Culture Is What You Do
Make failure genuinely safe by rewarding bold-but-wrong bets in public, not by writing it on the wall
- Difficulty
- Moderate
- Time to result
- ~ongoing to results
- Steps
- 4
- Confidence
- 90%
A stated tolerance for failure is worthless; culture is enforced by what leadership actually does — who gets promoted, who gets praised in public, and how failed projects are discussed. Mercado Libre draws a sharp line between acceptable failures (a bold vision that didn't pan out) and unacceptable ones (outages, bad quality), and deliberately promotes people who took the right kind of risk.
Origin
Sebastian Barrios on how Mercado Libre actually operationalizes psychological safety, distinguishing it from companies that claim it but punish it.
Core principles
- 01Culture is not what you write on the walls or the website — it is what leadership does
- 02The signals that define culture are promotions, titles, public praise, and how failures are talked about
- 03Separate acceptable errors (wrong bet, bold vision that failed) from unacceptable ones (outage, bad quality)
- 04If you fire the person who led a bold-but-failed project, you have voided your stated values
How to run it
- 1
Define which failures are acceptable
Explicitly distinguish taking a bold risk that didn't work (acceptable, even promotable) from failures of quality or reliability like outages (not acceptable).
Pro tip Encourage teams to take large risks specifically on what to work on, while holding a high bar on execution quality.
Watch out Blanket 'all failure is fine' messaging erodes the quality bar; be precise about the boundary.
- 2
Encode the culture in real decisions
Make sure who gets promoted, who gets public praise, and how product announcements are framed all reinforce the stated values.
Pro tip Someone whose bold vision failed can still earn a promotion — that signal is extremely powerful.
Watch out Firing the leader of a well-reasoned bold bet that failed tells everyone the website values are fake.
- 3
Give direct, candid feedback in reviews
Have leadership participate in product reviews and deliver honest, clear feedback on what worked and what didn't — always cordial, never personal.
Pro tip Separate feedback on the product/vision from feedback on the person: 'this is on the product, not on you.'
- 4
Have leaders propagate it into their teams
Select leaders who absorb the culture and carry it down; this is how the norm scales across the organization.
Watch out Culture that lives only at the top does not survive contact with 18,000 people unless mid-level leaders embody it.
In the wild
Barrios says that when someone takes a bold vision that turns out to be the wrong path, they are not penalized — they might even get a promotion. Conversely, saying you embrace risk while firing the person who led a failed project means you aren't living your stated values.
→ The public promotion/praise signals create genuine safety to take risks on direction while keeping a hard bar on execution quality.
Common mistakes
Claiming safety while punishing failure
Leaders say 'we let people fail, no problem' but performance reviews still demand demonstrated impact and success, so people learn failure is actually punished. The stated culture and the enacted culture diverge and employees follow the enacted one.
Failing to separate person from product feedback
Delivering hard feedback without clarifying it targets the product or vision, not the individual, makes it feel personal and discourages the risk-taking the culture claims to want.
Is it for you?
Best for
Leaders trying to build genuine risk-taking cultures who suspect their stated values aren't matching enacted behavior
Not ideal for
Contexts where execution reliability is the whole job and risk-on-direction has little room (e.g. safety-critical operations)
From the transcript
“it's very clear that it's not what you write on the walls or what you put on on on your website. Uh from from what…”
“You're not going to get penalized for that. Uh you might even get a a promotion”
“yes we like risk with the person that led the project was fired. It's like, well, then you're not sort of like living what you…”
From the episode
How Mercado Libre built Latin America's most valuable company: 18k engineers, 30k deploys a day, and their own fleet of planes
Sebastian Barrios