think throw away think

Debt is evil.

Debt is good.

It all depends ….

I think about debt the following way and I feel like it helps me harness the goodness of debt while mitigating its evilness.

What is debt?

Debt is money borrowed from a party who does not have a better alternative use for it in the near or (often) long term.  It is money the lender has earmarked for later consumption (otherwise it would be spent now), and so to derive value from the forgone consumption, the person who has the money “sells it” to party who wants to “consume or use” cash now, but does not have it.  The “cost” of that money is to give it back in the future along with interest to compensate the lender for her forgone consumption and the risk she took that she might not get it back when she lent it.

So debt is what is created when a person who has money, but a later consumption preference, gives that money to someone who doesn’t have money, but has an immediate consumption preference.

But what happens to the borrower over time?  The borrower must earmarks future monies earned to pay back the debt (i.e. they will forgo future consumption in order to pay back funds to the person they borrowed from).

Are you following?  This is the key point.

DEBT PULLS CONSUMPTION FROM THE FUTURE INTO THE PRESENT.

As a borrower, whatever you consume today is consumption you’ll forgo in the future.

When a whole bunch of people borrow money at once, a whole bunch of future consumption is brought into the present.

One reason that group debt binges are so bad (when everyone pulls their consumption into the present by borrowing), is that in the future they’ll all have to forgo consumption together as they pay the debt back.  If everyone consumes at the same time (pulling future consumption into the NOW), one, they drive up prices of commodities and assets and labor today, and, two, in the future they will all NOT be consuming at the same time and drive down prices of commodities, assets and labor.  As labor demand drops in the future, and as the price of assets drop in the future, it makes it harder to pay back the debt from all the previous consumption, and leads to bankruptcy.

This is often called a boom/bust cycle.   And they are destructive to society.

We don’t want debt spikes.  We want smooth debt patterns that aren’t lumpy, where not too much consumption is pulled into the present.

Knowing that, I get VERY CAUTIOUS when there’s a lot of people borrowing money at the same time because I know that a lot of the business the binge is generating now will result in a bust later.  I don’t want to commit to business that is ephemeral.

On the flip side, if I don’t get into debt when everyone else is, but instead live within my means and save, then when the bust occurs and labor, assets, and commodities get cheap, I load up.

I’m not perfect and I make debt-related mistakes, but by keeping in mind what debt is and how it affects present and future consumption patterns we have kept our company out of trouble first during the tech boom/bust and later during the housing boom/bust because we were cautious when everyone else was reckless.  After the busts, we were aggressive in expansion when others were hunkering down.

I don’t want to see boom/bust cycles in our economy, but so long as there’s a central bank manipulating interest rates, I have to live with them and plan accordingly.  I hope you will choose to “run against the herd” so that instead of going over the cliff during debt-binge booms, you sleep well at night.

In fact, at our company when we discuss investing in expansion we have a “sleep at night” test.  If any expansion move would cause any of us to lose sleep at night, we just don’t do it.   That means we don’t do things just because everyone else does.

No one person really “creates” a culture.  Individuals live their lives and their shared beliefs, desires, and ritualized “transactions” result in the culture established.  Cultures are collective contributions. They are “crowd-sourced”.

However, there is great power in the individual contributions we choose to make to the cultures we’re in because we can be examples. We can even change the dynamic of these cultures as others imitate us, including our desires.

The cultural contributions I try to make are ones that I refer to as “cultures of care” contributions.   By care I mean concern for others, loyalty, empathy, accountability, carefulness, and other behaviors and sentiments that indicate/project value for others as people who – by dint of the fact that they are people – are like me, and who share with me similar hopes, dreams, aspirations, and fears.

Corporate cultures could – in my opinion – greatly benefit from their members making contributions to a culture of care and it starts “at the top” so to speak.  At least, that’s the easiest way to encourage such a culture, because people take their cues from leaders in organizations.

Many years ago I was in the unenviable position of having to work for two direct reports.  Both, technically, had an equal and simultaneous claim on my time and work.  However, this presented me with a very unique opportunity to experience how being treated in different ways affects employees, because I got to experience a range of emotions interacting with two different bosses throughout a day.   How I was treated by each drastically affected how I felt about the organization.

Just two quick anecdotes.

On some Friday afternoons at 5PM, just as I’d be thinking about finishing for the day, Boss #1 would email me her unfinished tasks and ask that they be completed by Monday morning.  This boss would set the email on a delayed/scheduled send, so that I’d see her leave for the weekend (without a goodbye), and then a few minutes later, the task assignments would hit my inbox.   I resented this person very much, because I felt like she did not care for me, and really did such things in order to assert some sort of power over me, not because there was ever any real need for the tasks to be done.  Most of them were menial.  The Monday due date was arbitrary. After all, if the tasks were so vital, the boss would have taken the time to actually have a conversation about them and verify that they’d be done.  A few times, just to test my hypothesis, I left some tasks undone.  The boss never noticed.  Never followed up (on hardly any of them, actually) and I soon learned that this was a CYA tactic the boss employed so that if work she was assigned was not completed, she’d have a “fall guy”.

