Assessing VC-istan in full requires looking into the “Isms” of which it’s accused: racism, sexism, ageism, and classism. I’ll address each of these, the extent to which they seem to exist, and their sources. They all kind of blend together, difficult to separate the one from the other, but I’ll try. This analysis is, of course, based on limited experience, and I’ll only speak on what I’ve directly observed, or have from a credible source. This will bias my error, if there is any, in the direction of underreporting the degree to which VC-istan is racist, sexist, and classist, etc. Therefore, my failing to mention something does not mean that it does not exist, but only that I’m not aware of it.
Is technology racist? Are venture capitalists racist? For the first, I’d say “no”. Software engineers are one of the less racist professional groups out there. For the second, it’s harder to say. I don’t believe that the leading VCs would turn down a qualified founder because of his race. If a black or Latino or Asian founder did manage to convince Sand Hill Road that he was a “rock star”, he’d have no problem getting funding. So what’s the problem? Getting there in the first place.
Ultimately, the goal of the leading VC firms is, foremost, to exploit emerging natural monopolies that technology (temporarily) creates. Between inception and commoditization of a new thing (e.g. social networking) there is a period of time in which a lot of money can be made (because of these transient monopolies, and the fact that no one knows how to value new kinds of assets) and branding matters a lot during that period. Facebook and Twitter are obvious examples of such natural (but non-permanent) monopolies. Clearly, that has nothing to do with race, quite clearly, nor especially with the founders. That is, except for this: there is a perception that the percentage of people who can execute these sorts of red-ocean, high-risk strategies is very small– that it takes a right type of “founder material” people that only VCs can detect. When a person manages to convince a critical mass of influential people that he is in that set, he goes (almost instantaneously) from being a cipher to being incredibly highly valued (see: Sean Parker, Jack Dorsey) far beyond his actual competence. Such is the effect of social proof. But getting there requires wining the auspices of a sufficient quorum. This is an area where the biases and perceptual defects of the few can dictate the perceived “will” of the many.
I’d also argue that this is not a healthy way to run an industry, because it encourages people to chase celebrity rather than improve their competence gradually (which is the only way to do it). Robust businesses are built slowly, growing confidently but intelligently. Competence is attained over years. “Hockey sticks” and overnight successes are much more intermittent, highly unpredictable, and generally fruitless for an individual to chase (ask most people who spend hundreds of dollars each year on the lottery). If the U.S. is going to get back to making things that matter, then “get rich slowly” will have to become cool again. Yet, when it comes to a VC-istani’s reputation, he goes from being viewed as human garbage to being a highly-sought property, instantaneously and with no middle ground.
All of the “cool kids” in VC-istan are, of course, “produced” by more powerful entities (something I’ll return to, later) and a competent “producer” will create such an obsession around the person being produced. For these VC darlings, reputations are not earned but managed (that is the definition of being “produced”) by their backers from that point. Funding, acquisitions, soft landings, and EIR sinecures in the event of utter disaster, are all worked out from there on.
None of that has a thing to do with race. Yet. I’ll get there.
In business plans, venture capitalists attempt to detect emerging natural monopolies; but in the early stages, they claim that their job is to assess (and, I will add, to produce) people, because there’s still too much fluidity and uncertainty in the business plan to grab on to anything else. What they are trying to figure out is: who can be produced with the least effort? A person who looks like other people the VCs have funded is, simply put, easier to produce. There’s less resistance. VC-istan is built on the commoditization of things that the rest of the country (in its middle-class earnestness) refuses to consider a commodity at all: innovation, high-end technical talent, and reputation (the most important commodity in the feudal, relationship-oriented economy of the Valley). I’ve harped on VC-istan for treating software engineers like a fungible commodity, but so are founders to them. They crank out commodity startups run by commodity founders using well-known formulae in the hope that one will become something more in spite of itself. If founders are commodities, it shouldn’t be surprising that production thereof is a worn industrial process. Now, producing someone requires getting a large number of powerful people to trust a stranger. Anyone who does not suspect that race would be a huge variable in this process is extremely naive.
Investors, acting alone, would be more willing to invest in minority founders were it not for the culture of co-funding, note-sharing, and social proof that exists in the Valley. Plenty of investors are forward-thinking, non-racist people; but they must also be aware (at least subconsciously) that, when convincing a significant number of other people (most of whom make overconfident judgments about other people very quickly, since that is a consequence of high status to the mind) to trust someone with millions of dollars, race will have an impact.
