#15 – Acting in the best interest of the company: No Rules Rules | Ben Grynol & Michael ‘Miz’ Mizrahi

Successful companies need to hire employees who are invested in the long-term outcomes and future of the business, rather than their own short-term gains. But to find people you can trust to work toward the company’s best interests, you need to instill a sense of integrity into your company’s culture. In this episode, Ben Grynol and Michael Mizrahi of Levels discuss the importance of acting in the company’s best interest and how to find employees who share your values.

05:19 – Align your interests with the company

Miz said if there are things you need in order to accomplish your work more effectively, it’s in the company’s best interest for you to get those things.

What’s in your best interest is in the company’s best interest. And so, if there are things that you need to do within your own work, tools you need, environment you need to set up, money you need to spend to make yourself more productive within reason, then that’s in the interest of the company because as a team we want everyone to be at their full output, be of a good state of mind, be well-rested, be well resourced, all these kinds of things. And so this is a situation where your own interests align with the company’s interests, and you being set up well. And so the specifics of desk chair or desk environment or software that you need to use, those all make sense. They make you better and therefore your work output for the team is better. This is the one that overlaps those two areas, what’s in your best interest is in the company’s best interest.

08:05 – Think differently about company money

Miz said the way you think about personal money is different than the way you should think about company money, so make sure to acknowledge the differences.

When it comes to the company dollars, we have one chance to get this right. That goes two ways. One, we don’t want to burn money and spend irresponsibly such that we run out of runway or use up all of our resources before we have time to execute all the way. At the same time, we want to make sure we get it right early and not waste time going down the wrong path or not being well resourced and adding a ton of frustration along the way. Oftentimes, spending company resources versus spending personal resources, realizing that those are different things and we’re working with different amounts of capital and resourcing here and it’s very hard to translate your personal dollars to a company expense when you’re using company money, you want to use the same mindset and philosophy. But the way you think about your personal money is different than the way we think about company money. That’s a mindset shift that’s sometimes difficult to make and there’s an intricacy there that’s important.

09:01 – Time is a currency

Ben said time is just as valuable a currency as hard dollars, so make sure you’re spending your time efficiently.

We’ve talked about capital allocation, right? Investing hard dollars in things that you have to use discretion around. Well, the same heuristic can be used for time. Time is a currency and you are investing, especially as a fully remote company. Now, many companies are remote or have some aspect of remote work that they do, acting in the best interest. Well, it’s pretty easy to say that sitting around for five days in a week and reading magazines and not doing any work is probably not in the best interest of the company. But going for, and this is maybe more specific to Levels, going for a workout in the middle of the day, being autonomous, sure that’s in the best interest of the company. Absolutely. You’re taking care of your health and wellness. These are extremes but there’s also a heuristic to use around the way that we invest our time as it pertains to acting in the best interest of the company.

20:09 – Think long term

Miz said that in order to truly act in the best interest of the company, you have to think long-term, not short-term.

The way that that principle translates here in terms of acting in the best interest of the company is really thinking long term beyond this decision, specifically beyond any short-term gains that might be at play here. Are there long-term benefits for the company that lead to outcomes that we’re looking for that result in progress on something we’re working towards with, someone else in your position who also has the same interests of the company in mind make a similar decision? That’s where we’re really starting to trade short-term gain for long-term optimization. That’s where a sense of ownership comes in and that’s where a sense of being a steward of the company comes into play.

21:12 – Don’t get bureaucratic

Ben said too many policies can take up unnecessary resources. Don’t bog down your employees with unnecessary rules.

The example that was given in No Rules Rules was this idea where, to not have it, to say, well, we actually have policies around everything. Then it just starts getting into this bureaucratic and parental way of navigating everything where it’s like, “Go talk to Judy. Judy is the policy person.” Next thing you know, you have a full-time resource or more. Sometimes the team gets big enough, where you have an entire team that is just auditing people’s expense statements. Like, “Well, Miz, that $64 bottle of wine is no longer reasonable because our policy says $52 is the max you can spend on wine.” It’s just like parental, menial, bureaucratic. It gets very political to start enforcing these rules around things that are unnecessary. And so, Netflix just said this is a total waste of human capital and resource time to put any attention and diligence to it. If somebody is not acting in the best interest of the company, have the conversation. If the behavior continues after you’ve had three conversations, well that’s a different conversation altogether. But I think people who have integrity are generally good at adapting when given feedback. Like, “Oh, I didn’t realize that was a different lens I had.”

22:37 – Keep it simple

Miz shared that the more policies you have, the more loopholes you create and the more complex the situation becomes.

