REPOST: Venture Capitalists are not Superheroes (or they're very complicated ones)
Three years ago, I wrote this. It still pretty much tracks.
Note: I originally posted a two-part series on Medium in January 2021. With some recent high-profile foibles by a few VCs in the space, I thought I’d review it and see whether it’s really gotten any better.
My sense is that it has not - and in fact, we are seeing some investors and tech leaders double down on some of the more troubling aspects that this piece highlights. As we approach another consequential election - both at the federal and state/local levels - the importance of aiming a critical eye at the discourse is all the more important.
I’m reposting it with only minimal updates. Some of the statistics have gotten even worse, as has some of the rhetoric.
Finally: I refuse to call Twitter by its new name. Sorry for the pedants in the audience. :)
PROLOGUE: I wavered on writing this.
After all — I’m a venture capitalist, so how could I authentically strike the balance between calling out the clear and damaging issues in our industry and its icons, while not sounding sanctimonious and presuming that I’ve got this all figured out?
I was still on the fence on writing about this until this past week, when I saw many tech leaders’ responses to the violent insurrection that occured less than a mile from my home, where they concluded the real villains were the platforms that tried to snuff out violent rhetoric, not the rhetoric itself. This terrifying response reminded me that I had a lot to say, and I might as well say it.
If anything, this is my feeble attempt at doing three things all at once: criticizing the areas of venture capital that need some light shone on them; expressing my own observations on where I’ve seen some things attempted to make change in the industry internally; and to put some context on what you, reader, can do as an observer, engaged/injured party of, or participant in this industry.
It’s messy, because my thoughts on the topic are emotionally charged. It is chock full of opinions and anecdotes — thus, if you are looking for some form of rationalism that takes a cold, emotionless look at things, this is not it. And I think that’s okay.
So, here we go, and remember: you’re only a click away from yelling at me on Twitter if you have some thoughts.
The men who the CEO seemed to admire were the same men whom all the other men in the ecosystem admired: entrepreneurs, investors, one another. Chief among them was a founder of the seed accelerator…I didn’t doubt his business insight, but I didn’t know why he seemed to believe it qualified him as an expert on anything — everything — else.
— Anna Wiener, Uncanny Valley
We’re in a weird time in the tech industry — or, at least, it feels weird in that it feels even more detached from reality than tech usually does. At the time of this writing, the statistics from 2020 are grim: over 350,000 Americans dead, and over 19 million more of them unemployed, due to the combination of a horrifying pandemic and a nearly-equally-horrifying response to it by officials both unelected and not.
In the midst of this glum news, there is a particular commune that has seemingly walked through the fire unscathed, if not actually galvanized by its heat: it was a bellewether year for the tech industry, with several long-anticipated IPOs coming to fruition, large-cap stocks growing in value, and new unicorns minted. Each of these success stories comes with an extraordinary jump in the net worth of a concentrated class of individuals. Today, one share of Amazon stock is worth more than what most Americans on unemployment insurance get in a month. San Francisco rent prices are declining, yet home values continue to skyrocket.
I fully admit that am part of that concentrated class — maybe not in the nucleus, but definitely in nearby orbit to it. I watched as those a little bit closer to the sun — those who perhaps haven’t been burned by tech as much as me, or those who are more deeply and anxiously attached to it — followed a similar pattern this year with their online presence. (I should pause here and state that, while I know that Twitter is not a perfect representation of reality, it’s also not pure performance fiction. Out of the heart, the mouth speaks.)
These tech leaders’ year of publicly-facing discourse mostly included blips of how to hack society and invest wisely in the throes of a lockdown, then followed up with a two- or three-week barrage of posts suggesting that Black Lives Matter (or mattered, I suppose, since many black-squared posts and promises to “do better” were bookended by photos of Marin sunsets or excursions to Tahoe), then some generally subdued observations of the upcoming election with the year bookended by a reflection on how many hustle points were earned in 2020. Throw in a puff piece or two about the “next frontier” of tech conducted from the living room of a multimillion-dollar home while ignoring an actual coup or explaining it away, and we’re just roaring into 2021 on the back of a gilded chariot.
