Silicon Valley Blues

 

As a finance executive who’s worked for a few high profile, public companies, I know something of the rise of Silicon Valley. I spent an entire summer there working on a deal with what is now perhaps the most highly touted law firm in the country. Back in those days, Silicon Valley had yet to spread as far south as San Jose. In fact, no one in those days could have predicted how quickly and incredibly the tech revolution would transform the Valley landscape. So with the Google diversity debacle and the Uber and venture capital sexism scandals dominating much of the media, I feel it’s necessary to wade in and see if I can understand what exactly is going on in this Silicon Valley of paper billionaires.

My first thought is this: Silicon Valley evolved in a very short time. Yeah, it was important back during my time in Palo Alto, but compared to today, it was a mere fledgling then, represented by some software companies, Adobe for example, but dominated by network and hardware guys like Intel, HP, AMD, Cisco and an up and down player, Apple. The real rise of the Silicon Valley came later, in parallel with the convergence of network computing, wireless telephony and the internet. Silicon Valley came of age just as the first Apple iPhone hit the market, in mid-2007.

So think about it, in the past 10 years gigantic corporations like Google, Facebook, Oracle and EBay have emerged, some from nowhere, to become the new tech juggernauts. They have had to employ tens of thousands of the best and brightest technical minds in the world, of which there is a limited supply. It’s not like our academy could foresee this revolution and could react by doubling or tripling the number of promising software, RF, electrical engineers and physicists coming from their universities. Our high schools did not suddenly become adept at motivating and preparing their best and brightest to pursue the path to a career in tech. Rather, they tried to prepare their graduates as they have always done, for college generally.

So I find the fact that women and some minorities, as a whole, are underrepresented among Silicon Valley firms to be both predictable and not particularly alarming. When I started my career in public accounting nearly 40 years ago there were very few women in the CPA profession. In my first “class” at Deloitte in Boston, of the thirty-six or so new accountants hired, more than a third were women. Now some university accounting programs are dominated by women and these women often outperform their male counterparts. In this very demanding of professions, 19% of Deloitte’s partner level employees are now women. In fact, Deloitte’s CEO is a woman.

Engineering and tech, like public accounting, have not, historically, been careers pursued by women for a host of reasons that are difficult to ascertain. Certainly, at least in the last forty years that I have been in the workplace, young women have not been discouraged or barred entry into either profession for prejudicial reasons. They’ve been welcomed and recruited. But both professions involve objective, difficult, demanding, and quantitative undergraduate study, an emersion in their own esoteric language and structure. They are both, in a word, nerdy. And career-wise, they are difficult and hyper-competitive. Success, in either profession, is hardly assured. Tech firms blossom and die with amazing frequency; today’s stock grants or options are often tomorrow’s wallpaper. And the accounting profession, aside from being an incredible grind, is built around the notion that about 1/3 of its staff will either leave or be counselled out each and every year. Extrapolate that over time and you can see why only one in fifty or more staffers hired eventually make it to partnership.

I have three daughters, all extremely bright and hardworking. Each of them laughed at me when I suggested a career in engineering or accounting. I know that this is anecdotal, but I don’t think it is unusual. Of those twenty or so children among our inner circles of friends, I can count three who pursued engineering as undergraduates, two of those female. In all three cases, their parents are in the tech world (two engineers and one a PhD physicist.) There several other parents who are tech engineers whose children are not pursuing tech degrees. Of those three students who chose undergraduate engineering, none is pursuing an aspect of engineering that will attract a Silicon Valley career. I should note, however, that two young women are pursuing STEM careers, both in PhD programs in medical science, one is my middle daughter and the other is the daughter of an electrical engineer.

The point here is that in my experience, parents have the most influence in their children’s vocational pursuits. Even in a place as filled with a disproportionate number of high tech entrepreneurs as Chandler, AZ, a kind of little Silicon Valley, the most informed and persuasive of parents in the biz seem to have had difficulty convincing their children to pursue a tech career. Why? Because they know how difficult and fickle a tech career can be. Today’s expert quickly becomes tomorrow’s dinosaur. Some two years ago Intel eliminated several hundred mid-high level engineering positions locally. Two of our friends were caught up in that restructuring. Less than a year later Intel announced that it was opening a mothballed chip foundry and hiring thousands of new techs. Only a handful of the layed off engineers were recalled. Apple recently announced it was building a state of the art sapphire coated screen manufacturing facility nearby. Months later they announced that the massive facility was being reconfigured as a cloud storage facility.

