Mayfield’s Palihapitiya: “White male circle of insiders”

February 25, 2007 | Matt Marshall | Comments | |

(Updated: Mayfield has responded, saying the citations from the Chamath interview were taken out of context.)

chamath.bmpChamath Palihapitiya, a venture capitalist with Silicon Valley venture firm Mayfield Fund makes a somewhat provocative remark about Silicon Valley in a video filmed by a French artist.

Despite his success in Silicon Valley, he still sees a white male circle of insiders that he can’t penetrate, with exclusive dinner parties and country clubs that he isn’t part of, he apparently says: “Once I get inside, I will do my best to completely explode it from the inside,” he tells the camera, during a 40-minute video made by French artist Sylvie Blocher.

The video is part of an exhibit that opened this weekend at the San Francisco Museum of Modern Art, and we haven’t seen it for ourselves yet. The quote above is cited in the San Francisco Chronicle article about the video (see here). We’re assuming for now he wasn’t quoted out of context.

[Update: A bad assumption on our part, because Mayfield says he was was taken out of context by the video. If true, it's a shame that such a mediocre piece of work would be supported by the SF Moma. Here's Mayfield's comment, sent to VentureBeat: "Chamath's comment was indeed taken out of context. It addressed how the world at large might work, but his comment about the Valley working as a meritocracy was not reported. As a VC firm with a 39 year history, we know that the Valley VC community is inclusive, diverse and values merit above all else."]

The comment is notable, because many people say the valley’s strength comes from the substantial diversity of its people. Many venture firms are predominantly white, but many other firms have plenty of foreign-born, non-white partners. Half of all start-ups are founded by immigrants, according to recent studies. But women, in particular, have long complained about the continued lack of representation in positions of power.

Interested to hear what you folks think.

Blocher’s “Living Pictures/Men in Gold” presents seven Silicon Valley men — Palihapitiya is just one of them — as they contemplate their success, money, power, fears and desires in front of a video camera.

Next Story: BitTorrent’s big day
Previous Story: Imagekind raises $2.6M

Bookmark and Share

Tags: ,

Photo of Matt Marshall

About the Author, Matt Marshall

Matt Marshall is editor and CEO of VentureBeat. Follow him on Twitter at @mmarshall, and follow VentureBeat on Twitter at @venturebeat.

  • RK
    Yes dealing with Venture Capitalist, can be pain! As they surround themselves with there favorite projects and friends to fund. This is what makes them enclosed in there own box, but they contradict themselves by telling people about to think out side the box! Palihapitiya being a VC is not content but just wants more attention that's all! Waha Waha!
  • Funded
    As someone who has raised several million dollars from VC's and strategic corporate partners I can vouch for what Chamath has to say. I saw Asian Women more then any other minority group, three of them, out of 30 or so meetings.

    List the 5 top valley VC funds. How many black partners? Sorry, lets make this a little easier. How many black partners or associates? How many women?

    Lets try this again. Look at the ten most famous valley startups of the moment and ask "How many are lead by a female or minority?" Then ask yourself "How many have been previously funded by the VC community?" Don't kid yourself. The Valley is the Valley and its not created equal.
  • niti
    let's just flip this over for a minute, just for the sake of understanding. i come from the business community in india and when money is invested it is usually done either with those whom you know and trust to make good your investment or those who can be vouched for. while there are indeed few minorities, women or minority women, I do wonder if the percentage of foreign borns and outsiders actively engaged in this community is not significantly different from other parts of the state or country?
  • bruce
    Let's be honest, and blunt.

    For the most part, America espouses a form of capitalism, and rightly screams from the roof that it should be allowed to fourish and to prosper. On the surface, this makes a great deal of sense. The issue has to do with leveloing the playing field, for all to participate. The fact that so few minorities are represented within the VC firms is simply another issue to face, and to somehow deal with. Simply having a few minority Harvard VCs isn't really thhe issue.

    The issue gets to whether the VC firms/angels/etc... are willing to give the minority run/driven opportunities, a chance to fairly compete for the chance to be funded.

    This is a fundemental mindset that isn't going to change until the organizations that provide the initial funding sources to the VC funds, step up to the plate and demand some transparency with regards to the kinds of opportunities that the VC firms are funding.

    So. The remarks attributed to the VC partner are correct, whether the statements came from him or not is not really the point.

    But the funny fact is, almost every VC partner what give almost anything to hang out with Michael Jordan, but would the really want to fund a Michael Jordan or a Dave Bing?

