What ancient wisdom could CEOs use to manage their workforces?
How do you think the ancient wisdom of stoicism would be received in the workplace today?
Is equity ownership the answer to employee engagement?
“When you wake up in the morning, tell yourself: The people I deal with today will be meddling, ungrateful, arrogant, dishonest, jealous, and surly. They are like this because they can’t tell good from evil.” - Marcus Aurelius
“It is the quality of a great soul to scorn great things and to prefer that which is ordinary rather than that which is too great.” - Seneca
“Let your desires be ruled by reason.” - Cicero
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Jim Stroud (2m 17s):
Hello, dear listener. Depending on when you are listening, good morning, good afternoon, or good evening. This is another exciting episode of TribePod, and today I have a very special guest for you. Special guest, tell us who are you and what do you do?
Francis Pedraza (2m 32s):
Hi, my name's Francis Pedraza I'm the CEO of Invisible Technologies.
Jim Stroud (2m 38s):
Francis and I were talking earlier about all the turmoil in the world today and how that was spilling over into the business world. In these interesting times, leaders are looking for policies, ways of doing business, wisdom as you may say, to make their enterprises prosper. Now, France has had a very interesting take on where today's leaders could get some inspiration of how to manage their companies. Francis, go into that if you would.
Francis Pedraza (3m 6s):
Sure. I'm sure we've all seen the books that they have at the stands at airports, New York Times, bestsellers, and such. I haven't read one of those in years. I also don't read the news. I read books by dead people almost exclusively. I read the classics and I've been reading books by dead dead people since I was about 12 years old, and not just in the Western tradition, although that's where I started. I started out reading the ancient Greeks, the Romans, medieval scholastics, and some of the authors of the Renaissance and enlightenment, but I've also been reading the classics of the east, everything from the ancient Chinese - Confucius, Mencius, to trunks to the ancient Indian scholars, the Vedas, the Mahabharata, the Ramayana, the ancient Japanese, the Norse, whatever I can in Native American ancient sources.
Francis Pedraza (4m 2s):
Anything I can get my hands on that's old is probably good. Some of your listeners may have heard of the Lindy effect, which was a concept popularized by Nassim Taleb, but the Lindy effect states that the longer something has been around, the longer it's likely to stay around it's like inertia for ideas. That's because of a Darwinian natural selection. When you're dead, you don't have a marketing team. If people are still reading Shakespeare, it's probably because Shakespeare is actually good.
Francis Pedraza (4m 46s):
Not because there's a whole marketing industrial complex promoting the place.
Jim Stroud (4m 54s):
Yes, interesting. Interesting. To your point, if people are still reading it years later, centuries later, it must be good. Could it also mean that human beings haven't changed in all the existence of time? We're still basically the same guy.
Francis Pedraza (5m 9s):
Great point, Jim. I think Jeff Bezos said, "In a world where everything's changing, you're going to get the most insight from asking the question what's not changing and getting very, very clear on what's not changing," because if you're clear on that, then you can use that as the foundation. To quote one of the gospels, you want to build your house on solid ground.
Jim Stroud (5m 35s):
Sure, sure, sure. To, I guess, meet you call for quote, there's nothing new under the sun. I think that's Solomon.
Francis Pedraza (5m 41s):
Yes, Ecclesiastes. I love the book of Ecclesiastes. Here's the thing, a lot of secular people are turned off by the wisdom and religious text. That's unfortunate because wisdom is wisdom. There's normally another way of putting it. To take the book you just quoted from, the book of Ecclesiastes, it's a very complicated book and it's actually maybe the earliest nihilistic text I can think of. People think the nihilism is something that happened after Nicha. They should read the book of Ecclesiastes.
Francis Pedraza (6m 25s):
He says, "Vanity, vanity. All is vanity," like meaningless, meaningless, all is meaningless. Everything is like a vapor. Everything has a quality of impermanence because everything is changing all the time. We're mortals and we're going to die. This can have a paralytic effect where your reaction is, "Well, what's the point? What's the point of building a company? What's the point of doing this or doing that?" That paralytic effect can be actually very negative or it can actually be the beginning of wisdom, so to speak. It can actually make you say, "Well, if my life is so short, and I'm really aware of my mortality, and then maybe I should be very, very careful with what I do.
