This Week in Startups - No Rules Rules Co-Author Erin Meyer: Netflix’s “keeper test”, comparative turnover, navigating global business cultures – Part 2 | E1168

Episode Date: January 30, 2021

WATCH PART 1: https://youtu.be/Hh-3Xzn1xnc Buy No Rules Rules: https://rb.gy/kbom13 FOLLOW Erin: https://twitter.com/erinmeyerINSEAD FOLLOW Jason: https://linktr.ee/calacanis

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professional VCs. If you're interested in investing, you can be able to invest early, you can join our crowd for free at O-U-R-C-R-O-D.com slash twist. The criticism I've heard and the place where people get tripped up is, wait a second, I'm a startup, I'm a small company, I don't have a money printing machine, I don't have tons of venture capital. I can't afford to compete with Netflix, which explicitly is telling people when a recruiter calls, ask them how much the position pays, bring it back to us, and we'll redo your salary at any time. Right.

You asked me about that earlier and we didn't get to it. I was going to bring it up, Aaron. As a guest of the program, I think that you could actually answer my questions. Answer my goddamn. No, but this is a really, it's just so much with Netflix. I know why you wanted to write this book, right? Because you could write any book, but you chose to go into there and write it. You're fascinated by this, right?

It was just fascinating. I just wanted to figure it out, Jason. I just was like, and I got to tell you, one of the most irritating things for me for the first nine months of interviews was that, okay, so there's Reed who I spent all these hours with. And Patty McCord, many of you know that they're, she's been on the podcast. They're famous, their famous HR person who was there for a long time. And people, Patty, Reid, everybody else, they kept saying to me, oh, yeah, it's just common sense. And I kept thinking, no, it's not common sense. It's not common sense.

So I really wanted to figure it out how it worked, right? But then going back to this, going back to this harsh sounding adequate performance, gets a generous severance. Now, whether or not the listeners of your podcast, whether or not they actually want to say that in their company, because, you know, I think there's arguments for and against. But I do believe that any responsible manager should be using the, the keeper test at least to ask themselves questions and think about how to deal with the situation. Explain the keeper test. I think this is really just very applicable. And that's one of the

nice things about what you did in the book. I just want to give it another plug. It's also a really good list. No Rules, Rules. Netflix and the culture of reinvention, just go buy it and then come back and listen to this. And if you like it, write a review. If you didn't like it, you can email her and give her some notes in her 360 dinner. Not at the dinner, right? You're not invited to the dinner. Only those of you who love the book come to the 360 dinner. Yeah, you love the book having a wine dinner. That was the other thing I love was I have to do another detour, but the book is so good,

the culture is so intriguing. My favorite was they're like the original, I love how they got to the current. I love language and how they phrase stuff. Like, it's so eloquent to say adequate performance, gets a generous severance. It's very eloquent, passive, aggressive, jerky, like, you know, type A way to say it. that's what I like. But the best one was when they had the expense policy, they said, well, do what you would do. Right.

And then all of a sudden, all these like L.A. Hollywood guys are like, you know, well, I would charter a jet and I would order two bottles of Screaming Eagle because Tom Cruise is coming to dinner. We got to spend at least 20 grand on wine. And then somebody's like, what the, who spent, who bought three bottles of Screaming Eagle? And then they reiterated on that one, if I remember correctly to say, do what's in the best interest of Netflix. What's in Netflix's best interest for the expense policy? That's right. It used to be used companies' money as if it were your own.

Right. And then it was like, oh, wait, no, don't do that. Don't do that. I'm buying an eight ball of cocaine and going to the Knicks game and then taking everybody to a strip club. Right. That's right. No, no, no, no, no, no, no, no, no, don't do that. That's not the trial and error.

Okay, I have to tell the keeper test, Jason. Okay, so the keeper test. Okay, so back to the keeper test. The keeper test is that you imagine, it's great for COVID, right? Because in our COVID times, you can do it all alone by yourself in your bedroom. But this is just a very simple practice where you imagine that each person on your team is coming to you and telling you that they're going to leave the company. Right. So like, I don't know, Tony walks in and he says, he says, right, he says, I'm done.

