In the Defense of Michael Moritz
Or: Why a VC that can’t find women to hire is not necessarily a male chauvinist
Michael Moritz, chairman of Sequoia Capital, took a lot of heat last week following his unfortunate remark about hiring women. “What we’re not prepared to do is to lower our standards,” he said in an interview with Bloomberg’s Emily Chang. Moritz immediately became the target of media and women, causing him and Sequoia to later issue apologies and clarifications. His bad choice of words will forever live next to his photo in Google search results.
It’s very easy to get upset at such a statement, as there are clearly plenty of capable women. How is it possible that they are not meeting Sequoia’s standards?
In his defense, Moritz further explained that the reason for the lack of women investors at his firm is the fact that it’s difficult to find women with technology backgrounds. The root of this issue, to his belief, starts at a young age, when many girls decide not to pursue STEM (science, technology, engineering and mathematics) professions.
Indeed, women are clearly underrepresented in high school and higher education STEM programs. Several organizations and government agencies are involved in decreasing this gap and it’s definitely an important topic. But, it’s not the main reason for the lack of women VCs. (I recommend reading Sukhinder Singh Cassidy’s post regarding this topic.)
The real reason lies somewhere between the university years and the time when a VC career would be considered. It’s the ability to acquire that “technology background” that Michael Moritz is looking for in a candidate. If you ask most VC firms about their image of the ideal VC hire candidate, especially partner material, they would tell you they’re looking for candidates that will add value to their portfolio companies. How can a candidate add value? The best way is by having relevant experience as an entrepreneur or as a C-level executive with operational experience in growing a company. A candidate could also be a banker or a consultant, but she (or he) would typically be beaten by other candidates with real field experience. Now, as a VC, how likely are you to find a woman with that kind of experience?
The Silicon Valley stats about gender diversity are known by most of us. In diversity reports published by prominent tech companies, the percentage of women employees is usually up to 30%. 40% is considered amazing. The numbers regarding executive levels drop significantly, and these figures are among the companies that are supposedly making an effort. In total, according to surveys of the U.S. Department of Labor relating to 2013, women make up only 26% of the tech industry. Another alarming figure presented in the same survey, is the 56% of women who drop out of tech professions, which is double the rate of men who drop out.
Considering those numbers, the composition of boards and C-suites is, unfortunately, not likely to be a surprise to anyone. A report of The Korn/Ferry Institute reveals that in 2013, in the 100 leading tech companies in the U.S., only 14.6% of board members were women. Out of 100 CEOs, only 6 were women. The same inequality applies to women executives and women founders, and the gap is quite wide long before we consider the situation of women investors.
A week ago, I was asked by a journalist if I know any women angel investors, and she shared her frustration that there are very few. “Well, that’s because you need money to be an angel investor,” I replied. “If there’s a gender pay gap, a gender promotion gap, and hardly any women executives and founders, how can we make the money to invest unless we inherit it?”
The same applies to venture capital. Unlike the world of angel investing, you don’t need to invest your own money. However, if you want to demonstrate relevant experience, you are more likely to have it if you’re a man. It’s that simple — it’s not the lack of women in STEM, it’s the lack of women in leadership, in entrepreneurship, in the share of wealth.
The good news is that the situation is fixable. If women are hired, paid and promoted as equals, if women get the same trust men get as entrepreneurs and leaders, then they can also have the experience and value required by the VC community.
So, before giving women a chance in venture capital, give them a chance in management, in leadership, and in the board room. Invest in their ideas, believe in their potential. When that happens, VCs will hire these successful women “all day and night,” to quote Moritz. Along the way, we will all gain more successful, diverse and creative organizations.
By the way, ladies, there’s almost nothing more fulfilling than building and growing a business, whether it’s your own, or if you are a part of a team. My recommendation — do what I do — be a part of the game, and don’t be discouraged if a Silicon Valley VC does not accept you to sit on the bench and watch.
