If We Want Tech to be More Diverse, Start With This.

The amazing community builder Danya Cheskis-Gold (of Spark Capital and formerly of Skillshare) gave a great talk recently called “What Tech Can Learn From Community Builders About Diversity.” Leading up to the talk, she asked friends and colleagues for input around the topic, and I compiled the following statistics and articles to provide some context and background on the topic.

The discussion around diversity in technology suffers mainly from the same problems that plague conversations about diversity in other settings: Corporate America, higher ed, politics, etc. Namely, the issue is that diversity-focused initiatives seek to include without becoming more inclusive.

The sharp-tongued comedian Hari Kondabolu speaks to the issue that many find when they become the target of said diversity campaigns:

The transition to living in a small college town in Maine also helped Kondabolu develop his comic identity. It was here that he first realized his childhood in Queens, the most ethnically diverse county in the United States, differentiated him from other people his age… he remarked that “admissions told me that there would be a surge of diversity when I got to campus. And I was the fucking surge they were talking about.”

“Diversity,” as it’s commonly understood, creates an inherent otherness. For true diversity to be reflected in any institution, be it startup founders, C-suites or college quads, we have to examine the core structures that dissuade a wider swath of the population to participate in these institutions in the first place.

I’ve divided my argument into five key areas of consideration:

1. Perception–the perception of the tech industry to non-tech people (including would-be founders, employees, customers, etc.)
2. Operations–what it would take to alter the pipeline to be more inclusive
3. Financial–resources needed, barriers, etc.
4. Tactical–an assessment of current tactics for reaching qualified candidates and suggestions for new ones
5. Risk–the motherlode of barriers to potential founders

1. Perception

Cultural Douchiness

I don’t think it’s a secret to say that a large portion of people outside the tech industry see it as douchey. Tech has a bit of a PR problem. Chatter about Silicon Valley industry seems to dovetail conveniently into conversations about wealth inequality, gender inequality, racial inequality, gentrification, ageism and the rest of the gamut of modern maladies. Is the (very, very low chance of attaining) egregious wealth really worth all of the strife?

I think part of this is just the natural human inclination to take down those at the top. 20 years ago the hot topic was Nike and sweatshop labor, 10 years ago it was Apple and Foxconn. But every article that comes out about Uber doing something to undermine competition doesn’t just affect Uber, it affects the industry at-large. Those articles may be great for would-be investors looking for evidence that their companies are willing to do what it takes to succeed, but to everyone else, it’s just toxic sludge.

Triviality in Product Development

If startup founders were just watching Hans Robling TEDtalks all day, they’d see plenty of areas where humanity has achieved tremendous progress in recent years in reducing mortality rates, hunger, poverty, etc. And his data seems to suggest a cornucopia of potential industries with viable market caps across a wide variety of sectors from public health to private sector development to education.

So why does the world need a lightbulb that is also a speaker? Because it’s fucking awesome! Hooks up to my iPhone via Airplay? Awesome. Solves the “pain point” that I only have Airplay speakers in one room? Double awesome. Costs more than I paid for my iPhone 6+ after rebates per device? Triple awesome, if I were an investor.

But what about the work that keeps me up at night? California’s water crisis, wage stagnation, housing insecurity, Donald Trump, etc. Problems that don’t lend themselves to 10-slide decks, Y-Combinator pitches, conversion funnels and user acquisition strategies. It’s hard to get excited about how awesome my idea for smart toilet paper is when I see the problems that need to be solved.

The Sociopathy of Silicon Valley

Let’s face it: a good portion of the startup world’s PR symptoms would be cured if Marc Andreessen would just keep his mouth shut. Soylent, Boston Robotics, Amazon Drone Delivery, the list of crazy-ass sounding funded ideas goes on and on. Most of us watch science fiction movies and crawl into a hole hoping the world we recognize is still outside. Some watch them and think of it as inspiration.

I don’t need to quote or even link to the numerous articles that reference a penchant for psychopathy among successful entrepreneurs. By this point, you’ve discussed Bezos and Amazon, and come to your own conclusions about how pervasive this behavior is. But no one is writing these articles about other sectors (well, besides finance).

