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. 

If you’ll ever die, don’t apply

Some day, I will die. So will everyone I know, everyone who has read this post, and everyone they know. I’m probably more than a third of the way there. I’m not especially afraid of it. Actually, I’m curious. Though I don’t subscribe to any religion or believe in anything resembling an anthropomorphic god or gods, I think it’s more likely than not that something interesting will be on the other side. (If I’m wrong, I won’t know.) All that said, I’m going to die some day, and even before that I’ll experience involuntary change (aging). It’s not an easy thing to forget, and it’s not a thing that I should forget. There’s no virtue in ignorance. And, despite not having any specifically religious faith, I’m pretty sure that what a person does in this life matters. Something in me is convinced that the ultimate reality of human existence is somewhere between the dichotomous nihilisms of materialist reductionism (existence ends fully at death, so all will be erased) and mainstream religion (only the next world matters). Perhaps that is why Buddhism (and its tendency toward middle paths on such questions) appeals to me more than the mainstream interpretations of the Abrahamic faiths (in particular, Christianity). The assertion that believing in the existence of a certain being (who left no evidence of his existence) is the key variable in separating people out for eternal bliss or agony is, in truth, far more nihilistic than most atheistic beliefs.

I’m not a nihilist; whatever this life is, it’s not to be thrown away. I conceive of myself, however, as a realist. I’m not immortal, and even though I haven’t really begun to age (I’m only 30) in any painful or even inconvenient way, I’m increasingly aware of the fact that I will die. People who are young and healthy one year are dead in the next. I’ve seen it happen too many times.

I’ve written at length about Silicon Valley’s perverse bubble culture and its obsession with youth. There isn’t a meaningful physiological difference between a 22-year-old and a 35-year-old that has any business importance. I think, however, I understand what Silicon Valley’s youth obsession is actually about: not age, but immortality. No one is immortal, but some people think they are. They haven’t learned the value and price of time yet. Nothing bad has happened to them yet. They still conceive of themselves as invulnerable.

These venture capitalists don’t just want to fund 22-year-old white males. They fund a specific kind of 22-year-old, white males: people who can trick themselves into living outside of time (and, more practically, throwing their time and health away, often at a pace of 100 hours per week, for someone else’s benefit) because they haven’t been reminded yet, by life, that they very much live in time.

The difference between the 35-year-old and the 22-year-old is not personal health but experience. The 35-year-old has had parents, aunts, and uncles get old, get sick, and die. He’s seen college classmates (and more than an unlucky one or two) lose the cancer lottery and die at a ridiculously young age. He realizes that time brings involuntary, unexpected, and sometimes painful change, and that a year of life spent “paying dues” or enriching ingrates is a permanent loss. Most 22-year-olds haven’t learned those lessons yet, and those who have are unfundable in the current Valley.

The “job hopper” stigma and “team player” nonsense of Corporate America, after all, make sense for people who haven’t figured out yet that their time is finite: that the “technological singularity” might not happen in the next 100 years, that “old people” were once as young as them, that they’ll get old and die and that it will always seem too soon. Those who believe themselves to be immortal are appealing to the exploitative overseers. They value the present at zero, convinced of some superior and unending future (one that will never come, except for the politically sacrificial and lucky). They are (for the moment) timeless and therefore without much memory.

I’ve always feared that if humans became technologically immortal, but if we did not succeed in ending scarcity, the first thing that an elite would do would be to create a “zombie” class of people who (like us mortals) lose most or all memory every hundred years or so, lest they acquire the knowledge that enable them to compete with the existing elite. They would continue to die (in effect) but be biologically maintained as peak-of-their-prime adults (to perform work, for others’ behalf) and probably conceive of themselves as immortal. Obviously, that doesn’t exist yet; the technology isn’t there. But culturally, it’s already happening. Of course, indefinite life extension and memory erasure aren’t there. Instead, the old class of immortals (once they become aware of their own mortality, and seek genuine purpose and value, rather than the enrichment of an ingrate elite, out of their work) is discarded and a new one is put in place.

Silicon Valley is for the immortal. If you’ll ever die, don’t apply.

Ambition tournament (more like a large game) in San Francisco on March 23

This post pertains to the Ambition tournament planned for the eve of Clojure/West.

What?:We’ll be playing the card game, Ambition (follow link for rules) using a modified format capable of handling any number of players (from 4 to ∞).

When? Sunday, March 23. Start time will be 5:17pm (17:17) Pacific time. I’ll be going over the rules in person at 5:00pm. You should plan to show up at 5:00 if you have any questions or need clarification, since I’d like to start play on time. 

How long? About 2.5 to 3.5 hours at expected size (6-8 people). Less with fewer people, not much more with a larger group (because play can occur in parallel).

Where? At or near the Palace Hotel in San Francisco. I’ll tweet a specific location that afternoon, around and probably not later than 4:30.

Who? Based on expressed interest, I’d guess somewhere between 5 and 10 people. If only 4, we’ll play a regular game. If fewer, we may cancel and reschedule.

Is there food? We’ll break around 7:00pm and figure something out.

Do I need prior experience with Ambition? Absolutely not. There will be more new players than experienced people. Ambition is more skill than luck, but I’ve also seen brand new players win 8+ person tournaments.

Do I need to be attending Clojure/West to join? No. This isn’t officially affiliated with Clojure/West and you need not be attending the conference to play. It just happens that a lot of the people playing in this tournament will also be attending Clojure/West.

How should I RSVP? “Purchase” a free ticket on the EventBrite page.

Can I come if I don’t RSVP? Can I invite friends? Yes and yes.

Are there any prizes? Very possibly…

Will you (Michael O. Church) be playing? That depends on how many people there are (if this is a home run and gets 12+ people, I’ll be too busy with administrative stuff). I’ll probably sit in the final rounds but I won’t be eligible to win any prizes.

Here’s why Paul Graham (probably) owes me an apology.

What I am about to say here is not based on a hunch. I don’t say this kind of stuff lightly, and I will give evidence.

Additionally, I make no pretense of knowing whether Graham himself participated in the adverse action. I know that people other than him have been given editorial power, and that some have, in the past, displayed serious incompetence, especially with regard to banning of posters. Reckless silent banning (“hellbanning”) is a notorious problem on Hacker News, and the general consensus is that the problem is with Graham’s hired editors, and not the man himself.

However, I believe that I am owed an apology. (If not, I seriously misunderstand the Hacker News comment ranking algorithm, which I believe to be based on age and votes of the comment.) In September, I was tipped-off (anonymously) that my comments were being downgraded in determining their position on the board. I’d suspected this, since I went at one point from several top comments to seeing mine often at the bottom, despite several upvotes.

At first, I didn’t believe that I’d been personally targeted because, while I have been critical of the VC-funded ecosystem (“VC-istan”) I’ve always supported Paul Graham and what he’s been doing. Additionally, I’m a high-quality contributor to the board: top-100 karma, high average karma, well-written comments. However, there did seem to be a change in the ranking algorithm; something flaky was happening. The tipper gave me a way to test whether something wrong was happening: check latency times from Hacker News while logged in, and though an incognito window (“slowbanning”). Sure enough, the 3- to 5-second latencies I’d experienced under my personal account were not experienced in incognito mode. Typical latency for me, when not logged in, is 250-400 ms.

A few years ago, Hacker News made karma ratings invisible. At the time, as I recall, the justification was to prevent runaway behavior whereby popular comments got even more (less deserved) upvotes than ones with mediocre scores. I now tend to think that the change may have been made for a less noble reason: to hide that certain posters were getting (in terms of comment placement) personal penalties. If it were true (and it may not be, and if I am wrong, then I will be the one owing an apology) then it would be extremely damaging to morale, and hiding the fact would be mandatory.

If I were being personally penalized (presumably, in direct retaliation for my criticism of the VC-funded ecosystem) it would be visible by looking at older comments. Why? With HNSearch, one can find the karma rating of any comment older than about a week. (You can, if you wish, check the assertions I am making here.) Additionally, multiple sources have given me that the age penalty on comments is on the order of (2 + t)^-p, where t is the comment’s age (in hours) and p is an exponent variously given between 1.5 and 2; this means that for old threads (t >> 1000 hours) age would, assuming the comments were within days of each other, which they almost always are, be pretty well factored out.

Looking into some high-karma comments, such as 99-point comment 5 months ago, I found strong evidence of a personal penalty. That comment was placed near the bottom, while the top comments on the thread had substantially lower scores. This is not of direct concern to me (few people read 5-month-old threads) but it confirms what I had suspected.

There are 3 possibilities.

  1. (Least likely.) In retaliation for my criticism of the VC-funded ecosystem, Paul Graham has assigned a personal penalty to my comments, causing them to fall to the bottom, even when they are highly rated. If this is the case, I am owed a personal apology by Paul Graham.
  2. (Most likely.) My comments have been personally targeted, but Paul Graham is not the culprit. In this case, Paul Graham should apologize not only to me, but to Hacker News at large, for giving editorial privileges to the incompetent who pissed off a top contributor. Additionally, this person should be dismissed from the editorial role.
  3. (Other.) There’s something I am missing: perhaps an additional complexity in the ranking algorithm not related to comment success (karma) or age– I’ve tested for both. I can’t see what, but I’d be open to an explanation outside of what I’ve covered here. If I am wrong and my comments are not being penalized, then I must offer my apology for the suspicion. It is not one that I developed (much less voiced) lightly, but I cannot for certain guarantee that I am not wrong.

I look forward to learning which of these is the case. If I am not alone in suspecting chicanery, it should be discussed.

My name is cleared.

This came from a very high-ranking person at Google, earlier today. It is posted here with the author’s permission.

Dear Michael,

Your continuing outspokenness, with regard to your time at Google, has come to my attention. After reading over your record in detail, I and many others on the senior leadership team agree that you were poorly managed and inaccurately reviewed. Your performance was strong given the short time you were here, and you showed very high potential for growth.

We find it regrettable that you left Google. Having reviewed your history, we want to impress upon you that we see your experiences as unjust and certainly not reflective on you in any negative way but, additionally, extremely unusual for Google. We hope that you will also see it this way, and not continue to regard it as reflecting any underlying pattern at Google. Had you been under different supervision, we believe that you would have been very successful here. You are clearly a driven, passionate, and talented technologist.

We wish for every person we hire to have a productive and successful career here, and of all the companies where I have worked, Google does the best job of achieving this. However, perfection in management is impossible for any company, especially given our size and the fast-paced nature of technology in general.

We wish you the best of success in your career going forward.

Sincerely,

[Googler]

My name is cleared.

I’m done criticizing Google. On the whole, Google is a great technology company in many ways, and has plenty of exceptional people with whom it was a privilege to work.

It’s time to move on. Back to building.

Gervais / MacLeod 7: Defining organizational health, the Mike Test, and VC-istan’s fate.

Over the past couple weeks, I’ve delved into organizational health and the processes that compromise it. (See: Part 1Part 2Part 3Part 4Part 5, Part 6.) Typically, organizations tend toward a MacLeod hierarchy with three tiers: the Sociopaths, the Clueless, and the Losers, in that order from top to bottom. Sociopaths, who take an up-or-out strategy and either end up at the top or fired, are strategic and dedicated but not subordinate. They’ll never sacrifice their individual career goals for the benefit of the organization, although they may work to improve the company if there is gain for them. These aren’t always bad people. Of the three personalities, I have most in common with the Sociopaths, but I’m not a bad (much less psychopathic) person. Clueless, on the other hand, are dedicated and subordinate but not strategic. They’ll work hard, and take orders, but they don’t have a good intuition for what is worth working on. They’ll eagerly follow or lead pointless, “death march”, projects. They tend to be shunted into middle management where their dedication and eagerness are an asset but their lack of strategy does minimal damage. Losers are subordinate and strategic but not dedicated. They know what’s worth working on and what not, and will follow orders– they’re subordinate because it makes their lives easier– but rarely put forth more effort than is required of them. (As already said, they’re not actually “losers”. More on that, later.) They’re discomfort-minimizers, while the equally strategic Sociopaths are yield-maximizers.