This wasn’t happening in small business communities, nor was it happening amongst those working on reproductive rights initiatives, and it definitely wasn’t happening in the healthcare industry. Most of the friends and acquaintances I know in these industries are burned out and see this coming year with trepidation: will there be right-wing violence in our streets and shockingly slow distributions of the vaccine combined with refusal to take it, leading to even more deaths? We know the answer to both is closer to “yes”, but it seems like a segment of our society is either blissfully ignorant or — at worse — cheer on the chaos.
Whatever was actually happening seemed to exclusively occur in two solar systems: one was in the orbit of President Trump and his cronies; and the other was in the venture-backed tech industry. We gave both inordinate amounts of attention, and we expressed universal disgust toward neither.
A few weeks ago, a rising college senior reached out to me on Twitter to set up some time to connect. They’re graduating soon, they said, and they wanted to get some tips on how to break into venture capital.
As they outlined a few questions, I responded with the first thing that came to mind: remembering what venture capital is at its core. Ultimately, it’s a more free-range, California-cool inspired version of investment banking, in which the end goal is to make wealthy people even more wealthy. VCs are essentially more nuanced mutual fund managers for their Limited Partners, except unlike Vanguard, the risk quotient is a lot higher and you spend a lot more time engaging with the company leadership within your portfolio. But yeah, at the end of the day, it’s about managing other people’s money with the hope you’ll be adept at diversifying their wealth.
They paused on the Zoom line, as if the screen froze, and then responded slowly: “you’re the first VC I’ve ever spoken to that has said that.”
I’ve scoured the internet far and wide, but for the life of me, I’ve not found a corner of society that dotes so heavily upon a Fidelity Investments fund manager, despite the fact that many of them have probably made some investors very, very, verrrrrry rich, like they do upon an investor that made a good early-stage play on a decacorn like Airbnb. (If you work for Fidelity, don’t worry, I see you and appreciate you. :))
I’ve witnessed this myself. Since joining the venture capital world, the amount of engagement I have online with strangers, the LinkedIn views, the requests for discussion, have grown exponentially in the past year and have far outpaced my knowledge acquired in the same timeframe. All that really changed was that, from the lens of an aspiring entrepreneur, I ostensibly have more power over their own livelihood.
Here’s the reality, though: no matter how off the grid you wish to be, you, tech worker or founder, have dozens of people in power with ownership over your livelihood. The fund manager for your IRA, the mayor of your city, your congressperson, the person that oversees public transit in your city, the head of the EPA, Homeland Security, the TSA Agent, the police chief. Every single one of these people has some form of power over not just the success or failure of your company, but your daily living and breathing. And every day, there are countless people mobilizing with their words, their actions, their donations, and their votes to make it plainly clear that decisions those powerful people make will not go unnoticed. In many ways, these people listen to their constituents and change their ways, out of moral obligation, duty to their constituents, or fear of power loss.
Yet the industry has given carte blanche to venture capitalists and gleefully invites them into our homes and screen to provide insight — and, worse yet, manipulate an entire sub-economy — with minimal critique. The industry has given them (er, us) free passes despite a rift of sexual harassment allegations (or staying mum when those allegations surface at one of their companies). The industry remains silent when we take aim at civic leaders, yet choose not to vote — or even worse, just move away because cities refuse to serve us, the highest-bracket taxpayer. The industry lauds our committed claims to diversity and equity in the industry, yet believe us when we say years later it’s just a “pipeline problem” and continue to fund founders that look like us, attended the same schools we did, and laud the same business leaders we do. We intrude into your lives with claims of higher knowledge of real estate, politics, journalism, constitutional law, medicine, and education despite having only cursory knowledge of each — and, in some cases, chastizing anyone that has the audacity to research the history and complexities of each topic and joining civil society to improve them instead of just programming something to disrupt them. We tell society that the only college degree worth getting is a Computer Science degree.
