. The CEO talked to Bill as an equal, not as a paternalistic, bullshitting, “this is good for your career” authority figure. There was a tone of equality that a software engineer would never get from the CEO of a 100-person tech company.

Analysis

Bill has a superhuman memory and took a lot of notes after each interview, so there was plenty to analyze about this sociological experiment. It taught me a lot. At Company A, Bill was applying for a Senior Engineer position and his perceived “fit” seemed to start at 90. (Only 90, for his lack of PhD and Stanford pedigree.) But everything he didn’t know was points off. No experience with Spring and Struts? Minus 5. Not familiar with the firm’s Golden Algorithm? Not a real “data scientist”; minus 8. No Hadoop experience? Minus 6. Bill was judged on what he didn’t know– on how much work it would take to get him up to speed and have him serving as a reliable corporate subordinate.

Company B showed a different experience entirely. Bill started at 70, but everything he knew was a bonus. He could speak intelligently about logistic regression and maximum likelihood methods? Plus 5. He’s actually implemented them? Plus 6. He knows about OCaml? Plus 5. Everything he knew counted in his favor. I’d argue that he probably scored these “points” for irrelevant “interesting person” details, like his travel.

When a programmer gets to a certain age, she knows a lot of stuff. But there’s a ton of stuff she doesn’t know, as well, because no one can know even a fraction of everything that’s going on in this industry. It’s far better, unless you’re applying for a junior position, to start at 70 and get credit for everything you do know, than to start at 90 (or even 100) and get debited for the things you don’t know.

This whole issue is about more than what one knows and doesn’t know about technology. As programmers, we’re used to picking up new skills. It’s something we’re good at (even if penny-shaving businessmen hate the idea of training us). This is all about social status, and why status is so fucking important when one is playing the work game– far more important than being loyal or competent or dedicated.

Low and high status aren’t about being liked or disliked. Some people are liked but have low status, and some people are disliked but retain high status. In general, it’s more useful and important to have high status at work than to be well-liked. It’s obviously best to have both, but well-liked low-status people get crap projects and never advance. Disliked high-status people, at worst, get severance. As Machiavelli said, “it is far safer to be feared than loved if you cannot be both.” People’s likes and dislikes change with the seasons, but a high-status person is more unlikely to have others act against his interests.

Moreover, if you have low social status, people will eventually find reasons to dislike you unless you continually sacrifice yourself in order to be liked, and even that strategy runs out of time. At high social status, they’ll find reasons to like you. At low status, your flaws are given prime focus and your assets, while acknowledged, dismissed as unimportant or countered with “yes, buts” which turn any positive trait into a negative. (“Yes, he’s good in Clojure, but he’s might be one of those dynamic-typing cowboy coders!” “Yes, he’s good in Haskell, but that means he’s one of those static-typing hard-asses.” “Yes, he’s a good programmer, but he doesn’t seem like a team player.”) When you have low status, your best strategy is to be invisible and unremarkable, because even good distinctions will hurt you. You want to keep your slate ultra-clean and wait for mean-reversion to drift you into middling status, at which point being well-liked can assist you and, over some time– and it happens glacially– bring you upper-middle or high status.

When you have high status, it’s the reverse. Instead of fighting to keep your slate blank, it’s actually to your benefit to have things (good things) written about you on it. People will exaggerate your good traits and ignore the bad ones (unless they are egregious or dangerous). You start at 70 and people start looking for ways to give you the other 30 points.

The Passion of the Programmer

I’ve always felt that programmers had an undeserved low social status, and the experiment above supports that claim. Obviously, these are anecdotes rather than data, but I think that we can start to give a technical definition to the low social status of “software engineers”.

Whether programmers are over- or underpaid usually gets into debates about economics and market conditions and, because those variables fluctuate and can’t be measured precisely enough, the “are programmers (under|over)-paid?” debate usually ends up coming down to subjective feelings rather than anything technical. Using this technical notion of status– whether a person’s flaws or positive traits are given focus– we have the tools to assess the social status of programmers without comparing their salaries and work conditions to what we feel they “deserve”. If you are in a position where people emphasize your flaws and overlook your achievements, you have low social status (even if you make $200,000 per year, which only means efforts to cut your job will come faster). If the opposite is true, you have high social status.

Using this lens, the case for the low social status of the programmer could not be any clearer. We’ll never agree on a “platonically correct” “fair value” for an engineer’s salary. What can see is that technologists’ achievements are usually under-reported by the businesses in which they work, while their mistakes are highlighted. I’ve worked in a company where the first thing said to me about a person was the production outage he caused 4 years ago, when he was an intern. (Why is nothing said about the manager who let an intern cause an outage? Because that manager was a high status person.) A big part of the problem is that programmers are constantly trying to one-up each other (see: feigned surprise) and prove their superior knowledge, drive, and intelligence. From the outside (that is, from the vantage point of the business operators we work for) these pissing contests make all sides look stupid and deficient. By lowering each others’ status so reliably, and when little to nothing is at stake, programmers lower their status as a group.

There was a time, perhaps 20 years gone by now, when the Valley was different. Engineers ran the show. Technologists helped each other. Programmers worked in R&D environments with high levels of autonomy and encouragement. To paraphrase from one R&D shop’s internal slogan, bad ideas were good and good ideas were great. Silicon Valley was an underdog, a sideshow, an Ellis Island for misfits and led by “sheepdogs” intent on keeping mainstream MBA culture (which would destroy the creative capacity of that industry, for good) away. That period ended. San Francisco joined the “paper belt” (to use Balaji Srinivasan’s term) cities of Boston, New York, Washington and Los Angeles. Venture capital became Hollywood for Ugly People. The Valley became a victim of its own success. Bay Area landlords made it big. Fail-outs from MBA-culture strongholds like McKinsey and Goldman Sachs found a less competitive arena in which they could boss nerds around with impunity; if you weren’t good enough to make MD at the bank, you went West to become a VC-funded Founder. The one group of people that didn’t win out in this new Valley order were software engineers. Housing costs went up far faster than their salaries, and they were gradually moved from being partners in innovation to being implementors’ of well-connected MBA-culture fail-outs’ shitty ideas. That’s where we are now.

So what happened? Was it inevitable that the Valley’s new wealth would attract malefactors, or could this have been prevented? I actually think that it could have been stopped, knowing what we know now. Would it be possible to replicate the Valley’s success in another geographical area (or, perhaps, in a fully distributed technical subculture) without losing our status and autonomy once the money spotted it and came in? I think so, but it’ll take another article to explain both the theoretical reasons why we can hold advantage, and the practical strategies for keeping the game fair, and on our terms. That’s a large topic, and it goes far beyond what I intend to do in this article.

The loss of status is a sad thing, because technology is our home turf. We understand computers and software and the mathematical underpinnings of those, and our MBA-culture colonizers don’t. We ought to have the advantage and retain high status, but fail at doing so. Why? There are two reasons, and they’re related to each other.

The first is that we lack “sheep dogs”. A sheep dog, in this sense, is a pugnacious and potentially vicious person who protects the good. A sheep dog drives away predators and protects the herd. Sheep dogs don’t start fights, but they end many– on their terms. Programmers don’t like to “get political”, and they dislike it even when their own kind become involved in office politics, and the result is that we don’t have many sheep dogs guarding us from the MBA-culture wolves. People who learn the skills necessary to protect the good, far too often, end up on the other side.

