Six Steps to Increase Diversity in Tech

In November 2016, LinkedIn published a enlightening report interviewing Founders and Venture Capitalists (VCs) about why diversity is so poor in tech. In #TechTalksDiversity articles since then, top thought leaders like Joanne Wilson and Melinda Gates continue to address the problem. At the end of 2017, LinkedIn's Caroline Fairchild reported, "tech’s diversity divide is as wide as ever."

From gasp-worthy quotes to the overwhelming indication that respondent's beliefs are unsupported by facts, the study reveals that neither investors nor founders (especially if they are male) understand why diversity is in their best interest, business-wise. Despite the dismal numbers, there is also an unrealistic faith that the problem will somehow resolve at epic rates spontaneously. Clearly, there is much work to be done to create awareness and ensure that accurate information is preached (and received) beyond the choir.

In order for this to happen, and for change to take place, a mighty minority will have to shoulder the burden of engaging, challenging, and persuading the uninformed. We can't expect tech founders or investors with no domain expertise in diversity to lead the charge or to have the faintest clue of what needs to be done. With that said, the focus of this post is to reiterate suggestions shared in Does Diversity Bother You? as to what can be done and the kind of work we're doing at DiverseCity Ventures.

1. BuildRapport

For those who care to address and / or solve the problem, consider the following. Even if a female or underrepresented candidate or founder doesn't seem like a traditional "fit," there is something to be said for establishing relationships with members of groups that are clearly socially and / or economically segregated. The point is to tap into overlooked or underutilized perspectives. Not only should Founders and 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 VCs or Founders to establish those relationships - especially with WOC (women of color), who receive < 0.4% of VC funding. While hiring more women and people of color to invest is important. So is bringing on Chief Diversity Officers to signal that an organization is committed to the cause. However, 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.

In fact, many recruiters have complained that hiring managers block highly qualified, underrepresented candidates. It seems that "culture fit" continues to be a barrier for diverse candidates. On the investing side, data indicates that when women or underrepresented investors are a minority at the table, they feel pressured to conform to the status quo. The fact is, everyone in the organization needs to do the work of normalizing diversity and gaining personal exposure to diverse perspectives.

2. Support Underrepresented Emerging Managers

In his 2016 report, 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 who are building up the deal flow to deploy.

It is also unreasonable to expect all emerging managers to have a track record when, clearly, historical barriers to entry make that nearly impossible. As Kerby unearths in his research, most VCs don't have an investment background, engineering degrees, or operational experience in a major tech company (among the qualifications expected of underrepresented emerging managers). Why should women and other under-represented entrants be held to higher standards?

The data show that the majority of venture capitalists don’t have operational experience or an engineering background. Therefore, it is important to focus on what all of the successful people listed above have in common. They are all intelligent, curious, driven, hardworking and a slew of other positive superlatives. But most importantly, they were given an opportunity to become an investor and access to capital to make investments. - Richard Kerby

Just as SBIC has impact funds to invest in pre-revenue companies, there should be opportunities for pre-"track-record" emerging managers who have the aptitude to source and support companies with diverse founders to meaningful exits. When diverse managers are capitalizing on diverse perspectives in their portfolio companies, others will take notice. Those who stay in a bubble will go the way of dinosaurs.

3. 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. How about company-sponsored movie nights with employee recommended films?

I'm also an advocate of corporate environments offering resources for more integrated lives - beyond ping-pong tables and cafeterias. Family-oriented picnics, Dave & Buster Days, etc. is a great opportunity to allow teams to bond over family associations and shared humanity. These are the dynamics that make SMBs strong. The same can be true at scale. On site daycare, nursing rooms along with nap rooms, and company hosted self-paced charter schools are also examples of cultures that nurture diversity and inclusion. Jack Ma's company, Alibaba, performs mass weddings every year. Sound outside of the box? Well, that's what you get when you tap into diverse perspectives.

4. Government Intervention

Insert collective shudder. Nevertheless, EEOC / Government intervention may be required to investigate and resolve 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 retain underrepresented candidates / founders. Further policy intervention may be required to achieve the kind of gains Nordic countries have been boasting for years.

5. Continuing Education

VCs, CEOs, and recruiters should be challenged to attend conferences with diverse attendees. Examples referenced before include NSBE or Grace Hopper Conferences. They should experience first-hand what it is like to be a minority and to witness the top of the funnel with their own eyes.

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.

6. Talk About it AND Be About It

No one's 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 of the highest caliber, 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 can be a source for wise seekers. Foundations, Family Offices, institutional investors and high net worth individuals will fund emerging managers who will invest equitably 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 oblivious, apathetic, 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. Especially when we all have so much to gain by tapping in to it.

Read more at DiverseCityV.com