I'm leaving the company. Okay, I have an offer. And then you ask yourself, how am I going to feel? Right. Am I going to be devastated? Am I going to say, oh, gosh, Tony, don't leave, right? Am I going to fight to keep Tony? Because if so, well, you know Tony is a keeper. You know Tony's the right person for that position. Are you going to feel relieved? Are you going to think, oh gosh, now I don't have to deal with that problem? Are you going to feel excited thinking about the fact that now you have a little bit of extra budget so you can hire someone else? replacement. Right. And, you know, then if you're going to feel relieved or excited, that's a clear sign. And the sign is now, the next question should be, have I given this person clear feedback, right? Have I given them the feedback? Have I coached them so that they can be the best, let's say, athlete, right? But if I have, if I've coached Tony and I gave Tony feedback and, you know,

I really see he's not going to be that the best person for that job, well, then I really have to think, you know, is it, is it time for a replacement? And, you know, it's just a very simple test, but I can tell you when everyone in your company is doing that, it automatically just gets the talent density up further, which then allows you to offer more freedom. It reminds me of, you ever see the movie Gladiator? I have not seen it. No, but tell me. I didn't. It might be, a gender thing. Like, Gladiator is just one of these. It's, it's, it's, it's, it's, it's, The radiator is incredibly violent, but it's got these incredible moments of resonance. And one of them is when Marcus Arolius says to Comedus, your faults as a son are my failures as a father.

And, you know, because his son is just basically evil. And if you are, and, you know, disturbed, as we find out later in the film, but if you did not give proper feedback, you have failed that person. You were the coach. You picked them. you kept them in the job and you didn't even have the self-awareness or the discipline to know that you would have replaced them in a heartbeat and you would have been happy when they decided to leave. And as one person told me, you know, when I had this challenge with some person at some point, he said, are you rooting for them anymore? And I said, no, I'm not rooting for them.

I'm like, why are they at your company? This is when I was like a 25-year-old CEO. And I was like, oh, that's a good point. Yeah, I could get the person the fuck out of here. This person's horrible. And I fired the person the next day and that person was relieved. And that's really actually the dysfunction that happens in a lot of things. You, you, you, and they moved from looking at as a family to looking at it as a team. And explain that philosophical difference for the audience. Yeah. So that's what I was thinking as you were talking. So of course, the most common analogy for a team, for a company, for an organization is the idea of a family. And, you know, okay, we are a family. We're all trying to be a family to create a family atmosphere. But the thing about families is that

when, you know, in families, we put up with a lot, right? We put up with a lot. We have to put up with a lot. But I like the idea. I think it's actually quite helpful, this idea of thinking about your company as a team, not a family and not just like any old team, but I mean, read lately. And maybe now as Netflix has gotten more successful, he's been talking about it as an Olympic team. But if you think about that idea, like if you're the coach of a professional football team or soccer team, your job as the coach is to get the very best person in every position, right? And then you're going to try to coach the hell out of them and get a lot of good feedback going and try to get, try to get, you know, a lot of camaraderie on the team.

but when that person shows that they can't perform, you're not going to keep them on the team just to say, well, gosh, we all have some low performers. You're going to say, okay, you know what? Cousin Billy's got to stay. That's right. Cousin bill is they got to go. That's right. And it's not even that.

It's not just poor performers. You're not even going to put up with adequate performance. If you can find someone better, you're going to say thank you so much for everything you gave to this team this year. And, you know, now I'm moving whatever, Samantha, into this. role. So I think if people recognize when they join the company that they're not joining for a decade or maybe even for five years, they're just going to be in that team for the period of time that they're the best person for the spot. Right. And it's important for leaders to know that

a lot of times the employee, the team member, is not looking for this to be their family. They've got a family already in most cases. That's enough. You know, they might have an extended family. They might have multiple extended families. They don't need this drama at work. The right players want to be on a team. They want to win and they want to do it for some period of their life. What is the tenure like at a Netflix? Because it does seem like they have people who are lifers over there. I mean, you do have the issue of that company has succeeded so much that the equity will cause people to call in rich.

But aside from people calling in rich and just, you know, having existential crises where they're just like, why would I go to work if I have this month tens of millions of dollars in my bank account? do people not leave and do people want to stay forever? Is that what you learned? Like are they lifeers there? Right. This is actually interesting. I realized, Jason, here's another question you asked me earlier and I never answered. Okay.

So I'll come back to it. That's the sign, Aaron, of a good interview. I don't mean to be defensive in my 360 dinner, but that's the sign of a vibrant conversation is that there's so much energy that the questions pile up. And that means that you and the interviewee are having a flow experience. We're having a flow experience. So many questions, Bubbly. Okay, thank you because I don't want to be irresponsible, Jason.

Okay, so that, yes, the question is about, oh, yeah, how many people leave the organization? Okay, so you would think, right, if everyone's asking the keeper test, that there would be a high turnover rate at Netflix. A lot of people getting kicked out the door. And of course, Netflix doesn't pay much attention to this at all. But what I saw when I looked into it was that their turnover rate is just a couple of percentage points higher than the industry average. And the voluntary turnover rate is several points lower. So people choose to leave the company less frequently.

And then the involuntary turnover rate, people getting fired, is slightly higher than in other companies. So that's where you get that kind of increased talent density that then leads to the, the freedom. But overall, it's not much different than you would find another company in the same industry. Yeah, see, that's the, that was very interesting to me, I think, and it's, it's very telling, is that they are cutthroat, said it, and you know, playing English here, they're cutthroat about cutting low performers, but they don't have people leaving on their own. What's that? Medium performers. Out of equipment.