So what is really going on in Silicon Valley? Is it really what the SJW’s are alleging, yet one more example of the free market patriarchy bent on keeping women and minorities from sharing in the spoils of the tech revolution? The answer is, not even remotely. Silicon Valley is a very competitive place with tech companies fighting desperately to survive and thrive in a world that is evolving at an incredible pace, where high profile companies like eBay and Yahoo rise meteorically and then fall as they are eclipsed by the likes of Amazon and Google. To survive, tech companies need the best technical talent and far more often than not for reasons that we don’t really understand, those individuals are men, and not just men, but nerds, and not just nerds, but extremely bright nerds who love computers and coding.

Silicon Valley is a boomtown with all the characteristics of a gold or silver strike. It suffers from incredible inflation (see Silicon Valley housing prices) and since today’s tech workers, like yesterday’s ‘49ers, are disproportionately male, it suffers from a dearth of women. Men need women, for all the obvious reasons, and the tech rush has created a massive disparity. We don’t know what the mechanism is that causes a young man to decide to become an electrical engineer, to specialize in integrated circuit design or to learn machine language. However we do know that this mechanism does not proportionately inspire individuals from certain groups (women, hispanics and blacks) to pursue tech. However, this mechanism does seem to disproportionally inspire certain other groups to pursue tech; that is all sorts of Asian men, many Jews and lots of nerdy white guys.

I would suspect that this concentration of young, wealthy, semi-homogenous young tech nerds, predominately male and introverted, might make for an unusual corporate culture, something that could use a little diversity. The tech companies provide their workers with outrageous perks (curb to curb transportation, on premise food dispensaries and not just snacks, but gourmet meals attending every dietary nuance, workout facilities, sleep pods, etc.) but this does nothing to address the real problem.

Google, Facebook, Uber, etc. don’t have a diversity problem. They don’t need more female, black and Hispanic nerds to prove that they are not harboring some kind of nefarious and hidden prejudice. What they need to do is stop fretting. They still need the best tech talent to survive, and if those people continue to be majority Asian, Jewish or white nerds, that is a reality that these employers must face. Tech employers need to take inventory of the things missing from their worker’s lives that will help them become happier, more well-rounded and grounded human beings. Tech engineers and specialists need lives outside of the Silicon Valley bubble. Their employers may feed them, but they are starving. Their employers may provide them with sleeping pods, but they are smothering them. Tech workers need real social lives, a spouse, a family, a home. This is a boomtown crisis of its own making. If Silicon Valley and its satellites Boston, Austin, even Chandler, AZ are so insular and competitive that these basic things are too difficult for tech workers to obtain, then employers should move their facilities and people elsewhere where there is still oxygen inside the bubble.

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  1. Hoyacon Member
    Hoyacon
    @Hoyacon

    Thanks, Doug.  It’s these kind of personal insights that really add to Ricochet.

    I have a question that you may have a sense of, coming from finance.  What’s the representation of women among  venture capitalist firms?  Kleiner Perkins in Menlo Park used to be pretty much the gold standard, but I’m sure there’s been a lot of evolution over the years.  I seem to recall a recent discrimination suit that was quite nasty.  I ask because that’s also a field that’s been tagged “anti-woman,” if that’s even the right term, but may be simply an area without interest for many intelligent women.

    • #1
  2. PHCheese Inactive
    PHCheese
    @PHCheese

    Red Auerbach the legendary coach the Boston Celtics said he didn’t care what color his team was as long as there were the best. He proved that by having an all white team then an all black team and then another all white team and then another black team. He said people bitched either way. Strangely enough he never had a midget of either color.

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  3. MarciN Member
    MarciN
    @MarciN

    Doug Kimball: This is a boomtown crisis of its own making. If Silicon Valley and its satellites Boston, Austin, even Chandler, AZ are so insular and competitive that these basic things are too difficult for tech workers to obtain, then employers should move their facilities and people elsewhere where there is still oxygen inside the bubble.

    It’s too bad they don’t have more educational partnerships with schools such as Northeastern University and the Rochester Institute of Technology and private laboratories such as the MIT Media Lab and Xerox PARC. In the old days there was Eastman Kodak in Rochester and Edison’s Menlo Park lab. I know there have been some, but not nearly enough.

    I know they were recruiting directly out of high schools for a while too.

    • #3
  4. Doug Kimball Thatcher
    Doug Kimball
    @DougKimball

    Hoyacon (View Comment):
    Thanks, Doug. It’s these kind of personal insights that really add to Ricochet.