The second is that we allow “passion” to be used against us. When we like our work, we let it be known. We work extremely hard. That has two negative side effects. The first is that we don’t like our work and put in a half-assed effort like everyone else, it shows. Executives generally have the political aplomb not to show whether they enjoy what they’re doing, except to people they trust with that bit of information. Programmers, on the other hand, make it too obvious how they feel about their work. This means the happy ones don’t get the raises and promotions they deserve (because they’re working so hard) because management sees no need to reward them, and that the unhappy ones stand out to aggressive management as potential “performance issues”. Not to be passionate is almost a crime, especially in startups. We’re not allowed to treat it as “just a job” and put forward above-normal effort only when given above-normal consideration. We’re not allowed to “get political” and protect ourselves, or protect others, because we’re supposed to be so damn “passionate” that we’d do this work for free.

What most of us don’t realize is that this culture of mandatory “passion” lowers our social status, because it encourages us to work unreasonably hard and irrespective of conditions. The fastest way to lose social status is to show acceptance of low social status. For example, programmers often make the mistake of overworking when understaffed, and this is a terrible idea. (“Those execs don’t believe in us, so let’s show them up by… working overtime on something they own!”) To do this validates the low status of the group that allows it to be understaffed.

Executives, a more savvy sort, lose passion when denied the advancement or consideration they feel they deserve. They’re not obnoxious about this attitude, but they don’t try to cover it up, either. They’re not going to give a real effort to a project or company that acts against their own interests or lowers their own social status. They won’t negotiate against themselves by being “passionate”, either. They want to be seen as supremely competent, but not sacrificial. That’s the difference between them and us. Executives are out for themselves and relatively open about the fact. Programmers, on the other hand, heroize some of the stupidest forms of self-sacrifice: the person who delivers a project (sacrificing weekends) anyway, after it was cancelled; or the person who moves to San Francisco without relocation because he “really believes in” a product that he can’t even describe coherently, and that he’ll end up owning 0.05% of.

What executives understand, almost intuitively, is reciprocity. They give favors to earn favors, but avoid self-sacrifice. They won’t fall into “love of the craft” delusions when “the craft” doesn’t love them back. They’re not afraid to “get political”, because they realize that work is mostly politics. The only people who can afford to be apolitical or “above the fray”, after all, are the solid political winners. But until one is in that camp, one simply cannot afford to take that delusion on.

If programmers want to be taken seriously, and we should be taken seriously and we certainly should want this, we’re going to have to take stock of our compromised position and fix it, even if that’s “getting political”. We’re going to have to stop glorifying pointless self-sacrifice for what is ultimately someone else’s business transaction, and start asserting ourselves and our values.

Never relocate unpaid

Someone asked me, a few months ago, if he should take a Silicon Valley (actually, San Francisco) job offer where the relocation was a “generous” $4,000. I told him to negotiate for more and, if the company wouldn’t budge, to decline. For an adult, that’s not a relocation package. That’s half-assery. 

I won’t get too particular on the details, but this person lived on the East Coast and had children. For an adult of any kind facing a cross-country move, $4,000 is not a generous relocation package. It’s downright pathetic. Movers don’t work for equity. A full-service move for an adult, with a family, costs at least twice that number. When you move for a job, your employer is still going to expect you to start as soon as possible and be 100% on-the-ball in your first weeks. You can’t take on a self-move and start a new job properly. If you do have that kind of energy, it means you’re the alpha-trader type who should be on Wall Street, not taking employee positions at startups. For the 99.99% of us who are mere mortals, taking on a self-move means you’ll be slacking at your job in the first weeks and, while slacking might be OK when you’re 3 years in and just waiting for something better to come along, it’s not a way to start a job– especially not a job you moved across the country to take.

In addition to the small size of that package, I think lump-sum relocations are a bad deal in general. I think they fail for both sides. They’re bad for the employee because, in addition to losing a chunk of it to taxes, the lump-sum arrangement leaves it to the employee to make arrangements and haggle. The employer, however, risks getting the amount severely wrong, while not getting the major benefit of a relocation, which is a 100%-focused employee with high morale, because the employee still has to haggle with movers and manage minutiae. A good employer, knowing how toxic moving stress can be, will solve every niggling, stupid little problem that comes up in the process of relocation. They’ll have a trusted moving company, rather than expecting the employee to make the calls and compare costs. (If the moving company’s client is the company, rather than you, they’ll do a good job because they want repeat business– a concern that isn’t there with “man with a van” outfits.) They’ll manage the flight and, with a high-quality placement agency involved, have an interview per day lined up for the spouse until he or she gets a good job. If you’re moving internationally, you’ll get an extra week or two of vacation (and you won’t have to ask for it) each year and they’ll have tax equalization already worked out. Why? Because genuinely good employers (who are rare these days) want their best people on, 100 percent, rather than phoning it in at their jobs because they’re fighting little piss fires in their personal lives.

I know that relocation is derided as an “old-style perk” in the Valley. If you broach the subject, you risk seeming entitled, high-maintenance, and worst of all, old. Most companies in the Valley don’t fall under the “good employers” qualification. Most of these Valley “startups” are just long-shot gambles running on a shoestring budget, and their real purpose isn’t to build businesses but to try out middling product managers (called “CEOs” of semi-existent, non-autonomous companies) for promotion into the investor ranks (EIRs or associates or partners at VC firms). The reason they can’t pay or relocate properly is that, while investors are handing these half-companies pennies and saying “Humor me”, even their own backers don’t trust the companies enough to take a real risk and give them the resources that’d enable them to pay real salaries and benefits. This raises the question, for the employee: if the investors aren’t willing to bet on that business, then why should you?

Anyway, this person didn’t heed my advice, took the job anyway, left a few months later and, from the titles and prestige of the following company, the next move appears to have been a demotion. I can’t speak for what happened or whether my perception (based on LinkedIn) of a demotion is correct. I generally cut ties with people who make bad decisions, so I haven’t heard his side.

California, here we come

So, there’s an epidemic of Shitty Relo (or even nonexistent relo) in Silicon Valley and it’s California arrogance at its finest. I need to address it, for the good of society. The mythology justifying it is that California is such a wonderful place to live, with its traffic and absurd real estate prices and brogrammers, that a $2,500 relocation package for an adult (meaning, here, 25+ and no longer allowed to live without furniture, because it’s just not socially acceptable to sleep on a hand-me-down mattress with no bed) is to be taken as a perk rather than a fuck-you. 

This culture of cheapness is disgusting. One time a couple of years ago, I spoke to a startup about a supposedly “VP-level” role and, when it came time to discuss an on-site interview, they asked if I could apply to another company (that would cover travel costs) and “piggyback” their interview process on the same day– that is, go to them in the evening after an all-day interview with another company– sparing them the cost of flights and a hotel. At that point, I stopped returning their calls, because I knew that if they couldn’t spring for airfare, they wouldn’t be willing or able to do the right thing when it came to relocation, so there was no point in continuing. 

Frankly, I think that the “we don’t do relo” policy is short-sighted if not idiotic. I checked my almanac to be sure, but the world is very big. No metropolitan area has anywhere close to a dominating share of the global talent pool. The Bay Area has some impressive people (and a much larger number of not-impressive people who still command impressive salaries) but if you’re serious about competing for talent, you just can’t restrict yourself to one geographic area. Not in 2014. Either set yourself up to be distributed (which is hard to do) or man the fuck up and pay for talent and pay for it to move. Otherwise, you aren’t serious about winning and you deserve to lose.

Oh, and another thing…

Then there is the matter of relocation clawbacks. Many companies put a stipulation on a relocation package that it must be repaid if the employee leaves within a certain timeframe. On what moral grounds is this OK? Did that employee not suffer the costs of relocation, either way? Do movers reimburse a person who relocated for a job that turned out to be a stinker? Of course they don’t, because they still did the work and that would be ludicrous. Almost no one joins a job expecting to leave in a year, which means people only will do so if things get really shitty. Why make it worse, by imposing a ridiculous penalty, if things go bad? Chances are, if the employee is willing to leave a company in the first year, that the company is partially at fault. The purely opportunistic “job hopper” is a hated straw man for employers, because the reality is that at least 75 percent of employers are just shitty (and bad at hiding it, so savvy people leave quickly). I don’t know why it’s considered a virtue to waste one’s life by investing in an employer that isn’t invested in one’s own career. It’s not. 

