Latest / Home Service Millionaire with Mike Andes / Optimization vs Obsession, Vanity Metrics & Layoffs | C. Suite EP 112

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Optimization vs Obsession, Vanity Metrics & Layoffs | C. Suite EP 112 · Home Service Millionaire with Mike Andes

• 0:00
  What gets measured gets managed, even if it's pointless to measure and manage it, and even if it harms the purpose of the organization to do so.
• 0:08
  I have always thought of actually his way.
• 0:10
  I'm always talking about measurement, management, but I can only manage so many things.
• 0:13
  Therefore, I should only measure so many things.
• 0:15
  I think that's the core of what Scott's getting at.
• 0:17
  I was like, you over optimize, you create all these metrics.
• 0:19
  As soon as one or two are off, now you have a negative influence on your life.
• 0:23
  You have a negative input coming back to you.
• 0:24
  Like I'm doing this right now in an apartment.
• 0:26
  I'm eating payroll.
• 0:27
  I know that I don't need, but I would rather keep the engagement of the team high and long term grow into that.
• 0:34
  The qualification of modern life makes us play the games we can easily measure rather than the games we deeply value.
• 0:43
  If you actually are optimizing for the long term, it'll change the way you operate a team.
• 0:48
  It'll change the way you allocate capital.
• 0:49
  It'll change the way you communicate with customers.
• 0:52
  Every behavior will change if you're just like, is this a five-year decision or is this a 50-year decision?
• 0:57
  We're back.
• 0:57
  Welcome back.
• 0:58
  Another episode, the C-Suite Unfiltered with Mike Andes.
• 1:01
  How we doing?
• 1:01
  Fantastic.
• 1:02
  Good.
• 1:02
  I love it.
• 1:03
  Well, we're going to dive straight into it.
• 1:04
  No cold open here.
• 1:07
  I want to reference a recent newsletter from Scott Galloway.
• 1:11
  So a person that I like to get news information from, market information from, and I would say he's a modern day thought leader, you know, if we were to use that term.
• 1:20
  So let me read you the opening paragraph.
• 1:22
  I did write up kind of like a synopsis for anyone that didn't read this newsletter of his.
• 1:26
  I did send it to a couple of people, mostly a couple of young, younger men who are high performers because I thought it was an interesting perspective.
• 1:33
  So here's here's the opening paragraph of this article from Scott Galloway titled Optimization.
• 1:38
  Optimization.
• 1:39
  All right.
• 1:39
  What gets measured gets managed is often misattributed to Peter Drucker, the father of modern management theory.
• 1:46
  The full quote from business journalist Simon Colkin is a warning, not a promise.
• 1:51
  What gets measured gets managed.
• 1:53
  even if it's pointless to measure and manage it, and even if it harms the purpose of the organization to do so.
• 1:59
  In other words, our mania for measurement can obscure what matters most.
• 2:03
  Consider the optimization of health and fitness apps that trend those technologies enable.
• 2:10
  To a point, the more data we collect on ourselves, the better able we may be to improve our lives.
• 2:16
  But metrics aren't the arbiters of well-being, nor is optimization life's end goal.
• 2:21
  I believe this trend isn't about optimizing life.
• 2:23
  It reflects a growing obsession that's consuming life's purpose and meaning.
• 2:29
  So that is Scott's opening claim in this article, newsletter, whatever you want to call it.
• 2:34
  Basically, his point is that measurement is not bad, but in fact, measurement can be incredibly useful.
• 2:39
  Businesses need scoreboard, people need feedback.
• 2:41
  And if you want to improve something, you usually need a way to measure it.
• 2:44
  But he warns that things we measure can slowly start replacing the things that we actually value.
• 2:49
  So do you need any additional context?
• 2:51
  Do you have like an initial reaction to that opening paragraph and kind of the brief I just gave you?
• 2:56
  Well, what's funny is like I have always thought of actually his way.
• 2:59
  Like I'm always talking, yeah, measurement, management, but I can only manage so many things.
• 3:03
  Therefore, I should only measure so many things.
• 3:05
  I've actually always thought of it that way.
• 3:06
  Okay.
• 3:07
  So what about from a personal optimization perspective?
• 3:10
  Because, yes, he is obviously in the business world, but the article focuses a little bit more on personal optimization.
• 3:16
  So like your sleep scores, like your VO2 max, like your whatever fitness scores, your –
• 3:20
  your whatever measurables we want to get after that we are over optimizing for these scores or for these this peak performance that we're actually losing sight of what actually is valuable so what is your thought on like this personal optimization it doesn't have to be fitness and health obviously that's really big right now but just general personal optimization like what is your reaction to that i don't know you assume that it makes you happy to not do those things for some people like hitting the number is like that's that's their thing
• 3:49
  I think it becomes a problem if it has actually caused anxiety or stress.
• 3:53
  But for some people, being able to track their sleep score is useful from a health perspective, and they get more joy from it.
• 4:01
  It increases the quality of their life.
• 4:03
  If that's what they're optimizing for.
• 4:05
  True.
• 4:06
  They're optimizing for...