The MacLeod process exists because most organizations make it inconsistent for a strategic person to also be subordinate and dedicated, meaning that the confluence of these three traits won’t occur. Strategic people tend to be rational and selective with their efforts. Some will aim to minimize change and discomfort, willing to sacrifice compensation and career progress in exchange for an easy job where they won’t get fired. That favors subordinacy: make the boss happy, get away with more and reduce risk. If such a person can leave work at 3:00 and collect the same salary, he will. (Why not? If the firm remains happy with his work ethic, is it unethical?) These are the Losers. It’s important to note that they’re not losers in the sense of being disliked, undesirable, or defective. They only “lose” in the first-order economic sense, since their position is one in which they receive less (usually, a steady pittance) from the organization than they put forth. They trade expectancy (long-term average compensation) for the risk-reduction offered by a large, stable company in which they can retain good standing by appeasing a small number of important people. There’s another crowd who are also strategic, but who have more of an appetite for risk and want to capture some of the surplus value generated by the Losers’ trade (of expected value for risk reduction). They make the equally rational decision to put forth a lot of effort, and to take on a lot of risk, in exchange for rapid career growth. They tend to be dedicated, hard workers, but they’re not subordinate. This doesn’t mean that they’re ideologically or obnoxiously insubordinate, but they’ll never buy into the fiction that people must put company goals above their own career needs. Ultimately, such a person will gladly work a 50 or 70-hour week for the right price, but will never sacrifice her own career goals for the company or “the team”. Such people can’t stay in one place for very long. It’s not that they make themselves disliked, but there is a certain “offness” about them. They’re ambitious. They have “an agenda” (as if that were a bad thing). They’re only loyal to companies that treat them well and give their career needs a special value that can’t be given to all. They’re mercenary. It’s up-or-out for them. Companies promote as many of these as they have room for, but must discard the rest. This is actually an impersonal and necessary process– when you have more ambitious people than there is room at the top, you must make a way out for some, even if they are good people that you personal like. However, companies often have a psychological need to create a mythology for hard decisions, and this leads into the “not a team player” epithet that exists to justify this process (that, in my opinion, companies are not required to justify, because it’s not immoral to fire people; it’s just the way human organizations work). These strategic, ambitious people are the Sociopaths. Finally, the non-strategic who are dedicated and subordinate must, almost by definition, be Clueless. Those are the “true believers” who give to the company without expecting much in return.

The MacLeod organization is very stable according to its own internal metric. The Clueless provide a barrier between Losers and Sociopaths on the rank spectrum, while Losers (who give little, and get little) provide one between (value-capturing) Sociopaths and Clueless (who give a lot, and get little) on the hedonic spectrum. The effort thermocline and differential social status hold everything together. It’s an envy-reducing structure. Clueless are oblivious to the effort thermocline and don’t want the jobs immediately above them. Losers don’t want to become Clueless middle-managers– with only token power and slight improvements to compensation, but substantial increases in responsibility and discomfort. Thus, very few people want the jobs immediately above them, and those who clearly do want to ascend (Sociopaths) are fast-tracked either up or out. The MacLeod organization is, on its own terms, fairly peaceful. On the external market, however, such organizations are not always able to compete. MacLeod hierarchies keep peace within the firm, but often make the organization slow to adapt to the world outside.

The problem with the MacLeod organization is that it’s driven by three tiers for which each has a critical defect. Insubordinacy (of the Sociopaths) is not always bad, but it is a defect from an organization’s point of view, and with no one to audit the Sociopath tier here is no way to exert control over the moral character of the leadership. If “good Sociopaths” (Technocrats) are in charge, it will be a good organization. If bad people get into power, they will drive out the good. The problem isn’t that such ambitious people are uniformly or even often bad, but that organizations can almost never self-regulate in such a way as to audit or change the moral character of their leadership– and once an organization goes bad, it will rarely revert, because bad people have an innate competitive advantage; true psychopaths are more agile in social competition than the irreverent-but-decent “good Sociopaths”. In short, MacLeod Sociopaths are not necessarily bad people, but they’re impossible for an organization to control. The Clueless, lacking strategy, are unable to function without good people above and below them. They produce most of the tactical effort, but require management from above and below in order to retain focus on useful stuff. This dependence on others is their shortcoming. Finally, there are the Losers, who do most of the work and will directly affect the company’s ability to execute as well as its reputation for quality of service but who are, rationally, only dedicated enough to remain in good social standing. It’s not true that they “do the minimum not to get fired” (that’s a common misunderstanding of Loser-ism) so much as they manage their performance to the Socially Acceptable Middling Effort (SAME). They want neither the reputation for being a slacker, nor that for working too hard. They aim for the middle. While less important than the strategic competency of the leadership, the SAME level is a major cultural factor in a company’s macroscopic performance.

The organizational issue with the SAME is that it drifts over time. A high SAME will keep the working people of the company, who are often very competent despite their lack of ambition, highly productive. On the other hand, when the SAME falls to zero, the company ends up with a lot of deadwood; Losers stop working, because there’s no reason to do so. In this light, we can understand Marissa Mayer’s recent decision to crack down on work-from-home employees. This effort is about raising the SAME, which is hard to manage in a distributed setting. The problem isn’t that WFH employees are likely to be lazy. That’s often not the case. In fact, the best WFH-ers are far more productive than any in-office employee. The issue is that the good WFH-ers have no effect on the SAME– they get a lot done, but the rest of the office doesn’t see them working hard– and the bad WFH-ers have fallen to zero. An in-office policy will, at least at first, reduce bulk productivity (by hurting the good WFH-ers more than it brings up the bad ones, most of the latter being incorrigible people who will need to be fired) but the expected second-order effect is to raise the SAME. Mayer’s changes may kick Yahoo into the ugly state of a tough culture, but that’s likely to be less dysfunctional than the stodgy rank culture into which MacLeod corporations devolve. In rank culture, getting along well with management is more important than effort itself, which pushes the SAME down as obedient non-performers get a pass and weak managers become entrenched.

If each of the 3 MacLeod tiers is defective in one of these three desired organizational traits, we must ask the question. Can people be strategic, subordinate, and dedicated? It only happens in the context of a mentor/protege relationship. In truth, people who are truly strategic are never fully subordinate or insubordinate. While I originally approached the MacLeod hierarchy and this three-trait decomposition, I assumed the existence of all three traits to be impossible. In reality, those who are strategic are subordinate or insubordinate based on context. Strategic and dedicated people will subordinate, in the short term, if the leadership (management, advisors, investors) shows a long-term interest in their careers. True loyalty is not incompatible with the insubordinate tendency of the highly capable mind. There’s a pay-it-forward mentality and a personal affinity that enables such people to live in harmony with the organization. This is observed in the rarest of the four work cultures: the guild culture, which creates balance in the relative importance of dedication, subordination, and strategy. The other cultures tend focus on one of the 3 traits at the expense of the others: rank culture, on subordinacy; tough culture, on dedication and sacrifice; self-executive culture, on being strategic. Guild cultures encourage balance. Why, then, are guild cultures rare (and dying)? The answer is two-fold. First, they’re hard to maintain, because the leadership must continually refresh its skill base in order to mentor new people, which means that the teachers must “moonlight” as students and study new methods as well as the external market. Second, guild cultures cannot grow fast. If they take on too many new people at subordinate ranks, it becomes clear that the not all of their careers will succeed (there isn’t enough room higher on the ladder) and the whole thing falls to pieces. While guild culture may be “good”, it is not fit (as an evolutionary term) insofar as it does not allow fast growth of its organizations.

A guild culture that collapsed recently is that of large-firm law (“biglaw”). Originally, it was difficult to get an associate position at a “white-shoe” law firm, but one who had one stood a very high chance of making partner. Not making partner (after seven to ten years) was the exception reserved for bottom-5% performers. In the 1980s, this changed, due to the increased workload generated by the private equity boom. The firms began taking on large numbers of associates without allowing the partnership ranks to grow in tandem, the result being that making partner is now the rarity. Now, it’s about 5 percent who get partnership, rather than 5 percent being denied it. The guild culture died horribly, being replaced by a catastrophic tough culture where 70-hour work weeks and “4:30 work drops” (late-day assignments with next-morning deadlines) are the norm. New York attorneys frequently describe the state of their (ex-)profession as “banking without the upside”.

So what defines a healthy working culture? We now have the vocabulary to address this. I’m going to elaborate six statements about a healthy workplace culture, and then arrive at a 7th (The Mike Test) which is the most important of all. I derive these six assertions from the three workplace traits– strategy, subordination, and dedication– in addition to the need for moderation in each.

  1. (Dedication, or DED) People can be relied upon to do their jobs well, and to treat their work as important. Ideally, this trust and reliability should exist at all levels of the organization. The company functions best if everyone is willing to do the hard jobs. 
  2. (Moderation in dedication, or M-DED) People do not engage in unnecessary sacrifice for social or subordinate reasons. Pain does not become a measure of a person’s work or value.
  3. (Subordinacy, or SUB) People take a “pay-it-forward” attitude toward their colleagues and the company. Junior employees take direction from mentors; seniors invest in their reports for the long term. People invest in their relationships with the company, because it is worthwhile to do so. 
  4. (Moderation in subordinacy, or M-SUB) Doing the right thing is more important, to employees and the company, than following orders. This requires a culture that enables people to speak up without fear of retribution.
  5. (Strategy, or STR) Individual employees take ownership of their own work and have the autonomy to place their efforts where they perceive the most value. There’s no need to ask permission or “apply for transfer” to work on something that appears important. This is where open allocation shines.
  6. (Moderation in strategy, or M-STR) Allowance is made for exploratory work that might pay off only in the long-term. Work need not deliver short-term dividends to be acceptable. People are allowed, at all ranks, to invest at least some of their time into R&D that is abstractly beneficial to the organization, even if it doesn’t produce an immediate benefit.

If I were to grade each of the four cultures (0 to 8, 8 best) for its typical level of success on each of these traits, here’s how I would assign them (based on their observed performance, not on their purported values).

Trait Rank Tough Guild Self-exec.
DED     2    6     5      8
M-DED   3    0     5      6
SUB     4    1     8      4
M-SUB   0    2     5      7
STR     1    4     4      8
M-STR   2    0     5      3
Avg.   2.0  2.2   5.3    6.0

Rank cultures are across-the-board weak. They excel in superficial subordinacy, but the lack of true loyalty earns them only a ’4′ grade for that trait (SUB). The only good thing about them is their internal stability, which is why they are the eventual state of a hierarchical (MacLeod) organization. Still, they tend increasingly toward macroscopic underperformance due to their corrosive mediocrity. When the only thing that will prevent laziness is aggressive management, effective managers leave (wanting better reports) and the company ends up getting stuck with lazy managers who tolerate crappy employees. Tough cultures are slightly better– people actually give a shit, if only for selfish reasons such as aggressive performance reviews– but still fail in most critical areas, and behavior tends toward moral degradation. In tough cultures, people are as subordinate as they need to be to survive, but deeply disloyal. Two examples of tough-culture degradation are Enron and Google after the introduction of “calibration scores”, but the tracks of the organizations are different. Enron maintained its tough culture by executive fiat and experienced top-to-bottom ethical corrosion. Google’s tough culture (introduced by a play-for-play copy of Enron’s performance review system) reverted quickly to a rank culture, because many managers had no desire to enforce it and began agreeing to “peg” calibration scores in return for loyalty. (Google is an unusual example, having a healthy self-executive culture above the Real Googler Line– enabling it to maintain strong macroscopic performance– and a necrotic tough-turned-rank culture below the RGL.) The latter path is more common. Tough cultures usually return to rank cultures; those who have the power to protect people from the harsh review system become the new holders of rank.

Let’s examine the healthy cultures, in the light of the grades above. Note that self-executive cultures get top marks for dedication and moderation in dedication. When people are trusted to direct their own efforts, and rewarded for good work, they tend to put their effort levels at the right level. They also excel at moderation in subordinacy and (of course) strategy. What self-executive cultures tend to be bad at is rewarding long-term investment, including mentoring new hires. Guild cultures, although not especially fit due to their intolerance of fast growth, are well-rounded and healthy. When they work well, they excel in terms of a “pay-it-forward” attitude that replaces subordinacy (or insubordinacy) with genuine altruism. They’re also, perhaps surprisingly, the most prone to long-term investment (moderation in strategy). The central planning inherent in guild culture can be a weakness, but it can also allow the firm to “future-proof” itself consciously– if its leadership wants to do this.