Francis Pedraza (7m 8s):
Maybe I should be very careful who I spend my time with. Maybe I should be very careful what I build," et cetera. I think that you see this in a religious text, in the book of Ecclesiastes, but if you want to turn to a secular philosopher saying the same thing, you don't have to look farther than the Stoics. The Stoics had this phrase, Memento Mori, remember you will die. When Julius Caesar or some general had just come back from conquering some lands and they would host a giant celebration, a feast in their honor and do this big celebration down the streets of Rome and have all the musicians come play and have a parade, they would have somebody whose job it was to stand right behind them in the parade and whisper into Caesar's ear, "Memento Mori, Memento Mori, remember you will die."
Francis Pedraza (7m 54s):
For them, this recognition of mortality was the beginning of wisdom because you would never become too arrogant. You would stay focused on what's important.
Jim Stroud (8m 7s):
Yes, definitely. One thing that another example of things staying the same, no matter how much it changed, on LinkedIn yesterday, I shared an old video from Steve Jobs. He was talking about how to recruit people. I was like, "Wow, okay. It's not like he's an ancient stoic or anything like that, but his wisdom is traversing time because he's long gone, but his words are still there. People can still learn from his wisdom." As I listened to that video, I thought, "What kind of CEO's with some of the ancient philosophers be like today?"
Jim Stroud (8m 52s):
I'll read a quote to you and then see if you can think of maybe another influential philosopher who could make an interesting CEO. This is a quote from Marcus Aurelius. He said, "When you wake up in the morning, tell yourself that the people I deal with today will be meddling, ungrateful, arrogant, dishonest, jealous, and surly. They are like this because they can't tell good from evil." What kind of CEO would he be?
Francis Pedraza (9m 20s):
I needed to hear that. Jim, could you send me that quote afterwards? I need to save that. I'm so glad. That was a such a gift. I appreciate that. Can you read it one more time?
Jim Stroud (9m 35s):
I will. "When you wake up in the morning, tell yourself that the people I deal with today will be meddling, ungrateful, arrogant, dishonest, jealous, and surly. They are like this because they can't tell good from evil."
Francis Pedraza (9m 47s):
I love it. I love it. I love it.
Jim Stroud (9m 52s):
You dropped off there. There you go. Okay. There you go.
Francis Pedraza (10m 0s):
I was saying I saved quotes like this. I view them as little treasures and my treasure chest is on notion. I keep a database of these quotes and I actually have an email list that goes out every day, meditations that invisible about email. It's optional. My discipline is I don't actually check how many people subscribed to it. I don't know. It could be just one. I know at least one other person who tracks, but every morning, I send out a quote. The quote you just gave from Aurelius is such a good example because I view it as, to quote the old Testament, "Man does not live by bread alone." In the same way that you have a diet, a physical diet, like I just came from a workout.
Francis Pedraza (10m 46s):
I exercise every day. I try to eat meat and veggies and eat clean. I know that what I put into my body will affect my energy levels. It's very much the same in terms of your information diet. There's just a difference of depth and substance. When you start your morning off with some wisdom like that, everything goes better. The Indian word for this is Dharma, in the Mahabharata, which is like their Lord of the rings. It's like their Odyssey. They tried to encode, into the story, all of the abstract philosophy of the Vedas, but put it into a story that ordinary people would never forget.
Francis Pedraza (11m 33s):
It's the story about five brothers who ended up conquering the kingdom and losing the kingdom in a game of dice. Then they spent 13 years in exile. They have to go to the top of the Himalayan mountains and the gods give them special gifts. They come down, they fight, they win, and they bring justice back. Anyways, this is great story, but at the very end, there's this whole section called the education of the Dharma King. The idea was that this dying king teaches the new king everything he's learned about being a CEO. The idea was that great kingdoms or great companies are founded, have their house on solid ground.
Francis Pedraza (12m 16s):
They are based in Dharma. They are based in Dharma. Dharma was, in their word, for right action. We have this Western word truth, but the idea is that this is truth applied in a day-to-day way. It's very similar to the word wisdom. Wisdom is the application of truth in day-to-day situations. What should I do right now? What should I do right now? It's very different understanding of truth and truth in the abstract. It's more of the embodied truth of like, "What is Francis here to do? What should Francis do right here and right now?" Having an intuitive sense for the answer to that question, being connected to a sense of guidance about what to do next, they call Dharma.
Francis Pedraza (13m 3s):
In the Hindu concept, they call it Krishna's flute. The idea is you make yourself so hollow of pride, of envy, and of all the vices that the gods can blow through you. Of course, this is very similar to the Judeo-Christian idea of the holy spirit. You get yourself to a state of inner purity, and then you are led to right action. It turns out, the ancient Greeks have the same idea. They had a word for it called Aristeia, which was the going beyond skill, practice, or excellence into this place where you can almost make jazz.