We don’t want to solve for the lowest common denominator with policy. The more policy and rules and structure you add, the more loopholes you introduce and the more complex this all gets. And so, the amount of overhead that you add to a company’s ability to function and just people to operate freely is severely limited when you add in all that structure. And so, even just thinking through that example, the difference there in that $10 on the policy is $52, you spend $64. You went over by 12 bucks. The amount of time of whoever is working on that is probably more expensive than the delta in the bottom line. Unless every single employee is doing this, there’s no way that that ROI makes sense. That’s where we hire smart people, we trust them to make good decisions. If we spend $10 more on average per month because of that, that’s an okay cost to incur.

23:31 – Be an owner, not a renter

Miz said instilling a sense of ownership in your team helps them stay invested in the long-term outcomes for the company.

One of the values that comes from Uber, speaking of company cultures, was be an owner, not a renter. The concept here was really instilling in the entire team a sense of ownership in the long-term well-being and outcomes of the company. Like I spoke about before, whereas if you use the traditional mindset, a renter might be optimized for short-term gains, really focused on their own outcomes. Not caring about the neighborhood, the HOA, the gardening, the long-term upkeep and maintenance of a neighborhood in the block. Owners are. And so, we had this phrase, “Be an owner, not a renter.” What that meant was hire people and instill a culture where people are invested in the long-term outcome and future of the company instead of optimizing for short-term gains that might be personally motivated or specific to their position or role. And so, it’s really a sense of ownership which has a lot of interplay with acting in the best interest of the company.

28:09 – Hire people with good judgment

Miz said if you hire people who have good judgment, you can trust them to make good decisions that align with the company’s best interests.

So long as we hire and screen and build culture around using judgment and making sure that people have some sense of good judgment and an awareness and context, they can then make those decisions and run the business forward without us having to forecast every single decision along the way. That’s going to slow us down. We don’t know what those questions are going to be. To have to make those calls each and every time is just a load of bureaucracy that’s gonna slow us down. And so, having this principle frees us up, frees everyone up to feel a sense of ownership, to be trusted, to be smart individuals, and to make big calls they need to move something forward.

30:51 – Leaders set the tone for integrity

Ben said it’s up to the leaders of the company to set the tone for integrity and moral values. Your employees will follow your lead.

When people see the people that they work with who are their leaders acting without integrity, acting not in the best interests of a company, they start to fall into these traps too even when that is not their natural state. And so, it’s one of those things where it reinforces how important the foundation is, to lay that foundation of high integrity team members who are always acting in the best interest of the company. If something does come into question, that they are calling each other out and keeping them on and saying are we acting in the best interest of the company? I don’t think that we would fall into this trap, but it’s interesting to see the research of how that unfolds, that people might not start off with a certain mindset but eventually they become influenced to do that.

33:48 – Take care of your employees

Ben said well-rested, cared for individuals make better decisions than burned out and exhausted employees. Make sure your people are operating at their best.

People might make different decisions if they’re tired, if they’re exhausted, if they feel burned out. They might not want to navigate the world that way, but we’re more tempted to take the easy route or maybe to make decisions that aren’t the best decision if we’re not feeling 100%. Maybe we’re tired, we’re exhausted, we’re burnt out, we haven’t exercised, we haven’t been taking care of ourselves. It reinforces the importance of acting in the best interest of the company is back to the foundation of taking care of yourself so you can be in the right mental state and physical state to make those right decisions.

Michael Mizrahi (00:06):

One of the values that comes from Uber was being an owner, not a renter. The concept here was really instilling in the entire team a sense of ownership in the long term well being and outcomes of the company. A renter might be optimized for short term gains, really focused on their own outcomes, not caring about the neighborhood, the HOA, the gardening, the long term upkeep and maintenance of a neighborhood and the block. Owners are. And so, we have this phrase, “being an owner, not a renter.” What that meant was hire people and instill a culture where people are invested in the long term outcome and future of the company instead of optimizing for short term gains that might be personally motivated or specific to their position or role.

Ben Grynol (00:55):

I’m Ben Grynol, part of the early startup team here at Levels. We’re building tech that helps people to understand their metabolic health, and this is your front row seat to everything we do. This is a whole new level.

Ben Grynol (01:21):

Netflix. Culture, No rules rules. These words come up time and time again. Well, Miz and I, Michael Mizrahi, head of operations, the two of us sat down and we discussed this principle from Reed Hastings’ book, No Rules Rules. It’s around acting in the best interest of a company. Something that Mark Randolph, one of our investors and co-founder of Netflix, he tends to bring this up too, some of the principles around use your best judgment.