Both cultures struggle when it comes to growth, but in different ways. Guild cultures can grow vertically– bringing in people of lower or higher skill levels– because they have the machinery for assimilating them into mentor/student relationships, but tend to fail at horizontal growth, because guild cultures require a carefully managed balance of work quality, skill level, and rewards. If that gets out of whack due to rapid growth, some form of scarcity (e.g.,of good reports, of high-quality work, or of room at the top) will turn the firm into a zero-sum slugfest that destroys the mutual trust of the guild culture. (It becomes a tough or rank culture.) On the other hand, self-executive cultures can grow horizontally– taking on more people at the same skill level– but tend to be incapable of assimilating people of superior or inferior skill levels to those who are already there, because self-executive cultures rarely provide the incentives for managed growth (as opposed to going out and putting forth work that brings immediate results). An example is Valve, an ideologically self-executive culture that simply does not hire junior-level people– it has enough self-awareness to know that it can’t maintain its self-executive culture in the face of the skill inequality that vertical growth creates.

In truth, self-executive cultures tend to downplay differences in skill– everyone has basic autonomy, there are no real “bosses”– and can’t hire below the prevailing skill level and maintain their culture. They could hire above the prevailing skill level and survive– that would be desirable– but have a hard time getting such people to work for them without offering some authority to them. People who are used to be entitled leaders (executives) do not usually want to work on equal terms with people they consider of inferior skill. Thus, self-executive cultures can only hire near the prevailing level and, since they only succeed if the prevailing skill level is fairly high, the scarcity of such talent means they cannot grow fast even if they would want to.

Tough and rank cultures, on the other hand, grow much faster. Why is this so? Tough cultures do not focus on growth so much as churn. They hire a lot of people, fire a lot of people, and are responsive to market conditions but generally agnostic on the direction of headcount numbers. Tough culture, being the absence of a work culture, has no growth management. A tough culture can hire a person of low market value, accepting the very high chance (in some cases, over 50% per year) that it will have to fire him. What causes directional growth (i.e. more hires than fires) in tough cultures is the long-term tendency toward inefficiency (necessitating greater headcount) and the emergence of pockets of rank culture as the tough culture decays. Tough cultures tend to grow in spite of themselves, because the cultural corrosion reduces individual performance despite the culture’s intent of doing the opposite. Rank cultures, for their part, actively encourage headcount growth. Hiring binges mean that there are more subordinates to go around, which makes managerial decision-makers happy.

In other words, neither of the desirable cultures (self-executive, guild) excels at horizontal growth and vertical growth. This makes them less fit, at least in terms of the ability to subsume people, than the pathological rank or tough cultures of typical organizations. There might be as many of these desirable cultures (self-executive and guild) as there are pathological cultures, but the latter house more people. It may be that most businesses have good cultures, but most employees work in dysfunctional businesses, if only because the dysfunctional work cultures are most able to grow quickly.

This conclusion is depressing: most people will work in dysfunctional cultures. Can we change that? If we want to do so, we need to answer some questions? What is the best workplace culture? Should one aim for the guild culture, or the self-executive one? I think the answer is obvious: one needs a hybrid, with ideas from both. I would say that one should aim for a culture that is mostly self-executive, and especially so for senior hires, but that creates an internal market for mentoring new employees, and for long-term investments, in which those efforts are equally valued. In doing so, it would manage to capture some of the assets of the older guild cultures, thus enabling some degree of vertical growth.

On the topic of growth: in addition to the six cultural evaluations above, I’ll add a 7th that is, above all, most important. The other six pertain to the present-time cultural health, but this 7th determines whether an organization will improve or decay over time. It’s The Mike Test. It has one criterion. The Mike Test is…

…would you, if no one would know or give you credit for doing so, want to hire someone better than you? Would it be rational to do so?

Assume that there’s no hiring bonus, and she’s not your best friend. You won’t get credit, in any form, for a great hire, and she won’t feel preternaturally loyal to you if she rises fast. The only benefit you get from hiring this great person is that you improve the company. The risk you take on is that your relative status in that company will decline. In a large company, the risk is low– you’re unlikely to compete directly with her– but so is the reward, making the balance zero. (It’s not worth it to hire her even in the large firm, not because there’s a risk of competition, but because you could spend time on other things.) I would argue that most companies fail The Mike Test. In the vast majority of companies, it is not rational to hire a person of superior ability.

This hits on the (slightly altered) Jack Welchism that “A players hire A+ players; B players hire C players”. In my use, however, “A” and “B” orientation pertain to context and security rather than innate competence. A players are secure enough that their interests (at least, in hiring) align with the company’s. They want to work with great people, and it has nothing to do with coarse personal benefits (hiring bonuses, “finder’s” credit). They make their companies better. B players, who are insecure because they are unremarkable, want to be safe and manage themselves to the middle. Hiring incompetents minimizes their risk of drifting out of the middle (and into the bottom). Good cultures discourage this kind of B-ness. They make sure that competent people are secure, and they rid themselves swiftly and fairly (preferably with severance; it reduces drama) of incompetents. Sadly, that’s rare. Most companies fail the Mike Test, and MacLeod hierarchies form because of organizations’ tendencies to hire people inferior to the (semi-insecure) real decision makers and, when superior people are brought in, to try to make them inferior using their control over the division of labor. Those tiers emerge because people in an insecure context have the incentive to hire only inferior copies of themselves.

Let’s discuss each of the four cultures in the context of the Mike Test.

Tough cultures fail the Mike Test in the worst way. In a tough culture, no one is secure– that’s the whole point of tough culture– so everyone is a contextual B-player (i.e. incentivized to hire mediocrities and make oneself look better). No rational person living in a tough culture would hire someone of superior skill– that person becomes an immediate threat. Rank cultures don’t fare much better. In a rank culture, one tends to have one of two kinds of managers. The first is the checked-out (i.e., also lazy and mediocre, as befits rank culture) boss who just doesn’t care. There isn’t a major loss inherent in hiring strong people, but it’s not a worthy use of time. The second is the hard-ass, careerist boss who creates a pocket of tough culture under him. (The company might still have a rank culture, but this boss holds high expectations.) That type of boss only cares about hiring insofar as it builds his team, and the tough-culture rules (don’t hire someone better than you, lest you be thrown under the bus) apply. Bosses in rank cultures might want to hire people of superior skill, but only if they could lock in permanent rank superiority. Rank cultures especially stigmatize reporting inversion (i.e. having a younger, less senior, or less educated boss) to the point that it can be career-ending to be at the butt of one. The benefits of having a strong subordinate are offset, in a rank culture, by the risk of reporting inversion. Therefore, both of the dysfunctional cultures (rank and tough) fail the Mike Test, explaining why they hire worse people with each generation of growth.

Guild cultures pass The Mike Test. If you hire someone better than you are, he might end up in a higher place, but that’s okay. You get a mentor, not a threat. A well-managed guild culture can assimilate someone at a higher skill level without eroding the well-being of the rest of the organization. This is the symbiotic nature of the guild culture. Self-executive cultures also pass, because their “bossless” nature means that the prospective hire’s superiority of skill is not a major concern. It’s a good thing to hire a better person, because you’ll have a strong colleague.

To summarize this briefly for each culture:

  • Tough cultures fail the Mike Test catastrophically. You endanger yourself directly if you hire someone better than you are.
  • Rank cultures fail the Mike Test by apathy. People only hire strong people if they can guarantee that person’s subordinate status. Rank cultures tend toward inferior hiring– strong people are less likely to be subordinate– but not as fast as tough cultures.
  • Self-executive cultures pass the Mike Test, as most people would prefer stronger colleagues, but the equality inherent to a self-executive company is a hard sell to one who might expect (because of a higher skill level) a leadership role.
  • Guild cultures pass the Mike Test, if they can convince the superior to take the role of a mentor rather than a manager.

Perhaps surprisingly, most VC-funded startups fail the Mike Test. They pass it for founders and real owners, who will have a more successful company, but they fail for engineers. Founders and investors control the dilution process and, even if they lose relative share, they’ll only make deals that are beneficial to them (50 percent of something is better than 100 percent of nothing.) If you own 20 percent of the company, you’re ecstatic if you just hired someone better than you are. What about engineers, however? What are their incentives?

Let’s consider a typical software engineer at a 50-person technology startup with 25 software engineers. His compensation is $25,000 per year lower than the market level, offset by equity equal to 0.05 percent of the company, vesting over 4 years. (In practice, he’d more likely have options at a low strike price, but I’m going to simplify here.) Salary raises are rare in startups, and equity improvements (without a promotion) are almost unheard-of. When things are going badly, that’s not a time to ask for anything; when they’re going well, the appreciation of equity is the raise. In addition to the $100,000 lost over four years at a low salary, let’s value the lost salary growth at $50,000 over 4 years, plus another $50,000 to account for future income lost to being at a low salary level when he exits. So he’s paying $200,000 for 0.05% of the company, implying a valuation of $400 million. This is, most likely, much higher a valuation than the one at which investors would buy into it. However, I can make a strong case that the engineer’s valuation should be lower than that given by investors, especially in a VC-feeding frenzy. When risk, liquidation preferences, cliffs and the lack of control are included, an engineer doesn’t do well to accept this typical startup offer ($25,000 salary drop, no raises; 0.05% equity) unless he can realistically value the company at approximately $1 billion. With the shoddy IPO climate, not many startups deserve that kind of valuation. (In fact, the companies that do are no longer really startups.) So, the equity offered by a startup is not, for most mere engineers, a good reason to be there.

So why do software engineers work for these VC-funded startups? There are many Clueless in the mix who massively overvalue their equity consideration, but most engineers believe their initial grants to be “teasers”. They know that their starting allocations are low, but expect that they’ll get something closer to a “fair” share when they grab those “inevitable” executive positions at which real equity allotments (0.25 to 0.5 percent for Directors, 0.5 to 1.0 percent for VPs, 2.0 for C-level, 3.0 for CTO/COO and 5.0 for CEO) are common. That is what keeps engineers in VC-istan motivated; the implicit (and often broken) promise of a higher-ranking role (with investor contact, and real equity) as the company grows. The real concern, when engineers participate in hiring decisions, isn’t about equity dilution associated with strong hires. They just don’t have enough equity for that issue to really matter. Their fear is that, if they hire people stronger than them, they’ll lose out on the executive positions implicitly promised to them as early hires at their startups. If they hire engineers better than they are, they’re doomed to languish in a company that has begun hiring above them. One note about typical startup sociology: once your startup hires someone from outside directly above you, it’s over. It will continue doing so, and your career has stalled out. You’re not a real player in the firm.

There’s an inherent conflict of interest in this style of VC-funded startup. The real owners (investors, founders, top management) get a social-climbing mentality and seek to hire stronger technical talent (even if they don’t need it!) for the sake of “scaling”. Engineers, on the other hand, would do well to subvert this. They don’t actually want to hire bad people (terrible software engineers reduce the productivity of the team) so much as they want to hire just-slightly-inferior people who aren’t so bad as to poison the team, but won’t challenge their chances of getting an executive position. This is more of a case of B players hiring B- players than one of them hiring C players. 

However, two to five generations of “just slightly inferior” will turn to bad, and the rapid churn of VC-funded startups means that it doesn’t take that long. VC-istan startups degrade severely and predictably once hiring decisions are made by people with small equity slices, whose concern is not the health of the company (ownership) but the protection of their own inside track to executive positions. Such startups fail the Mike Test, and it doesn’t take long for it to show.

What is VC-istan’s place in the 4-culture taxonomy?

What is the culture of a typical VC-istan startup? Within VC-istan, there are efforts (e.g. Y Combinator) to generate a pay-it-forward guild culture. This is actually quite interesting– entrepreneurship is supposed to be market-oriented, but the most healthy subsector of VC-istan is guild culture– the healthy variety of a command culture. On the other hand, the healthy market culture (self-executive) is shockingly rare. This suggests that VC-istan has become somewhat of a command (not market) culture, and it seems that it would be more of a rank culture than anything else. I tend to believe that this is probably true. VCs talk to each other. They decide as a group who is hot and who is not, and this extortionate power makes them the true holders of rank. VC-istan, a postmodern corporation that manages to transcend mere companies– in VC-istan, companies are disposable– is so amorphous and complex that it cannot be tagged as “only” belonging to one culture, but rank culture is increasingly the dominant force. Unfortunately, I don’t see a solution for this. One possibility would be for the government to interfere with communication among VCs in order to kill off the collusion, herd mentality, and “accept this term sheet or I’ll pick up a phone and no one will fund you” extortions, but a government step-in would probably cause more problems than it would solve.