    I have a question that you may have a sense of, coming from finance. What’s the representation of women among venture capitalist firms? Kleiner Perkins in Menlo Park used to be pretty much the gold standard, but I’m sure there’s been a lot of evolution over the years. I seem to recall a recent discrimination suit that was quite nasty. I ask because that’s also a field that’s been tagged “anti-woman,” if that’s even the right term, but may be simply an area without interest for many intelligent women.

    I would lump venture capital with private equity and private mezzanine lending firms.  This is a small and very insular pseudo-community made up of very wealthy individuals or folks who run private closed end funds designed for only qualified investors and private institutions.  The only thing that links them is their competition for deals, however the come in every type and stripe.  Some law firms, especially those in Silicon Valley who take equity in lieu of fees, have themselves built large war chests and use this to attract early stage clients and compete with more traditional venture funds for deals.  Many so called venture firms are run by early tech executives who cashed out of their ventures and seek to leverage their fortunes by funding other new ventures.  Some firms are more traditional, running closed end funds designed to invest in start-up or follow-on capital for qualified investors.  Others funds are designed for management buy-outs or other leveraged transactions.  Yet others still are designed to provide patient, mezzanine funding for established businesses.  All these firms tend to be male dominant, though those managing other people’s money, the more buttoned up, business school outfits, are more likely to hire promising women as the top business schools produce them.  These are, of course, very private firms, so statistics are not published.   And the top business schools, how are they faring in admitting and graduating women?  We’ll never know as they will not publish the numbers.  So venture firms, who hire almost exclusively from top MBA programs, reflect at a minimum the same kind of male dominance.

    • #4
  5. Nanda Panjandrum Member
    Nanda Panjandrum
    @

    Hear, hear, DK!  As esoteric as all of this is, a job is a job; a *part* of one’s *life*.  Building relationships that are capable of nurturing/ inculcating/sustaining commitment, and role-modeling of interdependence, critical thinking/diversity of thought is a vital part of “humanware development”.  Thanks for being an incubator in this effort!

    • #5
  6. Chris Member
    Chris
    @Chris

    Doug – thanks much for sharing your perspective.  There are so many good points in it that I am thankful we have a like button.

    Editors – don’t wait – promote this to the Main Feed.

    • #6
  7. Joe P Member
    Joe P
    @JoeP

    Doug Kimball: Silicon Valley is a boomtown with all the characteristics of a gold or silver strike. It suffers from incredible inflation (see Silicon Valley housing prices) and since today’s tech workers, like yesterday’s ‘49ers, are disproportionately male, it suffers from a dearth of women.

    This also partially explains why SJWs have shown up and harp constantly about “tech.” Just like how snake oil salesmen and prostitutes arrived after the 49ers to separate them from their gold, so too have the otherwise unemployable college graduates who have been displaced from other forms of employment thanks to the Great Recession.

    • #7
  8. David Foster Member
    David Foster
    @DavidFoster

    Hoyacon (View Comment):
    What’s the representation of women among venture capitalist firms?

    New Enterprise Associates, a very large and successful VC firm ($20 billion in total investments), has pictures of all its partners right here.  Pretty easy to determine the male/female balance.

    I believe most other VC firms also list their partners on their websites.

    • #8
  9. Steve C. Member
    Steve C.
    @user_531302

    Evolution.

    From small agile tribes moving at light speed to big fat slow moving mastodons in one generation.

    America, what a country.

     

    • #9
  10. Fredösphere Inactive
    Fredösphere
    @Fredosphere

    I have three daughters, all extremely bright and hardworking. Each of them laughed at me when I suggested a career in engineering or accounting.

    My daughter is 15. Reports from my wife and other teachers from the homeschool co-op suggest she can handle math just fine, and of all STEM fields, might somewhat enjoy chemical engineering. I’m urging her to study chem as an undergrad (at Hillsdale, of course; it’s a 75 minute drive away and her brother will be a freshman there this fall. I am ECSTATIC about that) and then get a masters in CE.

    I think chemistry is her path to a well-paying job with minimized stress. I’m not sure she’s buying my advice.

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  11. Joe P Member
    Joe P
    @JoeP

    Fredösphere (View Comment):
    I think chemistry is her path to a well-paying job with minimized stress. I’m not sure she’s buying my advice.

    She shouldn’t.

    I studied chemistry (not engineering, so take everything I say with a grain of salt) in college. When I got out in 2010, it was the worst year for chemistry employment in the past 40 years. I still found a job using my degree in cheminformatics, but that’s because I got extremely lucky in that one of my drinking buddies ended up meeting the founder of a software startup a couple years before I got out.