Are all venture capitalists racist? Of course not. Most? Probably not. A few probably are, but I’m not interested in getting into that. I’m arguing that even without explicit VC racism, racist results can occur. Why? Venture capital is a relationship-driven business: a who-you-know world rather than a what-you-know world. First introductions and producers are found through social rather than professional circles, and a good number of those social circuits just don’t belong in this century. Even if the VCs aren’t racist, many of the the social intermediaries and clubs one must navigate in order to get to them are. Furthermore, when you are deciding whether to produce someone, you don’t know how much social access that person has. You have to guess. And, although it’s incredibly wrong that this is so, physical variables will play a role, for most, in that estimation process.
It’s wrong and horrible, but there it is.
When it comes to the marquee funds in the Valley, my guess would be that for a black or Latino or Asian founder to get VC funding and become one of the “cool kids”, he’d have to make his race part of his “personal brand” (just as Marissa Mayer has, with being female) in order for it not to be a disadvantage. An engineer is an engineer is an engineer (not “a black engineer” or “a white engineer” or “a female engineer” or “a male engineer”). Yet for founders, under the scrutiny that VCs apply when deciding whether to produce someone, I don’t think they have that luxury. They don’t get to be “a founder” without adjectives, unless they’re young, white, overprivileged and male. Others have to prove that they are already in social access. This is made especially tricky by the fact that explicitly proving social access (as with intelligence) is usually socially harmful, making it better for a person to just have it presumed. There are plenty of non-white UCLA students who are way sharper than most Stanford kids, and they can easily prove it to be so. But to prove intelligence invariably puts social grace at risk, and the Stanford kid doesn’t have to take that risk on; he’s assumed to be intelligent from the start, and can focus 100% of his energy on being liked.
I would guess, not based on evidence but supposition, that this racial effect is significantly smaller for biotechnology, scientific computing, and “clean tech”. Why? Those fields require skill, experience, and actual talent, making social access less likely to be a major deciding factor. But this venture-funded light tech (e.g. Clinkle, Snapchat) is stuff that any fuckhead idiot could do, which makes it profitable (at least, quickest) to bet on the fuckhead idiot with the low-resistance image, and who’s probably already packing heat in terms of family connections.
As I said, I think the racism of VC-istan is an emergent, second-order property. I don’t think VCs are especially racist, aside from their need to select founders who are easy to “produce” and likely to bring inherited social access with them. Sexism, on the other hand, is much more entrenched. It’s well known that the leading technology companies have significant pay disparities and do a bad job of promoting women. This is even worse in the VC-funded world than in the (disparaged, but generally not as bad) large corporations. Banks and law firms, despite their reputation for being stodgy and conservative, are actually a lot more fair, when it comes to gender, than any slice of the VC-funded world.
For a woman to be promoted to partnership in a venture capital firm is extraordinarily rare– far more rare than for her to rise in a traditional corporation. While venture capital presents itself as morally superior to the disliked, macho world of private equity, that distinction is an artifact of PR. Venture capital is private equity. The admissions criteria, cultures, and dominating personalities are the same. This also makes venture capital an extremely inappropriate fit for true technology, which probably explains most of why VC-istan has drifted into consumer-web light tech, often more akin to marketing using technology than technology itself. (However, since the top positions are mostly filled by men, it’s not called marketing but “growth hacking”.)
If the culture within VC firms is hostile to women, it shouldn’t be surprising that the funding climate is harsh for them as well. But there’s another factor that really keeps women out, and that is probably designed in part to do just that. Fairly common for a venture capitalist is not only to check listed references, but to poke around and find “back channel” references that the candidate didn’t volunteer. That’s not far from stalking, and I think the reasons are obvious why women would be more hesitant to submit themselves to that (but even well-adjusted men find it creepy). Such reference checks are also, I would guess, more likely to deliver negative inaccuracies about a woman or a person from a disadvantaged minority. Until the benighted and morally offensive institution of back-channel reference checking is extinguished from technology altogether, I don’t think we’ll get anywhere near gender parity. When you perform back-channel reference checks, you’re allowing (in fact, encouraging) whackjobs to ruin another person’s career. Whackjobs and stalkers hurt everyone (I’m a white male and have been hit a few times) but they seem, at least in technology, to target women disproportionately.
There is one group of people who enjoy back-channel reference checks, enough not to object but rather to relish the intensive process and attention: narcissists. A true narcissist loves attention of any kind, positive or negative, and the more detail there is in the inspection, the better. Most people fear back-channel reference checks for risk of misinformation: a rumor about them denies them a job. (For successful women, the probability of such negative rumors emerging is very high.) Narcissists, on the other hand, love for misinformation to exist about them, even if its direct consequences are negative. Narcissists are not especially driven by financial desire or professional ambition, but they love gaining extreme reputations, positive or negative, and moreover enjoy exploiting reputation’s tendency to perpetuate itself. Just to put their names in others’ minds, for any cause whatsoever, is victory. The VC-istan game is like crack, for them. I don’t think I’m going out that far when I say that complete narcissists (the only people who would gleefully submit themselves to that sort of invasive, back-channel reference check) are somewhat more likely to be men.