• 4:08
  enjoying that tracking process is what you're saying true but what about the people that obsess over it like we're and that's i think where scott's getting at the heart of like there's this fine line between doing it for you're optimizing for the sake of optimizing in the sense of this is a positive this will have a positive impact on me there's that but then there's the line of like we obsess over everything we're optimizing for that we lose sight of what we're actually trying to do yeah but you've made artificial scoreboards effectively
• 4:36
  Yeah, but optimization and obsession, you can use the same exact thing for business.
• 4:41
  It's like, well, is it healthy to track how much money in your bank account?
• 4:44
  Yeah, probably.
• 4:45
  But like, do you work 19 hours a day?
• 4:48
  Well, probably shouldn't do that.
• 4:49
  But I did it.
• 4:50
  Yeah.
• 4:51
  And like, it served my goals.
• 4:52
  So it's like, I think it depends on what your goals are.
• 4:54
  Mm hmm.
• 4:55
  Yeah, so the article really is asking, these are some of the notes I made, is what happens when optimization stops serving your life and starts consuming it?
• 5:04
  More importantly, the made-up scoreboard starts consuming you.
• 5:08
  What does consuming mean?
• 5:10
  I don't know.
• 5:11
  I didn't define that term specifically, but I think that's essentially what Scott is asking.
• 5:17
  Consuming meaning you obsess over VO2 max, you obsess over your sleep score, whatever.
• 5:21
  So you probably saw that Stephen Bartlett clip go viral.
• 5:25
  Okay.
• 5:25
  He was talking about this exactly, and he was getting dragged all over the internet.
• 5:30
  Yeah.
• 5:30
  Especially about red-pilled far-right guys.
• 5:33
  But it's very funny.
• 5:35
  So he talks about how he hasn't been drinking for over a year.
• 5:37
  Okay.
• 5:38
  And then he had three glasses of wine at a party.
• 6:06
  And his words, I think this is the direct quote, it wrecked me for three days.
• 6:11
  My sleep score was off.
• 6:13
  My VO2 max was off.
• 6:15
  My this was off.
• 6:15
  I podcast worst.
• 6:17
  I interviewed worse.
• 6:18
  And I'm like, OK, that is all consuming.
• 6:21
  You're telling me that three glasses of wine put you out for three days?
• 6:25
  Like, you're just like, dude, step up.
• 6:27
  Like take some ibuprofen, drink, drink some water and like go live your life.
• 6:33
  Like, I think that's a perfect example.
• 6:35
  This leaves perspective.
• 6:36
  It could be wrong.
• 6:37
  You could hate me.
• 6:37
  That's fine.
• 6:38
  But like his reaction to that is like he his optimization consumed him.
• 6:42
  Like you couldn't just have three glasses of wine, wake up like, oh, I kind of have a headache and just go about his business.
• 6:47
  Yeah.
• 6:47
  It let it affect him for three days.
• 6:49
  You cannot tell me that that is like a normal reaction.
• 6:53
  You can't.
• 6:53
  Yeah.
• 6:54
  Well, or, or is it the fact that he has numbers now because he has, but why?
• 7:00
  Like that's where, that's my question.
• 7:01
  That's what Scott's asking this article.
• 7:03
  And I don't even know if I fully believe this, but I'm just for the sake of conversation.
• 7:06
  That's why we don't podcast is for the sake of conversation.
• 7:08
  Yeah.
• 7:09
  Is why though?
• 7:10
  Like it wrecked him for three days because he's been tracking these scores for a year, two years, three years.
• 7:16
  So he made up a scoreboard and now he's upset for three days in a row that the arbitrary scoreboard he came up with isn't what it wasn't what he wanted it to be.
• 7:25
  And now it's negatively impacting his life.
• 7:27
  Well, it could be negatively impacting his life because his goal is to make more money and to make better podcasts.
• 7:34
  Right.
• 7:34
  And if it does damage that, now he has a number to track that.
• 7:38
  Like, I think the same, you could just switch all these things out for business.
• 7:40
  Like, if you check your, check how much money is your bank account, is that a bad thing?
• 7:44
  Like, if you obsess over it, like, yeah, probably.
• 7:46
  Like, you'll probably make better progress from a financial perspective.
• 7:49
  If you work more hours, yeah, is it not healthy?
• 7:51
  Probably not.
• 7:51
  But, like, you're probably in the middle of bigger business.
• 7:54
  And so like I think if Stephen Bartlett's goals are to be the best podcast in the world, having three glasses of wine, if it really does affect his performance and now he has metrics to prove it because he actually cares about what those metrics are, that's his prerogative.
• 8:07
  Here's my thought.
• 8:08
  If he never tracked his sleep score and he references his sleep score.
• 8:12
  Okay.
• 8:12
  If he never tracked it, you could just like how red pill, blue pill.
• 8:17
  It's like, it's like all based upon like how many times you reference your score.
• 8:21
  I said, and quote to someone the other day, if I ever tell you about my sleep score, punch me in the face.
• 8:26
  Like, I'm just like, I'm sorry.
• 8:28
  I'm not doing that.
• 8:30
  First off, not going to track it for myself.
• 8:32
  Second off, definitely not going to tell anyone publicly.
• 8:34
  And here we go.
• 8:35
  What's your sleep score?
• 8:36
  I only track one number of my sleep is how many hours I was.
• 8:40
  Okay.
• 8:40
  Okay.
• 8:40
  Fair.
• 8:41
  So but what I'm saying is if he had never tracked his sleep score historically, he wouldn't know he was in the red.
