About two-thirds of the way through Dan Lyons’ new book Disrupted: My Misadventure in the Start-Up Bubble my mind went, as it often does, to an excerpt from a Wendell Berry essay. The essay is “Two Economies” and in it Berry begins by talking about how the great problem facing us today is that our economies are not large enough to hold all of life. If there’s a fact that looms large throughout Lyons’ darkly funny new book, that is it.
Lyons, a former Newsweek reporter famous for creating the Fake Steve Jobs blog, began his misadventure at marketing startup HubSpot for reasons that anyone pursuing work in journalism or academia will find familiar: He needed a job.
Laid off at Newsweek and then struggling in an editorial position at an under-performing online tech magazine, Lyons needed something, anything really, that would allow him to support his family. His need was made particularly acute due to his wife’s chronic migraines, which forced her to quit her teaching job, and the fact that their family (which also included seven-year-old twins) lived in the pricey Boston area.
Given that he’d spent most of his career covering tech companies, which inevitably involved watching lots of other people become fabulously wealthy while he plodded away on a journalist’s salary, it’s no surprise that Lyons thought he should get in on the fun, particularly given how awful the job market is for journalists right now.
Thus Lyons, a life-long journalist, landed a job as a “marketing fellow,” at the Boston-based marketing software company HubSpot. The position turned out to be every bit as ambiguous and ill-defined as you’d imagine based on the title. So it didn’t take long for Lyons to realize his mistake. The book is largely the story of what happened after Lyons realized his error.
So far the coverage of the book has centered around the frat-house culture that existed in parts of HubSpot—a wall of free candy in the break room, sales guys drinking beer as they pound the phones, employees having sex in the showers upstairs, and so on. But if that’s the chief thing people take from the book they’ll have missed the heart of the thing.
The chief problem that Lyons’ book highlights, although I’m not sure Lyons’ himself has any solutions, is the inhumane behavior that is increasingly normal in many companies. Heartless layoffs, of course, are nothing new—and that’s where the book begins when Lyons is laid off not by a tech company, but by a legacy journalism company.
But that’s a problem facing the old, establishment companies that haven’t found a way to maintain themselves in the digital era. These are companies that have come to behave in horrifying ways largely due to economic necessity. (To be sure, some of that economic necessity comes from their own inability to anticipate technological changes.)
The heartlessness Lyons found at HubSpot is of a different sort. Part of it relates to the disdain the company has for older people, something that Lyons hammers several times throughout the book and has brought up in other forums more recently. But the ageism Lyons sees is not a standalone offense; it’s a natural consequence of a pervasive culture that is deeply inhumane at all levels.
For example, HubSpot presents their unlimited vacation benefit as a great perk to employees, but in reality it is anything but. In the first place, the culture of the place is so demanding that it is difficult to actually take advantage of that perk. Sales reps, laboring away at $35,000 a year (in the Boston area) are given monthly quotas, meaning it is nearly impossible to ever get ahead enough that you can use that benefit. But second, and more insidious, is the fact that if the company doesn’t offer a defined vacation benefit, then they don’t have to pay out unused vacation time when an employee leaves the company. This, in turn, makes it easier for HubSpot to kick people to the curb quickly and at minimal expense to the company—and that is precisely what they do. Granted, they don’t call it “firing” or even the passive “laid off,” but, in a linguistic ploy that would make Big Brother smile with recognition, they say that dismissed employees have “graduated” from the company.
This example is reflective of the larger reality for tech companies. The way to make money in tech these days is, as Lyons says multiple times, to get big, lose money while you burn through VC funds to grow the business, go public, and get out. You get big enough that you can pull in big venture capital funding. You burn through that money to grow the business as rapidly as you can without any concern about profitability. Then you go public, make a killing at your IPO, and get out as quickly as you can. Who benefits from this arrangement? The start-up founders. Does anyone else? Not really.
It’s bad for employees, who won’t find anything like stability at such volatile companies. It’s also devastating for mom-and-pop investor types who invest their money in a hot young startup, thinking it’s a sure thing, only to have stock prices stagnate or even fall after they purchase them. But it works out beautifully for the founders. Here is Lyons describing the day HubSpot went public and how the company, and CTO Dharmesh Shah in particular, handled their newfound wealth:
The best comment comes from Dharmesh. He owns 7 percent of the company, more than any other individual. At a $30 stock price, his 2.3 million shares are worth nearly $70 million. This windfall has come to him thanks to a single daring bet, one that probably seemed crazy at the time: Back in 2006, he took $500,000 of his own money out of the bank and used it to start HubSpot. He was the only seed investor. Dharmesh holds the title of chief technology officer, and he wrote the HubSpot culture code, but he doesn’t seem to be around much.
By October 2014, when the IPO takes place, he is mostly working on a new project, an online community for marketers, called Inbound.org. But now he’s the richest person at the company. I’m anxious to hear what he will say to the people back in Cambridge—the engineers who write the code, the bros in the boiler room who sell it, the grunts in the content factory who generate the leads, the customer service reps who deal with angry people all day.
