4 ms·

In Silicon Valley start-up world, pedigree counts

36 points by kenshiro_o 13y ago

michaelochurch 13y ago
As sad as it may be that the current California-centered incarnation of technology has fallen to become Yet Another Feudal Reputation Economy, I think the only thing worth doing is to figure out what comes next. It's dead, we won't be able to save it, so let's move on. The established players aren't going to quit their shitty behaviors just because a few negative blog posts are written about the death of meritocracy in the Valley (which is old news; they're the ones who killed it). Rather than complain about MBA culture and colluding VCs and Stanford Welfare, we should be figuring out a way to replace these assholes. What are we, as a generation, going to build that shows them up? The same inefficiency that beset large corporations in the 1990s is hitting the mainstream startup scene now. Maybe Austin will take the lead, possibly somewhere else like Portland, Chicago, Baltimore, or Durham. It might not even be in the US. What does make me sad was that I thought (being extremely naive) that the Crash of 2008 might have a positive effect on technology, by reversing the "talent graveyard" effect of finance. However, quants (the ones we'd want) mostly stayed in high demand; the ones who moved into tech from finance were the MBA-culture types who ruined New York's potential to ever be taken seriously as a startup scene. It had the exact opposite effect of what I was hoping for.
- jacquesm 13y ago
  > It's dead, we won't be able to save it, so let's move on. I think rumours of the California start-up scene's demise are vastly exaggerated. Maybe we should wait proclaiming it 'dead' until it is no longer the top foundry for new start-ups world wide?
  - michaelochurch 13y ago
    It's dead in the "Microsoft is Dead" sense, which means that it's not actually out of business, but that it has ceased to be exciting, innovative or useful. Microsoft is still in business, but no one finds it very interesting anymore. The VC-funded game that has taken over the Valley is now just a way for those who were preselected to win at birth to launder their inherited connections and make it look like they built something. It's for legacy rich kids to make the appearance that they created something, when the hard work was done by hired-gun software engineers getting 0.05% equity slices.
    - nickpinkston 13y ago
      > Hard work 'Replaceable work' you mean? It's far easier to engineer good software than to pick a problem worth solving and actually fund & execute on this idea. This replaceability is why you get 0.05% - take no risk, come late to the party - your reward will be less.
      - mahyarm 13y ago
        But many engineers are choosing to do exactly that with their micro-startup idea vs work for that 0.05% equity slice. Start up recruiters have a hard time and have to compete against Google hours & compensation or engineers going into business for themselves. On top of the equity slice can often disappear from a firing whim, since they often expire soon after you stop working for the company. On top of that many employees who leave startup's don't actually buy the options, as the founders of ESO fund found out.
  - mjn 13y ago