• 8:47
  He wouldn't know he was negative.
• 8:48
  So this is the question then is did he feel bad because the numbers were down for three days or did he already feel bad regardless of now?
• 8:56
  He has a metric to quantify it.
• 8:59
  Or does he just not get consumed by this optimization culture and realize like I had three glasses of wine because I was at a party with friends and I woke up feeling a little worse the next day.
• 9:10
  And that's OK.
• 9:11
  I had a great time last night with my friends.
• 9:14
  We have to assume that part.
• 9:15
  Maybe maybe the juice wasn't worth the squeeze fair in that.
• 9:19
  But then that's then that's less about the red wine affecting him.
• 9:23
  That's just him making a bad decision.
• 9:25
  True.
• 9:25
  So maybe he just needs to quantify whether his decisions are good.
• 9:28
  Right.
• 9:29
  That's what I'm saying is like this.
• 9:31
  And I feel like that's a good example.
• 9:32
  I don't know.
• 9:33
  But that's really what Scott's saying.
• 9:34
  And like I said, I'm making claims here.
• 9:36
  I don't know if I believe all of them.
• 9:38
  But I think it's interesting to discuss because like from a business perspective and you yourself, like you're performance driven, you're a metrics oriented person.
• 9:44
  I would say I am generally in a business sense.
• 9:48
  And you've said before one of the things that I thought was interesting.
• 9:50
  Like while I was reading the article, I thought of like, I guess I'll.
• 9:53
  famous quote of yours, but you said like a runner that makes progress is always out of balance.
• 9:58
  Technically, you've used that analogy before.
• 9:59
  And I love it because yes, jumping from one foot to the other is a, is an act of imbalance.
• 10:04
  You are jumping from one foot to the other, but you will make progress.
• 10:07
  And so I think the question that I came up with while reading the article and thinking about recording with you is like, when the imbalance, what, uh, when is imbalance, the price of progress and when is imbalance self-indulgent misery?
• 10:20
  Hmm.
• 10:21
  Like, what are your thoughts on that?
• 10:23
  What is imbalance the price of progress?
• 10:26
  And when is imbalance self-indulgent misery?
• 10:29
  Only Stephen Bartlett, in this case, can quantify the joy he gets from having that time with his friends versus the downstream effects that it has on his optimized life.
• 10:42
  And he has different weights of what he puts value on.
• 10:47
  And only he can determine which one is greater to him.
• 10:49
  For some people, they care less if the next day they have a hangover and they're doing a podcast.
• 10:55
  Take care less.
• 10:56
  Last night was so great.
• 10:57
  Yeah.
• 10:59
  But...
• 10:59
  Only he, so when he goes back and judges himself, his decision is bad.
• 11:04
  He is saying, this is the joy that I got from that night.
• 11:07
  And this is the incremental loss of joy that I got for the next three days of having loss of productivity.
• 11:14
  For someone else that's not geared the way he is or has different goals than him.
• 11:18
  They would completely change those, those quant, the same, the same exact stimuli, different quantities of joy and joy reduction.
• 11:27
  We're done joy reduction now.
• 11:28
  Let's go.
• 11:30
  No, I get what you're saying.
• 11:31
  I think that's the interesting part is that is the imbalance, like is this imbalance we're talking about, like this lack of optimization or this imbalance towards optimization, however you want to define it.
• 11:44
  It's only worth it if you understand your own goals.
• 11:47
  True.
• 11:47
  100%.
• 11:48
  All right, so Lee is making a great point here, and that is about your goals and being able to have progress markers towards it.
• 11:56
  I think of it like a football field.
• 11:57
  You have your end zone, the goal, and then you have hash marks all along the way, your yard lines to get there.
• 12:03
  And in business, a lot of us know our end goal, like how much revenue we want to do, how many employees we want to have, how many trucks we want to employ, but we don't actually know the hash marks or the metrics or the numbers to get there.
• 12:14
  And so you don't actually know if you're making progress.
• 12:17
  That's like your close rate, your customer acquisition cost.
• 12:19
  How much invoices are overdue right now?
• 12:22
  Using HomeWorks, you can know your numbers and be able to track your progress towards your goal.
• 12:26
  Now, what I'm really excited about is we are adding MCP access to HomeWorks, which means it connects your AI agent and you can just ask it in common English language, like, hey, is my close rate going up right now?
• 12:38
  from a lead attribution perspective, which marketing channel is producing the best results in terms of churn.
• 12:43
  These are things that in the future, you'll be able to just ask your AI agent, it'll go into HomeWorks using the MCP access, and we'll just deliver those reports right back to you.
• 12:52
  Talk about knowing where you're at on the way to your goal.
• 12:54
  So go check it out, go check out HomeWorks, lots of really cool stuff around this whole aspect of KPIs, but just be able to ask it in common language using your MCP.
• 13:02
  All right, back to the pod.
• 13:04
  And that's where it's subjective to everybody.
• 13:06
  Yes.
• 13:06
  And that's why this conversation people get mad at things we're saying because they're like, well, my goals are different.
• 13:10
  I think about it differently.
• 13:11
  And that's fine.
• 13:12
  And not to defend Stephen Bartlett.
• 13:14
  It's just that his goals being the way they have is why he owns his net worth from a monetary perspective is more than 99.999% of the people that judged him on that post.
