A group of more than 400 tech entrepreneurs and CEOs have formed a coalition called Founders for Change to press for greater diversity and inclusion in the venture capital industry. The group includes the chief executives of major startups like Dropbox, Lyft, and Airbnb, as well as public companies like Stitch Fix, and represents a reversal of the traditional founder-VC relationship, Pui-Wing Tam reports for the New York Times:
On Tuesday, in a statement underlining the importance of diversity in the tech industry, the tech executives said the racial and gender makeup of a venture capital firm would be “an important consideration” when they were raising money …
The entrepreneurs’ public statement is unusual. In Silicon Valley’s start-up ecosystem, founders and investors have generally maintained a delicate power equilibrium. Venture capitalists strive to get into the hottest start-ups, aiming for a big payoff when those companies go public or are sold. Entrepreneurs, in turn, take money and guidance from the investors to help their start-ups grow and flourish.
Writing at Recode, Inkling founder and CEO Matt MacInnis discusses how he discovered his own values as a leader when he left Apple after eight years to start his own company. In the beginning, he explains, he attempted to emulate the tech giant’s famous culture of secrecy, because he had seen it work so well for Apple, but soon began “to recognize that some of the default settings I had adopted were at odds with my own values”:
I did at Inkling what I had been trained to do at Apple: I strictly controlled information flow in and around our tiny organization. I had an aversion to speaking with media. I insisted that new employees sign strict NDAs. And I behaved as though our little-known brand and products were worthy of instant, outsized coverage. It was a tad nutty. …
My own move from middle management at Apple to executive leadership in a startup provided time for reflection and recognition of what is most authentic in me. While retaining some of the most valuable characteristics of Apple — a commitment to craftsmanship, strong top-down leadership and a devotion to hiring A-level players — I also forged an independent course. I found my own voice in radical openness and transparency, a hallmark of the Inkling culture.
We all eventually recognize that we don’t get to choose our core values. Rather, they choose us.
MacInnis’s experience both at Apple and as a founder speak to some of the core lessons of our latest research at CEB (now Gartner) into how organizations can effectively and design and manage culture.
Steve Jennings/Getty Images for TechCrunch/Flickr/CC
Dan Primack at Axios broke the story on Thursday of a lawsuit filed in Delaware Chancery Court, in which Benchmark Capital, a major institutional investor with a 13 percent stake in Uber, is accusing the ridesharing startup’s founder and former CEO Travis Kalanick of fraud, breach of contract, and breach of fiduciary duty for what the suit describes as an attempt “to pack Uber’s Board with loyal allies in an effort to insulate his prior conduct from scrutiny and clear the path for his eventual return as CEO”:
The suit revolves around the June 2016 decision to expand the size of Uber’s board of voting directors from eight to 11, with Kalanick having the sole right to designate those seats. Kalanick would later name himself to one of those seats following his resignation, since his prior board seat was reserved for the company’s CEO. The other two seats remain unfilled. Benchmark argues that it never would have granted Kalanick those three extra seats had it known about his “gross mismanagement and other misconduct at Uber” — which Benchmark claims included “pervasive gender discrimination and sexual harassment,” and the existence of confidential findings (a.k.a. The Stroz Report) that recently-acquired self-driving startup Otto had “allegedly harbored trade secrets stolen from a competitor.” Benchmark argues that this alleged nondisclosure of material information invalidates Benchmark’s vote to enlarge the board.
Publicly reporting diversity statistics has become the norm for US tech companies over the past few years, but some major employers in Silicon Valley, including Twitter, Pinterest, Salesforce, and Ebay, are delaying their annual diversity reports this year, the Wall Street Journal’s Georgia Wells explains, as they rethink the purpose of these reports and refocus them on their recruiting goals rather than raw diversity data:
“It’s not about hitting a number for the sake of doing so,” said Candice Morgan, Pinterest’s head of diversity and inclusion. “The goals are about fundamentally making progress towards doing our most innovative work.” …
“There’s starting to be a shift in the conversation: we can’t just put the diversity data out there,” said entrepreneur Tracy Chou, who is part of an initiative to better measure and increase diversity in tech called Project Include. Instead, she said, companies are starting to ask, “What can we do to move the data in the right direction?”
In the past year or two, many of these Silicon Valley diversity reports have been met with disappointment, as tech giants fail to reach the goals they’ve set for themselves, sometimes making no progress or even moving backward despite investing significant resources in their diversity and inclusion strategies. Reporting on these missed goals may be transparent, but these companies now fear they are sending the wrong message:
A growing body of research shows that building a diverse workplace directly benefits business performance by fostering innovation, empathy, and a broader perspective among employees. These attributes are especially valuable in the tech sector, where creating and improving products takes a great deal of creativity. However, Fast Company’s Jared Lindzon flags a study showing that while most tech startup founders believe in the value of diversity and inclusion, most aren’t going too far out of their way to act on that belief:
In a new study conducted by Lawless Research on behalf of Techstars and Chase for Business, 72% of tech founders believe building a diverse workforce is very important, and 81% acknowledge that a diverse workforce enhances creativity and innovation. The same study, however, found that only 12% employ five or more employees from diverse or underrepresented backgrounds. The study also notes that while 92% of founders are at least familiar with the term “unconscious bias,” only 45% have taken steps to combat it.
The study gathered responses from 680 tech founders and executives from companies established within the past seven years. While some major companies like Intel, Google, and Pinterest are taking proactive steps to improve the diversity of their workforce, the study concludes that early stage companies, particularly those founded in the past two years, are most likely to have no women or minorities in tech positions.
Those who champion diverse workforce initiatives, however, have a proven advantage. A 2015 study by McKinsey and Company found that companies in the top quartile for gender diversity were 15% more likely to outperform their competitors, while those in the top quartile for ethnic diversity were 35% more likely to see financial performances above the national industry median.
Sequels are hard to get right, but that doesn’t stop movie producers (or corporate boards of directors) from bringing back the famous characters of the past to try and revive their own fortunes. At the Washington Post, Jena McGregor recently explored the recent run of returning founders at companies like Starbucks and Charles Schwab, and how this trend is particularly pronounced at technology companies such as Pandora, which just appointed co-founder Tim Westergren to take the reins as CEO.
Everyone knows how Steve Jobs’ second stint at Apple turned out, but replacing the CEO with a founder isn’t always a surefire recipe for success. So when is it right to pull a founder back in? First, it’s important to consider the context of the leadership transition at hand, because having the skills to run a company doesn’t help if you can’t run the business in its current state. The most common senior leadership transitions we’ve seen fall into four basic categories:
- Replacing an Icon: The leader’s predecessor was very successful in the job (18 percent of the time).
- Following a Train Wreck: The leader’s predecessor was not successful in the job (27 percent of the time).
- Jump Start: A static environment where the performance of the leader’s predecessor wasn’t particularly strong or weak, but the organization needs to quickly move in a different direction (19 percent of the time)
- Breaking New Ground: The leader assumes a newly created position (31 percent of the time).