We shouldn’t overstate tech’s gender problem

Much has been made of the tech sector’s gender problem — in which women don’t hold a fair share of positions and a boys’ club culture is still going strong. In particular, the prestigious Y Combinator program, which gives seed money to young tech companies, has been criticized for favoring startups founded by men. Commentators have blamed the numbers, at least in part, on the lack of female graduates in STEM (science, technology, engineering and mathematics) fields.

My team at Engine, a research foundation and advocacy organization for technology entrepreneurs, has recently taken a special interest in the topic. We believe that in order to study the issue adequately, it’s important to ask the right question. Instead of equating employment in STEM occupations with founders of a very rare, very small subset of companies in a tiny industry in one part of the country, it’s better to ask, How does Y Combinator’s gender parity stack up against a directly comparable group of early-stage tech companies? If we’re going to have this conversation, which we should, let’s do it with the benefit of additional data and the right analysis.

Public data from the Census Bureau lets us look at employment by firm age and detailed industry classification. This allows us to compare startups with other firms and to properly categorize the industry-diverse high-tech sector. In the interest of time, we looked at just California.

The chart below shows women’s share of employment in all California high-tech firms and their share of employment in the youngest of California’s high-tech firms, those one year old or younger. Both series have been adjusted to extrapolate trends.

A couple of insights are worth pointing out. First, women’s share of employment in California high-tech companies has been on a steady decline over the last two decades — dropping from about 39 percent in 1991 to 33 percent in 2012, the latest year for which data are available. Women’s share of employment at high-tech startups also fell over this period but not by as much, from about 36 percent in 1991 to about 32 percent by 2012. Why there is a general decline should be the subject of another article. We can talk about office culture and unreasonable working hours, but even with quantitative data, there is no single right answer. 

The second, perhaps more important trend is that from 2004 to 2012, the percentage of women in these young high-tech firms consistently grew, from about 30 percent in 2004 to 32 percent in 2012. Again, this runs counter to the prevailing understanding of what’s happening in tech, and there is no single, clear explanation for this unexpected trend. What is clear, though, is that women are breaking through. Interestingly, the online education platform Coursera reported a significant increase in its proportion of female students from 2012 to 2014.

So while women continue to play a declining role in California tech sector employment overall, women have recently been increasing their share of employment in the youngest tech companies, those one year old or younger. And while a quarter of all tech companies fail in the first year, it is still vitally important for women to be involved, as founders or serious equity holders, at this early stage.

And that takes us back to Y Combinator. These elite companies with financing and institutional support might appear to be the ones best prepared for success, but research shows that this is not necessarily the case. VC-financed firms do not have more stringent survival thresholds, and while some VC-backed firms might grow more rapidly, there is little difference in profitability measures at times of exit. 

So the limited presence of women in Y Combinator and similar programs does not signal the death knell for women in tech. Moreover, it’s worth adding here that by definition, a company founder is in a management position and therefore does not register in any employment counts. In fact, there are many company have founders who have never been in technical roles. SaleTally, for example, was founded by two women, both MBAs. This is yet another example of a flaw in recent examinations of the issue.

Y Combinator is not representative, female employment at the youngest tech firms is growing, non–Y Combinator startups might do as well as if not better than their Y Combinator peers, and talking about women in technical (or STEM) roles is not the same as talking about women working in tech as founders or in other managerial positions.

Of course, there is still a problem, but women are starting companies, and while sounding the alarm might help raise awareness of the problem, focusing on the wrong problems will not get us to the right solution.

Gender disparity is an issue for tech companies of all ages, not just frat-boy startups. When startups deserve to have a finger pointed at them is when they don’t take the opportunity presented by their youth and agility to be conscious about business and culture choices that affect the gender diversity of their workforce and ultimately their success.

Ian Hathaway contributed the data analysis for this article