• 13:25
  110 percent that's why he is there yeah and the same but also like does that mean that his personal relationships are potentially less than everyone else watching yeah that's that's potentially true yeah he made that judgment call based upon his goals yeah and that's fair and that's that's not me like casting judgment on him specifically but i do think there is this this nebulous idea that like he said it wrecked me for three days where i'm like that's just not a human response like
• 13:55
  That you could have three glasses of wine.
• 13:57
  Let's just, like, I just don't think someone at his age, his physical abilities, like, he seems like a pretty fit guy, he takes his fitness seriously, that, like, three glasses of wine wrecked him for three days.
• 14:08
  I just don't believe that.
• 14:09
  Like, you can't convince me in an unmeasurable way that that actually wrecked him for three days.
• 14:16
  Mm-hmm.
• 14:16
  I think he made arbitrary scoreboards that now are telling him those are those are now inputs for him that he was wrecked for three days.
• 14:25
  Do you see what I'm saying?
• 14:26
  I see what you're saying.
• 14:27
  It's like, OK, here, I'll use a real world example.
• 14:29
  Once again, not me casting judgment on Stephen Bartlett.
• 14:31
  But here's a real world example.
• 14:32
  Two weeks ago, we had a leadership meeting.
• 14:35
  Liz looked at me and she was like, Lee, you look tired.
• 14:37
  And do you remember my reaction?
• 14:39
  Yeah.
• 14:40
  When?
• 14:40
  Two weeks ago?
• 14:41
  Two weeks ago we had a meeting.
• 14:42
  You and Liz came and sat.
• 14:44
  Oh, in the corner.
• 14:45
  And we were talking about your plans, which I don't know if we can talk about that yet.
• 14:47
  Okay, perfect.
• 14:49
  There's a little teaser.
• 14:51
  And she was like, Lee, you look really tired.
• 14:53
  And I got a little upset.
• 14:57
  In a joking way, like, oh, thanks, Liz.
• 14:59
  I really appreciate you telling me I look tired.
• 15:02
  But I thought about it after the fact, which I was like, why did I get like mad at her?
• 15:07
  I love it.
• 15:08
  I don't think about this stuff at all, dude.
• 15:10
  Totally fine.
• 15:12
  And I was like, why did I get mad at her?
• 15:13
  Like I was like, I kind of snapped at her.
• 15:14
  But in a joke, you like Liz and I have the rapport.
• 15:16
  It wasn't a big deal.
• 15:17
  And I was like, you know what it was?
• 15:18
  It's like I took an affront to that because like I when I'm here at work, I don't care what happened to me outside of these walls.
• 15:25
  I'm here to perform like I'm here to do a job.
• 15:27
  And so it upset me.
• 15:27
  That's like, oh, you look tired.
• 15:29
  Do you need to like take a break?
• 15:31
  Are you OK?
• 15:31
  Like, can we get you?
• 15:32
  It's like, dude, I'm here to work.
• 15:34
  And so for me, I know if I was tracking my sleep score, it would have been horrible the night before when she said I look tired.
• 15:40
  Why?
• 15:41
  Because my son slept horribly the night before.
• 15:43
  And as a parent, you got to get up.
• 15:45
  You got to do the whole song and dance, try to help him sleep.
• 15:47
  It's great.
• 15:48
  And I love my son.
• 15:48
  It's like I'm optimizing to help my son sleep.
• 15:51
  Right.
• 15:52
  But I also am not going to be upset when I'm tired the next day.
• 15:55
  I'd be like, oh, my son's sleep wrecked me.
• 15:59
  Oh, my sleep score was a 30.
• 16:01
  I don't even know.
• 16:01
  I don't even know.
• 16:02
  Is that is that is it an actual number?
• 16:04
  I don't know.
• 16:04
  Because I never tracked it.
• 16:06
  But you see what I'm saying?
• 16:06
  Like, I think when you when you over optimize, I think that's the core of what Scott's getting at.
• 16:11
  I was like, you over optimize, you create all these metrics.
• 16:13
  As soon as one or two are off, now you have a negative influence on your life.
• 16:17
  You have a negative input coming back to you.
• 16:19
  And now that messes with your psyche to then go out and just perform and just go out and get the job done.
• 16:25
  Do you see what I'm saying?
• 16:26
  Yeah.
• 16:26
  Like for me, when it comes to the metrics around health, I like to look at over the course of a month, like a week.
• 16:31
  But specifically the last three weeks, I do not look at myself because I don't want to have the negative association.
• 16:38
  I never want it to be a crutch.
• 16:40
  Like, oh, I only slept three hours last night.
• 16:41
  Therefore, I will perform badly today.
• 16:44
  I think it's just, yeah, it can be a reinforcing loop of negativity around like what I'm actually trying to optimize for, which is like living life and being super productive.
• 16:53
  Yeah.
• 16:54
  me knowing that's up three hours last night and I be careful today.
• 16:57
  You're going to be tired.
• 16:58
  I'm like, I don't think I need to see that.
• 16:59
  So I just won't even look at it, but I do like to see over the course of time.
• 17:04
  It is, it is, it is another just like thing to measure to be able to, to try to optimize for health.
• 17:11
  But to your point, I agree.
• 17:12
  I agree.
