Lab Rats: How Silicon Valley Made Work Miserable for the Rest of Us

Amazon

50-something journalist Dan Lyons wrote Disrupted back in 2016 about his experiences working at a startup (Hubspot, tl;dr: lots of toxic techbro culture and ageism). In Lab Rats, his colorful writing and outsider perspective insight into the tech industry is back and it’s a fun read that seems to capture the zeitgeist: recent VC-fueled movements in tech/capitalism aren’t as good as we’ve been led to believe. Case in point, consider huge recent branding efforts by Facebook/Uber — as Lyons points out which is like what tobacco companies were doing post-Surgeon General warning, a kind of “here’s my mea culpa, so business as usual.”

His book is like Piketty’s Capital toned down for millennial/plane digestion, and is interesting in its scope and copious references to modern tech titans for both good (more equality) / bad (because selfish motive: scared of revolution) reasons.

Overarching message: shareholder capitalism is no longer working, and, seriously, why is still everyone treating Milton Friedman’s 1970 The Social Responsibility of Business Is to Increase Its Profits as the bible in 2018. And duh, your employees will do their best work when they’re at their best, not constantly surveilled and fearful they may lose their job at any time.

Specifically with regards to how SV is making work miserable for the rest of us, he outlines 4 factors:

  1. money, by slashing wages and retaining corporate profits, companies are taking $2T away from workers every year: (a) wages down 52->46% of GDP in past 4 years, (b) bottom 99% of workers take 78% vs. 92% of all wages;

    1. Why does Amazon make so much and pay so little? They killed a $275/head Seattle tax meant to pay for homelessness intervention, link, which would have cost $12M; recently raised wages to $15 for warehouse workers, but took away their ESOP, link; also seriously backlog ESOP so most people quit /leave in 2 before they can get 80% (5-15-40-40); 200 ambulance calls/y to UK warehouses, most dangerous place to work

    2. if minimum wage tracked productivity growth it would be $22, if it tracked 1% income growth, it would be $29; atm federal minimum is $7.25

  2. job insecurity, thanks to a new idea of employment: gigs not career; inspired by 2009 Netflix’s McCord’s (head of HR) and Hastings’ SlideShare (team, not family) contravening previous ‘HP Way’ (family, not team), and later LinkedIn’s Hoffman’s idea of (2 year) tour of duty

    1. Exacerbated by rising global competition (India/China) for fewer jobs (tech) and democratized access (Google, Coursera), tech companies can really grind their employees who are handcuffed to their stock options

    2. McCord’s ideas are popular though: Sheryl Sandberg said “[her code] may well be the most important document ever to come out of the Valley.”

      1. More McCord: employees should no longer expect their managers or anyone at the company to help them with career development or acquiring new skills. The company doesn’t have time for that. “Managers should not be expected to be career planners. In today’s fast-moving business environment, trying to play that role can be dangerous.”

  3. change, having to constantly deal with new workplace tools and business ideas (Agile, Holacracy, both of which Lyons rips the sh*t out of)

    1. it’s traumatic (more trauma) and ineffective (relatively: n=1500 executive survey, 30% of change initiatives not producing lasting improvement)

    2. mainly, Lyons says, large old companies trying to be new/dynamic; some sh*t on Ford

  4. dehumanization, this seems super topical with the rise of AI (see notes on AI Superpowers), starts with crazy example of France Telecom trying to stress engineers into quitting (by making them work in call centers)- executives in lawsuit right now, link

    1. tech = more surveillance and more KPIs = more pressure to perform (like a robot) WHILE knowing that the more automated / less creative your work is the more likely it will be taken over by a robot

      1. “Hoping to save money, companies now automate every aspect of their organization, from sales and marketing to customer support. They are even automating HR, a department that actually has the word “human” in its name.”

    2. working at Amazon? Apparently feels like being plugged into a “continual performance improvement algorithm”

    3. Uber and psychologically manipulating drivers, link

    4. HireVue… owns “A complete psychographic profile of you exists—the blueprint of your brain, every inch of your wiring—and you have no control over it. Apply for another job, and the system adds to your profile. Over the years, your profile becomes richer and more granular. Can you imagine what that information would be worth to a political party, or certain government agencies? And what they might do with it?”

