Features & Columns

The New Work:
Employees as Widgets

Dan Lyons' New Book, Disrupted, Deep Fries Silicon Valley Bro Culture

Disrupted: My Misadventures in the Startup Bubble.

It turns out I've been naÏve. I've spent twenty-five years writing about technology companies, and I thought I understood this industry. But at HubSpot I'm discovering that a lot of what I believed was wrong.

I thought, for example, that tech companies began with great inventions—an amazing gadget, a brilliant piece of software. At Apple Steve Jobs and Steve Wozniak built a personal computer; at Microsoft Bill Gates and Paul Allen developed programming languages and then an operating system; Sergey Brin and Larry Page created the Google search engine. Engineering came first, and sales came later. That's how I thought things worked.

But HubSpot did the opposite. HubSpot's first hires included a head of sales and a head of marketing. HubSpot started out as a sales operation in search of a product.

Another thing I'm learning in my new job is that 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.'

That's what HubSpot is doing. Its technology isn't very impressive, but look at that revenue growth! That's why venture capitalists have sunk so much money into HubSpot, and why they believe HubSpot will have a successful IPO. That's also why HubSpot hires so many young people. That's what investors want to see: a bunch of young people, having a blast, talking about changing the world. It sells.

Another reason to hire young people is that they're cheap. HubSpot runs at a loss, but it is labor-intensive. 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. You make the company a team, with a team color and a team logo. You give everyone a hat and a T-shirt. You make up a culture code and talk about creating a company that everyone can love. You dangle the prospect that some might get rich.

But Silicon Valley has a dark side. To be sure, there are plenty of shiny, happy people working in tech. But this is also a world where wealth is distributed unevenly and benefits accrue mostly to investors and founders, who have rigged the game in their favor. It's a world where older workers are not wanted, where people get tossed aside when they turn forty. It's a world where employers discriminate on the basis of race and gender, where founders sometimes turn out to be sociopathic monsters, where poorly trained (or completely untrained) managers abuse employees and fire people with impunity, and where workers have little recourse and no job security.

In December 2014 Nicholas Lemann published an essay in the New Yorker contrasting the vision of work that Alfred P. Sloan, the legendary CEO of General Motors, described in his 1964 memoir, My Years with General Motors, with the vision laid out in a series of books published by executives from Google.

In the twentieth-century model under which Sloan's GM operated, companies 'were heavily unionized, and offered their white-collar employees de-facto lifetime tenure. Employees got steady raises during their working years and pensions after retirement,' Lemann writes. Things changed with the emergence of the Internet and in particular with Google, the first successful Internet company with a large workforce. Google succeeded, Lemann writes, by 'breaking the rules about how to run a business.'

The biggest rupture involves the social compact that once existed between companies and workers, and between companies and society at large. 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. In this model, we are basically freelancers, selling our services in short-term engagements. We may have dozens of jobs over the course of our careers.

'Your company is not your family' is how LinkedIn's multibillionaire cofounder and chairman Reid Hoffman puts it in his book The Alliance: Managing Talent in the Networked Age. Hoffman says employees should think of a job as a 'tour of duty' and not expect to stay for too long. In his view, a job is a transaction, one in which an employee provides a service, gets paid, and moves on. In addition to his duties at LinkedIn, Hoffman works as a partner at Greylock Capital, a top venture capital firm. Forbes calls him 'the most connected man in Silicon Valley.' He is widely respected, even revered, and his ideas about the relationship between employers and employees have influenced a generation of entrepreneurs, who take his word as gospel.

Hoffman's line about a company not being a family traces its roots to a 'culture code' that Netflix, the Silicon Valley video-subscription company, published in 2009, and which famously declared, 'We're a team, not a family.' The Netflix code inspired a generation of tech start-ups and 'may well be the most important document ever to come out of the Valley,' Facebook COO Sheryl Sandberg once said. Shah used the Netflix code as the model for his HubSpot culture code and lifted the original Netflix line: 'We're a team, not a family.'

Netflix justified the 'not a family' idea by arguing that like a pro sports team, tech companies need 'stars in every position.' That deal makes sense if you're a professional athlete who can earn millions of dollars a year and retire at age thirty or thirty-five, but seems a bit ruthless when applied to the rank-and-file worker. The result, according to countless articles in publications like Fortune, the New Republic, Bloomberg, and New York Magazine, is that Silicon Valley has become a place where people live in fear. As soon as someone better or cheaper comes along, your company will get rid of you. If you turn fifty, or forty, or thirty-five; if you demand a raise and become too expensive; if a new batch of workers comes out of college and will do your job for less than what you are paid—you're gone. So don't get too comfortable.

Copyright Dan Lyons, courtesy of Hachette Books.

Disrupted: My Misadventures in the Startup Bubble

Dan Lyons
Wednesday, April 13, 7:30pm
Kepler's Books
1010 El Camino Real
Menlo Park