2017: The Year the Culture Bubble Popped

Drive Capital
Oct 11, 2017 · 5 min read

Originally published by Robert Hatta on October 6, 2017

2017 was a shitty year for corporate culture in the tech industry. In February, a short but powerful blog post by Susan Fowler set off what would become a stream of revelations about the deeply toxic culture that had developed at Uber. This summer, allegations of sexual harassment by Binary Capital investor, Justin Caldbeck, led to the collapse of the firm. Moreover, it re-ignited the issue of gender diversity in the VC industry. In August, tech giant Google got in on the action with the now infamous James Damore “manifesto.” Responding to this last scandal, the New York Times declared that the The Culture Wars Have Come to Silicon Valley. 2001 will be forever known as the year the dot-com bubble burst. For those paying attention, 2017 will be the year the tech industry culture bubble burst.

Wait, the tech industry has been in a culture bubble? I first learned that the word “culture” had a meaning beyond wine, art and music nearly 20 years ago. In their now famous book, Built to Last, James Collins and Jerry Porras wrote that great companies all have cult-like cultures:

Architects of visionary companies don’t just trust in good intentions or “values statements;” they build cult-like cultures around their core ideologies. Walt Disney created an entire language to reinforce his company’s ideology. Disneyland employees are “cast members.” Customers are “guests.” Jobs are “parts” in a “performance.” Disney required — as the company does to this day — that all new employees go through a “Disney Traditions” orientation course, in which they learn the company’s business is “to make people happy.”

That seemed a bit abstract to me at the time and I thought little of it for the next several years. It wasn’t until 2003 that I heard the word mentioned in a corporate context. I was sitting in an auditorium with about 200 Netflix employees as the CEO, Reed Hastings, was walking the company through a presentation that would later become known as “The Culture Deck” (all 125 slides of that presentation have been viewed over 17 million times since it was shared publically in 2009. Even if you have read the deck before, you should listen to this great podcast of Reed discussing how and why the deck became a thing at Netflix.). For the next ten years, I would talk about how important company culture is for companies that want to succeed. I’d talk about it with co-workers. I’d blog about it so that both of my readers could tell their friends. I’d even help startups define and articulate their cultures.

I wasn’t the only one. Everyone was talking about culture. Thousands of books and blogs were being written about it with titles like, Culture Eats Strategy for Lunch and The 5 Languages of Appreciation in the Workplace. Tech companies of all shapes and sizes scrambled to publish their own culture decks — many of them found here. Each one touted the unique environment and guiding principles awaiting tech workers in search of personal growth, impact and inclusivity. Culture was king in the land of startups. And while Netflix earned Godfather status, a mass of Fredos stumbled over themselves to establish their culture cred. Chief among them was Hubspot. The Boston-based maker of automated marketing software snapped up the URL culturecode.com and used it to host commentary on its culture deck — a 128-page masterpiece full of phrases like, “dare to be different” and “we like people with HEART.”

Then, in 2016, Dan Lyons authored Disrupted: My Misadventure in the Start-Up Bubble, where he skewers Silicon Valley tech culture. Specifically, he takes aim at Hubspot, where he spent over a year as a content writer. In the book, Lyons describes all sorts of shenanigans that pass as culture in tech startups, among them: ageism, questionable management and a homogenous culture of white dudes in their 20’s crushing beers and playing ping pong. Regardless of how much of Lyons’ account you believe, at least some of Hubspot’s highly touted culture appears to be bullshit.

In the winter of 1928, Joe Kennedy famously said, “You know it’s time to sell when shoeshine boys give you stock tips. This bull market is over.” Even before Lyons’ book came out, I was seeing the signs in my own work. After all, I was part of that bubble. I shared the Hubspot and Netflix decks with many founders as examples of the cultures they should aspire to build. I’d see founders build these beautiful decks and present them grandly to their employees. But I also saw those same founders, and many of their employees, struggle to reference one of their company’s core values when prompted. Or describe what one looked like in action. Or show me examples of someone being rewarded, hired or fired based on their culture. Worse, when told, “we didn’t hire that person because of culture fit” (which I hear a lot), I could never get a precise answer as to what specific part of their culture the candidate didn’t fit. So I stopped talking about culture. I stopped writing about it. I stopped being the shoeshine boy.

Today, I spend my time helping founders and their teams understand and implement interviewing best practices. In fast growing companies, the culture of the company is most influenced by the people you hire. Even founders and early hires become outnumbered quickly when a company starts to scale. During the interview process, I insist that cultural fit not be part of the evaluation process unless everyone in the process knows what to look for and how to screen for it. Consistently. I also advise interviewers that cultural “fit” is an outdated framework. eShares CEO, Henry Ward, tells his hiring managers that culture builders are better than culture-fitters, directly challenging the Built to Last position on cult-like cultures:

Because of Built to Last, good corporate culture is considered static and decided early in a company’s life. For these companies, hiring means selecting people who fit the existing culture and keeping out those who don’t. Hiring is gatekeeping… Our culture is dynamic. It should expand like our business. We welcome its change. Just like we want people to contribute new skills and ideas, we want people to contribute new culture. Hiring culture-fitters does not make our culture better. On the contrary it makes culture worse through decay.

Hype, poseurs and greed fuel market bubbles. But truth lives within all bubbles and usually survives long after they burst. The Internet did not go away after 2001, nor did the mortgage industry after 2008. While Uber turned culture into a dirty word in the tech industry, Netflix remains a shining example of how a company can curate, nurture and evolve a great culture. The Netflix Culture Deck endured while the company evolved from DVD-by-mail service to streaming service to Hollywood movie studio. Since that day in 2003, the company has gone from 1 million to over 100 million loyal customers. Reed Hastings would tell you that Netflix did all of this because of its culture.

And with every bubble that bursts, lessons are learned. The long known, but little discussed, lack of diversity in the tech industry is finally getting real attention. This is something that I’ll be talking about a lot in the future. Unlike the culture bubble that it follows, I’m hopeful that the diversity boom is more than talk and pretty decks.

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