    Is it the top foundry? It depends on what sectors you look at, I believe. It's definitely still top in web technology. But in other areas I'm less sure. One slice of the successful startup market is looking at tech IPOs, which are on the upswing again. This probably downplays the Valley scene, which focuses more on quick smallish exits (acquihires and other kinds of acquisitions), but does give a view of where the next-gen of large tech companies is coming from. According to PWC's Q2 2013 tech IPO report [1], there were 13 North American tech IPOs: EVERTEC: $505m, Puerto Rico CDW: $395m, Chicagoland Tableau Software: $254m, Seattle Blackhawk Network: $230m, SF Bay Area Gogo: $187m, Chicagoland Gigamon: $128m, SF Bay Area Cyan: $88m, SF Bay Area Rally Software: $84m, Boulder CO ChannelAdvisor: $81m, Research Triangle NC Marketo: $79m, SF Bay Area Tremor Video: $75m, NYC Textura: $75m, Chicagoland Halogen Software: $55m, Ottawa Canada The SF Bay Area is still the largest single source, with 4/13, but not in a dominating sort of way. [1] http://www.pwc.com/gx/en/technology/publications/assets/ipo-review-q2-2013.pdf http://www.pwc.com/gx/en/technology/publications/assets/ipo-... edit: Oops, those are millions, not billions; fixed. Nobody is raising a half-trillion dollars in an IPO...
    - sashagim 13y ago
      your numbers are off - took me a lot of tab switching on my tablet to figure out the mistake :) it should be millions, not billions, and they represent the proceedings (the amount raised on IPO), not the market cap.
  - qwerta 13y ago
    It is just too expensive. I would like to see stats which shows it as 'the top foundry', perhaps only companies which raised $1M qualify?
- philwelch 13y ago
  I'm disappointed in you, O'Church. I was a single "VC-istan" away from bingo.
- slurry 13y ago
  What does make me sad was that I thought (being extremely naive) that the Crash of 2008 might have a positive effect on technology, by reversing the "talent graveyard" effect of finance. The crash, and the policy response to it, are basically the reason why The Startup Scene looks like it does. We have banks full of cheap capital from QE but nowhere to lend it because aggregate demand is weak, large corporations with lots of cash on hand from cheap labor and asset appreciation, but nowhere to spend it because aggregate demand is weak. Banks can't just sit on the money because they're not allowed to, and large corporations can only use so much as dividends or cash reserve before people start to wonder if they have any business plan at all. The current startup scene is mostly an arbitrage trade on this scenario. You acquire liquid capital on the cheap, convert it into a little unit of fixed capital (i.e. startup firm) and sell it at a markup to a motivated buyer (i.e. cash-rich BigCorp who desperately needs the appearance of a forward looking business plan). And really, this is the kind of inefficient market where something like credentials would become more important.
r0h1n 13y ago
Reuters' URLs seem to be messing up HN dupe-detection. Here are 2 other prior posts of this story: 15 points - https://news.ycombinator.com/item?id=6377663 https://news.ycombinator.com/item?id=6377663 1 point - https://news.ycombinator.com/item?id=6379004 https://news.ycombinator.com/item?id=6379004
kyro 13y ago
I may be wrong and this may be more fueled by my own insecurities about not having gone to a top school, but this attitude that The End of The Degree as the next phase of education shows a real two-faced side to Silicon Valley. You have investors and startup founders who firmly believe that soon degrees won't matter, that credentials and pedigree shouldn't be a reflection of your skill and talent. They write blog posts, they invest and start companies. And yet, when you go look at the biographies of many of the rising stars, you'll notice that the majority of them do have pedigree. When watching TC Disrupt last weekend, I tried looking up the background of every investor and founder that stepped on to the stage, and it became obvious just how many of them have a strong pedigree. You can't help but think that it actually does go a long way in Silicon Valley, despite what's said. Maybe people with those pedigrees on average are more intelligent than those who aren't, but nevertheless it's a pattern you can't ignore, and one that makes me doubt the Valley's conviction to topple formal education.
