As unicorn startups send customer service gigs to the hinterland, is Silicon Valley exporting its prosperity, or just dead-end jobs?
Illustration by Olivier Bonhomme
By: Lauren Smiley
The goal was to get in and move up.
In the fall of 2013, ten new employees signed on with Lyft in San Francisco, to work in customer support making $35,000 a year. Mostly in their mid-20s, two had law degrees. Four had other graduate degrees. All but one had a bachelor’s degree, recalls one of those support staffers. If Lyft had expected these accomplished new hires to feel content answering angry emails for the longterm, they chose some odd recruits.
“All of us were constantly scheming on how to get out of support,” one of those early workers told me. (The former Lyft staffers don’t want to be named because they signed non-disclosure agreements.)
For these non-coders, the job was a mere foothold into the heady promise, and perhaps the pay and equity, of San Francisco’s bustling startup boom. But Lyft didn’t make the scheming easy. They were partitioned off on a different floor from the other workers in the then-headquarters in the Soma district, up in an attic they called “the treehouse” with a slanted floor that made their rolling chairs constantly wheel downhill.
Still, they started to climb out: workers would come in on off-hours to network with the heads of other departments. They’d chat them up on breaks. They’d constantly try to keep pace with each other’s output, dashing off cheery emails to respond to the sticky scenarios arising from rides with strangers or early bugs in the app. “We’d do 100 tickets a day, and you could see everyone’s volume [in our computer system], and if you weren’t doing a 100 a day, you weren’t even in the running to get out of support,” the same staffer says. “People would stay really late and do more emails.”
Six months later, when the company moved to its current headquarters in the Mission District, the wrangling started to pay off. “Mission [office] is really where people made it out,” the worker says. They were mainlined into corporate culture, passing the CEO in the stairwell, sitting in on all-hands meetings, perching next to designers and engineers during the company’s daily catered lunch.
The result: all ten eventually moved into higher-paid positions with more creative work — roles in product design, or government relations, or quality assurance. Most negotiated company equity.
Yet as the company added hundreds of new hires in increasingly stratified departments, the people who joined after that group of ten faced tougher odds. Some support staffers still eked out promotions and pay raises — as much as $16,000 in one case — but they were becoming the exceptions: “The people who moved off the team pursued roles of their own volition,” says another former staffer. “There was no mentoring or helping people figure out how to actually pursue that. People didn’t understand how to move up.”
Then last September, the support and trust and safety teams — about 20 people in all — were invited by a calendar invite into the all hands’ space to “hear about exciting updates,” one recalls.
Once they clamored into the lunchroom, they were handed packets hyping the low cost of living in Nashville.
Their jobs were moving to Tennessee. They could relocate and take an eventual pay cut, or they could leave. “We didn’t imagine there was any reason other than monetary reasons to do it,” says one person who chose the severance package, even if it meant staying in the most ridiculous rental market in the country. “They were like, look at this awesome opportunity to go somewhere where everything costs less. It costs less in Tennessee!”
Lyft is certainly not the only maturing Silicon Valley unicorn that has taken a page from much older companies’ playbook, sending customer service jobs out to cheaper climes. Call it the Great Customer Service Exodus of Tech Boom 2.0: Lyft is joined by San Francisco-based Postmates and Eventbrite and Brooklyn-based Warby Parker in growing their customer service teams in Nashville.
Support outposts are cropping up in other cities, too. Thumbtack, the San Francisco-based gig economy platform, built out its Salt Lake City office to 250 support and sales staffers, and Zendesk has 100 customer service folks in Madison, Wisconsin. BuzzFeed’s recent exposé on Uber’s customer service revealed that, in 2014, it outsourced the jobs to a third-party contractor that employed work-from-homers across the country, then eventually corralled the jobs to Phoenix and Asia. Then there was the support rep cry heard ’round the world: Yelp worker Talia Ben-Ora wrote on Medium about surviving on rice while making San Francisco’s $12.25 minimum wage. (“Every single one of my coworkers is struggling. They’re taking side jobs, they’re living at home.”) CEO Jeremy Stoppelman deflected the blame onto San Francisco’s astronomical cost of living, and announced that Yelp would be moving these poorly paid jobs to Phoenix.
