Bad news if you’re still clinging to the idea that Silicon Valley is some sort of marvelous Horatio Alger LARP. Reuters has done a deep dive on the question, and surprise, surprise: they found that you’re more likely to become an entrepreneur if you grew up in a household with wealthy, educated parents, and Silicon Valley investors tend to default to connected founders who fit a very particular mold.
We are simply shocked.
One researcher, Ross Levine, a professor at Berkeley’s b-school, looked at the data and found that: “As children, entrepreneurs lived in households where the average income in 1979 was $88,711, compared with $67,548 for the population as a whole.”
“Who’s going to be an entrepreneur? It’s going to be a rich person, to a much higher degree,” Mr. Levine concluded. Brilliant as he is, it’s easier to be Bill Gates if you’ve got early-life access to computers.
Then there’s the “pattern matching.” Reuters looked at Northern Cali companies funded by Accel Partners, Andreessen Horowitz, Benchmark Capital, Greylock Partners and Sequoia Capital. They found that:
“Analysis of the 88 Silicon Valley companies that received “Series A” funding from one of the five top Valley venture firms in 2011, 2012, or the first half of 2013 shows that 70 were founded by people who hailed from what could be described as the traditional Silicon Valley cohort.”
By that, Reuters means some who has “held a senior position at a big technology firm, worked at a well-connected smaller one, started a successful company already, or attended one of just three universities,” i.e. Stanford, Harvard or MIT.
Of course, VCs like Ben Horowitz insist that naw, you don’t need any of that stuff to make in the Valley. “I don’t really think that a kid coming out of Harvard or MIT is actually well connected,” he told Reuters, pointing out that it took Sean Parker to make the introductions. A good idea is all that matters.
What he doesn’t say is that the Sean Parkers of the world are more likely to listen to someone who looks like Zuck.
But hey, there’s an inspiring instance of gender parity in the article, at least: “When asked whether her connections got her the cash, [Brit] Morin said: ‘I don’t think any VC is going to invest in a company that doesn’t have a clear business strategy.'”
Glad someone’s breaking nepotism’s glass ceiling, at least.