Jason Calacanis and the Evil Cult of the Internet Start-up

[Note: This article is a follow-up to How do you treat your staff? Like 37signals, or like this prick?, written after that piece received a lot of attention. But my views are more complex than simple Good vs Evil, as a look through all Calacanis-related posts will show.]

I’m still chuckling at the seriousness with which some people treat getting onto Techmeme. It’s true, I keep stopping typing to giggle. It’s embarrassing.

I’d never visited Techmeme until this weekend. Even then it was only because someone told me I’d blipped up there. It’s just another feed of what someone thinks is “important” in infotech, yeah? Who cares. It’s not as if it’s Reuters or BBC News.

It’s just more geeks telling geeks what geeks think other geeks should think about stuff that geeks think about.

Photograph of Jason Calacanis

But Jason Calacanis cares.

Jason Calacanis must care very deeply because he “joked” about it on this website, and over at TechCrunch he “joked” about getting pageviews. His fan club speculates that Duncan Riley and me and others are only attacking him to generate our own web traffic. Well, I can’t speak for Duncan, but no, I couldn’t care less about website traffic — especially the low-grade drive-by flamers that usually wash up here after being mentioned on high-traffic fan sites. That’s not why I’m here.

I’m attacking Calacanis because I reckon the business style he describes, the one championed by his defenders, is rotten to the very core.

But first, let’s talk about religion…

The Cult of the Internet Start-up

Attracting attention and scoring pageviews is very, very important to these guys — and for good reason. They’re fully indoctrinated into the Cult of the Internet Start-up. They must generate The Buzz.

Let us now read from their gospel…

… 19 Soon, our Labours will have produced The Beta. We shall ready ourselves to supplicate Our Great Saviour the Venture Capitalist. 20 He shall ask, “Doth thy Beta have The Buzz?” 21 If it does have The Buzz, He will see that It is Good, and He shall writeth The Cheque. 22 And there shall be much rejoicing.

23 And then cometh the Second Phase wherein — praise be to The Great Saviour! — we shall write the IPO. 24 If we still have The Buzz, the Shares shall Rise, and the land will overfloweth with milk and honey. 25 And there shall be much rejoicing…

Internet Start-upers are fundamentalists. Anyone who doesn’t follow their pathway of monomaniacal self-sacrifice (read: high-risk workaholism) in pursuit of the Nirvana of the successful IPO is branded a Slacker, even by The Prophet.

The Cultists truly believe that the faster-faster-VC-to-IPO chase to these glorious riches is the right and proper thing to do — and like all zealots, they think the ends justify the means.

Note also Bill Moore’s comment. “A few million (or 10s of millions, max) dollars a year” and being “very comfortable” isn’t enough for him. He talks a bit about “industry changing”, but soon gets back to the money, complaining if he’d get “only” 15% of $100M.

That’s 15 million dollars, Bill!

There’s a word to describe that.

Greed.

If you’re on an average US, Australian or European wage, you’re already richer than 99% of the planet. But forget the top 1%. Even being in the top 0.01% isn’t enough, it seems. And anyone who isn’t this filthy greedy, anyone who isn’t prepared to treat people as disposable, exploitable objects along the way, is a “wimp” or a “wannabe”.

“There’s a Pig Loose in the Mosque! Sooooooooooooeeeeee!”

This discussion is heated because we’re not talking about subtly different ways of doing business here. We’re challenging the Cult’s core tenets. That greed is good. That the ideal is to grow fast and cash out, not build something of lasting value. That it’s just fine to burn people out along the way — collateral damage, I guess. That it doesn’t matter if your life is totally out of balance now because it’ll all sort itself out later.

Magically.

Somehow.

A few years ago I was discussing a couple of Internet start-up concepts with a well-respected VC-savvy adviser who paused and said:

You do realise you’ll be doing business with evil people? They don’t care about anything other than the return on their investment. As long as you deliver that, it’s fine. Just remember, though, they are evil.

The Cult of the Internet Start-up is evil. It’s selfish. It’s inhuman It’s amoral. Using the term “work ethic” to describe driving (or seducing) people into appallingly long work hours to the neglect of family and community and even self is disgusting.

This “grow now, worry about the consequences later” attitude is precisely the greedy, short-term thinking which has driven the world to the edge of an environmental disaster. But who cares, eh? You got your $100M — all of it! Leave someone else to clear up that mess, and plough on to the next “world-changing idea”.

Assuming you don’t die of a heart attack first.

Assuming you have a heart.

