1/ Why Revive the BTC Tip Jar?

Back in 2012, at my first internship, I suggested that we supplement our wages by listing a public-facing BTC address on the website, calling for the good people to chip in some bitcoin to show their appreciation (and offload pressure on the startup founders to, well, pay better themselves).

This was self-interested on a couple of fronts.

1. I was an intern at the time, and
2. I was an idealogue, and wanted to spread the crypto gospel — constantly scheming ways to advertise and incentivize adoption of BTC, to get it to at least $10k/BTC, building a radically decentralized global marketplace as a result, etcetera, etcetera.

The idea was shot down for a million good reasons, but it would have made an amazing story for my former team to have also become sleeper millionaires from a 5+ year old half-joke digital tip jar.

In conversation recently, the topic of pay, incentives came up [especially for startups] - and how those are applied & approached differently to different roles & engagements. For example, sales people generally see a base salary + performance based compensation in the form of a per-sale commission. Why though, is this not applied in most other departments, contracts, etc...

There was this scene in As Good As It Gets [1997] — basically the only bit I remember from whichever sick day I watched it on TV back in middle school — where Jack Nicholas’ character, a mildly unlovable monster struggling to navigate the world with both grace and crippling Obsessive Compulsive Disorder, went to a restaurant and ordered a meal.

He began the meal by placing 15% of the total cost of his order on the table in cash. He then informed the waitress that as a result of any acts of perceived superb service, he would be adding to the cash pile to reward the above-standard service — but for any mistakes, he would equally subtract from the pile.

This sociopathically bold move stood out as hilarious to me. I am, however, also reminded of it, as a cautionary tale, any time I am working on building incentive systems, reviewing tokenomics structures, or writing up an offer letter for a growing team.

Here’s why.

What I also remember about this particular scene, is that this caused his server to become exponentially more self-conscious, causing her to make more and more ‘egregious errors’ — all the while, Jack Nicholas calmly, disappointedly, withdrawing the tipping cash from the table, in time with each slight infraction— until she had a breakdown — and he was thrown out of the restaurant.

The moral of the story here, is that, while radical transparency is great — when applied in a kind of homo-economicus unnaturally normative exchange — it not only bums everyone out, but can also have dramatically disincentivizing unintended consequences.

Let’s take this concept one further.

In the notorious socio-economic example of the Israeli Daycare Centers — which, briefly, started charging parents a fee for picking up their children late, actually saw a dramatic uptick in late pickups, having created a product line where there had previously only been a cultural-community disincentive available — designing incentive systems needs to account for more than just time-value ceteris paribus.

…30 min pause to google this economics concept I use all the time, but don’t know the term for: where samartitans are, in some instances, less likely to help their ‘fellow man’ [ie. changing a flat tire] when remuneration is introduced — than in instances where assistance is offered out of pure good will and a re-enforced sense of community, tribe, etc…

Alright, we’re calling this one ‘The Holo Dilemma’ — as props to Matt Schutte for reminding me of the Israeli Day Care example — and as none of my econ-geek friends seem to know of a term of art for that [but if you can remember the term for it, my DMs are open for slam-dunking grammar nazis & econ nerds].

Between currencies, social or monetary, it’s not always clear what the optimal exchange or UX needs to be in order to incentivize your desired outcome — between single actors, or en masse.

So, how might you go about settting up a culture-preserving, performance-incentivizing System?

...continued in part 2...

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