Clawbacks aren’t usually a big deal (it’s not hard to stay at a company for a year) but they send a strong signal: we employ at least one person who enjoys shitting in places where fecal matter doesn’t belong. That clawback clause didn’t appear by accident. It’s not likely that cosmic rays hit the hard drive where the contract template was stored and just happened to put additional words there. Someone in that company, at some time, made the decision to include a clawback clause. And I’m sorry, but the people who try to earn their keep by shitting on things should be fired. Companies are complex beasts and need a wide variety of services to maintain and grow them. What they don’t need are people who indiscriminately shit on things because it amuses them to leave festering piles of dookie all over the company. If I wanted to see creatures shitting indiscriminately, I’d go to the zoo. The issue with a relocation clawback isn’t the economic risk for employee, but the fact that the company actually retains someone who took the time to put that garbage in the contract.

The bigger problem

In this essay, I’ve Solved It with regard to relocation, because it actually is a simple issue: if you’re a company, play or go home. If you’re a prospective employee and you’re offered an inadequate relocation package, turn the job down. If the company was serious about winning, they’d give you what you need to pull off the move properly. These, “oh yeah, we offer $2000″ fly-by-night startups aren’t serious about winning. They don’t need top talent. What they need are clueless, naive, true believers who’ll throw enough hours and youthful enthusiasm behind a bad idea to continue the founders’ campaign to defraud investors. It’s best if those true believers don’t have families, because their spouses might “disrupt” (I had to use that word) them with questions like, “why are you working more than 40 hours per week, at a company that only gave you 0.02% in equity?” It’s best if they’re under 27 and don’t mind taking on the insane risk of going into an extremely expensive city without an offer of temporary housing.

Of course, there’s one exception. If you will have at least 20 percent equity in the company, you might consider taking on the risk of an unpaid relocation. That’s right, 20%. You have to be partner-level for it to make sense, and prior to external investment, anything less than 20% is not partner level. (After external investment, full relocation should be a given for all key players.) Don’t take partner-level risk for an employee-level role. It doesn’t engender respect; it shows weakness. 

So what’s the bigger issue? What I’ve noticed about such a large number of startups, in the Valley and elsewhere, is that they’re disgustingly cheap. Cheap things are usually of low quality. Exceptions exist, but they’re rare and if your business strategy is based on cheapness, you’ll fail, because opportunities to buy something of high quality at a low price are usually far too intermittent to build a company on them. Also, one thing you learn in technology is that low-quality components often corrupt the whole system. If you pour a cup of wine in a barrel of sewage, you have a barrel of sewage. But if you pour a cup of sewage in a barrel of wine, you also have a barrel of sewage. Most VC-funded companies are launched with absolutely no understanding of this principle. They’re designed to be as stingy as possible in the hope that one “home run” company will emerge from the chaos and pay for the hundred failures. Occasionally, the idea is so good that even terrible health benefits and sloppy HR and closed allocation won’t block a success. These opportunities only emerge a few times in each generation, but they do exist. In general, though, a company designed poorly and with low-quality components (management, policies, mission and founding principles) will just be a loser. VCs can afford to generate hundreds of losers because they’re diversified. Rank-and-fire employees can’t. 

In reality, a company succeeds not by being as cheap as possible, but focusing on the delta. What are you paying, and what are you getting? Cost-minimization usually leads to low quality and a minuscule if not negative delta. A new Volkswagen GTI for $20,000 is a great deal. A beat-up clunker unlikely to last a year isn’t worth $1,000, and is likely to cost more in headaches and maintenance than buying a quality car. In general, both extremes of the price spectrum are where the worst deals are found. The high end is populated by Veblen goods and dominated by the winner’s curse, while the low end’s psychological and technical advantages (some purchasers will always buy the cheapest option, and sometimes this is by regulation) to the supplier render it protected, often allowing quality to fall to (or below) zero. In hiring, just as with commodity goods, this is observed. Overpaid executives are often the most damaging people in an organization, and paying them more doesn’t improve the quality of people hired; on the other hand, the desperate employees willing to take the worst deals are usually of low or negative value to the business. 

The actual “golden rule” of success at business isn’t “buy low, sell high”, because opportunities to do so are extremely rare, and “carrying costs” associated with the wait for perfect deals are unaffordable. Instead, it’s “maximize the spread between your ‘sell’ and ‘buy’ price” or, for a more practical depiction that sounds less manipulative, “sell something that is more than the sum of its parts”. With some components, the right move is to buy high and sell higher. For others, it’s to buy low and sell less-low. For example, in software, you probably want to take the “buy high and sell higher” strategy with employees. A competent software engineer is worth $1 million per year to the business, so it’s better to hire her at $150,000 (which, in current market conditions, is more than enough to attract talent, if you have interesting problems to solve) than to hire an incompetent at any salary. Talent matters, which means that to spend on salary and benefits and relocation is worth it. The way you win in software is to buy high and sell higher. That said, “buy high” also means you have to buy (in this case, to hire) selectively, because you can’t buy many things if you’re buying high. Unfortunately, people who have sufficient talent to make those calls are rare (and most of us are irrelevant bloggers, not investors). MBA-toting VCs like cheapness because, without the ability to assess talent and make those calls, the scatter-shot approach is all they have. 

I think it’s important, before I go further, to focus on the difference between genuine constraint and stupid cheapness. Before venture capital got involved in small-business formation to the extent that it has (largely because bank loans now require personal liability, making them a non-starter for anything with a non-zero chance of failure) most emerging firms were legitimately limited in their ability to hire more people. “Lean” wasn’t some excuse for being mean-spirited or miserly; it was just the reality of getting a company off the ground. If the constraints really exist, then play within them. If you can barely afford salaries for your three founders because you’re bootstrapping on scant consulting revenue, then maybe you can’t afford to pay their relocation costs. The problem with the VC-funded cheapness is that those constraints really don’t exist. “We can’t afford $X” is predicated on “We only have 100X and need to hire 100 people” which is predicated on “We’re going to hire such mediocre people that we need 100 of them to get the job done”, and that mediocrity wouldn’t be such an issue if $2X were offered instead. If $2X were offered, the job might be feasible with 15 people, but the VCs aren’t able to assess talent at that level, nor pick founders who can, so it’s easier for that class of people to just pretend that talent differentials among engineers don’t exist and implement a closed-allocation MBA culture. 

Mindless, stupid cost-cutting isn’t limited to startups. Large corporations show this behavior, as well, and it’s easy to explain why it’s there. Those who can, do. Those who can’t, evaluate and squeeze. This evaluation process can take many forms, such as micromanagement; but a complementary form is the senseless and mean-spirited penny-shaving of the modern corporate bureaucrat (“I don’t think you need that!”) It takes no vision to “cut costs” in a way that, in 99% of cases, actually externalizes costs to somewhere else (low-quality technology, morale problems, environmental impact). Penny-shaving is what stupid overpaid fuckheads do to justify their executive positions when they don’t have the vision to actually lead or innovate. They cut, and they cut, and they cut. They get good at it, too. Then they start asking questions like, “Why are we paying full relocation for these experienced programmers, when there are a bunch of starry-eyed 22-year-olds with California dreams?” Six months later, that’s answered by the cataclysmic drop in code quality, which is starting to bring major pain to the business, but the cost-cutting idiot who had the idea has already gotten his promotion and moved on to fuck something else up.

