How do you build trust through transparency in your organization. How much is too much and what happens if you go too far or don't give it the respect it deserves.
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Gene: I feel like our intro needs to be an extra five minutes just to prepare myself for what I'm about to go through.
Carl: I didn't even realize that was going to happen. The worst thing about that was not the insult to you. Yes, that's whatever.
Gene: It's the best [crosstalk 00:01:19].
Carl: Dwayne Johnson sang that song better than me. Good Lord. That was horrible. Yeah, whatever. How you doing? Gene, you are logoed up today, man. You got the Warrior Mindset logo. You got the T-shirt logo. You got your coffee cup logo.
Gene: You like that.
Carl: What's going on over there?
Gene: Like that.
Carl: Is that the Warrior Mindset secondary logo?
Gene: No. That's not mine. That's David Goggins. You know who that is?
Carl: No.
Gene: We'll have to do a whole podcast on that animal. He's crazy.
Carl: Do you know why I said no, because I was being honest with you, Gene, and honesty is part of transparency-
Gene: It's the first step in transparency-
Carl: ... and that's what today's episode.
Gene: ... it's honesty.
Carl: That's right.
Gene: No, it's transparency.
Carl: Transparency leads to trust.
Gene: Yes.
Carl: I know that.
Gene: Fear leads to hate. Hate leads to anger. Anger leads to the Sith. I don't know. I messed that up. You just said that.
Carl: That leads to putting some sort of a battle axe on your coffee cup.
Gene: I just know I hate sand. It gets everywhere.
Carl: Good to know. Now I know what you've been doing.
Gene: I'm going deep on the prequel references.
Carl: I like it. I like it. Never been a Star Wars guy, really. I watch them. I like them.
Gene: You're not missing much with those prequels. So transparency, what you got, man? What makes you want to talk about transparency?
Carl: This is something that comes up all the time, and I think it started because we're looking at all these struggles that people are having with hiring, and they are sometimes out there presenting themselves in a certain way. They're trying to present themselves so that they are the place you have to say yes to, but then it's not necessarily real, even though it may feel real in the moment. It's not necessarily honest.
Carl: The best example I think I have of this is a while ago, when nGen went distributed, I was traveling around to different places working from different shops. I just thought this will be fun. I'll take a year, and I'll go four or five different places where there these great companies, and I'll work there and just see what that's like. The same thing happened in almost every one.
Carl: You walk in. They're giving you a tour. They open the door. Turn on the light and that's where the ping pong table or the video games or whatever is. Then they turn off the light and shut the door. Then they go on. But you go to the website, and they're sitting there playing games. But you go to the place and it's like-
Gene: There's dust on that ping pong table.
Carl: ... there's an understanding. Now, I will say there were a couple of places that weren't like that. I'll say MailChimp. When I went to MailChimp, they were playing ping pong and also residual income. Definitely. Kids, if you're making millions every month, you can play a little ping pong.
Gene: Dude literally had a suit of Iron Man armor in his office. I think he's got it figured out.
Carl: Dan definitely did. He had a home run with that. For me, it's like, when you start to think about it, transparency is the cornerstone of not only being able to create a great culture, but being able to go home and being able to sleep at night because you didn't leave some unsaid things or end up, I don't want to say lying because that's not what it is at all, you're just not disclosing.
Gene: Right. That's a form of lying, though.
Carl: Bunch of liars is what I'm saying.
Gene: But you can use that. You can use that tactically. I've been in business with people who have used not disclosing things tactically, I'll say it, to manipulate you.
Carl: I want to give people credit that I don't think they necessarily know they're doing it all the time.
Gene: It's sort of like gaslighting.
Carl: A little bit.
Gene: Not that it is gaslighting. I'm saying it's sort of the same effect where someone can do that on purpose because they have an agenda, or they do it because they're just like, whatever it is, they just don't feel comfortable being transparent with where the company is financially with their employees because they're scared their employees will leave or ask for more money or whatever it is.