• 17:12
  We're coming.
• 17:13
  We get where you're coming from.
• 17:15
  And yeah, I just don't think about that much.
• 17:17
  Yeah.
• 17:18
  If I usually only look at my sleep score or like it's a score.
• 17:21
  It's just how many hours I slept when I know I slept good.
• 17:24
  It's like a positive reinforcement, you know?
• 17:26
  Yeah, that's fair.
• 17:26
  It's going to be a great day.
• 17:27
  Yeah.
• 17:29
  And I get that.
• 17:30
  And like I think there are elements of like the arbitrary that can be positive.
• 17:34
  Like even like think about like, you know, an affirmation, right?
• 17:38
  Some people might say like an affirmation in the mirror.
• 17:40
  They have like motivational sticky notes or, you know, like like I have one next to my desk, like work hard, be good to people.
• 17:45
  That's kind of like a personal mantra for me.
• 17:47
  That's a positive outside influence on me, but it's not, it is not a made up score.
• 17:53
  Like that's just more of a theory.
• 17:54
  That's an idea.
• 17:55
  It's not, oh, well, Lee was only 70% good to people today.
• 17:59
  Oh, and Lee only worked 80% hard today.
• 18:02
  Like now I have this arbitrary thing telling me whether I was good or bad.
• 18:06
  Yeah, but that's what salaries are in dollars per hour.
• 18:10
  Fair.
• 18:10
  And how much money you have in the bank.
• 18:13
  Yes.
• 18:14
  So unpack that.
• 18:15
  Like you're optimizing for...
• 18:18
  Make you more money.
• 18:19
  Well, the reason that you show up every single day and perform the way you do is because you have been rewarded for that in the past.
• 18:24
  Correct.
• 18:26
  So, well, I'm optimizing to make money.
• 18:28
  Right.
• 18:28
  And so for someone else that's optimizing for their health, they've been rewarded for in the past when they have a good sleep score.
• 18:33
  They feel better.
• 18:34
  They get closer to their goals.
• 18:37
  Right.
• 18:37
  I just think it's like, I think there are these, these elements of something like a sleep score.
• 18:42
  And I know we're resuming in on that.
• 18:43
  So I don't want to like, that's not what the article was specifically about.
• 18:47
  But I feel like I know over optimization.
• 18:49
  It's yeah, you're over optimizing for like a number about how you slept the night before.
• 18:53
  Yeah.
• 18:53
  And so that's the part that like Scott's really drilling it on.
• 18:56
  So like, I'll go back to the article here.
• 18:57
  I'll pull a quote.
• 18:58
  metrics aren't the arbiters of living well, nor is optimization life's end goal.
• 19:04
  That's one of the quotes that Scott has.
• 19:05
  Metrics aren't the arbiters of living well, nor is optimization life's end goal.
• 19:08
  And that really resonated with me because I do think that too many people are focused on certain metrics, the number in the bank account, the car I drive, the make and model of the year, because that's a metric like, oh, I have a 2025.
• 19:21
  Right.
• 19:21
  Like that is a metric we use societally that that's a new car.
• 19:24
  I guess 2026 is now.
• 19:26
  And so the question that I thought of was, do you believe there is a difference between living a like productive metric focused life or living just a good life?
• 19:38
  Do you have to have metrics to define what a good life is?
• 19:41
  Or can you have a good life that is not defined by any metrics whatsoever?
• 19:44
  Whether or not you have metrics, you are optimizing for something.
• 19:47
  Yes.
• 19:47
  And you might not be optimizing for something that is easily quantifiable, like money or sleep score or whatever.
• 19:53
  Yeah.
• 19:53
  but you might be optimizing for is time with family or good relationships.
• 19:58
  And so I would say you are always optimizing for something because there's always a give and take.
• 20:03
  It's just a matter of whether or not that thing that you are doing has become a game that everyone's easily quantifiable around dollars and cents, hours in a bed, calories tracked, proteins, fats, and carbs.
• 20:14
  Those are things that are easily tracked.
• 20:15
  It is much harder to quantify metrics around quality time.
• 20:23
  quality time i think we need to step it up like that doesn't happen and so i think somewhat of how he's defining is like going for things that cannot be optimized or sorry should cannot be cannot be quantified that's actually i think what he's actually digging at because everything in life can be quantified besides the things that to some people matter more and those things that he's putting weight on which i think is true it has the validity to it but you could also make up a game for those things
• 20:51
  How many hours did you spend with your son?
• 20:54
  Does that make you a better father?
• 20:56
  Your father scores 40.
• 20:57
  Like, that's just a harder game to play.
• 20:59
  It's harder to measure than your heart rate.
• 21:02
  And how many calories you had yesterday.
• 21:03
  But you could also make that a game.
• 21:06
  And I think there are niche audiences that are really into certain things that do make it into a game.
• 21:10
  Like, how many days have I showed up on a certain platform?
• 21:13
  How many miles have I run?
• 21:14
  They make everything becomes a metric because they're optimizing for something else.
• 21:17
  And I think what he is trying to say is like not everything needs a metric in order to be optimized.
• 21:22
  You can optimize your relationship without having a score to it, without having a scoreboard.
• 21:26
  Yeah.