    5. Bridgewater and Dalio’s PriOS, link, hopes to be running fully 2020; working there like being part of an experiment, constant assessment

And the VC argument basically goes $$$$$ has attracted toxic tech bros to SV who use the gig economy (1099 > W-2) as an excuse to under-treat employees. Also, concurrent popular narratives of hustling and overworking, but which are primarily financially self-interested vs. old Ford/HP way. Some notes on lack of diversity in tech too, see recent Facebook has a 'black people problem,' says former employee who quit this month.

It does end on a good note though, with references to Basecamp’s super enlightened founders (32 hour work weeks in the summer!!! and more).


Summing up the book’s references:

Good people

  • David Hansson (created RoR) and Jason Fried, Basecamp; strict 40 hour work weeks, no chat function in Basecamp because of goal that every employee (at least at Basecamp) should be able to get 8 hours of uninterrupted work (please), simple flat pricing model that doesn’t profit-max: “Why is software pricing so complicated? Because people are trying to extract maximum value. I’m not interest in maximizing anything. Are we leaving money on the table? Yes, every day we are. But we don’t want to be nickel-and-diming people. It all flows from what kind of company you want to be.”

    • success means staying in business, “People tell me, ‘Steve Jobs could not have made Apple if he took Fridays off.’ Well, I’m not trying to make Apple. And I don’t care what Steve Jobs did.””

  • Dan Teran, Managed by Q (like Handy), all employees are W-2 with health benefits if they work >30h, and promotes from within including from field agents; knows his people

  • Howard Schultz, Starbucks

  • Yvon Chouinard, Patagonia, stakeholder capitalism including employees, customers; office closed every other Friday so employees can spend time with family / go outdoors (like REI?)

  • John Mackey, Whole Foods (pre-Amazon): “business can elevate humanity” Conscious Capitalism

  • Jay Gilbert, sold AND1, behind B Labs, certified companies as B Corporations, an assessment of employee welfare; getting more popular: 2500 today vs 205 in 2009, incl. Warby Parker, Ben & Jerry’s, Patagonia

  • Zebras Unite, funding companies that can make a profit and improve society; Kapor Capital, gap-closing investments

  • Hilton, all executives have to work at least one week as housekeepers / dishwashers / bellhop

Neutral people (self-interested)

  • Chris Hughes, FB co-founder, new economy is “going to continue to destroy work,” wants UBI

  • Nick Hanauer, sold aQuantive to MSFT, 2014 TED “The Pitchforks Are Coming for Us Plutocrats” link

Bad people

  • IBM, GE, Verizon, AT&T, raiding/reducing employee pension plans via myriad ways: use it to pay health benefits, sell business units and include pension money, switch cash plan to 401(k); IBM in 1999 $7B pension surplus, in 2017 contributed $500M and still in deficit

  • Mark Pincus, Zynga, forcing employees to return stock pre-IPO; then at IPO, binding employees into a lock-in period

  • Keith Rabois, apparently Twitter rants

  • Tesla, trying to fire factory workers for unionizing, link

  • Amazon


New classes of people:

  • automaton class: Uber drivers and other gig-economy workers who are “treated as literal cogs in transportation and delivery machines.”

  • precariat: those who lack secure employment or predictable income, and suffer psychologically as a result.


