So that commitment to low time preference, I think, is key.
And it's, again, one of the things that I just love about the PBM approach.
It's central to the way that Bitcoiners view life.
And it's a great merging.
And I think there's an exciting opportunity.
I think we have a better money in Bitcoin.
Let's build some better businesses on top of that better money.
And let's use these principles and use a framework like PBM to build that better future.
Not just hope for it to come, not just wait for it to come and say,
oh, once Bitcoin is adopted, then we'll have a high trust society.
Hey, one quick thing before we get into it.
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Okay, let's get into it.
Jason, how are you?
Hey, Sean, great to be here. Thank you.
I appreciate it. You are on the circuit. I am looking forward to sharing your TFTC recording with everyone as well, which I think serves as a great backdrop.
And I think it's an important message that you're getting out there.
So let's jump in. And I want to start with this.
Most people, everyone, I presume, have worked somewhere, unless you're extremely, extraordinarily fortunate, that betrayed their trust.
Layoffs after record profits, values that amounted to nothing, decisions that hurt customers to hit targets.
In that, Jason, what is actually broken?
Is this just bad leadership or is something structural going on and going wrong?
Yeah, that's a great question.
I think kind of to give a kind of a step back and a little bit larger context, I guess, to where I'm coming at this from or the way that I'm thinking about this, right, is the there's a there's kind of this compete.
There's these competing paradigms that exist, I think, in management.
And in many cases, they're unstated or unspoken. Like it's not like they're talked about, but they're real and you feel the effects of them when people act based upon these paradigms. And one of those paradigms is one that's more top down and control heavy. Right. And that and that tends to not always, but very often tends to lead to a lot of the behaviors and concerns that you just talked about. Right.
Like sacrificing value for the customer to hit quarterly or maybe annual revenue targets, something more of a short-term goal, a long-term cost or sacrifice for a short-term goal.
And that tends to emerge and we see that more consistent with that top-down paradigm of management or leaders tell you what to do.
You follow them.
You don't question them because you do what the company has told you to do.
You show up.
You do your job.
you get things done, you get paid and you move on with your life. Right. And that's that's a paradigm that, again, not really spoken about, like very few people go and say you manage people by, you know, yelling at them and telling them what to do.
And this is the paradigm that you like. Very few people talk like that. Right. But that is kind of an unspoken assumption in many. And I'm sure many, many American employees can attest to that, even though, again, it's not been stated they felt it.
On the other side of that conversation is what I could saw an emergent paradigm or a bottom-up paradigm where there's this belief in the value that each individual in the company brings, that we are here for the purpose of long-term value creation, a sustainable operation that prioritizes customers, that achieves mutual benefit.
and we want to build a company and a culture that is dedicated toward that end goal, right,
of fulfilling the customer's needs, wants, desires by providing them with real value
that makes their lives better and then using the skills, the knowledge, the experience of the people
that come to the company, that work for the company to contribute to that end.
And those two paradigms in contrast with each other, again, not really talked about.
It's very you're not going to hear that openly discussed or debated, but it is something that if you participate in those cultures, you feel the effects of them.
So to your point about, you know, Americans, you know, what's really going on here is I do believe that especially in the idea of work, there's just this loss of meaning.
And there's this there's there's this kind of cynical view of of of work that has emerged.
And honestly, I don't know. I can't pinpoint exactly where it started. I personally felt it emerging kind of in the late 2010s, early 2020s. Like I'm sure it's all there's always been nothing's ever been perfect. Right. But culturally as a whole, that that really has seemed to come to a forefront, I'd say, in the past five to 10 years or so.
And it's a big problem because at the end of the day, customers are hurt.
Businesses are not going to operate as efficiently.
Innovation is going to be harder, right?
And you lose trust and it becomes harder to work as a team.
So there's just a lot of downsides to it when you leave it unaddressed and it goes on for so long.
So those are some of the things that you're weighing when you're looking at those two paradigms
and you start to see the world from those two paradigms and apply that to how you run your business.
Absolutely. And I think, you know, perhaps to get a bit more specific and to build on that, FTX had no discernible values. Enron, for those of us around in the 90s, I was in Chicago and saw the Anderson Consulting building empty out when Enron crashed. Enron had four values, including integrity.
Yeah, right. Theranos had a mission to democratize health care. None of it mattered. And so what's the pattern perhaps to go a bit deeper into the underlying sort of common threads?
yeah i mean one of the one of the patterns is uh or one of the themes that i think emerges from
examples like you talked about well there's there's two theme things that i would say in
and they don't apply to every scenario you just mentioned but they at least one of them applies to
each scenario so one is the idea of stated but not lived values like that applies to the enron
example, where values or a company's culture becomes the motivational poster on the wall
that you walk by. Yes, exactly. You walk by, you acknowledge it, you see the word integrity there.
So we operate with integrity and then you forget about it. It's like it's just that word on the
wall. So that idea of stated but not lived values is a huge one. And we've I think every pretty much
anyone who's worked in a corporate America or something at some point over the course of a 10,
20, 30 year career, you've been in a situation where you've seen or experienced that. And then
on the other hand is sometimes even in the case of, of like you mentioned FTX, like not even,
there's not even an attempt to articulate a real sense of deeper mission, meaning and values.
and it obviously well obviously with their situation they were it was a fraudulent uh
company from the root from the top down all the like just just toxic all the way through so
you're not surprised when you see a company like that and and to be clear not every company
companies are not every company is ftx so that's also no although and forgive the interruption but
i i would say for those perhaps who don't remember or didn't know that um the founder was trotted out
on countless podcasts and television shows and lauded and held up as a beacon of the future.
I mean, it was remarkable.
So but, you know, the point is, though it wasn't stated in so many words, he was held
up as an icon.
And I think it goes to your point.
Absolutely.
No, 100 percent right on there.
And he was definitely just a darling child of like the whole crypto industry and just
everything that was going on at that time.
