Beyond Investing in Women
How venture capitalists can be a force for good in the world of tech
Written by Michelle McBane
Investment Director at the MaRS Investment Accelerator Fund; Managing Director, StandUp Ventures
This past summer began with the resignation of Travis Kalanick from his reign at Uber. It was another instance that added to a wave of troubling reports of toxic culture permeating through Silicon Valley – not just for startups and venture capitalists (VC), but also big tech companies. These are giants who have teams dedicated to tackling the diversity challenge, which just goes to show how deep-seated this problem is.
Recent news has rightfully made issues of diversity and the treatment of women in tech top of mind. With much of the venture capital community under scrutiny, it’s time to look at how we can be a part of the solution instead of the problem.
As the Investment Director at the world’s largest urban innovation hub, I’ve seen first-hand that investing in female entrepreneurial efforts and encouraging diverse thought across the staffing of a startup yields business rewards. It’s one of the main reasons we decided to launch StandUp Ventures, one of the few funds in the world with capital dedicated exclusively for women-led ventures. Though the industry is smaller in Toronto, we’ve benefited from this closer community with more checks and balances to our actions. As a result, there’s less room for poisonous environments.
If Silicon Valley wants to address its culture problem and reap the benefits of a diverse community, VCs can play an instrumental role not only in the companies that they invest in, but also how they build culture within their own teams.
Be as data-driven as the companies you invest in
Hard pieces of evidence of sexist attitudes are often difficult to pin down. According to a meta-analysis of studies by Lilia Cortina of the University of Michigan and Jennifer Berdahl of the University of British Columbia Sauder School of Business, a quarter to a third of people who have been harassed at work report it, and only two to 13 percent file a formal complaint. What’s more, anecdotes and sentiments can be hard to act on, especially if the source of the issue is unclear or is tied to workplace culture more than one specific person. In the BetterWorks court filing, the case argues that “women who attempted to complain [about harassment] to HR and upper management were deterred from complaining and told to be a ‘cool girl’ or that ‘it’s a female issue’… or were simply ignored.”
In the absence of hard evidence, we often need to act as sleuths to suss out what’s really going on with a company’s culture. For instance, when evaluating startups to invest in, I often find that unexpected employee data offers valuable insights into culture problems. In an industry that prizes being “data-driven”, it’s astounding that this same approach isn’t always applied to employee-related matters. Real insights can be gathered from employee feedback on social media, like Glassdoor, while retention numbers that show high turnover – particularly amongst women or minorities – may be a sign of an unwelcoming atmosphere. VCs should ask for these statistics before investing and take them seriously when they hint at troubling trends.
The startup Hubba, which released an open source framework to help companies track diversity in their teams, is a great example: by deeply understanding the dynamics of their teams, they are better positioned to think about the types of roles they hire for, the job descriptions, the hiring process – all of which contributes to creating an inclusive work environment.
Recognize that gender balance starts with you
It’s easy to assume the answer to the sexism problem in tech is simply to invest in more women-led ventures – in fact, I’m proud of StandUp Ventures, which encourages more women to step up and become entrepreneurs, moving us beyond the outdated assumption that the reason we have so few women in tech leadership roles is solely a “pipeline problem.”
But the reality is that we need both men and women at the table – both at the startups we invest in and our own firms. Only this will lead to true diversity of thought.
One of the main ways to increase gender balance is to stop hiring for “culture fit” and start hiring people who have strengths your existing team may be lacking. We naturally gravitate toward funding and hiring people who are just like us; it’s human nature. When we’re recruiting, I challenge my team to take an honest look at the core skills – that goes for the soft skills, too – that we’re weak on and evaluate 100 percent of the talent pool for those qualities.
VCs who take board seats can also influence the conversation around the board table. They should be pushing founders and senior leaders to take these issues seriously.
Invest in leaders who prioritize gender diversity
Venture capitalists often say they invest in people, not just ideas. I believe this is true, and that it’s essential for our community to thoroughly vet a founder’s approach to gender diversity. Leaders are ultimately responsible for everything that happens on their watch – which is why founders like Travis Kalanick were forced to resign following one sexism scandal after another, regardless of whether he was personally involved. Many have argued that he allowed that culture to intensify from the start.
Of course, the counter argument is that Uber is a wildly successful company in spite of its attitudes toward women. While that may be true now, I don’t think that’s a sustainable approach to building a strong company.
Employees and consumers alike are becoming less tolerant of sexist attitudes; and social media is making it easier than ever for their voices on the matter to be heard. At the same time, Trump’s presidency is reigniting people’s activist spirits, meaning we’re likely to see more grassroots campaigns in the #DeleteUber vein.
Tech is ultra competitive, even when you’re a unicorn; so it’s smart to invest in leaders who prioritize gender diversity from the start and have a demonstrated track record of creating inclusive work cultures. These are people you can trust to protect and enhance their company’s reputation as they grow and make sure there’s gender balance from the get-go; because once you get off on the wrong track, especially at high-growth companies, it can be hard to course-correct while in flight.
Make the headline we all want to see
If we as a VC community make the right moves now and tackle these problems head-on, the next controversial headline about Silicon Valley you read won’t be about culture at all – it will be about a founder who is too ambitious in the problem she is trying to solve; or because a VC took a risk on an entrepreneur with a bold vision. As this year of scandals draws to a close, it’s time to get back to the real reason we all got into this industry – to be a force for good and change the world.