Carl: Let's say that right now. There's such a hiring focus right now. There's also a retention focus because at the same time that people are needed for the team, other people are being recruited away and people are calling it poaching. I don't even think it's poaching at this point. It's like, if somebody is talking to your employee, I get it. They're gainfully employed and somebody is coming in and talking to them, but this is a change. This is like a complete sea level change of everything that's going on.
Carl: What I wanted to start with is transparency in the hiring process, I think is super important. I think it also gets to acknowledging something, and we got some mail, Gene. We actually got some mail. I didn't tell you about this, but people were really into this idea that employees shouldn't stay forever. That's not a core thing, and it's not realistic. That you should anticipate that people are going to leave.
Gene: Right, and we've talked about that before.
Carl: Yeah, and so that was a big part of this. When I was hiring at nGen, I would tell people when they came in, "Look, you're not going to be here forever. You've got different goals than the company has, but we have this point in the future where we can see it intersect, so let's go to that point in the future together. Let's be open about everything and every opportunity, and when something better comes along, that's my job to make sure you leave for a better reason." This leads to starting a relationship based on trust and honesty and saying what your expectations are and then for that employee, they also know that they can then bring these opportunities to you.
Carl: You're right. We have talked about this before, but I think it goes so much deeper. That's what I really want to focus on. For example, transparency without context is dangerous because people will fill in based on their own experience... I know Lullabot I think was one of the best shops to do this with what they called the Weather Report, where they would share with their employees. I think it was once a month, this kind of outlook. "Hey, here's where we are financially. Here's what's in the bank. Here's what's coming in. Looks like sunny skies ahead. Hey, we got some tornado warnings coming through here," and they would make fun of it a little bit, but they would always make sure that they were sharing it in a way that was easy to understand.
Gene: Right, because sometimes people don't want that. There's a type of person that's like, "Look, I work for you, so I don't have to worry about where the next paycheck is coming from. I'm doing what I'm doing. You do what you do, and you keep the money coming, and I'll keep the projects flowing."
Carl: No, that's so right.
Gene: A lot of people like that.
Carl: I remember one designer that we had that she told me, "Look, when the adults are done talking, will you just tell me what the F to draw?" It's like, "I came here to design stuff. I didn't come here to expand my mind."
Gene: I didn't come here to run your company.
Carl: No. Exactly.
Gene: [crosstalk 00:09:06] feel like I'm participating in it.
Carl: Bam. I did not come here to run your company, and that is the thing. It's like, people don't want to run your company, but they want to know that you are. Right. Come on.
Gene: That's probably the best litmus for the way you should give information out.
Carl: That's our first [inaudible 00:09:27] take of the year.
Gene: Convey confidence. Step one. Convey competence. Step two. Don't fuck it up.
Carl: Exactly. Think about it. People are not going to dig into the financials. They don't want that. If you tell somebody we've got $300,000 worth of money in the bank and worth of money means we got $300,000 in the bank. I don't know what's going on with my little soliloquies here, but if you've got $300,000 in the bank, and you tell the team, "We've got $300,000 in the bank." They're like, "We're hitting Vegas, baby." But if you tell them, "Hey, we've got two months worth of revenue, of expenses in the bank." If you say, "We've got three payrolls in the bank," and then you bring in the new opportunities, and you say, "Hey-"
Gene: This gets us even more ahead.
Carl: "... I know everybody hates these financial services projects, but it'll give us two more months that we're clear, or we can take that really cool project you want, and it's going to give us a half a month, or we can take both." But then people are making decisions based on understanding, and they're not saying their thing, "We said we don't like those. Why does he keep bringing them in?"
Gene: Yeah. At least they know why you're making the decisions you're making. They know your reasoning, and you don't have to defend yourself whenever they're like well, like you say, "I don't want to do that shit anymore." Well, it's kind of paying your mortgage, so we should probably do more of these.
Carl: Yeah. Right. That's the thing. If you make everybody a part of the process, that's transparency too. If somebody makes a decision that they want to work on something, or they say they will work on something, then they've made a commitment versus if you say this is what you're going to work on next, they've taken an order. I get it. It's like we work in a really liberal industry. We work in an industry where people want a lot of control, and you talk to people in the professional services who work with web shops, and they'll be like, "What are you all doing?"