Read beat that into me because he kept, every time I would say poor, he would say everyone fires poor performers. There's no innovation here. You get credit for firing a dick shit. You get credit for firing somebody doing a good job. I mean, in his mind, and that's why people get confused about the culture

because we've been trained to think, you did your job, you keep your job. That's equitable, but that's not what high-performing teams do. and this other idea of loyalty, if you can replace the person in that position with a better player, you are cutthroat about it. I don't know if you follow the NBA,

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not loyal to people who do their job. Well, I think that this is actually... This is actually one of the more interesting things that someone said to me during an interview and it was after the... or during a discussion and it was after the book was already finished. So it's not in the book,

but I had one of the senior leaders or high-level managers say to me that she thought that the entire reason that Netflix was... She said, I don't think it has to do with all of that stuff you talked about. She said, I think the entire reason we are so successful at Netflix.

is because we say to potential job candidates at Netflix, adequate performance gets a generous severance. So people know, okay, people who choose to work here are risk takers, right? The people who opt in are comfortable taking a big amount of career risk. And people who don't want to want that methodology, they go work somewhere else. So what we find that at Netflix is that we've got an entire, company of employees who are quite comfortable taking risk and, you know, thoughtful risk. And that that then has led to this kind of like enormous speed and development. So I don't know.

I thought that was an interesting thought. Yeah, I mean, it's it sounds cutthroat, but when you put the generous severance on it, you've given an exit ramp. I find it's very important to have that exit ramp and that kindness to, you know, soften the blow of, you know, hey, adequate performance, you're out. or most people would say doing your job, right? That is very counter that you got a generous severance. You got asked to leave for that.

And as one venture capital firm, very famous one told me when I said, like, what happened to these two partners? And it was like, they weren't invited into the next fund. And I thought that was like, oh, you fired them. They're like, well, they didn't continue on with us because they weren't invited into the next fund. And I was like, okay, that's why you're the number one venture capital. a firm in the world with like the greatest hits. But it's such a great way to think about it, right?

Like at the end of every year, you go back and you look at every employee and you think, okay, would I rehire this person or not, right? And if everyone knows that's the deal, you know, I don't, I don't think it's unfair. I actually think it's quite exciting. Although, of course, there are some. You're in France. You're in a socialist country. And you teach in France business students, correct?

I do. Yes. How does this philosophy vibe with socialism and, I don't mean that in like a communist, you know, socialism as a road to communism, but in a socialist-leaning country, uh, or continent where you are, you know, the idea of firing somebody for adequate performance, you would get put, you would, you would, uh, you have to go to, uh, a labor board in order to fire somebody correct. Like, you can't just really, nearly fire. It's not an at-will place. If people do an adequate job, They're supposed to get like some raise every year. Yeah. How does Netflix operate in France? Yeah, well, that was one of the things I really didn't understand. And my husband who's French, I remember that he was like, well, there's no way they can do that in France.

And when I started working with them, they weren't in France yet, right? They were just starting to get, I was in 2015, they were just starting to get ready for this big international expansion. But what I found, and I, you know, I actually, I don't know the details about it. But what I've learned from reading and the human resource people at Netflix is that adequate performance in the Netherlands or in France gets a more generous severance. A much more, like a six month or a 12 months more. So what I found was that actually in, you know, in in in Europe where it is much, let's say, like harder to fire people. if you offer enough money, you can ask that person to leave, right?

Got it. And, you know, there was actually a case in Amsterdam where there was one Dutch person who was super angry about being asked to leave and wanted to take Netflix to court for the generous severance. And the lawyer said, you know, they gave you this big chunk of money.

There's nothing I can do, right? There's no, there's... Yeah, how much more are we going to fight for here? That's right. the year. Like, what are we going to do? Get you 18 months? Let me ask you a candid question then. Can a company, a world-changing company, be built in France or Norway or, you know, a socialist country given that you cannot deploy a team mentality. You have to deploy the family or a socialist mentality when it comes to managing elite talent. Well, I do think, okay, I do think in many ways

that the principles of Netflix are more difficult to roll out in here and Europe. And I do see, like yesterday I was doing a session with CEOs in the Czech Republic. And I clearly saw that they were like, whoa, what are you asking us to do here? But I still think that these principles are, I mean, are super important really in any part of the world. Just simply, okay, if I want more innovation, then I have to take a couple of steps towards increasing talent density, whatever that might be. And then I have to take a couple of steps towards increasing candor, whatever that might be. And then I need to think about giving my employees more freedom.

