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5 resources Black entrepreneurs can leverage to build and grow

Delali Dzirasa
Contributor

Delali Dzirasa is CEO and founder of Fearless, a full-stack digital services firm in Baltimore, MD with a mission to create software with a soul — tools that empower communities and make a difference.

Building a business is hard; about 50% of businesses fail in the first five years. The early years of an entrepreneur’s journey can be difficult and lonely. When starting my digital services firm Fearless, I convinced my wife to rent out our home and move in with my mother so we could have an extra income while I built Fearless in my mother’s basement.

That was 10 years ago — Fearless now has over 115 employees.

That story of struggling to build a tech company and working out of a basement or garage until you “make it” is pretty common, but the barriers facing Black entrepreneurs make it harder to find success and support.

Research by the University of California, Santa Cruz states that minority-owned startups have access to less capital than their white counterparts. The right investors can offer more than just funding to early-stage companies; the connections those in the venture capitalist world have can bring an entrepreneur the new business, mentorship and employees needed to grow.

Venture capital firms like Harlem Capital and Black Angel Tech Fund are focused on changing the faces of entrepreneurship by diversifying their portfolio, but traditional venture capitalist funding is not the only way to grow your business.

There are other avenues and opportunities to get the support, financial and otherwise, to help build a successful company:

Equity crowdfunding: Similar to crowdfunding campaigns like GoFundMe or Kickstarter, equity crowdfunding allows nontraditional investors to support businesses and receive equity. Enabled through Title III of the 2012 JOBS Act’s Regulation CF, equity crowdfunding allows all companies to sell securities, whether in the form of equity in the company, debt, revenue shares, convertible notes and more. Equity crowdfunding platforms include WeFunder and LocalStake.

Mentor programs: Fearless was lucky enough to be accepted into the DoD Mentor-Protégé program early in our growth. As the oldest continuously operating federal mentor-protégé program in existence, the DoD program helped us establish and expand our footprint in the federal government contracting space. NewMe and Black Girl Ventures are two programs that specialize in mentorship for early-stage companies.

Become 8(a) certified: The federal government has a goal of awarding at least 5% of all federal contracting dollars to small, disadvantaged businesses each year. These businesses fall under the 8(a) classification. To qualify for the program, you must be a small business with 51% of ownership and control from U.S. citizens who are economically and socially disadvantaged and the owner’s adjusted gross income for three years is $250,000 or less.

The full definition of what counts as being economically and socially disadvantaged can be found in Title 13 Part 124 of the Code of Federal Regulations. Fearless has been classified as an 8(a) company for several years and we have been able to secure several contracts through the certification.

Tap into Small Business Administration resources: More than a million users visit SBA.gov to utilize tools like the SBA Business Guide and Lender Match site. By using the SBA website and reaching out to your local SBA office, you can make full use of the programs available and connect with business owners who can offer advice and mentorship.

Identify supportive bankers: Your business is your top priority and the people you engage with should view your company as a priority too. You need someone vested in your success who will advocate for you when you need them. If you meet with a banker and get a sense that you would be an account number instead of a person, then find another one. If you don’t have your banker’s personal cell phone number, and they aren’t willing to visit you at your business, then take a pass and find a true partner who supports you.

A call to action for business owners

I am putting the call out to business owners and entrepreneurs who are further along in their journey to mentor and invest in Black-owned businesses. Think back on the support you received, and be that model for someone else. Or be the mentor that you wished you had when you were starting out. Take time to invest in other Black-owned tech companies or fund the programs that do. Share your knowledge and experience with Black tech leaders.

If there isn’t a resource hub for Black entrepreneurs in your city, create one. Fearless is a small company and we have still managed to help 13 new companies get off the ground through our accelerator program, Hutch.

Hutch is an intensive 12-month program that gives entrepreneurs a blueprint for building successful digital service firms, by empowering them with the tools, mentorship and peer support they need to have a lasting impact. We think of this program kind of like a home base for our entrepreneurs, providing them with a foundation of support so they can grow without getting lost amongst bigger companies in the industry.

Help create the spaces in your community that will foster innovation and business growth.

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So you want to talk about race in tech with Ijeoma Oluo

“A lot of people denigrate the value of talking about race and racism in technological spaces,” said Ijeoma Oluo, author of So You Want to Talk About Race, which has surged to the top of the New York Times best sellers list in paperback nonfiction, two and a half years after its initial January 2018 publication. “…I don’t think there’s a more important space to be talking about it.”

Oluo and I were talking this January, just before the global pandemic struck, at One Cup Coffee: a no-frills, “more than profit” coffee shop that shares a storefront with a church, and is just down the road from a methadone clinic. The cafe is not far from Oluo’s home in Shoreline, Washington, a city just north of Seattle.

“I’ve seen the absolute best and the absolute worst in race and racism in America on the web,” Oluo continued, “in ways that have had true-life consequences for me and for people I love. [The internet] is a space that is just as real as face-to-face space. And we absolutely have to be looking at it politically and socially, as to how it’s contributing to the way in which we look and deal with each other and how we address issues of inequality and injustice.”

To drive to Shoreline from the posh Seattle neighborhood in which I’d been researching Amazon’s growing campus which exceeds anything at Harvard and MIT, the two campuses at which I work as a chaplain, in terms of glittering architectural swank I’d had to pass directly by probably the largest homeless encampments I’ve ever seen in my life. And I’ve led interfaith groups of students to study and volunteer in large homeless encampments. 

Speaking of religion and faith, Oluo and I began our 90-minute conversation (edited highlights below) by bonding a bit over our shared interest in “humanism,” a semi-organized movement of atheists, agnostics, and allies who try to do good and live meaningfully without belief in a God. I work as the Humanist Chaplain at Harvard and MIT, and write about humanist philosophy as a kind of secular alternative to religion.

