Millennials, technology will not save your generation

Picture a startup founder.

Chances are you went straight for a Mark Zuckerberg-type: male, white, nerdy and, above all, young. Zuckerberg founded Facebook in 2004, three years after the collapse of the dotcom bubble, at the age of 20.

Twelve years later, the company he founded is worth $270bn, and the tech world is in the middle of a new boom. Valuations are going through the roof, and big money is flowing into every stage of the system: in 2015, almost $60bn of venture capital was invested in startups in the US alone.

As a result, it is easy to see the second dotcom boom as a rare volley in favour of intergenerational equality: huge sums of money flowing from older, richer, people into the pockets of hungry young entrepreneurs with ideas, talent and motivation but no access to capital.

In other words, the stronger the tech sector becomes, the more Mark Zuckerbergs there are, and the less millennials – 18- to 34-year-olds, also known as Generation Y – have to worry about their systematic economic disadvantage. Don’t worry about a financial system tilted against your interests: just invent Facebook.

If that does not sound too reassuring, it is with good reason. Technology will not save us. For every way in which the sector stands alone from the wider economy, there are two more in which it reinforces the same constraints.

Go back and think about that stereotypical founder again: chances are you noted the other attributes that come alongside youth. White, male and nerdy is not the best recipe for a broad spread of wealth among a generation, and yet it remains sadly accurate for a large proportion of the industry.

Y Combinator, a prestigious startup accelerator that provides seed money, advice and connections in exchange for 7% equity, revealed last year that 22% of the companies in its latest intake had a female co-founder. That’s the highest ever. The proportion of companies with a male co-founder, meanwhile, fluctuates between 98% and 100%. And for black and Hispanic co-founders, the situation was even worse: 8% and 5% respectively.

“There are definitely less girls in tech, and in science too,” says Vivian Chan, 31, the co-founder of scientific search engine Sparrho. “There’s only a few names that we can think of, globally, at the co-founder level. And being a female PhD science entrepreneur is a rarity.”

Vivian Chan, the co-founder and CEO of Sparrho. Photograph: Sarah Lee for the Guardian

While the British startup scene, particularly in Cambridge and in London, where Chan lives, is quite international, she fears this may change as it becomes more difficult for people to get UK visas.

“Nerdy” does not sound like quite such a barrier. But in practice, it can very quickly become a signifier of other demographic hurdles – principally wealth. Bill Gates, for example, came from an upper-middle-class family and attended a private school where he was able to access a computer terminal on a time-share basis in 1968. Twenty-five years later, Mark Zuckerberg’s nascent interest in computing was boosted by his father, who taught him how to code on an Atari, and then a private tutor, hired when his dad hit the limits of his ability.

It is not that one cannot be nerdy and poor, but it is a lot easier to channel that nerdiness into the sort of avenues that will please investors a decade later if you have access to the right resources from an early age.

And often, of course, wealth has a more direct effect. When asked how they could afford shiny new offices in King’s Cross, central London, for their startup, given their app had not launched, two affable posh graduates replied it was thanks to funding from “private individuals”. It is not a stretch to suggest that that opportunity is not offered to everyone.

Tushar Agarwal, whose company Hubble offers a marketplace where startups can rent office space, says the biggest problem for poorer would-be entrepreneurs is simply staying solvent in their business’s early days. “In order to become a founder, you have to be comfortable with living life with zero pay for the first 12 to 18 months, then receiving below market wage for the next couple of years … so if you can’t afford to live that way, that’s a huge barrier.”

Worse still, without a pool of wealth to fall back on, Agarwal says, founders can be forced to take the first funding they’re offered, selling huge chunks of their company at a bad price just to stay fed and housed.

Accelerators such as Entrepreneur First, which supported Agarwal, can provide bursaries to technical founders to let them scrape by until seed investment comes in, but spaces are limited and even that funding runs out eventually.

But even for those founders who are lucky – and connected – enough to get funded, they are not quite striking a blow for their generation just by getting on the capital train. The reality of venture capital-backed entrepreneurship is long hours, low pay and no job security for a one in a million chance at striking it big. There is a reason why that world is dominated by young people, and it is not because they are naturally better at it: it is because that equation only sounds appealing when you have nothing to lose.

But while millennials, also known as Generation Y, may be up for the startup game, they are not the ones winning it. The majority of European startups with a valuation above $1bn were founded by someone over 35, according to research from tech investment bank GP Bullhound. Less than a quarter were founded by people below 30, and almost as many were founded by over-40s.

Startup Alley at the TechCrunch Disrupt SF conference in San Francisco. Photograph: Bloomberg/Bloomberg via Getty Images

But is it blinkered to focus on funding and founders, on profit and loss? Entrepreneurism could do more for this generation than help a few become rich, after all. Seizing control of the means of production is a time-honoured step to changing the world, so could not a few young entrepreneurs in the right place at the right time have a beneficial effect – for generational squabbles, if not class ones?

Joe Mambwe, the founder of Terrestrial, which provides a toolkit for startups to expand internationally, argues that setting up a company very young allows a different set of problems to be tackled. “In the past, the barrier to starting a company would have been experience: you get a job, work that job for a long time, then start a new company, based on what you did in that job.

“Now, you have students coming out of university and building companies straightaway, and so in general you get companies that are solving the problems of that age.”

In theory, maybe. In practice, probably not. For every young entrepreneur tackling the problems of our age, be that anthropogenic climate change, geopolitical strife, or intergenerational conflict, there are plenty more focused on fluff.

There are young people working on solving the great problems of the generation, but they are not the ones getting funded. Instead, they get financed to produce Uber for barbers, Facebook for dogs and endless Bitcoin startups.

Modern tech entrepreneurship is less about restoring generational equilibrium and more about “solving all the problems of being 20 years old, with cash on hand” as George Parker put it in the New Yorker, or, as overheard by Aziz Shamin, an engineer at GitHub: “Tech culture is focused on solving one problem: What is my mother no longer doing for me?”

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