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Startups could be key to fixing tech's diversity problem

Experts say that if Silicon Valley wants to eliminate pervasive sexism and racism, growing companies need to put inclusion at their core.

The Young Women's Leadership School of Astoria

Silicon Valley still has a non-white-man problem.

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Silicon Valley companies are learning a hard lesson: They can't escape their attitude problems.

The last few months have been rocky. In June, a female engineer who sued Tesla for sexual harassment was fired. In July, prominent venture capitalists including Dave McClure of 500 Startups admitted to behaving inappropriately toward women founders.

And earlier this month, it emerged that a software engineer at Google had written a controversial 3,300-word memo arguing that biology prevents women from being as successful as men in the tech industry (he was later fired).

"It's not just about one person being affected," said Adriana Gascoigne, CEO and founder of Girls in Tech, an organization that helps advance women in science, technology, engineering and mathematics careers. "It's a systemic issue."

Tech industry executives often say their companies need to do a better job finding and keeping women and minorities. For the past three years, more than a dozen companies, including Google, Apple, Facebook, Microsoft and Twitter, have even released annual reports that show the industry remains overwhelmingly white and male. Women make up about 30 percent of the tech workforce and hold an average of just 18.5 percent of tech-related roles in those five companies. According to a report from software company Atlassian, black and Latino employees respectively account for about 2 percent and 3 percent of the tech workforce. It's a problem that begins at the startup phase and extends all the way to major companies.

Some companies say it's a "pipeline problem," meaning there just aren't enough diverse applicants to fill positions.

Catherine Ashcraft, senior research scientist at the National Center for Women and Information Technology (NCWIT), says that argument is just plain wrong.

"It tends to mean that you're not looking in the right places," Ashcraft said. "You haven't done a lot of things to actively expand your networks and look at your job descriptions for bias and be more creative about where you're hiring."

Joelle Emerson, CEO of diversity consulting firm Paradigm, says too many companies rely on gut instinct in the hiring process, asking inconsistent questions. The end result is that companies hire more of the same rather than diversifying their employee mix.

An anti-diversity memo has thrust Google into the debate.

Tania González/CNET

But recruitment is only one issue. Once inside the organization, women still have to contend with pay gaps, a testosterone-laced "bro culture" and unconscious bias ("mansplaining," anyone?). Various studies of men and women in computing and engineering jobs report that women tend to feel isolated in the workplace.

Women in STEM careers are more likely to leave within the first few years than those who aren't in STEM fields, says the NCWIT, because of unsupportive work environments, lack of role models and significant personal sacrifices they're required to make. About half continue to use their technical skills, but at a different company. The rest abandon their training.

That's bad for business.

According to researcher McKinsey & Company, gender-diverse companies are 15 percent more likely to have better financial performance, and ethnically diverse companies are 35 percent more likely to financially outperform their counterparts. Other studies found that startups with female founders have faster growth and better performance compared to all-male startups. Racial and gender diversity is linked to higher sales revenue, more customers, greater market share and greater relative profits.

"The company's culture is really defined early on," said Anu Duggal, founding partner at Female Founders Fund. "If you look historically at most successful large companies, they don't retroactively go back and establish what their values are."

Even with data to support the diversity cause, Erica Joy Baker, a member of Project Include, says talk of diversity's benefits still tends to fall on deaf ears.

"I've heard several people say, 'We make plenty of money in Silicon Valley just the way we are,'" she said. "If you don't have everybody represented in your decision making, you're going to end up making products that don't work for everybody."

Baking it in

Some younger companies recognized early on the importance of having different perspectives inside the workplace.

Pinterest, for example, says women make up 44 percent of the overall team and hold 26 percent of technical roles. Slack, the business communications company, says women comprise 43.5 percent of the overall workforce and 29.8 percent of the technical team.

Candice Morgan, Pinterest's first-ever head of inclusion and diversity, said the company started asking more objective, consistent interview questions and ultimately scrapped culture-fit interviews. Recruiters also began looking more closely at schools with greater diversity in their computer science graduating classes, as well as at historically black colleges and universities.

Female Founders Fund, which invests in startups with at least one woman leader, says new companies need to recognize early that diversity will play a key role in their success.

That view could become par for the course as women-led startups begin to succeed.

"Capitalism's king," said Dell entrepreneur-in-residence Elizabeth Gore. "I don't care how biased they are; [companies] want to make money."

Pivoting

It's never too late for a company to change.

In 2015, Intel invested $300 million to increase diversity at the world's biggest chipmaker. The following year, the company said it had achieved 100 percent pay parity and promotion parity for women and minorities in the US. Diverse hiring increased from 31.9 percent in 2014 to 45.1 percent in 2016.

Facebook, pushed by Chief Operating Officer Sheryl Sandberg, developed a course on managing unconscious bias, expanded its recruitment to more schools and now requires that people from underrepresented backgrounds be considered for all technical and nontechnical job openings.

Despite these and other efforts, Silicon Valley is still predominantly made up of white workers, even in nontechnical roles. Black employees make up just 5 percent of the nontechnical workforces at Facebook, Google and Twitter. They make up 4 percent at Slack, 6.5 percent at Microsoft and 11 percent at Apple.

Maxine Williams, Facebook's global director of diversity.

Maxine Williams is Facebook's global director of diversity.

Jennifer Leahy for Facebook

Maxine Williams, global director of diversity at Facebook, said part of the issue is that Silicon Valley itself isn't very diverse. According to the Joint Venture 2016 Silicon Valley Index, only 2 percent of the area's population is black. Facebook University, which began four years ago as a technical global internship program for college students in underrepresented communities, has broadened to nontechnical roles to encourage greater enrollment of African-Americans and Hispanics in locations such as Austin, Texas, and Atlanta.

"We are building products that the world is using immediately," Williams said. "Unless we have more diverse perspectives ... we will not build the product that anyone wants to use."

But it can be challenging to move the needle with a larger workforce, Project Include's Baker said. "It's extremely hard to make these changes when a company is 10, 15 years old or has 20,000 to 100,000 employees," she said. "Changing a culture at that size is almost impossible."

Uber is an example. Former CEO Travis Kalanick was eventually asked to resign following a February blog post by an engineer, Susan Fowler, who alleged a culture of unchecked sexism at the company. But though the ride-hailing service has been trying to change its culture, there have already been bumps along the way. At an all-hands meeting in June meant to address allegations of sexual harassment, board member David Bonderman jumped in with a sexist remark about women talking too much. He resigned hours after a recording of his comment went viral.

"At Uber's level, I don't think that asking Travis to resign is going to fix much," Baker said. "You have to have him replaced by somebody who is not from that culture and who comes in there with a mind and authority to fix things. That person has to come in with the power to fire people."

A silver lining?

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So, will young startups get the message?

It may take a while, according to a State of Startups 2016 survey by investment firm First Round Capital. According to the report, 61 percent of founders say their boards are all-male. Only 14 percent say their organization has a formal strategy for promoting diversity and inclusion.

That's not enough, particularly for the next generation of employees who are being encouraged to explore STEM education now. 

"When diverse candidates get to the next stage, they will be looking for employers that will support their career growth and ambitions," said Karen Quintos, executive vice president and chief customer officer at Dell. "It's essential that there are diverse role models throughout the company, and that companies are addressing unconscious biases head on."

For what it's worth, women who are victims of harassment are increasingly speaking up -- and being met with acceptance. This makes Duggal "cautiously optimistic."

Ashcraft, of the NCWIT, is also hopeful.

"We know how to improve this problem," she said. "We just need people to be committed and commit adequate resources, and treat it like a business issue."

With additional reporting by Brianne Garrett.

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