For her part, Oluo accepted an award for feminist humanism from the American Humanist Association in 2018. She delivered her acceptance speech to a mostly white liberal crowd who tended to think of themselves as enlightened and broad-minded and thus took it in stride when she opened by telling them to ‘buckle up,’ as they ate chicken breasts on white plates and black table cloths, busily passing rolls and butter and accidentally clinking their water glasses. But when Oluo told them, “I need for you to not always be looking for the harm others are doing, but look for the harm you are doing,” as my friend Ryan Bell tweeted at the time, “you could hear a pin drop in here. 

Back to this past January, however: as we sipped simple cups of coffee and tea, I told Oluo about the thesis I’ve developed over the course of my year-plus here as TechCrunch’s “Ethicist in Residence”: that the world we call “technology” has grown bigger than any industry, and more impactful than a single culture. Technology has become a secular religion: quite possibly the largest, most influential religion human beings have ever created.

As you’ll see below, Oluo kindly tolerated, maybe even enjoyed the idea, riffing on several possible tech/religion comparisons. Like this one:

One thing tech fundamentally has in common with many religions, at least in America is that it is a white man’s version of Utopia. And tech especially has this cult-like adherence to a white man’s vision of a Utopia that fundamentally disempowers and endangers women and people of color.

I consider myself an agnostic (not necessarily an atheist) toward this new religion of technology, because I want to view tech the way I’ve always tried to view traditional faith: as a mixed bag, something that can do both good and harm, depending on the circumstance. But as multi-billionaire entrepreneurs like Mark Zuckerberg and Jeff Bezos accumulate power; as social media misinformation sways the fate of democracies while artificial intelligence intrudes on justice systems; and as the current pandemic drives more of our life online, I sometimes wonder if I’ll be forced to re-evaluate my own would-be “prophesy.” If we’re not careful, tech could become the most dangerous cult of all time.

Just a bit more context before the interview below, which Oluo and I agreed to call “So You Want to Talk About Race in Tech,” after her bookwhich was already a major success, but has now reached iconic status nationwide in the wake of George Floyd’s murder.

This article is the last installment of the roughly year-long series I’ve done for TechCrunch, offering in-depth analysis of people and issues in the ethics of technology. So let me just mention that up to now my editors and I have produced 38 articles, with over 150,000 words about mostly women and people of color who happen to be leading efforts to reform and re-envision the ethics of our new technological world.

The series included interviewed Anand Giridharadas on “Silicon Valley’s inequality machine“; Taylor Lorenz on “the ethics of internet culture“; and James Williams on “the adversarial persuasion machine” of efforts by his former employer Google — among others — to distract us to death.

It featured CEOs and venture capitalists disclosing childhood traumas before debating the moral merits of their creations; employees and gig workers speaking painful truth to their powerful employers; as well as deep dives into perspectives on tech feminism, intersectionality, and socialism, alongside heroic efforts to combat cultures of abuse and violent immigration policing within the industry.

Now, to introduce the interview with Oluo: which was, again, completed weeks before the current crisis, but is even more relevant today. To paraphrase the self-described “zillionaire” venture capitalist Nick Hanauer, another Seattle resident with whom I met the same week as I met Oluo, the pitchforks have finally come for American plutocrats. We’ve come to the point, across this country, where my fellow white people and I are not talking about race and racism because we’re woke, or because we want to do everything we can to make the world a better place,” but because we fucking have to. As Kim Latrice Jones says in her viral video that has become emblematic of this period, we’re “lucky what black people are looking for is equality, and not revenge.

This is perhaps doubly so in the tech world, where perhaps not all our neighborhoods and offices are literally burning at this moment, but where there is the most to lose because … they could be. Tech is immune neither to COVID-19 nor to pitchforks. If Black people aren’t able to achieve more sustainable forms of equality in the tech world in the coming years, revenge could become the next goalpost. And it could be justified.

But I trust no one wants to go there. As Malcolm X once said on a visit to Coretta Scott King while Martin Luther King, Jr. was in a Birmingham jail:

Mrs. King, will you tell Dr. King . . . I didn’t come to make his job more difficult. I thought that if the white people understood what the alternative was that they would be willing to listen to Dr. King.

MLK has become an almost literal civil rights deity over recent generations, deservedly so. But we may one day, hopefully a long and peaceful time from now, look back on the life and work of Ijeoma Oluo (along with several of her peers, many of them Black women) as having achieved a level of influence and inspiration that at least approaches King’s.

And while some readers might need to buckle up in order to take in what she has to say, they should remember that her vision is the more optimistic alternative for how things could go in the coming years.

So you want to talk about race in tech? Let’s talk.


Editor’s note: This interview has been edited for clarity.

Greg Epstein: To what extent has the work you’ve been doing, particularly since your book So You Want to Talk About Race came out, intersected with the tech world?

Ijeoma Oluo: I wrote the book as a black woman who grew up in Seattle, which is such a tech-centric city, and who worked in tech for over 10 years before I moved over to writing. So it’s very much shaped by these environments — environments that think they’ve transcended race and racism and clearly have not, and also a place where people of color are extreme minorities, especially women of color.

So the tech industry was very present in the book even when I wasn’t talking about tech. Because a lot of people in tech recognized themselves and their peers in the examples used in the book.

Probably one of the most watched videos of a talk I’d given is the one I gave at Google. And a lot of the tech industry, especially here in Seattle, immediately adopted the book, like, “Oh, she lives here. Let’s read this, this will be the thing we do for the year, as far as race and racism.” 

But when I walk into a tech space, I think about it the way I think about just about any other white-majority, liberal-leaning space. Which is that there’s a very limited amount I can do in the time I’m there; the most I can do is reinforce what the extreme minority of people of color in that room are feeling and experiencing. Because I’ve lived it to an extent many other speakers cannot.

[The idea of the book as relevant to tech] also applies because as a black woman, and as a writer, I wouldn’t be [where] I am today if it weren’t for social media, the access that it granted me.

But the cost that [social media has] had, and the way in which it’s giving, via tech, the exact same if not larger platforms to hate, division, and abuse, especially of people of color and women of color, and LGBTQ community, is something that needs to be discussed.

There’s this argument in tech that anyone can prosper in this space. They’ve removed all the boundaries to prosperity. But the truth is, they’ve moved their own personal boundaries, and left all the boundaries to people of color and women in place because they just don’t exist in these origin stories, as anything other than props.