And as I do that, you know, the soil will become more fertile and innovation will grow. So applicable, but I mean, sort of to my question, I'm wondering, you know, when you look at an ecosystem for excellence, America seems to still have, even through some very rough times of late, we still seem to be exceptional at creating global companies that touch almost everybody on the planet where we're allowed to go. Now, some folks are not allowed in certain countries, you know, that are communist countries, but we do have Google or Netflix or Tesla or, you know, Uber or Airbnb spread around the world. and it has to have something to do with the fact that we have at-will employment, and we can spin up a unit. And if it doesn't work, fire everybody, start over, and those people have no recourse.

But another country is if you spin up a unit for 50 people in the Netherlands, you can't spin it back down. It's a death meal for the company. That's right. And then you look at China and Jack Maude disappeared for six weeks, and he just, I don't know if you saw on Twitter, he showed back up. Did you see the video? No, I didn't.

I mean, the video is. he looks like he's being held by al-Qaeda. I mean, he's like reading from a script, and he looks like he's a little shaken. And he's like, it looks like he just got out of re-education. They basically are sending a signal that if you're playing by their rules, talk about no rules. Like, you're working for the government, essentially.

They took his IPO off the table. So what does this mean for global innovation since you're in America living in Paris? Yeah. So, I mean, of course, that's, Jack Ma is a very specific case. China, but I've been doing some work with Alibaba University. Sure. So I did that just in November and December, and those are all Chinese entrepreneurs. And, you know, I work with them mostly through translation.

And I would tell you, they love the no rules rules of philosophies. And, you know, really focusing, those young entrepreneurs, really focusing on creating environments that are very, like, un-Chinese. But they definitely find the people in China who love working. that way. So I would say more of an anomaly, but definitely those things are, yeah, coming up all over the world. But you know, I think you did also ask me that question earlier. I didn't answer it. I do. This is what they call a really great, vibrant discussion. It doesn't, we don't have to cover everything. We leave them wanting more, Erin. Okay. They don't want a part two

from us. That's a good thing. You asked me earlier, I'm remembering about candor in other countries. Yes. Well, that's your speciality, is it not? You understand. understand in this sort of matrix in Japan, you don't ask for the deal in the first meeting and, you know, you never ask directly like, do we have a deal? You would, there would be some other process, right? Right. So that's how I started working with, with Reed, because he read my first book, The Culture Map. He was getting ready for this international expansion. He had his leadership team read it. I came and spoke to Netflix about it. And I remember after that first, that first speech, He and I had lunch and he said to me, Aaron, you know, I just want to know, you know, candidly,

do you think that the Netflix culture, as you understand it now, do you think that that can work in other countries? And I remember, you know, my answer just flew out of me. I was like, well, that candor, you know, read, you can't, you can't do that candor in Japan. You can't do that in Singapore. It's going to ruin the relationships. It's going to kill the good environment at work. And I remember, you know, he thought, he listened carefully to me. And then he said, well, you know, I hear that. But that candor is so fundamental to our success at Netflix that we can't operate without it. Do you have anything else for me? That's what he said. That's a great answer, Aaron, I respect it. Now give me the answer I would like to hear.

So then we talked about some other things. I mean, I talked about the fact that nothing to do with what we've been talking about, but I talked about the fact that they were so task oriented at Netflix, these 30 minute meetings, not much relationship building. And, you know, that was really going to need to change. And he was like, okay, well, that I can do because although we're very task oriented, that's not a fundamental part of our success. And, you know, then he went on this big relationship orientation diary after that. But the candor, I learned something. So I was wrong. I was wrong. What I learned as I was doing interviews in Tokyo and Netflix, Tokyo, and Singapore and South Paulo, was that candor, the behaviors of candor that were coming out of California could not be applied directly to Japan. Okay, I was right in that way. They had to be adapted. They had to be adapted. And they had to be home grown. So what I mean by that was like the idea that you would like stop someone in the hall after a meeting and give them feedback, which happens, you know, in so in Silicon County, in L.A. I mean, that's not happening very much in Tokyo. And if it does happen, it's likely to,

you know, really hurt the relationship. But to my surprise, those 360 degree feedback dinners, they worked really well in Japan, which would stun me. Do you have a business that accepts purchases or orders online? I bet you do. You're listening to This Week at startups. And if so, have you ever had a digital transaction not go through? Of course, the answer is yes. So that's called a false decline in the industry.

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having been there five or six times, is it's very formal and buttoned up like you're saying. But once that whistle blows and it's the day's over, going out with your boss and getting placard and singing karaoke and literally coming in the next day, because I've done this, where I've gotten so polluted on scotch, drinking with Japanese business executives.

And then the next day, everybody's like, oh, they just like rub their hair and they're like, oh, yeah, yesterday. But then you're back to work and, you know, nobody's giving credit feedback. But the night before, people are puking in garbage pants and just laid out like in a karaoke room just bombed out of their skulls with their bosses. That's right.

