Entrepreneurs face very difficult decisions dealing with their team members as business grows and the needs of the company change. Throwing in the towel on "loyal incompetents" on the team is one of the most difficult things I've had to do and one of the least pleasant aspects of growing a business.

The larger an organization becomes the more "loyal incompetents" that organization is likely to be filled with. This creates opportunity for leaner-meaner-smarter (i.e. more competent) entrepreneurial companies to capture market share at the expense of these fat-dumb-lazy companies.

The last few months have demonstrated more clearly than ever how "loyal incompetents" can rise to leadership positions in some of the largest companies over time.

As an aside, I have always found people who "demand" loyalty from subordinates to be poor CEOs. Typically, because they lack principles.

Talk about your principles and do not confuse the discussion by mentioning loyalty.

So I see three different concepts in here. I also don't want to work with people I don't like, but am willing to make exceptions if necessary. I also don't want to work with people I don't "respect" (broad word), but am willing to make exceptions if necessary. I will not work with people I do not trust, no exceptions.

I then implement my own filter which I call the “fuck me over once rule.” Everyone gets to fuck me over once. When I find myself in a fucked over position, I confront the person. If we reconcile, there’s one more chance. If not, we are done.

One of the concepts I've been thinking about is whether the trust established anew after a "fucked over" situation can be stronger than the original bond. Ie, does the rupture, if reconciled, actually strengthen the long-term prospects of the relationship. Many say that even if you re-build, it can never be the same. I tend to think that sometimes going through a low point, a trust-breaking point, can be a long-term net gain in some cases.