Notebook for
Lab Rats
Dan Lyons

INTRODUCTION: MAKE A DUCK
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There is, in fact, a body of scholarly looking research around LSP discussing things like the cerebral cortex and the limbic system. Julia says LSP is especially useful with software programmers, who tend to be introverts, because it creates a “safe space” where they can talk. Lego workshops also help Type-A top executives stop being such overbearing assholes, and can even be a catalyst for changing an entire organization, she claims.
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It turns out that Make a Duck is the best-known exercise in the Lego Serious Play canon, and this is its lesson—that everyone makes a different duck.
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Why now? Why has the workplace become a cross between a kindergarten and a Scientology assessment center? Why do our offices now have decor that looks like a Montessori preschool, with lots of bright, basic colors? Why does work now involve such infantilization?
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call “The Four Factors”—that contribute to worker unhappiness.
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money, insecurity, change, dehumanization tour of duty
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DEHUMANIZATION: Once upon a time we used technology, but today technology uses us. We’re hired by machines, managed by them, even fired by them. We’re monitored and measured, constantly surveilled.
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Do we want the world to be tech-centric, or human-centric?
CHAPTER ONE: UNHAPPY IN PARADISE
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I had gone into the job with high hopes, deceived by the perks and pampering into believing that these new companies were supportive, progressive organizations inventing a new human-centric approach to work.
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That’s how I came to think of employees as lab rats. It turns out others had noticed the same thing. “Work is feeling more and more like a Skinner box” is how Gregory Berns, a neuropsychologist at Emory University, put it when he wrote a New York Times article about a study he had conducted about how fear impairs decision-making, which involved putting people into an MRI machine and zapping their feet with electric shocks.
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Companies might offer parties, snacks, and Ping-Pong, but are stripping away things lower on Maslow’s hierarchy of needs, like job security.
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They are well-educated and Internet savvy, and often make a very good living. They have what many of us would consider to be good jobs.
CHAPTER TWO: THE NEW OLIGARCHS
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Tech work has changed because the people have changed. During the second Internet boom, which began a few years after the dotcom crash in 2001, Silicon Valley has attracted a new kind of person. Instead of geeky engineers, the industry draws hustlers, young guys who hope to get rich quick and who in a previous generation might have gone to work as bond traders on Wall Street.
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The United Automobile Workers union claims Musk has fought efforts by workers to unionize and even fired workers who supported unionization. In 2018, Congressman Keith Ellison published an open letter warning Musk that retaliating against workers for trying to form a union “isn’t just morally wrong—it’s against the law.”
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“new compact” between companies and employees.
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Just before the IPO, the Wall Street Journal broke a story that Pincus had been quietly forcing some employees to give back options that Pincus had granted them when they were hired.
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Zynga rejiggered its lock-up agreement in early 2012, allowing Pincus and Hoffman, a Zynga director, to jump the line and sell shares before then-current and former employees.
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The problem is that a venture capitalist writing a book about how companies should treat employees is like Ted Bundy offering dating advice to young women.
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Where else on earth can you run a company that loses billions of dollars—and become a billionaire yourself by doing this?
CHAPTER THREE: A VERY BRIEF HISTORY OF MANAGEMENT SCIENCE (AND WHY YOU SHOULDN’T TRUST IT)
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Taylor’s methods were flawed to the point of being ridiculous. He fudged his numbers. He cheated and lied. He was at best misguided and at worst a “shameless fraud,” as Jill Lepore put it in the New Yorker in October 2009.
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Drucker was a trained economist and respected academic who coined the term knowledge worker.
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After the war, Japanese companies refined Training Within Industry into what came to be known as the Toyota Production System, which then evolved into Lean Manufacturing and just-in-time manufacturing. In the 1980s, two engineers at Motorola, the American consumer electronics giant, dreamed up a manufacturing system called Six Sigma, which big companies around the world spent the next two decades adopting.
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In the great tradition of management science, a priesthood arose.
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A methodology that began as a one-page list of common-sense principles for software coders—Deliver working software frequently; Simplicity is essential—has morphed into a miracle elixir with the power to do everything, including an alleged magical ability to transform entire organizations.
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“This is destroying people’s lives,” says Daniel Markham, an Agile consultant who in 2010 published a widely shared essay titled “Agile Ruined My Life”