Ben Grynol (01:49):

Well, what does that actually mean when you start to think about subjectivity? It’s really hard to think through what does it mean to act in the best interest of a company. So, we ripped on this idea and we went deep. We tried to deconstruct this idea of acting in the best interest of the company to see what it actually meant. How does that pertain to Levels? Every company is going to have a different lens, and it’s important that we set these cultural values and this foundation early. Here’s the conversation with Miz.

Ben Grynol (02:23):

We are talking today about acting in the best interest of a company. What that means, where it came from. It’s probably a bit philosophical, but there’s a lot of insight or a lot of examples where this can come into play. The goal is to talk about how this relates to Levels and how we might think through some of the things as they pertain to our team moving forward.

Michael Mizrahi (02:48):

There’s a few different pieces to it, and I think it’s just a good principle that spans across our employee policies and what it’s like to run the company, but also into the business side. When you’re making decisions from a business standpoint, it’s helpful to have some heuristic that guides you in the right direction and helps you think through the trade offs of every decision. And so, the intent there is just to have some sort of policy that everyone knows we can lean on, that spans all of our policies and process, and just gives people a backbone. So this is the one that we’ve landed on, which sounds straightforward and basic, but it does come into play in practice quite often.

Michael Mizrahi (03:22):

The question is, there’s little details and intricacies and areas around the edges where it might not be clear. So, our hope is to kind of chat through some of those and give some definition where there might be some subjectivity or just questions around how it can be applied.

Ben Grynol (03:36):

This idea of acting in the best interest of a company came from, again, No Rules Rules, but it’s very much taken out of the playbook of Netflix. And so, some of the examples are around what is acting in the best interest? What does that mean? Because to your point, it is subjective. It’s hard to put goalposts around exactly what that is. It’s a person’s interpretation or a group’s interpretation of what does that mean. Subjectively, what one person might think is acting in the best interest is seen as… Malicious isn’t the right word. Maybe acting without the right intent by another person.

Ben Grynol (04:16):

Some of the ways of thinking through it is maybe some examples, right? So being conscious of the way that you spend time or money on behalf of a company, ways of going through it as like, will this improve the quality of your work? I.e., a better microphone. If a microphone is going to help improve the quality of your output, go for it. Will it improve your experience? Will it make you have a better work experience, like a better desk chair? Yes. Will you be more productive? Yes.

Ben Grynol (04:45):

That’s a very easy thing of thinking through. Cool, I’m going to spend money on this thing within reason. Now, you get into these nuances of how good of a microphone, how good of a desk chair. Again, use your best judgment. Is it in the best interest of the people you work with, of the company to get a $10,000 desk chair? Probably not. To spend 500 bucks, probably, yeah. It’s going to make you have a better experience. Those are some loose examples but maybe a starting point for thinking through it.

Michael Mizrahi (05:16):

Yeah, this is the category that I would label as what’s in your best interest is in the company’s best interest. And so, if there are things that you need to do within your own work, tools you need, environment you need to set up, money you need to spend to make yourself more productive within reason, then that’s in the interest of the company because as a team we want everyone to be at their full output, be of a good state of mind, be well rested, be well resourced, all these kinds of things.

Michael Mizrahi (05:40):

And so, this is a situation where your own interests align with the company’s interests, and you being set up well. And so, the specifics of desk chair or desk environment or software that you need to use, those all make sense. They make you better and therefore your work output for the team is better. This is the one that overlaps those two areas, what’s in your best interest is in the company’s best interest.

Ben Grynol (06:02):

But one of the ones that I think gets overlooked, I’ve seen it from a video editing standpoint often, and it’s even come up with people that are working on things that require a lot of computer processing power. People will say, “Oh, I’m on this old 2013 Mac Air,” right? Let’s say somebody is trying to edit videos on this old MacBook Air and it’s barely keeping up. It’s on an old OS. What do you do? Somebody won’t want to spend the money to get a proper iMac, like a desktop editing suite specifically for video. This is one loose example, but mathematically there is a ton of value in spending $20,000 which is absurd. That’s a realistic price to spend on a desktop iMac that’s meant for rendering videos that have a ton of storage required.

Ben Grynol (06:56):

People will say, “Oh, I can’t spend the money.” You’re actually putting out less work, you’re less productive, you’re able to be less good at your job by not wanting to spend the money because you think it’s not in the best interest of the company. Actually, it’s the opposite. What is not in the best interest of the company is to be so frugal that you’re like, “Nah, I’m just staying on this 2013 Mac.” Raise the flag whether you are a dev or whether you’re working in content. Whatever it is, get the gear, get the tools that you need. Because like a contractor isn’t using a little leatherman to cut the posts, the studs, as he or she is building the house, it’s like, oh, get a proper skill saw and make it happen.