Calacanis’ original post exhibited the language of exploitation. Petty bean-counting to suck every last productive hour out of the meat-assets. He changed that wording quick smart, eh? But did he change his attitude?

TechCrunch‘s Michael Arrington did a beautifully-written follow-up — though really the message was standard advice for any business: (1) hire the right people, and (2) don’t waste money, but avoid being penny-wise and pound-foolish.

Some of Calacanis’ points were probably written in haste, like his statement “Fire people who are not workaholics” (he later changed it to “Fire people who don’t love their work”). Others were not controversial, like his advice to “Buy cheap tables and expensive chairs.” Overall, I get the impression that if he had spent just a few minutes editing his post, he would have had a 100% different reaction from readers.

Agreed. The reaction wouldn’t have been as sharp. But changing the surface PR spin is just spraying perfume to cover the underlying stench.

Arrington exhibits the same exploitative signs in a later comment.

And I totally agree with you that for x duration you can work someone to death but the person needs to understand what happens once x duration is completed. There has to be downtime.

No, they don’t need to understand that. Think of them as a goldfish. Goldfish will eat everything you give them until their little stomachs explode (or so I hear). The key isn’t to find a goldfish that knows when to stop eating. They key is to know when to stop feeding the goldfish, for their own good.

Once again, it’s about treating your staff as objects to be manipulated at your whim. Wrong. Wrong. Wrong. Wrong. Wrong.

“If you’re not like us, you’re a loser”

This is not the only way of starting a new business. It’s just one specific model — about fast growth and high risk. Without a doubt, it can sometimes produce astounding results. It can also crash spectacularly, leaving no survivors.

You can also build a business calmly, rationally, with solid foundations — and with respect for the people and world around you. A business which can weather the storms because the captain has a clear view from the bridge, accurate maps and a firm hand on the wheel — as well as a dedicated crew, of course.

Calacanis has been more measured since he encountered the criticism of his original post, but he’s still condescending when comparing the fundamentalist Cult approach to the truly enlightened 37signals.

You haven’t raised tons of money and you’re building a “lifestyle” business from what I gather (correct?) You’re not trying to displace Google, Yahoo, Microsoft, etc. You’re not trying to build a service that gets to 100M monthly users, and you’re not on some aggressive timeline. You’re trying to build something that you enjoy working on and that helps people… correct?

When you take VC money and try to compete in a really aggressive space like search/research you’re faced with folks like Google, Wikipedia, about.com, Yahoo, eHow, DMOZ , etc. These are big companies with lots of resources… the way you beat them is to zig where they zag and/or out hustle them. So, if you want to compete in that space you’re gonna need to really work hard — you’re not going to do it working a four hour work week that’s for sure!

I’ll gloss over the fact that one of his differentiators is that 37signals is trying to build something “that helps people”, compared to his megalomaniacal goal of “displace Google, Yahoo, Microsoft, etc”. 37signals’ David Heinemeier Hansson quite rightly takes exception to all this.

[W]e’re not building a “lifestyle” business. We’re just building a business. To take the sound bytes [sic] from the recent Wired article, a multimillion dollar one that doubled in revenues last year…

So please don’t make the choices we’ve made about treating our employees one of a “lifestyle” (aka “small timer”, “toy”) vs “real” business. That somehow only those happy hippies who are not going for the gold can afford to hire whole people with a life outside of work. That’s bullcrap.

I very much do believe, though, that taking VC money with loads of strings attached will put hard pressures and increased stress on the decision making. And that in turn can lead to a culture where long hours and no walking outside for coffee can be seen as good, patriotic practices.

What I take the most offence to, though, is the dichotomist split between the workaholic go-getters who gets the quick cash and the lame waiting-in-line nine-to-fivers who get a gold watch after 30 years. What a crock.

We launched Basecamp four years ago. We built it off a 10 hour/week technical time budget. It’s very possible to build a “real”, multimillion dollar business that has high growth without resorting to the workaholic path.

Mr Calacanis, failing to comprehend that there are paths other than your own is fundamentalism. Even when you pretend to accept that there are alternatives — but still wrap your words in condescension.

Cult Myth #1: “It’s OK, I choose to work this way”

No it’s not OK. If you’re immersed in one specific highly-focussed environment for almost your entire waking life, then your decisions will not be made with a sense of perspective. You are not what DHH calls “a whole person”.

Vast slabs of the social fabric which informs good long-term, ethical decisions simply won’t be on your radar.

