Dan Lyons, courtesy photo

Publisher and Reporter with Silicon Hills News

This model of throwing lots of money at “Bros” to startup tech companies without any focus on diversity and inclusiveness is not working, said Dan Lyons.

Lyons spoke to a half-empty ballroom Friday afternoon at South by Southwest Interactive on the need for reform in the tech industry to include more women, people of color and older workers. Ultimately, it benefits the bottom lines of businesses, Lyons said.

Lyons, a former technology editor with Newsweek, wrote the book, Disrupted, last year. In it, he chronicled his time spent at HubSpot, a software marketing startup based in Cambridge, Mass. which had raised $100 million before going public.

HubSpot’s culture seemed like a mash up of a fraternity house, Montessori school and Scientology cult, he said.

HubSpot lacked diversity, a chronic problem throughout the technology industry, Lyons said. And Lyons, who was 52 at the time, twice the average age of HubSpot employees and one of only two people over the age of 40 at the company, experienced ageism in the tech industry.

His talk at SXSW focused on the rise of “Bro Culture” which he defines as a company led by a good looking white male CEO with no work experience, running a startup and hiring bros like him with no focus on diversity or promoting women.

“The Internet industry is 25 years old and we’ve had two generations of companies so far and I think we’ve made some mistakes and gone off the rails,” Lyons said.

To illustrate how Bro Culture isn’t working, Lyons pointed to the recent case of Susan Fowler, a Silicon Valley software engineer who formerly worked for Uber. She wrote a personal blog post “Reflecting on one very, very strange year at Uber.” In the post, she recounts being hit on by her boss, reporting it to Human Resources and being told to either endure it or find another assignment.

With that post, the floodgates opened against Uber, Lyons said. All kinds of other stories began to come out and other women reported the same problems with sexual harassment and HR ignoring their complaints. The New York Times did a story and found the company faces three lawsuits from former employees alleging sexual harassment and verbal abuse.

Then Newsweek wrote a story a week ago about “How Uber Could end up as Silicon Valley’s Most Spectacular Crash,” Lyons said.

“Uber has raised more than $11 billion and it is valued at more than $60 billion.” Lyons said. “Now Uber is scrambling. It has to put out the fire.”

Travis Kalanick, Uber’s CEO and founder, who is 40, is now going to hire an adult to run the company, Lyons said.

In Silicon Valley, Venture Capitalists required founders to have what they called “adult supervision” or an experienced executive to help develop and steer the company. For example, Google brought in Eric Schmidt. But in the last ten years that’s changed, Lyons said. And the VCs think the founders are better off when left to their own devices, he said.

But “it might be too late to save Uber,” Lyons said. “That is the cost of Bro Culture.”

“It isn’t just about changing it so women feel more comfortable at work, although that is reason enough,” Lyons said. “This is a really, really big story and it just started with one blog post.”

In the past, employees who endured abuse often just put up with it and shut up about it. Companies scared people and made people sign papers saying they couldn’t write or speak ill of the company after they left, he said.

“This may be the beginning of the end of Bro Culture,” he said.

While he was at HubSpot, Lyons also worked as a writer for the HBO Show Silicon Valley for two seasons. It was a show about masculinity and Bro Culture, Lyons said.

Bro Culture CEOS share common characteristics such as they are glib, they can’t be over the age of 40, they are over confident, obnoxious, and amoral, Lyons said. There is a certain amount of amorality that is required to be a Unicorn startup bro, he said.

They create what’s called the Bro Code: labor laws are irrelevant, it doesn’t matter if you’re a woman and if you’re pregnant you get fired, Lyons said.

“There are no protected classes,” he said. “They lie about their numbers to go get money from VCs. That behavior is not only tolerated but it’s encouraged.”

Lyons journey into Bro Culture started in 2012 after he got laid off from Newsweek. He needed to find a job. He landed one at HubSpot.

HubSpot had every kind of tech perk for employees including dogs at work, open offices, bright colors, bean bag chairs, nap rooms, candy wall and more.

“Every stupid thing you could possibly think of for a startup they had to have,” he said.

Training was an indoctrination to the company culture, Lyons said. They talked about having a superpower.

“I have never been at a place where people talked about having superpowers,” he said. “Here everybody had superpowers. We were all rock stars. They told us in training it is harder to get a job here than it is to get into Harvard. We had to go around and talk about what makes you special, what makes you unique. What is something about you that makes you different from everyone else. And I’m like I’m the only here who has had a colonoscopy.”

HubSpot had a culture czar who enforced the culture code. The only key to success was team spirit, Lyons said.

“You just had to be super cheery,” Lyons said. “One women got fired after 12 weeks – she was doing a fine job – they told her she just wasn’t excited enough.”

HubSpot went to great lengths to try to make people happy, but so many people were unhappy, Lyons said. There were actually two cultures at the company. The surface culture and the one below that.

HubSpot’s executives used the term “graduated” when someone got fired. And they would send out a really cheery email to the whole department announcing the graduation, Lyons said.

“I never saw so many people get fired in my life,” Lyons said. “I never been in a place where people were so miserable.”

“The culture code was we’re a team, we’re not your family,” he said. “We owe you nothing. You’re just a widget. You are totally disposable.”

And women got the worst of it. Women over the age of 35 or women who were mothers were pushed out of the company and mistreated, according to Lyons.

“There were no black people,” Lyons said.

“These biases go hand in hand,” he said. “When you see one, you see all of them. Age bias, gender bias, racism.”

It’s very high stress, Lyon said. There is a focus on growth above everything else to the expense of profit, he said.

In the last 20 years, the Venture Capital business has become enormous. There are twice as many funds in the last 20 years. Four times as many active investors in 2015. Four times as much capital under management, Lyons said. In 2015, venture capitalists made $60 billion in investments, up from $8 billion 20 years ago, he said.

“The main product of Silicon Valley now is not technology, it’s money,” Lyons said. “It’s become like mini-Wall Street.”

In the past, only profitable companies went public. But that changed in the 1990s when Netscape went public and a lot of Venture Capitalists got rich, but then the company tanked and a lot of the public got stuck with worthless stock.

Since 2011, of 60 independent tech companies that went public only 10 have ever made a profit, Lyons said.

Since its IPO, Twitter has lost $2.5 billion, he said. The company has never made money.

“That is a recent phenomenon and a dangerous one,” Lyons said.

In the end, the Bro Culture is not working because they are missing out on talent that is superior, Lyons said. Statistics from Broadway Angels, a group that invests in women, shows that women led startups outperform the industry.

To change the Bro Culture, tech startups need to create good jobs, treat people well, pay taxes, hire with diversity, Lyons said.