Back in the pre-bubble days of Web 1.0, we wrote a piece called, “How to Get Rich in Silicon Alley – The First Wave.” We still have it, for those of you who’d like to see it; it’s too long to include here – and part of it was a ‘guide’ to how to keep employees chained to their desks by incentivizing them with anything but money, which, of course, as founders, you wanted to keep for yourselves.
That was then and this is now and not much has changed in all quarters of technology, except for company names and maybe a slightly different lexicon. ‘Millenials’ is a new one and we’re actually not attacking you all here, so calm down. This is meant to be instructional. Millennials are being dot.conned by cult-like tech companies, said this New York Post piece about “Fake Steve Jobs” Dan Lyons, a former HubSpot writer who now writes for “Silicon Valley,” as in the HBO show, and his experiences in the tech world – specifically, at HubSpot. “A huge chunk of potential compensation at tech startups comes in the form of stock options, which could turn out to be worth nothing but are certainly worth nothing if employees get so burned out that they leave before the options vest,” reads the piece. “This is part of the plan. Tech firms basically operate like South African gold-mining operations, with confident young Tame Impala fans being the bodies thrown into the pit to break their backs digging up nuggets. All of the IPO gold, though, goes straight into the pockets of their masters topside.”
You know how it goes: unless you’re the lead dog, the scenery never changes.
“At HubSpot, every time another bedraggled would-be “world changer” hauled his dejected remains out the door, or got fired, the company would say he or she “graduated.” “Team, just letting you know that Derek has graduated from HubSpot, and we’re excited to see how he uses his superpowers in his next big adventure!” a typical e-mail would read.””
We know the drill in the startup world (and when, exactly, does a company stop being a startup?): long hours, little pay – but you can wear shorts and flip flops and there are almost always candy machines or Pizza Fridays. At HubSpot, they even have an unlimited vacation policy. Brilliant! According to the Post piece, “Fired employees have no accrued vacation time, which saves the company payouts to its “graduates.” Firms with vacation plans are also required to set aside cash reserves to cover the cost. HubSpot dodged this cost.”
And you wonder why companies prefer to hire younger, less experienced workers… And why we refer to many of the better-known/media darling founders as the tech overlords, and they’re not all necessarily unicorns, although, as the article points out, HubSpot is one, as a result of its IPO, despite the fact that it has yet to make a dime in profits. Voodoo economics is not a new term, but it’s certainly applicable in the tech world.
We know that Millenials are driven by doing good for the world and somehow, giving back, or working for a company that’s doing so-called social good. All well and good, but charity begins at home and you to take care of your own first – which includes paying your people a living wage (Man moves to San Francisco, pays $400 a month to sleep in wooden box in friends’ living room).
We know from experience that many a Millenial will start a company and live/work from home, as do many of their cofounders and early employees, while they gather eyeballs, then go for funding. We know that, as a generation, you’ve never experienced this before, but Forget unicorns – investors are looking for cockroach tech startups, meaning “… a business that builds slowly and steadily from the get-go, keeping a close eye on revenues and profits. Spending is kept in check so that it can weather any funding storm.”
Think P/L rather than insanely overvalued PE ratios.
The unicorn body count is growing – and leaving massive numbers of unemployed tech workers in their wake. Losing a job is a rite of passage, but it doesn’t mean that you go to the head of the class – unless you’ve learned something. Like the fact that it’s time to stop drinking the Kool Aid, and to stop making the same mistakes and putting someone else’s ‘vision’ above your basic survival needs, meaning, nothing says more that you’re a valued employee than a decent salary. Above all else remember that at the end of the day, you’re working for yourself. Truth be told, unicorns were real and they were ugly and if you’ve fallen for the same old, same old often enough, you might want to look at it this way: it wasn’t that you were drinking the Kool Aid: it’s more like you were delivered a sucker punch. Time to move onward and forward.