He was, as you mentioned, yeah, before everything was revealed about FTX, he was definitely lauded.
But in their case, again, not even an attempt to articulate real organizational values or to live up to any kind of values in what they did.
And so you have those two approaches, which ultimately, obviously, I would say are harmful in the long run, eventually.
Like it's one of those things where you may be able to exist or do something for a time or things you can get some things done.
But if you're thinking about a long run, sustainable operation built on trust, efficiency, great people building a winning team for a very long time, you're not going to do that without appealing to a deeper sense of meaning or values and people.
And that actually comes from, so again, the framework that we use at Satoshi Patrol is called principle-based management. And in principle-based management, there are five key dimensions. And the way to think about these dimensions is, if I look at my business from the perspective of this dimension, I can ascertain what are some of the problems in my business, and I can have a better diagnostic tool to fix it, right?
So one of the dimensions is vision, right?
Does everyone have a shared vision?
Do we understand what we're working for and how we create value for the company?
Or do we have the right capabilities to execute on our vision?
Are there gaps in what we're trying to accomplish and what we're able to bring to the table, right?
So you look at the world and your business from the perspective of your vision, and you really force yourself to ask some deep, meaningful questions that get you and your team on board working toward that vision, right?
So that's one dimension.
The one that I want to highlight in response to what we're talking about here is the fifth dimension of principle-based management, which is self-actualization. And that fifth dimension challenges businesses to think about, my employees are not just robots who come to work to check in, check out, collect a paycheck, and go home.
They have hopes and dreams for the future. They have unique knowledge, skills and backgrounds that they can bring to the table that we can leverage to contribute to that vision of creating value for the world that we uniquely have for our company.
And how do we tap into that deeper sense of meaning and purpose in work? That doesn't mean that we become their therapist and, you know, their their their shaman on a mountain at work like that is not the purpose of a business.
But we tap into that using that fifth dimension.
Are our employees motivated?
Are they contributing to the vision voluntarily?
Are they free to share and express their ideas?
And do they see value in the day-to-day work that they do connected to the overall vision, right?
So when you look at a dimension like that in the principle of Mase Management Framework,
again, it forces you to ask some very deep questions about how are we getting our team on board
and what kind of team and what kind of culture are we building and how are we tapping into really
almost, you could argue, a psychological need of individuals when they're at work. Just because
you're at work, it doesn't mean that, you know, you don't want to have meaning or purpose in the
things that you do. Certainly, certainly. And I think, you know, what I took away from some of
what I reviewed, Jason, that you shared with me is, and I think you alluded to this, but values as
decoration versus values as a decision framework, right? So a set of lenses or filters through which,
but I think, you know, seems like it'd be fair to say the problem isn't whether you have values,
that you've stated them. It's something deeper. And in respect or with respect to design,
you argue that organizational dysfunction is not random, it's designed in. So walk me through that.
What are the design choices that almost guarantee a company will eventually betray employee and customer trust?
Well, that's a great question.
I think one of the things that you want to be wary of, one of the red flags, is lack of any kind of a challenge culture internally.
And so what I mean by that is if I go to a company as an employee, I'm one of however many, right?
It could be a team of 10.
It could be a team of 100.
It could be a team of 100,000.
However big the company is.
I'm one of however many people there are.
That's a lot.
You are one person in that team,
and you're going to have opinions, knowledge,
ideas about how things should be done,
or maybe a new tool that we can innovate with.
And you're going to want to sometimes share that with the team,
or you're going to want to bring that to the table,
or you might even want to challenge the way things are done,
even though everybody else around you is comfortable doing it that way.
because there you see there might be a better way there might be a better way of doing it so
if a company if you go into a company and one of the first things that you kind of get the sense
for one of the things that you feel on a day-to-day basis is I do my job everyone does it this way I'm
checking the list I'm checking the boxes and I kind of keep my head down if I do my job I collect
my paycheck nobody's going to give me any problems if you feel like you're going to be punished for
bringing those concerns or those challenges to the table when you see opportunities to improve,
that's one of the first red flags I would, you know, and that is something that many people have
felt or been a part of in organizations. And it's demoralizing, like going back to that idea of
feeling fulfilled at work, the idea that you feel like you'd be punished for trying to make the
company better, trying to serve the customer better, trying to come up with a new idea,
a new way of doing things.
If you feel like you're going to be punished for that,
that's going to be one of those things
that's just going to lead to burnout.
It's going to lead to turnover of really good talent
that otherwise would be creating more value for you.
And again, it's one of those things
that a lot of organizations default to it
because it's easy.
It's very easy for once you get everyone in line
to follow the rules.
It's just an easy way of doing things.
But in the long run, you're less innovative.
You're less open to new ideas.
you and you're that so that's one of the first things um the second thing i would also
is the second thing is is a any kind of company that um has any kind of a cult of personality
and and so what i mean by that is is it it lends itself toward very top-down
approaches right where the ceo is is is is the guy who uh or woman who says this is the way
things are and this is the way things should be. And a lot of the direction just filters down from
them. That's not to say, obviously, there are many CEOs that have aggressive personalities.
They get charisma. They're great at landing deals or working on behalf of the company.
Not saying that's bad. It's when it transcends into something more and they're almost seen as
like, you know, they're the only thing associated with a company and everything they say is right
and nothing they say can be challenged. It almost goes back to you see, you also see less of a
challenge culture in those environments as well. So those are two of the first things I look for.
There are obviously many things I mean we could go through a whole list Bureaucratic controls is another thing like just feeling like you got to send 20 emails to get something done Again many of us have been there where you just I this is a very simple thing
I just need to install this software. But it took 20 emails to to get this software installed, you know, stuff like that.
I think, you know, the two that you led with are the more sort of insidious and perhaps less in your face, but important.
And so from the standpoint of management leadership going awry in whatever way, you talk in your work about high time preference management, which who anyone in the Bitcoin sphere, of course, recognizes that phrase immediately.
