1/ Why Revive the BTC Tip Jar?

Back in 2012, at the first startup I joined out of college — New York Natives, a digital publicat...

1/ Why Revive the BTC Tip Jar?

Back in 2012, at the first startup I joined out of college — New York Natives, a digital publication [intended to be a kind of franchisable, hyperlocal version of VICE, basically] — I suggested that we supplement intern wages by listing a public-facing BTC address on the website, calling for the good people to chip in some crypto to show some appreciation to our starving-artist interns.

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, dear god, that would have made an amazing story, for my former team of interns to become sleeper millionaires from a 5+ year old half-joke digital tip jar.

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In conversation recently, the topic of pay, incentives came up [especially with regards to the start up space] - 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...

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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...

About the Author

Elizabeth
EIR

Design, marketing, business development spanning the creative, strategic, technical, operational & executive.