Francis Pedraza (13m 44s):
You're in flow. You're in flow, you're in a creative place, the muses are inspiring you. Whether you're a poet and the muses are inspiring you write poetry, or you're a warrior and the muses are inspiring you to go into battle, or whether you're a business person and the muses are inspiring you to come up with a disruptive business model or to manage your team through a recession. Whatever it is that you're doing, you're tapping into some deeper inspiration beyond you that is grounded in intuition.. Anyways, in all of these wisdom traditions, wherever you look, the ancients are very obsessed with wisdom, which is, I think, a concept that goes beyond truth, and it's a little bit foreign to the modern vocabulary, but I couldn't think of a more important thing to focus on and start my day with.
Jim Stroud (14m 36s):
Yes, definitely. Definitely. Do you think that some of these desire to pursue Ancient Wisdom could translate into a really good company culture?
Francis Pedraza (14m 48s):
Yes. To some extent, we're trying it. I'll give you an example. Some of your listeners right now might be quizzical. I'm imagining a sea full of raised eyebrows there on the other end of this recording. They're like, "What is this weird business podcast? Why are we talking about ancient philosophy? How on earth does this relate to business?" I'll give you an example. It's not my own analysis. This is Peter Teal's thinking. Peter Teal studied philosophy at Stanford as an undergraduate. He was a protege of Rene Girard, who was a sociologist and philosopher there, a French scholar.
Francis Pedraza (15m 31s):
Rene Girard wrote a number of books. The main concept that he built all of his analysis of society around, he called mimesis. Mimesis is basically imitation, so the idea is that humans imitate other humans. For example, you don't want to red Ferrari because you inherently want a red Ferrari. You want a red Ferrari because I have a red Ferrari. It's not just you want a red Ferrari because I have a red Ferrari. You want a red Ferrari because society has decided that red Ferraris are status symbols and they're associated with other things that we want.
Francis Pedraza (16m 15s):
If you have a red Ferrari, it means that you're successful, that you're sexually attractive, et cetera. It really has nothing to do with the red Ferrari. It has to do with all these imitative qualities that are mimetic qualities. His whole analysis was that this is how babies learn. Babies learn from imitating other humans. Most people don't have a fundamental analysis of what is valuable. They have a mimetic analysis there. They think the price is the price because that's what other people are willing to pay for it, not because of something inherent. Now, Peter Teal then went on to great success, built PayPal with Elon Musk, and then invest in Facebook, Palentier, and many other companies.
Francis Pedraza (17m 1s):
One of the main things that he's contributed to business philosophy in his writing is this idea that competition is for losers. Don't compete. Focus on defensible advantages. He says, "Even though we think capitalism is about competition, really, capitalism is about trying to build a monopoly, a defensible, scalable, profitable monopoly." A good example of this is Facebook. If you wanted to compete with Facebook and you built a social network that had all the exact same features, would anybody join your new social network?
Francis Pedraza (17m 46s):
The answer is no. Why? Because the value of Facebook increases, the more users of Facebook there are. All of your friends are already on Facebook. That utility of the new social network is very low. It's very hard to motivate all the people to leave Facebook to switch to the new thing. That is an example of a defensible barrier. Another example of a defensible barrier is Netflix. When Netflix first produced House of Cards, they spent a hundred million dollars creating their own content. It seemed like a really expensive disaster, but the insight was that because House of Cards was popular, if you wanted to start a competitor to Netflix, if you wanted to start a streaming service, and you did the same deals for content with Hollywood, and you had the same price point, but you had fewer subscribers to Netflix.
Francis Pedraza (18m 38s):
Let's just say Netflix had spent a hundred million dollars on it and let's just say, they had 10 million subscribers. They spent $10 per subscriber around this piece of content. If you only have one million subscribers, and now you have to compete at the same price point with the same service that also has exclusive content, you have to come up with your own House of Cards, and then you only have a million users though. Netflix, it only cost them $10 per user to make House of Cards. For you, it's going to cost a hundred dollars per user to make House of Cards. Now you can't compete with Netflix so Netflix is defensible. It is very hard to compete with.
