Hey, what's up, Toby? We have made it to another
week of the Processed It podcast. You did. I
know. Another one in the books. Here we go. Today
is your topic. It is. It is. And I'm excited
to dig into this. Thanks for entertaining me.
As you and I've talked a lot about over the years,
there is the how we work, but also so much of
the why we work. Yeah. And behind the why is
always all these hearts and minds and people
that are showing up every day. our most notable
asset walks out the door. So it's not just the
human capital piece, but it's also what those
humans do together. And so the musing that we
were just touching on before we launched those,
it's ultimately this idea of another form of
process debt. And it's something that I would
describe as cultural debt, the way that we all
come together to interact. And I think a bit
of this goes back to what is the relationship
between how we work together and those norms
that we develop, and whether those create healthy,
vibrant process, or we get into that world of
all the myriad of reasons why process doesn't
work, but it probably has less to do with the
transactions and more to do with how we work
as humans. Let me just pause there first. What's
your thought? It's really interesting because
if you think about just deep cultures in in organizations,
right like one of my favorite interview questions
is Tell me who you'd rather work for in their
heyday. Oh, yeah Facebook move fast and break
things right that was their culture right Apple
design everything to the T's. Yes the apples
take care of the customers or Google engineer
things to its max, like to the technical max.
And those cultures, right? Like those companies
are different today, but like those cultures
drops up. Do you know the other one is Amazon?
Where they have a culture of don't ever do a
PowerPoint. Yeah, very pragmatic. Let me ask
you, so. And then I'll share mine, but of the
ones that you just listed, five great recognizable
organizations that most of us have some real
familiarity with as consumers. Yep. Which one
of those would you have rather worked at in its
heyday based strictly on culture? Which one of
those resonates with you? I would go, I would
probably go Google. Most likely because I have
a deep fascination in how they've strategically
engineered everything. to have the systems do
the systems. Even like think about what have
we, like if you had a problem with your Gmail,
what would you do? How long would it take to
get to a human? And I don't even like, so that's
a really, it's a really interesting cultural
decision that they made, but that to me, that's
very elegant because they've thought through
a lot of things. And then, and then the next
is, you know, the next is, you know, Apple. And
I do like Facebook's move fast and break things.
I just despise the computer. Well, and there's
always a little bit of that. So I like the framing
of in its heyday. You know, for my part, I was
really taken. I had an opportunity to see Tony
Hsieh, you know, What's Upon Time CEO of Zappos
present down in Austin at South by Southwest
Tech Fest. I think it was, I think he was 0809.
I'm a buddy and I were going down there. We did
it a couple of years. And he had, he was really
just starting to reveal their culture. And, and,
um, I think implicit in your response was there's
a trade off to some of these things, right? Engineering
everything to the ends means there's a long time
before it sees the light of day. And then with
Zappos, this idea of one of the stories he shared
was he was hanging out with some buddies and
they're like, no way, nobody's customer service
is that good. And he's like, yeah, yeah, they
weren't even in, you know, Zappos was headquartered
in Las Vegas at this point. They just finished
the move or were in process of moving. And he
said, well, why don't you just call up the number
and see if they'll order us a pizza, get us a...
For anybody that doesn't know Zappos, like they're
all about shoes, right? Zapatos. So sure enough,
Tony Hsieh and his guys are sitting there and
one of the guys gets on the phone. He's like,
hey, I'm in the Bay area and I need a pizza.
And they're like, what part of the Bay Area?
Do you like Chicago? You like New York? What's
your pizza jam? So over the course of, I may
not remember this right, but within a half hour
though, this guy who has nothing to do with pizza
delivery takes their order and gets them a pizza,
doesn't even know that Tony's in the room. And
that is what insane customer service is about.
And so what I love is that all of these are remarkable
companies. each one of these is gonna have a
place where it shines and then it's gonna have
costs. And I think the idea of cultural debt,
it's not that it's much like process debt. It's
not good or bad. We all carry some. By putting
our heart and soul into one very clear mission
and aligning the talent to deliver on that mission,
we're gonna have blind spots. We're gonna have
some hiccups. And so I think at the heart of
it, The idea of culture debt, though, is really
about what are maybe the unknown costs that we
don't always appreciate. And so it's delightful.