I do have something about nighttime. That's right. And there's a word for that that they use in Japan, which is numin, numination, numinication. Yeah. Numi, which means drinking, vacation, right? Which is to communicate. A drinking vacation or communication? No, communication.

So the more we drink, the better we communicate. But let me hope that that's not what's happening in the 360 dinners. I don't think so. I think that's probably exactly what's happening. But the other thing is for Netflix, they don't need the entire country to buy into their system in their culture.

They need only the elite. This is what's very interesting and makes me very encouraged about your work with these Chinese entrepreneurs. If the whole country feels like, oh, tall poppy syndrome and don't get out of line,

that's fine. If, you know, 999 million out of a billion, think that way, we only need that million and that little creative class, that little entrepreneurial class to actually want to embrace

this philosophy, correct? Well, yeah, yes and no. I mean, that's really what Reed kept saying. He kept saying that to me, right? He kept saying to me, Aaron, I'll find the Japanese who like candor. That's what I was thinking. But, you know, I actually, I would say even the Japanese who were more comfortable with candor, they were clearly not liking candor the way they were liking it in California.

But what was so interesting about those 360 feedback and meals was that I think actually a couple of them were being ordained on in the afternoon. But what was interesting was that people understood what the expectation was. They had time to prepare. They knew that they were supposed to provide feedback that would be helpful to each person at the team. And, okay, in Japanese culture is really about, you know, group orientation, helping the team, and preparing. So when they came in, they were better at that feedback than the Americans were. Fascinating.

And, you know, so I, you know, I actually really, really learned this lesson. And I've now been kind of talking about that with a lot of other companies, which is that you can take your values and you can, you know, spread them around the world. And if your value is candor, okay, take candor and spread it around the world. But don't think you can take the behaviors from your own country and, you know, transplant them. You have to let that culture say, okay, well, what does candor look like here, right? And then come up with the behaviors that go with it. And, you know, that seems to actually be working. quite well. Was there something that you found that was a leak in the game? Because so much of it is so inspiring, so refined, so tight. But was there anything you said, you know what, Reed, I disagree 100 percent, you're wrong and that he changed his behavior eventually? Or was it just, hey, they've really dialed this and figured it out? Well, I mean, so they clearly had some on bets that failed. They clearly had some experiments that failed. And Reid does think about the corporate culture as an experiment, right?

So I think that's actually interesting for the entrepreneurs on the podcast to just think about, okay, you know, of course you have to be there like figuring out what's working and we're not working and trying things out. But one of the things that they tried at Netflix was open salaries. And Reed believed very strongly that he wanted to have salary transparency throughout the organization. So everybody at every level would know what everybody else was making. And I actually love his reasoning for that. So his reasoning was that every manager should be able to explain, you know, clearly and transparently why they pay each person what they do. And if they can't do that,

well, then there's something wrong here. I agree with that. Yeah. And he also, yeah, go ahead, please. No, I was going to say, but he didn't originally believe in that or he did? No, he did. I mean, and he still does. Okay, so that was his big, like, I really want to make this happen. And there were also these, of course, you know, wonderful reasons for doing it, like getting rid of gender disparity. Right. So if you're paying women less than men on your team, if you make it, if you make salaries transparent, well, that's going to go away, right? Yeah.

Well, people will take out the spreadsheet and they will do the math for you. Like, and they will show you exactly where your bias is. That's right. So Reed started by first rolling out that salary transparency to his vice presidents. And, you know, it was like that, I don't know, for a year, six months or something like that. And then he rolled it down to the next level. So now the top 10% of the employees had salary transparency. And it was a big mess. So Reed kept thinking, you know, it's just a period of adjustment. Because I thought just adjust. We'll just get used to it. Right. He said, people. People are not used to it, so they're kind of like flipping out, but we'll get used to it. But I interviewed people about it. I was fascinated. I actually wrote a chapter for the book, but I ended up taking it out because it was kind of like a transgression. But it was, you know, people just like, oh, every time I look at any of my colleagues, I see their salary flashing on their head.

Wow. Or I can't feel good about working here anymore now that I see how much money people are paid in that. department. So it went from being like fairness to just creating anxiety or angst and people were just jealousy or whatever. I mean, it is people's papers. People consider very private what they get paid. And so I could see people who are high performers being like, I really don't want people to know my salary. And people didn't want, they didn't want to know other salaries. People would say things to me like, I felt really good about my job and about what I was making until I had. had that spreadsheet open to me. And then I got that link and I spent all night pouring through it.

