The Dark Side of Silicon Valley’s Contribution to Management Techniques
“The world of online marketing… has a reputation for being kind of grubby.” A quote from one of my latest reads, Disrupted by Dan Lyons. In this short review I am going to reflect on information that touched me personally. I gave this book five stars not because I enjoyed the authors negative attitude or focus on himself, but because it is an easy, fun read for those of us in the business of developing software delivered on a SaaS basis over the Internet. It is also a must read for people who are curious about how Internet companies can make investors rich while the company actually loses money.
In Disrupted, Lyons describes his time at Hubspot, an inbound marketing and sales startup, where he reveals the truth about these seemingly prosperous tech companies by exposing their faults, which have been masked by the mystic and allure that surrounds them.
The emphasis of this book focuses on the premise behind venture capital startups and how their motives are solely based heavily on company growth. Aside from interesting facts about how venture capital startups are run, Disrupted points out a curious notion about these new tech companies; they operate using innovative ways to motivate employees while at the same time being abusive by traditional standards. They have the ability to run and grow top line revenues for years without making money. This is due to their business practice of essentially operating as a hamster wheel, ceaselessly running in order to maintain wild growth and sometimes running out of capital until they receive an IPO so original investors can be cashed out. We see this same flow in the early days of major tech companies like Twitter and Facebook.
Step one: acquire venture capital. Step two: achieve extraordinarily growth.
Dan Lyons explains this business model from the viewpoint of Hubspot.
Hubspot was focused on earning around 100M in sales, and used boiler sales rooms to achieve it. There were two parts of the sales process. The first group of people generated Internet content for Hubspots’ blogs to attract leads. These leads were then passed onto the second group of workers who proceeded to cold call the contacts to try to finish the sale. However, what they were selling in the early days, according to Lyons, was not even a platform of quality. Although they received 100M in venture capital at the beginning of their launch, Hubspot struggled with software performance. This is because they stressed generating leads over creating quality software and delivery. This mentality resulted in users having difficulty using the site as well as having the site crash on more than one occasion. Eventually, Hubspot purchased another company with better coders and by 2013, they were selling a better product.
Another issue in these types of startups today is how content marketing has become increasingly more focused on quantity versus quality in terms of content. This new age marketing approach is simply having writers flood their website with content for the sole purpose of generating leads. For me, I have been blogging and providing content for eLearning for 10 years and have always taken a serious educational approach when publishing content. However, if generating more content is the new strategy for creating more leads, where is the quality control when these companies are pumping out blog content? These companies should be asking themselves: Are you providing serious content or are you just manipulating your audience for lead generation?
Lyons explains our current reality in marketing, “instead of spending money on traditional marketing, things like buying advertising and cold calling customers, companies publish blogs and websites and videos, and use online content to draw customers toward them.” I agree with generating blogs and web content as a way for those in the tech industry to market to consumers, but we need to make sure that there is substance. On what level are you providing value to your viewers? At what point does generating content simply turn into manipulation for gaining leads?
From the perspective from someone in their 50s, Lyons gives insights into the hidden culture of startups revealing how managers treat their employees. There are few women in top leadership roles, essentially no diversity within the office space, and they battle high turnover rates. At Hubspot, the layoffs weren’t much better. An email would be sent to the rest of the staff explaining that an employee had “graduated,” or, in other words, been terminated. This new terminology gave another reason for Lyons to criticize the management. He felt that there was a lot of Orwellian “double speak.” In his opinion the deception of not calling things by what they really were simply attempts to sugar coat what they were doing. For example, Hubspot claimed that “cold calling is dead,” yet, they had these “boiler rooms” of solicitors calling their website leads.
Overall, the major contribution to this book is how Lyons elegantly describes how difficult it is to see fact from fiction inside of these startups. The venture capitalists paint a picture of tech companies like Microsoft and Apple and how their employees got rich when they finally made it big. These new startups, like Hubspot, showcase their stock options, manipulating this facade of how their employees can make it just as big as the first dot-com era startups. Unfortunately, this mystic allure of tech companies is what many recent grads cling to when applying to startups, and many find themselves disappointed when stock options become diluted. At the end of the day the main goal of these startups is all about reaching a scale; to be able to generate enough growth that will cash out the venture capitalists.
The book was an easy and entertaining read, and it certainly did not disappoint. I loved reading as Lyons uncovered the hypocrisies within this new era of startups as well as the grunginess of the content marketing mirage. This is a good read for all those involved in tech and also business. Disrupted encourages us to see past the façade that surrounds the Silicon Valley and to view their business models and concepts from a more critical stance. A lot of what goes on in Silicon Valley is mysterious and alluring. However, Lyons reveals the dark side of the Valley’s contribution to management and the new era of content marketing.