Silicon Valley’s sexism problem — an analysis

Women in technology

by Tamara Kachelmeier and Biodun Iginla, Technology Analysts, The Economist Intelligence Unit, San Francisco

Venture capitalists are bright, clannish and almost exclusively male

Print edition | Leaders

Apr 15th 2017

“BOOBER” is the nickname Travis Kalanick, the boss of Uber, used to describe the effect that the ride-hailing startup had on his attractiveness to the opposite sex. Mr Kalanick’s wisecrack seems to have been emblematic of a deeply macho culture. An investigation is under way into allegations from a former employee that Uber refuses to promote capable women or to take complaints about harassment seriously. The results are due to be released in the coming weeks.
Uber is not the only technology star in the spotlight for its treatment of women. Google has been accused by America’s Department of Labour of paying female employees significantly less than male ones (see article). Google flatly denies the charge. But that technology in general, and Silicon Valley in particular, has a gender problem is not in doubt. A survey of 210 women in the valley found that 60% had experienced unwanted sexual advances and that two-thirds felt excluded from important social and networking opportunities. PayScale, a research firm, has found that only 21% of American tech executives are female (the figure in other industries is 36%). Women in tech are paid less than men, even after controlling for experience, education and responsibilities.

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Not all these problems can be laid at the door of Silicon Valley. Plenty of people are worried about the small number of girls taking science, technology, engineering and mathematics courses. Only 18% of bachelor’s degrees in computer science in America were awarded to women in 2013, down from 37% in 1985. Pay gaps are pervasive, too.
But that shouldn’t let the valley off the hook. It prides itself on solving difficult problems and on being a meritocracy. Being as bad as everywhere else in its treatment of women falls disappointingly short. More to the point, the valley suffers from a distinctive form of sexism which is in its power to fix.
Venture capitalists are the technology industry’s demigods. Through their cheques, connections and advice, they determine which startups succeed and which languish. They are bright, clannish and almost exclusively male. Only around 6% of partners at venture-capital firms are women, down from 10% in 1999. Less than 40% of the top 100 venture-capital firms have a female partner charged with investing. Many of the most highly regarded funds, including Benchmark and Andreessen Horowitz, have none.
For a set of people who finance disruptive firms, venture capitalists are surprisingly averse to disrupting their own tried-and-tested way of doing things. They sit in small groups, meet entrepreneurs and repeat a single formula for investing whenever possible. John Doerr, who backed companies like Google, summed up his philosophy thus: “Invest in white male nerds who’ve dropped out of Harvard or Stanford.”
Defenders of the valley have two retorts. One is that throwing stones at the most successful business cluster on Earth makes no sense. Market forces ensure that the best ideas win funding, irrespective of gender. The data suggest a different story. Only 7% of the founders of tech startups in America that raised $20m or more are women, according to recent research by Bloomberg. Yet nobody would argue that men make the best founders nine times out of ten. On average, firms founded by women obtain less funding ($77m) than those founded by men ($100m). The VC industry has been successful enough to ward off the pressure to change. That does not make it perfect.
A second defence is that VCs rely on tight-knit relationships, in which trust is essential. Call this the “dinner with Mike Pence” gambit, after the American vice-president’s reported refusal to eat alone with a woman other than his wife. On this argument, any outsider, particularly one lacking a Y chromosome, is liable to upset the club’s precious dynamic. Venture capital is indeed a strange mix of capital and contacts, and peculiarly hard to industrialise as a result. But as a justification for sexism, clubbiness is an argument that is as old as it is thin.

Y combinator, X chromosomes

Plenty of studies show that diverse teams are more productive. Hiring more women in venture capital seems to increase the odds of finding and funding those elusive female entrepreneurs. Venture capitalists play a vital role in shaping the culture of startups: investors who value diversity are likelier to guide them away from the reputational and legal risks that beset offices full of “brogrammers”. Silicon Valley is a remarkable place. But it is time for the boy’s club to grow up.

This article appeared in the Leaders section of the print edition under the headline “Silicon pally”

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Labels: gender problem, google, sexism, sexual advances, silicon valley, Tamara Kachelmeier and Biodun Iginla, technology, technology analysts, the economist intelligence unit, Venture capitalists

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