Michael Mizrahi (07:40):

This is the trade, this is the function. Be great at it. This one’s tricky and I think there’s kind of a double-edged sword here. On the one hand, there’s a desire to feel like an owner, to act in the best interest of the company by being frugal and by being really intentional with these kinds of purchases. If you’re acting like an owner, this is in your personal interest, you probably wouldn’t necessarily spend that money in the same way if it were your own resources.

Michael Mizrahi (08:05):

When it comes to the company dollars, we have one chance to get this right. That goes two ways. One, we don’t want to burn money and spend irresponsibly such that we run out of runway or use up all of our resources before we have time to execute all the way. At the same time, we want to make sure we get it right early and not waste time going down the wrong path or not being well resourced and adding a ton of frustration along the way.

Michael Mizrahi (08:30):

Oftentimes, spending company resources versus spending personal resources, realizing that those are different things and we’re working with different amounts of capital and resourcing here and it’s very hard to translate your personal dollars to a company expense when you’re using company money, you want to use the same mindset and philosophy. But the way you think about your personal money is different than the way we think about company money. That’s a mindset shift that’s sometimes difficult to make and there’s an intricacy there that’s important.

Ben Grynol (08:58):

Yeah, and another one’s down to… We’ve talked about capital allocation, right? Investing hard dollars in things that you have to use discretion around. Well, the same heuristic can be used for time. Time is a currency and you are investing, especially as a fully remote company. Now, many companies are remote or have some aspect of remote work that they do, acting in the best interest.

Ben Grynol (09:23):

Well, it’s pretty easy to say that sitting around for five days in a week and reading magazines and not doing any work is probably not in the best interest of the company. But going for, and this is maybe more specific to Levels, going for a workout in the middle of the day, being autonomous, sure that’s in the best interest of the company. Absolutely. You’re taking care of your health and wellness. These are extremes but there’s also a heuristic to use around the way that we invest our time as it pertains to acting in the best interest of the company.

Ben Grynol (10:01):

I think you referred to in… I can’t remember which video it was, but I always love when you use the term. I know it was your medium, everyone on content piece that came talking about LARPing in jobs, right? If people are phoning it in, that’s not in the best interest of a company. You don’t get it in smaller teams because everyone is relatively aware. But I think it’s probably a lot easier to do when you get to 10,000 or 100,000 people in a company and very much a cog in a wheel. It’s probably a lot easier to not act in the best interest of the company, to be like, “Oh, I’m working really hard but you’re just cruising social all day,” or doing things that are probably not the best use of your time as it relates to the way you should invest in the company.

Michael Mizrahi (10:48):

The key here is just being reasonable. I think we all have a pretty good sense of acting maturely and having a good sense of judgment. We screen for that, we hire for that, we embed that into the culture. And so, just acting in a reasonable way and using your judgment on what is right and wrong.

Michael Mizrahi (11:04):

Your example of midday workout, if that’s what you need to do to stay well and that’s when you perform best, by all means go for it. We’re not measuring butts in seats, we’re measuring collaboration, we’re measuring output and work product, and that’s what matters.

Michael Mizrahi (11:18):

The best example that I’ve heard of this is one that Tom mentioned early on. He was referencing a previous company, and the value as it’s come out into the handbook or into the policy is don’t take the red eye. The story that he tells, he can probably tell it better than I can, was that he was traveling for work with his old boss, or whatever it was, and they were doing a transcon US flight. They had a presentation the next morning and so they took the red eye to be there early in the morning and give the presentation.

Michael Mizrahi (11:48):

On the one hand, that was saving the company time because the employee was sleeping while they were flying. On the flip side, they showed up, they were exhausted, they presented poorly, didn’t sleep well, kind of felt sick. It’s possible that that flight was cheaper economically, but it wasn’t cheaper for the company because they didn’t perform at their max.

Michael Mizrahi (12:08):

The principle here is think smartly about how you’re using time and money. This doesn’t mean to save 200 bucks you have to stretch your body to the limit and not sleep. Unless, of course, that’s fine for you and it doesn’t affect you too deeply, then do what you want. But don’t necessarily make a rule of taking the red eye because it’s in the best interest of the company’s time. Think a little bit more holistically about where you perform well, how you do well.

Ben Grynol (12:35):

Let’s talk about what isn’t acting in the best interest of the company or a company. Because there are examples that, as much as there might be subjectivity to some of it, I think for the most part people would agree on some principles.