But in short, optimizing for the short term at the expense of a long term.
How does high time preference play out at the management layer in a typical company?
Yeah. So one of the things that you're going to see is you're going to see often a reduction or or yeah, reduction is a good word. Reduction of quality of service for the customer. That's one of the first things that you're going to see. Right.
As long as we can figure out a way to maximize the revenue or the sales we get from the customer, even if the service or the level of service declines, that's one thing that typically you will see in a high time preference management style or approach.
Here's one other thing, too, or another way that that manifests is also when you see that toward employees.
Right. So it's not just reduction in quality of service for the customer. It's also reduction in quality of how you treat managing coach employees. And that's one thing that I think so many managers again, I don't mean to say this is like every manager is like some.
demon who's lurking in the shadows waiting for it to tyrannize their employees. But I think they
just default to it, right? Where it's this idea of, hey, you got a job to do. This is what I'm
telling you to do. Go do it. And if you don't do it, you get punished, right? And that is the
default approach of many managers and many management styles. And the way that that works
out in terms of that high time preference versus, you know, low time preference approach is you see
employees lose trust, become frustrated, become, look for new opportunities because they're not
being treated well. And it also typically coincides with that reduction in service to the customer,
because how can you expect an employee who you're running into the ground over and over again
to feel like they can genuinely serve and provide for the customer that you're supposed to serve and
provide for, right? There's no mutual benefit there. It's just kind of, it's using your
employees' resources to extract resources from your customer and you provide some value in return.
I'm not saying no value is provided. I'm not saying an operation can't be successful, but it
just, it tends to problems that will erode the company over a long enough time if you continue
to allow the culture to function that way. And so in contrast with that, low time preference,
you're going to emphasize a lot more concepts like mutual benefit of ensuring like, hey,
what are we doing that's beneficial for us as a company and beneficial for the customer?
And how do we build a process that sustains that not just for tomorrow, not just for next month or even next quarter,
but for the next five years? Like, how can we build a process that keeps that going?
And then how can we destroy that process creatively so that we're doing it even better five years from now?
Right. But that's a that's that's a cycle of mutual benefit, a positive cycle of mutual benefit, a self-reinforcing cycle, I should say. And and that that often takes you have to really prioritize the needs and wants the customer. You have to think about your needs as a business, but then how you can merge those two together in a way that truly is beneficial to both.
And that takes extra thinking than focusing on just maximizing the profit and even if that means reduction in service.
And let me ask you this, Jason.
Sorry to interrupt.
Of course.
What strikes me there, and you noted this in your conversation with Marty, I believe on TFTC, is that these high-performing, and we're about to get into the details, these high-performing organizations and teams operate as if they are themselves a free market.
I think you noted in so many words.
And so given that in a free market price is the signal, let's talk about signals.
So in the scenario that you laid out where it is top-down, dictatorial, hierarchical,
you know, stand and deliver, we've all, I think, been in situations where we have, and
you noted this, tried to deliver information upward.
In these dysfunctional, and perhaps to everyone listening, it becomes obvious, but if it is
not, what happens to information as it flows upward in a hierarchy in this default, broken
sort of style that we're talking about? Yeah, well, several things can happen. One is it just
becomes siloed. So there's no information sharing where it should be shared. It stays within a
certain individual or certain team because there's no real incentive to share. It's just,
I'm trying to get ahead. I'm trying to do what's best for me. I've got this knowledge,
so I'm going to capitalize it. And, you know, uh, the other, the other thing that can happen with it
is it gets shut down. So you just, you try to take the new information or knowledge to someone
above you and it doesn't coincide with what they think, or it doesn't coincide with what
the, uh, the company wants to do. So therefore it gets shut down. And I do want to, I guess I'm
going to, I'm going to slightly caveat myself here just to make sure I'm, I'm being, uh, uh,
I guess, fair in how I'm talking about this.
A company that's practicing the low time preference,
the principle-based management approach
that we use at Satoshi Pagacholi,
you may shut down an idea that comes from beneath you
because it's not because that's the culture,
but because it is not the best idea
because the solution that's proposed
is not better than the way
that we're currently doing things.
So I do want to say that
and just because you have an idea
and just because you present it,
that doesn't mean it's right
or it necessarily should be heard
or it necessarily is the way forward.
You're advocating, are you not for a meritocracy, not a democracy?
Exactly.
Yeah, we want the best ideas to emerge to the top.
We want you to advocate for your ideas.
And we want those ideas to emerge as the best because they'll serve the customer best,
because they'll contribute to that long-run, that long-term mission of value creation, right?
Because it contributes to meet the mutual benefit that we want to do for our employees,
for ourselves, and for our customers.
And I would just interject, Jason, and get your take on this. Man, I'll pick an easy target, Starbucks. Sorry, anybody out there, if you're working at Starbucks. But I mean, I think so much of what we've observed in large public companies like that is, in fact, the expectation that it is a democracy, if not a socialist democracy, where, you know, I get to express myself, do whatever I want, and, you know, you damn well better go about it.
And I think I just want to underscore what you're saying is that, you know, a meritocratic approach is that the idea needs to stand on its merits.
The contribution needs to stand on its merits.
Absolutely.
Because a bad idea that's that's that's a good way to think about this is if you have a bad idea gets coddled and entertained and then becomes what the organization does, then you're going to fall into problems associated from that as well.
So anyway, but you should still have the culture of always encouraging those ideas, because if you encourage that culture, we can weed out the bad ideas, tell you to go back and try again and learn from that and then come back with a better idea.
Right. It's an ongoing process as opposed to. But when the culture is is consistently what I'm talking about here is when the culture is consistently shutting down new ideas or a better way of doing things.
And there's just no freedom to assert yourself in that way.
Absolutely, to even entertain them.
Exactly.
So the signal gets destroyed.
