Alpha Insights is a weekly newsletter that applies Stoic philosophy and Charlie Munger's core rule — "Show me the incentive, and I'll show you the outcome" — to real leadership decisions in tech and growing companies. Written for new and aspiring leaders navigating decisions nobody handed them a playbook for, to help you make sharper, less reactive decisions under pressure. Plus the occasional outlier story 😉 [Personal views; operated independently of my role at Databricks.]
Design the incentive before you need it
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Most incentive thinking happens backwards. Something breaks — a team stops collaborating, a good employee starts cutting corners, a partner quietly deprioritises you — and only then does anyone ask what's actually rewarding it. Charlie Munger, Warren Buffett's business partner of over fifty years and Vice Chairman of Berkshire Hathaway until his death in 2023, built his reputation on exactly this kind of question. His most quoted line: "Show me the incentive and I'll show you the outcome." It's the idea I keep coming back to more than any other — that incentives, not intentions or values statements, explain most of what actually happens inside an organisation. Most people use that lens diagnostically, after the damage is visible. There's a sharper way to use it. Ask the question before there's a problem to diagnose. A firm that built the answer in on day one When Bob Kagle, Bruce Dunlevie, Andy Rachleff, Kevin Harvey, and Val Vaden founded Benchmark — now one of Silicon Valley's most iconic venture capital firms — in 1995, they made one structural decision that broke sharply from how most professional partnerships work: every partner shares the fund's profits completely equally, regardless of seniority, tenure, or who personally sourced which deal. Bill Gurley, who joined the firm in 1999 and became one of its most prominent partners, has described why this matters: "This equal partnership structure has a cultural dynamic that encourages an immense amount of support from the partnership... And also an element of peer pressure. So the pressure's not a pressure of 'do this or you're out.' It's a pressure of my partners putting up these wins and I'm sharing equally — I need to do that myself." No partner has a reason to quietly root for a colleague's deal to underperform. No junior partner is stuck competing with someone twenty years more senior for credit. The structure made the right behaviour the automatic, easy default — not something anyone had to choose against their own interest. Benchmark's founders didn't wait to discover a misalignment problem. They designed against one before the firm had a single partner or a single deal. Why this matters more than it sounds like it should Most leaders — myself included, for a long time — only reach for the incentive lens once. After something's already gone wrong. It's a genuinely useful habit even used that way. But it's a much smaller use of the tool than it could be. The prospective version asks a different question entirely: before this team, this comp plan, this reporting line exists — what behaviour does this structure make easy, and what does it make hard? Not what you hope people will do. What the structure itself will quietly train them to do, regardless of what's written in the onboarding deck. That's a harder question to sit with, because it means designing for people you haven't hired yet, situations you haven't hit yet. It's much easier to fix what's visibly broken than to prevent something that hasn't happened. Where I've started applying this I used to build reactively — set something up, watch what happened, adjust when it clearly wasn't working. Functional, but always a step behind. What changed is a single question I now ask before any new structure goes live, not after: if everyone in this team followed the incentives exactly as designed, and ignored everything we say we value, what would they actually do? If the honest answer makes me uncomfortable, the structure needs to change before anyone starts operating inside it — not after. It's a small shift. It moves the incentive lens from something you reach for in a crisis to something you use at the drawing board. Thanks for reading! If you liked it, please share and tell your friends to subscribe. And if you want to browse the archive go here. /Jonas |
Alpha Insights
Alpha Insights is a weekly newsletter that applies Stoic philosophy and Charlie Munger's core rule — "Show me the incentive, and I'll show you the outcome" — to real leadership decisions in tech and growing companies. Written for new and aspiring leaders navigating decisions nobody handed them a playbook for, to help you make sharper, less reactive decisions under pressure. Plus the occasional outlier story 😉 [Personal views; operated independently of my role at Databricks.]
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