Ben Grynol (12:55):

An example is if you are a venture-backed startup. You hear examples like Warren Buffett, whether or not this is anecdotal, who knows, but Warren Buffett still will fly in regular class, right? He’s not going to waste money on first class. Spending on, assume a team member needs to go to Europe and he or she has the option of spending 1500 bucks… Well, let’s just say $2000 to get a ticket overseas or $20,000 to get a first-class seat. Well, as a startup, that’s probably not acting in the best interest of the company. It will be more comfortable, absolutely. You’ll be able to sleep, you might be able to work a little bit better, but is the delta of $18,000 actually getting you the value out of it?

Ben Grynol (13:47):

Maybe if it’s, again there are going to be gray areas, you’re going to close the King of Dubai or something like that. Maybe there is some reason, but for the most part the idea is you probably don’t want to take that first-class seat because that’s not acting in the best interest of the company at the stage it’s at.

Michael Mizrahi (14:11):

The value that it adds to the company long term is very unclear, and even to the company short term is unclear, right? And so, this is optimizing for short term personal gain with no measurable output for your work product, for your well being, or for the company.

Michael Mizrahi (14:28):

It’s important to caveat too, everyone has their own approach to how they travel and how they live their lives. It’s okay that we all come from different places on that. Some people might be opting for the Tuesday sale with the one-way southwest ticket for $59 to do their travel and other people might be splurging on business class to do a crazy trip. It’s okay that people come from different places. When it comes to company dollars, we should use some sort of the same heuristics and structures for just being generally reasonable and taking that middle line here.

Ben Grynol (15:00):

Another example is the idea of purchasing an expensive bottle of wine at a company dinner. I think this does come up in… If it doesn’t come up in No Rules Rules, it’s in Randolph’s book, That WIll Never Work. I think it’s No Rules Rules, though. But it’s this idea of, if you’re taking people out for dinner, let’s assume you’ve got clients, there are going to be nuances. Again, every company is different. Everyone has to use discretion given a situation. So, what is expensive? Well, it depends again. Are you a wine connoisseur? How do you look at it?

Ben Grynol (15:35):

I think objectively people would agree that spending $500 on a bottle of wine when there might be really good options for 60 bucks, I don’t know. Some price point that… or 50 bucks, 10x. A 10x difference. I think generally, people would be like, “Yeah, 500 seems like a lot,” especially if you’re getting a couple of them to serve a table. That’s probably not in the best interest of the company.

Ben Grynol (16:00):

Now, it doesn’t mean you can’t have it. Order it and pay out of pocket or something. But there’s probably not a good reason to get the expensive bottle of wine. It’s not going to do anything to help the company move forward.

Ben Grynol (16:14):

That’s another example where you get into the slippery slope of subjectivity. I think the discretion is if it feels a little off, you’re probably better to default to not doing it than doing it.

Michael Mizrahi (16:27):

Yeah, and wine is tricky, because wine pricing, costs, it’s a whole world. It’s a very slippery slope. I think that one in particular is a good example to kind of set us up a nuance.

Michael Mizrahi (16:36):

The other example I’d give here is if there’s a team dinner and it costs a few thousand dollars for 10 people to get together and it’s X dollars per head, it’s okay to just spend that. Get the team together, go to a fun place. You don’t necessarily have to go to the most insane restaurant, but we also don’t necessarily want you to get a fast food joint and trying to find a table somewhere.

Michael Mizrahi (16:56):

Reserve a private dining, whatever you got to do. It’s okay to spend a little given that our meetups are so infrequent. When this happens, it’s okay to arrange that for a team. That’s a good example of where we’ll spend for team entertainment, for morale purposes, for meetups. Sometimes that sounds like a big number up top, but when you break it down per head, it’s not crazy given our overall expenses and overhead for employees. So, in those areas, we’re okay to spend and we feel fine about it.

Ben Grynol (17:24):

Another example, and again, we could get into tons of different examples with this, but another would be when we talked about what’s acting in the best interest. Well, purchasing things that’s going to make your work environment feel comfortable, right? Again, there’s gray area and nuance. Does an office chair make you feel more comfortable and more productive? Does a better desk area, does another display, another computer display? We can rationalize this all day because they are things that 99 out of 100 people will say yes, right?

Ben Grynol (17:58):

But what is not in the best interest of the company is like, my guitars make me feel really good in my work environment here and it makes the experience maybe a little bit better. But does that mean that I should be able to rationalize that it is acting in the best interest of the company? Same thing like if I… I’m not into Star Wars, but assume I wanted to have nerdy figurines lining the walls. Sure, it makes the work environment better and maybe it makes me feel more productive. Maybe that actually does. Maybe we could get into something where we could rationalize and be like, yeah, it helps you be better.