And the interesting thing about that is if you think about that from the perspective of a controlled society, what is the problem with socialism?
Like if you read Ludwig von Mises in the socialist calculation debate, why does socialism fail?
It's a problem of coordination.
It's a problem of not letting the information, you mentioned the price signal, not letting prices flow freely in the market to allow us to understand the relative supply and demand at that moment.
And the free market is not perfect at this.
And I think even any advocate of free markets will say it's not perfect.
It's always updating and it's always changing over time when you allow the price to signal relative value and relative supply and demand.
But the problem is when you consistently shut that down, that leads to the misallocation of resources. That leads to people who need food starving because the groceries don't have food on the shelves because the price signal was not allowed to communicate who needed food and where.
And that's why you look at the Soviet Union and why did that economy fail in terms of the distribution of resources? It wasn't because they didn't have resources. The Soviet Union was a very resource-rich society, and Russia still is a very resource-rich society.
They have resources. They have what they need to be a very rich, wealthy society. But because the Soviet Union had so heavy restrictions on price control and price controls and restrictions on economic movement and freedom, you weren't able to see that emerge.
The same thing applies to businesses. When you are consistently using your power to shut down those signals that are emerging from people who are on the front lines doing the work, you're going to run into the problem of now we're not getting the knowledge to where it needs to go. And that signal becomes muted.
I think it's an incredibly important parallel and a great stepping off, jumping off point, Jason, to move from what do we see most of us, all of us that's broken to, OK, let's talk about alternatives.
And so you work with a framework, as you mentioned, called principle-based management.
In plain terms, what's the difference between running an organization on principles versus running it on rules?
Great question.
So with a principle-based approach and with the principle-based management framework in particular, we are working on – our goal is to create a culture where our employees are empowered by the underlying principles to act in their own – act according to their best knowledge and skills and experience, right?
People can take a general principle and apply it once you give them that principle and tell them what's expected of them, what's the goals, what are we trying to do.
Now, here's the general principle, take it and go do what's best for the company.
If that's your default approach, it's amazing how much more quickly people are to respond with creativity, new ideas, better ways of doing things, just even basic things like serving the customer better.
because they now feel like they're a part of,
people are contribution motivated at work.
This is also a fundamental assumption
of a principle-based management.
People are contribution motivated
and you should be hiring for people
that are contribution motivated.
You should be screening for that
as a part of your hiring process.
But if you, let's assume you are doing that.
Let's assume you have done that.
You're screening for people
who are contribution motivated.
They don't want to be told what to do
at every turn and corner.
They want to have the freedom
with the general principle,
the underlying framework,
Like here's the framework. Here's the here's here's the here's the principles of decision making that we operate off. Here's our vision as a company. And that's a lot of that is it's it's it provides direction and accountability without micromanaging. And that's the micromanaging part is what we want to avoid and weed out as much as possible, because that that leads to the suppression of the signal.
So the rules-based approach is about using employees as resources to accomplish specific tasks. Once those tasks are accomplished, things are good, we've moved on, and it ends up treating people in the company as ultimately as if they're robots or ultimately as if they're just part of the machine.
whereas the principle-based approach is here's the underlying principle here like we believe in
like here's a great example of this we believe in free speech as a company like as a company
we believe that if you have an idea bring it forward you know if you want to improve
the way that we do this process tell us about it right no punishment no problem if it's not the
right idea we'll tell you that but we're not going to punish you for bringing a bad idea right
that's our general principle now go and and coach your employees coach your direct reports along
those lines you know model that for them bring those ideas to us have them bring those ideas to
them whatever that looks like that's gonna and that's gonna be a little different for everybody
it's not always going to be consistently and that can say it's not always going to be specifically
the same but it is going to be you're going to be surprised at a lot of the good that you see that
comes from. Yeah. And I think, you know, maybe to drill in on that a bit, Jason, one core idea I
think I understand is that decisions should flow to people with local knowledge, the ones closest
to the problem. What does it actually require to make that work, to put that into practice?
Yeah. Well, actually, one of the first things that it requires is a commitment to integrity.
And I know that's like we talked about that earlier with Enron, but like an actual commitment
to integrity, right? If you should be, again, hiring for people that are in the PBM framework,
we call it a virtue and talents matrix. We want people that are high on virtue and high on talent.
Although if we have to make a trade-off, we would prefer to make the trade-off on talent because we
believe that can be coached. We can build up someone's skill set. If we need them to be a
better engineer and they're not as good at engineering as some of the other people we have,
we can train them to be a better engineer. We can show them what that looks like.
If we're concerned that they're going to lie or they're going to, they're going to be
gossiping about their teammates behind their back or whatever it is, playing politics,
whatever those concerns are, we, that's, we don't want to make that trade-off. So we would,
bottom line is we, we ultimately want high virtue, high talent, but we will, we will
also opt for a high virtue on, and a lower talent level in order to build that long-term culture.
But let me ask you there, Jason, sorry, let me jump in real quick.
So I and one of the things I took out of this was specifically the use of the word virtue, which I think to so many.
I could pick on ESG, I could pick on all sorts of frameworks and sort of modalities.
Seems bold, you know, to call out virtue feels to me bold and help us understand in this framework, particularly, if not semantically, what's the difference between virtues and values?
So values are going to be, think of those as the ideals that you live by.
The value is the ideal that you live by.
The virtue is the day-to-day commitment to doing it, right?
So the ideal always exists.
It's out there.
And you could argue, again, there are companies out there that have the values,
but they don have the virtue component in order to fulfill and live out those values So I like to think of the of the values as the ideal that you appeal to that whole you hold yourself accountable and those around you accountable to
The virtue is, okay, I'm in a tough situation. It's going to take a little courage to address
the situation or to bring it to the right outcome, but I'm going to do it anyway because
it's the higher value that is good for me, that's good for the company, that's good for the customer
long-term. So that's the way that I distinguish it. I don't know anyone who would have a different
interpretation, but that's how I would frame it. I teed you up knowing you would get it,
nail it, for a reason. And I think that's so important is it is, as we talked about,
it's so easy to espouse a value, but virtue is to live it, to behave in a way that is consistent
with it. And I think that that to me, as I was coming up to speed on PBM, is incredibly powerful.