VC-istan itself may be a rank culture, but an imperfectly formed one. VC-istan exists because a web of socially connected people– reputable investors, and those with welfare-check (err, I mean “acq-hire”) writing ability at large companies– have created a controlled-market zone. Outside of that is regular ol’ business formation: an actual market. By the way, what are free markets? They are like self-executive cultures at best, but tough in their own way. Corporate tough cultures are mean-spirited and driven by intentional human malice (stack ranking, “calibration scores”, transfer blocks). Free markets are tough only because they are indifferent, but self-executive for those who’ve managed to develop a pattern of success. So the “greater world of business” formation is one that contains the market’s mix of self-executive and tough features at its periphery, and becomes more rank-culture-like as one grows closer to the VC-istan power players.

Startups are a reaction against the dysfunctional rank cultures, and would prefer to set themselves up as self-executive enterprises.However, as the company grows, power shifts to the rank culture of the world without (investors, acquirers). Full-on rank culture is usually in force shortly after liquidity, but the phase most typically associated with VC-darling “startups” is a transitional spell of (unplanned) tough culture. 

Startups tend to remain “flat” for a long time, but this is usually not out of executive altruism. Self-executive cultures are naturally flat, but so are tough cultures. Tough cultures want everyone in competition with everyone else and use a (pathological) flat model to maximize internal competition. The self-executive model of the VC-istan startup dies as soon as the company stops handing out real equity slices (often immediately after the Series A). At this point, the “colony” mentality (live or die as a group) ends and the true goal of the new hires is to get into the executive positions that make real equity slices possible. The internal competition that emerges causes alliances to form and break, influence to be peddled, and informal management (people who manage to win credibility through illicit trades and manufacture the appearance of high performance) will emerge. The tough culture’s informal management is actually substantially worse than the rank culture’s rigid system, because the former encourages more influential people (managers in practice, if not in title) to compete with their (again, informal) inferiors. Rank cultures, at least, are rendered stable by the absence of competition between managers and subordinates– leading, over time, to the Gervais hierarchy. Tough cultures are just amoral, vicious messes.

When a startup first gets funding, the cultural neighborhood of the founders switches from the tough one of an indifferent market to a more self-executive one. They now have some autonomy, measured numerically in “runway” (how long they can survive with current capital). Unfortunately, this self-executive culture cannot survive the rapid growth typically expected by investors (especially VCs). Self-executive cultures can only hire near the prevailing skill level. VCs, on the other hand, want the company to indulge in social climbing (hiring above that level, which involves enticing people with executive positions that reduce the autonomy of those within) and rapid growth (which mandates hiring below the prevailing skill level to tackle the grunt work generated by sloppy, fast growth). Guild culture is clearly not an option, because tight deadlines leave no time for mentoring. Nor is rank culture, because it tends rapidly toward the underperformance of the MegaCorps that startups exist to destroy. Thus, VC-funded startups tend to degrade into a tough culture by default. This should explain the churn-and-burn behavior for which they are so infamous.

So, what culture is VC-istan? It depends. If you’re lucky enough to win the attention and mentorship of the (extremely rare) well-connected person who’s not an asshole, it’s a guild culture. If you’re a founder who just got funding, or a very early hire guaranteed a strong position, it’s self-executive. For founders and executives fighting mostly external battles (with acquirers, investors, and others with a million times more in the way of connections) it’s a rank culture, but one that does not (at that point) seep into the organization. For typical engineers facing internal battles (for scarce future executive positions that come with real equity) it’s a tough culture of long hours, harsh deadlines, vicious politics, and fast firing.

In other words, startups go through four cultural phases. Before funding, they live in the prevailing, indifferent tough culture of the market. Once they get their initial funding and have some autonomy, they turn self-executive (second phase). The romance of the “startup ideal” is derived from this phase of organizational life. As they grow (often sloppily) and take on more people than they can really provide startup perks (real equity, autonomy, leadership) for, they turn into tough cultures (third phase). Most VC darlings have tough cultures. By the time the company is getting that much attention, the self-executive era has ended. Finally, once the startup reaches liquidity and is a full-fledged corporation, it tends toward typical rank culture (fourth phase).

Mike Testing VC-istan to predict its future

Let’s see if we can apply the Mike Test to VC-istan, noting that Silicon Valley emerged as a reaction to the stodgy rank cultures associated (at the time) with East Coast corporations. The Mike Test tells us that self-executive and guild cultures can improve as they grow, although these low-entropy work cultures are hard to grow fast. Rank cultures, on the other hand, tend to stagnate, and tough cultures actively devolve, as headcount grows. What is the future, then, of VC-istan?

Most VC-istan companies are in active cultural devolution, being tough cultures where people are prone to hire inferior versions of themselves. In software engineering, this process is slowed somewhat by the (genuine) desire not to hire outright incompetents. Software is structurally cooperative enough that the pain (bugs, bad designs, low code quality) associated with hiring an incompetent does not offset the gain in relative position. As I said, this software-specific trait means that B players don’t try to hire C players, but B- players, which slows the Mike-Test decay normally associated with tough cultures. All of this is, in fact, not a major problem for VC-istan. Companies are disposable! The thing should be sold before it falls that far. VC-istan can tolerate the corrosion of the tough corporate cultures it generates, since these companies are just going to be sold to rank-culture corporate behemoths. VC-istan is not designed to build free-standing companies. They exist to be bought or to die.

The tough cultures of VC darlings will bring incompetents into those companies, but not a rate that is fast enough to matter to the corporations themselves. They’re build-to-flips that have no reason to care about slow cultural corrosion. There might be a “littering effect”, if these tough cultures are (a) bringing undesirable people from outside of VC-istan, and (b) leaving them in the VC-istan ecosystem after the company fails or is bought. If both (a) and (b) are true, then we can hold these cultures responsible for lowering the overall quality of people in it. I don’t know if that’s the case. That subject needs further study. Since the most egregious incompetents in VC-istan are not low-level engineers but the supernumerary, non-technical, executives, I tend to doubt that any engineering-specific littering effect is a problem, either in the short or long term. The executive-specific one is well-documented; VC-istan does have a way of turning shitty, failed bankers into even shittier non-technical startup “executives”.

In other words, I don’t know if the tough culture that typifies the standard VC darling is going to fill VC-istan with incompetents. The company itself will take on undesirable people, but those companies aren’t built to last very long. That tough cultures are so common is a symptom of something pathological, but that’s a topic for another essay. Instead, to project the future of VC-istan, we need to look not at the culture of the typical VC-funded company, but at the culture of VC-istan itself: the postmodern corporation in which the VCs are executives, so-called “CEOs” are glorified project managers, and engineers are clueless chumps who don’t realize they work for a big company. What we see is a very typical rank culture, with VCs and well-connected “serial entrepreneurs” (read: people whose connections entitle them to continued funding no matter what happens) in the Sociopath tier and a swollen Clueless tier. It’s a very effective, internally stable MacLeod rank culture.

As I discussed earlier, the stability of the MacLeod organization comes from the lack of envy between Losers and Clueless; and between Clueless and Sociopaths. Differential social status (DSS) and the effort thermocline (the level at which jobs become easier, rather than harder, as one ascends) ensure this stability. Losers prefer things of genuine value over the non-transferrable DSS coveted by the Clueless. Clueless are oblivious to the effort thermocline and consider the Sociopaths above them to be harder working and more capable than they are. Losers who want to become Sociopaths are fast-tracked up or out of the organization. How does this work out in VC-istan? The effort thermocline is blindingly obvious: it’s the distinction between startup employees and powerful investors. Above the thermocline are the reputable VC partners, whose social connections entitle them to an easy life; below it are founders and the people they hire. The founders are the upper-tier Clueless who (just as in a MacLeod organization) don’t want the jobs above them, on the assumption that the Sociopaths “just shake hands and push paper around; we do the real work”. Differential social status, in VC-istan, is access to funding and publicity– something that a generation of idealistic idiots has spent decades of hard work to get, while their peers “sold out” and made actual money that could be used to buy actual houses and vacations.

For all this, I used to think that VC-istan didn’t have MacLeod Losers (with the losses borne by the swollen Clueless tier) but I realized that I wasn’t looking hard enough. Clueless are true believers, while Losers are rationally disengaged people who work hard, but minimize discomfort. (Again, they aren’t actually losers per se. Unlike the Clueless, they know the trade they make.) In VC-istan, MacLeod Losers tend to be consultants and freelancers. They cherry-pick the work that’s interesting to them, can lead quite a nice lifestyle if they’re good, and never work for equity. Since these people can often command $250 per hour or more, it’s hard to call them Losers! What they are is checked out of the Clueless game of VC-istan. They will never get rich– it’s hard to get more than 800 hours of work per year, with a decent rate, as a freelancer– but they will never lose a vacation or a relationship to a get-big-or-die company either. They sell tools and water to the idiots who dig for gold in the 120-degree heat. The MacLeod Losers of VC-istan are the mercenary consultants who manage to get by, contribute some work, but never hitch their fortunes or make undue sacrifices for a specific company.

If VC-istan is a MacLeod organization, then what is its future? MacLeod rank cultures decline, but they do it slowly. That is also what will happen to VC-istan. I couldn’t possibly say whether it will happen over the next 2 years or the next 20, but VC-istan is already in a MacLeod state and, while its decline is likely to be gradual, it’s also inexorable. I’ve started calling many of these companies “ad-banking”; VC-istan is what investment banking was in 1995. That is far from “death”. It does not even mean that it will become impossible to get good people; investment banks are able to get good people even now, but they pay dearly. It only means that good people will become more expensive over time. Only when compensation ceases to grow exponentially (in banking, circa 2009) will the best people start to trickle out and look for something new. VC-istan engineer compensation has quite a few years of 10-20% annual growth before reaching the unsustainable level, so I don’t see its “death” setting in until about 2025. Until then, there’ll be a lot of money to be made by mercenary engineers, so long as they know the market well enough to play it.

What will make VC-istan’s unwinding process interesting is its generation of alternatives. As investment banking grew stodgy, boring, and difficult, banks raised compensation (for genuine talent) into the stratosphere. No one would spend 15 years in New York investment banking for less than $400,000 per year at the end of it. This transfer of wealth generated early retirees and a few hedge funds, but not rival investment banks. People did not take their $6-million nest eggs and launch rivals to Goldman Sachs. VC-istan’s story will be different. As talented engineers wake up to the scam, wages may rise to the same levels that bankers commanded, generating a transfer of wealth toward a set of people not typically associated with richness: hard-working computer programmers. Those among them who have a mind for business will want to participate in investment, and to build something different from VC-istan. Something better. I don’t think anyone knows– yet– what will be built.

So what should be built? At 7.7 kilowords, I can’t hack that now. That’ll be covered in a future essay.

Gervais / MacLeod 5: Interfaces, meritocracy, the effort thermocline, and a solution.

Today, I continue my analysis of the MacLeod hierarchy and the Gervais Principle. (See: Part 1, Part 2, Part 3, Part 4.) I’m going to analyze the interfaces between the three MacLeod tiers in order to tease out the magic that makes it all work. How do three disparate types of people get along seamlessly? What prevents the existence of the Sociopaths and Losers from “cluing in” the Clueless?

In doing this, I’ll also analyze the concept of “meritocracy” in the corporate world. Every company seems to think its internal mechanics are meritocratic. VC-istan sees itself (despite the heavily manipulated market) as the ultimate in meritocracy. Is there truth in this? That I’ll address.

The Loser/Clueless interface: differential social status

The separation between the Loser and Clueless tiers comes down to differential social status (DSS). Here, “social status” includes not only in-crowd membership and popularity, but also the hard currencies: job titles, division of labor and compensation. Based on work experience, education, and negotiation skills, people have certain “market levels” of social status that they can expect to get in a new company. The difference between what a person has at a current job and what she can get on the market in a new job is DSS.

It’s not uncommon for a person’s DSS to become negative, when she improves faster than her company allows her career to advance. She can improve her standing by finding another job. In fact, in slow-to-promote organizations, negative DSS becomes common over time. “Familiarity breeds contempt.” This may explain why most organizations do a poor job of promoting from within– they have a systematic tendency to downgrade their own people relative to outsiders, the latter being untarnished by years of political fighting. People who grow “too fast” for most companies become used to negative DSS and underestimation, and end up with a “job hopping” trajectory.

That said, most people will have DSS close to zero. Relative to the noise factor inherent in taking a new job and the tendency of social status toward illegibility, whatever they have effectively a rounding error. For our purposes, we will say people with such close-to-zero DSS have “zero DSS”. Losers, when they play social games, tend to form in-crowds that don’t matter, such as the “Finer Things Club” and the “Party Planning Committee” on The Office, but these have no effect on compensation or division of labor. They’re diversions, and they don’t generate meaningful DSS.