When companies balk at the concept of offering a proper relocation, the message it sends to me is that they’re in the business of squeezing zero-sum petty wins out of their employees, rather than vying for actual wins on the market. 

Conclusion

Most software engineers don’t know what they’re getting into when they enter this industry, and spend more time than is reasonable being a loser. I can’t claim innocence on this one. There were jobs where I worked for shitty companies or inept managers or on pointless projects for a variety of reasons that seemed to make sense at the time, but were almost certainly errant. Don’t make that mistake. Don’t be a loser. The good news is that that’s rather easy to control. One can’t change one’s level of talent or influence the large component that is truly luck, but avoiding loserism has some straightforward rules. Don’t work with losers. Don’t work for losers. (Don’t fight against losers either. That’s a mistake I’ve made as well, and they can be vicious and powerful when in groups.) Don’t make excuses for people who don’t seem to be able to get it together and play to win. Stick to the people who actually want to achieve something and will bet big on the things that matter, not the 95% of VC-funded founders and executives just trying to draw a salary on a venture capitalist’s dime (despite all that paper-thin bullshit rhetoric about “changing the world”) while squeezing everyone else at every opportunity. 

Unless you’re a founder and the resources simply don’t exist yet, never relocate unpaid. If the company actually sees you as a key player, and it cares about winning more than zero-sum cost-cutting, it will solve your moving problems for you, so you can get to work in earnest on your first day. 

Greed versus sadism

I’ve spent a fair amount of time reading Advocatus Diaboli, and his view on human nature is interesting. He argues that sadism is a prevailing human trait. In an essay on human nature, he states:

They all clearly a demonstrate a deep-seated and widespread human tendency to be deceitful, cruel, abusive and murderous for reasons that have almost nothing to with material or monetary gain. It is as if most human beings are actively driven a unscratchable itch to hurt, abuse, enslave and kill others even if they stand to gain very little from it. Human beings as a species will spend their own time, effort and resources to hurt other living creatures just for the joy of doing so.

This is a harsh statement, and far from socially acceptable. Sadism is a defining human characteristic, rather than a perversion? To put it forward, I don’t agree that sadism is nearly as prevalent as AD suggests. However, it’s an order of magnitude more prevalent than most people want to admit. Economists ignore it and focus on self-interest: the economic agent may be greedy (that is, focused on narrow self-interest) but he’s not trying to hurt anyone. Psychology treats sadism as pathological, and limited to a small set of broken people called psychopaths, then tries to figure out what material cause created such a monster. The liberal, scientific, philosophically charitable view is that sadistic people are an aberration. People want sex and material comfort and esteem, it holds, but not to inflict pain on others. Humans can be ruthless in their greed, but are not held to be sadistic. What if that isn’t true? We should certainly entertain the notion.

The Marquis de Sade– more of a pervert than a philosopher, and a writer of insufferably boring, yet disturbing, material– earned his place in history by this exact argument. In the Enlightenment, the prevailing view was that human nature was not evil, but neutral-leaning-good. Corrupt states and wayward religion and unjust aristocracies perverted human nature, but the fundamental human drive was not perverse. De Sade was one of the few to challenge this notion. To de Sade, inflicting harm on others for sexual pleasure was the defining trait. This makes the human problem fundamentally insoluble. If self-interest and greed are the problem, society can align peoples’ self-interests by prohibiting harmful behaviors and rewarding mutually beneficial ones. If, however, inflicting pain on others is a fundamental human desire, then it is impossible for any desirable state of human affairs to be remotely stable; people will destroy it, just to watch others suffer.

For my part, I do not consider sadism to be the defining human trait. It exists. It’s real. It’s a motivation behind actions that are otherwise inexplicable. Psychology asserts it to be a pathological trait of about 1 to 2 percent of the population. I think it’s closer to 20 percent. The sadistic impulse can overrun a society, for sure. Look at World War II: Hitler invaded other countries to eradicate an ethnic group for no rational reason. Or, the sadists can be swept to the side and their desires ignored. Refusing to acknowledge that it exists, however, is not a solution, and I’ll get to why that is the case.

Paul Graham writes about the zero-sum mentality that emerges in imprisoned or institutionalized populations. He argues that the malicious and pointless cruelty seen in U.S. high schools, prisons, and high-society wives is of a kind that emerges from boredom. When people don’t have something to do– and are institutionalized or constrained by others’ low regard for them (teenagers are seen as economically useless, high-society wives are made subservient, prisoners are seen as moral scum)– they create senseless and degrading societies. He’s right about all this. Where he is wrong is in his assertion that “the adult world” (work) is better. For him, working on his own startup in the mid-1990s Valley, it was. For the 99%, it’s not. Office politics is the same damn thing. Confine and restrain people, and reinforce their low status with attendance policies and arbitrary orders, and you get some horrendous behavior. Humans are mostly context. Almost all of us will become cruel and violent if circumstances demand it. Okay, but is that the norm? Is there an innate sadism to humans, or is it rare except when induced by poor institutional design? The prevailing liberal mentality is that most human cruelty is either the fault of uncommon biological aberration (mental illness) or incompetent (but not malicious) design in social systems. The socially unacceptable (but not entirely false) counterargument is that sadism is a fundamental attribute of us (or, at least, many of us) as humans.

What is greed?

The prevailing liberal attitude is that greed is the source of much human evil. The thing about greed is that it’s not all that bad. In computer science, we call an optimization algorithm “greedy” if it is short-sighted (i.e. not able to capture the whole space, at a given algorithmic step) and these greedy algorithms often work. Sometimes, they’re the only option because anything else requires too much in the way of computational resources. “Greed” can simplify. Greedy people want to eat well, to travel, and for their children to be well-educated. Since that’s what most people want, they’re relatable. They aren’t malignant. They’re ruthless and short-sighted and often arrogant, but they (just like anyone else) are just trying to have good lives. What’s wrong with that? Nothing, most would argue. Most importantly, they’re reasonable. If society can be restructured and regulated so that doing the right thing is rewarded, and doing the wrong thing is punished or forbidden, greedy people can be used for good. Unlike the case with sadism, the problem can be solved with design.

Is greed good? It depends on how the word is defined. We use the word ambition positively and greed negatively, but if we compare the words as they are, I’m not sure this makes a lot of sense. Generally, I view people who want power more negatively than those who want wealth (in absolute, rather than relative terms) alone. As a society, we admire ambition because the ambitious person has a long-term strategy– the word comes from the Latin ambire, which means to walk around gathering support– whereas greed has connotations of being short-sighted and petty. We conflate long-range thinking with virtue, ignoring the fact that vicious and sadistic people are capable of long-term thought as well. At any rate, I don’t think greed is good. However, greed might be, in certain contexts, the best thing left.

To explain this, note the rather obvious fact that corporate boardrooms aren’t representative samples of humanity. For each person in a decision-making role in a large business organization, there’s a reason why he’s there and, if you think it comes down to “hard work” or “merit”, you’re either an idiot or painfully naive. Society is not run by entrepreneurs, visionaries, or creators. It’s run by private-sector social climbers. Who succeeds in such a world? What types of people can push themselves to the top? Two kinds. The greedy, and the sadistic. No one else can make it up there, and I’ll explain why, later in this post.

This fact is what, in relative terms, makes greed good. It’s a lot better than sadism.

The greedy person may not value other concerns (say, human rights or environmental conservation) enough, but he’s not out to actively destroy good things either. The sadist is actively malicious and must be rooted out and destroyed. It is better, from the point of view of a violence-averse liberal, that the people in charge be merely greedy. Then it is possible to reason with them, especially because technology makes rapid economic growth (5 to 20+ percent per year) possible. What prevents that from happening now is poor leadership, not malignant obstruction, and if we can share the wealth with them while pushing them aside, that might work well for everyone. If the leaders are sadistic, the only way forward is over their dead bodies.

