by Dan Lyons
Yet this is a company where top executives allegedly engaged in a scheme to invade the privacy of a former employee and did something so serious that the FBI investigated. Despite that, those marketers cheering for Halligan at the Inbound conference somehow believe they can trust his company with their data.
The thing is, we all do this. We share our information with companies all the time. We send email through Google or Microsoft. We store files on Dropbox. We shop on Amazon. We buy apps and music from Apple. We hire drivers through Uber, and rent apartments through Airbnb. Companies use Workday for HR, Zendesk for customer service, Salesforce.com for customer tracking, Slack for messaging, and on and on. Most of these companies don’t operate their own data centers. Instead, they rent server and storage space from a hosting company like Amazon. Our information gets distributed around the globe, zipped between data centers at the speed of light, stashed on hard drives, backed up, duplicated, replicated, sliced and diced, sold and shared. Even the people who supposedly manage our data have no idea where all of it resides or who has access to it.
Yet we go along. We convince ourselves that nothing bad will happen. We tell ourselves that we’re not important enough for anyone to spy on us, or that even if someone did want to spy us, there must be safeguards in place that prevent bad people from snooping. We hear the people who run these online services present themselves as idealistic do-gooders who want make the world a better place.
Even if we don’t believe them, we understand that they have a financial incentive not to spy on us. They don’t have to be good people, or honest people, or law-abiding citizens. They just have to want to make money. They can’t do that unless people trust them. Their own greed will keep them honest—that’s the theory, anyway.
So we figure we’re safe. We figure we can trust the people who run online services not to snoop on us. I used to believe that. I don’t anymore. Halligan, Volpe, and Chernov were not random nerds going rogue in some data center. They were top executives of a publicly traded company. They’re the ones who were supposed to be keeping an eye on the others. During my time at HubSpot, I was shocked to see how badly managed the company was and how packs of inexperienced twenty-something employees were being turned loose and given huge responsibility with little or no oversight. In the world of start-ups that is now the norm, not the exception.
The consequences are just what you would expect. Employees at Uber, the ride-sharing company, have used a “God View” feature to stalk people using the service, including a BuzzFeed journalist. Re/code, a tech blog, claims other companies have done the same, including Lyft, a rival to Uber; Swipe, a photo-sharing app; and Basis, which makes a “health watch” that tracks people’s heart rates, sleep patterns, and other personal information. In the early days at Facebook, the young employees had a master password to gain access to anyone’s account, according to a book by a former Facebook employee. Dirty tricks have become par for the course at these places. In 2011 Facebook was caught running a sneaky smear campaign, hiring a PR firm to spread negative stories about Google—I know because I’m the reporter who caught them and broke the story for Newsweek. Facebook’s entire business model is based on mining personal data in order to deliver targeted advertising. The same goes for Google and countless other online companies. We have no idea who has access to what.
We also have no choice but to go along. None of us is going to opt out of using the Internet. Nor can we expect that the companies will do any better when it comes to oversight. They’re funded by venture capitalists who seek only the biggest and quickest return on their investment. That means hiring kids, cutting corners, breaking rules. It does not mean investing loads of money in order to build safeguards and protect users. There’s an adage in Silicon Valley that people who use online services are not the customers. We’re the product. As far as companies in Silicon Valley are concerned, we exist solely to be packaged up and sold to advertisers. We should not expect these companies to look out for us.
In March 2015, just five months after the initial public offering of stock, HubSpot went back to the public markets for a second shot of cash.
This time most of the money went not to the company but to a bunch of insiders. The company itself sold only 850,000 shares, while insiders sold 3.2 million shares. Shares were priced at $37, so the company raised $31 million while insiders raised $120 million.
Halligan and Shah each sold shares worth about $6 million. Four of their biggest venture capital investors—General Catalyst Partners, Matrix Partners, Scale Venture Partners, and Charles River Ventures—pocketed just under $80 million, collectively.