We keep seeing articles about the rise of tech hubs outside of Silicon Valley, and the growing number of accelerators launching in some of those newer hubs. One reason why: tech talent is fleeing Silicon Valley and according to Entrepreneur, there are 3 Reasons Tech Workers Are Fleeing Silicon Valley:
Of course, it’s really one point, when you get down to it. Between the high California taxes, outrageous rents ($250K Per Year Salary Could Qualify For Subsidized Housing Under New Palo Alto Proposal) and mushrooming number of H1B visa holders taking jobs formerly filled by American-born workers, meaning that American-born workers would have to take a considerable pay cut to compete with the auslanders, it’s all about quality of life. As a recruiter, we will honestly tell you that salaries for tech workers haven’t significantly changed since the ‘90s, despite the fact that the cost of living has risen considerably in the venerated tech hubs – specifically, Silicon Valley and New York City – and rent/home ownership costs have skyrocketed. And lest we forget, “…More than 80 percent of H-1B visa holders are approved to be hired at wages below those paid to American-born workers for comparable positions,” according to Mother Jones.
Former Intel chief and Silicon Valley icon Andy Grove died last week and a good time to remember Andy Grove’s Warning to Silicon Valley. ‘According to Mr. Grove,” says the article, “Silicon Valley was squandering its competitive edge in innovation by failing to propel strong job growth in the United States…. Silicon Valley misjudged the severity of those losses, he wrote, because of a “misplaced faith in the power of start-ups to create U.S. jobs.” … But just as American companies have bolstered their profits by exporting jobs (or hiring H1Bs), many now do so by shifting profits overseas. “… All of us in business have a responsibility to maintain the industrial base on which we depend and the society whose adaptability — and stability — we may have taken for granted,” said Grove. Silicon Valley and much of corporate America have yet to live up to that principle.’
But as we’ve said before, entrepreneurs are a scrappy lot, and they’ll move to where the opportunities are, and maybe to where the living is easy. Or easier.
And they’ll make their own opportunities.
“Silicon Valley has become a “monocrop” culture where entrepreneurs are well-educated, have frictionless access to capital, and have their basic needs taken care of. The majority of resources today are going to entrepreneurs whose lived experience is in well-off, well-connected cities,” said Ross Baird and Lenny Mendonca (Silicon Valley’s Unchecked Arrogance), and goes on to warn that “there is a problem with monocrop culture: ultimately, you deplete the soil.”
It should be interesting as Silicon Valley’s developer brain trust moves to the tech outliers and outside of a culture that caters primarily to the entitled – and where a good deal of one’s time goes to making rent or mortgage payments, becoming slaves of technology and basically accomplishing little more than what amounts to running in place. Now that the current crop of developers are looking to buy homes and start families, despite all of the perks, Silicon Valley is not addressing their needs, especially in an era where exits taking longer and longer, and IPOs are an increasing rarity, and by the time the exit does come, chances are early employees’ once potentially valuably equity has been minimized, and it’s the few at the top who really cash out. Sarah Haloubek gives an excellent breakdown on who really wins and who really loses in the startup world, reminding us that “wild successes feel good for staff. But most only receive a small to medium check. For most, they still would have made more, exit check included, working at an established company.”
It’s hard to jump on the successful tech startup bandwagon when you’re stuck on a treadmill.
And there is life – and new solutions to problems, solutions that have yet to be developed – outside of the major tech hubs. Uber started as a uniquely urban problem: in NYC, how do you get a cab during inclement whether/rush hour when there are a finite number available – a number that hasn’t changed in a century, despite the fact that the city’s population has – or in San Francisco, where one doesn’t simply raise one’s hand, and a cab magically appears? Like most disruptive startups, it arose from a personal need/experience that addressed a far wider reaching problem – one that may not necessarily exist outside of urban hubs/tourist centers. As the Silicon Valley developer brain trust moves beyond the large urban centers, it’ll be interesting what problems they will encounter and address, as a result of a new and previously unknown/unaddressed set of personal experiences.