• 21:26
  And this was another quote that I was going to bring up to a perfect kind of segue into that is he said, often the qualification of modern life makes us play the games we can easily measure rather than the games we deeply value.
• 21:40
  Yeah.
• 21:41
  And that's effectively what you're getting out.
• 21:43
  And I thought, what are the games in business?
• 21:46
  Let's zoom out from the personal side, the sleep scores, whatever.
• 21:49
  What are the games in business that are easy to measure but maybe not the most important?
• 21:53
  Like from your perspective, when you look at business optimization, kind of switching gears a little bit, do you think there are specific metrics that are easy to measure but aren't as nearly as important?
• 22:02
  Yeah, number of employees, number of trucks.
• 22:05
  Yeah.
• 22:05
  And you feel like there is a kind of antithesis to that that you could optimize for outside of number of employees, number of trucks, top line revenue.
• 22:15
  Things that are hard to quantify.
• 22:17
  Yes.
• 22:17
  Like, for example, for example, like this is one that I came up with revenue versus trust.
• 22:23
  Yeah, as a culture.
• 22:24
  Oh, culture.
• 22:24
  OK, great.
• 22:25
  Yeah.
• 22:25
  And so I think that that is much harder to quantify because if we are in this over optimization culture, there is no trust score, right?
• 22:33
  Like you've done business now with hundreds of people and you've seen people's books, you've seen their P&Ls, you've seen their bank statements and you've seen how they interact with their employees.
• 22:42
  You probably have an inherent gauge of how much you would trust that person based on those interactions.
• 22:47
  But there isn't a public facing.
• 22:49
  This person is a six out of 10 trustworthy.
• 22:52
  Right.
• 22:52
  Do you see what I'm saying?
• 22:53
  And so what do you value like from your perspective as a business leader, like in your organization?
• 22:59
  Are you valuing like the person who is a peak optimizer more than the person who is like the most trustworthy?
• 23:08
  I'm giving you a binary.
• 23:08
  I know that's not fair, but like, would you, if you had to pick, do you pick the person that's better optimizing, better at performing, or do you pick the person that is the average performance, but you trust way more?
• 23:18
  I don't know, I think they're very commingled.
• 23:20
  Because if someone performs very well, it inherently increases my trust that they'll actually deliver on what they said they're going to do.
• 23:26
  You can have all the trust in someone on the world.
• 23:27
  Like, for example, if I was like, hey, Lee, I trust you a lot, but you can't fly a helicopter.
• 23:33
  Does that mean that, like, somehow you're not fit to drive a helicopter?
• 23:36
  Yeah, you're not fit.
• 23:37
  You do not have the skills.
• 23:39
  And so I think those are two very commingled things.
• 23:42
  I think there are, like, quantifiable things, and then there are things that are very difficult to quantify.
• 23:48
  Um, also known as qualitative things.
• 23:50
  And so things like trust, yeah, I can't score that.
• 23:53
  Um, but I also need to have relative skills that I can measure.
• 23:57
  Like what was your revenue last month?
• 23:59
  How many calls did you have?
• 24:00
  Like a lot of the things we talk about is numbers based, but they're all, yes, the, the qualitative things of trust, culture, care, empathy.
• 24:10
  Those are the things that are harder to measure.
• 24:13
  And I think you need to have both.
• 24:15
  I think over optimizing for one or the other leads to downfall.
• 24:19
  If I only optimize for people I trust, well, then we have a bunch of unskilled people.
• 24:23
  If I only optimize for performance, then we have people who don't care about each other and don't work well with each other.
• 24:27
  So I think there has to be a balance.
• 24:30
  What about this is like literally the deepest, I think, every week is the 30 minutes we talk about this stuff.
• 24:37
  Oh, I appreciate you indulging me.
• 24:39
  I'm optimizing for getting that side out of you.
• 24:43
  Oh, man.
• 24:43
  What about like a different example would be like speed to make a decision.
• 24:48
  So like there are businesses that optimize for speed, speed of execution.
• 24:54
  And you have in the past said that like you've made decisions very quickly and sometimes you have admitted to making decisions too fast.
• 25:00
  So you have businesses that optimize for like speed of decision making and execution.
• 25:04
  But then you have businesses that optimize for making sure every single decision is as close to 100 percent accurate as possible.
• 25:12
  Like where do you see that?
• 25:14
  As a business owner, do you think that people tend to move one direction too much, or do you feel that they should be optimizing for one direction more so than the other?
• 25:24
  It depends on their goals.
• 25:25
  Yeah.
• 25:25
  Whoever has equity in that business gets to determine, do we...
• 25:30
  Do we put on a pedestal being correct or do we put on a pedestal making progress?
• 25:34
  And that's going to likely push them in the direction of either speed or perfection and getting everything right.
• 25:40
  And I think the bigger business gets, usually it tends to shift more away from speed because it has more collateral damage when there's so many people involved.
• 25:49
  It's harder to turn the Titanic than it is a rowboat.
• 25:51
  But you still want to be on the Titanic in the middle of an ocean, not a rowboat.
• 25:56
  As long as there's no iceberg around, you want to be in the Titanic.
• 26:02
  And so I think, yeah, it comes down to the owner.
• 26:05
  The owner has to make that decision.
• 26:06
  And there's going to be no matter where you're at in that spectrum, you're going to be called either slow by some or you're going to be you're going to be called overly cautious, optimistic and slow.
