Silicon Valley Venture Capital Has a Diversity Problem, recode guest post by Heather Hiles, minority woman founder and CEO of Pathbrite
Adam Rifkin stashed this in Women
Stashed in: Founders, Venture Capital!, Silicon Valley!, CEOs, @jguynn, Kleiner Perkins, @lizgannes, Sexism, Boards, inequality, startup, That's racist!, Medium, @melindagates, Ellen Pao, Change the Ratio, Women in Tech, Corporate Diversity, Ageism!
It took me 15 minutes to find this post from March 18, 2015, so I'm stashing it so I can find it again.
Heather Hiles writes:
I’m writing this post from the Austin airport, headed home to Oakland from SXSW. Before pulling out my laptop to compose this, I read a post on Medium that named me as one of three black women known to have raised millions in venture capital. The article began with the startling fact that less than .1 percent of venture capital in the United States is invested in black women founders. I’m not sure what sub-percentage of these are women in tech, but it doesn’t really matter when the overall numbers are so abysmal.
The problem isn’t a lack of compelling women of color to invest in; it’s a system in Silicon Valley that isn’t set up to develop, encourage and create pathways for blacks, Latinos or women.
Don’t just take my word for it — listen to industry leaders interviewed for a USA Today story on the Valley’s lack of commitment to diversity. Jessica Guynn reports that “venture capitalists tell [Mitch Kapor] all the time that they are “color blind” when funding companies. He’s not sure they are ready to let go of a deeply rooted sense that Silicon Valley is a meritocracy.”
Nellie Bowles and Liz Gannes today wrote the Kleiner Perkins guide to VC Jargon:
The two words that stand out from that lexicon are MERITOCRACY and PATTERN MATCHING:
Definition: “Kleiner Perkins is flat where possible. For the most part it tries to act like a meritocracy. What you need to be able to do is influence your partners and you have to use your skills as a communicator and an influencer. In a partnership, you have to be successful via influence.” –Schlein
Example: To the jury question of what Juliet de Baubigny meant when she called Silicon Valley a boys club in an online essay, she said: “I grew up in the U.K. and I’m an immigrant and so for me Silicon Valley is a really progressive industry that is also a meritocracy but because there are so many men at the top leadership positions it is a boys club. What’s great is that companies like Google and Facebook are publishing their diversity statistics.”
The judge interjected: “I’m not sure you really answered the question — what is your understanding of boys club?”
“More men than women,” de Baubigny said.
Definition: “Male nerds who had no social or sex life trying to get help from an online service. That correlates more with any other success factor that I’ve seen. … So when I see that pattern coming in — which was true of Google — it was very easy to decide to invest.” –John Doerr, leading Kleiner partner.
Example: “It’s very important to have very good people skills because at the root of everything is the ability to source, to make entrepreneurs want to work with you — next thing is honing that judgement and being able to pick and figure out what makes a good investment, a lot of that’s done in pattern matching.” –Schlein
That John Doerr quote really bothers me, as does the "genetic makeup" quote from Ted Schlein here:
Also: "Vassallo calculated profits and rev at Kleiner Perkins and found women made the company more money than the men."
This part of that Medium post stands out to me:
Of the 138 founders submitted so far to #ProjectDiane, we’ve been able to verify three black women founders who’ve raised more than $2MM in Venture and/or Angel funding (Heather Hiles of Pathbrite, Kellee James ofMercaris, and Cheryl Contee of Attentive.ly) in the past five years. Furthermore, we’ve only verified eleven black women founders who have raised over $100,000 in outside investment.This is extremely troubling since this suggests that over a five year period (2010–2014), black women start-ups comprised less than .1% (YES, LESS THAN .1%) of all the venture deals, according to information compiled from CBInsight Reports.
We hope that as we continue our data collection this dismal number increases, however our initial research of the 70,000+ start-ups listed in Crunchbase and AngelList (we’re about a quarter of the way through), found only one black woman startup founder who is not already a part of the #ProjectDiane database.The early data (and #ProjectDiane is still VERY early) suggests that we don’t have a pipeline issue per sé, but an existence issue.
Black women are starting companies, we’re just not starting tech startups. We don’t exist in the start-up space anywhere near the numbers of our white or asian counterparts nor do exist anywhere near our percentage of the overall US population (around 7%).
Sheryl Sandberg on tech's miserable diversity numbers:
This part of the Bloomberg article stands out to me:
For all the talk about diversifying the boardroom, there hasn't been a lot of action, from Silicon Valley or anywhere else. Women hold only about 19% of the board seats of S&P 500 companies, according to research group Catalyst, and that percentage has scarcely budged in 20 years. Data released this week show that women of color represent only 3% of directors. Executive search firm Russell Reynolds Associates says about 8% of corporate directors are black, 4% Hispanic and 3% of Asian descent.
Only a sliver of VC money goes to companies led by women.
The boardroom boot camp comes amid heightened scrutiny of diversity in the Valley. The community prides itself on being a meritocracy, yet many people feel shut out of this land of opportunity. Women computer scientists, for example, feel unwelcome because of the “brogrammer” culture at tech companies.
