[cortesoft]

This question presents a very false dichotomy: "Is the startup world a meritocracy, or are there leagues in startups?"

If we are making a sports analogy, then having different leagues does NOT imply that it is not a meritocracy. The very best (judged from merit) end up in the top leagues. Sports is the ULTIMATE meritocracy, in fact, because there is a simple and fair way to judge who is better.

Leagues just form so that that similarly talented people face each other in fair competition.

[andrewhyde]

Perhaps the BCS is a great analogy: there is a seemingly fair competition but luck, tradition and money sure help you get into the championship game.

[cortesoft]

Ah yes, the most unsporting system in sports!

[slg]

Maybe a better analogy is the promotion and relegation system popular in European football[1]. The teams are all divided up into separate tiered leagues, but through success a team from a lower division can move up to the higher tiered leagues. Likewise a top tier team needs to keep a certain baseline of success to prevent themselves from being sent down to a lower league.

[1] - http://en.wikipedia.org/wiki/Promotion_and_relegation