But I took you off track. We were talking local knowledge and what it requires to behave or
perform in a way that gets the decision, the authority, the problem to be solved to those
with local knowledge. Yes. So, yeah, absolutely. The first is integrity, living and being, staying
commitment committed that value the second we talked about it briefly so i won't spend too much
time here's just that commitment to a free speech and a challenge process within the culture and that
is modeled and and it is something that is again talking about the virtue it requires the virtue
to live by that day-to-day because some days people are going to tell you things that you
don't want to hear you might be their supervisor and they say something like that challenges you
that maybe challenges your authority that challenges your knowledge uh and they may even
be right. And that's the part that really stings. And then when that happens, how do you deal with
that? Right. Do you do you default to what might be a fairly natural response to shut that down,
to dismiss it, to even punish? Or do you default to all right, that may have stung or that is a
difficult thing to hear. Or maybe that's a difficult thing to hear and they're wrong.
How do I coach? But you you have to make you have to have an underlying commitment to that idea of
free speech and challenge within an organization first in order to do that and to do that effectively.
And then you have to live it out day by day.
And then the third thing I would say is good, just good benchmarking and good knowledge systems in place.
And that's a little bit more of an operational thing.
I know we've spent a lot of time in like the values and the virtues, but you do need to ensure that knowledge processes and systems are in place.
We're measuring things effectively.
We understand what we're measuring and we are committed to benchmarking our performance against industry standards.
And we're committed to having knowledge processes that people own and are accountable for.
One of the things, this is a slight side tangent, but I'll bring it back here in just a second, is the tragedy of the commons, right, in economics.
This idea of having a general resource that everyone consumes or benefits from but doesn't own or is not accountable for.
So therefore, that creates the problem of overconsumption, right, or the depletion of that resource. It's called the tragedy of the commons and economics. And you can have those emerge all over the place in organizations with knowledge systems. Like think about a shared drive in an organization that nobody manages and everybody just dumps their files and folders into.
And then when you need that one file for the presentation, like, like, is it version seven or version 10? And that's that can be evidence of a knowledge problem, a tragedy of the commons in the organization. So that's more of a process thing. And that's one thing, too, I would emphasize with PBM.
And we believe very much in the values and the integrity and having that side figured out.
We also, you've got to be good on your processes, your knowledge systems, who has decision rights over what, and who's accountable for those processes such that they are relaying and communicating the knowledge that we need to the right people.
Absolutely. And so, you know, to zoom out and recap, we're talking about building better organizations, building better companies, perhaps even building better institutions, if we dare to dream.
Um, how do you shape a culture where people are rewarded for long-term value creation?
Some may bristle at that term, but I think it is probably the term that, that, that applies,
uh, instead of short-term metrics.
Like, well, that's a big question, but what do you think are, are, are the core aspects
of how you make that shift or build from scratch in a way, uh, that is focused on the long-term?
Yeah.
I'll address that question. I'll first address that question from just the perspective of like a business owner, right? Or a manager in a company. I think that's, that's, that's where I'll start. But I think the first thing is, you need to commit to yourself having a management approach that takes these ideals and systematizes them in such a way that you can hold yourself accountable to am I actually doing this well?
because being real here,
you can say a lot of these ideas
just like Enron.
You can say a lot of these ideas.
You can talk about them all day long
until you're blue in the face
and then you can go out
and do exactly the opposite
because you just default to that.
That's human nature
and it's the easy way out.
And you need to have a system
or a framework with mental models
and with tools that encourage you
or that give you what you need
in order to when things get tough
to say, no, I'm committed to this approach. I'm committed to this process. And I have tools and
analytical frameworks and decision-making frameworks and mental models that help me work through
whatever the challenge is in front of you, right? I think of it as scaffolding, right?
Yeah, exactly. At the times of tough, you don't fall to your death.
The general principles, right? Go back. You have to have those underlying general principles and
you have to have that systematized into an actionable framework, which at Satoshi Pacholi,
we use as the principle-based management framework.
But the other thing that I think is important in that
is how you coach the employees that are underneath you
because those employees will eventually become
their own business owners or their own managers
and they will have people that report to them.
So are you coaching them and empowering them
to fulfill and take on that approach as well?
Or are you just kind of doing it for yourself?
And, you know, if they get it, they get it.
And if they don't, they don't.
I think that's a very important thing as well
is you do want to take,
especially if you are in that leadership position,
whether it's the founder of a company
or an executive in a company
or even a manager that has six or seven direct reports, right?
And you have people reporting to you.
Are you being consistent in applying that framework
and intentionally coaching them
so that they can do it in like,
I like to think of it as like a,
To use a football analogy, you know how coaches have trees of like, well, these coaches were studied under this coach and that's who they learned from and now they're in his coaching tree.
Lineage.
Who's in your coaching tree, right, as a manager?
Who's following the playbook that you've modeled and what have they learned from your playbook?
Yes, yes.
Um, so to get even more practical, if we talk about building or rebuilding trust in, in a team,
in an organization, in practice, someone listening works at a company that feels broken. They run a,
you know, they may lead a team that's starting to show cracks. Where do they start? What's the
first move toward building something sound? Great question. Uh, I think for that,
this is, this is without knowing anything else, because the first thing I would say,
the first thing I would say is a lot of, everything is, every problem is different in some way.