    Peace

    -Bruce
    bedouglas@earthlink.net
  • Surprised
    Chamath is part of the most exclusive group of business people on the planet (VCs).... I find it odd that someone INSIDE the group would complain that its too exclusive. Sounds somewhat like the old "I would never want to be part of a club that would have me as a member".
  • If it's true that valley VC is institutionally racist, it follows that valley VC money is being allocated inefficiently because the supposed meritocracy of the market has failed. That's a huge opportunity for someone with VC experience and contacts with minority entrepreneurs. What's not clear, therefore, is why Palihapitiya is appearing in videos telling the world about this gap in the market rather than quietly getting on with the job of making money from it. If I see an exploitable market inefficiency my first thought is usually not to make a video warning my competitors that it's there.
  • ArgleBargle
    Oh please. How many VCs have been more successful than Vinod Kholsa? Think he has trouble getting into the right circles?
  • Sam
    Whether you are black or white, you will find value in the frameworks articulated at
    http://www.franteractive.net

    Check double marginalization or Pareto Frontier in the Advanced Frameworks section... If you know what the Pareto Frontier means in business negotiations, and how to approach it, you can get into any network you want....

    Take it easy people,
    Sam
  • stone
    Interesting to hear Chamath say this as he has benefited from that same nepotism in how he was brought in to Mayfield. You might want to look into who the Managing Partner that sponsored him was, as well as that partner's network, which btw, is pretty damn robust. The Insider issue may be more that he's from the east coast, not that he's of Indian decent. I wonder what motivated this outcry? Partner pressure to bring deals? Hmmm...
  • Janwar Singh
    Totally true. VC's are racist money managers who will suck up to anything that's white. As if white engineers have a clue ! Silicon Valley's brain is either Indian or Chinese. White people can not only not jump, but they also cant code. All talk, all bullshit, and no ability to walk the walk..
  • Bob
    Maybe this is part of the reason Mayfield has such a poor track record for the last 5 years
  • SFG
    I have worked with him in the past and can tell you that he is a hard charging, get things done kind of guy and he doesn't suffer fools gladly. This type of work mode probably does not fit in with the clubby atmosphere at most VC firms. If VC firms are subject to the same kind of mediocrity that most organizations suffer, the "mediocre" types probably are intimidated and want to keep him outside their social circles to feel comfortable.
  • this is where this is coming from; an old 2006 article about how old VCs arn't cool enough.


    http://orangedaysnews4.blogspot.com/2006/07/how...

    excert:

    "The gambit is paying off for some investors. Venture capital firm Mayfield Fund recently made it a point to introduce goateed 29-year-old Chamath Palihapitiya, whom the firm was thinking of hiring, to an entrepreneur it was trying to court -- Greg Tseng, the 26-year-old co-founder of teen-chat Web site Tagged Inc. He was impressed with Mr. Palihapitiya's knowledge about teens and Web instant-messaging, a business Mr. Palihapitiya was at the time managing at America Online.

    Later, a Mayfield investor told Mr. Tseng that Mr. Palihapitiya had decided to join the firm. "That definitely was a factor in our decision to go with Mayfield," says Mr. Tseng, who collected $7 million in funding from the firm in February. Allen Morgan, a 53-year-old managing director at Mayfield, says Mr. Palihapitiya was snapped up for his experience not his youth."
  • Sherwin
    This is how all of big corporate America is! White people hooking white people up. Let's face it, white people aren't that smart, but they have so much power. It's because your white buddies hook you up!
  • Chamath (who is currently on his way overseas) clarified that his comment was indeed taken out of context. It addressed how the world at large might work, but his comment about the Valley working as a meritocracy was not reported. As a VC firm with a 39 year history, we know that the Valley VC community is inclusive, diverse and values merit above all else.
  • anon
    Mayfield shipped him overseas :-) That was fast!

    I would not want this type of immature, so called VC on my board team.
  • filly
    Use the word "explode" and expect to "implode".
  • rhubarb
    VC's are not a club of white guys. They are arrogant snobs who loath everyone for their stupidity.
  • Billy
    To say that white people are not that smart or that all VC's are racist money managers is completely ignorant. Ever heard of Bill Gates or Steve Jobs?
  • techies in VC
    to FUNDED's question, how many female or minority VCs? and, white male clubbiness?: Kleiner Perkins has 22 investing partners.

    7 are female, 6 are Asian. 18 of 22 are "techies", with degrees in science, math, or engineering, and operating experience in tech companies. 3 are MDs. Is there a doctor on your team? See www.kpcb.com.
  • Re: "...Mayfield says he was was taken out of context by the video. If true, it’s a shame that such a mediocre piece of work would be supported by the SF Moma."