I wasn’t the only one who experienced this behavior from this individual.  It was a regular occurrence with all the “subordinates” who reported to her.

Boss #2 however, was different.  Early on in my employment and work with her, she entrusted me with a task designed to raise my profile in organization (while she took a backseat), which I attempted to do to the best of my ability and felt grateful to have the chance to do.  However, soon thereafter it became apparent that I had not done the task correctly.  A senior person took issue with the work and asked “who was responsible”.  Before I could answer, Boss #2 spoke quickly and said, “It’s my fault.  I made that mistake.”  The senior person muttered something and it was dropped.  Afterward, I cornered her and said, “I was the one who screwed up, I should have taken the blame.”  She said, “No, it’s my fault.  I asked you to do something you’d never done before.  Either I didn’t train you right, or I didn’t check the work to make sure that you had understood what needed to be done.  That was entirely my fault.  I didn’t set you up to succeed and I wasn’t going to let you take the fall for that.  I’m sorry you were put in that position.”  Well!  Talk about loyalty!  I was willing to run through a wall for her at the drop of a hat!  For the remainder of my time with the company I did not mind coming in early, staying late, working a Saturday, changing my schedule, etc. to help Boss #2 out with any project she needed help with.  I knew that she valued me, respected my time, hoped for my success, and would never abuse her position or use our relationship as a way to demean me in order to gratify her ego.

Why?  Because I knew she cared about me and was sincerely trying to help me have a happy and successful experience, even to the extent that she was willing to put her neck on the line for me.

Let’s quickly tell another story about Boss #1 … Boss #1 eventually made a huge screw up on a project I was not involved with (nor asked to participate on) and blamed me for it.  Because of that, I resolved never to volunteer to assist her with anything, even if it was apparent she needed help.  If I was going to be blamed for things I didn’t work on that went bad, why make it even easier to blame my by getting involved at the last minute with something, try to fix it, and then take the fall for the whole thing when it went bad.  Later on, I noticed another project she was involved with and was not going well (she thought it was).  Rather than speak up and say something, and risk “volunteering” for the role of “fall guy” when it inevitably went bad, I kept quiet.  It, of course, ended poorly (a different employee got the blame for that one).  When boss #1 eventually left to take another job, it was one of the happiest days of my life.  A huge cloud that hung over the office was gone.

So, cultures of care.

Treat people like they are people, with shared hopes, dreams, fears, and problems.  Stick up for them.  Set them up to succeed, and they’ll run through walls for you.  Forgive them and help them when they mess up, and they’ll never forget it.

But treat them like dogs, and they’ll feel satisfaction when you fail.

On the wall of my office I have a picture of two triangular organization charts.  One is inverted.  They are labeled “Responsibility Flow” (inverted)  and “Accountability Flow”.

They look like this (I’ve tried to approximate the structure using characters.  The stars are “empty space”).

RESPONSIBILITY FLOW

—–customer——
**—employee—**
****-manager-****
*******ceo*******

This indicates that I, as the CEO at the “bottom” of the pyramid, am responsible for the success and well being of the managers, employees, and customers “above” me in the chart.  The customer is at the top – our highest responsibility is to her.  I want the employees to be responsible (responsive) to the customer.   I want the managers to be responsible (responsive) to the employees directly and also the customers.  I want myself  to be responsible (responsive) to the managers directly and also to the employees and the customers.

Usually org charts put a CEO at the top.  I think that’s awful.  It is intended to show accountability flow, but I think it fails for a couple of reasons.  One, that implies that everyone “under” the CEO and that the CEO is not “under” anyone.  Secondly, it is often used analogously for justification that CEOs aren’t accountable or responsible to others, but that all others are to the CEO.  That’s wrong.  If not for the customer and the privilege of serving her, none of us has a livelihood.  If not for employees and managers who do a great job serving those customers, I as the CEO don’t have a livelihood.

I must CARE for those people and those relationships and help those people be successful.  They don’t come to me, first.  Rather, I go to them, just as I want them to go to each other and out customers.

Now, the other triangle org chart (again, the *stars* are empty space).

ACCOUNTABILITY FLOW

*******customer*******
******—CEO—********
*****-managers-*******
***—-employees —-***

This chart reminds me that I’m accountable to the Customer, first.  I report to them.  The managers report to me, and are accountable to me for their performance.  The employees are accountable to the managers.

So, we have two directions of flow.  Responsibility for people who are traditionally “under” us in organization charts.  Accountability from people who are traditionally “under” us in or charts.

And a constant reminder that the whole organization is ultimately responsible for, and accountable to, the people we serve, the customers.

