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A record number of women are remaking Silicon Valley in their image.
They create start-ups, join the largest venture capital firms and push back a culture that has traditionally excluded them. They are women like Tracy Chou, the Silicon Valley engineer, who co-founded Project Include to help technology companies recruit more diverse employees; and Arlan Hamilton, who had moved from San Francisco Airport to millions of people as founder and CEO of Backstage Capital, a start-up investment fund that invests in companies with at least one founder, a woman of color or LGBTQ; and Katrina Lake, the founder and CEO of Stitch Fix, whose e-commerce startup was announced for $ 1.4 billion last November.
Despite progress, it will likely be decades before women reach parity with their male counterparts. The #MeToo movement and the many examples of leading venture capitalists harassing the founding women have forced us to question (again) the myth that Silicon Valley is a meritocracy.
The portrait of a founder or a venture capitalist as a young white man having graduated (or hung out) from a handful of elite schools arrives at his term.
Quartz has been talking to over three dozen women investors and founders to see what has really changed in Silicon Valley and in US cities.
It's complicated
The starting point for women is dismal. Decades of discrimination have created one of the most imbalanced imbalances between men and women in American companies. The venture capital industry, where investors decide which start-ups are getting millions of dollars to make their dreams come true, is still at least 82% male, according to an Equal Ventures analysis of about 1,500 companies in Canada. capital risk. Another study indicated that the number reached 91%.
If Silicon Valley likes to see itself as a place where talent and hard work are all that matters, historically, it has mostly been applied to a group of well connected men. In recent decades, the share of women in technical fields has actually decreased. After peaking at around 36% in 1991, women's share of IT occupations fell to less than 25% (pdf). Only 21% of the technical staff (pdf) are women. Google, which has spent $ 265 million on diversity initiatives in recent years, has had only a few results (pdf) to show; The percentage of women in the workforce has increased from 30.6% in 2014 to only 30.9% in 2018. In technology positions, this figure has increased from 16.6% to 21.4%. And for women of color, the numbers are even worse: the number of women, people and Latinx employed at Google increased by only 0.1% last year.
A similar story takes place with investors. In 2017, only 2.2% of venture capital dollars went to women-only teams and 12% of funds were awarded to companies with one man. and founders, according to Pitchbook. In contrast, the all-male teams reported 79% of the total, or about $ 67 billion (7% of the teams were unclassified). According to a Quartz analysis of Pitchbook data, the gap persisted, even among high-profile female founders. The evaluations of women-led businesses have benefited from a similar reduction.
But there is a palpable feeling that the taking of the old guard is loosening. When asked if the environment had improved since #MeToo, the answers of the founders and investors were clear. "Absolutely, one hundred percent," says Joanne Wilson, a New York-based angel investor.Wilson noted that sexist behavior, once ignored, is now a reason for dismissal – or, as Binary Capital has discovered , to close the company.Women are no longer afraid to talk.
Michel Feaster, founder of enterprise software company Usermind, has seen trends move in the right direction after decades of weak progress. Women are now entering the ranks of almost all major venture capitalists and dozens of new groups are forming to help other women's founders. "MeToo was a wake up call for many men in power," she said. "I do not think it's perfect, but it's a lot better than two years ago."
Steve Hirschfeld, Silicon Valley's key investigator and investigator and witness to Ellen Pao's gender discrimination case against investment firm Kleiner Perkins in 2015, sees more companies taking harassment complaints seriously . "In recent months, the number of domestic complaints of sexual harassment has increased dramatically, but the number of lawsuits is declining," says Hirschfeld, whose firm conducts training on sexual harassment policies. Women feel more able to speak. Companies now have a fairly robust reporting process. They take it seriously and treat it internally.
Stalling
Yet, the most notable indicators of success in Silicon Valley are still stalled: valuations, fundraising and decision-making on investments all persistently favor men. According to Pitchbook, women-led start-ups received $ 12.4 billion last year, a sharp increase over previous years, but the relative share of venture capital for women ( mixed or exclusively female teams) remained around 15%.
While more women are funded than ever before, the increase has largely followed the total number of venture-backed startups. The relative share of women-owned businesses has not changed much since 2014.
So why do not women earn more ground? "It's a systemic problem," says Alexis Ohanian, co-founder of Reddit and Initialized Capital. "It starts with the very structure of the company."
