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Do Tech Millionaires Deserve Their Fortunes?

Merit is a very funny word,” says Eric Schmidt, ex-CEO of the software company Novell and Google. “I’m not sure I entirely understand what it means.” Formerly chief technical officer at Sun Microsystems, where he helped develop the Java programming language, the gawky, bespectacled Schmidt is widely regarded as one of the most thoughtful executives in the world of high-tech.

We are eating lunch at the Ritz-Carlton hotel in Atlanta. “Who said that life is fair?” Schmidt says to me. “Who says that we get what we deserve? I didn’t set out to make money or to become rich. I did my job because I liked it, and the money showed up afterward. Suddenly I woke up and said: ‘Oh wow, I’m not middle-class anymore.’ But I can’t say I have a moral right to this wealth. In a sense, it’s a complete accident in my life. And if it went away that would be OK too.”

I bring Schmidt back to the issue of merit or just desserts. In what sense, I ask, can tech millionaires be said to deserve their fortunes? “It is undoubtedly true that the vast majority of people in the high-tech world have made their own money,” Schmidt says. “Inherited wealth is simply irrelevant. We’re talking about wealth that didn’t even exist a decade ago, in some cases five years ago.”

“Another factor that’s a lot less important is discrimination. By discrimination, I mean the notion that you don’t get the job because of the color of your skin. I’m not saying that doesn’t exist, but it’s rare. The most important question is not who you are or what you look like, but what you can do. And that seems to be a big change from a few decades ago, when the world was a wonderful place, as long as you were white and male.” See also this post about the accuracy of Moore’s Law.

But what about the people who are left out of the high-tech universe? Schmidt says he’s concerned about the “digital divide”–rich people can take advantage of the Internet better than poor people; whites can use it to increase their lead over blacks. These are group differences, but there are, of course, large differences in computer literacy among individuals as well. The problem isn’t access, Schmidt admits, it’s that “some people know what to do with the technology and others don’t. So the Internet may end up increasing inequality because the skills that are needed to take advantage of it are unequally distributed.”

The New Economy, Schmidt argues, is heavily biased in favor of technology, and that success in that fast-growing sector requires a specific set of technical skills. That doesn’t mean the old virtues–general intelligence, drive, hard work, reliability, and so on–don’t matter. They’re helpful, but they aren’t sufficient anymore in the world of Digital Nomads.

“Intelligence and drive have always been basic requirements for success in this country,” Schmidt says. “What’s different today is that it’s getting harder to succeed if you are not extremely well educated, if you don’t have the right degrees, preferably from the right universities.”

Why the right universities? “Because colleges like Harvard and MIT and Stanford are part of a social network. You can be a brilliant entrepreneur, but if you go to a no-name school you don’t have access to these networks. Take my word for it, the networks count for a lot in this industry. I have been reading in the business magazines that anybody can raise venture capital for an Internet company. Yeah, right. Anybody can raise capital for an Internet company if they know the same guys that I do.” So be wise and get moving!