Yes, such people exist in both genders, for sure, but the sense I get is that the top-0.01% level of narcissism– which is ubiquitous among those who tend to make it into the VC darling in-crowd, but relatively rare (by definition) in the general population– is more common among men. Combine this with the fact that nearly all the powerful venture capitalists are men, and the sexist climate is not surprising. It’s exactly what you’d predict.
Much deeper and more pervasive than VC-istan’s racism and sexism is its classism. As a who-you-know reputation economy, VC-istan the antithesis of the traditionally middle-class values of earnestness, hard work, and fairness. There is an irresolvable animosity between the earnest, pervasively middle-class, “maker” ethos of the traditional engineer or designer, and the wheeler-dealer realpolitick that dominates the VC-funded world. The middle-class attitude teaches an aversion toward “being political”– that is, trying to exploit or create a corrupt political environment for personal gain– preferring hard work and get-rich-slowly strategies over political will and extreme personal ambition. The upper classes, by contrast, are generally bred for political success. They relish “getting political”; it is what they have been designed, over generations, to do; and they’re very good at it. In terms of total social ability, I do not think there is a substantial difference. In 2013, people of upper-class origin have no more (nor necessarily less) refinement, consideration of others, or general couth than the average middle-class person. There is one difference, which is that people from upper-class backgrounds have superior tactical social skill. They learn, about ten years earlier than their quickest-learning middle-class counterparts, how to win organizational games.
Consider that getting funded (and staying in position once funded) requires a lot of manipulation behind the scenes: lining up introductions, managing credit and blame in the obvious directions, and flat-out social proof arbitrage (read: dishonesty about how much influential people like you in order to make influential people like you). People who have those skills at the required level by age 25 tend to fall into one of two (not mutually exclusive categories): psychopaths, and people who’ve been bred to win at such games not only by their parents but by their entire environments since childhood. People in the latter category tend to come from the upper classes. In sociopolitical combat, you are just not equipped to go toe-to-toe with a venture capitalist, as a prospective founder must, at age 25– that would be like a first-semester law student suing a lawyer– unless you’ve had that political nature baked into you. The middle classes breed their children to be smart, to work hard, to be honest, to be happy, or to be self-actualized. The upper class breeds its offspring to win in social and political combat; the rest is entirely optional.
Finally, the most overt dimension of classism (and probably the only intentional one) is derived from something I’ve already discussed, which is that venture capitalists aren’t only in the business of funding and managing founders. They also produce them. An upper-class background makes one far more “producible”. That’s pretty obvious, so I won’t dwell on it.
Classism has been on the rise in Silicon Valley of late. Why? I don’t think it’s intentional. VCs are classist, but not becoming moreso over time. What they are becoming is more ageist. Most of Silicon Valley’s classism is a derived feature of its ageism. If people have less time to prove themselves before they are written off as permanently second-rate, then early advantages matter more. This is especially true in Silicon Valley where even conventional success is considered failure; unless you’ve joined Those Who Have Completed An Exit by 35, you’re “not founder material” in the eyes of most VCs. Manufacturing this level of outlier success requires either extreme luck (which happens, even for people of humbler origins) or access to a rigged game: parentally arranged funding or acqui-hires (see: Summly, Snapchat).
As the age window in which a first success in VC-istan is possible constricts, the sexism and racism problems, but especially the classism problem, are only going to get worse. Let’s attack that, because it gets us directly into the soul of the VC-funded culture.
This is the fun one. Age awaits all of us. It’s universal, except for the unlucky (?) few who die young. Before confronting it, let’s take a detour.
Traditional Buddhism believes in six realms of existence. Hells are the worst, followed by the world of the pretas, or hungry ghosts. Those are horrible places, representing the karmic consequences of wrath and of lust. Next up, hedonically, is the animal world (ignorance) followed by the realm of humans (desire). Above us, in simple hedonic terms. are the realm of the ashuras (envy) and devas (arrogance); often transliterated as “demigods” and “gods”. (These terms are not correct. They are not theological gods, and Buddhism is deeply theologically agnostic.) Ashuras have existences we’d consider charmed, but are tortured by their envy of the devas; in this way, they are like upper-class outsiders. Devas have existences we’d consider heavenly. (In truth, to be a deva is not considered enviable; their conditions hinder enlightenment.) Their lives are long, but not infinite and, as they age and begin to die, they are socially ostracized by those around them, who refuse to look upon decay for it offends their severe narcissism. The devas live in a karmic bubble of extreme privilege, but the moment they show the first signs of being drawn out of it, and toward death, they become repulsive to the social world around them.
