Saturday, May 28, 2016

Disrupted: A Resonant Tale


History Does Not Repeat Itself, But It Rhymes
Mark Twain (maybe)

I finally managed to get some time off last week, and had a great time in Vancouver meeting up with an old friend, followed by taking a cruise back home. This was the first time I'd been on a cruise ship, and I can guarantee you it will also be my last. I have a hard enough time boarding an aircraft, with slow people who wander aimlessly, can't get out of the aisle, and are seemingly unable to follow even the simplest of instructions - however that's nothing compared to a cruise ship. 

Imagine 3000 people, from families to your local retirement home outing, trying to board one ship, all in the space of a couple of hours. While I have some sympathy for the cruise lines in trying to deal with all this, being herded like cattle from pen to pen is not what I consider a fun time. It didn't get much better once on the boat, but fortunately I had a couple of good books with me and I pretty much sat on the room balcony and read them through. The first was "Disrupted: My Misadventure in a Startup Bubble" by Dan Lyons.

"Disrupted" is a book that hit home for me, and I read it cover-to-cover in one sitting. Here was a person who had built his credentials through 'traditional' companies, a focus on high-tech, had looked on with incredulity through his career as the most ridiculous companies were funded then sold, and eventually jumped into that world only to learn that it's more ridiculous than you could have imagined, and that in the end you just can't stop being who you are. 

Lyons was a former tech journalist who had joined "HubSpot", a company producing software tools for "Inbound Marketing". This attempts to have the customer come to you, not the old fuddy-duddy approach of having farms of workers cold-calling from paper lists and reading scripts to grab a sale. HubSpot were "disrupting" the old way of doing business and receiving huge valuations based on that fanfare - yet behind the scenes were using those "boiler room" techniques to promote their own product, and appeared to be pushing the appearance of growth at any cost to ensure the money kept flowing.

HubSpot is also famous for its Culture Code, their set of rules for a workplace designed to attract and keep the best talent. When I first read it (along with the Netflix equivalent) I was really pleased to see the main themes (minus the touchy-feely bits) were what I had tried, as best I could within the confines of a larger company, to employ when I ran a small division selling high tech software. Sadly, it turns out they were more "aspirational" than "actual" and mostly geared to reducing company financial liabilities such as paid vacation. I'll be coming back to these Culture Codes in a future post.

Lyons' experience had both similarities and differences to mine. Being on the inside of a startup and watching the insanity is something I'd had to deal with myself, and there were plenty of parts where with a simple name change to the characters it could have been something that happened to me. On the other hand Lyons joined later in the company growth, where it was nearly $100 million raised with 500 people in the company, and watched more from the 'regular employee' viewpoint, whereas I had been there from pre-funding, developed large parts of the core technology, and was involved (at least as an observer) in most business decisions for a period, giving me some insight into the interactions with the investors. (I'll add this experience was at more than one company.)

One of the themes that's clear in Lyons' writing is that the ageism in HubSpot was rampant - the idea that "younger people are just smarter" and do better for the business, when in reality it simply means "too inexperienced to realise they're being taken advantage of" and both cheaper and disposable. Hardware engineering, compared to marketing, makes this business ploy almost impossible to pull off. Most hardware problems are so interdisciplinary, and require so much understanding of the technology, processes, planning, and the realities of development that it's really only achievable with experience and talent. They also require time to move through to completion, often four or more years, plenty for naive new hires to wise up. Generally, once they're put into a real world hardware development role, even the most capable and arrogant engineer quickly learns not just that experience matters, but the problems are so large that there's no way to solve it on your own - you have to work in a team, and know your role in it. That ageism, fortunately, isn't something I have really encountered.

Another aspect of his experience that doesn't match with mine was with the "Kool-Aid" drinking of his co-workers. At HubSpot, the young staff truly believed they were working on something world-changing, that they had a mission, and they were part of a glorious revolution, prophets of a new religion that it was their destiny to bring to the masses. It seems apparent from his writing however that the founders and leaders of the company knew exactly what they intended to do, and it was a cold calculated method to game the system and make the company look attractive for an IPO. 

If anything my previous experience has tended to the opposite, where the Board and "C" level are the Kool-Aid drinkers, the true-believers, who ignore technical reports that point to failures, issues, and problems, as they are just the work of "heretics", or incompetent/lazy engineers. The average engineer, however, is under no illusion as to the real status of the company and the work - if they are any good, then facts and evidence are paramount to an engineer. Measurements, numbers, statistics all matter more than perseverance and pig-headedness. Maths and physics don't lie or bend to management directives. 

