What's the Matter With the Start-Up Industry?

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Entrepreneurs sleep under their desks, live Clif Bar to Clif Bar, and face a lot of pressure. Should they just deal or is something seriously wrong?

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There's something rotten in the start-up industry.

That's the sentiment coursing through a series of soul-searching posts and discussions over the past two weeks, spurred by the suicide of Ilya Zhitomirskiy, one of the co-founders of Diaspora, at age 22. The particularities of Zhitomirskiy's death are the terrain of his family's private grief, but the generalities of the effects of start-up culture -- the pressure to always put on a happy face, the hours, and the feeling of always being on the brink of failure -- on the health of its actors are more widely relevant. 

But is it worth it? Are those pressures an inherent part of the beauty of building something entirely new? Are the critics just whiners?

Answering yes to those questions is Michael Arrington, formerly of TechCrunch, now of uncrunched.com. Arrington writes:

You might be sad that you work long hours and that sometimes your boss yells at you when tensions run high. But you also know that there is nowhere on earth like Silicon Valley. Nowhere else that is structurally designed to help you make whatever you can imagine into reality. Nowhere else where there are so many like minded people who are willing to sacrifice and work hard to create something new.

There's so much money in Silicon Valley now that a lot of non-like minded people have rolled in. Looking for easy stock options at a hot startup. They start whining when they realize that they have to give so much to make it all work. This happens periodically, and I wrote about it back in 2007. Then a downturn happens and suddenly everyone left is just thankful they're still here.

But if too many people like this roll into town, a tipping point will be reached. And the magic will be gone.

It feels like we're getting there. That not too long from now people will be talking about maximum working hours, minimum numbers of engineers assigned to complete a given task. And, shudder, unionization of startup workers.

I really hope that doesn't happen. If it does, all the really necessary people will just leave and do their thing somewhere else.

Work hard. Cry less. And realize you're part of history.

That's a grand vision of the start-up dream, and, indeed, having a dream that big -- you're part of history -- would be worth a lot of personal sacrifice. (How much? not as much as Zhitomirskiy sacrificed, certainly, but a lot nevertheless). But is that an honest picture of what start-ups are working toward? In many cases, no.

For example, take the company Arrington links to at the bottom of his post, Zynga, whose employees he mocks for "breaking down in tears" (according to a New York Times profile) even though they have an organic cafeteria and free acupuncture. Maybe Zynga's employees are softies, who knows, but it's hard to make a case that they should be miserable and make big personal sacrifices, when, at the end of the day, Zynga is a game developer. The company may make great games and may be worth a bundle of money, but it really isn't part of any grand narrative of history unless you are playing fast and loose with the entire concept of history. 

But to say Arrington was talking about Zynga is a bit of a straw man. Really, Arrington's point is just that hard work is the meat and potatoes of start-up life; always has been, always will be. If you don't like it, then it's not for you. To make his point, Arrington focuses on the diaries of one Jamie Zawinski, an engineer at Netscape in 1994, whose hard work and eventual pay-off is used by Arrington to argue that start-up life has always been hard and if you don't like it, leave. Many people, upon reading Arrington's post, had the idea to ask Zawinski, who has since left the tech world and now runs a nightclub, for his response, which he gave without mincing words:

He's trying to make the point that the only path to success in the software industry is to work insane hours, sleep under your desk, and give up your one and only youth, and if you don't do that, you're a pussy. He's using my words to try and back up that thesis.

I hate this, because it's not true, and it's disingenuous.

What is true is that for a VC's business model to work, it's necessary for you to give up your life in order for him to become richer.

Follow the fucking money. When a VC tells you what's good for you, check your wallet, then count your fingers.

He's telling you the story of, "If you bust your ass and don't sleep, you'll get rich" because the only way that people in his line of work get richer is if young, poorly-socialized, naive geniuses believe that story! Without those coat-tails to ride, VCs might have to work for a living. Once that kid burns out, they'll just slot a new one in.