“The vision thing”

Corporate executives do not like to acknowledge that the vast majority of them are motivated either by greed or by sadism. Instead, they talk a great game about vision. They concoct elaborate narratives about the past, the future, and their organization’s place in the world. It makes greed more socially acceptable. Yes, I want power and wealth; and here is what I plan to do with it. In the corporate world, however, vision is almost entirely a lie, and there’s a solid technical reason why that is the case.

We have a term in software engineering called “bikeshedding“, which refers to the narcissism of petty differences. Forget all that complicated stuff; what color are we going to paint the bike shed? The issue quickly becomes one that has nothing to do with aesthetics. It’s a referendum on the status of the people in the group. You see these sorts of things in mergers often. In one company, software teams are named after James Bond villains; in the other, they’re named after 1980s hair bands. If the merger isn’t going well, you’ll see one team try to obliterate the memetic cultural marks of the other. “If you refer to Mötley Crüe in another commit message, or put umlauts where they don’t belong for any reason, I will fucking cut you.”

Bikeshedding gets ugly, because it’s a fundamental human impulse (and one that is especially strong in males) to lash out against unskilled creativity (or the perception of unskilled creativity, because the perceiver may be the defective one). You see this in software flamewars, or in stand-up comedy (with hecklers pestering comics, and the swift comics brutally insulting their adversaries.) This impulse toward denial is not sadistic or even a bad thing at its root. It’s fundamentally conservative, but inflicting brutal social punishments on incompetent wannabe chieftains is what kept early humans from walking into lions’ dens.

As a result of the very strong anti-bikeshedding impulse, creativity and vision are punished, because (a) even those with talent and vision come under brutal attack and are drawn into lose-lose ego wars, and (b) almost never are there creatively competent adults in charge who can resolve conflicts, consistently, on the right side. The end result is that these aspects of humans are driven out of organizations. If you stand for something– anything, even something obviously good for the organization– the probability that you’ll take a career-ending punch approaches one as you climb the ladder. If you want to be a visionary, Corporate America is not the place for it. If you want to be seen as a visionary in Corporate America, the best strategy is to discern what the group wants before a consensus has been reached, and espouse the viewpoint that is going to win– before anyone else has figured that out. What this means is that corporate decisions are actually made “by committee”, and that the committee is usually made up of clever but creatively weak individuals. In the same way as mixing too many pigments produces an uninspiring blah-brown color, an end result of increasing entropy, the decisions that come from such committees are usually depressing ones. They can’t agree on a long-term vision, and to propose one is to leave oneself politically exposed and be termed a “bikeshedder”. The only thing they can agree upon is short-term profit improvement. However, increasing revenue is itself a problem that requires some creativity. If the money were easy to make, it’d already be had. Cutting costs is easier; any dumbass can do that. Most often, these costs are actually only externalized. Cutting health benefits, for one example, means work time is lost to arguments with health insurance companies, reducing productivity in the long run, and being a net negative on the whole. But because those with vision are so easily called out as bikeshedding, impractical narcissists, the only thing left is McKinsey-style cost externalization and looting.

Hence, two kinds of people remain in the boardroom, after the rest have been denied entry or demoted out of the way: the ruthlessly greedy, and the sadistic.

Greedy people will do what it takes to win, but they don’t enjoy hurting people. On the contrary, they’re probably deeply conflicted about what they have to do to get the kind of life they want. The dumber ones probably believe that success in business requires ruthless harm to others. The smarter ones see deference to the mean-spirited cost-cutting culture as a necessary, politically expedient, evil. If you oppose it, you risk appearing “soft” and effeminate and impractical and “too nice to succeed”. So you go along with the reduction of health benefits, the imposition of stack ranking, the artificial scarcities inherent in systems like closed allocation, just to avoid being seen that way. That’s how greed works. Greedy people figure out what the group wants and don’t fight it, but front-run that preference as it emerges. So what influences go into that group preference? Even without sadism, the result of the entropy-increasing committee effect seems to be, “cost cutting” (because no one will ever agree on how to increase revenue). With sadism in the mix, convergence on that sort of idea happens faster, and ignorance of externalized costs is enhanced.

The sadist has an advantage in the corporate game that is unmatched. The more typical greedy-but-decent person will make decisions that harm others, but is drained by doing so. Telling people that they don’t have jobs anymore, and that they won’t get a decent severance because that would have been a losing fight against HR, and that they have to be sent out by security “by policy”, makes them pretty miserable. They’ll play office politics, and they play to win, but they don’t enjoy it. Sadists, on the other hand, are energized by harm. Sadists love office politics. They can play malicious games forever. One trait that gives them an advantage over the merely greedy is that, not only are they energized by their wins, but they don’t lose force in their losses. Greedy people hate discomfort, low status, and loss of opportunity. Sadists don’t care what happens to them, as long as someone else is burning.

This is why, while sadists are probably a minority of the general population, they make up a sizeable fraction of the upper ranks in Corporate America. Their power is bolstered by the fact that most business organizations have ceased to stand for anything. They’re patterns of behavior that have literally no purpose. This is because the decision-making derives from a committee of greedy people with no long-term plans, and sadistic people with harmful long-term plans (that, in time, destroy the organization).

Sadists are not a majority contingent in the human population. However, we generally refuse to admit that it exists at all. It’s the province of criminals and perverts, but surely these upstanding businessmen have their reasons (if short-sighted ones, but that is chalked up to a failure of regulation) for bad behaviors. I would argue that, by refusing to admit to sadism’s prevalence and commonality, we actually give it more power. When people confront frank sadism either in the workplace or in the public, they’re generally shocked. Against an assailant, whether we’re talking about a mugger or a manager presenting a “performance improvement plan”, most people freeze. It’s easy to say, “I would knee him in the nuts, gouge out his eyeballs, and break his fingers in order to get away.” Very few people, when battle visits them unprepared, do so. Mostly, the reaction is, I can’t believe this is happening to me. It’s catatonic panic. Refusing to admit that sadism is real and that it must be fought, we instead give it power by ignoring its existence, thus allowing it to ambush us. In a street fight, this is observed in the few seconds of paralytic shock that can mean losing the fight and being killed. In HR/corporate matters, it’s the tendency of the PIP’d employee to feel intense personal shame and terror, instead of righteous anger, when blindsided by managerial adversity.

The bigger problem

Why do I write? I write because I want people in my generation to learn how to fight. The average 25-year-old software engineer has no idea what to do when office politics turn against him (and that, my friends, can happen to anyone; overperformance is more dangerous than underperformance, but that’s a topic for another essay). I also want them to learn “Work Game”. It’s bizarre to me that learning a set of canned social skills to exploit 20-year-old women with self-esteem problems (pickup artistry) is borderline socially acceptable, while career advice is always of nice-guy “never lie on your resume, no exceptions” variety. (Actually, that’s technically correct. Everyone who succeeds in the corporate game has lied to advance his career, but never put an objectively refutable claim in writing.) Few people have the courage to discuss how the game is actually played. If men can participate in a “pickup artist” culture designed to exploit women with low self-respect and be considered “baller” for it, and raise millions in venture funding… then why it is career-damaging to be honest about what one has to do in the workplace just to maintain, much less advance, one’s position? Why do we have to pretend to uphold this “nice guy”/AFC belief in office meritocracy?

I write because I want the good to learn how to fight. We need to be more ruthless, more aggressive, and sometimes even more political. If we want anything remotely resembling a “meritocracy”, we’re going to have to fight for it and it’s going to get fucking nasty.