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Another problem is that Agile is often adopted in an ad hoc fashion, by managers who have no real training. Some manager reads a book about Agile and decides to give it a shot—he’s the mad scientist, and you, the people who work for him, are his lab rats.
CHAPTER FOUR: WHO’S AFRAID OF SILICON VALLEY?
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Fearful rats can only think about one thing—how to get out of the box and stop getting shocked. The Berns MRI experiment might explain why the CEOs of big corporations, who fear that their organizations are on the verge of being put out of business and fear that they will be blamed for the collapse, might start doing crazy things,
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The most obvious lesson of the Berns experiment is that if companies want to boost the productivity of their workers and encourage people to engage in the kind of creative thinking that generates amazing ideas, they first need to make people feel safe. Spend more on training. Pay a little better. Offer health benefits and job security. Remove the fear that a job might disappear at any minute.
CHAPTER FIVE: BUILDING THE WORKFORCE OF THE FUTURE (OR: SORRY, YOU’RE OLD AND WE’D LIKE YOU TO LEAVE)
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just put it under a bit of low-grade stress and maintain the stress for a little while. Voilà—you’ve manufactured depression. Scientists call it the unpredictable chronic mild stress (UCMS) protocol.
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danger—just some environmental changes and some mild stress.
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“Change is the only constant.” Squint your eyes a little bit and the whole thing looks a lot like a human version of the unpredictable chronic mild stress protocol.
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hourss, healthcare, methodologies, graduating
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IBM is hardly alone in the way it has abused its workers. Loads of big companies, including household names like GE, Verizon, and AT&T, raided their pension funds in the 1990s and “managed to take hundreds of billions of dollars in retirement benefits that were intended for millions of workers and divert them to corporate coffers, shareholders, and their own pockets,” Schultz writes in Retirement Heist.
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Some funds lost money in stock market crashes in 2011 and 2008. But companies also started using pension fund money to pay for things like retiree health benefits, which previously came out of their operating budgets.
CHAPTER SIX: MONEY: “GARBAGE AT THE SPEED OF LIGHT”
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Chris Hughes, a Facebook co-founder, says the new economy “is going to continue to destroy work,” and in a 2018 book, Fair Shot, he argues for providing universal basic income—essentially handouts to unemployed adults—paid for by taxing the top 1 percent.
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Standing uses the term precariat to describe a new class of people who lack secure employment or predictable income, and suffer psychologically as a result.
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In a blistering 2014 essay, titled “The Pitchforks Are Coming for Us Plutocrats,” Hanauer warned that if we continued on the same path, eventually millions of people in the precariat would launch a revolution. “You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples,” he wrote.
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companies vacuumed up 6 percent of the economy that used to go to workers and moved it to their bottom lines. That’s only the first trillion.
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Four decades ago, regular workers (meaning the bottom 99 percent of wage earners) collected 92 percent of all wages. Today, regular workers get only 78 percent.
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Milton Friedman published an essay in the New York Times magazine titled “The Social Responsibility of Business Is to Increase Its Profits.” That’s a pretty boring title. But few documents have inflicted so much harm on so many people.
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In June 2018, an investigation by a trade union in Britain found there had been six hundred ambulance calls to Amazon’s UK warehouses in the past three years. One site alone, in Rugeley, received 115 ambulance calls, making it “one of the most dangerous places to work in Britain,” a union officer said. “Amazon
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here were some of the poorest people in the United States offering to pay the world’s richest man so that he might bless them with an office complex.
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“If the minimum wage had tracked the growth of productivity since 1968, it would now be $22,” Hanauer says. “If it tracked the top 1 percent, it would be $29.”
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The reason to give back the money, he says, would be so that the one percent can save their own skins.
CHAPTER SEVEN: INSECURITY: “WE’RE A TEAM, NOT A FAMILY”
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On August 1, 2009, the founder and CEO of Netflix, Reed Hastings, published a PowerPoint presentation on SlideShare,
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The meaning of “team, not a family” is completely brutal: at Netflix you have no job security. Your boss can fire you at any time. You can be fired even if the company is doing well—and even if you’re doing a great job.
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The “team, not a family” notion is not McCord’s only appalling innovation. In 2018 she published a book, Powerful: Building a Culture of Freedom and Responsibility, that elaborated on her vision. In her book, McCord explains that employees should no longer expect their managers or anyone at the company to help them with career development or acquiring new skills. The company doesn’t have time for that. “Managers should not be expected to be career planners. In today’s fast-moving business environment, trying to play that role can be dangerous,” she writes.