There's always little factors that you can't just go into every situation with a, it'd be,
it'd be kind of funny if you took the PBM approach and then said, this is the hammer that saws
every, that hits every nail. Yeah. A little contrary to what the approach entails. That
being said, without knowing any context, if I'm starting to see cracks, if there are concerns that
I've got, one, there's kind of, there's two questions I'm going to ask first. What is everybody
contributing towards? That's going to help you highlight the vision question, right? Am I going
to get a bunch of different answers from everybody? Like I just do this, right? And that's when you're
going to see a lot of things emerge. Like, oh yeah, I just do this. And I check in, check out,
I get my job done. And if you were to go around to every person on that team, what do they tell
you when they say, when you ask, what are you contributing towards? What are you doing day to
day? How do you add value to the company? Right. I'm not saying you necessarily do that, but that
would be the first question in my mind. That'd be what I'd be going in thinking and then trying to
ascertain on that team. Or if I was managing that team, I, you know, one thing that you could do is,
you know, hold a meeting and say, how do you guys contribute to the team? And you got to,
you got to set the tone. You got to set, you got to be like, this is open, open dialogue. No,
punishment, nothing comes, just how do you contribute to the team? Because you want to
ask in a way that elicits and invites a positive response, not that condemns.
And then the second thing that I would say is look at yourself as a manager and like really
look at yourself. Are your employees excited to work with and for you? And that's a difficult one
because sometimes as a manager, you got to look yourself in the face and say they're not.
And you have to ask yourself why. And in one of the things, so I've actually, I had experience with this. I had, I was in the fitness industry for six years, in addition to my time studying and learning the principle based management approach in my career.
and I took over management of a studio at one point,
one of the studios that was in our franchise.
And I took over the studio from the manager
who was let go before me.
Without going too much, it had just been a toxic culture.
It wasn't good.
The employees felt like they weren't heard.
And so I took over the management.
They appointed me manager.
and the first thing I did was I took every person on the team,
coach, front desk person, and I said,
what is going well at the studio?
What do you think we're doing well?
What do you think we could be doing better?
What can I do better to help you out?
And it was a process.
They didn't immediately trust me even when I was doing that
because of their experience with the last manager had been so bad.
But then through actually listening to them,
And so then when I listened to their idea in that one-on-one meeting and then I implemented it the next day, they were like, oh, actually he's listening to me. So I think for as a manager, the first two things I think is how do you contribute to the team? How do you contribute to the overall vision? How do you see yourself contributing to that? I'm just curious. I want to see where you guys are at.
And that would be the first thing I'd think about. And then the second thing I'd think about would be how am I eliciting and encouraging them to feel like they can be a part of this team and share ideas with me and show that I'm listening to them. I think if you start to do those two things a little bit better, you'd be surprised at just the change in morale and how people start to show up. Again, not a silver bullet. Every situation is different. There might be other things going on. But those would be two places that are very productive to start in a lot of cases.
Yeah, and it sounds like, you know, in some cases, perhaps coming in for a literal turnaround or maybe on a smaller scale, you're trying to reboot or reinvigorate a team.
Following that, Jason, you know, how do you hire?
We talk about values versus virtue or values and virtue.
How do you hire for virtue when most people can perform values in an interview?
Yes, good question.
Well, first of all, unfortunately, you can't get it 100 percent right.
If I knew that, I'll let you know when I figure it out.
I'll let you know when I figure it out.
But there are steps you can take to reduce the likelihood of making a mistake there.
And so a few of the steps that you can do are having a very robust interview process.
And I know people complain about interview process sometimes being too long or too arduous or whatever.
If you're doing it right, you should have at least, depending on the organization, right?
There's different sizes, but there should be at least two to three different people in the company that get a different read on the person you're bringing on your team because you're bringing somebody onto the team that's going to contribute for hopefully if you're making a good hire a very long time and you want them to be on the team, you want them to contribute.
But the risk inherent in that is that you're also bringing someone on the team that could do a lot of damage if they're not the right person. So having a robust interview process with at least, I would say, two to three panels of probably two people per panel would be a great way to start.
Now, that's a logistical thing.
Actually, in the interview, one of the ways
that we emphasize, or that I encourage people
to think about interview questions is to ask for questions
that elicit specific scenarios and actions
in those scenarios.
So we call it the situation behavior outcome method.
So I see on your resume that you worked for so-and-so
and you were doing this stuff.
You know, you did X, Y, Z.
So Quentin, I'm just curious, like, was there ever a time that you had a disagreement with a co-worker about how to move things forward? And what did that look like? You know, let them explain that. Right. So now you're getting them and questions like asking them about a disagreement with a co-worker that you're going to start to get a sense. Are they humble? Are they intellectually honest? Are they willing to learn? Are they or do they put someone down immediately as soon as they talk about a disagreement? Right.
You can learn a lot about someone in talking about how they disagreed with someone in a previous job.
Is there a way that you, you know, is there ever a difficult customer that you had to work with in that past?
Like, or is there a different client, difficult client that you had to close, right?
So you want to get a sense for how they talk about other people, other coworkers, other bosses, advisors, customers, all of that.
You want to get a sense for that.
Just let them talk about what they did, how they did it, how they behaved in those situations, and ultimately what was the outcome. So that's one thing that you can do. And then you can get a pretty good sense for how they talk about other people in that sense.
And then the second thing is it's also making it clear up front what your organization stands for. So asking quite like being very clear about like we like these are our values and we live by these values and this is our culture.
so if anything does happen after hiring someone you have a very clear strong culture that you can
refer to and norms in place that you can very quickly enforce as opposed to you know just the
values printed on the wall and things kind of uh the things kind of fall away from there so
the hiring itself is important but then it's the the norms and and culture that you've created in
the back end are also a big part of reinforcing that because it becomes hard to hide a bad culture
fit in a very strong culture. It becomes a lot easier once the culture starts to falter. So a lot
of the hiring also, and I know I've been going on for a while, but a lot of the hiring, even outside
of that interview process with multiple panels, getting different reads, asking questions about
specific situations and behavior to get a read, that's all good. But if you don't have the underlying
culture that you're onboarding them and integrating them into, it's not going to, that's not going to
be the magic bullet in that scenario The work is done in what you build in the culture underneath That the framework Makes sense You are implementing this at Satoshi Apacioli
Yes.