However, helping people hack broken organizations isn’t that noble of a goal. Don’t get me wrong. I’d love to see the current owners of Corporate America get a shock to the system. I’d enjoy taking them down (that’s not sadism, but a strong– perhaps pathologically strong, but that’s another debate– sense of justice.) Nonetheless, we as a society can do better. This isn’t a movie or video game in which beating the bad guys “saves the world”. What’s important, if less theatric and more humbling, is the step after that: building a new and better world after killing off the old one.

Here we address a cultural problem. Why do companies get to a point where the ultimate power is held by sadists, who can dress up their malignant desires as hard-nosed cost-cutting? What causes the organization to reach the high-entropy state in which the only self-interested decision it can make is to externalize a cost, when there are plenty of overlooked self-interested decisions that are beneficial to the world as a whole? The answer is the “tallest nail” phenomenon. The tallest nail gets hammered down. As a society, that’s how we work. Abstractly, we admire people who “put themselves out there” and propose ideas that might make their organizations and the world much better. Concretely, those people are torn down as “bikeshedders”, by (a) their ideological opponents, who usually have no malicious intent but don’t want their adversaries to succeed– at least, not on that issue–; (b) sadists relishing the opportunity to deny someone a good thing; (c) personal political rivals, which any creative person will acquire over time; and (d) greedy self-interested people who perceive the whim of the group as it is emerging and issue the final “No”. We have a society that rewards deference to authority and punishes creativity, brutally. And capitalism’s private sector, which is supposed to be an antidote to that, and which is supposed to innovate in spite of itself, is where we see that tendency in the worst way.

Greed (meaning self-interest) can be good, if directed properly by those with a bit of long-term vision and an ironclad dedication to fairness. Sadism is not. The combination of the two, which is the norm in corporate boardrooms, is toxic. Ultimately, we need something else. We need true creativity. That’s not Silicon Valley’s “make the world a better place” bullshit either, but a genuine creative drive that comes from a humble acknowledgement of just how fucking hard it is to make the world a tolerable, much less “better”, place. It isn’t easy to make genuine improvements to the world. (Mean-spirited cost-cutting, sadistic game-playing, and cost externalization are much easier ways to make money. Ask any management consultant.) It’s brutally fucking difficult. Yet millions of people every day, just like me, go out and try. I don’t know why I do it, given the harm that even my mild public cynicism has brought to my career, but I keep on fighting. Maybe I’ll win something, some day.

As a culture, we need to start to value that creative courage again, instead of tearing people down over petty differences.

 

In defense of defensibility

I won’t say when or where, but at one point in time, a colleague and I were discussing our “red button numbers” for the organization under which we toiled.

What’s that? The concept is this: a genie offers you the option to push a “red button” and, if you do so, your company will go bankrupt and cease to exist. Equity will be worthless, paychecks will bounce, and jobs will end. However, every employee in that company gets the same cash severance. (Let’s say $50,000.) The stipulation that every employee gets paid is important. I’m not interested in what some people might do if they had no moral scruples. Some people would blow up their employers for a $50,000 personal payoff, with everyone else getting nothing, but almost no one would admit this, or do it if it were to become known. If everyone gets paid, it pushing the red button becomes ethically acceptable. At $50,000 for a typical company? Hell yeah. Most employees would see their lives improve. The executives would be miserable, getting a pittance compared to their salaries, but… seriously, fuck ‘em. A majority of working people, if their company were scrapped and they were given a $50,000 check, would be dealt a huge favor by that circumstance.

The “everyone gets paid” red-button scenario is more interesting because it deals with what people will do in the open and consider ethically acceptable. When I get to more concrete matters of decisions people make that repair or dismantle companies, the interesting fact is that most of those decisions happen in the open. Companies are rarely sabotaged in secret, but disempowered and decomposed by their own people in plain view.

The “red button number” is the point at which a person would press the button, end the company, have every employee paid out that amount, and consider that an ethically acceptable thing to do. It’s safe to assume that almost everyone in the private sector has a red button number. For the idealists, and for the wealthy executives, that number might be very high: maybe $10 million. For most, it’s probably quite low. People who are about to be fired, and don’t expect a severance, might push the button at $1. Let’s assume that we could ask people for their red button numbers, and they’d answer honestly, and that this survey could be completed across a whole company. Take the median red button number and multiply it by the number of employees. That’s the company’s defensibility. We can’t actually measure this number directly, but it has a real-world meaning. If there were a vote on whether to dissolve the company and pay out some sum D, divided among all employees equally, the defensibility is the D* for which, if D > D*, the motion will pass and the company will be disbanded, and if D < D*, the company will persist. It’s the valuation the employees assign to the company (which is, often, a very different number from its market capitalization or private valuation).

Of course, such a vote would never actually happen. Companies don’t give employees that kind of power, and there’s an obvious reason why. Most companies, at least according to the stock market or private valuations, assigned values much greater than their defensibility. (This is not unreasonable or surprising, if a bit sad.) I can’t measure this to be sure, and I’d rather not pick on specific companies, so let me give three models and leave it to the reader to judge whether my assessments make sense.

Model Company A: a publicly-traded retail outlet with 100,000 employees, many earning less than $10/hour. I estimate the median “red button” number at $5,000, putting the defensibility at $500 million. A healthy valuation for such a company would be $125,000 per employee, or $12.5 billion. Defensibility is 4 cents on the dollar.

Model Company B: an established technology company with 20,000 employees. Software engineers earn six figures, and engineers-in-test and the like earn high-five-figure salaries. There’s a “cool” factor to working there. I’d estimate the median “red button” number at about 9 months of salary (and, for some of the most enthusiastic employees, it might be as much as five years, but at the median, it’s 6-9 months) or $75,000, putting the defensibility at $1.5 billion. A typical valuation for such a company would be $5 million per head, or $100 billion. Even though this is a company whose employees wouldn’t leave lightly, its defensibility is still only 1.5 cents on the dollar.

Model Company C: a funded startup, with 100 employees and a lot of investor and “tech press” attention. Many “true believers” among the employee ranks. Let’s assume that that, to get a typical employee to push the “red button”, we’d have to guarantee 6 months of pay ($50,000) and 250 percent of the fully-vested equity (0.04%) because so many employees really expect the stock to grow. The valuation of the company is $200 million (or $2 million per employee). We reach a defensibility of $250,000 per employee, or $25 million. That’s a lot, but it’s still only 12.5% of the valuation of the business.

None of these companies are, numerically speaking, very defensible. That is, if the company could be dissolved to anarchy with its value (as assessed by the market) distributed among the employees, they’d prefer it that way. Of course, a company need not be defensible at 100 cents on the dollar for its employees to wish it to remain in existence. If a $10 billion company were dissolved in such a way, there wouldn’t actually be $10 billion worth of cash to dish out. To the extent that companies can be synergistic (i.e. worth more than the sum of the component parts) it’s a reasonable assumption that a company whose defensibility was even 50 percent of its market capitalization would never experience voluntary dissolution, even if it were put to a vote.

In real life, of course, these “red button” scenarios don’t exist. Employees don’t get to vote on whether their companies continue existing, and, in practice, they’re usually the biggest losers in full-out corporate dissolution because they have far less time to prepare than the executives. The “red button number” and defensibility computations are an intellectual exercise, that’s all. Defensibility is what the company is worth to the employees. Given that defensibility numbers seem (under assumptions I consider reasonable) to consistently come in below the valuation of the company, we understand that companies would prefer that their persistence not come down to an employee vote.

That a typical company might have a defensibility of 5 cents on the dollar, to me, underscores the extreme imbalance of power between capital and labor. If the employees value the thing at X, and capital values it at 20*X, that seems to indicate that capital has 20 times as much power as the employees do. It signifies that companies aren’t really partnerships between capital and labor, but exist almost entirely for capital’s benefit.

