Silicon Valley likes to think it has a nice meritocracy going on, where smarts and ingenuity trump money and social class, but the circle of tech companies, described in today's New York Times proves, yet again, that's not exactly how it works.
Following the outsider rich kids with famous daddies throwing their money onto the scene, post-Facebook IPO we're about to see a new group of very rich kids, some of whom have already invested their money back into Silicon Valley, enter the investor scene. There's nothing particularly unfair about reinvesting in one's community. It's almost philanthropic. And these millionaires worked for their tech money, learning about the tech biz along the way. But, the way The Times' Somini Sengupta describes this circle, it's very much based on who you know, which does not at all fit that meritocracy image.
The Tech Circle of Life works like this: A tech company goes public, making a bunch of rich kids a ton of money, they invest in the next set of tech start-ups, some of which will get huge and go public, birthing a new group of young millionaires, and so on. "The history of Silicon Valley has always been one generation of companies gives birth to great companies that follow," Matt Cohler, employee number 7 at Facebook told Sengupta."People who learned at one set of companies often go on to start new companies on their own," he continues. On its surface, this fits the Silicon Valley meritocracy theme. It reads like: Nobodies work hard for their money, use that money to make another bunch of nobodies the next it thing. But, a closer look shows that the nobodies aren't nobodies.