And of course, there will be links and notes.
As to disclaimer, I'm a client.
I'm not remunerated, but I am a happy client.
So you're implementing it internally and you're implementing it with your business customers and clients.
What has surprised you and what's been harder than you might have expected?
Good question.
I think the thing that surprised me the most, I think the first thing that surprised me is just how ready some, and maybe this shouldn't have been surprising, but it still is, I guess I'd say positively surprising in that how ready, at least folks in the Bitcoin community are ready for something like this.
Like it just fits hand in glove with a lot of the things that we believe in as Bitcoiners.
Like we didn't get into this as much, but the general thrust of principle based management from a super top high level approaches, free societies work better than control societies. We talked a little bit about why free speech, free market signals, et cetera, et cetera. If that's true, let's take those principles and apply them to the organization at an organizational level running the business. Right.
so bitcoiners already agree with a lot of we we want free speech we want decentralization we want
equal application of the rules to everybody with no special privileges no carve outs no back-end
deals right like that's the that's the ethos of what we're doing we want low time preference we
want a society that admires and works toward the the principles and values associated with low time
preference like it's just that's who we are right so then you bring this management framework like
you know, comes along and it's, you know, it's kind of hand in glove in terms of,
so I, I kind of, I knew that that was the theory going into it when, when I joined the team at
Satoshi Baccholi, but then working with that team, working with Marty, it's just like, yeah,
it's, they're hungry, like for this kind of thing. And they, they want to learn and apply these
things more, which is awesome. It's, it's very cool to have that, that ready audience that wants
to hear what you got to say. So that's, that's, that's the first thing that's very positively
surprising. What's been harder than expected either internally or with clients? Yeah, I think,
I think, I think the hardest thing is just being consistent with the application day to day,
because it is when you're trying to, I'll use this example of, you know, you're trying to get on a,
let's say you're trying to get on a fitness routine or a diet plan or something that you
know is good for you. Like, you know, it's the right thing for your health. You know, it's,
It's going to it's going to help you long term. Right. Then. And but the problem is, you know, you decide, I'm not going to go today. I feel a little tired. And then and then before you know it, you have all these excuses that add up and you've got the ideas and you got the framework, the right framework and the right plan and the right solution to getting whatever goal you're trying to go for.
and then you just fall into the habit of,
oh, I default to the way that I do it.
Now, we're not having that problem all over the place.
I want to be clear about that.
But it's just very easy to just kind of,
oh, that's awesome.
That's really great.
And then you go and do the thing that you,
the way that you are used to doing it
or the way that you're familiar with doing it.
And then I think another thing that's been,
that's a little bit hard with it is just
getting everybody with the shared language and the terminology.
So there's a lot of terms that go there.
We've only scratched the surface and all the terms and concepts that PBM entails.
But I would say, not unlike Agile, not unlike any other methodological approach,
they've all got their own vocabulary.
Everyone's got their own jargon.
Yeah, everyone's got their own jargon.
So being consistent with what the words mean and applying those consistently, you also have to be on your toes for that.
But if you can get those things down, and again, we're not perfect.
We're getting better.
I think we're getting better as we continue to implement.
You continue to improve, and it's fun to see those little improvements when they happen.
Absolutely.
And to your point about, you know, both habits and language, we being humans, you know, it is so much about how committed are we to a particular outcome?
How much do we want it?
And so on that note, if more organizations, companies, teams operated this way with distributed decision-making, aligned incentives, long-term thinking, what changes?
Not just for the companies, but for the people who work in them.
So let's paint that picture that others can then work backwards from and say, this is why it's worth investigating and perhaps committing to.
I think one of the things that we see, I think we see a return of trust in society.
Not again, no silver bullets, no magic solutions.
If only.
I think, right, exactly.
Right.
If you could wave a magic wand and fix the world, what would you do?
Right.
But that being said, if more companies, more businesses, and it's interesting, right?
We live in a world of incentives.
And I do think, and Bitcoiners would tell you this, like the fiat system has incentives that lend very much towards short-term consumption and thinking.
Those incentives are not just going away overnight.
But if we were to have a system with more long-term incentives that emphasize and built their business and their approach to even life more broadly on these kind of principles, I think one of the immediate or one of the positive things that we would see is that increase of trust that honestly we've, I don't want to say completely lost, but it's not doing good in society nowadays, right?
There's a lot of low trust.
Absolutely.
There's a lot of low trust among individuals. Again, that's something I've noticed and observed over the, especially the last, again, I call it five to 10 years of time.
And if we live by and operate by these principles, there's a corollary assumption of dignity of the people around you. There's a correlation between your willingness to listen to other ideas and sit with an idea that you disagree with pretty strongly but still have a good rational conversation where both sides are more concerned about truth than about being right.
where there's an emphasis even on things like customer service.
One of the things that frustrates me to no end,
especially with my prior experience in the fitness industry,
is just the decline in customer service across multiple industries
where you just feel like you're literally just go anywhere
in almost any industry and get service.
And it's very rare to find companies these days
that really make you feel valuable as a customer.
and something like that even would go a long way to that.
Just that basic relationship of mutual benefit
with a customer and a business,
restoring trust, I think would be huge.
But I get that all of that falls under the theme
and umbrella of I do think we would see
an increase in trust in business, in work,
and potentially in society at large.
And like you said earlier, maybe institutions.
It would be nice to see some institutions
that more institutions that operate like this.
But again, there are a lot of incentives in place that make that very, very difficult.
So that's, you got to-
We can do without them.
Yeah, exactly.
Exactly.
Yeah.
Some of those institutions, maybe we don't even need some of those institutions, right?
So, you know, I'll be happy with local first, smaller.
