The topic of Silicon Valley’s toxic ‘bro culture’ is not particularly new. It has long been recognized that the Silicon Valley can be deeply alienating to several groups such as women and minorities. Some recent developments including the resignation of Uber’s Travis Kalanick have only brought attention to something that industry insiders have always known.
In many ways, it has to do with the way the technology industry has evolved. In an earlier era when the impact of technology was quite limited, the industry was considered the realm of geeks who fiddled around with giant computers that meant nothing to most people. To put things in perspective, less than 1% of the world population used the Internet in 1995. Today, that number stands at 49.6%.
As the start-ups of the 90s and early 2000s have become major corporations of today, supported in part by generous funding from venture capitalists, the stereotype of the geeky tech founder has unfortunately persisted, even among the VC community.
Talking about the industry’s tendency to place bets mostly on young, mostly male founders, Vivek Wadhwa, Distinguished Fellow at Carnegie Mellon University College of Engineering says, “…the mind-set became that if y
ou’re a young kid who’s arrogant and disrespectful and doesn’t have the right social skills, that’s the mark of a good entrepreneur.”
Unfortunately, while the trend of running a tech start-up like some kind of cool frat club may have caused minimum damage in the 90s, such behavior is simply not ok anymore given the impact that technology has on today’s society. Venture capitalists hold significant power to correct some of the biggest issues that the tech industry is facing. Here are some questions for the VC community to ask themselves.
In the case of Uber, the company has seen plenty of criticism over the years – for things such as its perceived callousness towards complaints of sexual abuse to poor judgement in marketing. More recently, Kalanick’s infamous argument with an Uber driver grabbed headlines. Yet, through all this, Uber managed to raise several rounds of funding from VCs who were far more concerned about valuations and performance rather than ethics or corporate governance.
The message is clear. When you overlook bad behavior, you encourage it.
A recent study covered in the Harvard Business Review threw up some interesting insights into the funding bias that female entrepreneurs encounter. Female entrepreneurs in the US receive only about 2% of all venture funding, despite owning 38% of the businesses in the country.
The study found that the bias starts right from the VCs’ questions. For instance, they tended to ask men questions about the potential for gains and women about the potential for losses. Similarly, 67% of the questions posed to male entrepreneurs were promotion-oriented, while 66% of those posed to female entrepreneurs were prevention-oriented. There are studies that demonstrate that such bias exists against minorities too.
The key takeaway is obvious. In order to overcome bias, investors must understand and acknowledge it.
A recent piece in the New York Times shed light on the culture of harassment that female tech founders routinely face during interactions with investors and VCs. Subsequently, several stories and accounts that demonstrated the gravity of the situation came to the fore. There was considerable criticism and calls for corrective measures such as ‘decency pledges.’ The article also elicited a rather long-winded apology from Dave McClure, one of the investors and a co-founder of 500 start-ups, a VC firm.
That brings us to the third lesson for VCs: Abuse of power must be curbed at all costs.
--
Travis Kalanick, after his argument with the Uber driver also issued an uncharacteristic apology, saying that he needs to ‘grow up.’ While a 40-year old man saying he needs to grow up drew its share of eye rolls, I think he accurately captured the biggest issue with the tech industry.
It’s time for the tech industry to grow up and set the house in order. And VCs, more than anyone else, can facilitate this through their actions.