Does defensibility matter? In this numerical sense, it’s a stretch to say that it does, because such votes can’t be called. Fifty-one percent of a company’s workers realizing that they’d let the damn thing die for six months’ severance has no effect, because they don’t have that power. If defensibility numbers were within a factor of 2, or even 4, of company’s market capitalizations, I’d say that these numbers (educated guesses only) tell us very little. It’s the sheer magnitude of the discrepancy under even the most liberal assumptions that is important.

People in organizations do “vote” on the value of the organization with what they do, day to day, ethically (and unethically) as they trade off between self-interest and the upkeep of the organization. How much immediate gain would a person forgo, in order to keep up the organization? The answer is: very little. I’d have no ethical qualms, with regard to most of the companies that I’ve worked at, in pressing the red button at $100,000. Most employees will be ecstatic, a few executives will be miserable; fair trade.

Thus far, I’ve only addressed public, ethical, fair behavior. Secretive and unethical behaviors also affect a company, obviously. However, I don’t see the latter as being as much of a threat. Organizations can defend themselves against the unethical, the bad actors, if the ethical people care enough to participate in the upkeep. It’s when ethical people (publicly and for just reasons) tune out that the organization is without hope.

The self-healing organization

Organizations usually rot as they age. It’s practically taken as a given, in the U.S. private sector, that companies will change for the worse as time progresses. Most of the startup fetishism of the SillyCon Valley is derived from this understanding: organizations will inexorably degrade invariably with age (a false assumption, and I’ll get to that) and the best way for a person (or for capital) to avoid toxicity is to hop from one upstart company to another, leaving as soon as the current habitat gets old.

It is true that most companies in the private sector degrade, and quite rapidly. Why is it so? What is it about organizations that turns them into ineffective, uninspiring messes over time? Are they innately pathological? Is this just a consequence of corporate entropy? Are people who make organizations better so much rarer than those who make them worse? I don’t think so. I don’t think it’s innate that organizations rot over time. I think that it’s common, but avoidable.

The root entropy-increasing cause of corporate decay is “selfishness”. I have to be careful with this word, because selfishness can be a virtue. I certainly don’t intend to impose any value, good or bad, on that concept here. Nor do I imply secrecy or subterfuge. Shared selfishness can be a group experience. Disaffected employees can slack together and protect each other. Often this happens. One might argue that it becomes “groupishness” or localism. I don’t care to debate that point right now.

Organizations decay because people and groups within them, incrementally, prefer their interests over that of the institution. If offered promotions they don’t deserve, into management roles that will harm morale, people usually take them. If they can get away with slacking– either to take a break, or to put energy into efforts more coherent with their career goals– they will. (The natural hard workers will continue putting forth effort, but only on the projects in line with their own career objectives.) If failures of process advantage them, they usually let those continue. When the organization acts against their interests, they usually make it hurt, causing the company to recoil and develop scar tissue over time. They protect themselves and those who have protected them, regardless of whether their allies possess “merit” as defined by the organization. These behaviors aren’t exactly crimes. Most of this “selfishness” is stuff that morally average people (and, I would argue, even many morally good ones) will do. Most people, if they found a wallet with $1,000 and a driver’s license in it, would take it to the police station for return to its owner. However, if they were promoted based on someone else’s work, and that “someone else” had left the company so there was no harm in keeping the promotion, they’d keep the arrangement as-is. I’m not different from the average person on this; I’ll just admit to it, in the open.

People in the moral mid-range will generally try to do the right thing. On the “red button” issue, most wouldn’t tank their own companies for a personal payout, leaving all their colleagues screwed. Most would press the button in the “every employee gets paid” scenario, because it’s neither ethically indefensible nor socially unacceptable to do so. Such people are in the majority and not inherently corrosive to institutions– they uphold those that are good to them and their colleagues, and bad to those that harm them. However, they hasten the decay of those organizations that clearly don’t deserve concern.

Let’s talk about entropy, or the increasing tendency toward disorder in a closed system. Life can only persist because certain genetic configurations enable an organism, taking in external energy, to preserve local low-entropy conditions. A lifeless human body, left on the beach to be beaten by the waves, will be unrecognizable within a couple of days. That’s entropy. A living human can sit in the same conditions with minimal damage. In truth, what we seem to recognize as life is “that which can preserve its own local order”. Living organisms are constantly undergoing self-repair. Cells are destroyed by the millions every hour, but new ones are created. Dead organisms are those that have lost the ability to self-repair. The resources in them will be recycled by self-interested and usually “lower” (less complex) organisms that feed on them as they decay.

Organizations, I think, can be characterized as “living” or “dead”, to some degree, based on whether their capacity for self-repair exceeds the inevitable “wear and tear” that will be inflicted by the morally acceptable but still entropy-increasing favoritism that its people show for their own interests. The life/death metaphor is strained, a bit, by the difficulty in ascertaining which is which. In biology, it’s usually quite clear whether an organism is alive. We know that when the human heart stops, the death process is likely to begin (and, absent medical intervention, invariably will begin) within 5 minutes and, after 10 minutes, the brain will typically be unrecoverable and that person will no longer exist in the material world. Life versus death isn’t completely binary in biology, but it’s close enough. With organizations, it’s far less clear whether the thing is winning or losing its ongoing fight against entropy. To answer that question involves debate and research that, because the questions asked are socially unacceptable, can rarely be performed properly.

“Red button” scenarios don’t happen, but every day, people make small decisions that influence the life/death direction of the company. Individually, most of these decisions don’t matter for much. A company isn’t going to fail because a disaffected low-level employee spent his whole morning searching for other work. If everyone’s looking for another job, that’s a problem.

In the VC-funded world, self-repair has been written off as a lost cause. It’s not even attempted. The mythology is that everything old (“legacy”) is of low value (and should be sold to some even older, more defective company) and that only the new is worth attention. Don’t try to repair old organizations; just create new shit and make old mistakes. It’s all about new programmers (under 30 only, please) and new languages (often recycling ideas from Lisp and Haskell, implementing them poorly) and new companies. This leads to massive waste as nothing is learned from history. It becomes r-selective in the extreme, with the hope that, despite frequent death of the individual organisms, there can be a long-lived clonal colony for… someone. For whom? To whose benefit is this clonal organism? It’s for the well-connected scumbags who can peddle influence and power no matter which companies beat the odds and thrive for a few days, and which ones die.

In the long run, I don’t think this is going to work. Building indefensible companies in large numbers is not going to create a defensible meta-organism. To do so is to create a con (admittedly, a somewhat brilliant and unprecedented one, a truly postmodern corporate organism) in which enthusiastic young people trade their energy and ardor for equity is mostly-worthless companies, and whose macroscopic portfolio performance is mediocre (as seen in the pathetic returns VC offers for passive investors) but which affords great riches for those with the social connections (and lack of moral compass) necessary to navigate it. It works for a while, and then people figure out what’s going on, and it doesn’t. We call this a “bubble/crash” cycle, but what it really is, at least in this case, is an artifact of limitations on human stupidity. People will only fall for a con for so long. The naive (like most 22-year-olds when they’re just starting the Valley game) get wiser, and the perpetual suckers have short attention spans and will be drawn to something shinier.

Open allocation

What might a defensible company look like? Here I come to one my pet issues: open allocation. The drawback of open allocation, terrifying to the hardened manageosaur, is that it requires the organization be defensible in order to work, because it gives employees a real vote on what the company does. The good news is that open allocation tends naturally toward defensibility. If the organization is fair to its employees and its people are of average or better moral quality, then the majority of them can be trusted to work within the intersection between their career interests and the needs of the company.

