The problem of inequality is really two problems. First, there's the lopsided distribution of wealth: Whether you look at income or assets, the rich, at least in America, are comparatively richer than they've been in decades while the middle and working classes are losing ground.
Then there's inequality of opportunity. Access to the engines of wealth creation is itself distributed unequally, producing socioeconomic mobility that's lower in the U.S. than in other developed nations, and getting worse.
There's no more powerful engine of wealth creation than the technology industry, but its record of widening the circle of opportunity is mixed at best. The people who get venture capital funding for their startups or high-paying engineering jobs tend to be disproportionately male, white (or Asian) graduates of elite universities.
If you're living paycheck to paycheck, you're unlikely to quit your job to start a company, even if it's a billion-dollar idea. To quote from a recent paper by Lynnise E. Pantin, director of Boston College Law School's Entrepreneurship and Innovation Clinic, "Entrepreneurship is a compelling solution to wealth inequality, but wealth inequality can be an impediment to success in entrepreneurship."
Maybe the problem is that, when it comes to identifying entrepreneurial talent, Silicon Valley doesn't act like Silicon Valley at all. It relies on old-boy networks, coffee meetings, demo days. "In reality, the venture market pretty much operates like a business from the 18th century," says Daniel Gross, a veteran of Apple and Y Combinator. "No one has really tried to bring the scale of the internet to this problem of finding extraordinarily productive, ambitious outsiders and supporting them."
That's exactly what Gross is seeking to do with his new company, Pioneer.
Each month, it runs a massive online tournament for people pursuing all sorts of projects--startups, nonprofits, scientific investigations, novels, whatever. Participants vote on each other's projects, awarding credit for status updates that reflect evidence of progress. At the end of the month, a panel of all-star subject-matter experts review the highest scoring projects and pick anywhere from a handful to a dozen or so winners. Judges include venture capitalist Marc Andreessen, Stripe co-founder Patrick Collison, mathematician Stephen Wolfram, and economist Tyler Cowen.
The second cohort of "Pioneers," announced last week, included a 24-year-old from Ghana who is building a Thumbtack-like booking platform for vetted local service vendors; a pair of 22-year-olds from India working on a digital driving assistant; and a 23-year-old Malaysian journalist who writes about the early lives of geniuses. Gross calls the winners "a collection of X-Men--these weird, powerful people who don't really fit in where they are." (He's fond of talking about Pioneer in pop culture terms. He also name-checks the wizard tournament in Harry Potter and says his biggest influence might be Ender's Game, the sci-fi novel about teenagers who train to fight aliens via a video game.)
Each winner gets $1,000 plus a plane ticket to San Francisco, where they'll have the chance to meet each other and network with mentors. Those who are starting companies will also be eligible for an investment from Pioneer, which is backed by Stripe and Andreessen.
At first blush, Gross looks more like the stereotypical face of Silicon Valley than someone trying to change it. He grew up in Israel, a country that consistently produces more than its share of successful startups, put his mandatory military service on hold after he got accepted into Y Combinator, and sold the resulting startup, Cue, to Apple in 2013 for a reported $40 million-plus.
But Gross didn't hail from Israel's entrepreneurial class. He grew up in an ultra-religious community just outside Jerusalem's Old City. Although his father was a computer science professor, his parents refused to allow the internet in the house. Had he not been accepted in Y Combinator, Gross thinks there's a decent chance "I'd still be stuck in Israel. Maybe an Orthodox Jew--married, with 12 kids."
That sense of random fortune is something he has encountered over and over in Silicon Valley, and it strikes him as curious in an industry that thinks of itself as both a meritocracy and a crucible for scalable, repeatable solutions. "I don't think we need to leave things up to chance," he says. "We used to, in an era before the internet, but now we can reach billions of people. Now we can remove luck from the equation and make it so if you have the talent and ambition, you can succeed."
Those Pioneers who start companies will also, through their success, pay it forward. Under the terms of the contest, accepting the award money requires granting Pioneer the right to invest up to $100,000 alongside other investors in any funding event, with Pioneer's investment capped at 20 percent of the round. Scaling opportunity in a global way, says Gross, requires "a lot of money moving through the system, and the way we do that is by capturing some of the value we create." (Y Combinator also takes a stake in companies that pass through its accelerator program.)
"If this system works, it stands to fix a massive problem in society, which is this Pareto distribution of wealth and income," Gross says. "If we have a systematic way of identifying promising young talent early on in life and we can give them money to support their goals, we've basically managed to fix this massive problem we have today. Which is, increasingly, the wealth is accumulating to the 1 percent of the 1 percent." Fixing one of the world's biggest problems with a video game--now that would be magic worthy of Harry Potter.