Isn't venture capital supposed to be at the cutting edge? Aren't venture capitalists the people who are helping entrepreneurs innovate, helping them create jobs, and in general bringing us the products and services that big companies can't manage?
Well, supposedly. Which is why it is so entirely disappointing to hear one of the most respected men in the field, in this case Sequoia's Michael Moritz, sounding completely uninformed on gender issues. Here's how Moritz responded last week to Emily Chang of Bloomberg TV when she asked him why Sequoia doesn't have any female investing partners:
I think the issue begins in our high schools, and where women, particularly in Europe and also in America, tend to elect not to study the sciences when they're 11 or 12. So suddenly the hiring pool is much smaller.... We just hired a young woman from Stanford who's every bit as good as her peers. And if there are more like her, we'll hire them. What we're not prepared to do is lower our standards.
This kind of pablum probably went over great sometime around 1982. We're smarter now, though, and Moritz should be, too. In response to growing criticism of his comments, Moritz released a statement saying, "I know there are many remarkable women who would flourish in the venture business. We're working hard to find them and would be ecstatic if more joined Sequoia or other firms."
His firm simply tweeted, "We must do better." A Sequoia spokesman said the firm has three female investing partners in China and three in India. Obviously, those women are hardly top-of-mind for Moritz.
The Pipeline Excuse
The issue of the so-called pipeline cited by Moritz--that relatively few women earn undergraduate degrees in the hard sciences, especially in computer science, making fewer eligible to become venture capitalists or tech entrepreneurs--is becoming, in my opinion, more of an excuse than anything else.
But let's just assume, for now, that I'm wrong. Let's assume that the overwhelming, non-negotiable requirement for becoming a venture capitalist is a degree in computer sciences, and that therefore the pipeline is legitimately restricting. (Moritz himself majored in history.) Women currently earn 18 percent of undergraduate computer science degrees. By this logic, you would expect that roughly 18 percent of investing partners at VC firms would be women.
Here's the problem: Six percent of investing partners at venture capital firms are women. So even if Moritz and his colleagues are extremely constrained in their hiring by the lack of women with computer science degrees, they're still doing a crummy job of hiring the qualified women who do exist.
Given, pretty much no one becomes a VC as their first job after college. So let's say someone needs to be about 40 years old to have the experience to become an investing partner in a VC firm. Fine. Someone who is 40 probably earned their undergraduate degree sometime around 1996, when 28 percent of computer science degrees went to women. So if women were being considered for venture capital jobs at the same rate as their male peers, we should actually expect to see somewhere between a quarter and a third of investing jobs at venture capital firms held by women. Obviously, it's not even close.
Then there's the part about the "young woman from Stanford," wherein Moritz says that "if there are more like her," he'd hire them. He just won't lower his standards.
Here, Moritz is implying that he's hired the only woman whose competence is similar to her male peers, which is patently ridiculous. I'd say he's hired the only one in his network, which is a completely different thing. He also implies that hiring her has something to do with increasing the number of investing partners in venture capital, even though venture firms tend not to promote from the bottom up. This was one of the big ironies of the Ellen Pao case, of course.
The part about lowering standards is even worse. There is plenty of research showing that diverse teams make better decisions than homogenous ones. The partnership at Sequoia is nothing if not homogenous. By adding some diversity--and not necessarily just gender diversity--to its decision-making team, the odds are that Sequoia would actually improve its performance, even if that new team member didn't perform better, by themselves, than anyone on Sequoia's current team.
This research is not new. Yet every overwhelmingly white, male management team, partnership, and board of directors seems to think they are the shining exception that proves the rule. They're not. Moritz and Sequoia, despite their reputations, aren't either. To pretend otherwise is just not modern, and not what we need from those who claim to be at the vanguard.