Fortune recently reported that women represent just 6.2% of directors on private companies with valuations of more than $1 billion. Among the companies with all-male boards: Uber, Snapchat, Tinder and Airbnb.
Venture capital firms have even fewer women now than they did in 1999:
More about this:
Back to the Heather Hiles article I started this post with.
I love this part:
Let’s start with a basic belief that folks aren’t practicing overt racism or sexism. I honestly believe that’s true. Unfortunately, it’s not enough. We need to be practicing overt inclusion. To realize the country’s full potential, and to benefit from the mosaic of perspectives and contributions in an increasingly diverse nation, we simply have to do better. We have to be intentional.
Let’s talk about merit for a moment. Very few of us get anywhere entirely by ourselves — because we earned it. Most of us who achieve any level of success had people who believed in our potential before we had track records. We had someone willing to take a chance on us, and quite often we had others willing to make a connection or do an introduction on our behalf. These are not to be taken for granted; most people who look like me don’t get those kinds of breaks. It doesn’t make them any less smart, talented, hardworking or innovative.
I graduated from UC Berkeley and got an MBA in finance from Yale. I’ve been a successful serial entrepreneur, and I give back to many communities through my membership on boards and other contributions. My resume is long, and people often describe me as “successful.” I suppose being “the one” is supposed to make me feel special, or better than others, but it doesn’t. Just when I’m tempted to revel in my success, the reality that the chances of scaling my company are stacked against me hits me in the face. In my day-to-day reality, I can’t afford to spend time thinking about the opportunities I may have missed because of who I am.
As an African-American lesbian in the U.S. who has raised $12M for my tech company so far, I have many different feelings when I read about Silicon Valley capitalists not investing in people like me. I wonder how many more studies need to be commissioned to show companies are more successful with diverse leadership and workforces. Silicon Valley touts itself as the most innovative site of productivity in the world, yet Forbes has extensively studied how lack of diversity diminishes innovation. Silicon Valley needs to wake up and move beyond the same group of players.
There is a mountain of research that shows funding only people who are white and male diminishes innovation and reduces profitability.
Not that profits are everything. In addition to profitability, I am fueled by the belief that I am on this planet to have some impact — to share opportunity and great technology with others. And not just a few others — hundreds of millions of others. I know I can open doors, in person and online, but I wonder how much longer it will take for the doors of venture capital to open to me, and to the many others like me, who are exceedingly qualified.
Also worth reading is Liz Gannes' post-trial opus, "The Double Discrimination Standard":
All of Liz's article is worth reading, but the middle part has really stuck with me:
It’s hard to take a meaningful stand against something that’s subtle. Discrimination in the technology industry is not often overt — in fact, there’s even a word for it: Unconscious bias. And the particulars of any one situation aren’t simple, especially when personal loyalties are at stake.
For the last five weeks as we wrote daily trial coverage about the gender discrimination lawsuit brought against venture capital firm Kleiner Perkins Caufield & Byers by former employee Ellen Pao, Nellie Bowles and I received daily emails and messages. It was the most feedback we’ve ever gotten on any Re/code story.
People told us about conversations they’d had with men in venture capital about why they don’t hire more women. “They say ‘We’ve tried!’ They say ‘They’re just not in tech.’ It’s horseshit,” one woman who works in VC said. She didn’t want her name used. “The vast majority of partners, they’re MBAs, or guys out of finance. There are tons of women with those backgrounds. They hire men who look like that, why can’t they hire women who look like that? They say, ‘Oh, they all have jobs.’ Who are you kidding, the men [candidates] all have jobs too!”
Many people, especially women, told us the issues strongly resonated with them. They told us they felt they were treated differently and had fewer networking opportunities in the industry because of their gender. But they were largely unwilling to go on the record.
There are good reasons for that. Most prominently, Ellen Pao’s case was far from perfect — a jury of her peers ultimately disagreed with every count of it. For another thing, Pao has a complicated personal life, and many people don’t believe what she says because of her husband’s hedge fund’s bankruptcy problems and history of litigation. Plus, the protracted five-week-long trial wasn’t over until it was over, so people told us they were waiting to pass judgment in public. Others reminded us that Kleiner Perkins continues to be a big, respected, established venture firm, and picking sides could be bad for business.
Former Yahoo president Sue Decker was a rare woman willing to wade into the public discussion after she sat through a day of the trial with her daughters. She wrote in a guest column for Re/code:
“I, and most women I know, have been a party to at least some sexist or discriminatory behavior in the workplace. Many of the examples raised in this trial are behaviors I have personally witnessed along the way. At the same time, the men who may be promulgating it are often very unaware of the slights, and did not intend the outcome. And for the women, it happens in incremental steps that often seem so small in isolation that any individual act seems silly to complain about. So we move on. But in aggregate, and with the perspective of hindsight, they are real.”
Listen to that — she’s saying she recognizes Pao’s story in her own. She’s not saying that Ellen Pao is a martyr. She’s not saying Ellen Pao should have won. She’s saying there’s a problem here, and the trial created an opportunity to talk about it.
Liz published that on April 1, 2015. We still have a long way to go.