Devas or ashuras may or may not exist in literal form; I have no way of knowing if such things exist in other universes, and that’s not my concern here. Buddhism also maintains that all realms exist to some extent within the other, which seems evidently true in the human experience. As social commentary, the worlds of devas (kings, CEOs, venture capitalists) and ashuras (courtiers, VPs, founders) do exist. The world of the devas (at least, the devas of the human world) is one that strives to attain perfection and succumbs to its own self-defeating narcissism. It’s a realm in which even age, which is the most natural thing in the world, is seen as ugly.
Part of it is regional. Silicon Valley is in suburban California, and includes places like Atherton and Mountain View where people are so soft that even normal aging becomes abhorrent. That may change as VC-istan’s center of gravity moves to San Francisco, because urban locations can demolish that kind of softness. But I wouldn’t bet on it. There are much more severe and continuing causes of the ageism problem.
At the heart of it is chickenhawking. The word “chickenhawk” has two (unrelated) derogatory meanings, and both apply so well to Silicon Valley’s age discrimination that I will discuss them both. The first came out of the gay community, referring to an older man who hits on men who are significantly younger, and often underage. Business chickenhawking, however, seems to be almost entirely devoid of any openly gay context; it tends to involve “mancrushing” among two men who both identify as heterosexual. I’ll get to it in a bit, don’t worry. Chickenhawking is the crown jewel of VC-land cultural criticism, so there is no way I will neglect to discuss it. The second meaning of chickenhawking refers to one who supports war but avoids personal sacrifice. Erich Maria Remarque commented that wars were for the benefit of the old and rich, but that all the suffering and dying was for the young and poor. I would extend the notion to cover any who would glorify sacrifice for others while avoiding it for themselves.
Read this classic article by Jamie Zawinski. Let me just snip from it:
[Mike Arrington is] trying to make the point that the only path to success in the software industry is to work insane hours, sleep under your desk, and give up your one and only youth, and if you don’t do that, you’re a pussy. He’s using my words to try and back up that thesis.
[...] He’s telling you the story of, “If you bust your ass and don’t sleep, you’ll get rich” because the only way that people in his line of work get richer is if young, poorly-socialized, naive geniuses believe that story! Without those coat-tails to ride, VCs might have to work for a living. Once that kid burns out, they’ll just slot a new one in.
Engineers and founders in VC-funded startups endure long hours and personal financial risk. There are also long-term career risks, because VC-funded startups tend to prefer phony “performance-related” firings (which entail no severance and a damaged reputation) over honest layoffs. (If a company of significant size claims never to have had a layoff, that’s a warning sign.) However, if the startup wins its little war and pays out, engineers get mostly “glory” in the sense of being able to say that they were on the battlefield; the financial windfall is usually quite mediocre (tiny compared to a half-decent quant’s bonus) and the long-term career benefits are only substantial for people who can whore themselves out to the parasitic rash of “tech” press that emerges during every bubble. Most get the useless asset of being able to say they were there.
The battles are fought, the long hours are worked, and the stress-related health problems are suffered, and the sudden no-severance, career-damaging firings are endured, by the young and mostly poor. The gains all go to the old and rich investors, most of whom aren’t even investing their own money. (Founders are a middle category. They’re young and mostly rich, because of the generally inherited social connections it takes to raise funding. They suffer with the young but also eat with the old.) Would any VC work for 0.05 percent equity in an uncertain startup? Of course not. I’ll also point out that their kids never take engineering roles in VC-funded companies either. VCs tell their kids to stay away from that scene, which is probably the most telling thing of all about it.
The top kingpins of VC-istan are chickenhawks in both senses of the word. The pervy sense of it explains their attraction to young hipster founders who don’t look like they’re fully men yet. The warlike meaning of it explains their aversion to personal and career risk, while glamorizing it for the young and clueless.
What if one wants to exploit chickenhawking? I don’t think it’s enough to be white, overprivileged, young and male. Those help, but I think it requires being a bit psychopathic. In order to explain that, it helps to get into what chickenhawking is.
