Always align the incentives

“Show me the incentive, and I'll show you the outcome.”

This is a quote by the amazing Charlie Munger, a great investor who left us earlier this month.

It truly is a great predictor of the future.

When you start any experiment, journey, or mission.

The way you align the incentives for each member of that organization will affect the outcome.

If an engineer is given minimal equity and salary, they will leave you with a better opportunity when the time comes.

If you are co-founding a company with a team and they don’t have some equal partnership, they will eventually leave for a place where they feel like owners.

If you incentivize sales agents heavily on output and not long-term outcomes, a culture of closing the sale regardless of what happens to the customer will emerge.

Even if you don't know how the organization will take shape. Align the incentives from day 0. This will help shape the organization, I have seen many failed businesses and lost opportunities where incentives were not aligned carefully.

No one can know what will happen in the future, but reading the incentives scheme will help in predicting a future outcome. So align them well.

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