Does Diversity Bother You?

November 4, 2016

 

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Today, the diversity topic made it into my inbox with the headline, "Mariah, tech has a diversity problem. How would you solve it?" Within were links to today's posts from Ellen Pao, Porter Braswell, and Hunter Walk and I soon discovered the presentation, Investors and Startup Founders Think Tech's Diversity Problem Will Solve Itself:

 

 

"Sure it will," I thought, "just like global warming, income inequality, homelessness, world hunger and human trafficking. It will all be fine if we keep our heads down and work hard on the bottom line." But I digress. The point is, the topic of diversity (let alone the manifestation of it) clearly bothers people.

 

The first thing that stands out to me in the slideshow is the response to "WHAT IS THE NO. 1 OBSTACLE PREVENTING YOU FROM INVESTING IN STARTUPS WITH RACIALLY DIVERSE OR FEMALE FOUNDERS?" in slide five. The top survey answer at 45% was, "It's a pipeline problem..." I call this the "kick the can" response. After reading Hunter's post, Never Too Early: How Homebrew Approaches Diversity At Seed Stage Startups, I wondered (partially from personal experience) about the pipeline. How many people of color (POC) / women are introduced to Homebrew & other funds? How many request meetings on their own? How many of each are accepted? How do the numbers measure up to slide nine perceptions?

 

Introductions are still the favored source of deal flow for VCs - yet women / POC - even when advantageously networked within their own domain - face higher barriers to accessing CEOs of portfolio companies and other "trusted sources" who make introductions. This is true in tech in general. As Sam Altman points out in the Y Combinator How to Start a Startup series, "...if you go to work at Facebook or Google one of the things they do in your first few weeks is an HR person sits you down and beats out of you every smart person you’ve ever met to be able to recruit them." Prestigious schools (like Stanford) put significant weight on letters of recommendation as part of the application process. Yet, with abysmally low numbers of POC (and a shamefully low number of women) making it into tech-track programs, positions, and VC meetings, the cycle of exclusion continues like an infinite loop on a bad block of code.

 

"'I'm a tall, straight, white male who went to Stanford and worked at Google. So, you know, it was a real uphill battle.' That was my response on a "Diversity in Venture Capital" panel a few years ago ... The panelists prior - all from underrepresented segments - had most certainly encountered more struggles in their careers than I had. Sure I've worked hard and been lucky, but I've also benefitted - knowing and unknowingly - from looking the part." - Hunter Walk

 

Meanwhile, VC-backed female and POC CEOs et al are overwhelmed with a disproportionate burden of vetting / opening doors to underrepresented founders. Some resent or reject the burden. Others may not have an extensive network of POC or female founder friends because they have themselves been segregated or busy establishing a network of more advantaged professionals. They may not want to be seen as the source of "diverse" referrals or labeled a "social justice warrior." 

 

Somehow, Joanne Wilson manages to find women / POC to invest in (and she elucidates in Why I Try As Hard As I Can to Invest In Women and Minorities), but it seems that most investors don't really care and / or don't bother. Why should they expend the extra effort to look outside their network or geography if they don't have to? There is no law against focusing on Sand Hill adjacent founders. Even when data points to the advantages of diversity, backing a company is "like a marriage" in the age of Tinder.

 

 

As Ellen Pao points out in Broken Venture Capital Funds Broken Tech But We Can Fix It, there is a prevalent bias that searching for diverse candidates / founders equates to "lowering the bar" or settling for less able. In slide six, over 50% of the White and Male survey respondents replied "I am focused on finding the best talent," when asked "WHAT IS THE NO. 1 OBSTACLE PREVENTING YOU FROM HAVING A MORE RACIAL OR GENDER DIVERSE TEAM?"

 

This belies their response in that it ignores the incredible talent one might find attending a BSBE or Grace Hopper conference, for example. I'd like to see a survey of how many VCs attend events that would expose them to more diverse candidates en mass (it can be arranged). It also neglects to acknowledge how adept women and POC are at assimilating information while applying new insights.  Silicon Valley at large grossly underestimates the value of those who don't blindly accept and pander to the heuristics of the status quo. To question age-old bias is seen as hubris - the antithesis of the much-touted humility often called for (if not authentically demonstrated) by those in positions of power.

 

One of the top complaints I hear from women and POC across the board (techie and non-tech) is that the experience of people acting condescending towards them or assuming they are less able, qualified, or knowledgeable than they are. I get this ALL the time in day-to-day life. For example, this week, a young WASP working in our local grocery story began explaining what a PODCAST was to me. "Really?" I thought, "I'm not your grandma, dude." I may have been making podcasts before he was allowed to use the internet unsupervised. While I could brush this slight off easily enough in that circumstance (he's now a new follower on Twitter), when these flawed assumptions carry over to the professional realm (to contextualize - two Black Black MIT engineering grads immediately come to mind), it's highly problematic. 

 

The attitude, "The media spends too much time talking about [diversity]" (slide ten) expressed by over 40% of investor respondents only compounds the problem. It suggests not only bias but also avoidance. Can we really expect that, when a woman or POC walks into a meeting with a respondent with that attitude (assuming s/he could get in the room), there will not be a conscious or sub-conscious association with diversity and corresponding resentment / discomfort, etc.?  This is yet another unnecessary hurdle women and POC must overcome. Data suggests that attitudes like this will be to the detriment of those who hold them, but that seems to be the crux of the problem. 

