How This Young, Female and Latina Investor Broke Into a Middle-Aged, Male and White Industry, by Hunter Walk
Gregory Alan Bolcer stashed this in Venture Capital
VC’s are realizing that addressing the needs of higher income people in urban areas won’t be enough to build many billion dollar businesses.
I'm not sure I agree. There's still a lot of tech transition in the pure chasm sense. The bottom of the graph markets aren't always early adopters.
And the similar response to Andreesen's "tweetstorm"
There are business opportunities at both the high end and the mainstream. It's not an either/or.
Hunter Walk's tweet about the interview is funny:
So he's talking about capital accumulation, which people have been researching for quite a long time, and even allowing for Twitter not being the greatest platform for detailed expression he's playing a bit fast and loose with the facts -- as do most of these companies.
Hotels: corporations invest in them, not "rich people". It is true that people who have previously accumulated enough capital to own a house can now use AirBnb to potentially turn some of that capital -- plus a not-insubstantial amount of personal labor and inconvenience -- into income. However it is ILLEGAL to do this with an apartment in most places, and the renter is basically taking on all the risk of losing their lease if they break the law. Also quite a few locales have voted for years to collect high taxes on visitors INSTEAD OF RAISING TAXES ON RESIDENTS, and if those taxes go away... will the tax revenue be made up by AirBnb hosts? Plus there is a lot of evidence that the bulk of short-term rental revenues are actually going to corporations who invest in apartments, who are clearly no better or more equitable than hotels -- in fact less so insofar as they seek to maintain a competitive advantage by evading taxes. Plus, even if AirBnb were really going to build a long-term multi-billion dollar valuation on the backs of little old ladies who own their own houses... does that really help INCOME INEQUALITY or wealth inequality? Homeowners and corporations already have substantial capital accumulation, and the system screws younger people who do not own homes yet... therefore, no.
Taxis: true that a medallion and/or vehicle required capital accumulation, but in most cases it was NOT AT ALL done by "rich people" but in fact by waves of the newest immigrants using various types of semi-legal sharing WITHIN THEIR OWN COMMUNITIES. These medallion owners are directly hurt by the new driving services. Also, many drivers for the new services can only do so if they have enough capital to purchase and maintain a NEW, PRISTINE vehicle. And finally, Uber in particular has been very open about the fact that they intend to replace drivers with self-driving cars at the earliest practical opportunity. So again, does this do anything about income inquality? I'd say the best-case scenario is a student or mom who owns a new vehicle -- presumably a gift from someone else in whole or part, or bought by savings aka previous capital -- and can only work part-time. You can fund a specific type of lifestyle that way, but is it structurally fairer?
So let's face it, we are not talking about endless opportunities for individuals to advance and society to become more fair. We're talking about people who had already accumulated some capital to turn that capital into part-time income, often at the cost of other people in the same or worse situation. And who is really in that situation except people who used to be employed full-time and for whatever reason -- layoff, retirement, childcare, illness, lack of better opportunity -- are no longer able to be? I don't consider any of this to be super worthy of celebration.
You make some excellent points, Joyce.
Jennifer Tsao points out in Venture Beat how Airbnb is potentially exploitive of working class people:
This is an article in the Economist, a pretty hard-headed media outlet, that expounds on many of my points regarding housing in particular:
Good article! I never realized how rent itself is something that distinguishes the economic classes.
A new piece in TechCrunch makes this point nicely in a very good explainer of the housing crisis in San Francisco. The economy of the Bay Area is booming, but the region is one of the most difficult places to build in the country. Prices are therefore soaring and neighbourhoods are changing, touching off some occasionally nasty social conflicts.
But the author of the TechCrunch piece, Kim-Mai Cutler, puts her finger on the real problem. Yes, supply constraints are the cause of the affordability crisis. The trouble comes in trying to understand why those constraints are there and how to alleviate them.
The issue is not technical limitations. In oil markets you have a cheap source of supply, in the form of oil that more or less bubbles obligingly out of the ground. But as soaring demand reduces the available supply of oil of that sort prices soar. Then we all worry for a bit before technology comes to the rescue. Engineers find new ways to do things using less oil, new ways to dig deeper holes, and new ways to shoot water at rocks until the rocks can't take it any more and weep oily tears. Housing is not really like that. There are cheaper or more expensive ways to build homes, but in the cities facing these crises construction costs constitute a relatively small portion of the expense of housing. The rest is rent.
That's right, rent, in the economic sense of the word:
Economic rent is the cost of non-produced inputs or advantages; the result of natural or contrived exclusivity.
I'm letting it sink in that rent is the consequence of exclusivity.
My favorite part of the Ana Diaz-Hernandez interview is what she says about the Ellen Pao suit:
A big part of the testimony was around this issue of apprenticeship: Yes, I think pattern matching is a learned skill: we’re not born with this raw talent without tailoring it to the observations of the market. I think apprenticeship is one way to gain those skills. However, women (particularly women of color) can attest to how hard it is to get mentors.
In Pao’s case, she’s being slammed for being “too aggressive”, “back-channelling on deals”, or trying to lead on deals as a junior member of a team instead of paying her time as a “board buddy”: I find it hard to believe that a man doing those same things would have received the same response. Venture is a business where “aggressive” people (men) typically thrive, why would Pao not aim to do the same?
By the way, the original Hunter Walk article really DOESN'T explain how the Kapor Capital associate broke into the venture industry. Her answer is that she used her network...
Ana Diaz-Hernandez: I got into Kapor Capital the way many people get into venture – through my network. I grew up in southern Georgia and had no connection to Silicon Valley prior to undergrad at Stanford, so it was all new for me.
I fostered a personal connection with partners at the firm. I met Mitch Kapor and Freada Kapor Klein through mutual interests in advancing diversity in tech and began to learn about the great work they did through Kapor Capital and the Kapor Center for Social Impact. As a Latina in the startup world, the diversity work of the Kapor Center was very resonant. I had been interested in venture capital for a while, but it was our relationship, our values alignment, and the desire to work together on advancing social impact in technology startups that got me to join the team.
...but this answer just explains how they convinced her to join them.
It sounds like how she broke into the industry is that she went to Stanford and then met the right people at the right time.
As usual, the answer is to get into Stanford!
Plus... not to rain on her parade, but everyone knows that starting in the business as an associate is a GUARANTEE that you won't end up a "real VC"! She'll just be a lackey for a couple years until they boot her for the next one. If she'd been smart she would have gotten a real job at a "unicorn" company using those Stanford connections, made a pile of cash, and cozied up to the founders.
Ana did work for one unicorn (Dropbox) and one non unicorn startup (Spool) before becoming a VC.
But you're right, not a lot of people realize that most venture associates do not make it to partner.
We've lived in this industry long enough to see many associates, analysts, and partners pushed out of venture capital firms. It's a tough industry to stay in.