A lot of people denigrate the value of talking about race and racism in technological spaces; I don’t think there’s a more important space to be talking about it. I’ve seen the absolute best and the absolute worst in race and racism in America on the web, in ways that have had true-life consequences for me and for people I love. It is a space that is just as real as the face-to-face space. And we absolutely have to be looking at it politically and socially as to how it’s contributing to the way in which we look and deal with each other and politically how we address issues of inequality and injustice.

Epstein: Great summary: [tech as] the best and the worst. I mean, I’ve learned so much from Black Twitter, which is extraordinarily empowering. Then there’s White Supremacist Twitter. And then there’s just the sort of White Supremacist Lite Twitter, that is, sort of…Twitter.

Oluo: It’s interesting [that you talk about] looking at [tech] like a religion. I think one thing tech fundamentally has in common with many religions, at least in America, is that it is a white man’s version of Utopia. And tech especially has this cult-like adherence to a white man’s vision of a Utopia that fundamentally disempowers and endangers women and people of color.

Epstein: I love that image; I’d love for you to brainstorm with me: what are the characteristics of this white man’s vision of Utopia that we see in tech culture?

Oluo: It starts with the mythologizing of white-male struggle that’s at the core of tech culture. The idea that these men were outcasts who built things up from nothing — the shunned ones. And they’re going to fix the problems standing in their way. This is their success story, their ascension. So what stands in their way, are people of color, the women that aren’t sleeping with them, the popularity and the wealth they aren’t automatically getting, old-class structures that are keeping them away from the new class structure [based on] who has these skills that they, as white men, have?

And the mythology built around it feels very cult-like, very religious-like. There’s this whole origin story that’s not true.

If we look at the founding of our biggest technological advances, we’re going to see a lot of extreme privilege, and this idea that there are rules, merits that are purely good, [things] you can do to ascend in these spaces that are going to revolutionize things. And in the tech space it’s really these guys saying [the criteria for inclusion are] going to be: How good are you at coding? Can you debate better than this person?

What it starts with is a fundamental centering of white maleness. And the goal is the ascension of white maleness. People of color can aid it, they can mimic it, or they’re in the way, to be overcome. There’s this argument in tech that anyone can prosper in this space. They’ve removed all the boundaries to prosperity. But the truth is, they’ve moved their own personal boundaries, and left all the boundaries to people of color and women in place because they just don’t exist in these origin stories, as anything other than props.

If you can’t get your shit together first and foremost for the people in the office, you’re never going to get it together for the products you serve.

What cracks me up is, for a dogma that likes to talk about change and adaptation as much as tech does, how completely closed they are to actual change, especially for any sort of ideological change, and how terrified they are of looking around a room and not seeing people who look just like them, of taking things down to bare bones and asking, did we do this right?

There is nothing revolutionary about what many in tech are calling revolutionary right now. And many complaints people have about organized religion — “Wait, we’re still sticking to these rules from 2000 years ago? We’re still threatened by change and progress?” — are things you can see in tech already. And it’s worrying, considering how recent this industry is, that [we already see tech leaders] saying, “No, no, no, this is the way it’s always been done.” 

Well, where does the change come in then? Are we locking in at these prototype stages and saying, this is the way it’s always been done? For what, the last 20, 30 years? It’s ridiculous.

But the fervor with which I’ve seen white men defend [that status quo of the last 20 to 30 years] and the ways in which they talk about threats to it, also have that kind of religious fervor — the same fervor that launched the internet — even for people who are beyond religion.

Wrter Ijeoma Oluo

Epstein: To what extent have you talked or written publicly about your work in the tech industry?

Oluo: I don’t write a lot about [my experiences in tech]. In my book there’s a couple of anecdotes about work; any time I write about work, chances are it was in the tech industry, but it’s not specific. 

The one thing I will definitely say is, I have never been more sexually harassed in my life than [while] working in tech. I have never faced more blatant accusations about my race, and whether it helps or hinders my career, than I have in tech. I’ve literally been asked to my face, “Do you think you got that promotion because you’re black?” 

I have never felt more of an outsider than in tech, and it’s an incredibly gaslighting environment because it likes to pretend it has that all figured out.

Do you believe there is a profitable future in racial justice? Do you believe you can build products and goals around racial justice? Do you believe people of color are your customers?

I’ve worked in places that suck on race and gender. And they very clearly suck in a way that you know [what you’re getting into]. I worked in the auto industry: I knew what I was getting into there. But in tech they’re like, “Oh, no. That doesn’t matter here. That’s not a problem here.” And it most certainly is a problem. A lot of people think everyone joins tech because they love tech, and that’s going to be the thing that gets them all together, right? This great passion that’s going to help you realize that gender doesn’t matter, sexuality doesn’t matter, race doesn’t matter. 

That’s absolutely not true, because the pitfall that tech falls into is the same one that every other corporation, or actually any other group in America falls into. Which is the idea that true diversity and racial justice is going to be painless for white people and there will be no adjustment. And that people of color want the exact same things you want, and value the same things you value. And somehow at the end of that, they’re going to still see you as superior in some way. None of that is true in real diversity, and in real racial justice and gender justice.

And we need to talk about it, because it’s not just a work environment. I’ve talked to some of the biggest tech or tech-adjacent companies in the world: not only [are] real human beings going into an office every day and facing the realities of a space that does not want to acknowledge issues of racism and sexism, but [that same company] creates products that shape how we interact with each other in the world, in a way that replicates those same issues. 

If you can’t get your shit together first and foremost for the people in the office, you’re never going to get it together for the products you serve. You can’t have an all white male environment, or a majority white male environment, and think the product you have isn’t going to replicate bias and harm. 

And you can’t create a product that you think eradicates bias and harm, while you have a work environment [in which] the people are creating it are suffering under extreme duress, and exclusion, and harm. It has to both be tackled at once. And a lot of times I find that environments try to do one or the other, and not well, and it’s impossible. And the ramifications of not attacking it in tech hurt more than just the people sitting in cubicles doing the work. It really hurts everyone.