Gene: You bunch of crazy people.
Carl: "Do you know that you give them money to do what you tell them to do, right?" I'm like, "Yeah, it doesn't work that way." It's their expectations of flexibility, and actually I like it because it means, if you do it correctly, that you get your life back or at least part of it and I think that's just critical.
Gene: Anytime I've ever had, for me, a significant head count of employees, three plus, I've always felt like the inmate's running the asylum. I've always felt that battle, that pull, and always the pendulum of how transparent to be versus how to set my expectations on what I put out. I think one of the pitfalls you can fall into is that you're being transparent. You're like, "I'm a good owner operator here, being transparent and letting them know everything. Why aren't they bought in?"
Carl: Maybe they are, and they're just quiet.
Gene: Right. Maybe they're like, "Shut up. We're doing it." If you want me to wear 12 pieces of flair, just make it to 12 pieces of flair. You want me to wear 13 pieces of flair, just tell me it's 13 pieces of flair.
Carl: If you want to be Jennifer Aniston, just let me know.
Gene: You caught my reference.
Carl: I'll call you Jen. What you're saying right there, I think, is one of the most important things because, and we'll get to my hot take later. I know we got some hot takes today. I'm just going to tease it a little bit. I'm going to tease my hot take in that people want somebody to be in charge, and they want them to be successful. There's this line between transparency and oversharing. I am a chronic oversharer. Somebody will say, "How are you doing?" I'm like, "I don't know." They're like, "No, no, no, no, no, no, no."
Gene: That was rhetorical, bro.
Carl: "Don't answer this question." Somebody will say, "Hey, I really appreciate that you did that for me." I'll go, "You know." As soon as I say you know, run for the hills, because I'm just going to start sharing stuff that you don't care about but for me, it feels really important, and I'm working on it. I'm getting help. When you look at transparency versus oversharing, I think you get to this point where people don't need to know how the clock works. They want to know what time it is. If you can tell them that we're okay, and you can share with them what's going on, that's great. The classic overshare, I think when it comes to companies for a lot of people, is salary transparency.
Gene: Oh, yeah. That's scary.
Carl: I think it's important.
Gene: Oh, you think it's important.
Carl: I think it's important, but I think again, it's within context, like salary bands. Showing people okay, this person's here.
Gene: Sure, this is where they are.
Carl: Yeah, because then you at least have an understanding. We experimented with it. We had this idea that a group would get a raise at the same time. That doesn't work. That doesn't work because some people are really pushing hard, and other people are sitting in the back of the cart. It's not fair at that point, but we did get to a place where we were able to share where people were and say, "The reason that she makes more than you is because she's really good with clients too. If you want to get to where she is, these are the things you can add."
Carl: The challenge was, we were a flat organization and so there really weren't a lot of levers that you could do in terms of climbing up, but the thing that I think was most important that I learned was when we would do employee surveys... When we got up closer to 40 people, we'd do employee surveys, and they would say, "I love it here. I love being a part of this company. This is some of the most challenging work I've ever done. What are we doing?" That last one was just like we didn't have any vision. We didn't have any mission. We weren't going anywhere. At least I never told them and that gets to be transparency too, because there's this line between, I just want to draw stuff and I want to live here.
Carl: I think to be successful, especially today, you have to accommodate both and allow people to opt in to whatever level of information they want or just let them know that you're running the company and if they have questions they can ask.
Gene: That's probably the best outlook, the best advice that I've heard about that. There was a company and I can't remember the name of it or how to research it because I don't know where to start, but I do remember reading an article about a company that experimented with everyone making the same amount. You remember that?
Carl: Yeah. I know it wasn't Zappos, but it was around that same time period.
Gene: Something like that. Everybody made like a hundred grand or something. Apparently the company's still around, kicking ass. Even the CEO made that much or something.
Carl: No. Here's the thing. If you say salary, then that doesn't include owner draws.
