DFJ Partner Steve Jurvetson (L) and TechCrunch moderator Connie Loizos speak onstage during TechCrunch Disrupt SF 2017 at Pier 48 on September 18, 2017 in San Francisco, California.
DFJ Partner Steve Jurvetson (L) and TechCrunch moderator Connie Loizos speak onstage during TechCrunch Disrupt SF 2017 at Pier 48 on September 18, 2017 in San Francisco, California. - 

This week, venture capitalist Steve Jurvetson of Draper Fisher Jurvetson, left that firm after allegations of inappropriate behavior and an internal investigation. The company said he left by mutual agreement; he has publicly denied any allegations against him and said on Twitter that he’ll pursue legal action against his accusers.

Several other high-profile VCs have left or been fired in the last year, but there have been questions about the industry for much longer. And as the tech industry grapples with its string of scandals, its near-legendary "bro culture," and questions about influence, empathy, and responsibility, let’s look at the seeds from which this ecosystem grew.

For months now, we’ve been studying the inner workings of venture capital here on Marketplace Tech. The idea for the series was simple: follow the money. Venture capital is a secretive and little-understood industry, but it dramatically shapes the world we live in.

Five of the biggest companies in the world by market value are venture-funded tech companies, and so are big household names — Snapchat, Uber, Airbnb, Tesla, Twitter — and hundreds of other companies you probably don’t know. Many of those started off as a pitch, in a room, in front of a few key decision-makers, most of whom were white men (89 percent by recent figures, as high as 94 percent, according to Lisa Wang, founder and CEO of the female entrepreneur network SheWorx).

And the way venture capital often works is that the small number of big firms choose a founder that they like, invest money, take seats on the new company’s board, and provide a halo of other services including advice, mentorship, and job prospects.

When I interviewed Steve Jurvetson earlier this year, he talked about something called a "homophily bias," which means that people like people who are like them, and that yes, venture capitalists have a tendency to pick founders and employees who are a lot like them.

I talked to Ellen Pao on Marketplace Tech this week. She sued the well-known venture firm Kleiner Perkins Caufield and Byers for gender discrimination back in 2012. Her case went to trial in 2015; she lost, but the public fight inspired a lot of women to come forward.

She said Silicon Valley has two features that make it unique when it comes to creating potentially toxic cultures.

One, an extreme power imbalance between the tiny priesthood of VCs who have all the money and make up an influential network of advisers and power brokers (with a raging superiority complex). And two, a sort of genesis effect in which founders either keep getting new money for new companies, or build companies so big that they beget other companies, also in the image of the original creators.

So if venture capital firms build companies in their image and the image is rotten to start with, they shape the entire system and the companies that are born from the companies they funded. And that’s the kind of rot that’s incredibly hard to root out. See: Uber.  

And then the question becomes: who didn’t get funded? Who never made it into the room? Who got turned away, or turned off by the constant barrage of negative sexual attention, the string of “no’s” on Sand Hill Road, the famous street in Menlo Park that houses most of the big VC firms?

Jurvetson acknowledged as much:

"What’s not reported because they’re invisible are the folks who get nothing. There’s actually a bunch of interesting business ideas that withered on the vine. Certainly a lot of Google competitors, for certain. … There are better search technologies, much better products that were launched just after Google was launched, and some before, that got nothing, and quietly went out of business. Probably 30 or 40 companies, I’d guess."

Hearing that again today, it’s hard not to wonder about the reasons those 30 or 40 companies didn’t get funded or didn’t get the next round of funding or didn’t ever make it through the door.

And when I asked Jurvetson whether he ever worried about the minor variations in decision-making, the specious power-wielding that anoints one company over the other and shapes the course of our lives, he said no. He said venture capital is a marketplace, with lots of companies with lots of different people, with lots of "cognitive diversity," (which, it should be noted, is not always the same thing as actual inclusion).

He said he trusts the system.

I’m not sure, especially after the past year, that everyone can confidently say the same thing. Certainly Pao does not, nor do many of the women and people of color we’ve interviewed in our series on venture. Pao said even the recent spate of firings and revelations don’t represent real change. 

"I have not seen that yet," she said. "I’ve seen more of the same people coming in to replace the people who do get pushed out, and the people who get pushed out, it’s maybe a handful or two. This is an industry that needs a complete reset and it needs complete transformation and little changes along the edges … are not going to do it. It’s going to be replacing a whole swath of people and I don’t know if that will happen yet."

So when you go looking for the reasons behind Silicon Valley’s bro culture, do what investigators always do. Follow the money.

Follow Molly Wood at @mollywood