Ben Grynol (18:31):

But these are these slippery slope areas where it’s not acting in the best interest of the company even if it makes you feel intrinsically good, because there’s just so much subjectivity to it. Those are areas where purchasing gadgets for your home office just because you “like them” doesn’t mean that that’s the right thing to do. That is somewhat of the line where you go, “I get it,” but it’s not really acting in the best interests of the company anymore.

Michael Mizrahi (19:00):

And these are the ones that are, I think, mostly clear to folks. I don’t think those are a question that have come up, but that’s a good example of drawing a line and say this is probably not in this area. But if you’re talking about a better chair or a different desk or something that makes you work better and can be a reasonable expense that we can transfer to other people as well, that passes the general test here.

Ben Grynol (19:22):

Maybe a good way of looking at it is if you heard that somebody else did something, would you think it was okay? And then you can just think about that for yourself. If I heard Miz just bought a whole bunch of mini die cast Ferraris for his wall in his shelf, he bought 20 of them, not one or two but 20, because it made his work environment feel better, would I think that was reasonable? If you go, “I don’t think so,” then, yeah, you should probably use that for yourself. Apply that lens to yourself.

Michael Mizrahi (19:58):

Let’s talk not just in the business context because I think there is relevance here where folks are making decisions for a partnership, a contract, a tool or software that they’re using that affects the whole team.

Michael Mizrahi (20:08):

I think the way that that principle translates here in terms of acting in the best interest of the company is really thinking long term beyond this decision, specifically beyond any short-term gains that might be at play here. Are there long term benefits for the company that lead to outcomes that we’re looking for that result in progress on something we’re working towards with, someone else in your position who also has the same interests of the company in mind make a similar decision? That’s where we’re really starting to trade short term gain for long term optimization. That’s where a sense of ownership comes in and that’s where a sense of being a steward of the company come into play.

Ben Grynol (20:54):

One of the things that tie into in the business sense is why should this even be a… It’s not a policy, but just a value, a general rule of thumb. Again, taking it from Netflix, I think the example that was given in No Rules Rules was this idea where, to not have it, to say, well, we actually have policies around everything. Then it just starts getting into this bureaucratic and parental way of navigating everything where it’s like, “Go talk to Judy. Judy is the policy person.” Next thing you know, you have a full time resource or more. Sometimes the team gets big enough, where you have an entire team that is just auditing people’s expense statements. Like, “Well, Miz, that $64 bottle of wine is no longer reasonable because our policy says $52 is the max you can spend on wine.” It’s just like parental, menial bureaucratic. It gets very political to start enforcing these rules around things that are unnecessary.

Ben Grynol (22:07):

And so, Netflix just said this is a total waste of human capital and resource time to put any attention and diligence to it. If somebody is not acting in the best interest of the company, have the conversation. If the behavior continues after you’ve had three conversations, well that’s a different conversation altogether.

Ben Grynol (22:26):

But I think people who have integrity are generally good at adapting when given feedback. Like, “Oh, I didn’t realize that was a different lens I had.” So, that’s one way.

Michael Mizrahi (22:37):

We don’t want to solve for the lowest common denominator with policy. The more policy and rules and structure you add, the more loopholes you introduce and the more complex this all gets. And so, the amount of overhead that you add to a company’s ability to function and just people to operate freely is severely limited when you add in all that structure.

Michael Mizrahi (22:55):

And so, even just thinking through that example, the difference there in that $10 on the policy is 52, you spend 64. You went over by 12 bucks. The amount of time of whoever is working on that is probably more expensive than the delta in the bottom line. Unless every single employee is doing this, there’s no way that that ROI makes sense. That’s where we hire smart people, we trust them to make good decisions. If we spend $10 more on average per month because of that, that’s an okay cost to incur. We’ll be fine.

Ben Grynol (23:25):

Totally. Well, let’s get into this idea of be an owner, not a renter.

Michael Mizrahi (23:30):

Yeah. One of the values that comes from Uber, speaking of company cultures, was be an owner, not a renter. The concept here was really instilling in the entire team a sense of ownership in the long term well being and outcomes of the company.

Michael Mizrahi (23:45):

Like I spoke about before, whereas if you use the traditional mindset, a renter might be optimized for short term gains, really focused on their own outcomes. Not caring about the neighborhood, the HOA, the gardening, the long term upkeep and maintenance of a neighborhood in the block. Owners are. And so, we had this phrase, “Be an owner, not a renter.” What that meant was hire people and instill a culture where people are invested in the long term outcome and future of the company instead of optimizing for short term gains that might be personally motivated or specific to their position or role.

