The best relationships are Peer Relationships: If there is someone above you, that is someone to learn from. If you are not learning from them, then there shouldn’t be someone above you. Or you should be somewhere else. If there is someone below you, it should be because you are teaching and enabling them. If you are not teaching and enabling them, get a robot. You shouldn’t have human beings below you.
In the future, anybody who wants to work for themselves will be able to work for themselves. They might have to make some sacrifices. Take on more risk, or accountability, less steady income…. More and more the younger generations are realizing that, if they are going to work – they are going to work for themselves.
In the short run, being unethical is effective. It’s not effective in the long run. Golden Rule: Do un to others as you would have done to you. Silver Rule: Don’t do to others what you wouldn’t want done to you.
The Principal Agent Problem: Principal being the owner. Agent being the agent who works for them. Julius Caesar: If you want it done, then go. If you don’t, then send. i.e… if you want it done right, do it yourself. Other people don’t care enough.
- In economics, it’s that they don’t have aligned goals. Principal will want what makes the most money for the business. The agent will want to make principal happy or might make them the most friends or make them the most money.
- Agents have ways of hacking systems. Almost all human behavior can be explained by incentives.
- You have to get incentives right to behave correctly. The thing is to judge based on people’s behaviors, not words. People lie more with their words than their behaviors.
- You always will be thinking of how to give this person founder mentality, to think like me.
- When doing busines deals it’s better to have aligned incentives, than ones where you get the better deal. Eventually the other person will figure it out, and it will fall apart. Won’t get the compound interest over decades.
- As an employee, the more you can think like a principal the better off you will be. Will help you get leverage.
- Often times, because of this, you get a better experience working with smaller firms than large. Because you often get pitched by the Principal – then handed off to an agent.
Negotiations are typically won by whoever cares least. If you are the one who cares the most, your best strategy is to turn it onto a long-term game or a repeat game. Try to bring reputation into line. Or bring other people into the picture who might want to play with this person in the future.
- Contractors are a good example. One 1 job, both parties have incentive to screw the other. However, if you negotiate and show them you have 3 friends who need work. Or bring in yelp reviews and such. Makes it multi move.
for a full transcript + podcast (worth the listen!!) = https://nav.al/rich