Hey kids: I know you hate all that summer reading you get assigned at the end of every school year. But when you grow up, you’ll discover that reading books is actually the best part of your summer vacation.
Here’s what I read on my summer vacation.
Brotopia — by Emily Chang
I already knew most of the stories — Chris Sacca’s weird hot tub meetings. Susan Fowler’s horrible experience working at Uber. The creepy abuse of power from investors like Dave McClure and Justin Caldbeck. James Damore’s manifesto. Taken individually, they are a series of really, really bad decisions made by men. Assembled together by Emily Chang, it paints a clear picture of the signifcant obstacles faced by women and minorities in tech. From minor daily annoyances to outright harassment and criminal behavior, women in tech have had to put up with a lot of unnecessary shit. The irony pointed out by Chang is that the numbers show companies who hire more women in leadership positions perform better.
One thing that really stuck out for me in Brotopia is the idea of hiring for cultural fit or — hiring people you’d want to get a beer with after work. In the real world, this translates to “hire someone exactly like you”. Chang proposes explicitly hiring for “cultural addition” i.e. people who can bring diverse experiences and perspectives. That makes a lot of sense to me.
While brainstorming writing this post, I wanted to think bro culture is less pervasive in the Boston tech ecosystem than in the Bay Area. But just last week, the MassTLC technology association announced the nominees for it’s annual leadership awards. There were 15 nominees in the category of CEO, CMO, and CTO of the year. Zero women.
(By the way MassTLC I’ll help you out: Carol Myers of Rapid7 should be the CMO of the year, every year).
In Lost and Founder, Rand shares the story of Moz and what it’s really like to build and scale a startup. I really enjoyed the book and the “cheat codes” he provides based on the successes and failures he experienced building Moz to over $45m in revenue.
Spoiler alert: it’s not always unicorns and rainbows.
The prevailing narrative is that every tech company is a hypergrowth rocketship that’s going to triple triple double double double their way to unicorn status. Yeah, on occasion this happens i.e. Box, Slack, Zendesk.
It’s happening at Drift right now.
But at vast majority of startups look more like Moz. Moz is a clearly a successful company. They’ve built a great product that users love. At $45m, they have significant scale. They are even profitable! But Rand admits he led the company through a series of bad decisions over the years, including:
- Launching a slew of new of product initatives that failed.
- Prioritizing investor feedback over customer feedback.
- Failed “growth hacks” and that brought in a bunch of new users… who all subsequently churned and distracted the company.
- Turning down a $25m acquisition offer from HubSpot. Note, that at HubSpot’s current stock price, Rand would have been worth at least a bazallion dollars by now had he taken the deal.
In the end, Rand left Moz — and it seemingly it wasn’t his decision. He seems like a solid guy, and I’m sure he’ll be a better entrepreneur after going through this experience. Thanks to Rand Fishkin for sharing these candid stories.
Bad Blood — by John Carreyrou
Okay, so this was the book I was most interested in reading on vacation. Once I started, I couldn’t put it down.
Bad Blood is the story of Elizabeth Holmes and Theranos, the company she founded after dropping out of Stanford. If you’ve been paying attention, you know this story did not end well. Theranos is now all but over, and Elizabeth Holmes is currently facing a number of criminal charges.
Elizabeth Holmes was a brilliant narcissist with a vision that one day, a single prick of the finger would bring blood testing into every household. Holmes and her arrogant COO boyfriend Sunny Balwani created an extraordinary illusion of success, faking out everyone from Walgreens to investors who gave her $400m a $9b valuation. She created a Jobs-ian reality distortion field.
All without a product.
Well, Theranos did have a couple of products. Their first product was a device that could run a few blood tests, but it often didn’t work, and it couldn’t completely replace everything you’d get done in a real lab. So Theranos ended up creating their own lab to analyze blood using tried-and-true Siemens blood testing equipment. The Theranos innovation was modifying the Siemans equioment it to handle the significantly reduced blood volume captured by their pinprick device.
Of course the Theranos modification introduced a really big problem: the results weren’t accurate. Walgreens rolled out Theranos to stores in Arizona, and delivered tens of thousands of inaccurate labs results to customers. It took brilliant investigative journalism from Carreyrou to unravel the the insane amount of investor fraud and criminal behavior happening at Theranos.
My wife has spent her career in biotech working with the FDA on new drug applications. It often takes decades for companies to commercialize medical research to the point where it can be put into the hands of customers. This is real life and death stuff, but Theranos treated it like an a form of a beta SaaS application. They purposely avoided both the FDA and the Centers for Medicare & Medicaid Services, both of whom are charted to protect consumers from evil companies like Theranos.
To Holmes and Balwani, the illusion of success and the paper wealth it created was more important than the truth. Bad Blood highlights everything wrong with the current “win at all costs” mentality that permeates the Valley.
I experienced a similar situation after joining Autonomy in 2008. At the time, Autonomy was a tech powerhouse, well on its way to a billion in revenue. Autonomy sold to HP in 2011 for a massive $11b valuation. But less than a year later, HP had to write off a huge chunk of the aquisition over “accounting improprieties” and last month Autonomy’s former CFO Sushovan Hussain was convicted on a series of felony charges related to the acqusition. Like Theranos, Autonomy formed a distorted reality where low margin hardware could be sold as high margin software, and where deals sold to resellers never had to make it to the end customer to be booked as revenue.
Autonomy employees knew that something was way off, but the power of the distortion field was strong. I suspect Theranos employees look back and see many of the same warning signs I saw.
In the end, I feel like the Theranos story should have ended much differently.
Look, Holmes isn’t exactly a sympathetic character having willingly put lives at stake by delivering inaccurate labs results. But she had a big vision, and was making good progress towards it — albeit more slowly than apparently she was willing to accept. But had she played by the same rules as, you know, every other healthcare startup, Theranos would be on a much different path.
Shoe Dog — by Phil Knight
I saved the most inspiring and grounded story for last.
Shoe Dog is the story of the early days at Nike. It’s the anti-Valley success story. There were no insane growth hacks or unicorn funding rounds. Just the perseverance and grit of the “shoe dog” — Nike founder and Phil Knight.
Nike started out as Blue Ribbon with a $50 loan from his father. Blue Ribbon became the sole distributor of the Onitsuka (now ASICS) Tiger. Knight faced a series of obstacles, ranging from terminated bank loans to a lawsuit that could (maybe should?) have crushed Nike before it even got started.
Today, Nike sales top $30 billion and Nike’s swoosh is one of the most recognized logos on the planet. Knight himself is worth $33.7b.
Not bad for a guy who built his business initially as a passion project.
Go buy the book and read it. If you don’t like it, let me know and I’ll refund the cost 🙂