Gene: Well, no.
Carl: I'm just going to say, because as somebody who had a company where we thought if we all made a hundred thousand because we thought that too, but you know what, it gets to the same point. Everyone's created equal and then through different things that happen throughout our lives, we end up in different places.
Carl: You may have one person who can create an amazing thing in five days and one person who can create five amazing things in one day, and there's a different level of value for those two people. If the one person who's making five great things every day is sharing 80% of that with the rest of the group, that person's going to leave, or you're going to realize that you've got a star and a supporting cast and that's going to create cultural rifts. There's all kinds of stuff around that and the thing is when everybody knows it and you don't talk about it, that's a transparency issue too.
Gene: I'll tell you something, I'll pay you a compliment. Something I've always been impressed by you, particularly back during the nGen days was a lot of what we talk about is just self-awareness. That's the secret to life is just be self-aware of your dip shittery, but you took it... It wasn't self-aware. It was self-aware of the company, because I think that's really what we're talking about because we always look at, oh, well, that company is doing this and that company is doing that and that company is doing that. I want to do that. That's cool. But you are your own company. The people in your company are different. You have to design it and engineer it with the personalities and the people that are there. That's what works.
Gene: Whenever you see successful companies, that's what they've done. They look at what they have, and they work with that, and they don't go, "Well, Sparkbox is like this and then nGen's like this, so I want to be like nGen, so we're going to do what nGen does. Well, the people that work for you might be like, I'm a Sparkbox person, and you're like, "Fuck."
Carl: That's so dead on because look, I can look at what the New England Patriots do. Oh, real quick. Sports analogy warning. You may want to fast-forward five minutes if you don't like the sports analogies. Think Joe Gibbs. Think the Washington Redskins. Wins three Super Bowls with three different quarterbacks. Totally different quarterbacks. He installs a different offense for each one.
Gene: That's right. Different styles of football.
Carl: It wasn't just this is the model, and we're going to reload, and we're going to do the same thing. It's the same with your team. When nGen started, we were known for illustration and animation. When we were done, we were known for doing really big database, nasty Python stuff.
Gene: Mm-hmm (affirmative). Totally different.
Carl: Why? Because we found that the team liked different work better. Actually, when we started, we were like 80% designers and at the end, I don't even know what... Maybe we were like 5%.
Gene: One person.
Carl: I'm sorry, Russell. I'm sorry, dude. I understand why you moved to Korea. I get it. You wanted to get away. That's part of it too. You got to go with that flow, and the only way you get there is by asking people and them feeling like they can tell you. You can see it. You can understand it. I think the other thing that happens with transparency, and Gene, I'm leaning in my hot take now. Okay.
Gene: All right. We're going straight to your hot take.
Carl: My pod face. What did you say?
Gene: I said hot take.
Carl: Hot take. Hot cakes.
Gene: Hot cakes.
Carl: Hot cakes. Hot cakes for everybody.
Gene: Your hot face.
Carl: My hot take, Gene. Okay, so you get to transparency, and you give people control, or you let them start to share what they want. You let them start to guide the company a little bit. There is no such thing as a flat organization, especially if you're running digital services, and we try to act like it is. There's two main dangers with this.
Carl: Number one, the only person who's ever going to be held accountable is the owner or owners, but you don't see it that way. If you're young, like I was back in the day, you think, "Oh, okay. You know what? No, they are the ones doing the work. They are the ones making the money, they deserve..." They do deserve a lot.
Gene: Sure.
Carl: But if somebody comes to you and says, "I feel like we should get ownership in the company. I feel like we should have equity." The best reply is, "I'm going to need a copy of your mortgage, your bank statements, all this, because I have to add you to the line of credit so that if we don't make payroll, you're on the hook to if we have to go into the line of credit for like 50 grand." I'm not trying to be snarky here. I didn't see this and I hurt myself.
