I was pleased to see that my post on ex-Adteractive employees going on to bigger and better things has gotten a lot of reaction. Most (if not all) of it seems to be coming from anonymous “ex-Teractives” perhaps still recovering from their days in the online lead generation business. Among the interesting comments I received:

“It is not that ADT hired exceptional people, nor is it that exceptional people gravitated there. This merely shows that ADT sat on, and did not properly exploit, the true potential of the resources in the market. These people got fed up with ADT, and saw how amazingly easy Internet advertisement is, and were tired of being personally exploited.”

“Hilarious. If you ever worked with Diego and Josh closely, you’d understand why they will never be able to scale Adteractive again.”

“Most of these guys owe a lot to the spirit that was in Adt -that of focus and entrepreneurship in the early days. None of these guys can put a candle up to Peterson and Diego … unfortunately where Adt is today is on account of certain inappropriate management tools imported from larger companies that have nipped innovation in the bud. Second, Peterson has been more relaxed and hence much more dangerous if he decides to come back in full vigor. Like one very well known luminary in the industry told me some time ago – ” We are not worried about Adteractive at all. They are not competition, as long as they are being run by current management. We will be scared shitless if Peterson and Diego enter the fray in that same vigor the early days.” Having said that, he looked around at his desk and touched wood.”

“Leaving Adteractive and finding a fulfilling job is the greatest thing I ever did- I am shocked that they paid me as much as they did to surf the Internet all day… the food and drinks were solid as well! I am going surfing… “

What I find interesting about most of these posts is that they revolve around the relationship between the owners (Josh Peterson and Diego Canoso) and the employees. Depending upon the viewpoint, there is a sense that either Adteractive did not fulfill it’s obligation to its employees, or vice versa.

For example, the first poster says that many people left Adteractive because “they were tired of being personally exploited.”A further poster counters that “most of these guys owe a lot to the spirit that was in Adt -that of focus and entrepreneurship in the early days.” And the most recent comment suggests that some workers were exploiting Adteractive: “I am shocked that they paid me as much as they did to surf the Internet all day.”

Karl Marx noted that it is inherent to the nature of capitalism that workers are exploited, or as he put it, alienated from their labor. Thus, if you produce $10,000 of value for your company and you are only paid $5000 in return, you have been ‘alienated’ from $5000 of your work-product.

Of course, the capitalist would argue that the difference between the worker’s output and the worker’s pay reflect the risk made by the company. Thus, while it is true that the owners’ of a company may not have literally earned the $5000 they made from their worker’s effort, they did enable the entire transaction to take place, and stood to lose their own investment if the enterprise failed.

In the 21st century Internet start-up world, the ‘dialectic’ between the Marxist exploitation of workers and capitalist risk-return ratio is much different than it was in the 19th century, when Karl Marx observed the horrific conditions of the factories of England.

Indeed, Internet workers are paid very well, and insulted when the free food and drink run low, expect stock options that could make them millionaires, and know that another job can be had in an instant. It’s a far cry from 1860s England when you were thankful to have any job and your family prayed every day that you didn’t get sucked into a vat of molten steel at work.

At the same time, the value today’s workers provide to their companies is much higher and less commoditzed that the worker of the Industrial Revolution. There’s no doubt that there were (and are) employees at Adteractive who single-handedly generated tens of millions of dollars of revenue for the company. Had these employees gone out and replicated the Adteractive business model, they may very well have retained these revenues for themselves.

It strikes me that there is great parity between worker and employee in the Internet economy at the moment. It is actually a rather existential moment where both employees and employers are truly “condemned to freedom.” To quote Wikipedia paraphrasing Sartre (how’s that for a post-modern moment): “The individual consciousness is responsible for all the choices it makes, regardless of the consequences. Condemned to be free because man’s actions and choices are his and his alone, he is condemned to be responsible for his free choices.”

Internet workers are presented with many, many options to choose from. Choosing the wrong option can cost you millions of dollars and likely cause a lot of second-guessing. No doubt employees who went to Adteractive expecting an IPO windfall may be regretting their decision not to join Google, YouTube, or any of the other start-ups that have since made their employees rich.

Similarly, employers who fail to maintain employee expectations – be it of wealth, work environment, or learning – risk mass migration of their human capital. And without human capital, no alienation from labor and therefore profits are possible. You can argue about why so many quality employees left Adteractive, but I think that few would disagree that these departures had a negative impact on the company.

Successful Internet companies cannot follow the 19th century industrialist tradition of alienating commoditized workers. Instead, Internet companies must both alienate and be alienated themselves. They must provide financial and life-style incentives that convince workers that their labor is better alienated at Company A than Company B. It is a delicate dance for both sides to perform.


  1. Anonymous August 9th, 2007

    David – good work on the economic philosophy. I am sure you understand your ramble better than anyone else. Let us take a case in point my friend. ADT paid over market prices for many of the folks. A lot of them are quite spoilt and largely incapable, in particular the late 2005 and 2006 era. In fact, they were paid atrocious amounts and did not produce anything. Some ran things like Search that did not make any headways for ADT profits; then there was the fashion trend called the Six Sigma– but they all pulled a lot of dough. So in your vocabulary – what does this mean. How do u penalize the drifters who take and take but are unable or incapable to give. But they are good at writing discursive dialogues and trying to appeal to the discreet charms of the bourgoise. As for the ones who spend the whole day surfing … alas … must have happened in post late 2005. I will bet you my bottom dollar that prior to then, they would be shown an exit to the beach long before that person even gets to his surboard. What a sham this is. What a joke! And what a disappointment. Monday morning quarterbacks that never built companies discussing philosophy. HA HA HA. Adt fed 308 families and is still well regarded. How many did Rawls feed or Marx or Adam Smith. Quality employees left my friend because as I noted previously — it is the new age of armchair management that came into vogue. No one bled … greatest lesson — stay away from the talkers ; get the executors.

  2. Anonymous August 28th, 2007

    Everyone was a capitalist, not a marxist.This is the why, how, who, and when, and the answer of all your questions:http://www.ftc.gov/bc/earlyterm/2005/04/et042905.pdf

  3. David Alt August 25th, 2008

    The example of an employee creating $10K and recieving $5K is what Marx means by exploitation. However, this is not what Marx meant by alientation, which is: workers have zero claim to the end product they produce. Instead of the employee owning this final product, or even some of it, they are completely alienated from it, and instead take a wage.The question of whether the wage compensates the employee enough (or too much) is a secondary question from the perspective of alienation. However, understand that in order a company to profit, the wage must be lower than the value of the product.

  4. David Rodnitzky August 25th, 2008

    Thanks David for the clarification – it’s been 17 years since I took a class on Marx, so I feel like I should get some credit for at least remembering alienation from labor as a concept!

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David Rodnitzky
David Rodnitzky is founder and CEO of 3Q Digital (formerly PPC Associates), a position he has held since the Company's inception in 2008. Prior to 3Q Digital, he held senior marketing roles at several Internet companies, including Rentals.com (2000-2001), FindLaw (2001-2004), Adteractive (2004-2006), and Mercantila (2007-2008). David currently serves on advisory boards for several companies, including Marin Software, MediaBoost, Mediacause, and a stealth travel start-up. David is a regular speaker at major digital marketing conferences and has contributed to numerous influential publications, including Venture Capital Journal, CNN Radio, Newsweek, Advertising Age, and NPR's Marketplace. David has a B.A. with honors from the University of Chicago and a J.D. with honors from the University of Iowa. In his spare time, David enjoys salmon fishing, hiking, spending time with his family, and watching the Iowa Hawkeyes, not necessarily in that order.