We’ve occupied an extraordinary and disproportionate amount of space in the innovation conversation, and it’s not just Twitter that has noticed: Josh Lerner and Ramana Nanda note that, beyond our public personas and behavior, there are some hugely systemic concerns with the overall effects of our work:
Three issues are particularly concerning to us: 1) the very narrow band of technological innovations that fit the requirements of institutional venture capital investors; 2) the relatively small number of venture capital investors who hold, and shape the direction of, a substantial fraction of capital that is deployed into financing radical technological change; and 3) the relaxation in recent years of the intense emphasis on corporate governance by venture capital firms. We believe these phenomena, rather than being short-run anomalies associated with the ebullient market of recent years, may have ongoing and detrimental effects on the rate and direction of innovation in the broader economy.
I read the above with some buzzing of hypocrisy in my head: I am complicit in many of the above, if not an active participant, without consequence. And the power that comes with attention — well, it enables me to sympathize just a little bit with the guys in their $29 million Miami homes. They’re hooked to the IV drip of power, unable to wean off of it, and definitely hostile to anyone that charges the throne.
Now, I like my job as a VC. I feel like I’m pretty decent at it. But there’s nothing I’ve done outside of some personal research and academic work (MPPs of the world, unite!) that makes me a particular sage on a variety of topics. If you trust me more than Chris Krebs on election security, Nikole Hannah-Jones on race relations, Sherrilyn Ifill on civil rights measures, or Amarnath Amarasingam on extremists using social media, then something is wrong with both the ways we glean information and my conceit in believing I’m smarter and more capable than them to discuss the topic.
Then again, if the internet was good for anything, wasn’t it this? Transparency in action; access to the minds of the industry elite….How else to know which members of the venture class defended megalomaniac founders as entrepreneurs who couldn’t scale, or mistook criticism as harassment and perceived themselves as victims of digital mobs? How else to understand the deliberately amplified identidies, ideologies, and investment strategies of the people transforming society — the people I was helping make rich?
— Also Anna Wiener, also Silicon Valley (P.S. you really should read this book)
If VCs are heroes, then we’re probably more in the veneer of a Hancock-style rather than a Fantastic Four. If you’re not familiar with the film, here’s a brief summary:
John Hancock is an alcoholic who possesses superpowers, including flight, invulnerability, and superhuman strength. While performing superhero-like acts in Los Angeles, he is often ridiculed and hated by the public for his drunken and careless acts, and becomes enraged when referred to as an “asshole.”
Is his presence a net good? mmmm…sort of. The film does a good job of creating a dilemma in the viewer’s mind on this. Either way, what we do know is that there is a clear difference between how Hancock perceives himself, and how others perceive him. He also shows very little desire to change that balance; why should he, after all? (Yes, I know he finally changes his ways in the end, which deserves some credit.)
So, shall we all revolt against the investor class, ignore our missives, and cast our iOS devices into the ocean in response to a longstanding pattern of VCs behaving like this? Yes. No. Maybe?
Eh, probably no. For all that we need to reckon with, starting all over and building a completely new tech ecosystem would probably result in the same outcome — an eventual rebuilding of a class structure with very few ultra-wealthy people at the top. This is an unfortunate blueprint of society at large, and it dismisses out of hand that technology can be an enabler of some good. It just needs some fundamental changes.
But it is a new year, and in the spirit of resolutions, let me offer up a few gentle nudges on how we can collectively make this industry a little more humane and equitable:
Organize. The idea of unionizing in tech has been dismissed by many: after all, what do already well-paid people actually need to organize around? But what if you could leverage your power to ensure gig workers are paid a fair wage, or janitorial staff aren’t forced to live in RVs or make four-hour commutes to work each day, or to protect power-thirsty leaders from wielding their disproportionate power against marginalized colleagues? If you believe in fair housing, organize around that or donate to causes that do. But don’t just pack up and leave — whether the industry or your city — do something with that pent up energy and extra money in the bank. I believe the reason why we’ve not seen sweeping changes in thoughtful capitalism in this industry is because we’re at the very tip of activism. Let’s stay the course. My specific commitment is to focus all of my earnings from a few liquidity events to organizations supporting Black-and minority-owned enterprises, whether as an investor or a donor. (Note: as I was writing this piece, Alphabet workers heeded the call. More of this is needed.)
