JUDY WOODRUFF: The technology sector, and especially the start-up culture in Silicon Valley, has long been criticized for its record on diversity, gender and inclusion. Now, the spotlight is being shone a spotlight on the investors and funders in the valley.
Here’s Hari Sreenivasan.
HARI SREENIVASAN: The scrutiny has intensified in recent weeks after two publications, “The Information” and “The New York Times,” documented how prominent venture capitalists had been accused of making unwanted sexual advances through texts, phone calls and physical intimidation. These powerful investors used their power to harass dozens of women in whose companies they might invest.
It led to the resignation of Dave McClure, who was the CEO of tech incubator, 500 Startups. McClure apologized after he was accused of harassment by other women and wrote to a prospective employee, quote, I was getting confused figuring out whether to hire you or hit on you.
Freada Kapor Klein is an entrepreneur and leading voice pushing companies to increase culture and diversity. Kapor Klein and her husband invest in several startups, including some funds run by 500 Startups. She joins me now from Oakland.
So, Freada, you have been working on this for decades. Why are those two stories in the past couple of weeks resonating?
FREADA KAPOR KLEIN, Founder, Level Playing Field Institute: Well, I think, finally, Silicon Valley is willing to look at itself and to recognize it may be on the leading edge of investing in tech. It’s certainly on the trailing edge of dealing with its own ecosystem, diversity and inclusion in particular.
HARI SREENIVASAN: Why is it —
FREADA KAPOR KLEIN: Venture capital —
HARI SREENIVASAN: Go ahead.
FREADA KAPOR KLEIN: Pardon?
I was going to say, venture capital is now looking at behaviors that it’s engaging in that were addressed on Wall Street more than 20 years ago.
HARI SREENIVASAN: there aren’t exactly any stats on this, but how pervasive is it? I mean, you’ve started projects to include women and people of color to try to foster change in the pipeline and it’s important to point out that this isn’t just about gender. This is also about race and sexual orientation sometimes.
FREADA KAPOR KLEIN: Exactly, and I think a term that’s a bit bulky but a very important concept, what we see is intersectionality, meaning we can have multiple identities. It’s important to point out that the women who told their stories to the information about binary capital and the women who came forward against Dave McClure in the “New York Times,” all of those were women of color, and talking about unwelcome advances from Caucasian men.
So, we need to look at that racial dynamic as it’s layered in with the gender dynamic. And you’re absolutely right. It’s an abuse of power.
HARI SREENIVASAN: One of the interesting things people point out about Uber is that there were so many different scandals where nothing happened to the CEO really until his big investors signed a letter and asked him to step down. It seems that money talks much louder here.
FREADA KAPOR KLEIN: Unfortunately, money does talk much louder. I think we’ve hit an era in venture capital where greed is everything and it, again, mimics Wall Street in the 1990s where greed is good was a commonplace statement and, in fact, in a commencement speech.
I think now we have to look at is the only thing that matters dollars? Is it the dollars that get invested in the entrepreneur? Is it the, quote-unquote, unicorn status meaning the billion-dollar evaluation of a startup? And when are we going to expand the ledger sheet to include how people are treated, to include how venture capital and startups behave as citizens of the communities and of the country.
HARI SREENIVASAN: So, how do you change that dynamic for venture funding that’s all chasing those unicorns, they all want to get rich quick, they all want to fund the right startup that’s going to make billions and billions of dollars, and it seems that they’re almost enabling a culture that goes on because, hey, it’s all about profits?
FREADA KAPOR KLEIN: Well, I think that’s right, and I think there are several groups that are going to need to join forces to make that change. The venture capital community itself has to say, wait a second, we aren’t with the bottom of the bottom here, and we need to work to clean up our own industry. But we also need to see the limited partners who invest in these venture funds need to start doing different kinds of due diligence, different kinds of demands about diversity and inclusion in the venture capital firm itself, in the companies that are funded and the values of the startups that are created.
So, the limited partners can create a lot of change. The entrepreneurs themselves, one of the things we need to point out is that venture capital as currently constructed is leaving billions of dollars on the table because they’re overlooking underrepresented entrepreneurs who have great ideas and who can serve real communities’ real needs.
HARI SREENIVASAN: All right. Freada Kapor Klein joining us from Oakland tonight. Thanks so much.
FREADA KAPOR KLEIN: Thank you.