There are three common things that will create a non-zero DSS. The first is for management to recognize someone formally with a job title or promotion, which creates positive DSS if management takes the accolade more seriously than the external market would. The second, which generates negative DSS, is for a person to be embarrassed or develop a negative reputation among colleagues. (If that person gets a negative reputation with management, she usually just gets fired.) The third source of DSS, probably most painfully common to my readers, is for a person to improve without it being recognized. This person’s DSS goes negative not because of organizational adversity, but because the organization refuses to allow someone to advance at the rate at which she actually improves, leaving her in a role and on work that’s below her frontier of ability.

Most corporate denizens aren’t noticed in any special way by management or their colleagues at large, nor do they improve fast enough to generate the third category of DSS. The result is that it’s most common for a person’s DSS to be close to zero.

Organizations have a love/hate relationship with DSS. On one hand, it’s a means of self-definition for the organization, and a way to motivate people. Those with positive DSS are going to behave like owners, because they’ll experience a drop in working conditions, compensation, and quality of work if they lose their jobs. Those with negative DSS serve a pariah or “omega” function: a way for an organization to state what it dislikes. DSS gives organizations a banner and a way to proclaim their values by promoting those who exemplify them. On the other hand, DSS is unstable. People with negative DSS will leave, of course. Regarding positive DSS, Sociopaths and Losers, when they find themselves with it, will usually try to parlay that into persistent, outside-of-firm social status and improve their long-term career prospects. If you’re strategic and have positive DSS, this is what you want to do with it: convert it into something that’s not contingent upon one organizational role. This improvement of their external alternatives reduces that positive DSS.

With the concept of differential social status well-understood, we can approach the Loser/Clueless interface. Losers have DSS right around zero, like most people. They could get other, equivalent jobs. What keeps them loyal and in-place isn’t the economic superiority of what they have, but the fact that they prioritize comfort and stability over the potential for gain. Additionally, when Losers get positive DSS they will, because they are strategic, convert it into genuine improvement of their overall career standing. One of the most incredible moments in The Office is when Pam, a receptionist converted into an unsuccessful saleswoman, uses the organizational “fog of war” following a management takeover to invent a new job for herself– a salaried Office Manager role. Pam is a MacLeod Loser, but a smart and very strategic one who uses her positive DSS (being married to “rising star” Jim, and having been with the company for much longer than the new management) to get improvements that actually matter: a better job title and more pay. The result of this is that Losers don’t tend to build up a bankroll of DSS. They convert it into forms that are more persistent and useful. If they can rise to a higher level in the organization, they do so and become Losers there (which is better than being a Loser at a lower level.) Clueless, on the other hand, will build DSS because they never cash it in.

It’s the Clueless who climb ladders, pay dues, and take on additional responsibilities in order to develop positive DSS, which they perceive as a two-sided loyalty. Venkat Rao argued The Office to be the first American workplace drama to peer into the world of the Clueless. I disagree. Willy Loman, in The Death of a Salesman, is the archetypal literary Clueless. Loman is a true believer in the importance of being well-liked. He builds up a bunch of relationships that, in the end, don’t matter and won’t save him. The loyalty is not reciprocated. He fails to convert his transient DSS into something more stable and, as he ages, it goes away.

So, how shall we separate the Loser and Clueless tiers? Losers, in general, do not exert themselves to build up positive DSS. When they get it, they attempt to convert it into something less contingent and more permanent. Sociopaths pursue DSS but only as a mechanism to rise to the top of the organization, which means they cash it in likewise. Clueless, apart from Losers, are those who sit on a fat bankroll of untapped and local social capital. They keep their DSS as it is, being true believers and wanting to show personal investment in the company. So what differentiates Losers from Clueless is a persistent pattern of nonzero DSS.

The Clueless/Sociopath interface: the effort thermocline

More interesting than the Loser/Clueless interface is the one that separates the Clueless and Sociopath tiers: the effort thermocline. Low in the organization, jobs get harder and more demanding as one rises the ranks. Salaried office workers work harder than hourly employees. Middle managers often work harder than the people they supervise, having more to lose. In the Loser and Clueless tiers, each promotion means higher standards, longer hours, and less job security.

There’s a level at which the jobs stop getting harder with each step up, and start getting easier at a rapid rate. Middle managers, in most organizations, are glorified grunts with front-man responsibility for meeting deadlines and deliverables, but no authority to define them or set priorities. However, there’s a level in each organization where the perks of the job include autonomous control over the division of labor and an extremely lenient performance evaluation process. It’s the “good old boy” club of upper management. It’s the level at which the top brass say, “Welcome, you can breathe now.” This group can be clubby and petty like any gossip-ridden small town, and this can make life within it very stressful, but judgment based on effort and sacrifice end.

The separation between these two worlds is the effort thermocline. That thermocline is the highest that a typical organization will allow someone to rise by working hard. It’s the top of the Clueless tier, the bottom of the Sociopath capstone, and if it’s serving its purpose well, it’s a one-way mirror: opaque from below, transparent from above. Executive Sociopaths, from the other side of the thermocline, appear (from below) to be working hard. Because they control not only the division of labor but the physical space, they can manufacture the image of high effort and investment while they enjoy the comfort of a private office and take the “fun work” for themselves. Losers, to some extent, know what’s up, but they’re so far from that theatre that they don’t really care about it on a day-to-day basis. The veil is for the Clueless, who must be tricked into seeing superior Cluelessness when they look up.

The purpose of the effort thermocline is to create an image of effort-based meritocracy at the bottom. This ruse makes people work hard, and it also creates social stability because people aren’t too eager to rise. Most Losers genuinely don’t want their boss’s jobs, because they realize they’ll be expected to put forth 50-200 percent more effort in exchange for about a 20-percent pay raise. Most Clueless see their bosses as superior– more talented, more experienced– and consider themselves ineligible (at least, at the time) for the roles above them. The only people who expect to rise rapidly (skipping the demanding middle ranks if possible) are the Sociopaths. As soon as they have something to trade, they look for a market.

Above the effort thermocline, being seen as hard-working isn’t especially important. In fact, it can be detrimental. If you have to work 12 hours per day, you’re probably inefficient. Sociopaths see the sacrificial lambs in the Clueless tier as chumps. Sociopaths actually “get” organizational politics. They understand that their progress within the organization will be based not on how much of themselves they put into an impersonal, organizational meritocracy (that doesn’t exist) but on how well they trade assets with important individuals. Effort is just one asset; credibility, relationships and information are often more important, and often easier to attain.

This enables us, as well, to look at some differences between the true Psychopath and the Technocrat (“good Sociopath”). The most successful Clueless have an unconditional work ethic, while Psychopaths and Technocrats are all about working smart. They define that a bit differently, however. Psychopaths like to manipulate people; Technocrats aim for improvements and genuine efficiency. They’re both hackers, but they enjoy different kinds of hacks.

Organizations that are going to generate MacLeod classes (and I will argue, later, that they need not necessarily do so) rely heavily on the effort thermocline. It’s the spine of the organization. Just above it are the lowest-tier Sociopaths who get direct information from the base of the company. As the executive suite’s filter, they have an enormous influence over what information is presented, when, and how. Top-tier Clueless could have this power if they wanted it, but their earnestness prevents them from seeing or exploiting the editorial control they could exert. To them, furnishing information is a duty, not something to be selectively performed. Thus, the information flow into the upper ranks of the company will generally come from the Sociopaths just above that thermocline, who perform the first filter.

Top-tier Clueless provide an obvious benefit as well, which is that they set the pace for the world below them. The most dedicated, productive Clueless are held up (at least superficially) as role models for the organization. Additionally, they take final responsibility for operational issues. Low-level Losers can blame circumstances for failures, nonproductivity, and mistakes. If the Loser’s computer breaks, he can sit tight and wait for IT to fix it. The perk of being a Loser is that the organization is tacitly responsible for maintaining your work conditions. Sociopaths cleverly define their jobs so as to have no hard responsibilities or deliverables. It ends up being the Clueless who are held responsible for keeping the lights on, resolving communication difficulties, and doing the ugliest work.

Technology, VC-istan, and meritocracy…

In my last post, I discussed the pseudo-meritocracy of VC-istan. What makes VC-istan successful is that it generates a context in which highly intelligent people can be rendered Clueless. When the ruse is new, peoples’ psychological immune systems haven’t formed yet and the smartest people, who would converge to MacLeod Loserism or Sociopathy in a normal corporation, can buy into it. Free markets are, on their own terms, meritocratic. The heavily manipulated market (by VCs and acquirers) looks like such. What makes VC-istan so brilliant is that the effort thermocline is extra-organizational. It’s not an organizational promotion that launches a person beyond the veil. It requires getting an entirely different job description.

For hard technological work, the MacLeod hierarchy is clearly dysfunctional. Losers are good at delivering grunt work reliably, but it tends to require a large number of them to do a major project. In technology, the result of this is intolerable communication overhead. Clueless tend to solve the wrong problems, unless micromanaged. Sociopaths, if they turn “black hat”, are outright dangerous. Whatever it is that causes the MacLeod hierarchy to emerge, the technological world would do well to eliminate that.

VC-istan’s pretense is that it has eliminated or obsoleted the MacLeod hierarchy, which is clearly dysfunctional. That’s actually not the case. The hierarchy has re-emerged. The solution is disposable companies. Sociopaths, as anywhere, find ways to trade social assets at a profit and become the major players. Many are not investors or “tech press”; in fact, I would guess that most of the Sociopaths are executives who’ve cultivated relationships with investors and can get themselves plugged into de-risked companies with absurdly high compensation. Clueless are the ones who suffer all the pain and risk. Losers are unemployable. Over time, this Loserlessness (despite the fact there’s a lot of losing going on) bifurcates the Clueless caste into Clueless-Losers and Clueless-Sociopaths. These mid-grade classes exist as Clueless rapidly become clueful, but are generally transient states. Clueless-Sociopaths are the ones who will readily screw their colleagues over but still believe that “delivering” is more important than acquiring credibility and trading social assets. Clueless-Losers are the ones who keep faith in the lofty “vision” (read: marketing) of their companies but have learned to tolerate subordination and are gradually realizing that their future and their firm’s (or VC-istan’s) will diverge.

With all this, the MacLeod hierarchy seems to fly in the face of the high-minded concept of meritocracy. In fact, MacLeod organizations are meritocratic not only on their own terms, but on multiple sets of terms. Losers, in general, don’t care either way whether their organizations are meritocratic. They can see the lie, but it doesn’t upset or anger them, because they don’t care to play in the higher leagues where the lie is in force. However, the differential social status of the Clueless, in addition to the opacity of the effort thermocline, create the appearance of a meritocracy from a Clueless position. That keeps these “useful idiots” happy and striving. For their part, Sociopaths also perceive a meritocracy, if only because they define merit as “what you can get”. To a Sociopath, the idea that there would be any definition of merit other than raw power, status, or money is laughable.

This leads me to a brief exploration of what I call localism and globalism. I borrowed it from machine learning and mathematical modeling. A global model is one that imposes underlying structure and uses that for prediction, while a local one uses nearby data and discounts distant observations. For example, if one were to predict average annual temperatures of geographic locations, the tendency for polar locations to be colder than equatorial ones is a very strong global feature. If you were to predict temperatures based on only one variable, latitude is what you’d use, and it would serve well for the majority of places, but not all. On the other hand, local data has value insofar as it can capture variations (altitude, ocean currents) that are specific to small regions. Rome is very warm for its latitude because of the Mediterranean Sea and the Gulf Stream; Lhasa, quite cold because of its altitude and continental location. Ultimately, the solution to most complex problems is going to require a mix of local and global approaches.

The age-old debate between planned and market economies is related to this. Socialism is an approach that sets social-justice standards (“no one should be without appropriate health care”) and expects to apply them globally. Central planning imposes globally-oriented solutions on a diverse world. (This is one of the reasons why Marx believed communism needed to be worldwide.) Capitalism allows individuals to exploit local information for personal profit, with the desire, because such exploitation will require trade, that some of the surplus will be dissipated into society in the process. Neither of these two approaches, standing alone, is adequate. Societies, it turns out, need both. Laissez-faire capitalism tends to diverge into undesirable states when power disparities reach a certain critical level of self-perpetuation. Without some wealth transfer back into the poor, absolute libertarian capitalism devolves into oligarchy and, as it perpetuates itself across generations, aristocracy. On the other hand, outright command economies cannot make use of the wealth of distant, local information out there and stagnate, in addition to becoming extremely corrupt. In either case, the elite becomes a locality that is both incapable of solving global problems or serving other localities, and disinterested in doing so.