• 26:15
  you will never be able, like only the person that owns equity can determine where on that gauge we're at.
• 26:21
  And for some decisions, you optimize way for one and on other things, you optimize way for the other.
• 26:26
  So like Jeff Bezos says, like if it's a one-way door, you would be way cautious.
• 26:51
  If you can't come back, you can't reverse the decision, then you slow down.
• 26:55
  And whereas if it's like, hey, we can take this back, we can always roll this feature back, we can change this, we can cut this department out, it's not going to make a big deal, then go, go as fast as possible.
• 27:03
  So I think it changes all the time.
• 27:05
  What about optimization when it comes to employees?
• 27:10
  So thinking about it from the perspective of, you know, and Scott very kind of briefly touches on this.
• 27:15
  He doesn't directly go this route.
• 27:17
  And I don't even think he has a specific claim.
• 27:19
  But he touches on, you know, business decisions are made based on measurables.
• 27:23
  And then there's almost like this loss of humanity that, oh, it's a business decision.
• 27:28
  Right.
• 27:28
  Like you said, like we can make a decision.
• 27:30
  We can roll it.
• 27:30
  We can roll it back.
• 27:31
  We can cut that department.
• 27:32
  We can move things around.
• 27:33
  We could cut that team member.
• 27:35
  We could cut out that division, whatever it is.
• 27:38
  And that happens all the time.
• 27:39
  Like, we can make a decision.
• 27:40
  Do you feel that there is a balance that you have found in your businesses to, yes, make educated decisions based on the measurables, right?
• 27:48
  Optimizing for these measurables for the performance of the business, but also still keeping the humanity of like, these are real people involved in these decisions.
• 27:55
  Like, this will impact real people.
• 27:56
  Like, where is that balance for you?
• 27:57
  Firing and letting people go is a very different, like, again, it's a completely different topic.
• 28:01
  But...
• 28:05
  how it affects the business, I have to ask myself, are the metrics in this case outweighing the potential downside effects that I might lose in culture?
• 28:14
  If I was put in the place and I've had to do it once, where it's like an unexpected layoff and...
• 28:20
  If I'm in the position where I need to make a business decision, to use that term, let's just say dollars and cents versus I know that this is going to hurt the culture of the business, I better have a really good reason.
• 28:31
  And I believe that people trust me less if that becomes a constant in my decision making, which is I just constantly just fall to the business side because then what you're saying is like, I don't care about the culture.
• 28:42
  And so I would just be very weighted with that decision.
• 28:45
  It would be something that would take very slowly if I was ever choosing dollars and cents over if I knew that the culture was negative.
• 28:52
  I will also say when you fire people most of the time, it's you reduce payroll and you also increase the culture of the business.
• 28:57
  Mm-hmm.
• 28:57
  when you make a good firing.
• 28:59
  So it's very, very rare in that case where you are making a business decision and you're cutting people and it's gonna negatively impact the business.
• 29:07
  Like I would make that, it's negatively impacting the culture, the trust built up.
• 29:12
  I would take that with a lot of calculation.
• 29:14
  I would rather eat payroll.
• 29:15
  Like I'm doing this right now in another department.
• 29:17
  I'm eating payroll.
• 29:18
  I know that I don't need, but I would rather keep the engagement of the team high and long-term grow into that capacity that's in that department.
• 29:27
  Yeah, I think it's an interesting decision to make because I made a decision and you probably won't remember it.
• 29:32
  It was months back, but I made a decision that effectively impacted a team member's compensation.
• 29:38
  But I was like, here's the data behind why.
• 29:41
  And to your point, I guess, yeah, I did have to have that internal dialogue of how negatively will this impact culture, how negatively will impact the affected employee if certain wages, commissions, whatever were changed.
• 29:53
  But the numbers support like this is this change should be made.
• 29:57
  And I know we don't like using shoulds.
• 29:59
  This change needs to be made if the business needs to is going to continue allocating resources appropriately with the resources we have available.
• 30:07
  Because we have a finite amount of resources in terms of salespeople and teams and whatever we might be doing.
• 30:12
  And so to your point, I guess I never thought that that internal dialogue before I brought you the numbers, before I told you I think this is the direction we should go in.
• 30:19
  I had that dialogue of how will this impact the culture?
• 30:21
  How will it impact the people involved in this decision?
• 30:24
  Even though I know objectively it's the right business decision.
• 30:28
  Objectively.
• 30:29
  Subjectively, I have to take into account like optimizing for team culture.
• 30:33
  Does that make sense?
• 30:33
  Yeah.
• 30:34
  So I think, do you feel like there's anything that business owners can use?
• 30:39
  Are there any tools or questions they can ask themselves when they find themselves at a crossroad like that?
• 30:44
  I think realizing that anything you do to your team, regardless of the percentage of the team, is going to affect 100% of your team.
• 30:51
  Meaning, this is why I disagree with a lot of the way the layoffs are being done right now with technology, is they're laying off 5% of their team, but what they're doing, they're doing it to cut costs by 5% for payroll, right?
• 31:02
  What they're failing to realize is that the other 95% that stay, they just got a 30% haircut on their productivity and buying at the company.
• 31:12
  And so I actually feel like it's a net loss in the long run.
• 31:14
  In the short term, stock market loves it.