And when I got through it, I was so mad. And I talked to my boss about it. And, you know, I'm still mad. And now I don't want to work here anymore. It is challenging, I think. If you look at any organization, the top sales execs, if the organization has a great year, are going to make 2x what their managers are going to make or the management team is going to make. Now, the management team might have equity. That's worth a lot more. ultimately. But I mean, my entire life, I've looked at like the people who are in the sales department, like, wow, they're making 2x the, you know, the people in operations, is that fair or not? It's like, well, that's what the market pays. The same thing with developers. When you are in tech,

you very quickly start to realize, like, wow, the people in operations who are working just as hard or sometimes more or whatever are being dwarfed in their compensation by the developers, but it's a free market. So you just say to people, do you want to be a developer and write go? And they're like, no, I would rather make $50,000 less a year and not have to write code all day. So people will opt into it, but it does create that. Let me ask you a question about modern as we wrap here. Wait, but sorry, I have to tell the end of the story, which is the end of the story is that he brought it to a vote, right?

So Reed wanted to pass it down to the whole company. He was dead fast on passing it down to the whole company, but he brought it to a vote at their quarterly leadership meeting and the top 800 voted. It was something like over 75%. maybe more than that. No, we don't roll it down. So Reid gave up. Yeah, in any case. That's interesting. Yeah, I mean, I think it's good for him to win the war and, you know, not like, you don't have to win every battle to win the culture war, right? Like, you can let certain things go. He can readdress it. Do you ever wish that you invested in some of the best

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Let's say you have three people who are different genders. One person happens to have 10 years experience more than the others. But they're all doing the same job. But one person has 10 years more experience. Should those three people be paid the amount because they're doing the same work? Or should the person with 10 years experience, because they've put 10 more years and they have a little more wisdom maybe, should they get that, let's just pick a number, 20% more? Well, I mean, the idea at Netflix would be that if you've worked 10 years longer, but you're not adding, you know, 10 years more value, then you get paid for the value that you're being delivered, right? And that, you know, that brings us back to the keeper test. Otherwise, we might end up in a situation where we're paying somebody,

you know, so much because they have so much experience, but we actually think that for that same amount of money, we could get a younger person who would add more value, right? But it's not clear cut, right? Of course. And of course, I don't know what your mom said. Well, it was interesting because my mom's a nurse. And so I framed it.

You know, obviously the framing of this is important. The framing came from the fact that in this example, it happened to be a male who had the 10 years more experience and a female who had 10 years less. And I had paid the person more who had the 10 years experience and that I was sitting there going, you know, do I have a blind spot here? I'm paying the male who's doing the same job as the female, some percentage more. But that was because they had 10 more years experience and they had had other positions that were

leadership positions. And so I went to my mom and my wife. I had a conversation with him. Tell me if a, my mom's a nurse. I said if a nurse had 10 years experience, but they were both emergency room nurses, which is what my mom did. she ran an ICU and then before that ran the emergency room, which is a nurse practitioner,

I said putting aside degrees, which you could make a judgment based on the degree and the investment in that and whatever, and the certification, putting certifications aside, just 10 years more experience in the emergency room versus, you know, one person has 10, one person has 20,

but they're doing the same thing. Any difference in salary? And my mom, immediate reaction was yes, and then she kind of backed, tracked a little bit and was like, well, maybe if they're doing the same, it was basically we all were struggled with it, is where we came out.

We all struggled with it, because you want to, in one way have it be fair to both parties. And it seems unfair to the person who put 10 years in and has more wisdom. Maybe at some point might have a little bit more scar tissue, so to speak, to make a better decision or more reps. But they are doing the same work. So that seems unfair to the person. I don't have an answer for it. That's why I'm asking you. Yeah. Well, I don't know. I mean, what I could, what I would have seen at Netflix with that would be that people are as they're looking at that, you know, every year as we talked to talk about that.

every year they look at the salaries of the people on their team. And if they feel like one of the people on their team could make more money at another company, then they up their salary to what they think they could make at another company. So that's the only thing that they're looking at. What they're looking at is how much is this person worth on the market? How much could they make at another company? That's where talking to the recruiters come this in. And then make sure that I'm paying them whatever necessary in order to keep

them on the team. Now, of course, there are other complexities. Oh, my gosh, right? I mean, I let you wrestle with that. Yeah. It's a little bit of a difficult one. And we all want equity. So I think having a transparent discussion about it is actually a good way to do it, which is what I ultimately did. And ultimately, you know, I basically decided to freeze the salary of that person while raising the other people's salaries and that other person will end up not being with the organization. So problem solved. But the free market does do. determine some things, right? Like, listen, I could talk to you for hours and I have. We're in hour or two here. So I am going to, Erin, thank you for your time. I know it's late in Paris.

Everything going okay there in terms of the pandemic or you guys are all shut down, huh? We're taping this. Oh, yeah, no, we're okay. I mean, it's not like, not like the UK. So the big, huge thing is that the schools have not closed in this school year. So I have these two boys, Ethan and Logan, they're 15 and 11. And we did close down in March, but the schools have been open. They wear masks all day, but the schools are open. So we have a 6 o'clock curfew here in all over France. So starting at 6 o'clock, no one can leave their house. But the kids go to school.