It's a great story that I can call a shoe company
to get a pizza delivered. But it also means that
a legitimate customer couldn't access that resource
for a half hour. Now, there's certainly going
to be, you know, I'm retelling that story 15
years later because I was so impressed and I
didn't even get a slice out of the deal. But
I think that some of cultural debt is like, what
does it mean for us to manage as an organization?
Yeah, yeah, yeah. Yeah, yeah. Well, and let's
pull it back, right? Because we just told great
stories of positive culture, right? How does
that culture degrade? Totally. There's the famous
stories of Enron, right? Where it's a culture
of greed. Right. In complexity. But also of innovation.
It led with innovation. They were made at Darling.
This is how you get on the cover of Businessweek.
And the cultural cost was challenging people
at an individual, curricular, and moral level
as this became a pervasive norm and expectation.
It was bad habits of shredding documents that
are subject to public audit and accountability.
Making phantom companies and You know, pocketing
the bonus as you buy an island in the Caribbean.
Well, we've also talked, you know, we've also
talked about Wells Fargo. I mean, they're in
the news for for setting up like like it's interesting
when you have when your culture goes away from
the story and the humans. Yes. It's so easy to
just point a finger and just be like what like
how did like it almost becomes like this gut
-wrenching pain. Yes. Of. I want to go and hurt
someone at that because they didn't take care
of their fellow humans. It's an interesting question.
I think a little bit of the exploration that
I want to be sure we touch on is a lot of this
comes down to what are the habits that both reinforce
how we achieve our mission, but also what are
the habits that provides checks and balances?
So it's not just how do we drive revenue or how
do we go fast and break things? It's also How
do we go slow and fix things once we decide we're
going to keep them? You know, innovation unfolds
quickly, but we have to harden it if it's going
to be persistent. For Gmail to work for decades,
right? I don't know. There's a handful. There's
probably something that comes to mind for you
too, as you think about like, what strikes me
and sometimes I, you know, I love these conversations
because we spin off into, you know, these rabbit
trails. But what's, what Greg's been here is
like, when you're talking about culture debt,
you're almost like, when you're talking about
culture, you're almost always exposing something
that's great or something that's, that's, that
really went very wrong. Right. Yeah. But there's
little fundamentals, right? So do we have habits
that are important enough to be rituals? Do we
have a way of always chopping wood? Do we, what's
the day to day expectation? You know, like, we've
got to, you got to show up at work. You got to
move work forward. You got to dot your I's and
cross your T's before you hand it to the next
guy and make it their problem. Those are just
foundational. They're not unique to a culture,
but if your culture doesn't value those things,
go fast and break things has a whole bunch of
broken crap. Right? For sure. I also think about
there's this inherent assumption, and we navigate
through the world as individuals with assumptions,
but organizations are just big organisms. And
when we move too far, too fast and never clarify
assumptions, and have explicit conversation,
those unspoken assumptions mount. And so I thought
Chris was going to double check it. And Chris
is like, well, I feel like it goes the Enron
world. That's funny. Well, it's interesting,
right? So like on both sides, you know, like
with culture oftentimes comes story, right, comes
art, comes like all these things that come with
that we expect from a culture. Absolutely. Yeah.
And yet, you know, like thinking about cultural
debt, you end up with the victim's story. Yeah.
Right. Like it's not something, it just doesn't
sell well. Yeah. Over the long haul, right? Yeah.
Yeah. Who wants to say, yes, we have cultural
debt. That sounds like we're deficient, you know,
but I think if we recognize that it's a real
cost of starting something, whether it's a new
product line, brand new venture. Yeah. Any of
these debt elements, I think it's just, how do
we, how do we move a little faster than we could
otherwise afford? And so move fast and bring
things is fine. When is it that we're going to
come back though, and put in place the practices
of clean it up and harden those things that are
are worth keeping. Yeah, what's interesting as
we're sitting here today, last week we ran the
podcast on Tesla that we did earlier as we did
a rewind. It's interesting to think about what's
happened, their cultural debt. Oh my gosh. Right?
So if you think of Tesla as being like this super
impactful brand. Yes. That basically is take
just basically made major swings at the ball
and hit many many home runs and Yet at the top
you have a person that is the CEO who will remain
Nameless who you know start name starts with
E and ends with long. Yeah And he what's funny
is He's gone on record and he has said that he
was the one that invented Tesla. Yeah which y
'all know to be contrary. Which is not true.