Women controlling capital
The National Venture Capital Association's survey of 1,336 venture capital firms in 2016 found (pdf) that women made up only 11% of the sector's investors, despite occupying 95% of administrative positions and 75 % investor relations, communications and marketing. For minorities, the numbers were even worse. The survey found no African-American investor and only 2% of respondents were Hispanic.
An increasing number of venture capital firms are now run by women. More than 16 such funds have been created over the last four years, including Aileen Lee at Cowboy Ventures, Sonja Perkins at Perkins Fund, Theresia Gouw and Jennifer Fonstad at Aspect Ventures and Anu Duggal at Female Founders Fund.
Some established companies also add accomplished women to their list. Pitchbook estimates that 16% of venture capital firms now have female investment partners, many of them for the first time. The initial capital, where three of the company's eight investment partners are now women, said it was a priority to recruit women when the company was founded in 2013, by leveraging their personal networks. Ohanian and his co-founder Gary Tan are now targeting gender parity to make investment decisions that would be lacking in a less diverse team. Most are catching up late. Andreessen Horowitz announced Angela Strange as her most recent general partner in a blog post on August 30th.
The effect of these changes will be greater success in the coming years, but in the short term, visibility and support will increase. The Female Founders Alliance offers women individual coaching and access to a community of female founders and investors. AllRaise sponsors individual office hours for women founders, as well as mailing lists by e-mail formerly circulated mainly in male social networks.
The more women who reach billions of dollars, the higher the success rate, the easier it will be for others to follow. Only a few start-up successes in blockbuster movies feature women, but the number of women leading "unicorns", startups over $ 1 billion, is growing.
Katrina Lake, the founder and CEO of Stitch Fix, is one of the most important. Lake was the only woman to hold the position of Chief Technology Officer in the US in 2017. Her e-commerce start-up was listed at $ 1.4 billion. Jennifer Hyman, CEO of Rent the Runway, told Recode in an interview last November that Stitch Fix, and startups like this, were changing what a good investment looks like for venture capitalists.
"We are working in a sector where pattern recognition is still the name of the game," she said. "So, the more people like Katrina – and hopefully people like me – get results, the more women will have opportunities."
Companies founded by women worth $ 1 billion or more
| company | Year of foundation | Evaluation |
|---|---|---|
| Can go | 2012 | $ 1 billion |
| Grab | 2012 | 11 billion dollars |
| Cloudflare | 2009 | $ 1 billion |
| C3 IoT | 2009 | $ 1.4 billion |
| Houzz | 2008 | $ 2.3 billion |
| Ginkgo Bioworks | 2008 | $ 1.4 billion |
| Cabbage | 2008 | $ 1 billion |
| Karma Credit | 2007 | $ 1 billion |
| The door next door | 2007 | $ 1.1 billion |
| Elevance Renewable Sciences | 2007 | $ 1.2 billion |
| Sapphire Energy | 2007 | $ 1 billion |
| SunRun | 2007 | $ 1.5 billion |
| 23 and me | 2006 | $ 1.1 billion |
| Eventbrite | 2006 | $ 1.2 billion |
| Kabam | 2006 | $ 1 billion |
| Automation Anywhere | 2003 | $ 1.8 billion |
| Kendra Scott | 2002 | $ 1 billion |
| Medallia | 2001 | $ 1.3 billion |
Over time, having women in powerful positions – by betting on women and meeting founding women who may never have been able to enter male-dominated businesses – could radically transform women's lives. industry.
"The only way to solve this problem is to find founders and investors who help each other," says Usermind's Feaster. "I do not think it's [VC firms adding more women] symbolism. [Women] are really empowered in their businesses. This will change the landscape in the next few years.
The power of LP
The pressure from limited partners (LPs), namely pension funds, foundations and other silver funds, which are the main source of funding for venture capital companies, is one way to achieve this. Duggal of Female Founders Fund says its conversations with the LPs have begun to change.
"We have recently seen issues in due diligence on the part of the SQs asking if there had been sexual harassment charges," she said. "This has not been the case before."
Efforts to date have been largely informal. But widely shared guidelines are forthcoming, promised Emily Mendell of the Institutional Limited Partners Association (ILPA). Today, none of the ILPA documents ask about diversity, inclusion or sexual harassment during due diligence. Mendell says this month, new guidelines will require venture capital firms to disclose all allegations of sexual harassment, as well as diversity and gender, by role and responsibility. These questions are intended to extend to portfolio companies as well.