So you know what? You can't even go for a run or a walk down the Chamst de Lise. No. I used to run at 6 and now I run at noon. This is my favorite part of France. This is what I would do every morning. I get up at 6 a.m. I go for a 3 or 4 mile run and I would end at a bakery and have two panos

Chocolat and negate the run times two. And I literally, they thought I was a crazy American, because Americans are looked, you're looked at as weird, right? In France as an American. Well, yes, I hang out in a little corner over here. There's not too many of us, but. Well, I would go for a run and then I would show up sweating.

When the bakery was opening at 6.30 in the morning, I had two pan of chagolots and a cafe latte or no swat, whatever they call. What is the coffee with a little bit of milk? God. Oh, oh. Cortado. Noazette.

A noizette, yeah. I would get a noizette and two-pounder truck a lot. Oh my God, it's the greatest thing ever. You can still do it, though, because the curfew lifts at 6 a.m. So you're still allowed. You can't sit in the coffee shop, but you can go in and get the coffee. Yeah, there's plenty of places you could go. All right, listen, if you haven't read the book, go buy it right now.

And you can follow Erin on the Twitter, Aaron, M-E-Y-E-R-I-N-S-E-A-D. Encead. Inciad, is how you pronounce it? That's right. Inciad. You teach MBA students there? I do. Yes, I do. It's global, right? Like a lot of people come from around the world. Oh, yeah. No, no. French are only 7% of our MBA students. So it's really people, people from all over the world. So it's been a perfect climate for my national, my national cultural research. Absolutely fantastic. Stay here forever. Well, you know, a lot of us have been thinking about other countries after the last four years.

years here. Where did you grow up in America? I'm curious. I'm from Minnesota. Yeah, not the most international place. Don't you know? But I met my husband, so my husband's French. I met him in Minnesota. He was working for Northwest Airlines at the time. So, you know, the rest is history. A Frenchman in Minnesota. Don't see how many of those just coming through that. That's right. All right. Okay, Jason. It's been amazing. The book is amazing. Go by right now. No Rules Rules, Netflix and the culture of reinvention. It's really well organized as well where you really, I think it's a very practical,

a very practical book. It's one of those books that's a quick read that you're going to probably listen or read to two or three times, and you're going to really, it takes a little work to deploy this. But this thinking really has made me understand what I had a, I thought I understood, just from looking at the Netflix culture deck or reading about it,

but you really want to read this book and apply it. And then get Patty McCordes as well. I think it's a nice, I've had Patty on as well on the podcast a couple years ago, and it's really nice to read both. I think you get sometimes two or three people's take on the same thing. I don't know if you read Mike Ovitz's book. Have you read Mike Ovitz's? Who is Mike Ovitz?

So reading Mike Ovitz's book, Who is Mike Ovitz, the CAA oral history, and then reading Bob Iger's ride of a lifetime, which is a little bit of a prestige, like pre-running for president kind of book. But if you read that trio of books, you really do start to understand what happens. at Disney over those decades. Patty was on in 2018, episode 792 for the fans of the pod. Aaron, thank you so much.

And good luck. And I can't wait to read. What's the name of your first book? I haven't read your first book yet. It's the culture map. Yep. And that just goes over culture across the world and how it's different?

So I have a method that breaks culture down into eight behavioral scales. So we look at things like, how do you give feedback in different countries or how do we build trust in different cultures. And then I have a, yeah, I have like a very detailed method for mapping cultures out and looking for gaps and figuring out how to be more effective when you're leading in another country or you're leading a global team. So if your listeners are interested, Aaron Meyer.com is where

to find me. Oh, perfect. Oh, let me ask you a self-serving question. Which place, which country would you say has the most promising, dogged, resilient, biggest thinking founders right now outside of the United States, you had to pick three locations where you think the next Alibaba, you know, Google, Uber, Airbnb, Netflix would emerge from other than the United States and China, where would you say? Because those are two obvious answers. Yeah. Oh, I don't have a good answer for you. I mean, what I see is that there's a lot of, there's a lot of great stuff that's coming out of the Netherlands. I mean, the Netherlands is a fantastic country. And of course, they're very good at, they're one of the most egalitarian countries in the world. So they're

very good at, um, at this kind of like pushing power down in the organizations. And they're one of the most direct cultures in the world. So when it comes to candor and when it comes to transparency, they're, they're very good at it. And they're pretty high on the comfort with risk scale, not as high as the US, but pretty, pretty high on that, that scale, which I think also makes people more likely to try things out. So yeah, that's one of my, my favorite countries to do work and lots of stuff happening there. It really is interesting the number of unicorns coming out of the Nordics. I look at the number of unicorns per million people, and you look at something like Sweden, you know, they have a dozen unicorns that have come out of there. It's a country of

