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Silicon Valley is synonymous with cutting-edge startups that offer a progressive workplace culture forged by young people who demand greater job satisfaction than the previous generation. Have these companies cracked the code of work-life balance? Hardly, says journalist and author Dan Lyons. His new book, Lab Rats: How Silicon Valley Made Work Miserable for the Rest of Us, exposes the junk science and questionable management practices that have migrated from Silicon Valley to the rest of the economy, making millions of workers stressed out and unhappy. He spoke to the Knowledge@Wharton radio show on Sirius XM about the perils of worshipping Silicon Valley’s false gods.
An edited transcript of the conversation follows.
Knowledge@Wharton: I’ll start off with the title, so why are we so miserable right now?
Dan Lyons: I think that in some ways a lot of unhappiness in the workplace emanates from Silicon Valley, and in two forms. One is the technology products themselves, and the other is business practices that have originated in Silicon Valley and now are spreading to other industries.
In [my previous book] Disrupted, I told the story of just me, personally, going into a tech startup and vying to work. In this one, I’ve taken a wider lens at a lot of other people in tech, a lot of other companies, and even beyond that to industries outside of technology.
Knowledge@Wharton: I think the change in business culture is really interesting because it started with the tech field then spread out. It’s part of the millennial culture, especially with younger founders who want to dictate what their company looks like.
Lyons: Yes, and there’s a strange phenomenon that has cropped up just in the last few years where you see big, old traditional companies trying to become more like startups, especially to recruit millennials. You see them either setting up labs and incubators in Silicon Valley in order to absorb the culture there and then bring it back into the bloodstream of the home company, or bringing workers or executives out for what they call “Silicon safaris,” where they ride around in a little van, meet with a lot of startups and try to crack the code of what makes a startup like it is.
“It turns out millennials aren’t really any different from the rest of us, and they’re just starting to wake up to the sort of bait-and-switch that was played on them.”
Unfortunately, what they often focus on are the sort of superficial things like foosball and ping pong. I don’t think that’s what millennials want, to be honest. One of the biggest revelations I had while reporting this book was talking to millennials who really can’t stand that stuff.
Knowledge@Wharton: Then how did that kind of superficiality become one of the hallmarks of the Silicon Valley startup culture?
Lyons: This is a very cynical take, but all of that superficial stuff was really this bright, shiny object that they dangled in front of employees, while on the side they were sweeping away a lot of the more fundamental stuff like job security, the chance to get promotions, the chance to develop your career inside an organization at the very lowest level, to have health benefits. It’s amazing how many people in their 20s I talked to who said the one thing they really want and they’ve never had is a job with health insurance.
They’re starting to figure out that, “Oh, we got tricked. We got distracted by all this fun and kooky stuff over here, and they changed the deal on the back end for us.” A lot of them only get hired as contractors. They’ve never actually been a real employee. It turns out millennials aren’t really any different from the rest of us, and they’re just starting to wake up to the sort of bait-and-switch that was played on them.
Knowledge@Wharton: Do you think that we are going to see a shift away from that in the years to come?
Lyons: I hope so because I think companies are starting to realize that what young workers want is the same as everybody else. Essentially, it’s just to be treated well, to be treated with dignity, to be treated with respect. I had an editor at Forbes who used to say, “It’s not the principle, it’s the money.” It’s kind of the money, like they want to get paid and have security.
In the last part of my book, I found and write about examples of companies that are becoming more human-centric, more employee-centric. They’re making a bet that, “If we treat employees really, really well, that’s how we’ll stand out, and that’s how we’ll deliver a better service to our customer.” That’s not just being good for the sake of being nice. It’s actually good business.
Knowledge@Wharton: Some companies want to have their employees putting in 16-hour days. They put cafeterias in the complex and fun, niche things so that they can have their break in the office and not be that far away from their desk, not take the walk outside.
Lyons: Yes, you’ll never leave. When I was writing on Silicon Valley, in one season of the show, we came up with this story line but abandoned it. It was the idea that Hooli, the big, evil company in the show, was going to announce plans to build this enormous underground skyscraper — like an upside-down skyscraper that just went down 20 stories into the ground — and they would just house everybody like in an ant colony. Then they would never have to leave. Everything you need is in the Hooli-plex. Yes, they’re trying to get you to work longer, even though there is enormous research that shows beyond 60 hours a week, you don’t gain any productivity. If you do sprints over and over and over again, it just stops working. People need rest time.