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McCord explains this in a section of the book with this very reassuring title: “People Very Rarely Sue.” Good to know. McCord also devotes a chapter to “The Art of Good Good-byes.”
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Sheryl Sandberg, once said McCord’s code “may well be the most important document ever to come out of the Valley.”
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2014, when Hoffman was touting his book The Alliance: Managing Talent in the Networked Age, he even borrowed McCord’s language when he published an article in the Harvard Business Review titled “Your Company Is Not a Family.”
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“It’s a money cult” is how a former worker described Uber to BuzzFeed in 2017. “People are putting up with massive amounts of abuse, mental abuse.” Workers tolerated the punishing grind because they didn’t want to lose their stock options.
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Henry Ford, in his 1928 autobiography, My Life and Work, declares that creating jobs and providing as many people as possible with the chance to make a good living was the whole point of building his company.
CHAPTER EIGHT: CHANGE: “WHAT HAPPENS IF YOU LIVE INSIDE A HURRICANE THAT NEVER ENDS?”
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The philosophy begins with a single central idea: there are no bosses. No one has power over anyone else, but everyone has power. People work in self-managed, self-organizing groups. The organization is flattened, with no top-to-bottom structure.
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“The pendulum has swung too far,” says Donna Flynn, who has a doctorate in anthropology and runs the WorkSpace Futures research group at Steelcase. “Right now there are a lot of unhappy people at work. We’re seeing the reemergence of people seeing the value of privacy.”
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When Zappos, the online shoe retailer, insisted in 2015 that employees commit to using Holacracy or leave the company, nearly 30 percent walked out. The ones who remained were so unhappy that Zappos fell off the Fortune magazine “Best Places to Work” list, where for years it had been a top company.
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Stuart wrote in a research paper titled “The Trauma of Organizational Change.”
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Rees and Rumbles published their results in a paper titled “Continuous Change and Organizational Burnout.”
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A survey of 1,500 executives found that only 30 percent of “change initiatives” produce any lasting improvement, Rumbles said. “It’s just change for the sake of change,” she said. Companies would be better off if they changed less frequently, and at a more measured rate, and put more thought into it. They should also put rest periods between each change.
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Their biggest recommendation echoes one that Stuart proposed in 1995, which is that companies should simply bear in mind that their employees are human beings. That “human factor” should be weighed alongside things like productivity gains and financial results, and factored into decisions.
CHAPTER NINE: DEHUMANIZATION: “THINK OF YOURSELF AS A MACHINE WITHIN A MACHINE”
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France Telecom wanted to get rid of them, but they were civil servants, and the law said they could not be fired. So the company devised a new plan: it would make these people so miserable that they would quit.
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https://www.bbc.com/news/world-europe-44507597 "I'll get them out one way or another, through the window or through the door," he was quoted as telling senior managers in 2007.
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But this fourth and final factor of unhappiness in the workplace—dehumanization—might be the most dangerous of them all.
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Back then, we used tech. Today, it feels like tech is using us.
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Tech tracks the humans who work in customer service and support—and in some cases just handles customer support on its own, without any humans needed. Tech tells telemarketers if they’re hitting their quotas and warns them if they’re falling short. Tech decides which people should be hired and which should be fired.
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For white-collar workers, taking a job at Amazon means agreeing to be plugged into what one former employee described to the New York Times as a “continual performance improvement algorithm,” a vast invisible machine that monitors employees, measures their performance, and doles out data-driven punishment. Remarkably, a lot of Amazon professionals go along with this. They subsume their identities into the system and become one with the algorithm. Significantly, they actually call themselves “Amabots.”
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Software entrepreneur David Heinemeier Hansson says Uber drivers and other gig-economy workers represent a new caste of people—an automaton class, who are “treated as literal cogs in transportation and delivery machines.”
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Uber uses software to manipulate its drivers psychologically, using tricks learned from addictive video games. The company employs hundreds of social scientists who devise behavioral science techniques that push drivers to work longer shifts.
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https://www.nytimes.com/interactive/2017/04/02/technology/uber-drivers-psychological-tricks.html
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Sixty years ago, the psychologist Erich Fromm warned in The Sane Society that the combination of capitalism and automation could create deep psychological harm, leading to widespread alienation, depression, and a kind of cultural insanity.