Corporate organizations are an interesting beast, in this light, and it’s useful to assess how the MacLeod Clueless and Sociopaths approach them. Ultimately, the corporation’s purpose is to provide some of the security of socialism while serving a capitalist purpose on the external market. Policies are set to impose fairness constraints that are held to be global up to the extent of the organization. The corporation takes on the hard, dirty work of competing on a tooth-and-claw market, but internally, it’s supposed to provide its employees with the comfort of a well-run, stable command economy in which the demands on them and their compensation will be regular and reasonable. This is the risk transfer that Losers tolerate, which is why they can’t be considered actual “losers”. Their low compensation (from an expected-value perspective) is due to the premium they pay for this comfort and abstraction. What corporations create is a story of internal globality. Most importantly, employees get a guaranteed minimum income based on the value of their skills.

The World is big and unwieldy and heterogeneous and scary. It’s a chaotic mess. Corporations intend to create order within the mess, and leave interaction with the scary Without to an exalted caste (in truth, comprised mostly of rent-seeking Sociopaths) called “executives”. They’ll handle that stuff. Employees can live in comfort and stability.

An analogy for this might be a cruise ship, which provides the comforts of a hotel in an environment where most people lack the skills necessary to survive. Losers are happy to remain above-decks. They enjoy the abstraction. Clueless, on the other hand, want to graduate from passengers to drivers. They’re willing to deal with bilge pumps and engine rooms. They want to “learn the ropes”, as if such objective principles existed. Although they are the actual (unwitting) muscle of the company, Clueless have a childlike eagerness to become “adults”, failing to recognize what Sociopaths already know: there are no adults. In the corporate world, there is no “God”. You get what you can get.

It’s the Clueless who believe in objective corporate policies, enforce written rules because they are rules, and sustain the fiction of a globalist meritocracy where talent within the organization will always be allocated toward its best use. Sociopaths, on the other hand, tend to be aggressive localist players who already comprehend that the best way to “get ahead” is the old-fashioned, localist, way: trading favors, peddling influence, and leveraging information. Clueless believe in a paternalistic, globalist system that will take care of everyone, and intend to gradually grow into a “leadership” role. Sociopaths focus on the local problem: moving themselves forward by exploiting features and people that are close to them.

Neither localism nor globalism is innately superior but, strategically, the localist approach is bound to be more successful within the modern corporate organization. Sociopaths can be either localist or globalist in orientation but, in the workplace, they take the more effective localist approach. Sociopaths win because, ultimately, the “global-within-local” concept is, in most corporate organizations, fictional. The people running these companies have no real stake in the globalist fairness constraints put forward as the organization’s values. The real dominating behavior is localism.

For one example of the ruse, let’s consider the legal obligation of corporate executives to represent the immediate financial interests of shareholders, even if the action taken is socially irresponsible. That “obligation” doesn’t exist. It’s a fiction, designed to give what these Sociopathic executives want (aggressive, self-promoting localism) a globalist spin: it’s just the law. The Clueless buy into it, and believe that “the company” is doing all these bad things because it has no choice. What is actually happening here is that executives have figured out that there’s profit to be made in taking a localist approach, and they want in. Executives are supposed to be the fair stewards of a fairness-and-process-oriented (i.e. globalist) organization dedicated toward capitalist purposes, but they become localists within them. Managers and the more adept employees have caught on to localism as well and taken up a strategy of careerist job-hopping instead of loyalist dues-paying. Good for them, too. They get it. The result of this, on the large scale, is the breakdown of the Clueless-o-polis of the paternal organization.

Transcending the MacLeod hierarchy

The MacLeod hierarchy emerges because of a tension between globalism and localism, and the tendency for globalism to be implemented half-heartedly. People who are rich– here, I’m not talking about financial wealth so much as risk tolerance and the ability to withstand intermittent, short-term failures– want the localist right to exploit information (opportunities for profit) as soon as they discover it. Among the rich, there are those who intend to take the high road (Technocrats) and make the world genuinely better, and the degenerates (Psychopaths) who will exploit anything, even if it’s a negative- or zero-sum cost externalization. Those who are poor and don’t have the resources, capital, credibility or connections to survive a failure prefer the safety net provided by a globalist institution, whether it be a large private company or a government. The Losers are the poor who understand the trade (and defect if the organization shows malevolence or extreme incompetence) and take part, because they prefer or need stability. The evil of such organizations is not that the risk transfer exists and that the poor are rewarded “unfairly” by losing in expected-value terms– that is basic finance (here applied, additionally, to non-financial assets like social stability and credibility). It’s that the Psychopaths at the top of many organizations will do anything possible to drive the exchange rate (not set by a fair market) on this risk transfer as far out of whack as they can get it. The end-state is an organization where the low-level Losers get almost nothing in the way of risk reduction, but give up a lot in terms of compensation and advancement potential (that might enrich them and bring them out of involuntarily Loserism).

My contention is that the MacLeod hierarchy doesn’t emerge only out of peoples’ psychological traits and emotional tastes for various forms of risk. If that were the case, it would be inevitable, and organizations would invariably tend toward pathology. I don’t think it’s so. I think that the MacLeod issues come from rich and poor, which are not limited to financial wealth. So where do rich and poor come from? Ultimately, on the organizational setting, they come from credibility, which I’ve discussed previously. In most companies, the credibility of a non-managerial employee is almost zero. Credibility is intentionally made scarce within the organization. What happens when you lack credibility? Your ideas aren’t taken seriously, you don’t get to define appropriate use of your own working time, and if it goes to zero, you’re typically fired. In the MacLeod world, Losers acquire just enough credibility to feather a nest and, once done, stop gambling. Clueless lay down enormous amounts of effort to get credibility, mindless of the diminishing returns, and get some moderate amount. Sociopaths find the credibility black market (there always is one) and find the most efficient ways to cheat the system, and they get the most credibility of all.

At this point, we can discuss the four work cultures and their tendencies. The planned cultures are guild and rank cultures, and those have globalist intent. Professions, in fact, are globalist beyond the extent of one company, and usually exist to create a guild culture outside of it. The better of the two planned cultures is the guild culture, which replaces power relationships with mentors and proteges. The “boss” is a teacher. The pathological planned culture is the rank culture where blind subordination becomes requisite. The market cultures are the self-executive and tough cultures. Both hold the employee responsible for delivering value to the firm, and allow for localist autonomy of sub-organizations, but the difference is that the self-executive culture gives employees more time to bring their ideas to fruition and more opportunities for good-faith failure. Tough cultures have tight deadlines and no control over scope-of-work for low-level employees. The self-executive culture is the healthier of the two market cultures, and the tough culture is the pathological one.

What unifies the two healthy cultures, and the two pathological ones? It comes down to employee credibility. The credibility floor in the tough and rank cultures is zero. Employees are not held to be implicitly credible. An employee who can’t demonstrate hard value-add on a minute-by-minute basis fails in a tough culture. One who is disliked by his manager fails in rank culture. Both of these cultures, in functionality, are defined by the fear-driven, cutthroat, unethical, and often harmful activities in which normal people will engage when there’s a threat of their credibility levels dropping to an unacceptable level.

The healthy cultures, on the other hand, set a credibility floor, although they do it in markedly different ways. The guild culture has a rigid seniority system, but assumes the junior employee to be a student and therefore of value– especially future value– to the organization. The self-executive culture is a more localist, market-driven culture, but with the assumption that each employee has some quantum of irrevocable credibility– a real vote that can’t be taken away by a priapic manager.

Companies that establish a credibility floor will still exhibit shifts of influence and, if nothing else, inequalities in soft power. There will be cliques and the best one can do is to render them fairly harmless. There will also be attempts to game the system and amass credibility through a variety of means. Credibility trades, although they “shouldn’t” exist, will. That’s human nature. The difference is that, when a credibility floor exists, one doesn’t have the panic trading (which Psychopaths love, because it’s easiest to exploit) that generates organizational pathology at such a rate that it’s uncontrollable. The trade of credibility still exists, but it’s mostly harmless and does not reach a level that creates unmanageable organizational pathology. When there’s a credibility floor, the rate of corrosion is slow enough that attentive management can reverse the damage. When the credibility floor is zero and panic trading defines the organization, institutional corrosion is so rapid and ubiquitous that it can’t be halted. 

I must make one note, here: companies that intend to function without corrosion and pathology must establish a credibility floor. That’s not to say that they must employ unproductive or harmful individuals indefinitely. If someone punches another employee, he’s still “credible” in the abstract, but he’s every bit as fired, because what he did was wrong and dangerous. The purpose of a credibility floor isn’t to say that no one ever gets fired (that’s a horrible idea) but to prevent people from, in RPG terms, being “killed by the dice”– that is, fired because of credibility fluctuations, and not because they deserve it.

It’s the absence of a credibility floor that generates a permanent Loser caste (whose exchange rate in their requisite risk transfer becomes increasingly unfavorable) and a fear-driven, tunnel-visioned Clueless “useful idiot” class, leaving both groups prone to exploitative Sociopaths. So the question becomes, then: how does an organization create a credibility floor? How can one globally legislate an amorphous, hard-to-define, and often very local social asset? That’s an incredibly hard problem to solve, and where I intend to go next.

IDE Culture vs. Unix philosophy

Even more of a hot topic than programming languages is the interactive development environment, or IDE. Personally, I’m not a huge fan of IDEs. As tools, standing alone, I have no problem with them. I’m a software libertarian: do whatever you want, as long as you don’t interfere with my work. However, here are some of the negatives that I’ve observed when IDEs become commonplace or required in a development environment:

  • the “four-wheel drive problem”. This refers to the fact that an unskilled off-road driver, with four-wheel drive, will still get stuck. The more dexterous vehicle will simply have him fail in a more inaccessible place. IDEs pay off when you have to maintain an otherwise unmanageable ball of other people’s terrible code. They make unusable code merely miserable. I don’t think there’s any controversy about this. The problem is that, by providing this power, then enable an activity of dubious value: continual development despite abysmal code quality, when improving or killing the bad code should be a code-red priority. IDEs can delay code-quality problems and defer macroscopic business effects, which is good for manageosaurs who like tight deadlines, but only makes the problem worse at the end stage. 
  • IDE-dependence. Coding practices that require developers to depend on a specific environment are unforgivable. This is true whether the environment is emacs, vi, or Eclipse. The problem with IDEs is that they’re more likely to push people toward doing things in a way that makes use of a different environment impossible. One pernicious example of this is in Java culture’s mutilation of the command-line way of doing things with singleton directories called “src” and “com”, but there are many that are deeper than that. Worse yet, IDEs enable the employment of programmers who don’t even know what build systems or even version control are. Those are things “some smart guy” worries about so the commodity programmer can crank out classes at his boss’s request.
  • spaghettification. I am a major supporter of the read-only IDE, preferably served over the web. I think that code navigation is necessary for anyone who needs to read code, whether it’s crappy corporate code or the best-in-class stuff we actually enjoy reading. When you see a name, you should be able to click on it and see where that name is defined. However, I’m pretty sure that, on balance, automated refactorings are a bad thing. Over time, the abstractions which can easily be “injected” into code using an IDE turn it into “everything is everywhere” spaghetti code. Without an IDE, the only way to do such work is to write a script to do it. There are two effects this has on the development process. One is that it takes time to make the change: maybe 30 minutes. That’s fine, because the conversation that should happen before a change that will affect everyone’s work should take longer than that. The second is that only adept programmers (who understand concepts like scripts and the command line) will be able to do it. That’s a good thing.
  • time spent keeping up the environment. Once a company decides on “One Environment” for development, usually an IDE with various in-house customizations, that IDE begins to accumulate plugins of varying quality. That environment usually has to be kept up, and that generates a lot of crappy work that nobody wants to do.

This is just a start on what’s wrong with IDE culture, but the core point is that it creates some bad code. So, I think I should make it clear that I don’t dislike IDEs. They’re tools that are sometimes useful. If you use an IDE but write good code, I have no problem with you. I can’t stand IDE culture, though, because I hate hate hate hate hate hate hate hate the bad code that it generates.

