5 Important Principles Start-Ups Can Learn from Pirates

Davide Migali
May 22, 2019 · 7 min read

The beginning of 18th century was full of exceptional technological developments. The steam engine (1712) and the flying shuttle (1733) kicked off a process of industrialization that was set to change the world and its balance of power.

However, civil and social progress didn’t advance at the same speed during that period. The War of Spanish Succession ravaged Europe and the resulting famine decimated the population. Life expectancy in England was 37 years old. Basic education was a luxury and slavery just a feature of society.

What if I then told you that roughly 50 years before the Declaration of Independence (1776) a community of individuals adopted and strictly enacted the following principles within their organization

  1. Fully democratic process to elect their officers.
  2. Equal rights for everyone.
  3. Egalitarian pay structure.
  4. Rule of law and generous health insurance.

No, I’m not talking about Google or the government of modern-day Denmark. I am talking about pirates.

Yes. A community of outlaws, murderers and torturers thrived in their criminal endeavors by applying what would be a set of very progressive tenets even by today’s standards.

We should not, however, be fooled by that as pirates were far from being enlightened. They simply strove to be profitable in an incredibly competitive market where they literally had to fight against sovereign states and their navies to earn their living. This forced them to ignore social conventions and innovate within their entrepreneurial organization.

Criminal Democracy

Pirate enterprises were entirely democratic, meaning that the captain was elected and deposed by vote of the majority of the crew members.

Why did pirates opt for a fully democratic control over the executive power? For the same reason that democracy has been widely adopted across the world — because it prevents the abuse of power.

We need to bear in mind that, at the time, the only legal alternative for sea men was to work on a merchant ship, where the captain was appointed by the ship owner with full and practically unchecked authority over the crew. Under these circumstances, merchant captains often abused their power for personal advantage and, equally often, physically punished those opposing their actions. Pirates knew this very well as many of them have worked on merchant ships before deciding that, instead, it was more enjoyable to rob them.

Pirates also knew that even democratic power can be abused and, therefore, instituted the office of quartermaster. He was in charge for most of the time, administering the ship and discipline over the crew members while the captain only took command during war time i.e. when the ship was attacking or being attacked.

Captain and quartermaster held each other in check with a strict division of power, with the entire crew having full authority over both. These sophisticated relationships and several other rules regulating the pirate life were then enshrined in and protected by the Pirate Code.

A law for the lawless

The first thing to note is that the Pirate Code wasn’t a law, but a contract. Pacts and agreements widely pre-dated any centrally-issued law and their enforceability only recently have been delegated to the state (e.g. under Roman Law, the very first form of collateral was to send the debtor’s son to live at the creditor’s house for the time needed to execute the contract’s obligations — because of that compliance was, usually, quite high).

Every pirate needed to accept in full the articles of the code if he wanted to join the pirate crew. From the Pirate Code’s perspective, crew members, captain and quartermaster had the same rights and obligations. No one was above the Code.

The second thing to bear in mind is that a written Pirate Code offered the opportunity to create a set of incentives and punishments designed to maximize the profits of the criminal enterprise.

Motivating people to work hard has always being a challenge. Even more so if your job description included running ferocious assaults against well-defended ships as well as the risk of being publicly hanged if caught.

Pirates were particularly aware of this and they came up with several incentives to increase motivation:

  • Higher compensation — Being a pirate was a very lucrative business. It has been calculated that a pirate could have earned 10 to 20 times the annual salary of a sailor on a merchant ship.
  • Excellent health insurance — Piratical enterprises were among the first companies/institutions in the world to offer compensation for injuries suffered while at work (Article 9 of Bartholomew Roberts’ Pirate Code specifically stated that every man who shall become a cripple or lose a limb in the service shall have 800 pieces of eight from the common stock and for lesser hurts proportionately).
  • Equal rights — Article 1 of the code clearly said that every man shall have an equal vote in affairs of moment. He shall have an equal title to the fresh provisions or strong liquors at any time seized and shall use them at pleasure unless a scarcity may make it necessary for the common good that a retrenchment may be voted. In 1721, when this rule was written, no other organizations had a similar level of equality among its members.
  • Extremely flat pay structure — Article 10 prescribed that the captain and the quartermaster shall each receive two shares of a prize, the master gunner and boatswain, one and one half shares, all other officers one and one quarter, and private gentlemen of fortune one share each.