    I finally pivoted to being purely a “software engineer” a few years ago. When I stopped following, the outlook for chemistry was still looking bad because the all of the Big Pharma patents are starting to expire, and because outsourcing to China is popular. You know how they say there’s a STEM shortage? What they really mean is that there’s a shortage of Americans in America who cost as much as Chinese in China.

    Everyone I went to school with as an undergraduate for chemistry either used it to do something else (e.g. Medical school, pharmacy school) or ended up trying to get out of it. The one guy I know who still is in it is not making very much money and is stuck in a job he hates because not many people are hiring right now.

    As I said before, I studied chemistry, not chemical engineering. The career outlooks for the two fields are different. I knew quite a few ChemE’s but not well enough to know how their careers are going.

    • #11
  12. Joseph Stanko Coolidge
    Joseph Stanko
    @JosephStanko

    Doug Kimball:However, this mechanism does seem to disproportionally inspire certain other groups to pursue tech; that is all sorts of Asian men, many Jews and lots of nerdy white guys.

    I would suspect that this concentration of young, wealthy, semi-homogenous young tech nerds, predominately male and introverted

    Hey now!  I resemble that remark…

     

    • #12
  13. Joseph Stanko Coolidge
    Joseph Stanko
    @JosephStanko

    Doug Kimball: Their employers may provide them with sleeping pods, but they are smothering them. Tech workers need real social lives, a spouse, a family, a home. This is a boomtown crisis of its own making. If Silicon Valley and its satellites Boston, Austin, even Chandler, AZ are so insular and competitive that these basic things are too difficult for tech workers to obtain, then employers should move their facilities and people elsewhere where there is still oxygen inside the bubble.

    What’s in it for the employers?

    The lavish benefits many tech companies provide come with string attached, for instance Uber provided free dinners — at 8:30 — and then created a culture where anyone who left the office before dinner seemed like a slacker.  Now when you’re a recent college grad, this environment is familiar and just like being back in school, you live at the office and eat meals with a bunch of super-smart coworkers who are all in your age group.

    But if you’re middle-aged, and want to actually eat dinner with your wife and kids, you’ll stick out if you leave the office at 5:00 (and even then, these days in Silicon Valley you’ll sit in traffic for 2 hours if you try to leave the office during rush hour).  Why would these companies want to hire/attract/retain such middle-aged employees with real social lives, a desire to work for “only” 40 hours a week, and whose career experience is mostly in languages and software tools that are now considered obsolete?  Instead you can hire fresh college grads who are willing to work 80-100 hours a week and who cut their teeth on today’s bleeding-edge tools and platforms.

    Though it gets less press, people have also been filing age-discrimination lawsuits against tech companies, and that’s a claim I’m more inclined to believe might actually have merit.

    • #13
  14. Eb Snider Member
    Eb Snider
    @EbSnider

    Doug,

    This was definitely an insightful post that takes a fresher and deeper look on the general situation surrounding the fired Google employee than what I’ve been seeing on various news sites. I also recognize points you made, but from the point of view of a different industry. I really like the Gold Rush ’49ers analogy. The boom like atmosphere with the mad rush for skills to meet and immediate demands in which a lot of money is at stake. Even though tech is much different from oil & gas in terms of culture and personnel, there also appears to be similar results based on the inputs. With a much higher male ratio. But without stability, less social, and fortunes can change in the blink of an eye. In general I see women as more prudent than men when it comes to work/life balance and seeking things that have more stability and security. As you mention too, there are very good female students who frequently out perform men in school programs. So in more stabile and mature organizations will acquire an increasing ratio of women in the future, one would think.

     

    A brief story that’s related. A cousin in-law of mine is a highly intelligent and well adjusted guy who obtained two engineering degrees from a prestigious eastern college. He’s better than me and is like the poster boy for a clean-cut all-American man. Polite, fit, good looking, hard working, and capable. He performed well in an engineering tech company and was promoted to manage a team. He earned a lot of money as the promotions came. However, the company he worked for hit changing economic winds and he got laid off during cost cutting. The lesson I drew from it, was that it doesn’t matter how good a person is if he or she is in the wrong place at the wrong time. He bounced back well though in a second career. Plus a dual working family with a professional earning wife helped out. Hence, certain people will avoid volatile industries. It’s also worth pointing out that in general men are less risk adverse.

    • #14
  15. Judge Mental Member
    Judge Mental
    @JudgeMental

    As far as Silicon Valley goes, I like the Residence Inn in Santa Clara.

