Big Cuts at Airy Labs, Ex-Employees Blame Management

When I found out about Airy Labs, I applied and interviewed with them in August 2011. I got the impression the engineers were very smart, and very overworked. When we got to discussing numbers, Hsu was interested in a low five-figure salary.

I sent him a few emails asking about things like revenue model. I was concerned that IAP corrupts the incentive structure around education. (Just imagine, your incentive is to keep kids playing games and spending money, nowhere does education enter into it).

I ultimately went to Google.

Andrew seems like a sharp guy, I hope he's successful.

I've seen this before. This is usually so that there isn't any evidence of the communication stored anywhere. A very bad sign of a Machiavellian management style that I've never seen end well.

Employees were warned against socializing or discussing their compensation with other members of the team. At the same time, office life was obsessively documented in photos, a practice that extended to people interviewing for jobs.

And here is where it gets really weird. You can't have evidence about how the company operates, but they can document you.

People working in the US really need to know about the National Labor Relations Act and what it means in terms of discussing salaries. Not having this kind of information out there is a bad thing for employees and lovely for conniving bosses.

Because the team is now 404: not found.

"employees were told not to speak to anyone who had left the company."

Oh, so it's a cult then. Understood.

I will say that taking one startup's stumble, or even their eventual demise, as a data-point to slam a whole program is pretty harsh. I'm a Mentor for 20 Under 20 and I certainly don't think the mission is to get kids to drop out of college, but it's easy for the media to push this little sound bite. If you've meet any of the Fellows you would know they're out to change the world and would likely do so with or without Peter's money. Failure is the expected outcome for the vast majority of startups. All you Founders here know that, or will learn it first hand. Most of these kids have never failed at anything in their lives, and will unfortunately face these hard lessons in the public eye. It's really easy to criticize and grab pitchforks online.

You can think whatever you want about the situation at Airy Labs and you are entitled to your opinion of Andrew Hsu as well. But to try and lump all the other Fellows into this is unfair to them and quite disappointing.

Hsu should have tried harder to understand the cultural dynamic in the US.

If you're a controlling person when it comes to your personal relationships, you won't likely be a great founder. You need to understand that everyone has their own goals, dreams, and desires in life. Your employees are not just things you put money into and productivity out of, they're people who will produce way more than you expect if you treat them well.

Maybe I'm biased though. My dad ran four small businesses in his life and the main thing that kept both the employees and customers coming back was that he was well-liked and personable with everyone.

Being a recent co-founder of a startup, I am managing a team of 8 contractors and consultants right now. Each one has their benefits and flaws, but I'm happy to work with them and willing to be flexible around schedules, etc. It would never enter my mind to setup such a draconian system and I think anyone who does is probably inherently broken as a founder.

I've worked in this situation. No way to know specifically what happened at Airy, but I worked for a company that was almost exactly as Airy is being described. Paranoid management, a creepy family dynamic, micromanagement, lots of promises never honored, loyalty lectures and under pay over worked staff, who bought into the vision and were essentially being exploited.

When I realized what was what, I went and found a better job. After I quit, I was talked into coming back to help answer some questions to help the person who I'd handed my work off to (I had reached a good stopping point, the code was shippable and gave them plenty of notice.)

When I got there, I got talked into the CEOs office who proceeded to lecture me about how I was disloyal, and demanded I give them several weeks of extra work. I told them that I couldn't do this and made to leave. The CEO physically barred me from leaving, and I was held against my will, until I promised to give them a couple weeks of free work. They didn't hold me long because I quickly agreed to do it....luckily they didn't try to make me sign anything right then and there, and once I got out of there I sent them an email telling them that I'd be happy to do the work, and naming an outrageous price for it.

The really sad thing is, I'd showed up for free, to help them, to do the work, and instead of taking the offered help, they tried to manipulate and coerce me into giving them a lot more.

This disturbed me for several years until I came to understand the deal.

I had been exploited. The person who ran the company knew nothing about technology but was basically a grifter-- a manipulator-- a conman.

So, obviously to them, there's no difference between getting uncompensated work when I was an employee, an manipulating me into uncompensated work after I'd decided to leave.

The lesson I learned- - and the reason for this long story is this: These people cannot be reasoned with. Just leave. Don't engage them, don't debate them, and don't expect them to be reasonable. They aren't operating by the same rules you are.

I've been in the startup scene for two decades-- since well before the first dotcom boom. I've seen a fair number of this stuff, and pretty quickly got to where I could tell when a company was that way during the interview. (In Seattle, in the 1990s there were a lot of ex-microsoft millionaires who'd never worked anywhere else and thought their microsoft experience made them competent to run companies...it was quite a minefield for awhile.)