Michael Mizrahi (24:19):

And so, it’s really a sense of ownership which has a lot of interplay with acting in the best interest of the company. I think the way we’re phrasing it has a much more direct and measurable feeling to it.

Ben Grynol (24:29):

I wonder if that has a value, maybe has deeper roots with startups. So, if you are in an organization that’s larger where there might not be an economic incentive, meaning there might not be equity or something that makes people feel this way, it might be easier for people to feel like a renter, right? But when you can truly feel you have some ownership, because you literally have some ownership, it’s probably an easier value to instill.

Ben Grynol (25:02):

Where it gets harder is like, I can’t imagine, and maybe I’m way off. I haven’t thought about this, but it might be hard in public sector to instill that as a value; be an owner, not a renter, because you’re not. You’re serving the public. It’s a very different mindset. Maybe it’s a value that is great for startups and might be more challenging to instill at a blue chip corporate value standpoint.

Michael Mizrahi (25:32):

Totally. Yeah. As the company size grows, I think your ability to lean on everyone having this mindset goes down. At some point that diminishes. But early on, when everyone is truly an owner and their actions have measurable impact on the company’s prospects, output, long term well being, it’s easy to rely on that.

Michael Mizrahi (25:51):

I think overall that’s a good mindset to instill. For as long as we can hold on to that, for as long as it makes sense and feels right and we’re certainly well within that stage, it’s a good principle to double down on.

Ben Grynol (26:04):

Ironically, Marc Randolph, Marc Randolp, co-founder of Netflix. For anybody who might not be aware, great podcast that Sam did with him. It could have been two years ago. It was probably within the past six months.

Michael Mizrahi (26:20):

[inaudible 00:26:20] almost, yeah.

Ben Grynol (26:22):

Yes. It was, geez, a while ago. That was one of our earliest episodes, now that I think about it. Wild. We’re at 70 episodes now, I think. It’s wild.

Ben Grynol (26:32):

Anyways, he put out a tweet the other day that was so timely for this conversation. He was on one of the big news networks and they had asked him about Netflix stock and what they’re doing. He said, “I can’t comment on that, but what I can comment on is Netflix culture. Because what we established back then,” and he hasn’t been with Netflix for almost 20 years now. He left a really long time ago. I don’t know what it was, ’05? ’06? The culture has become so strong and so deeply rooted in some of the original values and principles that he said, “What I can tell you is that I can sum up the culture they have, and it’s four words, use your best judgment.”

Ben Grynol (27:14):

It’s the exact same thing as act in the best interest of the company. That is what makes people feel deeply connected to making these decisions. Maybe it’s something that they have hired for and it’s something that, as you mentioned, we bring people on who have it, who have high integrity and who understand that these are the values that we hold as a company.

Michael Mizrahi (27:39):

Yeah. The question is, you have a group people. What kind of guidance can you give them to keep everyone on the right track and get to the right place without having the playbook? We have a large group of people over time. I need to give them some guidance in order to make decisions for the questions that come up as they go about their day-to-day jobs.

Michael Mizrahi (27:57):

From right here, at this point, given our playbook, we don’t know what those answers are going to be, we don’t know what those questions are even going to be but we want to give everyone some sort of guidance on how to make those and move forward as a group of people.

Michael Mizrahi (28:09):

So long as we hire and screen and build culture around using judgment and making sure that people have some sense of good judgment and an awareness and context, they can then make those decisions and run the business forward without us having to kind of forecast every single decision along the way. That’s going to slow us down. We don’t know what those questions are going to be. To have to make those calls each and every time is just a load of bureaucracy that’s gonna slow us down. And so, having this principle frees us up, frees everyone up to feel a sense of ownership, to be trusted, to be smart individuals, and to make big calls they need to move something forward. It’s as simple as that.

Ben Grynol (28:46):

Nice. Let’s touch on these two things. I found this paper. It’s just trying to find some data, right? Because a lot of this is anecdotal. To say, well, yes, you should act in the best interests of the company. It’s good to have some research that says what happens when you don’t act in the best interest of the company. You get into all these nuanced things. You can talk about Enron and what happens there and you can talk about when you get on the slippery slope of integrity, if you want to call it that, where people’s ethical values and their morals and all these things start to come into question.

Ben Grynol (29:25):

There’s a paper in 2013 it was in the Journal of Business Ethics from a Delphi University. It was called The Relationships Among Employee Perception of their Managers’ Behavioral Integrity, Moral Distress and Employee Attitudes and Well-Being. The outcome was, to summarize it, when team members felt that the leadership, either their manager or the executive team had compromised ethical values or compromised moral compass, they were more likely to act without integrity.