I did make a bunch of money by winning the Netscape Startup Lottery, it's true. So did most of the early engineers. But the people who made 100x as much as the engineers did? I can tell you for a fact that none of them slept under their desk. If you look at a list of financially successful people from the software industry, I'll bet you get a very different view of what kind of sleep habits and office hours are successful than the one presented here.

So if your goal is to enrich the Arringtons of the world while maybe, if you win the lottery, scooping some of the groundscore that they overlooked, then by all means, bust your ass while the bankers and speculators cheer you on.

Instead of that, I recommend that you do what you love because you love doing it. If that means long hours, fantastic. If that means leaving the office by 6pm every day for your underwater basket-weaving class, also fantastic.

But the thing about Zawinski's post is that though it discredits Arrington's motives, it also proves that Arrington isn't wrong: Zawinski did work really hard and he did make a lot of money. No one can quibble with the basic facts: for those with the right project (and as Flickr co-found Caterina Fake writes, finding the right project is more than half the battle), the hard work can pay off many, many times over, though the odds are slim. (Arrington, for his part responds to Zawinski here.) The point is not that start-ups don't require hard work. They do. The point is that the venture capitalists who back start-ups don't prioritize the mental health of those putting in the work.

For many, even knowing that, start-up culture still has its allure. Many young people are willing to put up with sleeping under their desks and living Clif Bar to Clif Bar for the chance of big money, all while working with other smart, talented young people. This all sounds very special. But maybe it will sound less special if you think about that grind, not as something unique to startups, but as part of a broader shift in American life: The Great Speedup, named and elucidated by Monika Bauerlein and Clara Jeffrey in the July/August issue of Mother Jones. They wrote:

Mind racing at 4 a.m.? Guiltily realizing you've been only half-listening to your child for the past hour? Checking work email at a stoplight, at the dinner table, in bed? Dreading once-pleasant diversions, like dinner with friends, as just one more thing on your to-do list?

Guess what: It's not you. These might seem like personal problems--and certainly, the pharmaceutical industry is happy to perpetuate that notion--but they're really economic problems. Just counting work that's on the books (never mind those 11 p.m. emails), Americans now put in an average of 122 more hours per year than Brits, and 378 hours (nearly 10 weeks!) more than Germans. The differential isn't solely accounted for by longer hours, of course--worldwide, almost everyone except us has, at least on paper, a right to weekends off, paid vacation time (PDF), and paid maternity leave.

...

In all the chatter about our "jobless recovery," how often does someone explain the simple feat by which this is actually accomplished? US productivity increased twice as fast in 2009 as it had in 2008, and twice as fast again in 2010: workforce down, output up, and voilá! No wonder corporate profits are up 22 percent since 2007, according to a new report by the Economic Policy Institute. To repeat: Up. Twenty-two. Percent.

This is nothing short of a sea change. As University of California-Berkeley economist Brad DeLong notes, until not long ago, "businesses would hold on to workers in downturns even when there wasn't enough for them to do--would put them to work painting the factory--because businesses did not want to see their skilled, experienced workers drift away and then have to go through the expense and loss of training new ones. That era is over. These days firms take advantage of downturns in demand to rationalize operations and increase labor productivity, pleading business necessity to their workers."

Startups may have experienced the Great Speedup earlier than the average American business, and the payoff for hard work may be greater (as is the risk), but startups are not unique. The grind is a feature of the American economy, a product of a variety of economic and technological currents at work for decades. The explanations for the Great Speedup are many. Some, including Jeffrey and Bauerlein, point to growing income inequality. Others, such as economists Erik Brynjolfsson and Andrew McAfee, argue that it is because of declining demand for human labor, due to machines. Globalization and the rise of the financial industry may also be partly responsible. Whatever the reasons for the Great Speedup are, their effects stretch through the provinces of the average American worker and into the haunts of Stanford-educated engineers. Startups are an extreme example of a society-wide problem.

When patting themselves on the back for being a part of history, entrepreneurs should ask themselves, what history? Perhaps the history of a company that will change the world, but almost certainly the history of a broken American economy.

Image: Anneka/Shutterstock.

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Rebecca J. Rosen is a senior editor at The Atlantic, where she oversees the Business Channel. She was previously an associate editor at The Wilson Quarterly.

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