Gene: You're right. I was a part of a business. There was four partners. It was me and another partner. We took the brunt of the investment. The other two partners didn't really... They invested a lot of sweat equity or whatever, and the project went on for a year, and then we had a capital call because we needed to grow. We were going to do something else, and it wasn't quite there yet, and they couldn't make a capital call. It was like, "You signed up for this. This is expected. We talked about it." They were like, "I got to get out." It ended the project because we were like, "Well, shit. I don't have that much. He doesn't have that much. We were counting on you guys."
Carl: Yeah. That's what you have to realize. You have to realize that as an owner, you're the only one that can't leave. Everybody else can jump ship. Even with the best of intentions, even total honesty and loyalty, but that's where transparency comes in to is there's a time where you have to say, "Look, I appreciate what you all want. That's not what we're going to do here."
Gene: Yeah. Have you ever had that conversation of like, "Hey..." The one you're literally talking about where you're like, "Look, I'm actually taking care of you here because while you want ownership, what I'm going to give you is profit sharing or more money or whatever, and you're not going to have the liability and by the way, here's how liability works." Have you had that conversation?
Carl: No. I did, but not in that way.
Gene: Me either. I was scared to be transparent. I was scared of it.
Carl: That's it. I think I had it, but not in that way because I don't think I was mature enough to handle the conversation.
Gene: Same.
Carl: I came at it from a slightly angry place. It was damaging. At that moment, I was not a good owner. I was scared. I think what hurts transparency the most is impostor syndrome. That fear that people are going to find out that, yeah, I started this, and now we're kind of big, but I still don't know what the hell is going on. Whereas, if you embrace transparency and say, "Hey, you know what? I know I started this, and we're big now, but I'm still figuring it out." Then people will appreciate that honesty.
Carl: The other thing is, and this is something that I learned from Aaron Mentele at Electric Pulp. I was sending him some photos when we were getting some upgrades at the house. We were putting on this new deck. We were doing all this stuff. He goes, "Why don't you share this stuff socially?" I was like, "I don't want the employees to see it." He was like, "They want you to be successful. They don't want to see you driving around in a crappy car because they think, 'Oh, our fearless leader can't even get a damn Honda Civic.'"
Carl: That to me became one of the other things about transparency is, especially in the world of social media that we live in now, share that you're winning. As an owner, don't feel like you have to hold back. Don't show up in a damn Lamborghini. Don't look like you're crushing it and not passing it on. You have to share.
Gene: It's really interesting. Yeah, you do. It's funny, you're talking about that very subject.
Carl: You got a Lamborghini.
Gene: No. I wish. Well, I don't actually [crosstalk 00:25:25].
Carl: Damn. Countach S.
Gene: That would be such a shitty car to drive around, honestly. It'd be really hard.
Carl: You can't pack a lunch because you've got nowhere to put it.
Gene: You can't go over speed bumps. A business partner I was involved in, in a project recently, he drove around in this piece of shit Dodge truck. I think he bought it for $800. No, speedometer. No mileage. No gas. He rode around with a gas can in the back, and he would just clock how far he drove and like, "I should probably fill up now." He'd park it right in front of the business. I had a conversation and was like, "Hey man, why don't you this quarter, take an ownership draw. We can afford a couple thousand dollars. Why don't you go get a nice used vehicle that's got a paint job, that's got a speedometer, and just park that in front?"
Gene: He was like, "Why? I want to send the message of these things don't matter." I'm like, "But I think to the average person..." I don't mean average, like an average human. I mean, like most people. "...I think those things matter." They need to see you, not dress like a hobo. Shave once a week. Drive a car that has all four tires. As the person in charge, they want you to have a basic sense of, "I have my life together because they're giving you their money, and they're like, "Am I just giving this guy money to shove up his nose or something? What are they doing?" They want to make sure, oh, he's competent, or she.
Carl: Without a doubt. We used to have these quarterly meetings where basically it was about... Everybody got five minutes to just say the honest truth as they saw it and there would be no repercussions. It was this little go for it session and I remember one of the people on the team said, "My goal this year is that you get a new car, Carl. My goal for me personally is that I don't see you show up in that car anymore."
Gene: Wow.