“The modern workplace has become a place that is almost set up as a psychology experiment full of stressors that overrun your brain.”
A great example of this, which is in the book, is a company called Basecamp in Chicago. They’re a software company. They have a 40-hour work maximum. You can’t work more than 40 hours in a week. In the summer, they make it 32 and everybody takes Friday off. If that means something doesn’t get done, they say, “OK, we’ll push it to the next cycle.” But they are determined not to work too much, which I think is amazing and radical. People in Silicon Valley think they’re nuts, but they’re doing really, really well. There are no ping-pong tables. There is no foosball. There’s no noise. The other thing they do that’s radical is library rules, they call it. It’s very quiet. You come in, you do your work, you concentrate, and then you go home. They think, “If 40 hours a week is enough for any human being to do, then we can do plenty with that.”
Knowledge@Wharton: You talk in the book about several factors that you believe are important to this displeasure in the workplace, including money, insecurity and change. Can you explain?
Lyons: What set me off on this was seeing all this data that shows people becoming more and more unhappy at a time when I thought we should be happier than ever. If you remember the late 1990s and the predictions about what the internet was going to do — we were all going to be rich. We were all going to have lots of free time. We had very utopian ideas of this. Flash-forward 20 years and antidepressant use is skyrocketing, suicide rates are skyrocketing. Every survey of engagement and job satisfaction shows a decline. I tried to unpack that, and money is just a fantastic one. If you look into the numbers, there’s $2 trillion a year that’s been sucked out of the economy that used to go to wages. In other words, the entire working and middle class have just been robbed of that money.
I’m giving a talk in a series that’s called “The Only Constant is Change.” We herald that as this wonderful thing in the new economy, but there are huge amounts of research that show our brains are just completely overwhelmed by constant change. We’re not actually wired for that.
Insecurity is another one. We now live with this new compact, especially in Silicon Valley, where there is no job security. You’re going to last a year, a year-and-a-half, two years, and you never know when that’s going to happen. Again, there’s enormous research that shows that that fear and insecurity actually does more harm to your brain than just getting fired. The fear of losing your job is worse for you than getting fired. In many ways, the modern workplace has become a place that is almost set up as a psychology experiment full of stressors that overrun your brain, which is why the book is called Lab Rats.
Knowledge@Wharton: One of the companies you spent some time at is Ford. What is the culture there right now?
Lyons: I was there a year ago and before the real trouble started, so I don’t know. I have a caveat, which is I love Ford. I’ve visited them and written about them over the years as a journalist, and I had tremendous respect for them and what they do. I think the ability to build millions of cars, to operate at scale, to sell those cars at a reasonable price and to still make a profit is a magic act that we all take for granted and we undervalue until we see somebody like Tesla that can’t do it, despite all of their Silicon Valley genius.
I visited Ford right before [former CEO] Mark Fields got fired, and they were desperately still trying to do this thing of, “We’re a startup, too. We have a self-driving car, too! We’re going to have a hackathon! Look at us, we look like Silicon Valley guys! We’re not wearing suits anymore!” I kind of left thinking, “Oh my God, this is bad.” They looked so afraid. They were having this event to try to look proud and hip and cool, and they were talking about technology. And I thought, “Oh, the more you talk about it, the more you look scared.” I wanted to say to them, “Just be Ford, you know? You’re in Detroit.”
They fired a bunch of other people. They brought in Jim Hackett, and I just saw they have this new ad campaign where they have actor Bryan Cranston saying, “Let the other guys dream about the future. We’re going to build it.” They’re returning to recognizing the value that they have. I wrote about them because I thought a lot of other big companies were going through that crisis. It’s like the old guy who starts dressing too young. He gets divorced and starts dressing like a millennial, and you’re like, “No, no, no, no, no!” But I hope and believe that they will turn it around at Ford.
“It’s the quality of the people in your organization that maybe is going to determine the success of your organization.”
Knowledge@Wharton: The technology that has come out of Silicon Valley has deeply impacted our lives and society. Even a company like Ford is putting more and more technology in cars. Do you think we will ever stop worshipping Silicon Valley?
