Disrupted: My Misadventure in the Start-Up Bubble

by Dan Lyons

Later I also will hear a story about janitors coming in one Saturday morning to find the following things in the first-floor men’s room: a bunch of half-empty beers, a huge pool of vomit, and a pair of thong panties. The janitors were not happy.

Everyone works in vast, open spaces, crammed next to one another like seamstresses in Bangladeshi shirt factories, only instead of being hunched over sewing machines they are hunched over laptops.

Online marketing is not quite as sleazy as Internet porn, but it’s not much better, either.

Every month, HubSpot’s customers send out, in aggregate, more than a billion email messages. And we’re just one of dozens of companies selling tools to automate the work of sending junk around the Internet. Now I’m a part of this. I’m working for the people who fill your email inbox with junk mail, the online equivalent of those pesky telemarketers who call you at dinnertime to sell you new windows or a set of solar panels for your roof.

In training we’re taught that the billions of emails that we blast into the world do not constitute email spam. Instead, those emails are what we call “lovable marketing content.” That is really what our trainers call it. That is the exact term they use. The convoluted logic behind this is that “spam” means unsolicited email, and we only send email to people who have handed over their contact information by filling out a form and giving us their permission to be contacted. Our emails might be unwanted, but they’re not, strictly speaking, unsolicited, and therefore they are not spam.

“You all must be pretty special to be here,” Dave, our trainer, tells us. “HubSpot gets thousands and thousands of applications. Just to be sitting here in this room means you’ve climbed past a lot of other really exceptional people. Did you know that it’s harder to get hired at HubSpot than it is to get accepted at Harvard?” That line about Harvard is one that gets tossed around a lot. I hear it over and over again. Halligan likes to tout it. I have no idea how they came up with the claim, but Harvard has a 6 percent acceptance rate, so I suppose they just figured out that in a certain year HubSpot had hired fewer than 6 percent of people whose resumes they had seen, so that makes HubSpot more exclusive than Harvard. This is ridiculous, and oddly enough not that big of a deal: McDonald’s and Walmart have at times also hired fewer than 6 percent of job applicants. Nevertheless, people at HubSpot take it seriously. I suppose it makes the new hires feel special.

HubSpot seems to recruit a certain kind of person: young and easily influenced, kids who belonged to sororities and fraternities or played sports in college. Many are working in their first jobs. As far as I can tell there are no black people, not just among my recruiting class, but across the entire company. The HubSpotters are not just white but a certain kind of white: middle-class, suburban, mostly from the Boston area. They look the same, dress the same. The uniformity is amazing. HubSpot prides itself on having numbers for everything—it’s a data-driven organization—and for being radically transparent. Yet oddly enough, HR, or “people operations,” as it is called, claims to have no statistics on diversity. One day, after sitting through a company meeting and noticing the bleachy-clean, driven-snow, Mormon-level whiteness of the crowd, I send an email to a woman in HR asking if we have any statistics about diversity. She sends back a terse response: No. Why?

Reporters are trained to hate corporate jargon and to eliminate it, not to engage in it. We’re expected to be cynical and skeptical, not to be cheerleaders.

Try to imagine the calamity of that: Zack, age twenty-eight, with no management experience, gets training from Dave, a weekend rock guitarist, on how to apply a set of fundamentally unsound psychological principles as a way to manipulate the people who report to him.

Apple CEO Steve Jobs used to talk about a phenomenon called a “bozo explosion,” by which a company’s mediocre early hires rise up through the ranks and end up running departments. The bozos now must hire other people, and of course they prefer to hire bozos. As Guy Kawasaki, who worked with Jobs at Apple, puts it: “B players hire C players, so they can feel superior to them, and C players hire D players.” That’s the bozo explosion, and that’s what I believe has happened at HubSpot in the course of the last seven years.

Harvey says everything I’m describing about HubSpot is absolutely normal. “You know what the big secret of all these start-ups is?” he tells me. “The big secret is that nobody knows what they’re doing. When it comes to management, it’s amateur hour. They just make it up as they go along.”

Dorsey once had blue hair and played music in the street. For a while he went around dressing like Steve Jobs. Then he was obsessed with Japanese culture. Then he was going to become a fashion designer. Then he reportedly wanted to be mayor of New York. After being pushed out of Twitter he started a payment company called Square, which raised $590 million in venture funding and in November 2015 successfully sold shares to the public, despite having lost nearly $500 million—half a billion dollars!—in just four years. In 2015, Dorsey became CEO of Twitter again, so he now runs two companies.

Williams left Twitter and founded Medium, but by 2015, after three years in business, he still was not sure what he wanted that company to be, and he started firing people he had just hired. Williams also runs a venture capital firm, Obvious Ventures, which in 2015 raised $123,456,789—get it?—from limited partners such as noted technologist Leonardo DiCaprio.

I remind myself that I have a lot to be thankful for—realizing, even as I do, that the only people who say this are people who are desperate and miserable.