2. Operational

Are you crazy?

Ok, so, assuming you don’t find the tech industry douchey, trivial, or sociopathic (which I don’t… mostly), what’s next? Jump into Y-Combinator and talk my MVP up until I pass out? Bootstrap the shit out of my customer acquisition through LinkedIn ads? Live in the valley in a van for two years until we get our first angel funding?

I came across this chart this morning, which makes it look pretty easy. 25 million users in four years? Why aren’t we all creating startups?

The reality is different: some products never get validation, founders quibble, talent is scarce, consumer spending is tight, trends are fickle, etc. Why do some startups succeed and others fail? Bill Gross says it’s timing, timing, timing.

So there’s an argument to be made that the more startups that get created, the greater the chance is that you’ll have a unicorn 100x return investment, but at some point you’ll run into the law of diminishing returns (Slide 17). And when you factor in timing, you’re threading a very small needle with some very large thread.

What then? How do you operationalize the development of entrepreneurship among groups that buy into the tech industry and have talent but are either overwhelmed by the options or the odds? You know, rational, intelligent people?

You somewhat have to lower the barriers to entry. In Alex Blumberg’s great podcast Startup, he talks about the difference between hockey stick companies and lifestyle companies. Hockey stick growth requires vast amounts of capital, sound planning and cut-throat perseverance, and lifestyle companies can build their customer base slowly while paying everyone’s salary in a comfortable capacity.

But, the story goes, VCs don’t like lifestyle companies because their limited capital is being eaten up by low growth-potential businesses when it could be used to take bigger risks on the hockey stick companies. As Chris Sacca responds to Alex Blumberg’s question about what is wrong with lifestyle companies, “Nothing, as long as you’re not using my money to create them.”

Of course, this notion is countered by several other investors in Gimlet Media (Blumberg’s production company that produces Startup) who end up investing in the business not necessarily for its growth potential, but for a slew of other reasons (advising to other related businesses, liking the product, trusting the leadership, etc.). Gimlet Media may end up being a hockey stick company that looks like a lifestyle company.

The era of T-shaped founders

So, if Gimlet succeeds in the face of conventional VC wisdom, what’s their secret? I’d say that it’s because they’ve been honing their product for a long, long time. Alex Blumberg might be described as what IDEO’s Tim Brown calls a T-shaped (PDF) individual, someone with deep knowledge in a particular discipline (radio production) but a penchant for collaborating with those with complementary skills (business, legal, marketing, etc.).

T-shaped individuals help counterbalance the timing issue, because these are folks who have honed skills for a long time in a particular discipline and who may find their skills in a very niche discipline all of a sudden valuable to a much larger audience by way of technology.

Then it follows that a good way to expand the qualified pool of startup candidates is to find more T-shaped individuals. Beats by Dre has Jimmy Iovine and Dr. Dre, Tidal has Jay-Z, Yahoo has Katie Couric (ok, bad example), etc. A better example might be Beme, video expert Casey Neistat’s new startup. Casey is a classic T, with years of experience as an advertising video director and filmmaker.

2015 is the year of content, but this is obviously constantly evolving. Snapchat is pioneering sponsored content that fits the user, and not the other way around. Right now is the time to be finding content leaders and building business teams around them. Take a guy like Bradford Young, super talented cinematographer who worked on the film Selma and has a cult following. Wouldn’t you download an app that makes your vacation video look like one of Bradford Young’s films? Maybe that’s just me.

Maybe 2016 is the year when wearables go from a “Ha! I told you so” dud to a “foot-in-mouth” success. All of the fashion houses are starting to get into wearables, but where are the up-and-coming T-shaped fashion people? They’re at Manufacture NY.

3. Financial

So now you’ve made it this far: you’re excited, you know what steps to take, and you’re plotting to take over the world with your idea. Now VCs just coming knocking, right?

Well, maybe you don’t need VCs as long as you have 20 years to wait. Lynda.com’s Lynda Weinman reportedly never took on VC funding because she “wouldn’t know what to do with it.” The company began as a web development course at the Ojai Digital Arts Center in the early 90s where she showed people how to design website. Demand grew so high that she started recording videos of her seminars. 20 years later, they’re acquired by LinkedIn for $1.5b.

