How a startup loses its spark

where/when did Netflix go wrong? curious to hear from insiders

In the places I've worked, the product is poorly defined. Not because we've neglected to define it, but because it's novel and amorphous and nobody knows what it should be, let alone what it will be.

Netflix on the other hand, in my view, has a clear goal: get video onto screens as efficiently as possible. It becomes much more of a pure technology problem solving situation.

Of course, I won't assume there aren't ongoing product development tasks constantly. I'm sure there's a massive back office suite, along with ads, etc.

But the overwhelming majority of the Netflix product "mandate" is pretty solid, so you don't need to spend a lot of time making sure folks are on the same page, or am I way off?

Later when I offered to defer my wages until the product was released (it seemed he was "running out of money"), eventually all the trust building tactics he had used on me over the years were cashed out on as I gradually became disillusioned to realize him paying me dirt was deliberate. He could have easily paid me a decent wage for that work, but ultimately I met nothing but resistance and breadcrumbing and stonewalling when trying to get a decent pay

"I don't have the money to pay you" he said at one point after the fact when I asked to be paid what he owes me. But afterwards and after I had rage quit, he simply hired someone else to start from scratch on my 2nd project after I had told the other developer that one thing I saw first hand working for him was how corporations don't care about people

Granted I wasn't the fastest developer in terms of the number of hours I worked, and the new person he hired seems to have been pretty good, definitely above my level, assuming they implemented all the features I did. But I was getting my work done just fine as far as I and the other dev could tell

“Yeah so three of my colleagues got fired so now I’m doing the work of four people, but my boss won’t listen to me when I say I’m overworked”.

Professional people would likely been gone before the firings, but if this situation would have arisen, they would have set boundaries and negotiate what work is and isn’t done within a normal work week. They don’t let themselves get tricked or fooled like this. And the fun part is that management never even asks to take over the work.

So many people are so brainwashed they care more about a company that would fire them without a single thought than their own life, it’s so insane.

Basically, drunk the kool-aid, doesn't know what they don't know.

I switched over to startups and have not looked back. Yeah, I work more, but I enjoy it a lot more. I can't do it forever, but the financial rewards have been better too, so I probably won't need to work to 65 like when I had the more stable, boring job.

In my experience people that claim otherwise are just getting less out of work than they could. Kind of a waste of 40 hours a week.

(Sure, bad situations exist etc. etc. but that’s just true of everything.)

My father is an orthopaedic surgeon and he definitely thinks about his job as much as I think about mine. My cousin is a cardiovascular surgeon who also does. Another cousin is a lawyer and she does too. A friend I met through another friend is a school vice-principal and he does too.

All of these people have family and friends who love them and who have hobbies that they spend time on.

I think people like this would just prefer to work with others like this. And so they write these things advertising that this life exists.

The market for engineers is pretty hot right now. To any junior engineer who wants to love their job, I'd say go for it. You have at least 40 h a week dedicated to your vocation. That's enjoyable.

Many people don't treat this 40 h as an enjoyable time of their life. But the reward is you have 40 more hours of enjoyment per week. Just remember that hard work and outcome are correlated at less than 1.

1. Not correcting problem hires fast enough.

First time founders are often too hesitant to give negative feedback, demote a too-technical manager who should have stayed an IC, or remove a problem employee who isn’t working out.

The anecdote that comes to mind is a local startup that hired a C-level executive’s UI designer friend into their VP of Product role. He was wholly incapable of doing the job but they kept him in the job for 2 years to “give him a chance to grow into it.” Everyone below VP level openly talked about how the VP of Product was incompetent and how to work around him.

The company’s product initiatives ultimately failed to even get started and they had to pivot to entirely services based work. Do not stay at a startup that insists on keeping unqualified people in leadership positions long after everyone in the company has given up on them.

2. Firing the wrong people

The same startup was forced to downsize, largely because their product plans failed to even become defined enough to start under the incompetent VP of Product.

It was the perfect opportunity to fire the VP of Product and his sprawling empire of people who did very little, but they avoided that due to his connections to a C-level executive. Instead, they started cutting engineers. They focused on cutting engineers with the highest compensation out of a misguided effort to cut as few people as possible.

In the process, they lost their key engineers who were holding things together. They sent a message to everyone that incompetence is tolerated if you know the right people. And they lost even more core engineers who quit in the months after those layoffs.

Everyone makes hiring mistakes. It’s how you respond to those hiring mistakes that will seal the fate of the company.

And another time, seen a less technical leader step in, see engineers around me roll their eyes a couple of times at the lady (with maybe a smidge of male chauvinism blended in), but then see her actually fire bad hires, hire star players, and get everyone to align their priorities so they could be productive. Leadership is a very different job from the kind of technical excellence that too often gets rewarded by promotions (vs raises or bonuses).

In other words, I don't think you avoid these, I think you understand they're coming and accept the trade off, making sure it's worth the issues you invite when you do have to promote those engineers/non-technical people, for example.