Corporate America has long found places with cheaper real estate and labor for its non-core work. As startups now do the same, they are selling it as the manifest destiny of Techlandia’s hip ethos, and taking many of their office accoutrements with them. Press and job ads from the areas focus on Silicon Valley’s much-envied culture: the cushy benefits, snacks and massages, the gong-banging and ping-ponging, the standing desks and free lunch. Warby Parker’s ad for an order processing associate in Nashville asks for a person with an “entrepreneurial spirit” who is “generally awesome,” saying “we fill our days with snacks, surprises, pneumatic tubes, and, when appropriate, costumes.” Thumbtack’s ad for Salt Lake City leans on its SF cred: “You want to be part of a San Francisco startup that is growing so fast we can’t keep up with ourselves!”
Some of the destinations are drinking the cold-brewed Kool-Aid, folding in the customer service jobs as a sign of their growing tech scenes. The Tennesseean newspaper ran the headline “Lyft to Create 400 Jobs in Nashville,” framing the news as an investment of $5.1 million in the local economy and underscoring “Nashville’s emergence as a center for innovation and technology.”
Lyft’s management sold the Nashville move to some employees as a chance at their long-awaited promotion — leading the new remote office. But former staffers couldn’t help but think a Nashville move would spell less opportunity. Customer service jobs are burnout positions with some of the highest churn rates at startups— “Support shouldn’t be a forever thing. You can only have people yell at something that’s not your fault for so long before you go bananas,” says a third former Lyft rep.
And there are constant reminders that they were the company’s bottom-of-the-barrel staffers, priority-wise, even beyond their low salaries. At Lyft, entry-level customer service reps didn’t get stock options. On weekends, the company sometimes forgot to refill snacks until a manager made a fuss about it. There was no catered lunch on weekends or Thanksgiving, when a manager went to buy pies at Whole Foods as a consolation prize. To promote team cohesion, engineers would get treated to an all-day trip to the go-kart track. Bonding on the customer support team meant ordering pizza after hours in a nearby park. They know this isn’t exactly boohoo territory — this isn’t Talia eating only rice — but relative to the other employees, “You’re like scraping by doing the shittiest job at this company and constantly being marginalized,” says one of the former reps. “There was a lot of stratification with regards to compensation.”
An MBA would tell you that only makes sense. Customer service mostly requires an ever-cheery personality, a good work ethic, and basic computer skills — not a CS degree, and really, not even college, though startups are certainly selecting places with eager college grads. A manager at Salesforce’s San Francisco office sizes up the tech industry’s attitude towards customer service: “‘How do we make this cost less?’ Every support case can cost up to $30 for them. You cost them a lot of money and don’t bring in a lot of revenue.” Still, “They can’t run the company without you.”
At Salesforce’s customer service hub outside Portland, turnover was higher than San Francisco. “It was like they weren’t getting enough love. Definitely people were saying they were not moving up fast enough.” Thumbtack’s founder Jonathan Swanson talked to me about his Salt Lake City office, saying, “There’s still opportunities for growth, but it will be within sales, support and recruiting.” He added that 85 percent of its Utah office has been internally promoted, and their employee reviews are very high. But he acknowledges that access to the original startup dream — of finagling a role in a higher-status department and moving up the food chain — has become scarce: “It will be harder to go to project manager because they’d have to move states.”
As companies mature, it makes less sense to have employees hopping between roles, says Lyft Vice President Brandon McCormick. “Mobility in a larger company is different than a startup where you get pulled on and off things all the time. When you get bigger, it does get harder, and it doesn’t benefit the company as much, it doesn’t make sense to pull them off what they’re doing and to do something else.”
At the LAUNCH conference in San Francisco earlier this month, venture capitalist Jason Calacanis brought up Yelp’s customer service controversy while interviewing a creator and investor with Hyperloop, Elon Musk’s 700 mph pneumatic tube of transit. He asked whether someday the Hyperloop could shuttle workers from Phoenix to Yelp headquarters in San Francisco, turning other states into Silicon Valley bedroom villages. “Are we going to build a Hyperloop to nowhere, then nowhere becomes somewhere?”