In my experience, software environments that rely heavily on IDEs tend to be those that produce terrible spaghetti code, “everything is everywhere” object-oriented messes, and other monstrosities that simply could not be written by a sole idiot. He had help. Automated refactorings that injected pointless abstractions? Despondency infarction frameworks? Despise patterns? Those are likely culprits.

In other news, I’m taking some time to learn C at a deeper level, because as I get more into machine learning, I’m realizing the importance of being able to reason about performance, which requires a full-stack knowledge of computing. Basic fluency in C, at a minimum, is requisite. I’m working through Zed Shaw’s Learn C the Hard Way, and he’s got some brilliant insights not only about C (on which I can’t evaluate whether his insights are brilliant) but about programming itself. In his preamble chapter, he makes a valid insight in his warning not to use an IDE for the learning process:

An IDE, or “Integrated Development Environment” will turn you stupid. They are the worst tools if you want to be a good programmer because they hide what’s going on from you, and your job is to know what’s going on. They are useful if you’re trying to get something done and the platform is designed around a particular IDE, but for learning to code C (and many other languages) they are pointless. [...]
Sure, you can code pretty quickly, but you can only code in that one language on that one platform. This is why companies love selling them to you. They know you’re lazy, and since it only works on their platform they’ve got you locked in because you are lazy. The way you break the cycle is you suck it up and finally learn to code without an IDE. A plain editor, or a programmer’s editor like Vim or Emacs, makes you work with the code. It’s a little harder, but the end result is you can work with any code, on any computer, in any language, and you know what’s going on. (Emphasis mine.)

I disagree with him that IDEs will “turn you stupid”. Reliance on one prevents a programmer from ever turning smart, but I don’t see how such a tool would cause a degradation of a software engineer’s ability. Corporate coding (lots of maintenance work, low productivity, half the day lost to meetings, difficulty getting permission to do anything interesting, bad source code) does erode a person’s skills over time, but that can’t be blamed on the IDE itself. However, I think he makes a strong point. Most of the ardent IDE users are the one-language, one-environment commodity programmers who never improve, because they never learn what’s actually going on. Such people are terrible for software, and they should all either improve, or be fired.

The problem with IDEs is that each corporate development culture customizes the environment, to the point that the cushy, easy coding environment can’t be replicated at home. For someone like me, who doesn’t even like that type of environment, that’s no problem because I don’t need that shit in order to program. But someone steeped in cargo cult programming because he started in the wrong place is going to falsely assume that programming requires an IDE, having seen little else, and such novice programmers generally lack the skills necessary to set one up to look like the familiar corporate environment. Instead, he needs to start where every great programmer must learn some basic skills: at the command-line. Otherwise, you get a “programmer” who can’t program outside of a specific corporate context– in other words, a “5:01 developer” not by choice, but by a false understanding of what programming really is.

The worst thing about these superficially enriched corporate environments is their lack of documentation. With Unix and the command-line tools, there are man pages and how-to guides all over the Internet. This creates a culture of solving one’s own problems. Given enough time, you can answer your own questions. That’s where most of the growth happens: you don’t know how something works, you Google an error message, and you get a result. Most of the information coming back in indecipherable to a novice programmer, but with enough searching, the problem is solved, and a few things are learned, including answers to some questions that the novice didn’t yet have the insight (“unknown unknowns”) yet to ask. That knowledge isn’t built in a day, but it’s deep. That process doesn’t exist in an over-complex corporate environment, where the only way to move forward is to go and bug someone, and the time cost of any real learning process is at a level that most managers would consider unacceptable.

On this, I’ll crib from Zed Shaw yet again, in Chapter 3 of Learn C the Hard Way:

In the Extra Credit section of each exercise I may have you go find information on your own and figure things out. This is an important part of being a self-sufficient programmer. If you constantly run to ask someone a question before trying to figure it out first then you never learn to solve problems independently. This leads to you never building confidence in your skills and always needing someone else around to do your work. The way you break this habit is to force yourself to try to answer your own questions first, and to confirm that your answer is right. You do this by trying to break things, experimenting with your possible answer, and doing your own research. (Emphasis mine.)

What Zed is describing here is the learning process that never occurs in the corporate environment, and the lack of it is one of the main reasons why corporate software engineers never improve. In the corporate world, you never find out why the build system is set up in the way that it is. You just go bug the person responsible for it. “My shit depends on your shit, so fix your shit so I can run my shit and my boss doesn’t give me shit over my shit not working for shit.” Corporate development often has to be this way, because learning a typical company’s incoherent in-house systems doesn’t provide a general education. When you’re studying the guts of Linux, you’re learning how a best-in-class product was built. There’s real learning in mucking about in small details. For a typically mediocre corporate environment that was built by engineers trying to appease their managers, one day at a time, the quality of the pieces is often so shoddy that not much is learned in truly comprehending them. It’s just a waste of time to deeply learn such systems. Instead, it’s best to get in, answer your question, and get out. Bugging someone is the most efficient and best way to solve the problem.

It should be clear that what I’m railing against is the commodity developer phenomenon. I wrote about “Java Shop Politics” last April, which covers a similar topic. I’m proud of that essay, but I was wrong to single out Java as opposed to, e.g. C#, VB, or even C++. Actually, I think any company that calls itself an “<X> Shop” for any language X is missing the point. The real evil isn’t Java the language, as limited as it may be, but Big Software and the culture thereof. The true enemy is the commodity developer culture, empowered by the modern bastardization of “object-oriented programming” that looks nothing like Alan Kay’s original vision.

In well-run software companies, programs are build to solve problems, and once the problem is finished, it’s Done. The program might be adapted in the future, and may require maintenance, but that’s not an assumption. There aren’t discussions about how much “headcount” to dedicate to ongoing maintenance after completion, because that would make no sense. If people need to modify or fix the program, they’ll do it. Programs solve well-defined problems, and then their authors move on to other things– no God Programs that accumulate requirements, but simple programs designed to do one thing and do it well. The programmer-to-program relationship must be one-to-many. Programmers write programs that do well-defined, comprehensible things well. They solve problems. Then they move on. This is a great way to build software “as needed”, and the only problem with this style of development is that the importance of small programs is hard to micromanage, so managerial dinosaurs who want to track efforts and “headcount” don’t like it much, because they can never figure out who to scream at when things don’t go their way. It’s hard to commoditize programmers when their individual contributions can only be tracked by their direct clients, and when people can silently be doing work of high importance (such as making small improvements to the efficiencies of core algorithms that reduce server costs). The alternative is to invert the programmer-to-program relationship: make it many-to-one. Then you have multiple programmers (now a commodity) working on Giant Programs that Do Everything. This is a terrible way to build software, but it’s also the one historically favored by IDE culture, because the sheer work of setting up a corporate development environment is enough that it can’t be done too often, and this leads managers to desire Giant Projects and a uniformity (such as a one-language policy, see again why “<X> Shops” suck) that managers like but that often makes no sense.

The right way of doing things– one programmer works on many small, self-contained programs– is the core of the so-called “Unix philosophy“. Big Programs, by contrast, invariably have undocumented communication protocols and consistency requirements whose violation leads not only to bugs, but to pernicious misunderstandings that muddle the original conceptual integrity of the system, resulting in spaghetti code and “mudballs”. The antidote is for single programs themselves to be small, for large problems to be solved with systems that are given the respect (such as attention to fault tolerance) that, as such, they deserve.

Are there successful exceptions to the Unix philosophy? Yes, there are, but they’re rare. One notable example is the database, because these systems often have very strong requirements (transactions, performance,  concurrency, durability, fault-tolerance) that cannot be as easily solved with small programs and organic growth alone. Some degree of top-down orchestration is required if you’re going to have a viable database, because databases have a lot of requirements that aren’t typical business cruft, but are actually critically important. Postgres, probably the best SQL out there, is not a simple beast. Indeed, databases violate one of the core tenets of the Unix philosophy– store data in plain text– and they do so for good reasons (storage usage). Databases also mandate that people be able to use them without having to keep up with the evolution of such a system’s opaque and highly-optimized internal details, which makes the separation of implementation from interface (something that object-oriented programming got right) a necessary virtue. Database connections, like file handles, should be objects (where “object” means “something that can be used with incomplete knowledge of its internals”.) So databases, in some ways, violate the Unix philosophy, and yet are still used by staunch adherents. (We admit that we’re wrong sometimes.) I will also remark that it has taken decades for some extremely intelligent (and very well-compensated) people to get databases right. Big Projects win when no small project or loose federation thereof will do the job.

My personal belief is that almost every software manager thinks he’s overseeing one of the exceptions: a Big System that (like Postgres) will grow to such importance that people will just swallow the complexity and use the thing, because it’s something that will one day be more important than Postgres or the Linux kernel. In almost all cases, they are wrong. Corporate software is an elephant graveyard of such over-ambitious systems. Exceptions to the Unix philosophy are extremely rare. Your ambitious corporate system is almost certainly not one of them. Furthermore, if most of your developers– or even a solid quarter of them– are commodity developers who can’t code outside of an IDE, you haven’t a chance.

XWP vs. JAP

The software industry is a fascinating place. As programmers, we have the best and worst job in the world. What we do is so rewarding and challenging that many of us have been doing it for free since we were eight. We’re paid to think, and to put pure logic into systems that effectively do our bidding. And yet, we have (as a group) extremely low job satisfaction. We don’t last long: our half-life is about six years. By 30, most of us have decided that we want to do something else: management, quantitative finance, or startup entrepreneurship. It’s not programming itself that drives us out, but the ways in which the “programmer” job has been restructured out of our favor. It’s been shaved down, mashed, melted and molded into commodity grunt work, except for the top 2 percent or so of our field (for whom as much time is spent establishing that one is, in fact, in the top 2 percent, as is spent working). Most of us have to sit in endless meetings, follow orders that make no sense, and maintain legacy code with profanity such as “VisitorFactoryFactory” littered about, until we move “into management”, often landing in a role that is just as tedious but carries (slightly) more respect.

I’m reaching a conclusion, and it’s not a pleasant one, about our industry and what one has to do to survive it. My definition of “survive” entails progress, because while it’s relatively easy to coast, engineers who plateau are just waiting to get laid off, and will usually find that demand for their (increasingly out of date) skills has declined. Plainly put, there’s a decision that programmers have to make if they want to get better. Why? Because you only get better if you get good projects, and you only get good projects if you know how to play the game. Last winter, I examined the trajectory of software engineers, and why it seems to flat-line so early. The conclusion I’ve come to is that there are several ceilings, three of which seem visible and obvious, and each requires a certain knack to get past it. Around 0.7 to 0.8 there’s the “weed out” effect that’s  rooted in intellectual limitations: inability to grasp pointers, recursion, data in sets, or other intellectual concepts people need to understand if they’re going to be adequate programmers. Most people who hit this ceiling do so in school, and one hopes they don’t become programmers. The next ceiling, which is where the archetypical “5:01″ mediocrities live, is around 1.2. This is where you finish up if you just follow orders, don’t care about “functional programming” because you can’t see how it could possibly apply to your job, and generally avoid programming outside of an office context.

The next ceiling is around 1.8, and it’s what I intend to discuss. The 0.7 ceiling is a problem of inability, and at 1.2 it’s an issue of desire and willingness. There are a lot of programmers who don’t have a strong desire to get any better than average. Average is employable, middle-class, comfortable. That keeps a lot of people complacent around 1.2. The ceiling at 1.8, on the other hand, comes from the fact that it’s genuinely hard to get allocated 1.8+ level work, which usually involves technical and architectural leadership. In most companies, there are political battles that the projects’ originators must fight to get them on the map, and others that engineers must involve themselves in if they want to get on to the best projects. It’s messy and hard and ugly and it’s the kind of process that most engineers hate.

Many engineers at the 1.7 to 1.8 level give up on engineering progress and take this ceiling as a call to move into management. It’s a lot harder to ensure a stream of genuinely interesting work than it is to take a middle management position. The dream is that the managerial position will allow the engineer to allocate the best technical work to himself and delegate the crap. The reality is that he’s lucky if he gets 10 hours per week of coding time in, and that managers who cherry-pick the good work and leave the rest to their subordinates are often despised and therefore ineffective.