I've seen how small dynamics resulting from individual personalities and nuances of org structure have led to massive dysfunction and productivity loss, even though everyone was well intentioned and doing their job to the best of their ability. I could list out hundreds of behavioral "flaws" that individuals exhibit, but there's no way to fix them all directly, good engineering can't be done by top-down edict and central planning. Instead, you need a critical mass of people, including engineers on the ground, with a good end-to-end understanding of the product and business so that micro-decisions can be suitably informed by the big picture, and the right concerns can be escalated for leadership attention. You need to be able to weigh the cost of product, design, legal, financial, support, security, and operations across both short and long-term to make the right decisions. This is only possible with a high degree of mutual trust and safety for experts to voice their opinion and find the right tradeoffs. It's very easy for egos and personality conflicts to come in the way, hence the need for maturity in leadership. Balancing a pencil on its nib is not a bad analogy.

1. Writing-intensive hiring process

This is controversial for some, but I have the personal advantage of having previously made The Worst Hire of All Time -- one that forced me to accept that using resume + interviews as the sole (or even primary) criteria left me extraordinarily vulnerable to Problem Engineers. We ask candidates not just for a portfolio of their work (and analysis samples and so on), but also ask them values-based questions[0] -- the answers to which are astonishingly revealing. Our review of candidate materials constitutes the bulk of our hiring process.

2. Transparent compensation

Another one that is surely controversial, but in my professional experience, an amazing number of anti-patterns arise from the scramble compensation -- and usually not for itself per se (that is, not for the marginal dollars), but rather for what it represents in terms of validation, power and so on. Making compensation transparent forces some measure of organizational health -- to say nothing for the bright light it shines on any institutionalized inequities.

3. Uniform compensation

One that even more people will find controversial. ;) When we wrote our blog piece on this 2+ years ago[1], we assumed that it wouldn't last as long as it has -- but it honestly is more important to us now than ever before. Especially as we go to expand the team with roles that are often less well compensated (e.g., customer-facing roles), the fact that we explicitly compensate them as well as everyone else allows us to attract extraordinary folks to the company. We still don't know if this is going to last forever, but we have seen so many incredibly benefits from it that we have stopped burdening it with asterisks.

4. Very, very careful hiring

We are deliberately lean. We add people to the company very carefully, and we have no one inside the company who is incentivized by the size of their team (see #3, above!). When we add people, we keep a sharp eye on versatility and intrinsic motivation. This allows us to do more with relatively fewer people -- helping us avoid the foot-guns you've outlined. That said, it is also not without side-effects: a consequence of this is that we are extraordinarily selective, which means we have many more people that want to work at Oxide than we can reasonably accommodate -- and it can be really, really hard to turn down someone who you think will likely be successful!

[0] https://docs.google.com/document/d/1Xtofg-fMQfZoq8Y3oSAKjEgD...

[1] https://oxide.computer/blog/compensation-as-a-reflection-of-...

Im a bit anxious and introverted and thus like to get my part done and focus on other things.

This always results in rest of the team losing will to go far and beyond.

I dont know what to do about it, beside aknowledging it exists.

Do you say that ppl like me should simply quit and go working at sewege?

I dont think I like that idea. So what can I do if thats just how I am ? I cant seem to change how others see ppl like me.

Then they start looking at the app and questioning every decision calling everything they don't have context on "technical debt"

I've seen it a few times. I told a new VP of Eng he was being asinine because he wasn't there for the original problem, decision, or timeline and saying we made a bad call is just showing ignorance.

Thankfully, He pulled me aside later to thank me and asked for more background on it. After hearing the whole story he agreed. We did the right thing.

Now, that could have gone the other way. And I've seen it happen. When it does, it sucks.

And for 4, the opposite is even worse, aka "no management". So when you develop something but it turns out the outcome was not needed or in a different way.

A classical example, which I've seen before, is a cowboy coder who can be a useful asset in the very early stages, but who later demonstrates a total lack of teamwork ability.

Such people are even worse than bad new hires because they have a certain clout with management who is therefore more willing to turn a blind eye.

I recall a teamwork study that found few if any superstar team players can really make any given team better, but they did discover that one bad apple can easily kill a team’s productivity, happiness and etc.

I once worked for a company that was really great about “no finger pointing” and lots of trust of employees to do the right thing.

We acquired a small troubled company along the way, they were a mess with finger pointing and empty accusations. Within a year they had infected our entire department:(

"I saw X on his Reel telling changing everything in our frontend to purely Coffescript will be more durable" is a kind of advice which does not bode well generally

I’d would disagree - I had the exact experience that the autor described. But you are right on this point

> it’s entirely possible to build that intoxicating environment anywhere. It’s more about having a dynamic leader who assembles teams into collections of individuals who know precisely why they are there

I still think it’s related to size and bad incentives. I heard stories of people at FAANG that said that department X is like a startup but Y is soul sucking boredom

From the article:

"You can’t just work on whatever you want; coordinating would be an O(N^2) communication mess."