On the other side of the coin, ditto the glut of H1Bs who are currently being trained in Silicon Valley, many of whom will return to or rotate back to their native countries, and who do and will continue to develop technologies outside of the purview of the SV tech overlords. We already see it happening, if you’ve noticed that investors more and more are looking at tech that’s developing in other countries, some of which is courtesy, no doubt, of the myopia of the West Coast based tech overlords who have been training their future competitors for a while now, and thanks for playing. One thing is certain: there’s no doubt that it’ll be interesting to see how this all plays out and what develops – literally – as we move onward and forward.
Now, that’s a book we’d like to see written and we do want credit for the title.
Dan Lyons put Silicon Valley’s bro culture back on the radar, and speaking of bro culture, Alicia Syrett (Pantegrion Capital) once referenced an article where two identical resumes were submitted to a hiring manager, one under a male name, the other under a female name. The hiring manager opted to meet with the male. Reason: he had stronger, more relevant experience.
What to speak of the fact that Men With 2 Years of Work Experience Earn More Than Women With 6.
Lyons (author of “Disrupted: My Misadventure in the Start-Up Bubble.” You remember him; we covered him in a piece about a year ago, when he was addressing ageism in tech) wrote an interesting OpEd piece (Jerks and the Start-Ups They Ruin) about Silicon Valley’s bro culture and the CE-Bros who run many of the companies if not the show. He seems to do a pretty good job at delineating the problem, stating that “That may finally change, if the people in charge of Silicon Valley — venture capitalists, who control the money — start to realize that the real problem with tech bros is not just that they’re boorish jerks. It’s that they’re boorish jerks who don’t know how to run companies.”
Uber’s Travis Kalanick is his case in point, and we’ve covered that ad nauseam.
Lyons defines Bro Culture as “a world that favors young men at the expense of everyone else. A “bro co.” has a “bro” C.E.O., or C.E.-Bro, usually a young man who has little work experience but is good-looking, cocky and slightly amoral — a hustler. Instead of being forced by investors to surround himself with seasoned executives, he is left to make decisions on his own.”
That’s part of it, and while Wall Street may have arguably gotten the ball rolling with its Old Boy Network, Silicon Valley has taken it to the next level, bro-kering a culture that took exclusion to a new level. Consider the anti-women forces at play:
So why does this persist? Says Lyons: “It may be because many of the venture capitalists are bros as well.”
You do need enablers. According to Lyons, “Venture capitalists used to be tech engineers who had made a bundle, retired early and took up investing in start-ups as a kind of white-shoe hobby. The new breed are competitive alpha males who previously might have gone to work as bond traders.”
In other words, former bros and C.E.-Bros. The circle goes unbroken, double entendre intended.
But Uber is trying to rectify its sexual harassment situation and in case you missed it, “Uber appointed one of its board members, Arianna Huffington, to join former attorney general Eric Holder and others to investigate the sexual harassment claims.” What Lyons missed was that this is the same Arianna Huffington who was sued by unpaid contributors to the HuffPo, after its purchase by AOL. Just a reminder of, perhaps, why she might have tapped, in particular, besides her gender, of course, and in the case of the HuffPo, the writers lost. Including some whom we know personally, so we were aware of what was promised prior to the sale – and what was done, post-sale. Ah, for the days when the press did their research, and we do realize that this is an op-ed piece, in this case.
Considering the list above (and let’s not forget the bros and C.E.-Bros themselves, and our thanks to Andy Harrison for his input), odds are hardly stacked in women’s favor. Lyons makes a good point when he says that it’s time for adult supervision, but it’s a tall order in the face of a vertical that values youth and where it seems the players refuse to grow up, in a culture where babes and balls just never grow old, which will chime in every now and again on rectifying the situation, re the treatment of women, putting on their very best poker faces, all the while knowing only all too who really holds all the cards. Onward and forward.