Carl: "That's how I feel about that car and what it says about our company."
Gene: That's the thing. You're representing everyone you work for.
Carl: Man, exactly. I felt like I don't want to look like I'm wasting the money that the team is creating, but that's the thing. It is their money. It is your money, but you're taking all the risk and that's where it becomes a conversation that when somebody steps up and wants more, you have to be able to say, "Okay, these are the ways that you can do that."
Gene: [crosstalk 00:28:18].
Carl: But the other thing is to be able to say, "You know what," and I've said this a few times. I think once I said it from a good place and twice I said it with the snark, which was, "That sounds amazing. I think you need to start your own company. I think it's time." Two of those three did, and one of those two is crushing it still.
Gene: Well, that's a great legacy. That's a great legacy for you.
Carl: That's what I tell people. The best people in the world don't work here anymore.
Gene: Very growth mindset ability to be thankful for the people who've left and created a great legacy for you because you wouldn't want everybody that doesn't work for you now to be somewhere else and be a total asshole. They crushed this company. This company's not around anymore because they hired this guy. All those fuckers that came from nGen, they're just like, "We don't know shit." That's the opposite of what you want.
Carl: That is. Gene, you've given me two compliments today after I insulted you in the cold open. I just want to say, I will be insulting you more. What about your hot take? You told me at the beginning, you're like, "I got a hot take today." You were like [inaudible 00:29:25]. You were ready to go.
Gene: I've got one. These T-shaped people.
Carl: Mm-hmm (affirmative). Yeah.
Gene: People that have deep knowledge of something, but then a lot of great knowledge. I'm sure you probably know this. Everybody that's in the Bureau knows this because they're all smart people. I'm not, so it was the first time I heard this.
Carl: You're in the Bureau. Come on now.
Gene: You know the old saying, a Jack of all trades, a master of none.
Carl: Yeah.
Gene: When we say that to people, we usually say it sarcastically. The actual entire saying is a Jack of all trades, a master of none, but oftentimes it's better than one. It's actually a compliment. It means people with experience across a wide spectrum of abilities are far superior to the person who's just a specialist in one thing.
Carl: That makes perfect sense. I remember, I guess it was at Converge one year. You had Dan Burka there, Daniel Burka, and he gave this talk on generalists over specialists and why Google was so into generalists now.
Gene: It's funny.
Carl: I think that's really amazing, and I love that that is the full saying. I never knew that.
Gene: Well, good because I was like, "Shit, why didn't I know that?"
Carl: No, I didn't know that. It's like pro bono. Do you know what the full phrase is?
Gene: Mm-mm (negative).
Carl: Pro bono publica. For the good of the people, not just for the good of. Hey, could you do this pro bono for me? No, you're not the people.
Gene: Right. I think you want a free website.
Carl: It's not for the good of the sports franchise.
Gene: Right. It's funny. Anyway, I just thought that was interesting because in one of the earlier shows we talked about how both of our businesses, we transition from that early on animation, drawing, flash-based stuff to web standards, to deep database work. I know that's all basically website shit, but it's really very, very different. The only way we got there is because we had people who were generally interested in the whole spectrum of web development and not just one thing. Everybody I know that was just really deep into animation stuff, they're not building websites anymore.
Carl: No. It's so funny because, and I know we're at time here, but when HTML5 showed up with animation, all the Flash people were like, "We told you. We told you we could. Why did you go and kill my baby? I love Flash."
Gene: Because it didn't work, but whatever.
Carl: Well, okay, so...
Gene: Your iPhone killed it.
Carl: It was impossible to find anything. Sure.
Gene: Like usability.
Carl: Yeah. Search, whatever. Well, I'm glad to see animation make a comeback and then go away again. Hey, five years from now, it'll be the hottest thing.
Gene: It will. Yes, it will be.
Carl: All right, Gene, I want to apologize for what I said at the beginning of the show.
Gene: It'll be edited out. Don't worry.
Carl: About you... Wait-
Gene: But I accept your apology.
Carl: All right, brother. I will see you next week.
