
Big Cuts at Airy Labs, Ex-Employees Blame Management - dwynings
http://techcrunch.com/2012/02/11/airy-labs-big-cuts/
======
blake8086
I have a deep interest in educational games.

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.

~~~
jessepickard
I'm a co-founder of a profitable 11-person educational gaming company called
MindSnacks, so I have a pretty solid perspective on what works in this space.

The key to making IAP work in an educational gaming company is keeping things
really simple. We give away one lesson for free and then offer the remaining
49 for a one-time $5.00 fee. If you get greedy and try to squeeze payments out
of your user at every turn, you might make a tiny bit more money, but you're
certain to lose a long-term customer that might buy multiple apps.

We pay a lot of attention to our cross-use (users with more than one app) and
retention numbers. We've found that the more you try to monetize like a
traditional social games company, the more these numbers start to drop.

~~~
fvryan
love mindsnacks! glad to see japanese under dev

------
bane
"They say the Hsus refused to commit anything to writing, and would become
angry if anyone complained via email (rather than verbally)."

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_.

~~~
fleitz
It's not weird at all, it's the hallmark of any police state.

------
rachelbythebay
"Employees were warned against socializing or discussing their compensation
with other members of the team."

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.

~~~
temphn
Oh yeah, the NLRA. As opposed to just quitting and finding a better job?
Getting the government (or unions) involved in variably makes a situation like
this worse. Just walk away.

~~~
michael_dorfman
I think you are misunderstanding the point. The NLRA grants you the right to
discuss your wages with your co-workers. Companies are not allowed to prohibit
this, and more people should be made aware of their rights under the NLRA.

~~~
derekp7
So if you are making more than you colleague, and he finds out, then your boss
has to spend a greater portion of the next pay increase funds to up his pay.
Guess who's raise those funds come out of? It doesn't matter what is legal to
do, sometimes it is still not a good idea to discuss compensation.

~~~
michael_dorfman
Whether or not it is a good idea to do so is not the point. The point is that
it is against the law for the company to prohibit those discussion (as the
company in the OP did). Companies that have policies in violation of labor
laws are probably not the best places to be working.

~~~
derekp7
I think I came across different than what I intended. I personally think it
should all be out in the open, but if the employer has a policy against
discussing compensation, and someone else comes up to your boss and says "Why
am I not getting paid as much as Michael", then it is quite likely that your
boss will try to rectify this situation (squeaky wheel and all). And since he
is only given a fixed amount of money to distribute in raises, it is likely
that yours will be affected negatively by that.

Now if you feel that the other employee is being under compensated, and you
are getting too much, then that may work out. Or, it may be better to work
somewhere else that has more money to spend on employee salaries. But the
point still stands, that just because something is legal for you to do doesn't
make it a good idea to exercise your rights in every situation.

~~~
michael_dorfman
If the employer has a policy against discussing compensation, they are in
violation of the law. Full stop.

Companies not complying with labor laws should be avoided, for your own
protection.

It's that simple.

------
a_a_r_o_n
"when you bring up the “team” page of the Airy Labs website, you now get a 404
error message."

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.

------
latch
This speaks to me against Peter Thiel's "20 under 20" program as it all seems
to come down to lack of maturity and experience (and inflated ego).

~~~
Alex3917
I think this says more about entrepreneurs in the education space than it does
about the program. For whatever reason this space seems to consistently
attract shady and/or underqualified people. I think the reason is that
education is an area where you can't really contribute anything of value
unless you are well versed in the science. Because of this it's really easy to
snow virtually everyone, from investors and the media to school administrators
and teachers. So you consistently see lots of ideas that have zero chance of
producing good results that still get lots of funding and even some initial
traction.

~~~
yummyfajitas
_I think the reason is that education is an area where you can't really
contribute anything of value unless you are well versed in the science._

As far as I'm aware, the #1 education startup was created by someone who was
poorly versed in the "science" of education.

He seems to be improving things with science now, but that's a fairly recent
thing.

