STARTUP HYPE

Our obsession with the “cult of the entrepreneur” has gone too far—and here’s why

Obsession
Life as Laboratory
Obsession
Life as Laboratory

The entrepreneur has been the lifeblood of American business since its founding. In recent years, a phenomenon has emerged in the technology industry around the “cult of the entrepreneur.” The rise of venture capital and its pursuit of unicorn startups (valued at $1 billion or more) has turned successful founders into mythical heroes. There are many benefits to celebrating the entrepreneur: The clearest upside of this societal construct is that it rewards innovation.

But there are dark aspects to this obsession, such as the focus on hyper growth, which encourages founders to challenge moral and ethical boundaries in the name of innovation. Uber, the most valuable startup in the world, is under fire for its toxic work culture, largely a byproduct of a cult of personality and an entrenched “bro” culture. Unquestioning faith in founders also influenced the scandals at Theranos, whose founder sought to channel Steve Jobs; and Zenefits, whose founder was terrified of failure. There are lesser-known examples, like the way a fake startup leveraged Silicon Valley hype to defraud employees. All expose the realities of startup life and its myths.

Following the startup hype to Vegas

I know what it’s like to get caught up in the hype around the cult of the entrepreneur. About five years ago, along with a few hundred entrepreneurs and thousands of onlookers, I was drawn to the aspirational mission of Zappos CEO Tony Hsieh’s Downtown Project, which was to create “the most community-focused large city in the world.” Channeling the fast-growth nature of venture capital, he sought to accomplish this in five years or less.

His vision was to mirror Silicon Valley and Burning Man culture in downtown Las Vegas, and he began allocating $350 million to create his ideal society. Some $200 million was devoted to real estate, $50 million to startups, $50 million to small business, and $50 million to arts and culture. Instead of ROI (return on investment), Downtown Project said its success would be measured on a new metric, called “return on community,” or ROC. Participants didn’t earn stock options, rather they essentially earned “stock” by contributing to ROC (it was generally assumed that this “stock” would eventually translate into financial support from Hsieh).

I thought that Downtown Project—essentially a redevelopment and revitalization of the core of Las Vegas following the financial crisis—had a lot in common with a startup church I was involved with in Brooklyn: Both sought to build communities that led to human flourishing.

I moved to Vegas after determining that Downtown Project’s mission was in alignment with a list of 11 personal core values I had developed that summer (including a commitment to pursuit of adventure, ambition, and vulnerability). Like many millennials Hsieh recruited, I was motivated by purpose over a paycheck. I had the unique opportunity to become part of a “tribe” with larger societal goals. Hsieh’s promise of identity and built-in community was enough to convince many, including myself, to forgo stability, financial and otherwise. Chaos was normalized through buzzwords that encouraged people to pursue “collisions” and “serendipity,” or chance encounters.

In pursuit of “return on community”

My contribution to ROC was documenting the project’s trajectory in the form of a book. When I sought investment capital to fund the venture, Hsieh instead encouraged me to couch surf, or essentially ask to sleep on people’s sofas in order to get to know people. He said it would be good for personal growth.

I agreed, and figured if I contributed enough ROC, he would eventually provide financial support. So I funded my project with freelance work and living in temporary situations, such as above the Downtown Project-owned GoldSpike bar for $500/month, and traveling home to Minnesota to live with family every few months to save money. Downtown Las Vegas did not have much to offer in terms of affordable housing. Intent on understanding the psychology of the community and what it truly means to be an entrepreneur, I viewed my book as a startup and saw this as essential bootstrapping to get it off the ground. (Two years later, I sold the book to a publisher, but that was never guaranteed.)

Over time I learned that few participants had ever built a business before. There was a general resistance to bringing in experts. Most everyone was winging it, as I was. When I asked Hsieh why he hired and funded inexperienced leaders, he cited Uber as an example, noting that innovation typically happens when non-experts apply their knowledge to a new industry. He asked people to have faith in the experimental process.

This single strategy of applying non-expertise to new industries, it turns out, was not enough to ensure success. Startup founders often felt pressure to consistently show a brave face, divorcing themselves from the reality of how tough it is to start a business. “ROC” often meant spending time at the bar in order to get face time with the Downtown Project leaders. This meant that founders and their employees saw no boundaries between work and the rest of their lives. “Play” became work, too. As a result, many burnt out and their startups folded. (And contrary to popular perception of my reporting process, “play” for me was always work, too.)

Many factors led to a wave of startup failures, which included ticketing platform TicketCake, virtual assistant service Zirtual, transportation startup Shift, and moving brokerage service Moveline. In addition to the strain around work/life balance, there was little mentorship from seasoned venture capitalists and serial entrepreneurs, and scarce follow-on funding. Much of the capital was early (“seed”) stage, enough to encourage entrepreneurs to pursue an idea, but not enough to bail out mistakes. As in Silicon Valley, several startups pursued fast growth and discovered that they had scaled too quickly.

By 2014, Downtown Project publicly removed “community” from its mission and asked members to stop using the term ROC. For those who had uprooted their lives and tied their livelihood to the mission, this was devastating. Hsieh explained that the project would now focus on profit. It didn’t take long for the project to spin into a Lord of the Flies environment, with cash-strapped entrepreneurs desperate for capital from a single source: Hsieh. (Unlike Silicon Valley, Las Vegas doesn’t have a robust venture capital ecosystem.) Participants had long assumed that their ROC contributions would eventually translate into money from Hsieh, but in a new environment that no longer valued ROC, that now seemed unlikely.

Mission-driven, or profit-driven?

I walked away from Downtown Project with more questions than answers. (The experiment’s five-year run concluded in January 2017 and it’s unclear what the project’s future holds.) There’s no question that Downtown Project upgraded the value of the real estate in downtown Las Vegas with new bars and restaurants. But it fell far short of its original mission to become the most community-focused large city in the world. Many entrepreneurs left after their startups failed.

Returning to Brooklyn, and a diverse and growing church, it became clear that the Downtown Project’s preoccupation with success (to become a city-as-a-startup in five years or less) and its adherent notion of what entrepreneurship is “supposed” to look like interfered with any chance of developing authentic community. The push for profits was too great. In Silicon Valley speak, entrepreneurs felt the need to show that they were always “crushing it” in order to secure access to more capital.

Silicon Valley has adopted a lot from religion and spirituality. Hsieh’s Zappos, for one, has been incredibly effective at infusing its employees with a sense of mission in pursuit of profits. So it’s a mystery as to why Hsieh, a globally-recognized, purpose-driven leader, chose to walk away from Downtown Project’s mission—which at one point, seemed possible. His abandonment left a lot of people in the dust.

Amidst all the questions, I came to the conclusion that our society’s obsession with the cult of the entrepreneur has gone too far. We benefit tremendously from the impact of visionary leaders like Hsieh who are willing to make bold bets. But there’s a fine line between supporting that audacity and having blind faith in non-experts who seek to disrupt industries that they know nothing about. People may be starved for a sense of belonging and the need to serve a higher purpose, but through experiencing life inside the Downtown Project I learned that following an inspirational leader who speaks the language of spirituality isn’t enough to create a community that can sustain itself.

The author published The Kingdom of Happiness: Inside Tony Hsieh’s Zapponian Utopia in February 2017 by Touchstone, an imprint of Simon & Schuster.

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