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Silicon Valley billionaires are lining up to condemn racism. But the tech and VC industry has a shameful, decades-long history of ignoring and perpetuating inequality. (AAPL, CRM, GOOG, FB, NFLX, INTC)

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  • In memos to employees and public social media posts, Silicon Valley leaders voiced support for the call for social justice in the wake of the death of George Floyd in Minneapolis.
  • But their expressed concern for systemic mistreatment of blacks by police stands in contrast to the relatively little they've done to address endemic inequality in their own industry.
  • More than 20 years after the Rev. Jesse Jackson called out Silicon Valley for having few blacks and Latinos among its employees, executives and board members, such groups remain underrepresented, in many cases egregiously so.
  • The venture capital and startup ecosystem is particularly lacking in diversity; just 4% of all venture firm employees and just 1% of all founders of venture-backed startups are black.
  • Those exceedingly low numbers risk perpetuating the problem, because today's startups and founders are tomorrow's tech giants and venture investors.
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Silicon Valley would like you to know that it's very concerned with racism — at least when it pertains to the killing and brutalizing of black people by police.
Over the weekend and on into this week, CEOs of tech companies big and small, investors, and everyday employees spoke out on social platforms against the death of George Floyd and in favor of the idea that Black Lives Matter. Many companies and top leaders pledged support to social justice organizations and to do what they could to push for reform.
These declarations — as impassioned and righteous as they are — ring a bit hollow. You see, for literally decades the tech industry has done little to address a systemic racial injustice that's much closer to home. More than 20 years after the Rev. Jesse Jackson first came to Silicon Valley to highlight the lack of diversity in tech boardrooms and campuses, black and Latino people are still a rarity in the tech industry. And the responsibility for that falls on the shoulders of many of the people who have been speaking out about the injustice in recent days.
Take Apple. In a memo sent to the company's employees over the weekend, CEO Tim Cook spoke eloquently about the legacy of racial injustice and the pain and fear black and brown people feel on a daily basis. He committed Apple to making donations to the Equal Justice Initiative and other groups fighting against racial injustice and pledged support to employees of color.
What he didn't do was pledge to do something that's fully within his control and would arguably make an even bigger difference — hire more black and Latino people.
Apple was actually one of the companies that Jackson targeted when he came to the Valley in 1999. He noted at the time that while the company, in its "Think Different" ad campaign, touted people of different ethnic and racial backgrounds, it had no black or Latino people on its board and relatively few such people among its rank-and-file employees.

Of 123 top managers at Apple, only one is black

Twenty-one years later, Apple hasn't changed all that much. Sure, unlike then, one of its seven current board members — James Bell — is black. But out of the 123 people in the company's executive and senior ranks in 2018 — the last year for which it has disclosed the demographics of its workforce — only one was black.
Tim Cook, chief executive officer of Apple, attends the annual Allen & Company Sun Valley Conference, July 12, 2019 in Sun Valley, Idaho. Every July, some of the world's most wealthy and powerful businesspeople from the media, finance, and technology spheres converge at the Sun Valley Resort for the exclusive weeklong conference.Overall, just 3% of Apple's top leaders were African-American, which was the same proportion as it was in 2014, the first year the company started releasing its diversity numbers. Among the company's tech workers — usually the highest paid group of non-management employees at Silicon Valley companies — only 6% are black, which, again, is the same percentage as in 2014.
The company has done only a slightly better job at employing Latinos. They comprised 7% of its leadership ranks and 8% of its tech workers, up 1 percentage point each from 2014.
But it's not just Apple. Other big tech companies are usually just as bad, if not worse.