Evidently, you're agreeing with the article. So which part is false then?

I think you’re being unnecessarily harsh and reductionist of the article’s arguments. I’ve experienced exactly this failure mode in startups.

The counter-example you described is an example of properly managing the N^2 complexity, not an example of it not existing.

I think the best way to scale is to build processes that reinforce the traits you want in a team, and hire managers who understand teams are collections of unique individuals, as is the manager. The manager should be free to manage their people in a way that optimizes delivery and reduces churn. Between teams there should be a very high bar for quality of communication and delivery. The culture of the organization should be built around respect for each person hired and a relentless focus on ensuring individuals end up in teams that they are effective in and are therefore maximally effective as teams.

Now, if it wasn't for all that, there's still the problem that, from personal experience, most employees don't invest as much energy as a founder would - which is perfectly understandable. As the founder to employee ratio gets smaller, you find yourself hiring three people to do a job you could do yourself, just to make sure it gets done reliably and timely. In a smaller startup, early hires are more similar to founders because they're close to them and stand to gain a lot if the company succeeds and grows. For employee #213, they sell 40 hours of work per week and their fixed salary is all they really stand to get out of it.

So while I like the romantic idea of having a large company comprised of multiple independent startups, I haven't seen that work and I can barely picture it work :( One can get somewhat close to this with the right organisational structure (e.g. sacrificing efficiencies of scale for team autonomy where feasible), but it's not even close to the same thing.

It also eventually became a monolithic org.

Same with Valve and flat org structures.

Once something scales enough it becomes the blob, like everything else.

The fruits of labor grow ever higher. By which I mean: In the early days of a startup the problem space is ripe and plentiful, the impact you can have is outsized, and the pool of people with which to share it is the smallest it will ever be.

As a company grows, all three of these factors are subject to strain. The problem space becomes sparser, outsized impacts are recognised further up the ever-growing hierarchy, and the pool of people with which you're sharing your impact becomes larger and recognition becomes shorter lived and more diffuse.

Hardest lesson I learned when I got promoted to upper leadership positions: Hiring middle management is incredibly hard. The number of absolute sharks in the candidate pool is wild. People will show up, sense that you’re new, and tell you everything you want to hear about how they’ll solve all of your problems. They’ll claim they’ve done exactly what you need at every prior company they’ve worked for. They’ll flatter you and tell you they’ve been waiting for an opportunity to work or someone like you.

Imagine the schmooze-iest IC candidate you’ve ever interviewed, but 5 times better and harder to see through. These people have charisma you wouldn’t believe (when you’re new) but they don’t really care to do the hard work. They just want to worm their way into the company and then extract. They’ll extract compensation for themselves, extract headcount to hire their friends and build an empire, extract compensation for their friends (who will return the favor at a future company), extract lucrative contracts for their contracting buddies (where they might even be in on the take). Years can pass before people realize they haven’t really done much despite producing a flurry of activity. They may have even driven away the good employees who got tired of their BS or were pushed out for identifying their incompetence.

I was unlucky-lucky to watch this play out under a fast rising CEO at a lesser known unicorn. The number of sharks who showed up and charmed him after he became successful was unbelievable. The same thing plays out with less experienced middle managers who get thrust into high-budget positions at smaller companies.

Dunbar's number is a suggested cognitive limit to the number of people with whom one can maintain stable social relationships—relationships in which an individual knows who each person is and how each person relates to every other person.

https://en.wikipedia.org/wiki/Dunbar%27s_number

The world scaled past this millenia ago. You can scale your company past it too.

I had seriously underestimated how bad the hiring situation for startups in SV had become though, and a lot of people are using them as a bench to either recover from FAANG burnout or to put on a resume while training for interviews. With that dynamic a hiring manager is going to end up leaning towards being too optimistic because you can't risk not noticing the few that can build your company. You just need to be aggressive about removing those that aren't working out.

Problem solved? Just be sure to leave a note online for potential hires to avoid the company.

Except more of your users will have jobs because the AI multiplier means new opportunities to provide cheaper services available to more businesses, new companies that weren't economical before will be founded, entire new markets and whole new professions will be created. So your addressable market will exponentially grow. So another bull run?

I'm sure we will work it out right.

If a customer is large enough, and their pockets deep enough, you can absolutely justify building what is good only for that customer, and shipping it only to that customer. Keep that branch separate from the general-purpose product you're selling to the pleebs.

Perhaps, though, if you only hire when you need, you can be more competitive with pay.

Maybe if you sell to end users. If you have clients with SLAs, requirements etc and legal penalties for missing them, not working to delivery dates isn't going to work. Even in teams with projects, ensuring deadlines are met is still tricky.

* The Mom Test: How to talk to customers & learn if your business is a good idea when everyone is lying to you

* How to Measure Anything: Finding the Value of Intangibles in Business.