CULTURES OF CARE are successful cultures.  They are the cultures that win.  They are made up of people who support one another, watch one another’s backs, fight for each other, and refuse to let each other fail.

Three weeks ago we launched AskForIt.com.  The central concept at the core of Ask For It is “borrowed desire” from the philosopher and cultural anthropologist Rene Girard’s Mimetic Theory.

Here’s the story behind the idea. I am a part of a music group.  People are always asking us to record another ablum.  We thought how nice it would be if we knew what songs our fans wanted us to record so that we’d know the album would find a ready market from the day it hit shelves. We could deliver exactly what our fans wanted, making them happy, and we’d sell more albums, making us happy. I soon realized there wasn’t an easy place for consumers to share what they wanted and organizations to receive feedback directly from their audience.

That insight, joined with some crowd-sourcing business ideas Andy Jennings (co-founder) had kicked around with me for a few years, let to me feverishly writing up a business plan for Ask For It that same day.

I approached the other founders right away (the other two being Brent Jensen and McKane Davis).  McKane heard the idea and reminded me that we owned that domain name to askforit.com (a name my Dad had bought years before); my jaw hit the floor.  We already had the perfect domain for the concept.

We all signed a letter of intent the day after that, and things grew from there.  Our team consists of three of the top programmers and UI designers around, and me, the jackass of all trades who is basically keeping the development altogether.  Serendipity struck and we brought in a few others partners who have key competencies in the area of consumer advocacy.

We quickly realized the idea of Ask For It had value for a widerange of asks– from political requests to corporate promotions to product improvements. Everyone has something they want to see happen.

As a group, we discussed how we could affect real change and we developed the advocacy process, which is one of the most unique features of the site. We realized the world needs this type of a platform.

In college I was a philosophy major.  For the last few years I have read the philosophy of Rene Girard, including his remarkable insights into how people learn.  We learn by imitating others.  And we even learn our desires by observing and then modeling the desires of others.   In fact, we had seen this at work at Scrapbook.com, so and I knew it could be a powerful force for good if  it harnessed good desires.

Ask For It would essentially become a platform of desires.  A cauldron of them, where the best (most mimetic) ones would “bubble up”.   A place where you could come, see the desires of others, and “borrow” them, or appropriate them to yourself.  If we could build the tool correctly, we could channel mimetic desires into viral requests – specific, actionable, requests.

So we designed the platform with that in mind.

Fortunately, the four original founders have some startup experience and could bring the skills tothe table needed to get Ask For It off the ground. It’s been a great ride so far.

If you want to learn a little more about mimetic desire, here’s info from a couple of posts I made at Quora on the topic.

Mimetic desire is a desire that arises because one sees an Other possessing or desiring something. It the absence of the Other’s desire, there is no mimetic desire (i.e. it is desire that is “imitating” the desire of an other). This desire is sometimes called “borrowed” desire because it does not originate in oneself, but rather originates in the other. Human beings learn by imitation, including imitation the desires of Others. This can be dangerous because when two humans desire the same object they can engage in rivalry, which leads to violence. Humans are always at risk of falling into the mimetic trap, wherein an example (or “Model”) that one imitates quickly becomes a rival.  Mimetic desire can also be very good (and usually is, think parents and children, mentors and students, etc.) provided that people do not become rivals.

Mimetic Desire is pervasive. Desires are not Appetites.  Appetites arise from biological need or drive and Desires do not (though an appetite may specifically attach itself to something and become a desire).

Clearly, in the absence of Others we may desire something, but there is a notion that the very things we desire are desired because we have learned from others (previously) that they are desirable.

Here’s a quick (probably dumb, or poor) example. I imagine myself in a post-apocalyptic world. I am lost in the desert and without water, dying of thirst and looking for something to drink. I know the rest of mankind to be dead, yet see something sparkle in the distance, identify it as a diamond, feel a desire to possess it, divert myself from my pursuit of water (my biological appetite) and pocket the diamond. Where did the desire come from (especially one which overwhelmed my appetite, and overwhelmed my better judgement, causing me to work against my best interest)? Was it not the borrowed desire of others, long before, still working on me? The thought that Others would find it desirable and therefore, I must? Girard would say that the felt desire was not consciously manufactured, but a residual vestige of the natural process through which we learn desire … by observing what others desire.

Certainly, things which satisfy appetites may be more desirable, but why this thing and not that thing? After playing basketball, I can have my thirst quenched by drinking water, but instead I *must* have Gatorade. Why? Because I must “Be Like Mike” … Once I have taken Michael Jordan as my Model (in a Girardian sense), I desire what Micheal desires … In trying to be like Mike, I am trying to appropriate his essence, what he is … I appropriate even his desires …

And here’s the rub – if there’s only one Gatorade left, and Mike and I reach for it simultaneously, very quickly my Model can turn into my Rival, precisely because I have borrowed even his desires from him.