Epstein: When you say “it really hurts everyone,” you’re talking about the lack of commitment to actual justice?

Oluo: Yes. And the lack of valuing marginalized people. Even when we’re looking not just from a, ‘do you like your neighbor?’, but even from a profit-level standpoint.

Do you believe there is a profitable future in racial justice? Do you believe you can build products and goals around racial justice? Do you believe people of color are your customers? Do you believe that your product should adapt to them instead of them adapting to your products? Do you want their children using your products, and their grandchildren using your products? Do you want them feeling welcome and well-served by you? 

If we’re looking at capitalism — and this is a capitalist enterprise, we can’t [act] like it’s divorced from it — it matters.

And even these platforms that don’t think they’re related to capitalism, think they don’t sell a thing: it’s bullshit. It’s all part of the capitalist world. And it’s about what you value. Do you think the voices of people of color matter? Because if they do, then the way you tackle issues around harassment and abuse looks starkly different than if you just value the voices of white men.

Epstein: A final question I’ve asked of everyone I’ve interviewed for this TechCrunch series on ethics: how optimistic are you about our shared human future?

Oluo: I’m not more or less optimistic than I ever was. I worry. I worry about how easy it is for people in Western utilization of tech to feel like technology means they don’t actually have to see anyone face to face, and they don’t have to form deep connections with people, or try to build real alliances, or tie their futures and their sense of safety and community and belonging to other people. 

The one thing I would definitely say, that [there] is an incredibly Western-centric view of tech. I’m Nigerian American. The way in which tech is utilized in Nigeria is completely different than the way it’s utilized here. In Nigeria it’s about utility first and foremost. And about bringing people together face to face, to make African businesses run more smoothly, to help undo legacies of colonialism that have taken away physical infrastructure. To build that infrastructure online so that it can exist somewhere.

When we look at even the ways in which Nigerians use the internet to reach across diaspora, it’s so fundamentally different to the Western view of what the internet’s for and how it should be used, and I feel like there’s so much to be learned there. If you want to look at where real pioneering is being done, look at the ways in which tech and internet [are] being used in Central America, South America, African nations, and many Asian nations. Look at what it looks like when communities of color say, “I’m going to build technology that solves the problems that we have, within these limitations of white supremacist structure.”

Look at what it looks like when you’re creating the internet in a society that values the group over the individual. What does the internet look like then? Because it’s not the dream of extreme independence in Nigeria, that’s not what the internet’s built for, that’s not a goal, that’s not what you want for your kids or your family, that’s not what you set out for. So then, what does the internet look like when you have a different social structure? When you think that maybe it isn’t the idea that we’re all here pulling ourselves by our bootstraps, maybe we’re pulling our communities up, what does it look like then when you’re creating platforms? Whole platforms created for that? That’s where if you want to feel hopeful about what tech can do that’s where you need to be.

Epstein: What a beautiful answer to that question. Thank you. That’s in many ways the best answer I’ve received to that question, and I’ve asked it of a lot of smart people.

Oluo: Oh, thank you.

Epstein: Thank you so much for taking the time, on behalf of myself and TechCrunch.

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If you’re not investing in diverse founders, you’re a bad investor

BLCK VC
Contributor

BLCK VC is a nonprofit focused on empowering Black investors and increasing diversity in venture capital.

We won’t sit here as we have for so many years with strong faces and encouraging words and pretend that we’re not tired.

We’re tired because we’ve spent yet another week mourning our Black brothers and sisters who died unjust deaths. We’re tired because we spent half of that week holding the hands of White allies as they were reminded that racism still exists and that it is, indeed, sad. We’re tired because we’re a broken record, telling firms and companies what they can do to fight racism and rarely getting the action they so emotionally promise they care about. We’re tired of holding back anger and sadness as we talk about these issues, knowing our industry isn’t even doing the bare minimum to support Black investors. On top of advising allies, mourning lives lost and working full time jobs, we also raised over $100,000. And we’re tired of racism.

Last week, BLCK VC hosted We Won’t Wait, a day of action where we called on venture firms to discuss, donate and diversify. We asked these firms to discuss Venture’s role in combating institutional racism, to donate to nonprofits that promote racial equity and to release their data on the diversity of their investment teams and portfolio founders. These are the first steps. If you haven’t done these, you’re likely not ready for “Office Hours.” So before we get ahead of ourselves, let’s address why these steps aren’t straightforward or sufficient.

Discuss. It took nationwide uprisings for many VC firms to discuss how they could combat institutional racism. Yet, 80% of firms don’t have one Black investment professional who can identify with what we go through in both our professional and personal lives. BLCK VC held its own discussion to share that perspective, centered on the experiences of Black investors and entrepreneurs.

During this discussion, Terri Burns of GV said, “when a Black person is murdered yet again by police, it is not correct to say that the system has failed, because the system was designed that way.” It is clear that systemic racism leads to the maltreatment, dehumanization and unjustified deaths of Black people across the country. Van Jones of Drive Capital drew a fitting analogy: “Being Black is like being in lane eight with a weight vest and cement boots.” Sounds uncomfortable. But that’s how every Black person in America feels stepping out of bed everyday. For Black founders, discrimination by VCs is par for the course. Elise Smith is not alone when she puts on her daily armor to allow herself to show up in the White-dominated industries of venture capital and Silicon Valley tech.

But we’re not going to repeat what they said. Because you can watch the video, and you can do the research, and you can understand the problem on your own. Truthfully, we have no interest in explaining the problem to White VCs again and again when so many of my brothers and sisters have already spoken on it. If you’d like to know why institutional racism made venture capital so homogeneous and exclusive and racist, please see here, here, here, here and here.

What we are interested in explaining is that these are just examples of what Black investors and entrepreneurs deal with everyday. For almost every Black person in tech, these examples are not only relatable, they are commonplace. These are not the stories that shock and surprise the Black community, these are the stories of the everyday. We didn’t talk about the times we heard the N-word from your colleagues or the times they said our natural hair and beards were unprofessional. We talked about the systems.