And then there’s the guys who say, “Well, I can work 16 hours a day for 7 days a week and it doesn’t do me any harm.” Well bully for you. I bet your dick’s bigger than mine too, eh? This isn’t a contest to see who’s the biggest martyr. It’s about who can achieve the most, not suffer the most.

Remember, Patty Hearst was there “voluntarily” too.

Cult Myth #2: “This is what makes America great”

This is the most toxic myth of all — wrapping your obsession in the flag.

No, this attitude is what makes America look like it’s populated by arseholes. Ignorant, arrogant, self-righteous, self-centred arseholes who consume everything in sight and dump their crap on the rest of the world under the delusion that their way is the best and only way. A nation that only now is starting to realise the mess it’s in.

What actually made America great — past tense — was the visionary foresight of its founders, the political geniuses who wrote the Declaration of Independence and the Constitution. At the time they knew they were creating some special — not just for the moment, but for all time.

God Bless America.

She’d better, because a clear-headed America will be needed to help face the challenges of the future — the very near future. And an America retreating into medievalism and stubborn arrogance is not what the world needs.

Fighting the Good Fight

So, this is why I refer to Jason Calacanis as a prick. His ill-thought-out wording in an essay intended to convey good advice — and some of it is good advice, let’s not forget! — exposed this smelly underlying attitude of winner-take-all exploitation and devil take the hindmost.

I strongly believe this to be a dangerous, toxic, anti-human attitude and it’s infecting others. It must be fought vigorously and with passion.

Calacanis and his defenders reckon that workaholic exploitation is the only way to “change the world”. It’s not. There’s also clarity of vision, a really good idea, and well-planned execution. It’s the difference between beating one’s opponent with serried ranks of massed foot-soldiers, or using snipers.

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  1. Zern’s avatar

    Fab, fab, fabbo. I keep giggling out loud when reading this. Which in itself is interesting – what you are saying makes absolute sense, any yet it feels so “naughty” and blasphemous.

    Reply

  2. Crispin Harris’s avatar

    All this stuff about firing workaholics reminds me of a couple of comments by Jack Welch (CEO of GE 1981-2001, short bio) regarding indispensable people. And now I can’t find the quote. :-(

    When you find someone who has made themselves indispensable; fire them.

    The intention here is that an organisation needs team players, and not empire builders or people who will not share knowledge. (There is also an expectation that you will give the person an opportunity to change their behaviour :-).

    JCal’s policies will tend to build the latter — people who push hard for the presumed IPO reward — they will work to ensure that they are not fired. In my experience, this is usually achieved through making yourself indispensable.

    I have spend a large amount of my professional life cleaning up environments that had been built/run/managed by people who couldn’t (or wouldn’t) create documentation.

    I then write the documentation, simplify the environment, and set it up in a direction/infrastructure that will last the next 5 years. I get paid handsomely for this, and I greatly enjoy walking away from a customer that no longer needs my assistance.

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  3. jason’s avatar

    When I first saw that guy’s face and read his sterile business ideas I thought it was a parody from the League of Gentlemen.

    Reply

  4. Stilgherrian’s avatar

    @Zern: I think we giggle precisely because it’s naughty and blasphemous. It breaks a taboo. We don’t expect people to make focused attacks. We laugh at Basil Fawlty’s relentless anger for the same reason. We laugh when someone flashes their tits. We laugh when someone unexpectedly bares their passions too.

    @Crispin Harris: That is a truly excellent point. I had a contractor like that once: he simply didn’t understand that the project he was working on was to create a system for the client to use — and then we’d arrange the next project. We had plenty to go on with, but he tried to create a sinecure for himself.

    He was also a Debian Linux / Python zealot but this project, mostly complete, had the five servers running on Red Hat. He started changing everything to Debian — even though that’d mean completely re-doing the testing and documentation. Then, when the client enquired about the delay and cost, he had the gall to lie to them and say it’s what I’d asked him to do.

    Needless to say, we lost the client. The cost to us was approximately $80k of future projects which had been discussed and were nearing approval. The cost to him was instant termination.

    @jason: Oh well spotted!

    As an aside, I’ve discovered Calacanis once tried to convince Jimbo Wales to run advertising on Wikipedia. Now the argument about whether advertising is a Good Thing or a Bad Thing is irrelevant. It demonstrates such a fundamental misreading of Wales’ character that it’s further evidence that JCal lives completely within his own ego bubble.

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  5. Stilgherrian’s avatar

    @Zhasper: They’re fantastic, thank you! While I’ve never really read a lot of Dave Winer’s material, what he says in his piece about the different kinds of friendship is spot on.