- _delirium 13y ago
  One theory some skeptics have is that the movement towards MOOCs/etc. isn't really about toppling formal education overall, but about toppling non-elite formal education, which would cement the dominance of a handful of top institutions. In that view, MOOCs become a kind of franchising for MIT/Stanford/Harvard, where they offer a lower-tier product that mainly aims at competitors, but doesn't really threaten their own top-tier product. If anything it might provide some advertising for the "real" university, by increasing name-recognition of their faculty.
- robertha 13y ago
  I don't think it's about intelligence, I'm from Chicago, I know a lot of incredible people from the top schools, but I've also met plenty of the "less intelligent" people from Northwestern and University of Chicago. I believe it could be about being able to get your way in into the right circles. Getting in into an ivy league school is usually challenging, unless you're born into money, you have to figure out a plan and correctly execute it in order to get in--just like meeting the right people, starting a business, and then getting funded. Also I think we like to associate and surround ourselves with people of the same background. So when a successful Harvard graduate sees another Harvard alumnus, there is an automatic desire to help out.
ronilan 13y ago
Advice from Pedigree suprisingly on Topic :) http://www.youtube.com/watch?v=Z3aP5Ks7e1s http://www.youtube.com/watch?v=Z3aP5Ks7e1s
gametheoretic 13y ago
Everywhere, pedigree counts. Silicon Valley ∈ Everywhere, whether it likes it or not.
jacques_chester 13y ago
I think pedigree is largely contingent on luck: http://chester.id.au/2012/03/02/does-leadership-matter/ http://chester.id.au/2012/03/02/does-leadership-matter/ I'm already one of the 1-2% of the luckiest people alive. Billions of people have nothing like my opportunities. Bugger Stanford. I was born to middle class Australians, I can take it from here.
- ryanmolden 13y ago
  Yes, not to mention that it simply means people that don't fit their pedigree filter are available. I have met brilliant hackers from MIT/Berkeley/et al, I have also met average hackers from those schools, and brilliant hackers from other schools. My experience leads me to believe the correlation between brilliant hacker and school (if any) is positive, but not dominating. The again maybe that is just me hoping, not having come from their vaunted halls :)
kenshiro_o 13y ago
I am going to play devil's advocate here. I was not born into a rich family (although we were not living in indigence either) so maybe my arguments will carry more weight. The way I see it is that the world is unfair. If I were to make a simile with athletics, I'd say we don't all start from the same line in the race of life. Some (the ones born into wealth) start much further ahead than you do and it is not their fault as no-one chooses the family he is born into. This has been the case for millennia and I doubt it will change before long. However if you who started much further back manage to catch up to these kids, say at university or any other time in your lives, then you should feel emboldened to have made it this far through luck and hard work and keep working towards your goals. Remember that the race is still rigged but you may get that gust of wind in your back that would propel you forward. So instead of moaning you should keep your focus and run down the path you have chosen, while thinking of ways to even up the starting positions when you find yourself in a position of power and influence in the future. Of course you may fall along the way or be overtaken by the privileged ones or by someone who started even further back than you - remember that there is always someone who started behind you.