~~~
Alex3917
"As far as I'm aware, the #1 education startup was created by someone who was
poorly versed in the 'science' of education."

If you're talking about Khan Academy, they're a non-profit not a startup.

~~~
yummyfajitas
I don't see how that changes things, unless you believe "underqualification"
only matters for people with a profit motive.

~~~
Alex3917
The difference is that Khan would be underqualified if he were trying to do
something innovative, but he's not. He's just making a bridge technology, a
collection of mostly mediocre content that's designed to be moderately useful
until something better comes along. There's no way a for-profit could get
funded if this were their goal, at least not if they were upfront about it.
Plus even if it's not the greatest site ever, at least it serves a purpose and
he's not actively trying to scam people.

~~~
yummyfajitas
The lectures are fairly standard, the exercise scheduling system he's
attempting to build is not. While I've criticized him for not being ambitious
enough (Khan often stresses he doesn't want to replace teachers), he is
building far more than just video lectures.

Also, he had several funding offers from VC's, so your assertion about what
VC's might fund is incorrect.

------
rjdagost
Working for a 19 year old would be a very tough sell. You learn so much about
real life in your early 20's and answering to someone who hasn't gone through
that "seasoning" process would not be something to look forward to. Yes,
Zuckerburg pulled it off but he is definitely the exception.

~~~
cellularmitosis
I'm sure it also helped that zuckerburg's parents weren't secretly doubling as
the company's senior management. YIKES.

~~~
ronness
That must have been the most awkward workplace ever. Working for two asian
parents...that's probably a recipe for disaster

~~~
nknight
Perhaps you could take your racist stereotypes elsewhere?

~~~
hello_moto
I don't condone racist stereotypes but at the same time this isn't the first,
second, third, or fourth time something like this had happened specifically
with a typical traditional Chinese family-run business.

Same patterns, similar "cut the oxygen" strategy, same outcome.

~~~
nknight
This is textbook confirmation bias, you're focusing on the most visible factor
that you expect to see. It's a very common way for people to rationalize their
racist views.

~~~
hello_moto
FYI my race is the same with Hsu's family. Part of the issue is cultural.

While I don't agree with stereotyping or generalization, sometime certain
cultural knowledge have helped me avoid frictions or troubles.

------
hongquan
I'll probably get flamed/negative karma for this, but here goes. I actually
know the folks involved so I won't comment on any of the details. Anthony and
Andrew are both doing their jobs. How well they are doing it is up to you to
decide.

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.

~~~
ptiaf
if you don't think 20 under 20 is an attack to get kids to drop out of college
(and not attend in the first place) you've paid no attention to Thiel over the
years. He's viciously anti-university due to his opposition to
multiculturalism.

~~~
andrewem
I had never heard multiculturalism mentioned in reference to Thiel (I'm no
expert on him), but apparently he co-wrote a book called "The Diversity Myth:
Multiculturalism and the Politics of Intolerance at Stanford". Looks like
there were 1996 and 1998 editions with slightly different titles. [0], [1]

[0] [http://www.amazon.com/Diversity-Myth-Multiculturalism-
Politi...](http://www.amazon.com/Diversity-Myth-Multiculturalism-Politics-
Intolerance/dp/0945999429) [1] [http://www.amazon.com/Diversity-Myth-David-
Sacks/dp/09459997...](http://www.amazon.com/Diversity-Myth-David-
Sacks/dp/0945999763)

------
JS_startup
This sounds like a culture clash. Asian cultures (Korean and Chinese
specifically) have a really unique family dynamic which you could describe as
boundaryless; I worked for a Korean entrepreneur for a while and he said it's
a foregone conclusion that if the business strikes it big his family members
get to come share in the success.

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

~~~
coryl
Not that I know for a fact, but I'd think he was born in the US.

~~~
JS_startup
I'm speculating as well. From the article it sounds like he is second
generation Korean or Chinese.

------
feralchimp
With 20 people riding in a $1.5M raft, you need to know exactly where you're
headed and why. Security-wise, you'd almost rather be in an actual raft.