 

Consider this anecdote: After participating in a pitch competition,  I recall getting feedback from an insider that a slide on the lack of diversity in the motion picture industry had sparked discord among judges. The statistics presented on the slide in question showed that audiences prefer more diversity, but that tastemakers are ignoring the market. This is literally the problem the product addressed and the "why." Yet, the the mentor sharing the feedback questioned almost incredulously "Why would you include that?" as if I should have known it would unnerve one or more judges. I'm not sure why advocating for proportionate representation should be offensive - especially not in the realm of entertainment. Yet, I soon learned that women and POC are routinely penalized for such advocacy.

 

 It wasn't hard to guess where the discord originated. Greeting the judges after the competition, one quickly disclaimed (perhaps to avoid giving meaningful feedback), "I know nothing about the motion picture industry." When I forgivingly mentioned that outside of George Lucas / Pixar, I didn't anticipate a great deal of awareness in Northern California, he went on to say "I know George Lucas." As I excused myself to accompany my guests to the reception, he said almost randomly "You're not like Mariah Carey, are you? Because she's kinda crazy," - his sentiments replete with an index finger circling his ear.  My response (over the shoulder, walking away) was "I can't even sing," but my thoughts were " Uhm...yeah, nice to meet you too. I'll see you at the after-party where I'll be sure to abstain from further conversation." I couldn't help but wonder if he had more challenges than Ms. Carey.

 

To anyone unfamiliar with the term, this is an example of "micro-agression." I could give more egregious examples, but, as slides seven and eight indicate, most White males are oblivious to either sexism or racism. Yet 60% of women surveyed and 43% of POC have experienced or sexism or racism respectively (10% and 8% declined to comment). While we can't expect anyone to confess to it, some percentage of respondents are perpetrators of racism and sexism - both overt and covert - and we've generously offered the possibility of "implicit bias." Regardless of how it's carried out, it's a deterrent to women and POC who may eschew the opportunity costs of entrepreneurship or entering tech when faced with seemingly unsurmountable odds.

 

So, to the question of "How would you solve it?"

 
Building Rapport

For those who care to address and / or solve the problem, even if a female or POC-founded company doesn't seem like one a fund would invest in, there is something to be said for establishing relationships with members of groups that are clearly socially and economically segregated (not to mention having varied insight into markets). Not only should VCs work on establishing rapport with women and POC, they should also request / express interest in introductions to other POC / female founders.

 

I've not seen much effort among White male VCs to establish those relationships - especially with WOC, who receive < 0.4% of VC funding.  While hiring more women and people of color to invest is important, that does not take the place of getting outside of one's own comfort zone. The task of diversifying should not be delegated to a single individual or task force.

 
Supporting Emerging Managers

In Who is a VC?, Richard Kerby breaks down the dearth of diversity in VC and what constitutes reasonable requirements. Emerging managers need not be engineers, operators, or MBA's. They must be insightful innovators with access to deal flow and the ability to support entrepreneurs in growing scalable companies.

 

As Ellen points out, we need more VC Funds led by women and POC. What's more, we need to ensure that publicly funded pension funds and endowments are pro-actively allocating funds to emerging managers and doing so in a way that allows them to establish a track-record and deal flow. Requiring a $10MM minimum check size to be no more than 10% of a first time fund is unrealistic for most emerging managers.

 

When diverse managers are capitalizing on diverse perspective in their portfolio companies, others will take notice. Those who stay in a bubble will go the way of dinosaurs.

 
 
Hiring and Retention
In hiring, I've suggested paid internships, "returnships," recruitment bootcamps, etc. Retention includes incentives for bias testing and cultural sensitivity training that revolves around positive cultural exchange and empathy-building exercises. I'm also an advocate of corporate environments offering resources for more integrated lives - beyond ping-pong tables and cafeterias.
 

 

Government Intervention
Insert collective shudder. Nevertheless, EEOC / government intervention may be required to investigate and solve exclusion: "The U.S. Equal Employment Opportunity Commission (EEOC) is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person's race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age (40 or older), disability or genetic information."
Minimally, data should be collected and made public on what employers and funds are doing to find and fund underrepresented candidates / founders.
 
Continuing Education
VCs and recruiters should be challenged to attend conferences with diverse attendees.
Organizations can host bi-annual or quarterly retreats with batches of diverse founders, VCs, LPs, and coaches. There, the focus would be on getting to know one another, sharing respective business interests, confronting bias, building empathy, and finding common ground in a relaxed setting. Think Iyanla Vanzant or Tony Robbins for the innovation economy.
 
Talk About it AND Be About It
No ones contribution to the cause is more or less valuable than anyone else's. Some, like Jessie Jackson, will move the conversation forward. Organizations like CODE2040 will place diverse candidates, PowerMoves, et al help diverse founders secure funding. Others, like Kapor Capital, will outline expectations for portfolio companies. Still others, like The Hidden Genius Project, HackTheHood, and YesWeCode will fill the pipeline. Affinity groups like Latino Startup Alliance, Vietnamese Women in Tech, Stealth Mode, Female Founders, etc. provide support, solidarity, and be a source for wise seekers. Foundations, Family Offices, institutional investors and high net worth individuals will fund emerging managers who will invest in diverse founders.
 
Like fanny packs over biker shorts, the era of excuses is tired - and laughable if not so embarrassingly sad. It's time to address diversity with decisive action, top to bottom. It's not for diversity's sake, it's not for business's sake, it's not to scapegoat or shame White men who are blinded or complacent. We need to address it to stop the insanity that burdens us all and move on to appreciating one another. Of course, there will always be fringes of bigots, sociopaths, and narcissists, but the subject of diversity shouldn't have to bother us so much.
 
See Also: Diversity Makes Us Smarter
 

 

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