An archetypical case of chickenhawking occurs in The Office, wherein the clueless middle manager Michael Scott develops a (one-sided) mancrush on sociopathic temp worker, Ryan Howard. Ryan is visibly creeped out by Michael’s intense interest in his personal life, but uses Michael’s support and devotion to launch his career, catapulting far beyond him. Michael is, of course, oblivious to Ryan’s character flaws, but it’s actually those defects that enable him to have the juicy personal life. The chickenhawk’s protege needs to be psychopathic to do many of the despicable things for which the chickenhawk himself lacked the courage when he was young.
One thing that business chickenhawking is not, I’ll note, is gay. It seems to be an entirely heterosexual phenomenon that originated in the red-meat-for-breakfast, three-martini-lunch, dinner-at-a-strip-club MBA-culture crowd (that now dominates the Valley, through VC). The hawks tend to be middle-aged and married with children, or at least outwardly heterosexual. The chickens tend to be young “Game”-spitting psychopaths who, while insubstantial without money, would (once produced) be able to tear through party girls like a late-April tornado.
The motivation of the “hawk” is clear: it’s a midlife crisis phenomenon. Most of the marquee venture capitalists came up not through technology, but rather, through the MBA culture. They were aiming to be working on billion-dollar deals and crashing third-world currencies. Instead, they’re hawking techie cantrips out in California. There’s nothing wrong with that, but it’s not what they wanted. In addition, they sacrificed their 20s to get there. Instead of partying and drugging and whoring, they were working 90-hour weeks, and too overweight to run “Game” thanks to all the takeout they ate. In middle age, they panic about having done their 20s all wrong, and look to cling to a young psychopath through whom they can live vicariously. The trade is this: the hawk ensures the chicken’s career and lines him up with an enormous income that he doesn’t have to work hard to get. In exchange, the chicken tosses back stories about weekend debauchery.
There are plenty of VC-funded founders who are obvious beneficiaries of chickenhawking, but I won’t give names.
Is there gay chickenhawking, or female chickenhawking? I have no idea. All of the examples that I have seen involve heterosexual men. However, I tend to doubt that it exists among gays or women. Chickenhawking is, to a large degree, based on the objectification of women– the idea that reckless, high-frequency sexuality (in addition to heavy drug use) in a man’s 20s is a “rite of passage” and that “tricking” women by pumping money (and “Game” advice) into some otherwise uninteresting loser, in order to prove that “women” are “whores”, is a worthy use of investors’ money. Chickenhawking is what you get when the corporate patriarchy of the 1950s meets the crass, status-obsessed, casual sex meat market of the 2010s.
Chickenhawking is a somewhat fascinating topic, although an ugly one. There’s a lot more I could say about it and its sociological ramifications, but it’s fundamentally depressing and I don’t see it worth it to double this article’s already large word count. I bring it up because it’s the Achilles’ heel of VC-istan. It’s massively embarrassing to the established players, and it’s one of the most powerful cultural variables in determining whether a young VC-istani’s career will succeed or fail.
I don’t think there’s a huge epidemic of chickenhawking in Silicon Valley. It’s there, but I don’t think most people (or even most VCs) participate. The problem is that it’s potent enough to be a driving cultural force, if not the biggest one, in determining who’s “cool” and who’s avoided. I discussed above that, even though most venture capitalists aren’t racist, they’re going to be more reluctant to throw their time into producing a non-white founder. When you have a culture of co-funding and note-sharing, where individual risk-taking is rare, the biases of the few will influence the many. For racism, there’s a countervailing force, which is that it’s extremely socially unacceptable, among educated people anywhere, to be racist. For chickenhawking and ageism in the VC-funded ecosystem, there’s no such counterweight; it’s taken as axiomatic (even if visibly untrue) that older people (with bias starting around 35) are incapable. The truth is that, even if the investors aren’t chickenhawks themselves, they’re going to be most inclined to throw their time into producing founders who are “chickenhawk compliant”: not just white, young, and male (a common combination) but arrogant and psychopathic enough to create drama that the backers (if they wish) can enjoy.
Age discrimination creates an extremely unhealthy culture, but it’s to the advantage of venture capitalists, because it puts unreasonable (and, I would argue, extreme) time pressure on the careers of founders and engineers. If such people were allowed to have typical 40-year careers, they probably wouldn’t treat specific startups as their sole shots at success, and they’d be less inclined to work 90-hour weeks for a comparably small slice of the pie.
While the age-discrimination culture begins with a small number of creepy middle-aged, rich men trying to redo their 20s through young sociopaths, it’s perpetuated because the time pressure it creates is beneficial to investors and startup executives– and harmful to everyone else.
Take a deep breath. You now understand VC-istan. Disgusted? Exhausted? Ill at ease? Good. That’s a sign that you really get it.
In future essays, I’ll discuss what to do about it.