But the issue still stands that capital (or “runway,” or the ability to at least sustain oneself while launching a business) is the leading prohibitive factor for many folks considering the jump to becoming a founder. As mentioned before, it turns out that the reason successful startup CEOs were willing to take risks is because, well,they could afford to.

And what about the financial implications of creating more startups on a broader societal level? There’s evidence that every dollar invested in an average startup (PDF) is less valuable than a dollar spent growing an existing business.

The point is, the biggest challenge may just be ensuring that potential founders have the financial support they need to even consider making the leap. Companies like Sofi have created some interesting alternative risk-assessment credit allocation models that may allow for the potential for evening out the founder playing field, but if one founder is operating without fear of devastating personal financial loss against another one who bears the burden of debt while trying to launch a startup, who is the better bet to succeed?

Add to the pot the ageist culture that tends to favor young founders as opposed to older, more experienced founders (and the fact that younger folks are more likely to be saddled by higher education debt), it isn’t hard to see why the tech world favors those who already have capital.

4. Tactics for Increasing Your Pool of Qualified Founders

What is the current pipeline for founders and teams?

• Y-Combinator and other accelerators
• Former Startup veterans from established players (Facebook, Google, etc.)
• The big engineering schools (Stanford, Harvard, CalTech, etc.)
• Biz schools (Stanford GSB, HBS, Wharton)
• Niche scientific graduate programs (applied sciences, engineering, robotics, etc.)
• Hackathons

Where is everybody else? According to the Bureau of Labor and Statistics:

• State and Local Gov’t (13%)
• Agriculture (12%)
• Healthcare (11%)
• Retail (10%)
• Leisure and Hospitality (10%)
• Manufacturing (8%)
• Freelance and Family Care (6%)
• Finance and Banking (5%)
• Other (Construction, Wholesale, Transportation, Information, Federal Gov’t, Education, etc. 20%)

So, irrespective of gender, race or other audiences you may be trying to control for in terms of expanding the pool of founders, this is where your prospective pool of qualified candidates works:

• A sizable portion work for the government, which can be anything from a policeman to mayor to any other myriad jobs).
• A lot of folks still work in agriculture (though that’s expected to fall further in the next 10 years)
• Many are in the service industry (healthcare, retail, hospitality, etc.)
• Fewer still still are in manufacturing
• Here’s the kicker: 1.8% are in information, which is a form of classification that includes most folks in the startup world.

An important question to ask is who are these potential founders that aren’t currently founding companies? Are they within that 1.8% of information workers? Are they from the ranks of these other industries that are very likely very underrepresented in Silicon Valley? It’s worth asking.

Better still, how do you reach these folks and cultivate them into becoming founders? That is also an interesting question, particularly from a community-building standpoint.

5. Risk

Ok, so let’s build a profile of this person:

They are:

• not jaded by perceptions of the tech industry
• think their work is meaningful
• aren’t scared of the future
• are experts in a high-demand skillset
• willing to collaborate with others

They need:

• personal financial runway
• access to capital OR
• patience and support to grow slowly
• need to provide more value than if they were just working for a large organization
• Side note: according to the same Bureau of Labor and Statistics data, leading economic output by industry:
• 20% manufacturing
• 14% finance
• 11% professional and business services
• 8% state and local governments

They work in:

• Most likely one of these industries:
• State and Local Gov’t (13%)
• Agriculture (12%)
• Healthcare (11%)
• Retail (10%)
• Leisure and Hospitality (10%)
• Manufacturing (8%)
• Freelance and Family Care (6%)
• Finance and Banking (5%)

So, what is the benefit to them to become a founder? Potential wealth? Building the future? The challenges? The glory? Maintaining the U.S.’ competitive advantage? Sell me on it.

What are the potential costs? Financial risk/ruin, lack of a personal life, stress, depression, etc.

The tech industry so far really seems to reward those who are already rewarded. The only way to grow the pool is to understand what the mitigating factors are that prevent more people from taking on the risk. Once we have a better understanding of how to even the playing field, we’ll see a more diverse founder pool.