Blacks comprised just 3.7% of Alphabet's employees

Like Tim Cook, Alphabet CEO Sundar Pichai sent out a memo to employees pledging to match their donations to racial justice organizations and to support black and other employees who were upset by the recent events. Like Cook, Pichai left unmentioned what Alphabet would do to address its own racial inequities.
Blacks comprised just 3.7% of Alphabet's workforce last year and Latino people just 5.9%, according to the company's latest diversity report. Among its leadership ranks, those numbers were 2.6% and 3.7%, respectively. And of its tech workers, blacks made up 2.7% and Latinos 4.8%.
Sundar Pichai
To be sure, Alphabet's made some progress — nearly all of those numbers are up at least a percentage point since 2014. But they remain pathetically low relative to the company having a workforce that looks anything like the demographic makeup of this country.
Pretty much wherever you look in the tech industry — at least among the companies that have released their numbers — the story is the same. At Salesforce, Facebook, Netflix, even Intel, whose former CEO, Brian Krzanich, pledged to Jackson that he'd diversify his workforce, the percentage of employees who are African-American or Latino — particularly in tech and leadership positions, but even overall — remains egregiously low, according to the companies' own publicly released numbers.

Venture firms have done an even worse job

The situation is even worse when it comes to the venture capital and startup wing of the tech industry.
Like the tech companies and their CEOs, venture firms ranging from Spark Capital to Kleiner Perkins announced their support for social justice causes and joined the chorus of support for Black Lives Matter. Prominent venture capitalists, including Bill Gurley and Chamath Palihapitiya tweeted or retweeted similar sentiments.
But those statements contrast sharply with the venture industry's own hiring and funding practices.
The venture-startup ecosystem has long been a white man's club. Oh sure, there are now quite a few Asian founders and VCs, and a small, but growing number of women in both roles. But when it comes to African-Americans or Latinos in either position, you'd be hard pressed to find more than a handful.
jesse jacksonSpark Capital doesn't appear to have a single black person on its team, at least according to its list of members on its website. The only black member of Kleiner Perkins' team seems to be former Secretary of State Colin Powell, who serves in an advisory, not investment role.
On Tuesday, a VC industry group devoted to the advancement of black people in the venture business, wrote a blog post calling the VC industry a "homogenous and exclusive" group.
"Venture Capital is one of these unjust systems. It is a system of funding entrepreneurs that has routinely overlooked talented Black founders and investors, squashing promising businesses and dreams as a result. It is time for venture to face the ugly reality that it is a system perpetuating the institutional racism that plagues our society," the post by BLCK VC said.
Industrywide, just 4% of all employees of venture funds are black and only 5% are Latino, according to a study released by Deloitte and the National Venture Capital Association, the venture industry's own trade group. Among those with any kind of role in making investments, 3% were black and 5% were Latino. African-Americans and Latinos each made up just 3% of all investment partners.
And those numbers look good when compared with the entrepreneurs that get venture funding. Just 1% of all founders of venture-backed startups were black and only 1.8% were Latino, according to a study released last year by RateMyInvestor and Diversity VC.

The industry's lack of diversity perpetuates itself

That's a problem, because that's the tech industry's future. Some of these companies are tomorrow's Apples and Alphabets and Amazons. If funding diverse groups of founders isn't a priority today, you can't expect the next tech giants to have particularly diverse workforces.
Worse, though, is that it risks perpetuating the situation. Venture firms often invest in founders that look like them and hire new investors from the ranks of former founders. The paucity of blacks and Latinos among venture-backed founders today will likely mean that venture firms will remain largely diversity-free zones into the future and their investments will too.
This long-standing lack of diversity in the tech industry represents failure of leadership, if not outright hypocrisy. It's also a huge business problem.
Diversity is good for business — for revenue, profits, and return on investment — as numerous studies have shown. Having people with different life perspectives in the room, designing products and setting the direction of corporations helps companies find use cases for their products they wouldn't have otherwise recognized, identify customers they likely would have ignored, and address needs they might not realize existed.
Ultimately what the people in the streets are protesting is not just police brutality, although that's obviously central. It's an entire racist system that's not and never has given black and brown people a fair shake.
Condemning police brutality from the confines of a corporate office doesn't take a lot of courage or leadership — especially when you're just joining the chorus. Doing something about your own company's role in perpetuating systemic discrimination takes a lot more leadership and effort, which, in Silicon Valley, has has been sorely lacking for far too long.
Got a tip about the tech industry? Contact Troy Wolverton via email at twolverton@businessinsider.com, message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop.
SEE ALSO: This female founder went from teaching middle schoolers to mentoring tech entrepreneurs — here's her unusual path and how she plans to help others succeed in Silicon Valley
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