    Er, the standards of modern art are not those of journalism. Taking a quote 'out of context' could just as well make an installation great as 'mediocre'.

    And if the quote was out of context -- who got it wrong? The SFChron presentation is:

    "But Mayfield Fund venture capitalist Chamath Palihapitiya said that despite his success in Silicon Valley, he still sees a white male circle of insiders that he can't penetrate, with exclusive dinner parties and country clubs that he isn't part of."

    That *doesn't* indicate that the "white male circle of insiders" is specifically in/about Silicon Valley. It *could* be read consistent with the Mayfield explanation. In contrast, this VentureBeat post's leading paragraph portrays this as a "provocative remark about Silicon Valley".

    So maybe it's neither the video nor the SFChron who got the context wrong -- but VentureBeat, who after all "haven't seen it for ourselves yet."
  • RK
    This is kind of interesting way to spin from Mayfield, they now wants people to think there childish untrained VC was taken out of context! Well may be they ought to admit, there little VC Screwed up, this people will buy. May be Kamini Ramani there PR lady ought convey in there Monday partners meeting !
  • Gordon,

    That's a fair critique. I probably should have held off on the piece, until I fully understood the entire context. Unfortunately, we may never know the full context.
  • Michael McDonell
    Blocher uses "models" as she calls them in her work. Let's not see this as an expose-not news sensationalism.

    The Pope who had refused the Madona from Caravagio in Florence was asked who likes it-perhaps nobody but everybody likes very much the wonderful girl who was the model of Caravagio.

    This was an art piece...A R T... but what do I know-VC's were in Saigon's Chu Chi tunnels in 1968-69-and now they are some of Silicon Valley's most productive folks-
    M
  • Whether or not the talk was taken out of context, it's clear from the comments that some people do feel that the Valley is exclusive.

    I wouldn't necessarily characterize it in terms of race or gender (though many women I know have assured me that the female experience is very different), but I will say that the desire to feel like part of the "in" crowd and the pain of feeling excluded still apply, and in spades.

    Everyone knows that there is an in crowd, especially in Web 2.0. Heck publications like VentureBeat, GigaOm, and TechCrunch act as de fact gatekeepers (though I admit that Matt is probably more egalitarian than Om or Mike). And while that status makes the insiders feel good, those on the outside looking in can't help but feel envious of the incredible feast of opportunity that always seems out of reach.
  • Felix A. Lopez
    Wow. Here is my take: I think initially the VCs have to filter through all the noise and find the right product or idea. And the person going after the VC money needs to have that right product or idea that will attract attention from VC. So we have swim in the right circles. And the people that swim in the right circles are US or we wouldn't be talking about this here! For example, my name is Felix Anastasio Lopez. But who really cares if I am Latin as long as I have a good idea, product or solution. Like minded individuals will attract eachother. That's why I read the Merc News and followed the report who started Venture Beat. And then I get invited to FeedBlitz and "wa la" I get to interact with people like you. And thanks to Matt for having the courage to do his own thing.

    As for me, I work in mesh networking and muni wifi. I have all types of ideas. I get involved in WiFi electric meter reading. But the 2.4 GHz 802.11 frequency is so full of interference and such that WiFi metering is not fully mature yet. So I cannot leverage the MuniFi network and build other business applications to prove the model. So I would love to devlop products that work on let's say 900 MHz or other frequencies that can seamlessly interact with the 2.4 Ghz 802.11 via Mobile IP Protocol for session persistance. And would love to get VC money to do this. Or how about developing "guadian RFID" for at risk students in need of a reminder of where they should be (studying and not fooling around)...or using the "avatar" ecosystem to simulate a business model in a real (simulated) environment. My buddies in China told me that they are already offering "avatar" services and people are paying someone to maintain their avatar on a 24 hour basis while the person is working!
  • Lee Taylor
    "Once I get inside, I will do my best to completely explode it from the inside"


    Get in, and then tear down the establishment. Sound familiar?

    In America, thanks to political correctness, it's been working overtime for decades. Multiculturalism is a one-way street. Or when was the last time you saw "diversity" in a chinese restaurant? Or any "minority owned" business. Only whites must conform to the numbers game.

    "Once I get inside, I will do my best to completely explode it from the inside"

    As a white male doing business in India, see how far that mindset will get you. Or better yet, try it in some of the countries in the middle east. Not a chance. You play by their rules - and be grateful - or you don't play at all.

    And no one complains.