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Silicon Valley: VC versus startup culture

December 16, 2012

This is a guest post by David Carlton, who first met Cathy at the Hampshire College Summer Studies in Mathematics when they were high school students. He was trained as a mathematician, but left academia in 2003 and has been working as a programmer and manager in the San Francisco Bay Area since then. This is crossposted from his blog malvasia bianca.

One thing I’ve been wondering recently: to what extent do I like the influence of Silicon Valley venture capital firms on the local startup culture?

There are certain ways in which their influence is good, no question: it’s great that there’s money available for people to try new things, it’s great that it means that there are exciting small companies around, and I’m fairly sure that VCs have valuable specialized knowledge that I don’t have and could benefit from. So that’s all to the good.

However, it is not the case that VCs’ interests and my interests are aligned.

Don’t get me wrong: if I’m working at a VC-funded company, then those VCs and I both want the company to succeed, and that’s great. But beyond that, our interests diverge significantly.

Their goal is to make money in a five-yearish horizon through a portfolio approach, starting from a significant pool of cash. The portfolio is a particularly important factor here: no matter what, most startups are going to fail; so, rather than try to get as many as possible to be a moderate success, it’s a perfectly reasonable thing to do to do what you can to get a few companies in your portfolio to be a major success.

And, while I’d be perfectly happy to be working at a company that’s a major success, it’s much less clear to me that I want to do that at the cost of reducing the chances that the company is a moderate success. Because while the company crashing and burning is potentially a problem at a financial level, it’s also potentially much more of a problem at a personal level.

For example, I believe in the concept of a “sustainable pace”, that on average, for most people, working too hard eventually produces less output. But if the unsustainable pace on average masks nine disasters and one remarkable success, then that may be just fine for a portfolio approach, despite what it does to the people who go through the nine disasters. (This is probably where some of the VC-funded startup youth fetishism comes in, too.)

Time horizons also play into that issue, as well: if you can keep up an unsustainable pace long enough to look good at a payoff threshold, then that could be good enough. (Possibly burning out many people along the way while hiring enough new faces to replace them and keep the company looking healthy from the outside.)

I think I saw a version of this at Playdom: the company spent the year before it got bought going on a hiring spree, buying companies that, even at the time, seemed like they made no sense. (Don’t get me wrong, some of the purchase made a lot of sense, but there were certainly many specific purchases that I raised my eyebrows at.) As far as I can tell, this was a ploy to make Playdom look good to potential purchasers by increasing our headcount, our number of games and players, and our geographic reach; but we shut down a bunch of those games soon after Disney bought us, and I didn’t see anything concrete come out of many of those studios.

The amount of money VCs are investing also plays into this. Even when funding small companies, they don’t want those companies to stay small: they want those companies to grow and grow, to justify larger and larger investments and still larger payouts.

So, if you want to work at a company that is small and focused, VC funded companies probably aren’t the best place to go (though there are exceptions: if your small and focused company is producing something that appeals to tens or hundreds of millions of people, then you can be the next Instagram).

That’s how VCs are looking for aspects of companies that I’m not; but I’m also looking for aspects of companies that VCs don’t have as strong a reason to be attracted to.

I’m always trying to learn something, and typically have specific goals along those lines that I’m looking for at companies; VCs have no reason to care about my personal development.

More broadly, I’ve been participating in industry discussions about how to develop software, and trying to figure out which of those ideas seem to work well for me; I’m sure noises about some of that filters up to the VC level, but I’m also sure that most VCs don’t have any real idea what the word ‘agile’ means. Not that they should; this is a difference, not a judgment.

I also want to work at a company that I feel is doing the right thing: e.g. on a basic level it should treat people of different genders, ethnicities, ages, class backgrounds, sexualities, relationship status, etc. fairly.

Silicon Valley actually strikes me as astonishingly open to different nationalities (most of the founders of most of the companies that I’ve worked at haven’t been American, along with a noticeable fraction of the employees); on many of the other dimensions, though, Silicon Valley isn’t nearly as open.

Here’s a nice takedown of some of the bullshit around the idea of a “meritocracy”, and VC firms themselves apparently don’t do so well themselves in this regard. I hear rumors about VC “pattern matching”; if this means that VCs are happy to insert ignorant sexist assholes into the management ranks of their portfolio companies because those execs fit some sort of pattern that the VCs have seen, that is not good.

What’s scary, too, is how hard it can be to tell this sort of thing in advance: when joining a company, you never know how it is going to change over the next months or years.

For example, when I did my last job search, I talked to a few Facebook game companies; some of them were steeped in testosterone, but one, Casual Collective, seemed like a pleasant enough place. They’d produced one game I respected, they woman I interviewed with seemed sharp, and their name seemed to signal that they weren’t going to go too far down the “core gamer” path.

I didn’t interview further with them because of the technologies they were using and because of their location, but if that job search had gone slightly differently I can easily imagine myself having been interested in them.

A year later, they’d changed their name to Kixeye, turned themselves into a maker of “hardcore” games, and released this recruiting video that positioned them squarely within the brogrammer manchild tradition:

And I saw more news coverage (and for that matter people in person) speaking favorably of that video than not: it’s not just one company, that’s a lamentably strong aspect of the culture around here.

There’s way too much adolescent male status jockeying going on, way too little quiet listening; and I will be perfectly happy never to see another foam bat or nerf gun in my life.

Though Kixeye does seem to be particularly bad: rather than quietly shunning people who don’t fit into that culture, they seem to have had an actively discriminatory culture.

I’d like to think that I would have picked up on that culture if I’d interviewed in person, but I’m not at all confident that that’s the case; and, for that matter, for all I know the culture of the company really may have changed significantly since I interviewed. Which could be fine for somebody on the outside who is trying to get the company to pivot in search of greater profits; not necessarily so great for people in the middle of it.

I dunno; I’ve been in a pretty negative mood recently. Because the truth is, I could find just as many bad things to say about lots of other corporate subcultures around here. I certainly wouldn’t actively want to work in large companies, either, though I’m getting a more nuanced view of their strengths and weaknesses. And I’ve worked with great people at a lot of startups around here: great technically, but also great human beings, people that it’s been an honor to work with. I also certainly have nothing against making money, and I think that it’s great that money is available for people with ideas.

I just wish I had better leads on companies that were concentrating a bit more on their culture and their effects, companies that want to build the right things in the right ways. I’m sure there are a fair number if I knew where to look, I’m just not plugged into networks that enable me to see them.

And, seriously: the sexism in the valley has to stop.

Categories: guest post
  1. mathematrucker
    December 16, 2012 at 10:04 am

    Kixeye must have hired Kevin Nealon, Jr. for that vid!

  2. December 20, 2012 at 12:58 pm

    The sad truth is Silicon Valley venture capital is a life style masquerading as a business. In her days at Morgan Stanley, Mary Meeker compiled statistics on wealth creation in Silicon Valley that demonstrated something counter intuitive: the absolute number of big winners has remained constant since the 1980s, despite order of magnitude increases in VCs and venture dollars available.

    The recent explosion of start-up activity in the city San Francisco suggests that entrepreneurship is also becoming a lifestyle: meetings in tea bars and hotel lobbies are not generally indicative of disruptive technology change.

  1. December 16, 2012 at 9:14 am
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