Filter. There is no rule stating that you have to follow the tech gentry on Twitter. I have 364,000 accounts on Twitter blocked or muted (and have been blocked by a non-trivial number as well!); nearly all are bots or far-right polemists, but a non-trivial number are some of Silicon Valley’s (and also Miami and Los Angeles’) most prominent investors and self-appointed “thought leaders” whose rhetoric occasionally borders on violent. I don’t feel like I’ve missed out on discourse across a spectrum despite this heavy-handed approach: on the contrary, I’ve discovered that engaging with people who are addicted to power, prestige, and attention will provide me with no added benefit, will probably just make me feel worse about myself, and there are dozens of books on my shelf — or even a call with my Trump-supporting, Tech-averse parents — that offer more sage advice with a kinder veneer than they ever will. There are many tech leaders that believe the best way to prove a point is to do it through brute force humilitation of an opposing viewpoint and the person who carries it, and this humiliation is often disproportionately lobbed at people of color — that is toxic, unproductive, and maddening. While we should admit that these tech leaders may have some power over you, it’s your choice on how much more you want to give them. In response to my own acknowledgement of this reality, I’ve started my own list of Twitter investors, nearly all located outside of Silicon Valley, with a more balanced, global, and empathetic view of the world. I believe the discourse in the circles I’ve found is more humane and inclusive, if not a little scary in its truth-speaking to privilege and power, and I believe it’s because everyone seems to come from the position of willing to learn before proclaiming any semblance of expertise. We should not just hone in on a little peninsula in California, or better yet, just the countries that are high on the Human Development Index.
Vet. I’ll keep this simple: if you’re seeking capital as a founder, yet find yourself morally opposed to the publicly-facing persona of a venture capitalist, include this as a factor in your decisions around whether to partner with them. You personally have agency in this scenario, and I would be saddened to find you, founder, in a situation where you discover that someone on your cap table behaves in a way that jeopardizes your position in the public realm or muddles your trust of them. It’s entirely possible you may not want to work with me on any deals based on your strong and fervent disagreement with this piece I’m writing — and I accept that as part of the risk. I just want you to feel unrestrained in your moral choices.
Explore. This may be an extension of (1) and (2), but in this journey, you may simply discover that tech is not the place where you will truly thrive as a person. As an example, my wife was tech adjacent for several years, returned to graduate school, and is now a clinical grief and trauma psychotherapist. Her life is infinitely possible — her problem-solving skills will apply to those facing trauma, not a buggy line of code, and she cares 0.0 percent that a technologist would find that work supposedly inefficient. I will, again, highly recommend you read Anna Wiener’s own journeythrough the industry.
Now, the unfortunate caveat here is that not everyone has the time, financial security, and even privilege to do any of the above. And for you just starting out in the Wild West of technology, I know that you’re really eager to gobble up any bit of information you can or get in front of the right power-broker to get your first investor/mentor. As someone that didn’t really get here until sixteen years into my own career, I can tell you that getting somewhere faster only gets you closer to getting more entrenched in something sooner — for better or worse. For me, I’m personally glad that my half decade in Silicon Valley has been bookended in cities (and industries) that many of the tech elite consider to be subpar loci of innovation.
Take your time and continuously ask who and what in this industry motivates and inspires you, makes you feel more motivated to take things on, or at the minimum, doesn’t punch down when you ask the hard questions. And speaking as a person in inherited power and unearned privilege, I ask you to hold me to these truths. I promise to do my best to listen and learn, no matter whether you approach with flowers or a sword.