    That said, there is no doubt that the upper echelons are populated with Indians, East Asians and nerdy white guys with a strong contingent of Jewish (I’m a nerdy white guy myself).  In order to get there you have to be out on the feathery edge of several different Bell curves representing different characteristics, and those are the demographics that produce such strange beasts.  I don’t know how companies can be required to hire people who don’t exist.  When you get to people actually slinging code, I only ever even met two black males doing it, and one of those was on an H1-B.  And that is just being a developer, not being in any way elite.  I did, however, work with more than one black woman as Project Managers or Business Analysts.  That could be a good way for them to check off some boxes.

    When it comes to 80-100 hour weeks, it’s true that is largely young people, but one of those Bell curves is for the people who will keep on doing that long past being young.  I ended up my years working with a group of people like that. for whom work is life, life is work.

    • #15
  16. Retail Lawyer Member
    Retail Lawyer
    @RetailLawyer

    I have lived in the heart of Silicon Valley for almost my entire life.  From my backyard I could throw a rock and hit one Apple and three Google households.

    I must correct one misconception in Doug’s fine post:  there is no shortage of women.  They dominate HR, PR, and investor relations, and hold their own in the legal departments of the giant firms.  This place also has many biotech firms where women are proportionally represented in all departments.

    Have you taken a walk through Palo Alto or San Francisco lately?  Luckily, no shortage of women!  Unfortunately, no time to enjoy them.

    • #16
  17. Doug Kimball Thatcher
    Doug Kimball
    @DougKimball

    Fredösphere (View Comment):

    I have three daughters, all extremely bright and hardworking. Each of them laughed at me when I suggested a career in engineering or accounting.

    My daughter is 15. Reports from my wife and other teachers from the homeschool co-op suggest she can handle math just fine, and of all STEM fields, might somewhat enjoy chemical engineering. I’m urging her to study chem as an undergrad (at Hillsdale, of course; it’s a 75 minute drive away and her brother will be a freshman there this fall. I am ECSTATIC about that) and then get a masters in CE.

    I think chemistry is her path to a well-paying job with minimized stress. I’m not sure she’s buying my advice.

    She may surprise you and remember, there are no perfect occupations.  Medicine used to be the guarantee of wealth, status and good work. More than 50% of Dartmouth freshmen in 1972 were premed.  And remarkably, more than 20% achieved that goal.  Today, that profession is not so promising; the cost of school is outrageous (with lenders lining up), scholarships are few and the prospect of wealth, diminishing every day, to say nothing of the fact that the actual practice of medicine is becoming more rote and dictated by accountants and bureaucrats than ever before.

    Engineering was never so easy, an up and down profession casting away its members with every recession.  When I was a kid, fathers in engineering seemed to suffer from chronic unemployment.  In many ways, the ebb and flow of engineering jobs was an early harbinger of today’s gig economy.   Engineers were needed during times of economic growth, to build plants, infrastructure, new products, and then the first ones cast aside in recession.

    This has not changed.  However, like technology, engineering is moving fast.  It’s much more difficult to stay up to date and relevant for today’s engineer (or doctor, accountant, etc.)  Still, it is a noble profession and CE’s seem to be situated in the most stable of industries (large and stable companies, neo-oligopolies.)

    For now.

    • #17
  18. Joseph Stanko Coolidge
    Joseph Stanko
    @JosephStanko

    Eb Snider (View Comment):
    In general I see women as more prudent than men when it comes to work/life balance and seeking things that have more stability and security.

    On the local news here recently they interviewed a woman from a group that advocates for more women in tech, and she relayed that a female engineer at Google had told her she was postponing having children because she was afraid it would hurt her career.  The woman speaking did not see this as a rational explanation for why fewer women might opt for careers at Google, rather she cited it as proof of how far Google still has to go to change it’s culture to make itself more welcoming to women.

     

    • #18
  19. Doug Kimball Thatcher
    Doug Kimball
    @DougKimball

    Retail Lawyer (View Comment):
    I have lived in the heart of Silicon Valley for almost my entire life. From my backyard I could throw a rock and hit one Apple and three Google households.

    I must correct one misconception in Doug’s fine post: there is no shortage of women. They dominate HR, PR, and investor relations, and hold their own in the legal departments of the giant firms. This place also has many biotech firms where women are proportionally represented in all departments.

    Have you taken a walk through Palo Alto or San Francisco lately? Luckily, no shortage of women! Unfortunately, no time to enjoy them.

    The disparity is small, but it exists, especially among younger folks.  But if you compare these statistics to other places where there are lots of young people, like Manhattan and Boston, where the young women far outnumber young men, the numbers start to jump a bit.  Young marriage aged men in Silicon Valley outnumber women by some 6-8%.  That might not seem like much however the reverse is true and then some other areas.

    (Source: Census Bureau, ACS 2010-2012)

    • #19
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