There are so many more stories and experiences out there besides what was shared by those seven voices, so please think about what perspectives are missing when you have your discussions. Not just your discussion about racism, but your discussions about the future of venture capital, and about aerospace investing, and about COVID-19 and D2C businesses, and about hiring, and about mentoring and about golf. Black voices are so often left out of the conversations where relationships are built and investment decisions are made, but discussions that lack a Black perspective are incomplete.

Donate. Many VC firms and investors spoke last week about donating their time and resources to Black entrepreneurs and investors — what an interesting way to talk about your job. Please do not donate your time or your money to Black investors or entrepreneurs.

Invest in Black founders because they’re some of the best entrepreneurs. Invest in them because they understand an issue that you do not. Invest in them for the same reason you invest in all of your entrepreneurs — because they’re good. When you frame what you’re doing as a donation, it not only demeans what these entrepreneurs are doing and perpetuates some of the most racist aspects of venture capital, but it also prevents you from understanding that you’re bad at your job. Yes, if you don’t have a diverse pipeline or a diverse portfolio you are bad at your job. Making a separate space and separate fund for Black entrepreneurs removes firms from the responsibility they have to search for, invest in and support Black founders.

If you would like to donate money, donate money to nonprofits that fight institutional racism. If you would like to donate time, volunteer. If you would like to become a better investor, figure out why your pipeline is so homogeneous and fix it.

Diversify. Let’s circle back to an important statistic: More than 80% of venture capital firms don’t have a single Black investor. This statistic is interesting because, as much as it’s about industry trends, it’s really about the failings of individual firms. Most firms don’t have a diverse investing staff. They don’t have a diverse investing staff because they don’t understand the value of racial diversity. They don’t understand the value of racial diversity because there are no diverse investors to force them to think about diversity. Rinse. Repeat.

The single most important part of diversifying a VC firm and diversifying VC broadly is tracking the lack of diversity. Most firms do not routinely track data on their investor, deal pipeline, event or investment diversity. As a result, they rarely think about racial diversity. This is where we ask firms to start. Yes, mentorship can be helpful, office hours can be helpful, but if you’re not tracking your firm’s diversity metrics, they will not improve.

What now? Okay, you’ve discussed racism with your partners, you’ve donated money to nonprofits and you (hopefully) started tracking the diversity of your firm. Now what? Racism resolved? Probably not.

Hopefully these conversations made you realize where your firm’s specific shortcomings are, and you have to address those. Most firms will realize they have a pipeline problem, so start there. Do all of your events, dinners and programs have Black representation? When you’re trying to fill an investor role, did you post the job on your website and in different Black online communities? Did your final round of candidates reflect the diversity of our country? Did you support the diverse investors you already employ so they don’t feel disadvantaged, under-advocated and left out? When you’re trying to write new checks, did you utilize Black scouts and consider businesses that don’t address you directly?

When you’ve done all of that, ask yourself this: When the protests quiet down, and articles about racial oppression aren’t at the top of your timeline, what will you be doing? Don’t let it just be office hours. Don’t let the enormity of the work ahead paralyze you against taking action now. Your actions matter. Your inaction matters.

The resilience of the Black community is unparalleled. That resilience means that no matter how tired we are, we will still fight to change this country and to change this industry. It means that no matter how many times we don’t want to advise allies, we will. And it means that no matter how many times we face oppression and mourn for our brothers and sisters, we will still rise to the challenges. And while the stories of overt racism and microaggressions will continue, so too will our drive to move forward and our action to break down barriers. We will continue to build a home for ourselves in this industry. We will continue to work to ensure that Black Lives Matter.

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What to consider before publishing your diversity memo

In the past few weeks, several venture capital firms have published different variations of the same pledge: we’ll do a better job supporting the Black community.

My timeline, and I’m assuming yours too, has been filled with statements from non-Black venture capitalists saying that they will rethink how to be more inclusive with their hiring and wiring.

There is no need to applaud firms for taking long overdue steps to treat others equally. What is more important is how we’re going to hold these firms accountable going forward, after a history of inaction.

In a memo published on Friday, Matchstick Ventures outlined a series of commitments to fight racism and underrepresentation. The firm, which manages nearly $37 million dollars and is led by Ryan Broshar and Natty Zola, turned to Black entrepreneur Clarence Bethea for advice on how to proceed.

The pledge stood out for two firm reasons: It is more robust than most promises we have seen by high-profile firms, and it has actual numbers and a deadline, which are key to benchmarking progress.

Disclose your current diversity statistics

Matchstick says 7% of the companies it has invested in have Black founders or founding team members, which is seven times the industry average. Portfolio diversity data needs to be more largely released by the VC community because it’s the only way to determine if progress is being made. So far, beyond Matchstick, we’ve only seen Initialized Capital release diversity metrics. Union Square Ventures said that of moe than 100 investments, only a few have been in self-identified Black founders.

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Why VCs say they’re open for business, even if they’re pausing new deals

This week Alexia Bonatsos of Dream Machine and Niko Bonatsos of General Catalyst swung by Extra Crunch Live to discuss where they are investing today and what the future might look like.

As expected, these seed and early-stage venture capitalists had a lot to say about their current investing cadence and what interests them in the world of edtech, Clubhouse and more. A big thanks to everyone who came out and submitted some great questions.

Going back through the chat today, a few sections jumped out. For this recap, I’ve gathered answers from the transcript regarding today’s fundraising climate, the future of AI and the possible impact of the downturn on VC-backed founder diversity.

And for everyone who couldn’t join us live, I’ve included the full video replay below. (You can get access here, if you need it.)

Today’s fundraising climate

Alexia:

It’s kind of a Rashomon; depending on whose perspective you’re getting the story, is just completely different.

Let’s see, are [VCs] being as active as they were in 2018? I’m gonna say no. I mean, look at your data, your data says no. But does that mean people [have] shut down the shop and are all in Montana? Also no, right?

We know that these kinds of “crisistunities” — and I’m not diminishing the crisis at all, it is very sad and very scary, and it’s something that I’m very privileged to be able to be experiencing from inside my apartment and not from outside within an emergency room or a food bank or any other place that it’s actually at the front lines, right?