HubSpot has created a great deal of wealth—by the end of 2015 the company was valued at nearly $2 billion. But most of the money has ended up in a remarkably small number of hands. After the IPO, in October 2014, nearly 80 percent of the company was owned by five venture capital firms and three insiders—Halligan, Shah, and J. D. Sherman, the chief operating officer, according to the S-1 prospectus filed with the Securities and Exchange Commission. The five venture capital firms invested $100 million and turned it into about $1 billion.
And HubSpot stock kept climbing. By the end of 2015, even after selling some of his shares in the secondary offering, Halligan had a stake worth $63 million. Shah had a stake worth $120 million.
HubSpot itself has never turned a profit. Wall Street analysts estimate that the company will continue losing money at least through the end of 2016. Most analysts recommend buying the stock.
Acknowledgments
I’m indebted to many friends from Silicon Valley who spoke to me when I was working on this book and shared their insight and perspective. For the most part I have not mentioned these people by name, for the sake of protecting their privacy—but you guys know who you are. Also, in some parts of the book I have drawn on reporting and writing that I originally did for other publications, including Valleywag.
My wife, Sasha, offered emotional support and boosted my spirits during the dark time when I was banished to the telemarketing center at HubSpot. She stayed calm when I was freaking out and dealing with lawyers and being interviewed by the FBI and trying to figure out what HubSpot’s executives had done to us. Most important, Sasha held down the fort while I was away from home, working in Los Angeles, and when I got back to Boston and was holed up in my office for weeks on end.
My agent, Christy Fletcher, and her associates at Fletcher & Co. read drafts and provided valuable feedback. My editor, Paul Whitlatch, offered wise counsel, as did others at Hachette, including Mauro DiPreta, Michelle Aielli, Elisa Rivlin, and Betsy Hulsebosch. Production editor Melanie Gold and copy editor Lori Paximadis exhibited tremendous grace under pressure, and improved the manuscript immeasurably.
Finally I would like to thank Brian Halligan, Dharmesh Shah, and everyone else at HubSpot for providing me with such rich material. You truly made one plus one equal three.
Thank you for buying this ebook, published by Hachette Digital.
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Contents
Cover
Title Page
Welcome
Dedication
Author’s Note
Epigraph
Prologue: Welcome to the Content Factory
Chapter 1: Beached White Male
Chapter 2: When the Ducks Quack
Chapter 3: What’s a HubSpot?
Chapter 4: The Happy!! Awesome!! Start-Up Cult
Chapter 5: HubSpeak
Chapter 6: Our Cult Leader Has a Really Awesome Teddy Bear
Chapter 7: We Need to Make the Blog a Lot More Dumberer
Chapter 8: The Bozo Explosion
Chapter 9: In Which I Make a Very Big Mistake
Chapter 10: Life in the Boiler Room
Chapter 11: OMG the Halloween Party!!!
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Chapter 12: The New Work: Employees as Widgets
Chapter 13: The Ron Burgundy of Tech
Chapter 14: Meet the New Boss
Chapter 15: Grandpa Buzz
Chapter 16: Ritual Humiliation as Rehabilitation
Chapter 17: A Disturbance in the Farce
Chapter 18: A House of Cards?
Chapter 19: Go West, Old Man
Chapter 20: Glassholes
Chapter 21: Excuse Me, but Would You Please Get the Fuck Out of Our Company?
Chapter 22: Inbound and Down
Chapter 23: Escape Velocity
Chapter 24: If I Only Had a HEART
Chapter 25: Graduation Day
Epilogue
Acknowledgments
Newsletters
Copyright
Copyright
Copyright © 2016 by Dan Lyons
Unicorn illustration by Samuel Bennett
Cover design by Christopher Lin
Cover copyright © 2016 by Hachette Book Group, Inc.
All rights reserved. In accordance with the U.S. Copyright Act of 1976, the scanning, uploading, and electronic sharing of any part of this book without the permission of the publisher constitute unlawful piracy and theft of the author’s intellectual property. If you would like to use material from the book (other than for review purposes), prior written permission must be obtained by contacting the publisher at [email protected]. Thank you for your support of the author’s rights.
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First ebook edition: April 2016
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ISBN 978-0-316-30607-2
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