It’s important as a company to know your ‘why’. It’s also important to know your first principles.
At Crash and Praxis, our ‘why’ is to help people discover and do what makes them come alive.
In the pursuit of that mission, are there any things we won’t do? Are there any “side constraints”? That’s where first principles come in.
I think I can boil the company first principles down to one: create value.
Value creation is the result of voluntary, mutually beneficial exchange. Its outcome is greater than the sum of the inputs. If I value an hour of my time at $100 (a liquid representation of my subjective opportunity cost), and you value an hour of me fronting your rock band at $120, you bring $110 to the exchange and I bring an hour of my time and value is created. I started with $100 of value (an hour of my time). You started with $110 of value (your cash). I walked away with $110 of value (the cash I got) and you walked away with $120 of value (the hour you bought). The exchange turned $210 of value into $230. That’s value creation.
If I sold for less than I valued my time, value would be destroyed. If you paid more than you valued my time, value would be destroyed.
Because value is subjective, it’s a constant searching and testing process, and sometimes losing exchanges are necessary to learn how to make future winning exchanges. But the first principle dictates that the company should always be striving to create products and experiences that are valued more than the money paid for them. That goes for customers, employees, vendors, shareholders, etc. That’s a guiding principle.
Note that forced exchange is precluded. Value isn’t created when it’s not voluntary. Because value is subjective, the only way to verify value creation is if the parties to the exchange choose to enter it. Their actions reveal their preferences.
So using the first principle of value creation, a company must steer clear of involuntary exchanges. That means no government contracts or subsidies.
It also means a lot of other good things, like a fun office environment, flexible hours, benefits, or certain cultural goals or preferences are subordinate to the first principles. To the extent they are necessary inputs in the process of achieving our ‘why’ through value creation, they are great. But they are not ends in themselves. They are not first principles. They should be judged to the extent that they create value.
This helps put a lot of things in their proper place. We have on-site staff and remote staff. We’re not dedicated to being a remote team or on-site team as a first principle. We will do whatever makes the most sense and creates the most value.
Our ‘why’ is our target and our motivation. Our first principles are the guard rails we check ourselves against along the way.