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Forget sourdough, these sisters are launching a starter to create authentic Asian food

For immigrants in the United States, representation can feel complex, celebrated and oftentimes a mix of the two. And that’s exactly why sister duo Vanessa and Kim Pham launched Omsom, a seed-stage food startup that sells packaged “starters” to recreate authentic Asian dishes at home. The starter contains sauce, spices and aromatics, and the co-founders say consumers can make a dish in 30 minutes or less.

“As we were seeing Asian Americans claim their voices in media and in culture more broadly, we then would juxtapose it with walking down this ethnic aisle in the grocery store and see the way Asian flavors were being represented,” Vanessa told me.

The existence of the ethnic aisle itself has drawn criticism for “othering” cultures that have long been within the United States. It was enough to make Vanessa, who worked at Bain & Company, and Kim, who has spent time in venture at Frontline Ventures and Dorm Room Fund NYC, join forces to create Omsom.

“The ethnic aisle feels super outdated,” Vanessa said. “Flavors have been diluted, branding and design have been stereotypical in nature. How can you boil a cuisine down into one sad jar of sauce?”

The aisle, also named the international aisle, currently contains bottles of never-to-expire thai pastes. Walk a little farther and you’ll find microwavable containers of high-fat butter chicken. And there in the corner is a bottle that boils down one of the world’s most diverse cuisines simply: “curry sauce.”

While progress is pitiful in grocery store representation, the founders are optimistic that they can change that. Omsom, from the flavors to the meaning behind its name (it means rowdy in Vietnamese) to the cap table it has at the moment, is another story waiting to be told about immigrant culture. This is theirs.

Omsom launched today with an undisclosed amount of pre-seed money. The early-stage startup’s ownership group is 50% women of color, including Reshma Saujani, the founder of Girls Who Code, and Brita Rosenheim, a partner at Better Food Ventures. It also raised investment from Peter Livingston, the founder and partner at Unpopular Ventures, a fund dedicated to entrepreneurs who are aiming at unconventional niches.

Livingston said that he invested in Omsom despite not actually being a “food tech investor at all” because it covers an unconventional category.

“Venture capital as an industry is so homogeneous, is clustered in a handful of geographies, prefers to invest close to home, and tends to invest within a small number of the same themes,” Livingston said. “Historically, ethnic food essentials hasn’t really been a ‘VC category,’ which to me, smells like opportunity.”

Saujani said her investment is “betting on the team and a product designed for a vastly underserved market, and the current circumstances make consumer appetite for pantry staples even larger,” referring to COVID-19 forcing more people to cook from home since restaurants are closed.

Your mother’s dish

Recreating authentic dishes with “mom’s ingredients” is not an easy goal, so the Pham sisters focused heavily on sourcing and chef collaboration and spent over a year in research and development of the recipes.

The sisters teamed up with three chefs — Jimmy Ly of Madame Vo, Nicole Ponseca of Jeepney and Chat and Ohm Suansilphong of Fish Cheeks — to create the first line of products. The chefs will get a tiered royalty on sales depending on volume.

“We made sure our ingredients, 90% of them, are unique to Asian food products and sourced directly from Asia,” said Vanessa. “We bent over backwards to get just the right kind of chili.”

But beyond authenticity, the Pham sisters also had another misconception to overcome: the oily and processed reputation of Americanized international dishes, like your favorite Chinese orange chicken takeout or a creamy bowl of butter chicken.

These flagship dishes that are so often associated with those cultures are often multitudes unhealthier than what an immigrant family within, say, the Indian culture, might serve on a day to day basis. Omsom flips that by offering dishes that have no preservatives, no high-fructose corn syrup, and are shelf stable for up to a year. It’s “acceptable for users trying to be generally health conscious, in line with something you would find at Whole Foods.”

Now, the Pham sisters just need to see if they can deliver on the promise of providing uncompromising dishes amid a pandemic. They think it will be a welcomed change for people stuck at home and looking to experiment with cooking.

“We grew up south of Boston in a predominantly white suburb and there was a bit of shame associated with our food,” said Kim Pham . “But as I went through the process of stepping into myself as a woman of color, I started to use food as the first stop in engaging with my identity.”

“I moved away from home, I don’t speak Vietnamese as I used to, but I turned to food,” she continued. “Even if it was a bowl of pho.”

Kim and Vanessa Pham (from L to R)

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WeWork and SoftBank unveil the first 14 startups in their Emerge accelerator for underrepresented founders

SoftBank Investment Advisers and WeWork Labs say they’ve officially kicked off the first session of Emerge, an accelerator program designed for underrepresented founders.

In their press release, the companies describe Emerge as “launched by SoftBank with support from WeWork Labs” (that’s the co-working company’s global accelerator program), with a goal of bringing more equality to tech and venture capital.

It’s an equity-free, eight-week program that includes workshops, access to mentors from SoftBank and the WeWork community and sessions with SoftBank executives. It all culminates in a showcase event for investors and SoftBank partners.

The Emerge website describes the program as based in San Mateo, Calif. — but given COVID-19, the sessions and programming are all virtual.

“Supporting underrepresented founders is a top priority for us, ensuring we see more diverse startups across the tech ecosystem,” said Catherine Lenson, managing partner and chief human resources officer at SoftBank Investment Advisers, in a statement. “There is a lack of diversity in the sector as a whole, and we need to do more to address it. That is why we’re excited to launch this program and to see the positive impact that these inspiring founders will have.”

This is also a reminder that while the larger corporate entities are currently embroiled in a legal and financial dispute, WeWork and its largest investor remain closely intertwined.