15 million people or 10. You know, Norway's 5 or 6. And, you know, I mean, these countries are punching well above the way. The other one is Australia. You look at, for some reason, those entrepreneurs there are really resilient, dogged pirates who really want to build big companies. Also, they happen to, you know, natively speak, the English language, so it gives them an advantage when they come to the west. Yeah, but that's really interesting because you've just listed now five of the six most egalitarian countries

in the world. So the three Scandinavian countries What does it mean egalitarian in this context? How much we defer to authority? Yeah, so how much we defer to authority or how much respect we show, like respect we show to the boss, right? So we can see that, of course,

and those cultures are much more egalitarian than the U.S., right? The Israel is. is the other one that scores very high on the egalitarian. We call low power distance scale. Low power distance means that we don't defer to the boss so much. Yeah, so egalitarian is equality amongst the team. So this respect of, you know, the most recent person, the lowest paid person to the highest

paid person, everybody has a voice. And in America, you know, somebody in the mailroom would have no problem calling out, Hastings or Jeff Bezos and saying, this is stupid. That's our culture in America. I mean, we would risk being fired to say that, right? Well, yeah, I mean, in comparison to France or China, that's definitely true that American is lower partisans. But we are very hierarchical in the U.S. And compared to the comparison to the Netherlands, it might shock you.

But when you start working with Dutch people or Swedish people or Danish people, you start seeing, oh, I thought we were egalitarian in the U.S., but actually we are really focused on pleasing the boss, which is not so much the case in those countries. So it's all relative. And that's how I build the framework, right? This culture of relativity. Yeah, this idea of like getting to Denmark is something I remember reading about and the economist or something where the people of some of these Scandinavian countries

really are represented by their political class in a very tight way. You know, whereas in the United States, it feels like there's such a big gap between what the people want and when the government actually gets to legal. of cannabis or gay marriage or gun rights. Like it's just, there's something out of sync in the United States that in these other smaller countries, like it could be the size and scale of those companies as well, right? Like it's, they're not that big. I also like that brown bread and the Schmurborg.

I don't know if you had that Schmurberg. I'm sure it's because of the bread. I'm sure it's because of the bread. It is. That Schmerberg, the open face brown bread sandwiches. I know it's so healthy. I know really, really thick, all those nuts in it. And, you know, they put cheese and jam on it at the same time.

Butter on the brown bread with cheese. Yum. So good. There's a place, if you ever go to Copenhagen, there's a place called Ida Davidson, which is like the oldest restaurant there. And they have these Schmerberg sandwiches, which are like those open face sandwiches with like salmon or whatever, mackerel on them and just 20 different things are beautifully constructed.

And the first thing I do when I go there is eat those sandwiches. I go right to Ida Davidson and I get it. And then I go to Noma. Is that Noma, the restaurant over there? Well, I'm supposed to go in in April if COVID allows. So I'm writing it down. Ida, I'm coming to see you. Ida Davidson.

And then is it Noma? Noma is the famous restaurant there. That's like where they do all the avant-garde stuff. I'll tell them you sent me. Yeah. All right. It's been amazing. Thank you so much.

Everybody buy the book. And I'll have you on again when your next book comes out. You got to keep working on another one, I bet. Not yet, not yet. The last one just came out in September. Give me a little time, okay, Jason. You should definitely do one on, you know, like where you think the next. I feel like the reason I was really excited to talk to you, even more so than like even

having Reid on because I know that conversation with Reed, but you, because you examine these things, you have a little bit of objectivity. I was really interested in your take on global themes in business and because of where, you know, seven percent of people at your university or French and everybody else is from around the world. I really think there's something brewing about capitalism around the world that you might have a very unique perspective on. And, you know, capitalism plus other operating systems, socialism, capitalism plus communism, capitalism plus democracy, and how this is hashing out because there's something really weird going on where it seemed like China was going to run away with everything.

And then all of a sudden you have Alibaba and the aunt IPO getting paused and maybe it's going to be hard for them to actually have, you know, Jeff Bezos and, you know, read Hastings and whoever emerge in China because that challenges the ruling class in a way that they didn't never expected. That's right. Well, yes, that's right. So, okay, I'll write that, I'll write that down for my next book. Okay. I'll get to work on that. I'll be back in a few months. I'm your agent. This is a book I think you should, you're born to write as like the, the book about the global perspective on, you know, can the Netflix is, where can the next, Netflix come out of him.

Where can't it come out of him? Why? Because of cultural reasons. All right, listen. Okay, we've got to go. We've got to go. We've got to end the show. All right, cheers.

Bye. Take care. Bye now. See you all next time on this week. Sorry.