He has gone on record to say many things. Now
he has done some great things for Tesla and Tesla
would not be what it is outside of him being
in that leadership role and yet they have some
culture debt and that culture debt is the principle
is due. It absolutely has. Well, think about
when the tone at the top allows you to lay claim
to work that's not yours. When the tone at the
top speaks in these, these really broad, you
know, generalities, it's really hard to feel
like you're connected to all of your own good
work or that it's important to be honest and
accountable and transparent. I think Charismatic
leaders in particular lose sight of that. You
know, a healthy culture allows everybody to have
some fingerprints on it and also has some shared
accountability. And I think that idea of visible
accountability, maybe that's really at the heart
of what makes cultural debt so slippery. Processed
debt blows up in our face. Invoices didn't go
out. We have no cash. Nobody gets paid. Well,
shit. Cultural debt, though, is invisible. And
I think that's what makes it tricky. And so when
you couple an invisible debt that's going to
come due, like a ticking time bomb, those who
don't know it, with a lot of unspoken assumptions
or bad habits, then it's a dangerous game of
hot potato. Well, what makes cultural debt so
hard is that it's invisible and it's very hard
to predict. The end. Because if you're the one
on the line in one of the gigafactories and you're
doing stuff, you might know what's going on.
There might be rumblings of like, what is Elon
doing with the president? There might be these
rumblings, but to be able to predict what's going
to happen is so hard. Because let's say his robo
-taxis worked. Game over. Right, like all of
a sudden stock takes off, you know, they're,
they just gained a couple billion in market cap.
Easy peasy. That's right. But if you miss on
Robotexi, which it looks like they have, right?
And you miss on, you know, I saw another thing.
What's interesting is you start to see, like
what I've started to notice is you see the Robotexi
come out. You're like, oh, Elon got in trouble,
right? Stock started to slip. Yeah. Push timelines
on this. Right. Robo taxi hits a parked car.
Oops. Right. That's a problem. Okay. And then
you start to see what the next thing is. Right.
And so what's interesting is you start to see
these pushing of timelines. Yeah. And that culture
is eventually going to implode. Now. That flywheel
is moving so fast and they're throwing up so
much cash that it is a slow cultural demise.
I think what's interesting is you have this cultural
issue where long -standing norm is people making
claims that aren't true and that just kind of
passes in the public, even if internally it's
debated, I wouldn't know. But then you also have
products that don't deliver on what they said.
And now the underlying business model of, you
know, it's not about the cars they sell as much
as the green credits that they can sell in the
secondary market off carbon emissions. And I
think that's often lost in the public eye that
it's not about the vehicles. It's about energy
management and consumption that one of the biggest
industries in the world. And so the revocation
of the EV tax credits is going to drive down
new acquisition. I can't imagine it being anything
other than that, which has the very indirect
cost then of wiping out this enormous revenue
stream. So what feels today like an impossible
company that is going to be here forever. And
I'm sure folks thought the same about Sears and
Roebuck and Cayman and Toys R Us for different
reasons. But there's a wealth of companies that
have gone by the wayside for a myriad of reasons.
I think maybe today's argument is that it's not
always bad finance. It's not always about, you
know, political will or legislation that moves
against or even one bad product launch. But when
the cultural foundation is weak and that invisible
layer is fraying or falling apart underneath,
there's a host of things that just simply aren't
going to react to help solve when the other problems
show up. Yeah, you end up and we can kind of
end it here, but you kind of end up with a black
swan event. I love that. Well said. Where literally
the risk is outsized in comparison to the rest
of the market. Yeah. And it's unpredictable.
It's not, you can't predict it. Like we can guess,
but it's just, we're putting a flyer out there.
But at the end of the day, at the end of the
day, the more, Kind of moral decline, the more
cultural debt we have, the more probability that
we have of these large 2008 events where Lehman
crashes. That's right. Where Enron dies, right?
Because we've lost sight of taking care of other
humans. Yeah, Nassim Taleb. I wanted to call
that out. Black Swan is a super interesting idea.
We're not getting into it on this. I'm 100 %
in alignment that I would dare say a number of
Black Swan events probably track back to unmanaged
practices, weak tone at the top. That was certainly
the case in 08 and lack of accountability. It's
a rather the debt family. I'm glad we could talk
about it today This is great. Thanks, Toby. It's
a deal. Have a great week. See you man. Take
care