Here are the 14 startups in the initial program:

  • Aquagenuity, which allows users to take any smart device and track water quality and monitor their environment in real time
  • Bridge to College, which helps students choose colleges wisely by matching and providing data
  • Caldo uses flexible automation and mobile designs to power satellite eateries for restaurants
  • GameJolt, a platform for gamers to follow more than 100,000 games while they’re still in development
  • Koniku, which is diagnosing disease using breath
  • Mogul, which helps employers find diverse talent
  • Moment AI, which uses AI to understand the driver and improve safety
  • Node, which builds houses through a proprietary assembly kit
  • OjaExpress, a marketplace connecting immigrants and foodies to local ethnic mom-and-pop grocery stores
  • Proven, which offers personalized skin care products powered by The Skin Genome Project, winner of MIT’s 2018 Artificial Intelligence Award
  • Rebellyous Foods, a production stack for plant-based meat
  • ScriptHealth, which provides easy access to prescription medications
  • Shyft, which builds IoT hardware and integrated software to connect and intelligently manage distributed energy resources
  • SPS, a cross-border payments provider operating across all major U.S. states and Canada

 

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With funding from Indie.vc, ReadySet is scaling to meet the demands of a changing workplace

ReadySet, a diversity, equity and inclusion startup led by Project Include founding member Y-Vonne Hutchinson, has raised its first, and perhaps last, round of funding from Indie.vc.

“We were lucky enough to close our round right as the coronavirus was hitting and then shifted our business to doing remote stuff that offered connection,” Hutchinson told TechCrunch.

For the last five years, ReadySet has been sustaining itself off of revenue, and in the last year saw about $1 million in annual revenue. ReadySet makes money by offering consulting services to companies looking to create more inclusive workplaces and cultures. ReadySet has worked with companies like Salesforce, Airbnb, Amazon, GitHub, UCSF Health, Mailchimp, Medium and many others.

“We’ve been profitable the entire time we’ve been in business,” Hutchinson said. “But we wanted to be able to maximize our impact beyond in-person training services and doing stuff that felt a little more like product development that didn’t necessitate immediate revenue.”

ReadySet decided to take funding from Indie.vc because of the firm’s focus on startups that are profit-driven, she said. She also “didn’t want to give up a huge chunk of ownership in a firm I built from scratch.”

Indie.vc doesn’t take any equity upfront. If a startup in its portfolio raises additional money or sells, Indie.vc converts its investment to equity at a percentage decided on by the company. If the company never sells or never raises another round, Indie.vc gets a share of the company’s revenue until the firm makes 5x its investment.

“They weren’t interested in taking a big chunk of the business but were instead interested in helping us get more profitable,” she said. “For me, as a founder that has not been in the VC space, it’s been hard to be seen as a real entrepreneur.”

Indie.vc aims to be the last outside financing founders ever need to take. For Hutchinson, she said that could be the case.

“I don’t want to be the kind of founder that chases the next round,” she said. “I want to smartly leverage the funding and continue our profitability and do it at scale. I think some founders get stuck doing that and then don’t focus on the product.”

In light of these trying times amid the COVID-19 pandemic, ReadySet is investing more heavily in remote training offerings.

“We’re really sort of looking for ways we can resource companies trying to rethink digital interaction,” she said. “I also think a lot of people or some people think this is a blip on the radar and we’ll go back to normal. We don’t think that is necessarily going to happen.”

Despite these rocky times where many tech companies are laying off staff members and putting some on furlough, Hutchinson said some companies have doubled down on what they’re doing in terms of workplace culture.

In past recessions, where diversity, equity and inclusion has been seen as a ” ‘nice to have,’ there is an existential threat that has changed the way we live and the way we have to show up at work,” Hutchinson said.

People are now isolated or needing to take care of family, she says. Perhaps they’re drinking more and/or working through grief, loss and death — all of which are traumatic, she said.

“All of those issues actually implicate DE&I,” Hutchinson said. “We’re used to siloing it, but in reality, DE&I speaks to how people show up, how they feel included, how we support people and now, more than ever, that’s really important.”

Hutchinson says her clients are asking her more about mental health, belonging, childcare and bringing compassion into these trying times.

“A lot of tech companies don’t necessarily have strong management cultures,” she said. “Those gaps are now becoming really obvious to people. I think we’re all in a place where we’re trying to figure out how we adjust to what’s going on now. It’s about so much more than work right now. I would encourage companies, even if they don’t consider that to be DE&I, to think about how they’re treating their employees.”

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The rise of the human-centric CEO

Romeen Sheth
Contributor

Romeen Sheth is president of Metasys, a workforce-management firm based in Atlanta.

Steve Schlafman
Contributor

Steve Schlafman is founder, coach and angel investor at High Output, a boutique leadership-development company based in NYC.

Peacetime CEO/Wartime CEO by Ben Horowitz is one of the most commonly cited management think pieces of the last decade.

And for good reason; Horowitz surfaced a fundamental distinction in operating philosophy that is necessary for companies to survive, reinvent and ultimately win when macroeconomic environments shift. The framework is especially useful given how counterintuitive the advice is — behaviors of a peacetime CEO and wartime CEO are often on diametrically opposite sides of the spectrum; it is rare to find a CEO who can successfully emulate both personas.

While in concept it is easy to understand these principles, as with most things in life, nothing can replace the visceral comprehension that comes via learned experience. We are at the onset of enduring the most challenging startup environment of (at least) the last 15 years. COVID-19 is an indiscriminate event that is systematically wiping out businesses, whether “atoms” or “bits.”

For most startup operators, this is the first taste of true systematic adversity. The undercurrents of frothy valuations, the social milieu of early-stage investing and stores of excess capital are coming to a grinding halt as the bull market of the last 12 years is dramatically disrupted. We have an entire generation of founders/CEOs who may conceptually understand the peacetime CEO/wartime CEO ethos, but now, they’re going to actually live it. At the same time as every other founder/CEO. Brutal.

Since the onset of COVID-19, we have spoken to more than 100 founders and CEOs. Naturally, we are hearing frequent allusions to peacetime CEO/wartime CEO as a framework to help navigate the landscape. We’ve even used it over the last few months. While we believe it is a helpful framework, it is also incomplete. Further, we believe its application can lead to deeply problematic outcomes.