36 points by kenshiro_o 13y ago

As sad as it may be that the current California-centered incarnation of technology has fallen to become Yet Another Feudal Reputation Economy, I think the only thing worth doing is to figure out what comes next. It's dead, we won't be able to save it, so let's move on. The established players aren't going to quit their shitty behaviors just because a few negative blog posts are written about the death of meritocracy in the Valley (which is old news; they're the ones who killed it). Rather than complain about MBA culture and colluding VCs and Stanford Welfare, we should be figuring out a way to replace these assholes. What are we, as a generation, going to build that shows them up? The same inefficiency that beset large corporations in the 1990s is hitting the mainstream startup scene now. Maybe Austin will take the lead, possibly somewhere else like Portland, Chicago, Baltimore, or Durham. It might not even be in the US. What does make me sad was that I thought (being extremely naive) that the Crash of 2008 might have a positive effect on technology, by reversing the "talent graveyard" effect of finance. However, quants (the ones we'd want) mostly stayed in high demand; the ones who moved into tech from finance were the MBA-culture types who ruined New York's potential to ever be taken seriously as a startup scene. It had the exact opposite effect of what I was hoping for.

jacquesm 13y ago
> It's dead, we won't be able to save it, so let's move on. I think rumours of the California start-up scene's demise are vastly exaggerated. Maybe we should wait proclaiming it 'dead' until it is no longer the top foundry for new start-ups world wide?
- michaelochurch 13y ago
  It's dead in the "Microsoft is Dead" sense, which means that it's not actually out of business, but that it has ceased to be exciting, innovative or useful. Microsoft is still in business, but no one finds it very interesting anymore. The VC-funded game that has taken over the Valley is now just a way for those who were preselected to win at birth to launder their inherited connections and make it look like they built something. It's for legacy rich kids to make the appearance that they created something, when the hard work was done by hired-gun software engineers getting 0.05% equity slices.
  - nickpinkston 13y ago
    > Hard work 'Replaceable work' you mean? It's far easier to engineer good software than to pick a problem worth solving and actually fund & execute on this idea. This replaceability is why you get 0.05% - take no risk, come late to the party - your reward will be less.
    - mahyarm 13y ago
      But many engineers are choosing to do exactly that with their micro-startup idea vs work for that 0.05% equity slice. Start up recruiters have a hard time and have to compete against Google hours & compensation or engineers going into business for themselves. On top of the equity slice can often disappear from a firing whim, since they often expire soon after you stop working for the company. On top of that many employees who leave startup's don't actually buy the options, as the founders of ESO fund found out.
- mjn 13y ago
  Is it the top foundry? It depends on what sectors you look at, I believe. It's definitely still top in web technology. But in other areas I'm less sure. One slice of the successful startup market is looking at tech IPOs, which are on the upswing again. This probably downplays the Valley scene, which focuses more on quick smallish exits (acquihires and other kinds of acquisitions), but does give a view of where the next-gen of large tech companies is coming from. According to PWC's Q2 2013 tech IPO report [1], there were 13 North American tech IPOs: EVERTEC: $505m, Puerto Rico CDW: $395m, Chicagoland Tableau Software: $254m, Seattle Blackhawk Network: $230m, SF Bay Area Gogo: $187m, Chicagoland Gigamon: $128m, SF Bay Area Cyan: $88m, SF Bay Area Rally Software: $84m, Boulder CO ChannelAdvisor: $81m, Research Triangle NC Marketo: $79m, SF Bay Area Tremor Video: $75m, NYC Textura: $75m, Chicagoland Halogen Software: $55m, Ottawa Canada The SF Bay Area is still the largest single source, with 4/13, but not in a dominating sort of way. [1] http://www.pwc.com/gx/en/technology/publications/assets/ipo-review-q2-2013.pdf http://www.pwc.com/gx/en/technology/publications/assets/ipo-... edit: Oops, those are millions, not billions; fixed. Nobody is raising a half-trillion dollars in an IPO...
  - sashagim 13y ago
    your numbers are off - took me a lot of tab switching on my tablet to figure out the mistake :) it should be millions, not billions, and they represent the proceedings (the amount raised on IPO), not the market cap.
- qwerta 13y ago
  It is just too expensive. I would like to see stats which shows it as 'the top foundry', perhaps only companies which raised $1M qualify?
philwelch 13y ago
I'm disappointed in you, O'Church. I was a single "VC-istan" away from bingo.
slurry 13y ago
What does make me sad was that I thought (being extremely naive) that the Crash of 2008 might have a positive effect on technology, by reversing the "talent graveyard" effect of finance. The crash, and the policy response to it, are basically the reason why The Startup Scene looks like it does. We have banks full of cheap capital from QE but nowhere to lend it because aggregate demand is weak, large corporations with lots of cash on hand from cheap labor and asset appreciation, but nowhere to spend it because aggregate demand is weak. Banks can't just sit on the money because they're not allowed to, and large corporations can only use so much as dividends or cash reserve before people start to wonder if they have any business plan at all. The current startup scene is mostly an arbitrage trade on this scenario. You acquire liquid capital on the cheap, convert it into a little unit of fixed capital (i.e. startup firm) and sell it at a markup to a motivated buyer (i.e. cash-rich BigCorp who desperately needs the appearance of a forward looking business plan). And really, this is the kind of inefficient market where something like credentials would become more important.