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There’s one aspect of modern work that is especially harmful, and that’s the ever-increasing use of electronic surveillance.
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Companies like the AI system because it lets them look at far more job candidates—ten times as many as they might see using the old-fashioned in-person approach, HireVue claims.
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A complete psychographic profile of you exists—the blueprint of your brain, every inch of your wiring—and you have no control over it. Apply for another job, and the system adds to your profile. Over the years, your profile becomes richer and more granular. Can you imagine what that information would be worth to a political party, or certain government agencies? And what they might do with it?
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Hedge funds like Bridgewater already rely on AI systems to make stock trading decisions. Teaching machines to make business decisions seems like the next logical step. In 2017, Dalio told Business Insider he expected to have a “thorough version” of PriOS running at Bridgewater by 2020.
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Principles grew out of a hundred-page manifesto, also called “Principles,” that is given to all Bridgewater employees and contains 227 principles for becoming a better person. New York magazine once said the manifesto read as if “Ayn Rand and Deepak Chopra had collaborated on a line of fortune cookies.”
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The incident also revealed something about the human tendency to defer to machine intelligence and to invest computers with authority. We believe they are smarter than we are. Have you ever followed the directions on your Waze navigation app, even when the route seems to make no sense?
CHAPTER TEN: THE BATTLE FOR THE SOUL OF WORK
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TechCrunch Disrupt encapsulated everything that had gone wrong with the new economy—the bros and fake bros, the bullshit, the scammers, the hordes of people who wanted to cash in and get rich, by any means necessary.
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UK business professor Sally Rumbles described to me in an interview as the “no-shit-Sherlock school of management.” As she put it: “If you treat people the way you’d like to be treated, if you praise them, and thank them, what a surprise! They do a good job on the whole.”
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Some of the unicorn start-ups that have gone public in recent years seem less like companies than like investment vehicles, little wagons that venture capitalists slap together and roll down into the public markets, then fetch back loaded with gold.
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Great Place to Work has been sifting through its annual data to identify traits that consistently great companies share, and boiled it down to these: “Trust, pride, and camaraderie,”
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Two opposing worldviews are vying for the soul of the corporation. On one side are oligarchs like Hoffman and HR mavens like McCord. On the other side are people like Frauenheim and his colleagues at Great Place to Work, who believe that companies do better when they treat workers well, and, as Whole Foods Market founder John Mackey puts it in his book Conscious Capitalism, that “business can elevate humanity.”
CHAPTER ELEVEN: BASECAMP: BACK TO BASICS
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They have written several books about their laid-back philosophy, including Rework, which sold more than half a million copies worldwide. They are working on a new book, The Calm Company, and produce a podcast, called The Distance, where they present stories about small business owners they admire, from a small family-owned brewery in Wisconsin to a forty-year-old company in Chicago that makes butter molded into the shape of animals.
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Basecamp could make more money if, instead of charging every company the same flat rate, it charged a price based on the number of people who used the product. That’s what most software companies do, but “it would turn us into the kind of company that we don’t want to be,” Fried says. “Why is software pricing so complicated? Because people are trying to extract maximum value. I’m not interest in maximizing anything. Are we leaving money on the table? Yes, every day we are. But we don’t want to be nickel-and-diming people. It all flows from what kind of company you want to be.”
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At the main office in Chicago people observe “library rules” and speak in hushed voices. The walls are covered in sound-absorbing material, the floors with thick carpeting. “I think an office should be more like a library and less like a kitchen,” Fried says. “You go into some companies and everyone’s running around with their hair on fire. There’s too much distraction. The culture here is, keep it down.”
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“Look at group chat,” Hansson says. “It’s getting a lot of attention because of Slack. But people end up getting interrupted constantly. They feel more stressed. These tools are supposed to make work easier and more productive and calm, and instead you have all this frenzy and it ends up exacerbating problems without any specific payoff.
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Same goes for shared online calendars. At most companies, people can read your calendar and request a block of your time. Pretty soon you find entire days given over to meetings. Basecamp bans the practice. If you really need to talk to someone, you can arrange to do it. But you can’t just glance at someone’s calendar and request a time slot.
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Fried believes collaboration often turns into “over-collaboration,” and that most of it is bullshit anyway. He says brainstorming “is wildly overrated.
