Joe Nocera

Silicon Valley's 'mirror-tocracy'

Mr Peter Thiel and a handful of others - overwhelmingly white and male - founded PayPal, and went on to finance another generation of (mostly) young white men.
Mr Peter Thiel and a handful of others - overwhelmingly white and male - founded PayPal, and went on to finance another generation of (mostly) young white men.PHOTO: BLOOMBERG

"If meritocracy exists anywhere on earth, it is in Silicon Valley," wrote Mr David Sacks in an e-mail to The Times' Jodi Kantor.

Ms Kantor was working on an article, published in The Times on Dec 23, about the Stanford class of 1994 - which graduated a year before Netscape went public, and, to all intents and purposes, started the Internet economy. She was exploring why the men in that class had done so much better in Silicon Valley than the women.

Mr Sacks, meanwhile, was one of the most successful members of the class. At Stanford, he wrote for The Stanford Review, "a conservative-libertarian campus newspaper", where he befriended Mr Peter Thiel, a fellow libertarian.

Then, in 1998, Mr Sacks, Mr Thiel and a handful of others - overwhelmingly white and male - founded PayPal, which made them all very rich. Since then, the PayPal Mafia, as these men are known in Silicon Valley, have seeded companies, founded companies and sold companies - in effect, financing another generation of (mostly) young white men.

In the e-mail, which Ms Kantor posted on her Facebook page, Mr Sacks described meritocracy as one of his "core values", and noted that when he has hired and promoted women, it was because they were the top candidates.

"I chose the best person for the job, I needed the best talent to win, and I wanted to foster a culture of excellence."

Well, maybe. But, as Ms Kantor pointedly asks in a short introduction to Mr Sacks' e-mail, if Silicon Valley is truly a meritocracy, "why do mostly men prevail?"

This is a question that has become increasingly urgent. This summer, United States civil rights leader Jesse Jackson shamed a number of important Silicon Valley companies, including Google, Facebook, Apple and LinkedIn, into publishing a breakdown of their employees by race and sex.

The numbers are appalling - something the companies were forced to concede once the figures became public.

At LinkedIn, 2 per cent of the workforce is black, and 4 per cent is Hispanic. Google is 70 per cent male, with 91 per cent of its employees either white or Asian. Facebook: 69 per cent male and 91 per cent white or Asian.

When it comes to leadership positions or board seats, the numbers are even worse. Can this really be the result of "meritocracy"? There aren't many women or African-Americans working in Silicon Valley who would agree. "Silicon Valley's obsession with meritocracy is delusional," Ms Freada Kapor Klein, the co-chair of the Kapor Centre for Social Impact, told The Los Angeles Times in May.

"Unless someone wants to posit that intelligence is not evenly distributed across genders and race, there has to be some systemic explanation for what these numbers look like." Her husband, Mr Mitch Kapor, designed Lotus 1-2-3, the seminal spreadsheet program that helped to make the IBM PC famous, and he calls the reality of Silicon Valley's hiring practices a "mirror-tocracy".

In its December issue, Fast Company published two articles about being black in Silicon Valley that included a round-table discussion with a handful of African-American tech leaders.

They talked partly about the cultural reasons that African-Americans have been underrepresented: It can be hard to take a big financial risk when you don't have a safety net - like parents or friends with money - to fall back on if you fail. They note that so often, Silicon Valley executives only want to hire people who have graduated from certain schools, like Stanford or Harvard.

Very few recruit from Clemson, even though, as Ms Nicole Sanchez, a diversity consultant, told me, "Clemson graduates the most black computer science majors in the country". But what shines through most is the extent to which people in Silicon Valley exhibit "unconscious bias". "The meritocratic glow of Silicon Valley is so frustrating," said Mr Kanyi Maqubela, a partner at The Collaborative Fund, during the Fast Company round-table.

"It creates a pass for people who use things like the 'culture filter'" - such as sharing the same interests as others at the company. "What's the culture filter?" he continued. "An easy excuse to be prejudiced." Fundamentally, people who create companies, with the attendant intensity and pressure, want to be around people like themselves.

They tend to be more forgiving of those like themselves, too. One man Ms Kantor mentions in her article - and several women mentioned to me when I was researching this column - is Mr Keith Ra-bois. Another member of the Pay-Pal Mafia, Mr Rabois left his job at Square in January last year after sexual harassment allegations - which he denied - were made by a former lover who also worked at the company.

Within one month, Mr Rabois had joined a venture capital firm. If a woman or an African-American had faced the same type of charges, would she or he have rebounded as quickly? It's doubtful.

It is easy to understand the appeal of going into business with your friends - and then surrounding yourself with mirror images of yourself. But let's at least not call it a meritocracy.