Silicon Valley Has a Diversity Problem

In a talk given at Harvard University's Berkman Center for the Internet and Society on Tuesday afternoon, blogger, entrepreneur and social media strategist Cheryl Contee tore into a fundamental disconnect at the very heart of the social media-fueled tech revolution. The problem, argues Contee, is that the people who make technologies like smartphones and social media apps look nothing like the people most likely to actually use them.

Contee, who is a partner at cause marketing consulting firm Fission Strategy and co-founded the business-to-consumer social media management start-up Attentive.ly, noted that women and minorities use smartphones and social media at a far higher rate than white men; however, not only do those groups comprise a small proportion of the workforce at most tech start-ups, they also receive only a tiny fraction of all venture capital funding.

A recent study by Pew Internet & American Life Project found that only 70% of white Internet users are on social networking sites, whereas usage rates for blacks and Hispanics are 75% and 80%, respectively; 74% of women use these sites — which include Facebook, Twitter, Tumblr, Instagram and Pinterest — compared to only 70% of men.

When it comes to the mobile devices, widely considered to the be the tech sector's largest growth area, blacks own smartphones at a rate 10 points higher than that of whites.

An analysis by CB Insights reveals that the founders of Internet start-ups that received Series A funding were 87% white, 12% Asian, and 1% black. It isn't just that the individual people in charge of most start-ups were white — in 83% of cases, every single member of the founding teams were white.

The same study found that 92% of all Internet start-up founders were male.

Why this is bad for business

‟Had I known the numbers about how few women and minorities get funded in Silicon Valley, I would have gotten discouraged. I don't know if I actually would have done it," said Contee. ‟And, even then, I had a lot of difficulty getting Attentive.ly's first round of funding."

Contee didn't raise the issue as an explicit attack on the executives at Internet and venture capital firms that can effectively act as gatekeepers within the tech sphere. Instead, she blamed shortcomings on implicit, often subconscious, biases pervasive throughout the industry that have led to a number of negative consequences.

The main one is that, without more pervasive representation of women and minorities throughout the tech world, there's a danger of these companies holding fundamental misunderstandings about their core markets.

For example, when Twitter (NYSE: TWTR  ) reveled, as part of its IPO filings, its all-white, all-male board of directors, the company was subject to two distinct, albeit intertwined, lines of criticism. The most vocal were charges of the micro-blogging site's management being tone-deaf in terms of diversity at a time when many corporations around the world are making a concerted effort to introduce a broader set of backgrounds to their workforce. However, there was another set of voices that also questioned the wisdom of having a board of directors without a single African-American or woman when blacks use the service at twice the rate of whites and more than 50% of its user base is female.

Without that outside perspective, start-ups like Twitter are likely missing out on a wealth of business opportunities.

In an article published earlier this year about Silicon Valley's growing political ambitions, New Yorker writer George Packer mused, ‟It suddenly occurred to me that the hottest tech start-ups are solving all the problems of being 20 years old, with cash on hand, because that's who thinks them up."

Interestingly, in this respect, supposedly nimble start-ups that often pride themselves on being able to spot previously untapped segments of the market are often at a disadvantage against their larger, more-established competitors — Microsoft, for example — that have long employed companywide diversity initiatives.

In her talk, Contee pointed to a quotation from prominent San Francisco Bay Area angel investor Dave McClure, who once dryly noted, ‟If a tech company is not headed by a white, male, nerd, college dropout — it's probably undervalued."

She added that a possible corrective is to encourage more minority youth to get into tech in the first place by holding, ‟more hackathons in the ‛hood" and simply putting the idea out there that the creation of the next Google or Facebook isn't solely the purview of people who look like Mark Zuckerberg or Sergey Brin.

This isn't to say that there's currently a complete dearth of efforts within the start-up community to foster diversity. There are efforts like those of Tristan Walker, the former VP of business development at Foursquare, who started CODE2040 — a fellowship programed aimed at placing talented, young, black and Latino undergraduate engineering students in top tech companies. However, such programs are far from the norm. 

‟There are a lot of ... [young blacks and Latinos] who don't know that being really good at Facebook is something people will actually pay you to do.... There's a complete lack of awareness about what those jobs are," Cotee explained. ‟I see two possible futures for the tech industry. One that's a mirror to our society ... and the other that maintains the illusion that there's a difference between what the consumers and the creators of the Internet look like."

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