Ben Grynol (29:59):

And so, to bring it back to this conversation, if somebody sees you… Assume you and I are working together and… Assume. We do work together. Assume that we’re working closely together on something and it starts to come up like, “Oh, Miz, we go out for dinner,” and you sort of give the nod. Now we can order this $400 bottle of wine. Maybe it’s not sitting well and maybe I pushed back. I’m like, “I don’t know, Miz, it feels a little off.” You’re like, “No, no, it’s fine.” Assume this happens a few times. Then maybe I’m going to think it’s okay too to like… We both know it’s not right, but then I’m going to start to think like, “Oh, I can go down this slippery slope.”

Ben Grynol (30:43):

We feed off each other because we’re humans and we’re imperfect and all these things. But that was the takeaway of this paper, is when people see the people that they work with who are their leaders acting without integrity, acting not in the best interests of a company, they start to fall into these traps too even when that is not their natural state.

Ben Grynol (31:06):

And so, it’s one of those things where it reinforces how important the foundation is, to lay that foundation of high integrity team members who are always acting in the best interest of the company. If something does come into question, that they are calling each other out and keeping them on and saying are we acting in the best interest of the company?

Ben Grynol (31:24):

I don’t think that we would fall into this trap, but it’s interesting to see the research of how that unfolds, that people might not start off with a certain mindset but eventually they become influenced to do that. We’ve seen it with the… I mean, not to get too dark on it, but the Stanford Prison Experiment and a lot of these things where the human mind is malleable in great ways and malleable in bad ways.

Michael Mizrahi (31:52):

The importance of being high integrity and being consistent even when no one’s watching and just being honest and not letting that slip is the key here. Everyone plays a role in it in every decision. If you compound too many bad decisions, they have an impact on overall morale, well being of the team, outlook, perspectives, relationships, all these kinds of things. And so, it’s an interesting study. It’s a good find there.

Ben Grynol (32:15):

One of the takeaways was the opposite side too where when team members felt that they were in an environment of high integrity, they reported having higher morale, and when they viewed their leaders as having integrity. So, the takeaway is that integrity is infectious as dishonesty, but integrity is a foundational principle were acting in the best interest of the company. You feel better about the work you’re doing, the team you’re a part of, because you feel, even though it might be subjective, you feel like you’re being diligent about making the right decisions.

Ben Grynol (32:51):

The last thing is, we have to touch on Dan Ariely again. I don’t know if this will land or relate, but I love Dan Ariely. Great work in behavioral economics and always pushing these different directions as far as testing different things like honesty and how our brains change based on different states that we’re in, what are the psychological and economic decisions we’re going to make based on the conditions that are created around us.

Ben Grynol (33:17):

He had this book, The Honest Truth About Dishonesty. I think it’s one of the more recent books that he has written. The idea is that there are takeaways where there are times when we can have, even if we have high integrity, if we’re around certain conditions, it can change our perception. And so, we have to be aware of how our state can affect things like this.

Ben Grynol (33:43):

Some of the research he did show that people are more dishonest, right? Again, bring this into integrity. People might make different decisions if they’re tired, if they’re exhausted, if they feel burned out. They might not want to navigate the world that way, but we’re more tempted to take the easy route or maybe to make decisions that aren’t the best decision if we’re not feeling 100%. Maybe we’re tired, we’re exhausted, we’re burnt out, we haven’t exercised, we haven’t been taking care of ourself. It reinforces the importance of acting in the best interest of the company is back to the foundation of taking care of yourself so you can be in the right mental state and physical state to make those right decisions.

Michael Mizrahi (34:26):

I like the idea of making sure folks are well rested and making decisions from a good place because, yeah, environment matters is I think the bigger message here.

Ben Grynol (34:35):

Let’s talk about these other principles. Really neat is once we start down a path of not having integrity, there’s a higher propensity to act in that same way again. And so, we start convincing ourselves that certain things are okay. You might know deep down, “I shouldn’t buy those Star Wars figures.” Well, then, everything becomes like, “Well, I do need dress shoes to go to that conference. The conference is for the company, and so I should probably buy the dress shoes on the company’s dollars.” It gets really easy to go down the slippery slope.

Ben Grynol (35:12):

Again, a lot of these examples are probably taking a little bit far. They don’t necessarily apply to Levels especially at our stage but-

Michael Mizrahi (35:20):

The important things here are our trust, everyone has trust in each other to make the right decisions, and integrity making the right decisions on your own and being honest and thorough and complete in your judgment calls.

Ben Grynol (35:33):

That should be one of our cultural values. What are your values at Levels? Keeping it real. We hire people who keep it real.