Why it’s smart to let employees lunch with competitors—and pay for it

Lunch tastes way better when it’s free.
Lunch tastes way better when it’s free.
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Fancy workplace cafeterias and snacks are now a staple of Silicon Valley startups. But some companies are taking free food a step further, encouraging employees to take unlimited lunches out on the company’s dime. There’s only one condition: These meal dates need to be with someone smart and outside of the organization.

“Learning lunches” were pioneered by HubSpot, the inbound marketing and sales software company based in Cambridge, MA. The company describes the benefit starkly in a presentation about its cultural code: “Take someone smart out for a meal. Learn something. Expense it. No approval needed. No limits. No rules. Use good judgment.“According to Dharmesh Shah, the co-founder and CTO of HubSpot, the policy really is that simple.

Lunch as an antidote, and equalizer, to golf

Shah first conceptualized “learning lunches” while building Pyramid Digital Solutions, a startup he founded at age 24, prior to HubSpot. Pyramid Digital Solutions sold enterprise software to Fortune 500 companies, though Shah himself, who was still young and early in his career, had a limited professional network. He asked a senior sales representative who he’d previously worked with for guidance.

“His advice: ‘Pickup golf—big deals are always done on the golf course.’ This was a problem for me because I  had never held a golf club and from what I knew, golf took time, money and patience, none of which I had,” Shah tells Quartz, expressing a sentiment that most people who aren’t wealthy white men can relate to. “So instead, I decided that to replace golf as a way to do business, I would do meals. I would reach out to companies in cities I was traveling to and offer to take them out for a really nice meal. It worked so well that we made it a company-wide policy: Anyone could take anyone else out for a meal and expense it to the company.”

Shah says the policy resulted in some of his team’s most essential learnings and investments, enabling him to sell Pyramid Digital Solutions in 2005. He then carried the tradition into grad school, inviting other students out to lunch multiple times a week and jokingly telling them it was on an “expense account.” “I had lots of takers, and learned a lot. So, we brought that same idea into HubSpot. I’ve now been doing this ‘learn and connect over a meal’ thing for over 25 years,” says Shah. “Reflecting back on my personal results, I can trace millions of dollars of opportunity, connections, and business from this approach.”

Free meals help hone “network intelligence”

The business incentive for unlimited, company-subsidized “learning lunches” can be explained by the concept of “network intelligence,” coined by LinkedIn co-founder Reid Hoffman, who also instituted subsidized meals out at LinkedIn. When confronted with a complex problem, most business leaders schedule a meeting with all the smart people at their company who might have ideas, writes Hoffman. That’s a good first step, he says, because “the most valuable information is often in other people’s heads,” not on Google or blog posts.

However, the most successful entrepreneurs and problem-solvers are those who mine the knowledge of people outside their organizations: “There are more smart people in the world who do not work at your company than the total number of smart people who work at your company,” says Hoffman. “When your employees share what they learn from the people in their network (about technologies, competition, talent), they help you solve key business challenges faster. An externally networked workforce is critical to an innovative company.” Of course, Hoffman is selling LinkedIn, a social network that quite literally facilitates external networks. Still, his logic applies to all industries, given there’s no way any single team can embody every intellectual and innovational capability.

The most pressing challenges facing every organization today are what Ronald Heifitz, founder of the Center for Public Leadership and senior lecturer in Public Leadership at Harvard Kennedy School, calls “adaptive challenges.” As compared to “technical challenges,” which can be solved by applying existing know-how and the organization’s current problem-solving processes, “adaptive problems resist these kinds of solutions because they require individuals throughout the organization to alter their ways; as the people themselves are the problem, the solution lies with them,” writes Heifitz in Harvard Business Review.

Given the prevalence of adaptive challenges—which cannot be solved within a silo of existing knowledge, and instead require collisions of distinct bodies of knowledge—encouraging employees to have in-depth discussions with experts in fields they do (or do not) have significant experience is an invaluable means of self-protection and resilience-building, says Liane Davey, an organizational psychology expert and author of You First: Inspire Your Team to Grow Up, Get Along, and Get Stuff Done

“Beyond solving discrete problems, these lunches can open up sales or partnership opportunities, help in the sourcing of other talented people, and even enhance Hubspot’s brand in the market,” Davey tells Quartz. If successful, these connections will easily offset the subsidized cost of the lunch in the long-term.

“Lunches are also well-suited to wide-ranging and meandering conversations, which leave room for serendipitous discoveries,” Davey adds, “and they support the development of a more personal relationship, which strengthens the connection between the employee and the external person and the potential for long-term associations.”

For the employee, lunches equate to autonomy

While pay raises and cushy benefits are often causally linked to employee satisfaction, research shows that autonomy is the key to happiness at work. That’s because, for most people, perceiving that you have a choice, and that your actions are driven by your own volition is intimately tied to feelings of self-control and stability. This reality has been heavily backed in management research, as Belle Beth Cooper explains in Quartz:

“Studies have shown personal autonomy at work correlates to lower turnover among nursing-home workers, higher engagement at work for nurses, and increased job satisfaction among general practitioners in Australia,” writes Cooper. “Autonomy has also been shown to alleviate negative emotions felt by customer-service employees doing stressful work. According to Steve Maier, a psychology and neuroscience professor at the University of Boulder, stressors we can’t control are far more damaging than stressors we feel we have some control over. It’s even possible that autonomy at work helps determine our longevity: One study of British civil servants found a lack of job control contributed more to incidence of coronary heart disease than standard risks like smoking.”

At HubSpot, learning lunches are but one manifestation of the company’s broader philosophy on employee independence. In addition to taking someone smart to a lunch and expensing it, HubSpot employees can download any book on the company’s dime, without approval. “The ‘rule’ for lunches at HubSpot and for all of our expenses is three words: use good judgment. We try to model what that is for folks who are new to the company so it’s clear, for example, that taking internal folks to a steak lunch every day might not be the best idea,” says Katie Burke, chief people officer at HubSpot, “but we try wherever possible to focus on the behavior we want to create versus rules people have to follow.”

Requiring employees to share what they learn on their expensed lunches via a write-up will multiply the value of the meetings, Davey says: “it guards against old-fashioned ‘knowledge is power’ types who hoard information as a way of gaining an advantage over colleagues.”

Not all companies can afford to adopt learning lunches, or need to. Ultimately, this policy is just one implementation of the greater mindset—applicable to all workplaces, and noted by Bill Nye—that “everyone you will ever meet knows something that you don’t.” “We really want our employees to make learning something they do remarkably well, as it’s core to our value of humility,” says Burke. “The second you think you have it all figured out is the second you fail, as a company, a team, and an individual.”