    Also, he’s right when he analyses Calacanis’ “offering” with Mahalo:

    Yesterday [at the Gnomedex conference, 10 August 2007], and in all his previous marketing, he rails against advertising and spam, which ironically, was exactly what he was doing to the environment at this mostly non-commercial conference. What we said (and I wasn’t the only one speaking back to him, I wasn’t even the first) was a response to this. It didn’t come out of thin air. If he had given a similar speech to venture capitalists, if he offered them no way to win, they would have had the same response, but it probably wouldn’t have been as patient or polite. Now, clearly he doesn’t have the same respect for us that he has for VCs. But it seems that to some extent the success of his company depends on winning over the people here at Gnomedex. If it didn’t, he should have stayed home, because his pitch, as delivered, doesn’t work here, because he didn’t offer us anything we want. We get a better deal from Google, believe it or not.

    Some of his argument against Google rings true, very few people love them as we did in their early days, but their proposition to web writers and podcasters is basically fair, it’s a win-win. We get flow from them, they get ad revenue. They also offer us a way to put ads on our sites, so we can profit financially from the relationship. Nothing in Jason’s pitch offers us anything like that. No flow, no money. And technically, it’s not a platform, so we can’t build on it.

    I don’t get Mahalo.

    It’s just pages with news that’s culled from elsewhere. Then if you search and they haven’t manually created a page for that search, it bounces you through to Google and the rest of the existing major search engines. Now I read somewhere that The Long Tail of Google searches is that, sure, there’s a lot of common searches like “britney spears” and “toothbrush sex”, but there’s a huge number of one-offs. So a good deal of the time Mahalo just bounces you through to Google anyway.

    What’s the value-ad for me over, say, a combination of, say, ABC News and Google? Particularly when I can combine them on an iGoogle page anyway?

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  6. Crispin Harris’s avatar

    I really thought that there was going to be more controversy about this Stil.

    Maybe all your readers agree with you?
    Are we all ‘Yes menPeople’?

    <Sigh> I was looking forward to a noisy debate.

    Reply

  7. Joel Brians’s avatar

    Basecamp creators are known for their views on project management. It might suit some teams, but not all of them. The tool is great, but sooner of later you start to miss some features that might have been really useful. This happened to me too and I had to look for another solution. Now I’m with Wrike. The tools is being developed very quickly and features like timeline with drag and drop function really do make my life a lot easier.

    [Stil says: I've edited this post to remove the hyperlink until I get confirmation back from the poster that he's not a PR person for Wrike.]

    Reply

  8. Stilgherrian’s avatar

    @Crispin Harris: It initially became controversial because the 680 thousand readers of TechCrunch, many of whom would be the monomaniacal workaholics Calacanis adores, had their personal views challenged. Duncan Riley linked to my original piece and that — plus the Techmeme mention — pulled in some 7000-odd new readers here.

    However most of those readers would have commented back on whichever higher-traffic site they first came from, because there’s where the discussion was. And it soon became obvious that there were two diametrically-opposed viewpoints. Everybody said their piece a few times, then stalemate.

    And after that, 36 hours later or whatever, it was the storm in a teacup over Mark Zuckerberg’s supposedly “disastrous” interview at SXSW. The feral goldfish had moved on. This piece has only scored 500-odd readers so far (plus RSS traffic).

    It’s also a few too many words for the poor little petals.

    @Joel Brians: What we’re actually talking about here is the different approaches to treating employees — as disposable meat-assets or as, well, people. Still…

    All you’re really saying is that 37signals’ products don’t do everything for everybody. They’d be the first to agree. In the same way if I buy a Ferrari, it’s fine for driving around the city but “sooner or later” I’ll want to drive off-road and then it’s no good.

    Given that you don’t actually address any of the issues we’ve discussed, and the wording of your comment sounds like a canned PR testimonial, can I assume you’re just some dishonest lackey whoring Wrike? If so, have the balls to say so — you’ll earn more respect that way.

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  9. Joypog’s avatar

    Just wanted to thank you for your very interesting post. My laissez-faire attitude is that if people are willing to kill themselves for the chance at big $$ it’s their own problem. If they want to sign on with someone like Calacanis, its fine with me — with the only caveat that he should be frank about the risk (and effort) / reward as he sees it. If JC is dishonest about the prospects or rewards for success then all bets are off, then he’d just be a fraud, but if he is honest, then it’s his employees are suxors.

    I’m an architect and I see this sort of issue all the time. The superstar architects are able to get interns to work insane hours for insanely low pay (like 12 hour days for $400/week). I’m not one of those, no-one can pay me that little for that much work for the privilege of putting their name on my resume.