Why does open allocation work so well? Processes, projects,  patterns, protections, personality interactions, policies and power relationships (henceforth, “the Ps”) are all subjected to a decentralized immune system, rather than a centralized one that doesn’t have the bandwidth to do the job properly. Organizations of all kinds produce the Ps on a rather constant basis. When one person declines to use the bathroom because his manager just went in, that microdeference is P-generation. The same applies to the microaggression (or, to be flat about it, poorly veiled aggression) of a manager asking for an estimate. Requesting an estimate generates several Ps at once: a power relationship (to be asked for an estimate is to be made someone’s bitch), a trait of a project (it’s expected at a certain time, quality be damned), and a general pattern (managerial aggression, in the superficial interest of timeliness, is acceptable in that organization). Good actions also generate Ps. To empower people generates power relationships of a good kind, and affords protection. Even the most superficial interactions generate Ps, good and bad.

Under open allocation, the bad Ps are just swept away. When one person tries to dominate the other through unreasonable requests, or to socially isolate a person in order to gain power, the other has the ability to say, “fuck that shit” and walk away. The doomed, career-ending projects and the useless processes and the toxic power relationships just disappear. People will try to make such things, even in the best of companies, and sometimes without ill intent. Under open allocation, however, bad Ps just don’t stick around. People have the power to nonexist them. What this means is that, over time, the long-lived Ps are the beneficial ones. You have a self-healing organization. This generates good will, and people begin to develop a genuine civic pride in the organization, and they’ll participate in its upkeep. Open allocation may not be the only requisite ingredient for success on the external market, but it does insure an organization against internal decay.

Then there’s the morale issue, and the plain question of employee incentives. Employees of open allocation companies know that if their firms dissolve tomorrow, they’re going to end up in crappy closed-allocation companies afterward. They actually care– beyond “will I get a severance?”– whether their organizations live or die. In closed-allocation companies, the only way to get a person to care in this way is either (a) to give him a promotion that another organization would not (which risks elevating an incompetent) or (b) to pay him a sizable wage differential over the prevailing market wage– this leads to exponential wage growth, typically at a rate of 20 to 30 percent per year, and can be good for the employee but isn’t ideal for the employer. Because closed-allocation companies are typically also stingy, (a) is preferred, which means that loyalists are promoted regardless of competence. One can guess where that leads: straight to idiocy.

Under closed allocation, bad Ps tend to be longer-lived than good ones. Why? Something I’ve realized in business is that good ideas fly away from their originators and become universal, which means they can be debated on their actual merits and appropriateness to the situation (a good idea is not necessarily right for all situations). Two hundred years from now, if open allocation is the norm, it’s quite likely that no one will remember my name in connection to it. (To be fair, I only named it, I didn’t invent the concept.) Who invented the alphabet? We don’t know, because it was a genuinely good idea. Who invented sex? No one. On the other hand, bad ideas become intensely personal– loyalty tests, even. Stack ranking becomes “a Tom thing” (“Tom” is a made-up name for a PHP CEO) because it’s so toxic that it can only be defended by an appeal to authority or charisma, and yet to publicly oppose it is to question Tom’s leadership (and face immediate reprisal, if not termination). In a closed-allocation company, bad ideas don’t get flushed out of the system. People double down on them. (“You just can’t see that I’m right, but you will.”) They become personal pet projects of executives and “quirky” processes that no one can question. Closed allocation companies simply have no way to rid themselves of bad Ps– at least, not without generating new ones. Even firing the most toxic executive (and flushing his Ps with him) is going to upset some people, and the hand-over of power is going to result in P-generation that is usually in-kind. Most companies, when they fire someone, opt for the cheapest and most humiliating kind of exit– crappy or nonexistent severance, no right to represent oneself as employed during the search, negative (and lawsuit-worthy) things said about the departing employee– and that usually makes the morale situation worse. (If you disparage a fired and disliked executive, you still undermine faith in your judgment; why’d you hire him in the first place?) No matter how toxic the person is, you can’t fire someone in that way without generating more toxicity. People talk, and even the disaffected and rejected have power, when morale is factored in. The end result of all this is that bad Ps can’t really be removed from the system without generating a new set of bad Ps.

I can’t speak outside of technology because to do so is to stretch beyond my expertise. However, a technology company cannot have closed allocation and retain its capacity for self-repair. It will generate bad Ps faster than good ones.

What about… ?

There’s a certain recent, well-publicized HR fuckup that occurred at a well-known company using open allocation. I don’t want to comment at length about this. It wouldn’t have been newsworthy were it not for the high moral standard that company set for itself in its public commitment to open allocation. (If the same had happened at a closed-allocation oil company or bank, no one would have ever heard a word about it.) Yes, it proved that open allocation is not a panacea. It proved that open allocation companies develop political problems. This is not damning of open allocation, because closed allocation creates much worse problems. More damningly, the closed allocation company can’t heal.

Self-healing and defensibility are of key importance. All organizations experience stress, no exceptions. Some heal, and most don’t. The important matter is not whether political errors and HR fuckups happen– because they will– but whether the company is defensible enough that self-repair is possible.

The complexity factor

The increase of entropy in an organization is a hard-to-measure process. We don’t see most of those “Ps” as they are generated, and moral decay is a subjective notion. What seems to be agreed-upon is that, objectively, complexity grows as the organization does, and that this becomes undesirable after a certain point. Some call it “bureaucratic red tape” and note it for its inefficiency. Others complain about the political corruption that emerges from relationship-based complexity. For a variety of reasons, an organization gets into a state where it is too complicated and self-hogtied to function well. It becomes pathological. Not only that, but the complexity that exists becomes so onerous that the only way to navigate it is to create more complexity. There are committees to oversee the committees.

Why does this happen? No one sets out “to generate complexity”. Instead, people in organizations use what power they have (and even low-level grunts can have major effects on morale) to create conditional complexity. They make decisions that favor their interests simple and those that oppose them complicated enough that no one wants to think them through; instead, those branches of the game tree are just pruned. That’s how savvy people play politics. If a seasoned office politicker wants X and not Y, he’s not going to say, “If you vote for Y, I’ll cut you.” He can’t do it that way. In fact, it’s best if no one knows what his true preference is (so he doesn’t owe any favors to X voters). Nor can he obviously make Y unpleasant or bribe people into X. What he can do is create a situation (preferably over a cause seemingly unrelated to the X/Y debate) that makes X simple and obvious, but Y complex and unpredictable. That’s the nature of conditional complexity. It generates ugliness and mess– if the person’s interests are opposed.

In the long run, this goes bad because an organization will inevitably get to a point where it can’t do anything without opposing some interest, and then all of those conditional complexities (which might be “legacy” policies, set in place long ago and whose original stakeholders may have moved on) are triggered. Things become complex and “bureaucratic” and inefficient quickly, and no one really knows why.

The long-term solution to this complexity-burden problem is selective abandonment. If there isn’t a good reason to maintain a certain bit of complexity, that bit is abandoned. For example, it’s illegal, in some towns, to sing in the shower. Are those laws enforced? Never, because there’s no point in doing so. The question of what is the best way to “garbage collect” junk complexity is one I won’t answer in a single essay, but in technology companies, open allocation provides an excellent solution. Projects and power relationships and policies (again, the Ps) that no longer make sense are thrown out entirely.

The best defense is to be defensible

The low defensibility of the typical private-sector organization is, to me, quite alarming. Rational and morally average (or even morally above average) don’t value their employers very much, because most companies don’t deserve to be valued. They’re not defensible, which means they’re not defended, which is another way of saying self-repair doesn’t happen and that organizational decay is inexorable.