[20yrs_no_equity]

In my experience I've found little correlation between pedigree and quality. This isn't a randomized study, but my experience for 30 years working for and founding (sometimes random) startups. The school one goes to and the companies one has on their resume do not mark a great employee or founder. Talent or ability and willingness to work hard and take responsibility are important.

At the same time, there are a lot of companies that fail into success-- where the market is right and the funding is sufficient that they can make mistake after mistake and still end up being successful.

So I think the part of the abstract that claims that this is "rational" to fund based on pedigree is confusing correlation for causation-- if people with pedigree but no ability tend to get a lot more funding than people with the same lack of ability but no pedigree, obviously more of them are going to be more successful. And the people with ability whether they have pedigree or not, may be more successful overall, but this study isn't controlling for that. (and it's hard to identify ability, that's for sure.)

[jmde]

I think this is a serious problem in various areas of society, and touches on the debates regarding the value of a degree or certification.

I have no doubt that pedigree, as you refer to it, does stochastically index quality. There's too much evidence from various studies that it does. But the strength of relationship between pedigree and quality, is much, much, much weaker than people typically assume. We end up relying on things like test scores in school, and degree in the workforce as a proxy for talent or ability or motivation or whatever, when it's more like a weak predictor. In the process, we end up granting monopolies to meritocracies and driving up things like income inequality, where income distributions don't parallel skillsets.

I agree that this paper probably reinforces false beliefs, but my guess is that it does so because it oversimplifies a kernel of truth, not because there's no truth to it to begin with.

[SmellTheGlove]

I don't think it's as much about pedigree (school especially) as it is what you're leaving on the table to do the startup. It's a strong signaling factor if a Fortune 500 VP leaves to start something new, versus someone who was an Analyst at a bunch of small companies. The VP is presumably leaving a lot of money on the table for the idea - its skin in the game measurable in opportunity cost.

>Talent or ability and willingness to work hard and take responsibility are important.

In reading the paper, that seemed to be the other factor in the human capital evaluation. Investors need to feel good about the abilities of the founders.

[DenisM]

Both VP and rank-and-file are leaving a lot on the table - their entire income. If anything it's easier for a VP due to their savings stretching farther and their passive investments.