Francis Pedraza (19m 19s):
Anyways, there's an amazing book called seven powers by Hamilton Helmer that analyzes seven different ways you can build a defensible business model. We could do a defensibility analysis of Tesla, for example or of Invisible. I can tell you what I think makes my company defensible, but it all comes back to this philosophical point. The competition is for losers. What that ties into for Teal is actually a moral point, which comes from the old Testament, or if you're Jewish, from the Torah, from the 10 commandments. In the 10 commandments, there are all these commandments about don't envy, don't be jealous, don't be jealous of your neighbor's wife.
Francis Pedraza (20m 3s):
Don't be jealous of your neighbors lands or there's neighbor's property. Don't compare yourself focus on doing what's right and on a following your own path. It's interesting how all this fundamental principles of business strategy can be derived from the 10 commandments.
Jim Stroud (20m 28s):
Very true. Wow. Wow. Wow. You get my mind reeling on a lot of different things. For some reason, I'm thinking about Cicero and he said, "Let your desires be ruled by reason." I guess it'd be unreasonable to try to say, "I'm going to try to kill Tesla," when Tesla has so much of the market, unless you're General Motors or something that have that kind of money to burn, but yes, definitely. I see your point. Let me throw some statistics at you. 66% of millennials are employed full time. 35% of that US workforce are millennials. Millennials will represent 75% of the global workforce by 2025. Now, whether true or not, millennials tend to have a reputation for being thin skin and easily triggered.
Jim Stroud (21m 14s):
How do you think the ancient of stoicism will be received in the workplace today, and when the workplace by 2025 would be 75% of millennials?
Francis Pedraza (21m 28s):
You're asking me to predict how other people are going to react to Ancient Wisdom. I would just quote, Aurelius back to you, the same quote you said earlier. Are the people that Aurelius was talking about likely to appreciate wisdom? Look, the good news is, to all the entrepreneurs out there, that you don't have to hire everybody. Now, I certainly don't believe in any form of unjust discrimination whatsoever, but I do believe in discriminating on the basis of wisdom.
Francis Pedraza (22m 8s):
Wisdom is a quality you can look for in people. We have other words for it. For example, humility. There's a line from TSL that humility is endless. In an interview process, you can test for humility. If somebody is really humble, that means they're open to learning. They're curious. They approach life with a sense of wonder. When they see something that is valuable and good, they have some ability to recognize it and some willingness or openness to learn from it or gain from it.
Francis Pedraza (22m 49s):
All of these are forms of wisdom. When you build a company culture around humility and around wisdom, I think it's a defensible advantage because you spend less time doing foolish things, less time wasting time, and more time following first principles. A lot of wisdom is about the difference between following the crowd and following first principles. Another book that is a modern way of thinking about Ancient Wisdom is Ray Dalio's book Principles and the whole Bridgewater philosophy of principles.
Francis Pedraza (23m 38s):
I can give you an example of a very simple business principle that seemingly has nothing ancient or philosophical about it. The principle of ROI, a return on investment. Everybody in Invisible, every partner in Invisible is expected to think in terms of ROI. Everyone is expected to understand the income statement and understand both our revenues, our costs, and our cost structure. When anybody proposes a new idea, we're very receptive to it, but we expect that it's not just an idea that they're going to give us and they're not just going to give us a budget or an estimate.
Francis Pedraza (24m 19s):
They're going to give us a return estimate. If we spend this money on this idea and we do it, what's the return that we expect, and not just the long-term return, but the payback period. When are we going to get to one X on our investment? It will be in six months or in 12 months. Then when will our investment double, triple, or more. Thinking in ROI terms is an example of first principles thinking, but guess what? You can see it in the ancients. There's a famous parable in the gospels where there are three servants of a master.
Francis Pedraza (25m 4s):
One servant was given 10 Bitcoin, another servant was given five Bitcoin, and another servant was given one Bitcoin. The person who's given one Bitcoin sells it, turns it into USD, and puts it under the mattress. The person who's given five Bitcoin, keeps it in Bitcoin, and it goes through the rollercoaster, and then it turns into maybe 10 Bitcoin. Then the person who's given 10 Bitcoin, sells it, invest it to starts a new company, and makes that company very valuable. When the master comes back, ROI management 101, he fires the person who did nothing.
Francis Pedraza (25m 44s):
He retains the person who took some smart risk adjusted return but was not fundamentally innovative or generating alpha or generating beta, was just following the market. Then he really rewards the person who was following first principles because that person is the person who can ultimately create the most value in the long run. I think wisdom is a great foundation for a company culture.
