President Barack Obama wants to help close the diversity gap in the technology industry, and he's marshaled support from the private sector to do it.
On Tuesday, the White House announced it has brokered a number of new initiatives involving major tech companies, such as Amazon and Microsoft; well-known venture capital firms; and engineering departments at large universities committing to concrete plans to foster diversity within their organizations. The announcement is part of the Obama administration's first-ever Demo Day, an event where startup founders from diverse walks of life and various parts of the country came to the White House on Tuesday to showcase their innovations.
Unlike a traditional demo day, where startups pitch prospective funders, entrepreneurs at the White House Demo Day pitched Obama their ideas to highlight their innovations and bring more awareness to the struggles that underrepresented minorities in tech, such as women and people of color, face in starting a company. Today only 1 percent of venture-capital backed startups are led by an African-American, and only 3 percent of startups are founded by women. Obama said at a press conference from the White House Demo Day that these statistics must change to ensure the US remains a driver of innovation throughout the world.
He acknowledged that finding capital is tough for any entrepreneur starting a company, but it can be "harder if you're a woman or an underrepresented minority who all too often have to fight just to get a seat at the table."
"Today America is home to more high-tech companies than anyplace else in the world," Obama said. "But we've got to make sure that we're taking full advantage of this moment by tapping all the talent America has to offer, no matter who they are or where they set up shop."
The president applauded the efforts of major companies, such as Intel and Pinterest, that have recently pushed their own diversity initiatives. But he said more needs to be done. With that he announced commitments from 40 venture capital firms, including Andreessen Horowitz and Kleiner Perkins Caulfield & Byers, as well as more than a dozen companies, such as Amazon, Microsoft and Xerox that have committed to take new actions to ensure diverse recruitment in hiring. These companies will adopt variations of the so-called "Rooney Rule," adopted by the National Football League, which requires companies to consider at least one diverse candidate for every senior executive position. Facebook and Pinterest have recently adopted similar policies.
Additionally, the administration secured commitments from institutional investors, such as the California Public Employees Retirement System and the New York city pension funds, to commit more than $11 billion to increase the diversity of its managers. And more than 100 engineering deans have promised to take steps to attract and retain a diverse student body.
The initiative has spurred companies to make their own announcements in an effort to increase diversity among their ranks. Facebook is launching a new Supplier Diversity program, which is meant to increase the number of women and minority-owned businesses in Facebook's supply chain. Google announced it will host its first-ever Women's Demo Day. IBM said it will expand its relationship with Girls Who Code to ensure more young women are exposed to cloud computing innovation.
The announcements come at a time when the technology industry has been scrutinized for its lack of diversity. On average, 30 percent of the tech industry workforce is women, even though women make up 59 percent of the total workforce and 51 percent of the population, according to US Census Bureau data. As for the most-coveted spots at the top, only 14.3 percent of board seats at the top 100 companies by revenue in June 2013 were held by women, according to a survey by executive recruitment firm Korn Ferry. Ten of those boards had no women directors in December of that year.
The numbers are even more bleak when considering the participation of women in venture capital firms, which command the currency the industry needs to thrive. An overwhelming 93 percent of top investing partners at VCs are men, according to Pitchbook Data, which analyzes the private investment industry.
The exclusion of women and minorities in the board room and among the biggest venture firms doesn't make sense from a business perspective, said Megan Smith, the US CTO of the White House's Office of Science and Technology Policy.
"Hiring women isn't just the right thing for companies to do -- it's more profitable," she said.
Smith pointed to a McKinsey and Co. study that shows companies that are more gender- and ethnically diverse perform better financially.
It's unclear at this point what effect if any these new initiatives will have in helping women and underrepresented minorities actually influence product development or business strategy. Companies have made promises in the past to little effect. But with the urging from the president himself, these initiatives might hold more weight.
"We've got to make sure that everybody is getting a fair shot," Obama said. "The next Steve Jobs might be named Stephanie or Esteban. They might never set foot in Silicon Valley. We've got to unleash the full potential of every American -- not leave more than half the team on the bench."