    That said, I think that there is a major cultural problem that you do address, which is best summed up in your penultimate line, and we really do need to knock down the high stature of the “high-risk/high-reward/high burnout” approach to life.

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  10. Stilgherrian’s avatar

    @Joypog: And thank you for such a thoughtful comment! At one level I do agree: if people want to kill themselves, so be it. As I jokingly said when a friend turned down a social invitation because he was volunteering as a beach lifesaver, “Nah, mate, come to the pub and let the stupid bastards drown.”

    Society does need risk-takers: look to any nation’s armed forces and emergency services for outstanding examples of bravery. However in those cases the end result is primarily for the society’s good, not for personal gain.

    The other problem with is that if people burn out, the rest of us have to pick up the pieces — either personally as family, friends and neighbours, or societally through the burden of increased healthcare costs.

    Nice point about the celebrity architects — and of course we see the over-rated “stars” in any field.

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  11. Joypog’s avatar

    Your last sentence brings up a good aside. I think JC’s comment was particularly inflammatory because he flaunts his wealth. Even though I don’t begrudge him if he spends a lot of money, he has created an aura around him that resulted visceral reaction. It is just unseemly that someone who brags about pre-ordering a Tesla and buying 3 Airs can turn around and write in a dismissive tone that his employees must be workaholics. It would have been one thing for Warren Buffet, who public persona is that of a person who lives as “regular” a life as the world’s second richest man can, to talk about the need for people to work hard.

    No doubt celebrity and showmanship are a central component of JC’s business advertising strategy, I would have never visited Mahalo except for his appearances on TWiT. But as you mentioned, there is a real danger behind JC’s (and many other Web startup impresarios’) cult of flamboyant personality around himself. Many of these men have something to fall back on while their troops have nothing in reserve. The ground floor startup workaholic does not have millions saved in the bank, when s/he burns themselves out, they have nothing to fall back on. The cult leaders are rich enough that they can burn themselves out – cause they can follow it up with a vacation to Tahiti. If I burned myself out, I’d still have to get up tomorrow and look for a new job.

    But then again, America and its uneasy relationship with celebrity (and the consequences of this liaison) is a whole ‘nother can of worms.

    Reply

  12. Stilgherrian’s avatar

    @Joypog: Again, a wonderfully thoughtful comment. You can stay! Your point about flaunting wealth has triggered a few thoughts which will turn into an essay at some point. In brief, though, I’ve already commented elsewhere that the main function of a MacBook Air is to show the world what a wanker you are. Having three means you’re just three times the wanker.

    “Look at me, I’m better than you because I have more expensive cool stuff” is an attitude which just shows how shallow one really is.

    Sadly for him, Calacanis buying a Tesla failed to impress me. I didn’t know that apart from being a famous scientist, Tesla is also the name of an expensive electric car. Now that I know it exists, I’ll have more to say about it later.

    Reply

  13. bernard’s avatar

    phew!

    The moon, the moon!

    Enjoyed it, but didn’t / couldn’t absorb it all.

    Will return later.

    Reply

  14. Stephen Stockwell’s avatar

    After the last week, would it be feasible to call Kevin Rudd the Australian Federal Government’s answer to Jason Calacanis?

    Reply

  15. Stilgherrian’s avatar

    @bernard: Yeah there’s a lot of material here. And I find I keep returning to it for inspiration, which says… something.

    @Stephen Stockwell: Jokes about our new Prime Minister being “The Ruddbot” have more than a ring of truth about them, eh? While burning the midnight oil is certainly a useful tactic for special situations, it simply isn’t sustainable.

    “Rudd has spectacularly failed the exploitation test,” says Mirko Bagaric in The Age today… and I’ll quote more in a fresh post.

    Reply

  16. Stephen Stockwell’s avatar

    @Stilgherrian: The dust from this particular issue has settled by now, but in quoting Mirko Bagaric’s opinion on, well, anything, really (given his in-principle support for torture and bizarre advocacy for capping legal abortions at one per female per lifetime) you risk entering very choppy waters, where common sense can vanish like a boat in the Bermuda Triangle. You’re a good captain, but take care.

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  17. Stilgherrian’s avatar

    @Stephen Stockwell: I’d never heard of Mirko Bagaric before quoting him in the previous comment, and as I write this I still no nothing more about him than what you’ve just told me. There’s an essay in here somewhere, though, about the logic of a message still being valid even if the messenger is otherwise unsavoury.

    Reply

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