Meet the founder who briefly forced Silicon Valley to confront its race problem

A couple weeks ago, Matt Joseph hit a breaking point.

The founder of Locent, a text message marketing service for brands, Joseph was tirelessly working to get venture capital funding to scale his business. While the fundraising process is undoubtedly difficult for every founder, Joseph felt like his startup wasn’t being given a chance. He would walk into a meeting wanting to talk about his business model and would walk out feeling like another issue dominated the conversation: His race.

Joseph has a similar pedigree to other successful Silicon Valley founders: He went to Princeton for his undergrad and has a J.D. and an MBA as well. Despite his qualifications to run a business, he felt like investors were unconsciously not giving him a shot because he is a black founder. Rather than stay silent, Joseph took to Twitter and wrote a prolific and engaging 30-part tweetstorm outlining the issues minority founders face in Silicon Valley.

Here’s how it started: 

“I thought, ‘If I have to go through another 40 conversations like I was, I am not going to want to do this anymore’,” he told me. “It was more than I felt like I could handle.”

Joseph timed the tweetstorm to go live right before Demo Day — an event run by Y Combinator where startups pitch their businesses to a room full of elite investors — and the response he got was completely overwhelming. With some tweets getting as many as 600 retweets and over 1,000 likes, Joseph struck a cord that had a strong ripple effect through Silicon Valley and beyond. But after that 24-hour firestorm, the question remains whether Joseph’s effort will have a lasting impact.

In an interview, we discussed Silicon Valley’s diversity problem, some proposed solutions and his advice for other minority founders looking to get funding.

Edited excerpts:

Caroline Fairchild: Did you expect to get the strong reaction that you did?

Matt Joseph: Absolutely not. I thought that maybe a few investors would see it on Demo Day. I did not think that so many people would take an interest and use it as a platform for themselves. The reality is you can replace [my story as a] founder of color for anyone who experiences bias in the workplace. My story will resonate with that feeling of hopelessness.

CF: Can you share a specific time where being a minority founder felt like a disadvantage?

MJ: As an entrepreneur, you go to these big events with other founders and investors, and generally it is all white men and usually I am the only person of color in the room. That doesn’t make me specifically uncomfortable, but I think when you are in an environment like that, there can be real cultural insensitivity. People will feel compelled to talk to me about black culture. Maybe the investor is trying to find common ground, but they will say things that are inadvertently offensive. One investor came up to me once and said that he was really impressed with guys like Troy Carter and Nas who are entering the investing world. He asked me what I thought about it. I told him I thought it was cool and sent a good message to our community. Then he proceeded to ask me what lessons from them I can apply to my business. I was thinking, “What are we even talking about here?” Now we are having a racially charged discussion where he is putting me in a bucket of entertainers that are now just coming into tech. I don’t want to have those conversations, but when you do, you have to compartmentalize them and pretend they never happened. It throws you off. The only way to change that narrative and that insensitivity is to have a voice when it happens.

CF: Venture capitalists are very open about the fact that they invest off of pattern recognition. How does that hurt minority founders?

MJ: The challenge that you run into is VCs rely on an existing archetype of a successful founder. If you have five exits by five founders who all look the same way, you develop a thesis in your head of what works. Investors then have to stretch their views of what is effective to include diverse founders. I’m not knocking what can be a very effective process, but you are making 50 bets hoping that one works. That is how the industry works. If you exclude a population of people from those 50 bets, then you are going to have a very homogenous portfolio. If you bet on the same type of person 50 times, absolutely one will work. But if you don’t bet on any people with a diverse background, zero of them are going to work. You have to be conscious of your own unconscious biases. It is easier for VCs to make bets on themselves — that’s the issue.

CF: What about the few diverse venture capital partners at various firms. Can they make a difference?

MJ: A lot of firms are moving in a good direction by hiring female partners and minority partners. But that is barely step one. You can’t hire a black partner and then say they are the diversity partner. I have talked to black partners who have told me in no uncertain term that in their partnership they feel pressured not to invest in black businesses because they don't want to be seen as the black partner. They are trying to fit in with a culture that doesn’t particularly embrace black founders. You have to look at the entire arch of how a deal comes together and make sure there are paths for diverse founders to enter the process. There is a lack of overlap of networks to allow this stuff to happen. The ways that deals get done, people don’t write checks off the cuff. They are usually  funding people who are in their extended network or people they have had a relationship with for a long time. I don’t think a lot of VCs are focused on making those relationships with diverse founders, but they should.

CF: So what needs to happen to solve the discrimination problem in venture capital?

The first step is accepting the breadth of the problem. That starts with VCs being more familiar of people with diverse backgrounds as execs, entrepreneurs and partners. These institutions are old boys networks and that won’t change unless they actively try. You can’t solve this problem unless you first acknowledge the problem. At it’s core, the reason that it is an issue is that the playing field is not level. Say what you will about the fundraising process, but the opportunity should be even no matter your race or pedigree and background. You should be able to evaluate someone’s business rather than come in with preconceived notions.

CF: What firms or partners do you admire?

MJ: Michael Seibel of Y combinator does a great job with this. He does an amazing job and he doesn’t toot his own horn, but he has opened up a path for diverse founders to get into the premier early stage organization in Silicon Valley. He is a straight shooter. He is there to help you build your business, and I like the way that he has committed to it and committed to a diverse organization of founders. The only reason I had the conversation that I had with such diverse founder was because of YC. They told me they were going through the same thing. That’s why I decided to speak out.

CF: Would you encourage other minority founders speak out?

MJ: Yes and no. I would encourage people to be authentic. I don’t think that if you go on a tweetstorm and call out a bunch of VCs that it will mean you get funding. Some news has started to come out of us getting funding, and I have heard from other founders who said that they should do the same thing to get funding. I told them no. The tweetstorm is only one small part of the story. In practice, you have to build a good business. And if investors are not interested and your business is good, then you should do something. The most effective thing that founders of color can do is build a great business. It sounds dumb, but that is how you get the furthest with investors. My problem was investors weren’t looking at my business in the first place.