Lyons: Ford has always had to incorporate technology. They’re 115 years old or something now. Taking new technology — now it’s autonomous driving and electric motors or alternative energies — that’s kind of what car makers do. They should be able to absorb that and learn that. There’s no special magic. I think what people maybe are going to start to recognize is that we make a lot of noise about how great Silicon Valley is, but I made a spreadsheet of every tech IPO since 2011 and identified which ones of those companies have ever made a profit, and there’s only 10. That was all I could find.
If you look in Silicon Valley and try to find an example of a company that operates at large scale and makes a profit, the last one is Facebook, which was founded in 2004. These guys out there make a lot of noise about, “Software’s eating the world, and we’re so transformative and disruptive.” They are, but they’re disruptive in the way someone that’s dumping steel onto the market below cost or dumping memory chips below cost is disruptive. You have companies just operating at massive losses for a long period of time.
I think people might start to wake up to that, that maybe we got a little scared of these guys and we didn’t need to. Maybe we had a little bit more going for us than they knew, and maybe they can actually learn from us.
Knowledge@Wharton: You mentioned not only the practices that are going on, but the products as well. Can you take us into your thoughts on that?
Lyons: One of the things I love is an easy example. If you’ve ever worked in an office where people use Slack or something like that, there are two things that happen that are both really annoying. One is, you have the tyranny of the Slack thing on your computer all day long, and it’s constantly popping up. You’re trying to work, and you feel compelled to answer. You get nothing done because you’re constantly trying to stay on top of this Slack conversation or multiple conversations.
The other incredible phenomenon that I saw when I was working at a startup is you’ll see two people working either right beside each other or right across from each other, and they’re talking over Slack. They could just literally look up and talk to each other. Sherry Turkle at MIT has called this phenomenon “alone together.” Technology that’s meant to bring us together ends up disintermediating us and actually separating us from each other. The more we talk about AI and the more we talk about robotics, people are coming to realize the tremendous value of person-to-person connections. Those things are becoming worth more in a world where anybody can have the same technology. So, it’s the quality of the people in your organization that maybe is going to determine the success of your organization.
“I made a spreadsheet of every tech IPO since 2011 and identified which ones of those companies have ever made a profit, and there’s only 10. That was all I could find.”
Knowledge@Wharton: Contract work was a great opportunity for people who lost their jobs during the recession, but now there are some companies that are moving away from that because the understand the problem it presents on the structure of the economy.
Lyons: Yes, there’s a company I write about in the book called Managed by Q. It’s not a company I had ever heard of before and that most of us have ever heard of, but they are what you would call a gig economy company. They are the Uber of janitors. If you need a crew to come clean your offices at night, you can go to them. They did something incredibly radical. The founder is a guy in his 20s, Dan Teran, who said, “We’re going to make all the cleaners W2 employees. We are going to give them health benefits. We’re going to have 401k matches. Some of these people have never had a 401k. They don’t even know what it is, so we’re going to bring people in in groups and give them a class. We’re going to offer everybody the chance to get promoted and move up and work in an office.”
I had never thought of this before, but the head of HR said to me, “Do you understand if you’re someone who cleans offices and you maybe don’t have any college, the idea that you might someday have a job where you work at a desk with a laptop and you don’t get dirty — that is an incredibly powerful incentive.” Working-class people, people working in the field, working in those jobs, are as upwardly mobile and as ambitious as everybody else. That became this huge incentive. Their bet is, “If we treat our workers really, really well and make them part of the family — not this serf class that’s over there that we never talk to — they will provide better service to our customers, our customers will stay with us longer, and we’ll make more money.” It was a really smart bet because everybody else in the gig economy went the other way, then they all started getting sued. And the lawsuits brought all sorts of bad attention and bad press and negativity.
So, you’re seeing now some gig economy companies that started off with contractors quickly moving over and saying, “Let’s make them W2,” or people starting from scratch. But yes, you’re right, the entire Uber phenomenon and TaskRabbit all benefited from the crash in 2008. That’s kind of changing now, and it would definitely be for the better if that happened. For example, will Uber ever change? I don’t know. They don’t want to.