However, great incentives were only one side of the coin. For those who stole from the common stock or didn’t fight hard enough the consequences were extremely dire (Article 2 indicated that if [a pirate] defraud the company to the value of even one dollar in plate, jewels or money, they shall be marooned. If any man rob another he shall have his nose and ears slit, and be put ashore where he shall be sure to encounter hardships while article 7 clearly stated that he that shall desert the ship or his quarters in time of battle shall be punished by death or marooning.)

Only by reading incentives and punishments together it is possible to appreciate that the apparently progressive parts of the Pirate Code were just a behavioral tool to ensure that pirates gave 100% while performing their tasks. When incentives were unsuccessful, the Pirate Code reverted to a far less progressive set of compliance rules.

Color-blind Pirates

One of the most striking aspects of pirate crews’ fully egalitarian structure was that no lesser position nor amount of rights were awarded to people of different race or color.

On the contrary, according to historian Kennet Kinkor, none of the pirate crews that sailed during the golden age of piracy were all white and, on average, black pirates represented 25 to 30% of crew members. Some, like the legendary Black Caesar, even ascended to the highest ranks of the piratical organization of Blackbeard, the most famous of all pirates.

Pirates likely shared the racial and discriminatory biases of the age they lived in, but the very nature of the pirate enterprise explained how pirates couldn’t afford that level of bigotry in their line of work.

Pirate crews constantly needed very motivated and experienced sailors and, even at the time, it was very clear that skin tone wasn’t a factor in how effective and competent someone was at performing his job. From the perspective of a person of color in the early 1700, joining a pirate crew would have almost certainly resulted in a vastly better quality of life as the alternatives were either slavery on land or an equally worse deployment on a merchant ship.

Therefore not ideology but the peculiar market forces of that time made this intersection between supply and demand extremely attractive for both sides, resulting in a high number of black pirates sailing under the jolly roger.

Lessons for the Modern Pirates

The world of pirates has always been very evocative in the start-up world, but often with the wrong connotation.

Looking through the historical accounts it is possible to see how pirates perfectly understood the tension between self-interest and common good, that economic factors are stronger than mere ideology and that aligning personal interests with the organization’s interests works better than simply regulating specific behaviors.

A start-up can learn a lot from shrewd businessmen like pirates. A modern Blackbeard in Silicon Valley would probably

1) Offer higher equity instead of higher salaries to employees. This will ensure better alignment of interests between the company and its employees.

2) Have generous health care benefits and pension plans for all employees. In addition, he would also create special rewards (monetary and non-monetary) for those that go above and beyond in the interest of the company.

3) Create rules to make sure that employees have a say in the company’s decisions, directly and individually instead of via a representative.

4) Hire from under-represented categories not because it is good PR, but because many of these individuals will already be very motivated and eager to repay the trust placed in them.

5) Create a list of principles that reflect the type of company he and his team would like to have and have everyone sign it. He would then ask every new hire to also sign it. He would specifically call it the Company’s Pirate Code and he would proudly place a copy, with all the signatures, at the entrance of the office.

Pirates can also offer great insights to those battling every day for greater democracy, inclusion and equality in the workplace.

Try to move the debate from the ideological to the economical ground. Show that improving in these domains will increase productivity, engagement and efficacy. Provide concrete and practical advice on how to re-design incentives within the organization in line with these principles. Refrain from telling anyone to do this because is right. Tell them to do it because is profitable.

Very little has ever been achieved by only appealing to the benevolence of the butcher, the brewer or the baker.

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Davide Migali

Written by

The Startup
Davide Migali

Written by

Still learning how to write. Lover of used digital photography equipment https://www.instagram.com/camera_flips/

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