And, you know, and I think, again, I led the witness, Jason, but I appreciate you playing
that out because that is certainly what we're investigating here.
And that's why I was very keen to speak with you. As we begin to wrap up, what's the one thing that you wish everyone understood about why organizations actually work or fail?
Yeah, and I should say, no pun intended on trust revolution, we're trying to increase trust.
I'll take it. I'll take it.
Yeah. So, you know, one of the concepts, and this is actually not native to the principle-based management approach. This actually comes from Simon Sinek. I don't know if you're familiar with this.
Absolutely. Start with why.
Yeah. Well, the one I'm thinking of is the infinite game, right? So this idea of business is a game, but it never ends, right? The players end, but the game keeps going on.
And I think approaching business with that perspective, again, it's really just, it's another way of saying low time preference, right?
Businesses that value low time preference may not be as exciting, flashy, or successful over a short amount of time, maybe over a one-year amount of time or two years, maybe even five years amount of time.
They're not going to look like they're that awesome or exciting.
it's in the
continued commitment to doing
the one or two
right things every single day for a very
very very very very very long period of time
that it compounds
that leads to the kind of growth
and if I were to
if I were to
look at a business and I would say
hey this business is committed to
low time preference
everybody in the organization is
contributing their ideas
bringing new ways of doing things to the table on a daily basis.
They feel like they're contributing something bigger than themselves.
They're going to stay in that game a lot longer than businesses that are not doing that
over a long enough time horizon, right?
If they keep doing that, if they stick with that and they keep doing that over and over again,
day in, day out, they'll still be around five years from now, 10 years from now, 15 years from now,
if they can keep that culture.
Businesses that don't, they might run high and fast.
that might do a lot of cool things in a very short amount of time,
and then they're probably going to flame out eventually
over a long enough period of time.
So that commitment to low time preference, I think, is key.
And it's, again, one of the things that I just love about the PBM approach.
That's central to the PBM approach.
It's central to the way that Bitcoiners view life,
and it's a great merging.
And I think there's an exciting opportunity.
I believe we have a better money in Bitcoin.
I know not everyone agrees with that, but I do.
and I think we have a better money in Bitcoin.
Let's build some better businesses
on top of that better money
and let's use these principles
and use a framework like PBM
to build that better future,
not just hope for it to come,
not just wait for it to come
and say, oh, once Bitcoin is adopted,
then we'll have a high trust side.
You know, let's go out there.
We're running, we're starting these businesses now.
We're managing these employees now.
We're serving these customers now.
Let's put these principles
in this framework into place now
and that low time preference, I think,
can make the difference for a lot of us in the long run.
Absolutely.
I think in the age of quality leering center,
we need a hell of a lot more of this.
Absolutely, absolutely.
Let's wrap it up here, Jason.
Let's get philosophical.
You've written about how the Bible portrays state officials
not as a special class with a right to rule,
but as fallible people subject to the same ethical constraints
as everyone else.
How does that view of authority shape how you think about management and hierarchy? Is there such a thing as a legitimate organizational authority?
um that's good no like yeah good question uh i think that for i do think there is definitely
legitimate organizational authority right and i because it stems from you it stems from property
rights right like so as as an organization i control and steward resources that i use to
create value for a customer right if you could think about it on a very micro level like and
And when I worked in the fitness industry, I worked for owners that owned a building and
or they rented the building, but they own they had the rights to that property under
whatever contract.
And then they had equipment inside of that building.
And as employees, we stewarded that equipment and we cleaned that equipment and we maintained
that equipment.
And we use that equipment to make sure that the customers had a great workout.
Right.
So the authority stems from that property and the allocation of resources and then the
What's exciting as an employee or, again, when these principles are applied and when it is operating well is that you're contributing to the stewarding of those resources efficiently to making other people's lives better.
And you have to feel better about yourself at the end of the day doing that.
You're making somebody else's life better and you're taking care of resources that you've been trusted with by somebody else.
That is their property, technically.
That is their equipment.
but they're trusting you to use that equipment to, to, to help a customer have a great workout.
And so to be, to, to be trusted with that is a great responsibility and a great opportunity.
And, but then also to be the one who gives that trust is a great opportunity. And, and I think
it's, I think this is where, again, a lot of the problems, a lot of the problems that we run into
are the people who give that trust, do so in a very top down way, very bureaucratic way, very
harsh way, whatever, however it is, very profit maximizing, short term driven kind of a way.
And that's what that's where it leads to a lot of a breakdown. So but I think the authority stems
from stems from that. And then I think the key is just still not making it about any one person
in that organization being above or outside of those rules, because going to what you said,
it's equal application of the rules right now. When we talk about government officials like a
truly just government, if we want to hypothesize that, they are not outside of the same rules that
we are outside of, right? Like, and just on a super basic level, if it's wrong for me to kill
someone, it's wrong for government official to go out and murder someone, right? If it's wrong for
me to steal from somebody, like, then it's wrong for government official to go out and steal from
somebody, right? So we want to have that same level of equal application of the rule set
across individuals, across institutions,
you take that same concept
and apply that to the business, right?
The CEO can't go out and embezzle funds
or do anything.
I mean, technically he can,
but there's going to be consequences for that.
But you need to have that same,
and think about it even down to just the basics
of the CEO embraces challenge.
You know, the CEO models that first and foremost,
then the executive team models that,
And then the individuals underneath them and so on and so forth.
And when you have a culture that does that, that's commitment to that equal application
of the rule set.
And that's the thing to the biblical principle you highlighted.
That's how I would think about that applied to the organization.
All right.
Well, Jason, I really appreciate it.
It's certainly given me a lot to think about.
I know others will as well.
I'll be sure to get all the links so they can find out more about PBM, about you guys,
about what you're working on.
and I very much appreciate your time.
Awesome. Thank you, Sean.
It was great chatting with you today.
I really enjoyed it.
Thanks, Jason. Take care.