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The goal at Basecamp is for every employee to get eight hours of uninterrupted work time every day. After that they should go home. “These people who say they’re working eighty hours a week, why do we need eighty hours?” Hansson says. “Nobody needs eighty hours. Most of us can’t fill forty hours.”
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Fried says. “Our employees have longer tenure with the company. Our people are happier. They spend time with their families. They get to enjoy the summer months. People tell me, ‘Steve Jobs could not have made Apple if he took Fridays off.’ Well, I’m not trying to make Apple. And I don’t care what Steve Jobs did.”
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workaholism. In 2017 I wrote an op-ed for the New York Times describing how Silicon Valley hucksters had started selling young people on a kind of prosperity gospel in which anyone—yes, that’s right, even you—could start a company and get rich, as long as they were willing to give up their friends and family and personal lives, and work themselves to death. I
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People in Silicon Valley are not worried about workaholism. In fact, they celebrate it.
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Business schools are not teaching people how to run a business and keep costs down and make more money than you spend. They’re teaching students how to look for money, how to raise money, how to write your Series A contract, how to make an exit. An entire generation is being taught that this is how you run a business. It’s obscene,” Fried says. The dysfunction originated in tech start-ups, but now, “these guys in Silicon Valley are being elevated to hero status,” Hansson says. “They’re the role models that everyone is looking up to and trying to emulate. And that’s how the bullshit keeps spreading.”
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What’s more, techies in Silicon Valley have become adept at shutting down dissent. Dare to disagree with them, and you’ll get dismissed as a crank, or a Luddite, or someone who just doesn’t “get it,” the way Rabois sneered at Hansson and Fried on Twitter.
CHAPTER TWELVE: MANAGED BY Q: “EVERYBODY CLEANS”
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In his legendary management book, In Search of Excellence, Peters gave the practice a name—MBWA, or “management by wandering around.”
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New research from Great Place to Work suggests that companies where front-line workers feel connected to the top brass produce three times as much revenue growth as do companies where the brass and the front-line people don’t know each other.
CHAPTER THIRTEEN: KAPOR CAPITAL: CONSCIOUS CAPITALISTS
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McKinsey in 2015 found that companies in the top quartile for gender and racial diversity were 35 percent more likely to produce higher-than-average financial returns.
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I’ve heard various theories for how things got so bad in Silicon Valley. One is that venture capitalists and tech companies are lazy about recruiting. Instead of casting a wide net, they hire kids out of Stanford and Berkeley, where black and Latino students are underrepresented. There’s the good-guy theory, which is when one guy tells another guy that a third guy is a “good guy,” meaning he’s one of us, go ahead and hire him. Another theory is that, just like Michael Moritz at Sequoia, techies really believe that diversity would hurt their performance.
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“Google spent $289 million on diversity over the course of two years, and you show me what changed,” she says.
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In essence the Kapors were calling for Uber’s board to fire the company’s founder and CEO, Travis Kalanick. Some fellow investors considered the move a betrayal. In Silicon Valley there’s an unspoken rule that investors should never do anything to hurt the valuation of the company,
CHAPTER FOURTEEN: THE SOCIAL ENTERPRISE MOVEMENT
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Most guys in this situation—still young, suddenly wealthy—either go off and do crazy rich-guy things, or they start another company and try to turn their millions into billions.
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With two co-founders, Gilbert created an organization called B Lab, which developed a kind of do-gooder certification program.
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Gilbert says the B Corporation movement is catching on because we’re going through a historical inflection point. Capitalism isn’t collapsing—but it is evolving. Little by little, the world is figuring out that shareholder capitalism leads to a dead end, and so they’re dumping it. Taking care of the community and your own employees is not a form of philanthropy but rather a form of enlightened self-interest.
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One of Chouinard’s big goals has been to influence other companies. The best way to do that was to build Patagonia and to prove that his model works. Patagonia has now been in business for forty-five years, and sure enough, people are starting to pay attention—including some people in Silicon Valley.
EPILOGUE: CAN ZEBRAS FIX WHAT UNICORNS HAVE BROKEN?
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Instead of building unicorns, why not be more like zebras? In an essay on Medium, titled “Zebras Fix What Unicorns Break,” they explained the analogy. Zebras are herd animals and band together to help each other. Zebras might not run as fast as unicorns, but they have stamina and are built for the long haul. Just as zebras are black and white, a zebra company would do two things at the same time: turn a profit and improve society.
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Paul Tudor Jones, a billionaire hedge fund manager, has little in common with the Birkenstock-wearing types who showed up at DazzleCon, yet he too thinks the corporate world is in terrible danger and needs a massive overhaul. The problem is not just the way companies are structured—it’s the overall economic system. “Capitalism may need modernizing,” Jones told CNBC in June 2018.