Some key signs:

-- Primary thing: If any of the people are super creepy, or come off as hustlers, fratboys or conmen, be careful. If it feels like you're talking to a Winklevoss (as portrayed in the movie anyway) that's a big red flag.

-- Ask arbitrary questions that they wouldn't have a pat answer for about employee benefits or having to do with how they treat employees. I used to always ask about parking. If they provided a parking space for me that was a good sign, but most didn't.... when they didn't they'd have all kinds of BS about it. (Downtown seattle there is no good parking, not once did I have a job there with decent parking... I started making a requirement of being hired that they get me a spot in a lot and pay the monthly fee. Its only $160 a month, or so, not a big hit on the salary, but the hard part is acquiring the spot.) A lot of people would BS me about parking, because I was coming from out of Seattle so they'd assume I didn't know the score.

-- Ask them if they provide a bus pass. Ask them if they provide cell phones or subsidize employee personal computers. Ask them how often they take employees out for dinner. It doesn't matter whether they do any of these things, it matters how they answer.

-- talking to individual employees will often give you the reality. Ask them how often people go to lunch together and if the employees ever associate outside the office. It doesn't matter the answer, but you're looking for employees who are fearful of management, or who have that form of stockholm syndrome that shows up in startups.

-- Read the NDA they ask you to sign. IF they ask you to give up rights to your inventions in the interview its a big freaking clue that management is psychotic. (Yes, I have been asked to sign that kind of document before even interviewing. Its normal when you take the job, but not for an interview.)

-- If their NDA gives them the right to audit you for two years, including sending investigators to your home and office to search for stolen documents-- and they ask you to sign this before the interview- the company is psychotic. (And yes, this happened to me too.. the HR person was absolutely shocked that I was unwilling to sign it, and thought I was being a prima donna. I asked her if she'd actually read it, and she hadn't, and when I suggested she should, she said "Its just a standard NDA."

-- If the receptionist is the kind of person whose Facebook profile would have a duck face, and she acts snooty to you, that's a big clue right there (I can't explain this one, but there's a strong correlation.)

-- Always try to talk to the CEO or management. Ask them pesky questions and see how they react. Often I'd be told the company was profitable or that they'd be "filing for an IPO in a couple of years." I'd ask to talk to the CFO (and the CEO afterwards). I'd as the CFO questions like "What's the total number of shares outstanding on a fully diluted basis?" If they don't know, you don't want to work there. If they refuse to tell you, then any offer they make that includes stock options is a meaningless offer. Most people don't ask questions like this, but they are actually reasonable. (Of course if you're interviewing at Facebook, you're not likely to get to talk to the CFO, but I am talking about small companies.) If they were profitable I'd ask the CFO about margins. If they were "going public" I'd ask the CFO what he thought about that and what kind of a valuation he thought they might be able to get. Some questions they can't answer or might want to be careful about making too much commitment....

-- Ask the CEO how he feels about computers (or some piece of technology relevant to the business.) The CEO doesn't have to be a programmer-- but I've had CEOs denigrate technical skills, or pretend like they're just as technical as the technical people even when its obvious they aren't. Its better for a CEO to admit his limitations than to BS you, and even if he's computer illiterate, his attitude is what's important. Is he the kind of guy who will shove technology decisions down the throats of engineers? Ask some questions of the CTO or head of engineering, will he dictate technology decisions?

The real question you want to find out is this: Is the CEO or anyone in management a grade a bullshittter conman? Or is he making absurd claims or promises? If he is, then he's not trustworthy, and any job offer from him is meaningless. (Once took a job with a very new company that said they were just starting to set up health insurance... over a year later they hadn't gotten around to it, but it turned out that the executive management was, of course, on a health plan.)

Another key- if they're in super fancy digs- temporary or otherwise- its a big warning sign.

Sorry this is so long. Sure there are companies that might have one or more of these qualities that are actually legit, good places. This is just some of the stuff I started to look for.

Airy Labs may be poorly run. There are dozens of small, well-funded startups that are poorly run.

The scale of what Anthony is writing about is so small, but he's done real damage to Andrew's reputation.

Was the schadenfreude worth that? Articles like this are one of the worst aspects of startup culture. It's our version of reality TV -- taking smug delight in the bruising (merited or not) of another person.

And if you say, no! Honest! This is an important article. Now people know to avoid this awful company.

I suppose we'll have to disagree. Anthony wrote this not because it's a public service, but because everyone loves juicy gossip. Especially gossip about a wunderkind getting knocked down a few pegs.

I also think the employees are cowards for giving up that gossip, e.g., the x@airylabs.com email address, but remaining anonymous.