• 31:16
  The stock, but you will start losing your best people three, four years from now.
• 31:20
  You will have less discretion or effort towards your business because now they've seen how you treat people.
• 31:24
  So when they show up to work one day and 5%, all their colleagues are gone, indiscriminately, completely arbitrary, just numbers.
• 31:30
  Dude, you guys are, it's a business decision.
• 31:33
  What does that do to the rest of the team?
• 31:35
  And so that's how I always look at whether it be one team member or a department.
• 31:39
  Everyone else's culture gets affected because they see how things are being treated.
• 31:42
  And the biggest unlock to any labor is discretionary effort.
• 31:47
  Do they think about in the shower?
• 31:48
  Do they think about while they're driving to work when they're not clocked in, when they're at dinner, do they have an idea and they write it down their phone?
• 31:52
  If I can't unlock that, I got to go buy twice as much labor to be able to get the job done.
• 31:59
  And so I think the biggest hack in labor or any sort of required work to be done, whether it be discretionary effort out in the field, like I can run to the truck or I can drive to a gas station that's three miles away versus one mile away.
• 32:15
  These are all the little discretionary effort cuts that come in the culture.
• 32:18
  And a lot of times it's when they look at the leader, there's evidence that they don't care about the people.
• 32:23
  And I think a lot of times we make sense of it because we do have a 5% reduction in payroll.
• 32:26
  We do cut a cost, but we forget about the other 95% of people that see that and they stop giving discretionary effort.
• 32:33
  And so I have always thought about that as like, okay, I'm making this cut.
• 32:36
  Great.
• 32:36
  What's that doing to everyone else that stays?
• 32:38
  Because if it's not positive, which usually when you're cutting someone is positive to the culture, it actually increases.
• 32:43
  I'm reducing payroll, but then you also have the 95% that all of a sudden outperform at 105%.
• 32:48
  Like that's usually what happens when you cut bad culture from the business.
• 32:51
  But if you don't, like if you're cutting good people that are performing well, but you do it based on business, like we're just cutting indiscriminately.
• 32:58
  I think that's such a damage to the long term of the business.
• 33:02
  And when someone starts doing that, a business starts doing that, I think it's like the first step of decline over the course of decades.
• 33:07
  It can take a long time to show up, but the discretionary effort is lost within the team.
• 33:11
  What do business owners optimize for that you respect?
• 33:15
  That garners your respect.
• 33:16
  Like this business owner is optimizing for X. I respect that.
• 33:19
  I don't know.
• 33:20
  Everyone's playing their own game.
• 33:21
  Long term.
• 33:22
  Long term.
• 33:23
  Just like focus on long term goals.
• 33:25
  Yeah, because if you actually are optimizing for the long term, it'll change the way you operate a team.
• 33:31
  It'll change the way you allocate capital.
• 33:33
  It'll change the way you communicate with customers.
• 33:36
  Every behavior will change if you're just like, is this a five year decision or is this a 50 year decision?
• 33:40
  And that's why people hate private equity, because usually when they step in, they're looking at a five-year term.
• 33:44
  And so I think I respect anyone that's like, in 50 years, this is important.
• 33:48
  Even something that happened last week with the leadership team, remember I said?
• 33:52
  It's like in 100 years, no one will care for this business as much as us.
• 33:56
  So we need to put things in place that will prevent them from undoing what we're doing right now.
• 34:00
  And I think that is the type of behavior that I have admired in other people.
• 34:05
  All right.
• 34:05
  Any non-financial advice?
• 34:06
  Yeah, dude, I do.
• 34:07
  I do.
• 34:07
  I do.
• 34:07
  Oh, let's go.
• 34:08
  All right.
• 34:08
  So Jocko just came out with the brand new.
• 34:11
  These are not new flavors.
• 34:13
  Okay.
• 34:13
  But they changed the way that they do their carbonation.
• 34:15
  It's now reverse osmosis.
• 34:17
  Okay.
• 34:17
  And they changed their sweetener profile a little bit.
• 34:19
  It's a little monk fruit, but it is significantly better.
• 34:22
  Not only is it the packaging, by the way, here.
• 34:25
  So editors before packaging, after packaging.
• 34:28
  See that?
• 34:29
  Much better.
• 34:29
  So anyways, I highly recommend.
• 34:31
  Go check it out.
• 34:32
  Perfect.
• 34:32
  Can I steal one from your fridge?
• 34:34
  Dude, this one's already earmarked for Nick.
• 34:37
  I got one more.
• 34:38
  Oh, that's fine.
• 34:38
  I'll take it.
• 34:39
  I'll go in on Monday.
• 34:40
  That's fine.
• 34:40
  I promise.
• 34:41
  Okay.
• 34:41
  My not financial advice directly from Scott's article is just enjoy every sandwich.
• 34:46
  every sandwich yeah i haven't had a sandwich in so long you have to yeah you have to read the article you have to read the article oh really just enjoy every sandwich okay but it's yours i'm guessing this is not food no it is oh it is but it's basically like don't worry about everything like just enjoy the small things stop optimizing for everything enjoy every jocko and jaco just not yours i'll get you on monday i'm fine nick's meeting before he was like hey can i have that i'm like yeah i gotta do it for non-management advice and then i'll give it to you all right i'll take it down to him like and subscribe