At a micro level, the misplaced application of peacetime CEO/wartime CEO can fundamentally change a company for the worse. A wartime CEO, as Horowitz notes, is “completely intolerant, rarely speaks in a normal tone, sometimes uses profanity purposefully, heightens contradictions, and neither indulges consensus building nor tolerates disagreements.” In the strictest application, we are seeing this align with a common false trope that has plagued the tech industry: “To change the world like Steve Jobs, I need to emulate all aspects of Steve Jobs’ personality.” A classic logical fallacy many founders/CEOs have learned the hard way — if you emulate all aspects of Steve Jobs’ personality, it doesn’t mean you will change the world like he did.

Each company is driven by its own unique culture and values — in a crisis situation, while it is important to be adept and agile, it’s equally, if not more important, to triple down on the strongest elements of your culture established pre-crisis. Many of the strongest founders/CEOs we have had the pleasure of coaching and investing in are uniquely world-class in their patience and tolerance, their ability to make the abnormal normal and their commitment to inspire with clarity. It is the adherence to these principles that will help carry their companies through this time.

At a macro level, peacetime CEO/wartime CEO conjures outdated themes that are at best inaccurate, and at worst, counterproductive. War implies “destruction, ruthlessness, blood, death;” there is an innate sense of machismo and bravado in this language reinforcing a homogeneous tech community. This type of vernacular and attitude increases barriers to a more inclusive community excluding women and underrepresented minority participation.

Now is the time for us to propagate community, resourcefulness and generosity.

One of the most common takeaways we have heard in reference to the framework is, “now is the time when real founders are made.” If Rent the Runway, ClassPass, Away, the Wing and the countless other women-led/minority-led startups that have been adversely affected by COVID-19 are not able to bounce back, we highly doubt it is because “they weren’t able to cut it as real founders,” a ridiculous assertion to make under any circumstance.

The peacetime CEO/wartime CEO framework is clearly valuable — it forces us to dissect the behavioral shifts necessary to survive in a crisis. That being said, it needs to evolve. Being firm, decisive and staring down an existential crisis is not mutually exclusive with applying empathy, gratitude and generosity. You can be an intense, laser-focused and paranoid CEO without losing yourself or fundamentally changing the culture of your company.

We know dozens of leaders who are leading their companies through these challenging times without leaving a wake of carnage or damage to the foundation they have spent years building. They are leading with their heart and values and will be remembered for how they carried themselves, treated their employees and guided the company through the crisis. COVID-19 presents us with a unique opportunity as an industry. Now is the right time to retire the false dilemma of peacetime CEO or wartime CEO and empower the rise of the human-centric CEO:

  • The human-centric CEO considers and balances the needs of her organization, employees, customers and other stakeholders in good and bad times;
  • The human-centric CEO recognizes she cannot change the macro environment or competition so she focuses her effort and energy on what she and the team can control and manage;
  • The human-centric CEO internalizes his mission, vision and values in the face of difficult challenges and critical strategic decisions;
  • The human-centric CEO views and manages her company as a complex and dynamic human system with nuanced inputs and interdependencies;
  • The human-centric CEO believes employees are the single most important stakeholder — that is reflected in how the organization hires, coaches, trains, incentivizes and retains;
  • The human-centric CEO orients around decisive and bold decisions that impact employees rather than a series of micro maneuvers that damage culture and trust;
  • The human-centric CEO creates shared meaning and purpose by reiterating the mission and vision over and over and over again;
  • The human-centric CEO fosters an organization that values and cultivates psychological safety;
  • The human-centric CEO develops self-awareness and inner resilience to weather the emotional ups and downs of company building;
  • The human-centric CEO invests the time and energy to go deeper with her employees at strategic junctures and times of crisis;
  • The human-centric CEO distills and simplifies issues, strategies and tactics to help employees reduce noise and increase focus;
  • The human-centric CEO communicates frequently and articulates expectations with humility and confidence to avoid uncertainty, prevent anxiety and achieve alignment;
  • The human-centric CEO recognizes he has a range of communication mediums at his disposal and selects the most appropriate one based on the magnitude of the situation;
  • The human-centric CEO believes in the power of company rituals such as one-on-ones, exec team meetings, all-hands, stand-ups, retrospectives and off-sites;
  • The human-centric CEO expresses empathy, appreciation and gratitude for the work performed by existing, outgoing and former employees;
  • The human-centric CEO listens intensely and empathetically with her full self — ears, eyes and intuition;
  • The human-centric CEO takes out time for self-care because she understands she cannot serve others and be highly effective unless she is mentally and physically healthy.

There’s no way to mince words. COVID-19 is having a devastating impact on the startup community. The inevitable is unfortunately occurring every day — many startups will never come back from this. As eternal optimists, however, we see opportunity in this crisis for the broader industry: the rise of the human-centric CEO. Now is the time for us to propagate community, resourcefulness and generosity. It’s the time to be ever thoughtful about employees, colleagues, stakeholders and fellow founder/CEOs in need. Individual startups may not survive this crisis, but it is our hope that an everlasting mentality does.

By no means is this list exhaustive, but it captures the behaviors and attributes from the top leaders we are working with. We believe CEOs should strive to become human-centric. Not only because it’s the right thing to do, but also because we believe it will lead to healthier organizations and better results over time.

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All Raise CEO Pam Kostka on how the world isn’t ending

This isn’t the first economic downturn All Raise CEO Pam Kostka has been through. 

“I was here during the dot-com bust and rush, and here during the financial fallout that happened, so we’re a little overdue for some corrective action in the market,” Kostka said. “While I’ve been through boom and bust cycles before, this one is more meaningful because life and death are associated with it.”

All Raise is a nonprofit that focuses on increasing diversity within venture capital, both from a decision-maker and a deal perspective. It recently released its annual report, and we covered how female-founded startups landed more deals than ever before in 2019, per PitchBook data.  

After our piece looking at the numbers came out, however, some readers weighed in that our coverage missed the mark: In the headline, did we focus too much on progress and not enough on what is left to be done?

Because we’re both social distancing, I caught up with Kostka on the phone and got her take on how to report numbers around diversity without glossing over the work that remains to be accomplished. We also discussed how to stay optimistic during a downturn, potential innovation that might come out of COVID-19 and why diversity matters now more than ever.

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