r0h1n 13y ago

Reuters' URLs seem to be messing up HN dupe-detection. Here are 2 other prior posts of this story: 15 points - https://news.ycombinator.com/item?id=6377663 https://news.ycombinator.com/item?id=6377663 1 point - https://news.ycombinator.com/item?id=6379004 https://news.ycombinator.com/item?id=6379004

kyro 13y ago

I may be wrong and this may be more fueled by my own insecurities about not having gone to a top school, but this attitude that The End of The Degree as the next phase of education shows a real two-faced side to Silicon Valley. You have investors and startup founders who firmly believe that soon degrees won't matter, that credentials and pedigree shouldn't be a reflection of your skill and talent. They write blog posts, they invest and start companies. And yet, when you go look at the biographies of many of the rising stars, you'll notice that the majority of them do have pedigree. When watching TC Disrupt last weekend, I tried looking up the background of every investor and founder that stepped on to the stage, and it became obvious just how many of them have a strong pedigree. You can't help but think that it actually does go a long way in Silicon Valley, despite what's said. Maybe people with those pedigrees on average are more intelligent than those who aren't, but nevertheless it's a pattern you can't ignore, and one that makes me doubt the Valley's conviction to topple formal education.

_delirium 13y ago
One theory some skeptics have is that the movement towards MOOCs/etc. isn't really about toppling formal education overall, but about toppling non-elite formal education, which would cement the dominance of a handful of top institutions. In that view, MOOCs become a kind of franchising for MIT/Stanford/Harvard, where they offer a lower-tier product that mainly aims at competitors, but doesn't really threaten their own top-tier product. If anything it might provide some advertising for the "real" university, by increasing name-recognition of their faculty.
robertha 13y ago
I don't think it's about intelligence, I'm from Chicago, I know a lot of incredible people from the top schools, but I've also met plenty of the "less intelligent" people from Northwestern and University of Chicago. I believe it could be about being able to get your way in into the right circles. Getting in into an ivy league school is usually challenging, unless you're born into money, you have to figure out a plan and correctly execute it in order to get in--just like meeting the right people, starting a business, and then getting funded. Also I think we like to associate and surround ourselves with people of the same background. So when a successful Harvard graduate sees another Harvard alumnus, there is an automatic desire to help out.

ronilan 13y ago

Advice from Pedigree suprisingly on Topic :) http://www.youtube.com/watch?v=Z3aP5Ks7e1s http://www.youtube.com/watch?v=Z3aP5Ks7e1s

gametheoretic 13y ago

Everywhere, pedigree counts. Silicon Valley ∈ Everywhere, whether it likes it or not.

jacques_chester 13y ago

I think pedigree is largely contingent on luck: http://chester.id.au/2012/03/02/does-leadership-matter/ http://chester.id.au/2012/03/02/does-leadership-matter/ I'm already one of the 1-2% of the luckiest people alive. Billions of people have nothing like my opportunities. Bugger Stanford. I was born to middle class Australians, I can take it from here.

ryanmolden 13y ago
Yes, not to mention that it simply means people that don't fit their pedigree filter are available. I have met brilliant hackers from MIT/Berkeley/et al, I have also met average hackers from those schools, and brilliant hackers from other schools. My experience leads me to believe the correlation between brilliant hacker and school (if any) is positive, but not dominating. The again maybe that is just me hoping, not having come from their vaunted halls :)

kenshiro_o 13y ago

I am going to play devil's advocate here. I was not born into a rich family (although we were not living in indigence either) so maybe my arguments will carry more weight. The way I see it is that the world is unfair. If I were to make a simile with athletics, I'd say we don't all start from the same line in the race of life. Some (the ones born into wealth) start much further ahead than you do and it is not their fault as no-one chooses the family he is born into. This has been the case for millennia and I doubt it will change before long. However if you who started much further back manage to catch up to these kids, say at university or any other time in your lives, then you should feel emboldened to have made it this far through luck and hard work and keep working towards your goals. Remember that the race is still rigged but you may get that gust of wind in your back that would propel you forward. So instead of moaning you should keep your focus and run down the path you have chosen, while thinking of ways to even up the starting positions when you find yourself in a position of power and influence in the future. Of course you may fall along the way or be overtaken by the privileged ones or by someone who started even further back than you - remember that there is always someone who started behind you.