This said, there’s an idea here, and it deserves attention. The sudden desire to move into management occurs when engineers realize that they won’t progress by just doing their assigned work, and that they need to hack the project allocation process if they want to keep getting better. Managerial authority seems like the most direct route to this because, after all, it’s managers who assign the projects. The problem with that approach is that managerial work requires an entirely different skill set, and that while this is a valid career, it’s probably not what one should pursue if one wants to get better as a software engineer.

How does one hack project allocation? I’m going to introduce a couple terms. The first is J.A.P.: “Just A Programmer”. There are a lot of people in business who see programming as commodity work: that’s why most of our jobs suck. This is a self-perpetuating cycle: because of such peoples’ attitudes toward programmers, good engineers leave them, leaving them with the bad, and reinforcing their perception that programming is order-following grunt work that needs to be micromanaged or it won’t be done right at all. Their attitude toward the software engineer is that she’s “just a programmer”. Hence the term. There’s a related cliche in the startup world involving MBA-toting “big-picture guys” who “just need a programmer” to do all the technical work in exchange for a tiny sliver of the equity. What they get, in return, is rarely quality.

Worse yet for the business side, commodity programmers aren’t 90 or 70 or 50 percent as valuable as good engineers, but 5 to 10 percent as useful, if that. The major reason for this is that software projects scale horribly in terms of the number of people involved with them. A mediocre engineer might be 20 percent as effective, measured individually, as a good one, but four mediocre engineers will only be about 35 percent (not 100) as effective as a single good engineer.

Good programmers dread the “Just A Programmer” role in which they’re assessed on the quantity of code they crank out rather than the problems they solve and the quality of their solutions, and they avoid such positions especially because commodity-programmer roles tend to attract ineffective programmers, and effective people who have to work with ineffective programmers become, themselves, ineffective.

This said, a 1.8 engineer is not a “commodity programmer”. At this level, we’re talking about people who are probably in the top 2 or 3 percent of the software industry. We’re talking about people who, in a functioning environment, will deliver high-quality and far-reaching software solutions reliably. They can start from scratch and deliver an excellent “full-stack” solution. (In a dysfunctional environment, they’ll probably fail if they don’t quit first.)  The political difficulty, and it can be extreme, lies with the fact that it’s very difficult for a good engineer to reliably establish (especially to non-technical managers, and to those managers’ favorites who may not be technically strong) that she is good. It turns out that, even if it’s true, you can’t say to your boss, “I’m a top-2% engineer and deserve more autonomy and the best projects” and expect good results. You have to show it, but you can’t show it unless you get good projects.

What this means, in fewer words, is that it’s very difficult for a software engineer to prove he’s not a commodity programmer without hacking the politics. Perversely, many software environments can get into a state where engineering skill becomes negatively correlated with political success. For example, if the coding practices are “best practices”, “design pattern”-ridden Java culture, with FactoryVisitorSingletonSelection patterns all over the place, bad engineers have an advantage on account of being more familiar with damaged software environments, and because singleton directories called “com” don’t piss them off as much (since they never venture outside of an IDE anyway).

Software wants to be a meritocracy, but the sad reality is that effectiveness of an individual programmer depends on the environment. Drop a 1.8+ engineer into a Visitor-infested Java codebase and he turns into a bumbling idiot, in the same way that an incompetent player at a poker table can fluster experts (who may not be familiar with that particular flavor of incompetence). The result of this is that detecting who the good programmers are, especially for a non-programmer or an inept one, is extremely difficult, if not impossible. The 1.7 to 1.8 level is where software engineers realize that, in spite of their skill, they won’t be recognized as having it unless they can ensure a favorable environment and project allocation, and that it’s next to impossible to guarantee these benefits in the very long run without some kind of political advantage. Credibility as a software engineer alone won’t cut it, because you can’t establish that creativity unless you get good projects.

Enter the “X.W.P.” distinction, which is the alternative to being a “J.A.P.” It means an “X Who Programs”, where X might be an entrepreneur, a researcher, a data scientist, a security specialist, a quant, or possibly even a manager. If you’re an XWP, you can program, and quite possibly full-time, but you have an additional credibility that is rooted in something other than software engineering. Your work clearly isn’t commodity work; you might have a boss, but he doesn’t believe he could do your job better than you can. XWP is the way out. But you also get to code, so it’s the best of both worlds.

This might seem perverse and unusual. At 1.8, the best way to continue improving as a software engineer is not to study software engineering. You might feel like there’s still a lot to learn in that department, and you’re right, but loading up on unrecognized skill is not going to get you anywhere. It leads to bitterness and slow decline. You need something else.

One might think that an XWP is likely to grow as an X but not as a software engineer, but I don’t think that’s necessarily true. There certainly are quants and data scientists and entrepreneurs and game designers who remain mediocre programmers, but they don’t have to. If they want to become good engineers, they have an advantage over vanilla software engineers on account of the enhanced respect accorded their role. If a Chief Data Scientist decides that building a distributed system is the best way to solve a machine learning problem, and he’s willing to roll his sleeves up and write the code, the respect that this gives him will allow him to take the most interesting engineering work. This is how you get 1.8 and 2.1 and 2.4-level engineering work. You start to bill yourself as something other than a software engineer and get the respect that entitles you to projects that will make you better. You find an X and become an X, but you also know your way around a computer. You’re an X, and you know how to code, and your “secret weapon” (secret because management in most companies won’t recognize it) is that you’re really good at it, too.

This, perhaps, is the biggest surprise I’ve encountered in the bizarre world that is the software engineering career. I am so much without words that I’ll use someone else’s, from A Song of Ice and Fire: To go west, you must first go east.

An ethical crisis in technology

Something I’ve noticed over the past few years is how outright unethical people are becoming in the technology business. I can imagine the reply. “Bad ethics in business; you mean that’s news?” Sure, people have done bad things for money for as long as there has been money. I get that. The difference that I sense is that there doesn’t seem to be much shame in being unethical. People are becoming proud of it, and a lot of our industry’s perceived leaders are openly scummy, and that’s dangerous.

An example is Mark Pincus, who prides himself on having done sleazy things to establish his career, and who moved to deprive his employees of equity by threatening to fire them if they didn’t give it back. When he was called on this, rather that admit to minority shareholder oppression, he went on a tirade about not wanting to have a “Google chef”, referring to the first cook at Google who earned over $20 million. In his mind, blue-collar workers don’t deserve to get rich when they take risks.

This is bad for startups. Equity is the only thing that pre-funded startups have to attract talent. These types of shenanigans will create an environment where no one is willing to work for equity. That is often the externalized cost of unethical behavior. It doesn’t hurt only the “victim”, but it harms all the honest players out there who are less trusted.

I will state that what appears in the news is only the tip of the iceberg. Here’s some shit I’ve either seen, or been credibly informed of, in the past 24 months, most of which was never in the news: no-poach agreements, attempted blacklisting of whistleblowers, a rescinded job offer based on a rumor that suggested PTSD, abuse of process within large companies, extortion of ex-employees, gross breaches of contract, frivolous lawsuits, threats of frivolous lawsuits, price fixing among venture capitalists, bait-and-switch hiring tactics, retaliatory termination, and fraudulent, no-product startups designed to embezzle angel investors. That took me about 60 seconds; two minutes more and the list would be three times as long. None of this was in finance: all tech, with most of these pertaining to reputable companies. I’m not an insider. I’m no one special. If I’m seeing these behaviors, then a lot of people are, and if a lot of people are seeing them, it means that a lot of unethical things are happening in a sector of the economy (technology) known for good behavior and a progressive mindset.

This is just the first act. This is what it looks like when the economy is doing well, as in technology, it is. The wronged move on. Their jobs may end and their equity may be stolen, but they move on to better opportunities. Those who’ve entered criminal patterns in order to keep up with expectations can still break out of them, if they do so now, without spiraling straight down. We’re not seeing the lawsuits, the disclosures of misconduct, the bitter fights and the epic crimes yet. At some point, presumably in a worse economic environment than what we have now, that will come. When it does, the results will be terrifying, because the reputation of who we are, as an industry, and what we do is at stake.

People, in the U.S., have developed a reflexive dislike for “finance” and “Wall Street”. The financial industry has certainly earned much of its negative reputation, but finance isn’t innately bad (unless one believes capitalism to be evil, which I don’t). Most of finance is just boring. I would also caution us against believing that “technology”– this brave new world of venture capital and startups and 25-year-old billionaires– is incapable of developing such a negative reputation. A few bad actors will give us all a bad name.

In finance, most of the unethical behaviors that occur have been tried so many times that laws exist to discourage them. There are problems of lax enforcement, and too often there is frank regulatory corruption, but at least there is clarity on a few basic things. One example: you don’t front-run your customers, and you will go to jail if you do. In addition to legal pressure from without, finance has imposed regulations on itself, in part, to regain its reputation. Self-regulatory organizations like the New York Stock Exchange have fired people for life over the worst crimes.

The ethical failures in technology have a different, and more intimate, character than those in finance. Financial crimes usually cause the loss of money. That’s bad. Sometimes it’s catastrophic. What makes these crashes especially newsworthy is the sheer number of people they affect. Nearly everyone was affected by the late-2000s property bubble, for example. The recent spate of ethical lapses in technology are of a more focused nature. They don’t inflict their losses on thousands of people, but they damage careers. The most common example that I’ve seen would be bait-and-switch hiring, where a person is brought on board with the promise of one type of project and given another. There is no legal recourse in this case, and there are lots of other ethical lapses that have similar effects. These activities waste the time of highly talented people in fruitless relationships, and often on pointless work.

In technology, we haven’t figured out how to regulate ourselves, and we’re risking the reputation of our industry. Too much depends on us to allow this. With the aging population, the depletion of fossil fuels, and the exigent need to move toward an environmentally sustainable economy, we’re just too important to the world for us to take a dive.

One might argue, in response to that claim, that most of what comes out of VC-istan isn’t “real technology”, and I’d agree. Venture capitalists may love “semantic sheep-throwing coupon social network” build-to-flip startups, but those don’t have much social or scientific value. For that, most of the unethical activity I’ve seen comes from the “fake technology” companies, but not all of it. Either way, few people make this distinction, and regarding them making it, I wouldn’t take that chance.

Who has the authority to address this problem? In my opinion, it’s an issue of leadership, and the leaders in technology are those who fund it: the venture capitalists. I’m not going to assert that they’re unethical, because I don’t know enough about them or their industry to make such a claim. I do, however, think they encourage a lot of unethical behavior.

What causes the ethical compromise that occurs commonly in the financial industry? My opinion is that it’s proximity to money, especially unearned money. When working for clients with $250 million in net worth, often who inherited it, people begin to feel that they deserve to get rich as well. It’s human nature. The cooks feel entitled to some of the food. Some people in that industry just take that mentality too far and begin committing crimes. I don’t think the problem with finance is that it attracts scummy people. I think it tempts them to do scummy things.

The sociology of venture-funded startups is similar. The entire funding process, with its obscene duration that is measured in months, with terms like multiple liquidation preferences and participating preferred, and with the entrepreneur expected to pay VCs’ legal fees– I am not making that up– is based on the premise that MBA-toting venture capitalists are simply Better Than You. Venture capitalists, in no uncertain terms, outrank entrepreneurs, even though the jobs are entirely different and I would argue that the entrepreneur’s job is a hundred times harder. Among entrepreneurs, there are Those Who Have Completed An Exit, and there are the rest. It’s not good to be among “the rest”; people can dismiss you as having “no track record”, which is a polite way to call someone a born loser. Among that set are Founders (of funded startups) and “founder-track” employees– proteges invited into investor meetings so they might become “Founder material” in the future– within funded startups… and then theres’s everyone else, the fools who keep the damn thing going. It seems like a meritocracy, but it’s the same social climbing bullshit found in any other industry. The meritocratic part is derived from what does when one has resources, but to get the resources one usually needs a full-time devotion to social climbing. There are exceptions, and incubators are making this situation better, but there are not that many.

Venture capitalists may not all be unethical, but they’re not ethical leaders either. They establish this lack of leadership through onerous terms, malicious collusion, and the general attitude that the entrepreneur is a desperate huckster, not a real partner. The Better Than You attitude they cop is intended to make people feel hungry, to make them want to get to the point where they actually “deserve” the company of venture capitalists, but it actually makes them act desperate. Does this lead to unethical behavior? Sometimes yes, sometimes no. When not, it still produces ethical ruin in the form of inappropriate, hasty promotions, which lead to the same kinds of behavior in the long run.

In other words, this ethics problem is not just limited to “a few bad apples”. Culpability, in my mind, goes straight to the top.