On Dan Lyons’ Disrupted

Dan Lyons’ Disrupted, the tell all about a prominent journalist’s experience working at Hubspot, a marketing company, is a train-wreck of a read. I could not put it down and have accomplished little work this week as a result 🙂 Lyons details a hundred examples of plain naïveté and pathology within the company. Lyons comes across so harsh that some have dismissed the book, but doing so is a mistake. Ignore the specifics about Hubspot—Lyons’ more important contribution concerns the state of the companies that can attract venture funding and successful IPOs.

Lyons’ book could have used a bit of framing to better highlight some troubling themes, many of which are not specific to Hubspot. First, Lyons paints the company’s executives as out to lunch, and its employees as suffering from the Dunning-Kruger effect, leading to a bozo explosion. So the question arises, how could a company so misdirected and poorly constituted attract big investment? Lyons’ argues that we’re “feeding the ducks.” Investors demand startups that look like Facebook, with young employees and drop-out-of-Stanford leaders. And so our economy is creating hollow imitations of Facebook and Google that keep the ducks satiated.

Second, of course there are incompetent companies out there. But most collapse and the losses are internalized to a small number of actors. Lyons discussions of Hubspot and other companies that have not posted profit (in some cases, not even revenue), sounds a lot to me like the explosion of NINJA loans in the 2000s. Back then, we were feeding the ducks—giving home mortgages to anyone in order to feed investor demand. The logic of the mortgage market was both inscrutable yet unquestionable. Switching to today, Lyons explains how founders and venture capital firms stand to benefit from boosting these firms, and how employees and investors will end up holding the bag. In these bubble situations, even good, smart people will tend to the ducks and attack those questioning the situation. Let us just hope that when the charade ends, the losses do not require a bailout.

Third, while Lyons is preoccupied with his age, (he is a journalist in his early 50s starting a new career at a company where the average employee is 26) the reaction of others to him is troubling. Lyons portrays his Hubspot colleagues as passive aggressive, as dismissive of expertise or experience, as having paper-thin skin, as the kind of people who would fail a philosophy course—or file a harassment case about it—because the argumentation would be too traumatic. Lyons portrays the Hubspot employees’ disgust as palpable. “Culture fit” was first a thinly-veiled, but then explicitly-expressed preference for employees in their 20s.

Finally, Lyons delivers a warning about cloud services and how we have entrusted our data to them. Recall that Hubspot fired a high-level employee and another had resigned concerning an apparent attempt to obtain a copy of the pre-release manuscript of Disrupted. Lyons adds up the evidence—HP’s investigation of a reporter; Uber’s intimations about the power to investigate a journalist; the god-modes built into many social network services; Facebook’s PR scheme against Google; the powerful incentives of venture capitalists to get quick hits; and so on. He explains that the market is set up so that “trust” ensures good behavior with data. That is, the desire for commercial success should police the worst behavior and stop petty abuses with data. His experience at Hubspot has changed his mind:

So we figure we’re safe. We figure we can trust the people who run online services not to snoop on us. I used to believe that. I don’t anymore. The (Hubspot executives) were not random nerds going rogue in some data center. They were top executives of a publicly traded company. They’re the ones who were supposed to be keeping an eye on the others. During my time at Hubspot, I was shocked to see how badly managed the company was and how packs of inexperienced twenty-something employees were being turned loose and given huge responsibility with little or no oversight. In the world of start-ups that is now the norm, not the exception.
All your data are belong to a bunch of bozos! What could possibly go wrong?

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