Board members don’t always know everything about a company, he says. They only know what the management team tells them, and sometimes that is not too much. “I tell my board as little as possible,” he says. “I treat them like mushrooms, I keep them in the dark and feed them shit. I don’t want them meddling in my business and telling me what to do.”

while people still refer to this business as “the tech industry,” in truth it is no longer really about technology at all. “You don’t get rewarded for creating great technology, not anymore,” says a friend of mine who has worked in tech since the 1980s, a former investment banker who now advises start-ups. “It’s all about the business model. The market pays you to have a company that scales quickly. It’s all about getting big fast. Don’t be profitable, just get big.”

tech companies know how to spin negatives and present them as positives. HubSpot offers unlimited vacation time and pitches this as a perk. The truth is that this policy saves money for HubSpot. When a company has a traditional vacation plan, it is required by law to set aside a cash reserve to cover the cost of all of the vacation days that it owes to its workers. When employees quit or get fired, the company must pay them for the vacation time they have accrued. But if a company has no vacation plan, it doesn’t have to set aside the cash reserve. Better yet, the company can fire people without having to pay them for any accrued vacation time. Paige, who got canned after eleven months, had taken only five days of vacation. At a traditional company she would have been owed a week or two of vacation pay, but from HubSpot, she got nothing. Think about how many hundreds of people churn in and out of a place like HubSpot, and you can see how the savings add up.

Not just limited to tech companies either A lot of big cos do this accounting exercise

The Netscape IPO set off the dotcom frenzy. In Silicon Valley it was as if someone had flipped a switch. Suddenly there was a new business model: Grow fast, lose money, go public. That model persists today. It’s a simple racket.

Old-guard tech CEOs seem baffled by the phenomenon of companies that operate for years in the red. “They make no money! In my world you’re not a real business until you make some money,” Steve Ballmer, the former CEO of Microsoft, said about Amazon in 2014, a year when the company lost $241 million yet saw its market value climb to $160 billion. Oracle CEO Mark Hurd, another old-guard business guy, expressed similar astonishment about Salesforce.com. “There’s no cash flow,” he said about that company in April 2015. “What are they worth right now? $35 billion?… It’s crazy, just crazy.” That was nothing. A few months later Salesforce.com was worth more than $50 billion.

Benioff is a buffoon, a bullshit artist, and such an out-of-control egomaniac that it is painful to listen to him talk. He lives in Hawaii and signs his emails “Aloha.” He’s a Buddhist and hangs out with Zen monks from Japan, and he gave his golden retriever the title “chief love officer” at his company. He is the Ron Burgundy of tech. He and this conference are the essence of everything that has gone wrong in the industry. “Have you transformed the way you innovate?” was Benioff’s big line at the 2012 Dreamforce show. Note that you can switch the two buzzwords in the sentence and it still sounds good and still means nothing. Meaningfullessness is not a word, but should be. There’s an art to this kind of horseshit, and Benioff is its Michelangelo.

Silicon Valley is filled with people like this who spend their careers jumping from one tiny dysfunctional company to another, chasing a pot of gold. “I was stunned when I was doing recruiting in the Valley,” a former software executive recalls. “Everyone is a mercenary. Every resume you’d look at had all these stints of a year here, a year there. Like if they didn’t hit the jackpot in a year, they’d go place a new bet.” I think of this as a kind of mental disorder—the Start-up Disease.

One of the maddening things about discrimination of any kind is that it is often difficult, if not impossible, to prove that it’s taking place. The bias is often subtle, or even subconscious.

I smile. I laugh along with the joke. I’m old! I’m so goddamn old! I should totally write something funny about what it’s like to be this old!

Story of every minority office worker's life Just replace the 'old' with black or brown or young or gay.

Maybe I sound thin-skinned. It’s just a few wisecracks, after all. These are not bad people. For the most part they’re not trying to be mean about my age. It probably never occurs to them that any of this is hurtful to me. Of course I’m not going to mention any of this to the HR department. It would only make me seem nuts and paranoid and, worst of all, old, which is the last thing I want to be. This is no doubt why older workers tend not to complain about age discrimination. Who wants to sound like a whiner?

Part 2 of Relatable af as any kind of minority

Stock market manias are heaven for venture capitalists. Eugene Kleiner, a co-founder of Kleiner Perkins Caufield & Byers, the legendary VC firm where Doerr works, once said: “Even turkeys can fly in a strong wind.” Kleiner Perkins was founded in 1972 and is one of the oldest, most respected VC firms in Silicon Valley. Kleiner’s maxim about flying turkeys is one of ten “Kleiner’s Laws,” a set of rules that people all over Silicon Valley still live by. Pump money into sales and marketing, generate enough hype, and you can sell almost anything if the market gets frothy enough. “I love bubbles,” Tom Perkins, another co-founder of Kleiner Perkins, once declared. “We made a lot of money in bubbles.”

In the old days, Silicon Valley venture capitalists embraced a California version of clubby East Coast white-shoe culture. All of the top VC firms literally sit beside one another on the same street, a big boulevard called Sand Hill Road in Menlo Park. For decades these firms resembled snooty private gentlemen’s clubs—in the British upper class sense of the word. They were almost exclusively male and were run by former engineers who shunned publicity and quietly voted Republican.

“It’s not a bubble; it’s an unprecedented, long boom,” Doerr told Bloomberg in June 2015. Then again, Doerr is in the business of selling companies to the public markets. What do you expect him to say? Asking a venture capitalist if private companies are overvalued is like asking a car salesman if he thinks you’re paying too much for the new Mercedes he’s selling you.