"Binary Capital was a wake up call to the industry that these things are happening and should not continue," says Mendell. "The LPs did not know who they were investing in. We quickly determined that this bad behavior should stop."
Will that prevent another binary capital?
Not necessarily, since answering the questions is voluntary and the venture capital companies may not be available anyway. Caldbeck, for example, had already been expelled from Lightspeed Capital for similar behavior, but was still able to increase Binary Capital's fund despite a poor reputation among many founders and investors.
Some Invest Rather than take a stand, few people want to risk access by demanding funds to publicly outlaw the behavior.
While Mendell says she is not aware of any LP with public positions on sexual harassment or diversity, she predicted a change in attitude.
"Many are starting to get an idea of this behavior, not only because it's the right thing to do, but because drawing a line is a good deal," she says. "This will send a message that LPs care about that. It must be better.
From promise to politics
Since most incidents are not reported, it is difficult to say with certainty that the worst abusive behavior has been eliminated. Jessica Mah, the founder and CEO of the inDinero accounting software startup, said she has seen a dramatic drop in the number of serious incidents raised in conversations with colleagues.
"I think we're talking more about it, and it's less happening, talking to a lot, a lot of women getting started," she says.
Of course, "minus" is a low bar. A survey conducted in 2015 among about 200 older women in the technology sector revealed that 90% had observed sexist behaviors at conferences or business meetings and that 60% had reported to their companies cases of unwanted sexual advances.
Following revelations by engineer Susan Fowler on Uber's treatment of women, Reid Hoffman, co-founder of LinkedIn and partner of Greylock, published "Decency Pledge," which asks investors to forgo relationships with sexual predators, ability. More than a dozen leading venture capital firms have publicly signed this commitment, but many venture capitalists have dragged their feet in revealing their policies. In February, the NVCA issued guidelines on sexual harassment for the sector, but these were also optional.
To make sure the promises come to fruition, Cheryl Yeoh Sew Hoy, of which Dave McClure, co-founder of 500 Startups, talked about the sexual assault, was fired from the company's New Year business. latest. It's about whether companies are committed to creating "diverse, inclusive workplaces without harassment". She quickly discovered that the vast majority of capitalization companies have no policy on sexual harassment, diversity or discrimination. "If they had a policy," she said, "it only covered existing employees, and it was not public at all."
Now, most large companies registered on the MovingForward website (110 at the latest) have diversity and harassment policies that state that investors or employees can be fired for sexual harassment and discrimination and extend their coverage outside.
"It's a huge improvement over what was before," she said. According to Wilson, New York's angel investor is also a tectonic shift for an industry that has long refused to abide by the rules. "For years, HR was a joke," she said. "Now it's the most important work of society."
Resist a backlash
But as the sector evolves, some women are worried about a negative reaction.
Hirschfeld cautioned against responding quickly to incidents by preventively dismissing people rather than taking a deliberative process.
"The concern I have is to overreact without giving both parties a fair chance," he said, noting that he was facing harassment and harassment cases. bullying against men and women. "People are accused, companies can not afford bad publicity and people are fired. It's a strike and you're out.
Several female entrepreneurs said they heard about men who were considering a version of the "Mike Pence Rule". A 2017 profile of the US Vice President revealed that he "never eats alone with a woman other than his wife and alcohol without her by his side, either."
How, they ask, could a woman take a leadership role without interacting with men individually?
"I've heard men say, 'I do not want to be with a woman. I do not want to take her to lunch, "Wilson says. "Please, do it. If you do not know how to behave during a meeting, you should not work. "
In the end, the perceived risks of not having to deal with female colleagues will affect the results, as will the credibility of investors. Over the next few years, venture capital firms without a significant number of female partners or investments in women-owned businesses may not only seem anachronistic, but discriminatory and non-competitive.
Solving this problem in Silicon Valley would ultimately solve the problem for everyone, "says Lynn Jurich, CEO of SunRun, a solar energy company.
Jurich started her start-up in 2007 when she and her husband attended a business school. They both agreed to start their own businesses at the same time. The creators who seemed the most promising would pursue him and the other takes a steady job. Jurich arrived first. Sunrun is now a $ 1.5 billion public company and the largest residential solar utility in the country, employing more than 2,500 people.
Jurich warned the technology industry not to withdraw from the problems that #MeToo has brought to light. "There are so many things unspoken. Let him go out there, "she says. "When the world is unbalanced, both sexes suffer."
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