~~~
joshu
Indeed. That's absurd. My rule of thumb: $1m is ~8 staff in full for one year.

------
tansey
I think it's unfair to jump on the guy as being naive or young. I don't know
if people who setup these dysfunctional workplaces ever improve. He probably
is just not great at running a business, end of story.

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.

~~~
mgkimsal
take "founder" out of the equation. systems like this (no written
communication, no talking to ex-employees, etc) are just not good, full stop.
It may be easier to get away with in larger companies because there's already
a revenue stream (and presumably profits) in place to continue to fund
bringing in new blood, but regardless of a "startup" vs a long-standing
company, these are just bad practices.

------
pg_bot
"We thought when we started Y Combinator that the most important quality would
be intelligence. That's the myth in the Valley. And certainly you don't want
founders to be stupid. But as long as you're over a certain threshold of
intelligence, what matters most is determination. You're going to hit a lot of
obstacles. You can't be the sort of person who gets demoralized easily."

------
cycle
Good luck to everyone involved. Hope you continue to live your dream. Here is
to treating others as you would like to be treated.

------
nirvana
TL;DR: I have had this experience. Don't try to reason with creepy management.
Don't work somewhere that you're not being fairly compensated for (Even if its
not cash, it needs to be fair.) They'll never change, and if you let them give
you a raw deal, they'll never give you a fair one.

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.

~~~
ido

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

What's "super-fancy"? Seems most successful companies (albeit also many that
aren't and just living off of investor money) have pretty nice offices.

E.g. would that raise a warning sign for you with google?

~~~
jt2190
I wish I could remember the source... I'd heard a few years ago that an
investment company had started a "corporate corruption index" and that "super-
fancy new offices" was one of twenty or thirty indicators of corruption. Taken
by itself it might not mean much, but taken together with the other items in
the index it was a warning flag.

------
bluefun
It's almost funny to see the screwed up founder and his family desperately
defend themselves, against the whole world. Learn from your mistakes! You
ruined the lives of 20 ex-employees!

------
startupcto
It's the valley. People learn and move on. Same for Hsu and same for the
people working there. Most importantly at what price? In this case it's 1.5M
and a whole lot of reflecting.

------
jfarmer
What a vulgar article. I don't know Andrew Hsu and from the sound of it,
neither did Anthony Ha or anyone who commented on it (there, or here).

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.

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

If the claims in the article are true, the company was being run like a police
state, worse than most of the Big-Company shops that we love to deride here on
HN. A borderline abusive work environment that's policed over by the family
patriarch and matriarch... that's "small stuff"?!

Damage to one's reputation is only unfair if the claims leveled against you
aren't true. I suspect we haven't heard the last salvo fired in this whole
brouhaha, but if these claims are on the mark, I'd say reputation hit
deserved.

~~~
jfarmer
Internet-scale vigilantism has an awful side effect: it can never be entirely
walked back.

The damage has been done and the crowd is happy. They have their circus.

~~~
jfarmer
'A single article, quoting sources, and even giving the founder a chance to
respond right in the article itself, is not "internet vigilantism".'

Yes, it is. This isn't meticulously researched. This is not a 60 Minutes
exposé. Did Anthony do any fact checking? Did he spend time researching the
company and verifying these people's stories?

No, he wrote an article in the Fox News style. Who needs fact-checking when
you can just get people from two opposing camps to contradict each other?

It was gossip. It worked. It's no better than an article about how such-and-
such celebrity yelled at a waitress and made her cry.

'In your books, me blogging about a terrible previous employer is
"vigilantism".'

Again, yes, by definition.

If you put your name to it I'd think it was distasteful and a little petty,
assuming we're talking about bad management and not something criminal.

If you didn't, I'd think you were a coward.

(This is my last response, so you can have the last word if you care to.)