If C-level directives fly in the face of sensible technical choices, it's noticed and questioned. Sometimes you accept a poor engineering choice due to business reality of cost or timing, but if it's purely fantasy and you're being told to accept an impossible/stupid engineering choice then it simply forms an "us and them" mentality. It creates an odd situation where the lunatics are running the asylum, one where the patients are all sane and know it.

Lyons on the other hand was the sole sane man in the asylum, constantly surrounded by the insane, with no-one to turn to and laugh with. You can tell from his writing that at some points he questioned his own sanity, and was it he himself that was wrong and out-of-touch? It chips away at his self-belief, which had already taken a hit due to his earlier layoff from Newsweek. The whole process is insidious, as by breaking their self-belief, the company culture prevents someone from the clarity of thought and confidence to simply walk out, leaving the person feeling trapped and powerless - which I've learned over the years is something a lot of bosses like to have in their employees. You want to scream "Just get out!" at him, and fortunately he does have some friends simply tell him that. 

The psychological turning point for him seems to have been landing the gig writing for the show "Silicon Valley", spending weeks talking and working with other sane, rational people and laughing at the insanity he was dealing in with his regular job. At that point, he regains his self-belief and it's just a matter of time before he leaves, but he does what always amazes me about abused staff and shows a remarkable professionalism even in the face of egregious behaviour by his management. He continues to work and deliver product until it all finally blows up, and resigns giving them plenty of notice, but unsurprisingly is "graduated" (fired) immediately (definitely familiar to me).

Where the book really meshes with my experience though is in the observations of the startup and funding ecosystem - the game whereby VC's and founders manipulate the metrics not to produce better product or to satisfy customers, but to garner the appearance of growth to inflate valuations, and sell on to a greater fool, be it another larger VC, or the general public in the form of an IPO. It's not about creating an effective product, or improving productivity, it's about manipulating the employees, the unquestioning tech press, and the investment analysts into keeping the charade going long enough that someone has put so much money into it that either it's not allowed to fail, or you've banked the gains before it collapses. To quote from Disrupted:

"The one thing people do not appreciate is that these companies are incredibly fragile. There is so much less than people believe... The whole thing is based on companies trying to achieve escape velocity before they blow themselves up."

The book resonated with me on two main levels - the first being that Lyons is our "everyman" in a bizarre world, and he reacts as a sane man should, though often questioning his sanity. He reminded me of the titular characters in "Life of Brian" and "Blackadder", simply trying to make his way through life and doing what he can in the weirdest of circumstances. 

The second, stronger, resonance for me is his tying of the experience to the startup ecosystem, pointing out that, like the financial crises of the past, these valuations and investments are based more on sizzle than the steak itself, and that it's impacting our society in significant ways. Chapters like "Glassholes", "Escape Velocity", and "The New Work: Employees as Widgets" are really where the meat of the story is - a small fraction of the book but highlight the insidious effect "The New Work" is having on all our lives. These chapters alone made it worth reading, and the humour of the rest keeps your attention - go buy it. 

I'll leave you with a final quote from the book that in a few sentences perfectly covers what I have been trying to put into words. I doubt I'll ever be able to phrase it better than this:

"I've been in the Valley a long time. As far as I can tell, nobody here ever feels guilty about anything they do. What I have observed from these guys is that they have a strong sense that they are moral actors. They believe very strongly that they operate with high integrity. They believe they are the most moral folks on the planet. But they are not."

These are the people who claim they are making the world a better place. And they are. For themselves.

4 comments:

  1. Your blog has been such a delight to read and your insights have been quite impactful to me. I am a graduating MIT PhD in robotics just beginning on the start up journey and have viewed from the sidelines as many not-so-great teams with not-so-great vaporware get millions of dollars in investment. My friends and I have questioned whether we are the real idiots. Your writings have been quite enlightening and I wanted to extend my appreciation.

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    1. Thanks for your comment. Best of luck to you.

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  2. I too have enjoyed your blog. I also enjoyed Dan Lyons book because it put in context some of my experiences in the VC funded startup space.

    Over the course of my career I've had the opportunity to work with some really smart founders and I got a chance to build some really cool systems and work on truly transformation projects that have created lasting value for the owners. In working with VC based startups I've learned a few valuable lessons:

    1. People get paid lots of money to invent worse wheels.

    2. Obedience and ignorance has a higher value than competence.

    3. People who point out the insanity are labeled trouble makers and swiftly removed from the environment. Therefore, the very traits that make you a competent engineer are a liability in these organizations.

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    1. I agree with all your points. We seem to have worked in very similar companies!

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