Is this really true? It seems a lot of people are part of dysfunctional organizations out of desperation. If there were better alternatives for the employees, would shifty endeavors such as the one in the article thrive?
The company in the article clearly has very serious problems. Based on the description they're in serious trouble no matter what.
But when there's a boom going on in an industry it can be so easy to make money and gain new clients that it can cover-up a lot of fundamental problems with the way that business is run.
Because money is pouring in the door (either by earning it or from VCs) the company can afford to give out a lot of perks and raises. It's easy to hire extra employees to pick up slack or for employees to get away with wasting large amounts of time or being semi-competent. If customers buy your service once and never come back who cares if there are beating a path to your door? There will always be more so you'll stay in the black. The atmosphere can be really relaxed and fun and casual. Lots of different ideas can be tried in a "throw spaghetti on the wall and see what sticks" manner. It doesn't really matter if you fail, things are going really well!
The problem is what happens when the market starts to cool down. The perks suddenly disappear in the raises stop happening. Manual processes that wasted a lot of employee time or cost extra people to have to be hired suddenly get cleaned up and people find themselves working overtime or without jobs. When the executive start seeing the money disappear the feeling inside the place changes completely. You better not make any mistakes or trying waste money with a new idea. Best to stick with what used to work; that must've been correct. Wasting money is the last thing you need.
But it doesn't really matter if the employees were doing their best job and weren't slacking off or wasting resources and all. Even if they are model employees the business model may have been unsustainable (like pets.com) and never would've succeeded even if everything had been run perfectly. $300/customer acquisition cost doesn't work well when the average customer ends buys $25/year in products.
If you knew all this was going on, employees could get out near the top or skip the ride altogether and work in a company that's solid building up their reputation there. Instead they might get laid off or have to leave under desperate circumstances and might have to find another job on the quick.
All because a change in the market revealed that there was a company that never should've been successful in the first place and may have only grown through an accident of luck.