Most of these people will get next to nothing from this IPO, but their hard work had just made Dharmesh an immensely wealthy man. How will he thank them? He embodies our culture: humble and modest, remarkable and transparent. He’s the creator of HEART (part of the company’s culture code), the inventor of delightion, the pundit who proclaims, “Success is making those who believed in you look brilliant.”
This man who has just reaped a $70 million windfall, whose stock will soon be worth more than $100 million when HubSpot shares keep climbing, looks into the camera and says something amazing: “Get back to work.” I will never forget it.
On the way out we each get a mini bottle of Freixenet Brut with a HubSpot logo. Penny, the receptionist, checks names off a list so nobody can duck back and grab a second bottle. It’s perfect.
Of course, this issue of stability raises another question which ties in to Berry’s two economies. For the HubSpot founders, the company is, like Netflix, “a team, not a family.” This is meant as a way of saying that the reason they exist is primarily to build a business, not simply be friends with each other.
But the practical outworking of this is that there is no possibility of stability for anyone in the company or even a desire for stability for many. This NPR story on Netflix highlights how cold and heartless this philosophy often is in practice. This, then, goes some distance toward explaining the euphemistic language used by HubSpot when an employee leaves the company.
This also speaks to a broader problem though, one that is not simply caused by greedy tech founders, but that is also propped up by the rampant individualism of the millennials swarming to these companies, looking for work. Traditionally, many lines of work don’t just provide an income for the worker, they also provide a number of other ancillary values. They provide them with an occupation that serves their neighbors.
The income (and the reasonable confidence in continued income) provides them with a means to marry, have children, buy a home, and so on. It also provides one with some level of real agency that one can use, alongside the social capital one builds from being in a place long enough, to serve that place and make it better. In this understanding, one’s professional work is a means of service to God and neighbor. So the income is important, but the other ancillary benefits are equally important.
But in the economy created by Silicon Valley, most of these other benefits evaporate and are (maybe) replaced by larger paychecks. There’s no promise of stability at all, and so it is difficult or even impossible to commit yourself to a place. This also makes the acquiring of any sort of social capital with one’s neighbors difficult.
Yet, at the same time, these companies which offer their employees very little in terms of long-term stability or loyalty, expect their employees’ to give a tremendous amount to them. The way they’re able to make such a one-sided bargain seem reasonable is by offering a great work-place “culture” which basically means free candy and beer, flexible hours, tons of social events, and an aura of cool that these companies sell at every turn:
How can you get hundreds of people to work in sales and marketing for the lowest possible wages? One way is to hire people who are right out of college and make work seem fun. You give them free beer and foosball tables. You decorate the place like a cross between a kindergarten and a frat house. You throw parties. Do that, and you can find an endless supply of bros who will toil away in the spider monkey room, under constant, tremendous psychological pressure, for $35,000 a year. You can save even more money by packing these people into cavernous rooms, shoulder to shoulder, as densely as you can. You tell them that you’re doing this not because you want to save money on office space but because this is how their generation likes to work. On top of the fun stuff you create a mythology that attempts to make the work seem meaningful. Supposedly, Millennials don’t care so much about money, but they’re very motivated by a sense of mission. So, you give them a mission. You tell your employees how special they are, and how lucky they are to be here. You tell them that it’s harder to get a job here than to get into Harvard, and that because of their superpowers they have been selected to work on a very important mission to change the world.
Given their agenda and the way they have to market themselves to their impressionable young employees, it’s no surprise that many tech companies seem to take on the roles traditionally filled by family, friends, neighborhood, and church. But whereas family, friends, neighborhood, and church tend to offer some measure of stability, tech companies (with their emphasis on “team, not family,”) end up dominating their employees’ lives in much the same way, but with no offer of permanence, loyalty, or any sort of relationship maintained by anything save commercial interest. Lyons gets at the problem nicely:
There was a time, not so long ago, when companies felt obliged to look after their employees and to be good corporate citizens. Today that social compact has been thrown out. In the New Work, employers may expect loyalty from workers but owe no loyalty to them in return. Instead of being offered secure jobs that can last a lifetime, people are treated as disposable widgets that can be plugged into a company for a year or two then unplugged and sent packing.
Sadly, the problem is not limited to the employee’s professional life either. The issues run deeper. When you switch companies every 2-3 years, as is fairly common in companies like HubSpot, you don’t ever actually develop a deep knowledge of a place, a commitment to people you actually live with on a day-to-day basis, or a knowledge of that place as a coherent whole economy that includes more than just isolated, autonomous human beings. To put it in Berry’s terms, if the industrial economy is too small and crowds out much of life, it appears that the post-industrial knowledge economy may be smaller still. And that is the great danger that Lyons book warns us of. We would do well to listen.