Jim Stroud (26m 15s):
Speaking of company culture, I'm wondering, to have that mindset of the good servant who multiplied the profits of the Bitcoin, do you get that from ordinary workers? I know it's certainly possible, but is it more likely to get that mindset when someone has an equity ownership in the workplace?
Francis Pedraza (26m 39s):
At Invisible, on our website, we say, "No employees allowed," and we're actually buying back our investors. We're trying to become a hundred percent partner owned. We call our core team partners. When you're an employee, the mindset is to just do your job, follow instructions, and pass some bar, like basically do the minimum required, but when you own a company, you're always going above and beyond, you're thinking about what the company's best interests are, and what the company's risks and potential rewards are. It's a very different set of behaviors.
Francis Pedraza (27m 21s):
We've tried to put our equity where our mouth is, so to speak. We want ownership behaviors so we give people ownership and liquidity actually. Starting next year, all partners will have liquid stock. If they leave the company, the company will be able to buy them out after three years so we can keep recycling equity into the hands of the people at the company. That should keep our culture meritocratic instead of becoming a gerontocracy where it's like, "Who owns the company?" People who used to work here 10 years ago, people who invested 10 years ago. No. We want the company to be owned by the people at the company, but we expect that people at the company to act like owners.
Jim Stroud (27m 57s):
I imagine that's a great strategy to have, especially in this great resignation era where people are jumping all over the place from job to job now. Before you go, tell us a little bit more about your company, Invisible technologies. Tell us a little bit, just a little bit more about that.
Francis Pedraza (28m 17s):
Oh, sure. Invisible makes it easy to delegate work. Our clients will go on zoom calls with us. They'll screen-share, and they'll show us some business process, some repetitive work that they or their team are doing, that they don't know how to scale, they don't want to do anymore, or they want to automate. We will take that business process for them, run it, scale it, and figure out how to lower prices over time through automation. We combine outsourcing and automation into an end-to-end solution. It's industry agnostic so you can use it for literally any process. Insurance companies use it to process claims. Consulting companies use it to extract data points out of resumes.
Francis Pedraza (29m 1s):
Airlines use it to submit reports to the FAA. Food delivery companies use it to digitize restaurant venues. Real estate companies use it to scrape Zillow and find homes to buy. You can use it for any custom process. Unlike traditional outsourcing, which will bill you by the hours, Their incentive is to bill as many hours as possible, we bill by the unit. That allows us to use as many automation tools as possible to figure out how to lower prices over time while increasing our margins.
Jim Stroud (29m 34s):
Interesting. It's not like a cost-effective and recession resistant type of business strategy you have there. Very cool.
Francis Pedraza (29m 45s):
Yes. It's some Ancient Wisdom there, actually. Henry Ford, about 100 something years ago, Ford was creating a business miracle because every single year, Ford cars were improving in quality, they were decreasing in costs. Ford revenues were increasing and margins were increasing, but at the same time, Ford employees were getting paid more and working fewer hours. Normally, these things are in trade off relationships. They can't all be possible, but they were able to transcend those trade offs. How? They industrialized manufacturing through a combination of machines and human labor. We're doing the same thing. We call it our digital assembly line. We have a thousand workers in 60 countries around the world, but we use 200 different automation tools.
Francis Pedraza (30m 27s):
At this point, we have our own automation team and we're trying to create the same dynamic where workers are getting a better shake. We call it results-based agent pay. Their effective hourly rates coming up. Clients are getting a better shake. We're deflationary. We're figuring out how to cut costs and then we're also trying to grow into this massive market of literally every business process in the world.
Jim Stroud (30m 51s):
Another modern spin on Ancient Wisdom. This has been a very interesting conversation. I really appreciate it, learning the Ancient Wisdom being applied to today's workplace. If someone wanted to get on your mailing list for Ancient Wisdom or just contact you in general, how can they find you online?
Francis Pedraza (31m 10s):
They can find me on LinkedIn. Francis Pedraza on LinkedIn. I'm the CEO of Invisible. If you send me a LinkedIn message with your favorite quote by a dead person, then I can send you instructions for how to join our little meditation's group.
Jim Stroud (31m 29s):
Francis Pedraza, thank you again for being a guest on TribePod. You are appreciated.
Francis Pedraza (31m 31s):
Jim Stroud (31m 58s):
hank you. Thank you. Thank you. A thousand times, thank you for listening and subscribing to our podcast. If you have any questions, comments, or suggestions, please send them to us. You can reach us at TribePod@ProactiveTalent.com. We look forward to hearing from you.