Investor Shervin Pishewar rolled with the idea: “You could take land in upstate New York and build a new New York and transport people back and forth. The car century is coming to any end.”
But until that day, the Great Customer Service Exodus is raising eyebrows among people who track opportunity in the tech space. Ariel Lopez is the founder of 20/20 Shift, which coaches minorities and women who don’t have engineering backgrounds to apply for jobs in product management, data analytics, and digital marketing. Lopez says she’s irked when companies only see Middle America as a pasture for cheap labor. “There’s so many opportunities around the country to spark local economies. Do it the right way, and make sure you aren’t opening up a sweatshop in the middle of the country.”
Sometimes Silicon Valley’s new colonies do produce a greater diversity of roles. For instance, Eventbrite started a customer service hub in Nashville in 2014, and a couple months later, hired on an engineering team as well,Nashville Business Journal reporter Eleanor Kennedy tells me. “That proves the theory of why it’s important to get those companies, even if it’s just customer service, and build it up further,” she says. “The fact it’s proven it can lead to more tech jobs, is very exciting and interesting out here.”
The cities’ ambitions, it seems, are not so different from those of the scheming early customer support staffers at Lyft: get on a fast-growing startup’s radar with support positions, then lure the higher-skilled, better-paying jobs. Michael Flynn of the Economic Development Corporation of Utah had that goal in mind when wooing Thumbtack. “We like to bring in sales and support jobs because that’s often the tip of the iceberg that leads to a larger software development operation,” he says, adding that a similar progression happened with Adobe’s Utah office. So far, many of Thumbtack’s phone crew in Utah seem ecstatic — ranking it among the top employers in the Salt Lake City Tribune. Well, not everyone. One rep on the job review site Glassdoor called it “a call center for hipsters.”
Not all economic development types expect to tap into Silicon Valley-caliber opportunity by answering the phones. Appalachian Eastern Kentucky has lost more than 70,000 coal jobs in recent years, bringing the local economy to a near halt. Amid the job crisis, the region has doubled down on placing people into work-from-home customer service phone jobs, 213 so far, for the likes of Apple, U-Haul, and Starbucks.
“We’re not just content to just see the $9- or $10-an hour jobs,” says Michael Cornett, communications manager of the Eastern Kentucky Concentrated Employment Program. But for now, low-paying jobs are the reality. “We can’t just sit around and plan for bigger things and not do anything. They’d otherwise be working retail or fast food, and we want them accessing opportunities to the digital economy. This is the front door.” He’s seen some phone workers promoted into management, overseeing other work-from-homers. Eventually, “we want to use the hubs for remote coding jobs for companies in Boston or Seattle, where they’re making $70,000 or above.”
In the meantime, the same Talia-on-rice-like conditions are being replicated nationwide in these new customer support hubs. While a Yelp promo video from the Arizona office features one account manager raving about the “opportunities to move up in the company,” Glassdoor has one Yelp sales worker in Chicago blasting the work environment: “Last week our director tried to leverage the free food and coffee as to why our base salaries are so low. Have to say, that was pretty weak… Fully paid benefits are nice (way to stay competitive with literally every other tech company), still no excuse for a 35K base.”
In the end, only a couple of the San Francisco Lyft staffers decided to go to Nashville. Some scrambled to find new jobs in the company, and the rest got severance and left. Six months later, two people I talked to are still looking for jobs, in a city that boasts a 3.4 percent unemployment rate. “I feel a little burned by this experience,” said one. “There’s just this understanding that if you work for customer service in the tech world you’re not valued. Those are soft skills, and associated with women, they’re not super valued.”
They likely never will be. That’s why Ariel Lopez, founder of 20/20 Shift, encourages liberal arts majors to look beyond customer service. “That field has always been known to not pay that much. Job seekers need to do their research in terms of what they’re getting into.”
With their skills deemed better suited to Nashville, Lyft’s workers can’t help but internalize another message about whether they belong in increasingly Darwinian San Francisco. “It doesn’t make any fucking sense to live in one of the most expensive areas in the country and work in nonprofit development,” one told me.