The War For (Diverse) Teams At Early Stage Companies…and Beyond

Note: Diversity is a term used 30+ times in this piece and refers to all types of diversity, beyond just gender.

In 2004, there was a post-bubble burst resurgence of well funded startups and VMware, like many other companies in the Silicon Valley, was struggling to compete for talent against Google, Yahoo and others in their space. The hot conversation in the weekly e-staff meeting in Palo Alto was about maintaining the bar and hiring the very best talent they could find. This was well before diversity and inclusion was trending as a hiring pain point. There was a war on talent.

To combat this war, the leadership team at VMware got creative. There was an urgency to bring on talent and just competing on compensation and equity wasn’t enough when that talent pool itself was sparse. So, leveraging ties to several of the team members’ east coast roots, they tried an experiment and opened an office in Cambridge, MA.

As the Site Director hired to build out that office at the start of 2005, I was charged with bringing on at least a dozen engineers by the end of the year. I had strict guidance on who to hire first;  the first six hires had to be at least a Staff level engineer, which at that time was like a Principal at most other companies. Even though we were desperate to bring on more talent, the leadership team insisted we still keep the bar high. There were no compromises – hire the best, no matter what.

By the end of 2005, we ended up hiring over 20 seasoned engineers and were well poised to scale that location with more junior talent and expand into other regions across the globe. It was a hard push to win the war, but we won it and many would say that getting scrappy, maintaining the bar and taking risks outside of Palo Alto to hire great talent was one of the key factors that led to VMware becoming the multi-billion dollar success story it is today.

Getting Scrappy And Taking Risks To Create Diverse Teams

Flash forward to 2017, and the talent war is still on, but it’s not just about hiring top talent, it’s about hiring for diversity. There’s plenty of science to prove that diverse teams are what separate average companies from the big success stories. Once there’s diversity in teams, you attract more candidates from underrepresented groups. But there is a catch-22 when companies and teams with no diversity can’t hire candidates from underrepresented groups, in part, because they have no diversity in their current teams!

I was at an event recently where I sat in a breakout session about diversity and inclusion where most of the fifteen or so participants were white, male, CEO-Founders of very early stage companies. These leaders were complaining that despite best efforts, they were not able to find/hire qualified, candidates from underrepresented groups for their open positions. Investors were on their back to meet deadlines and reach revenue goals and the push for building diverse teams was not a high enough priority to push back. They had to hire the best talent they could find, and get coding!

But what if that talent didn’t exist? What if it was 2004 and there were no engineers to hire, never mind engineers from underrepresented groups? How do companies, like VMware did back then, combat this war vs. becoming complacent? What can companies do today to be creative, continue to scale, and develop a diverse team? What if CEOs, their leadership team and their boards held the line on diversity metrics, no matter what?

Starting From The Top

A company that is committed to diversity must demonstrate that commitment from the top, down. CEOs set the tone for the organization’s culture by demonstrating a commitment to diversity and inclusion. They don’t just say they care about the problem and acknowledge the importance of solving it, but they force it to happen. VMware’s founding CEO, Diane Greene, was adamant that we hire only the best talent from day one, and CEOs today need to do the same when it comes to hiring diverse talent.

One of the most compelling reasons for any strong candidate to join a company is knowing there’s diversity at the senior most levels. Having Diane at the helm played a huge role in my decision to join VMware. She was a role model and inspiration to everyone at the company as she balanced the complex demands of scaling our business with her family and other commitments outside of work. We were not only inspired to follow her drive and passion for the business, but the company naturally attracted other strong, candidates because of her leadership.

Whether you are an early stage company, mature business or even just a growing team within a maturing business, committing to diversity at the top is critical. Here are some suggestions on how to do that:

  • The founding team: Diversity does not just have to exist between your co-founding team, it should be among your first hires, your advisors, customers and/or friends of the company. The more diverse the team, the more likely you will be to attract new team members from under represented groups. Introduce prospects to these company “community” members to begin to demonstrate your commitment to this metric at the start. For example, I frequently join interview panels for early stage companies I advise to ensure not just a great hire, but to add diversity to the panel itself.
  • Set and hold the diversity bar for leadership hires: Don’t say “it would be really great to fill the next senior role with a diverse candidate”, rather make it mandatory to create a diverse organization. “We will not hire another manager, director, VP, etc. unless they bring diversity into our team.” Get scrappy and go hard to build these teams (see below). Stop looking for just culture fit and homogenous pattern matching and seek those different than you – they are sure to be additive to your organization beyond just their skills and experiences. Yes, it may take longer to find that person, but hold out for it – it’s worth it!

Note to VCs & Board Members

It is great to see so many VCs and board members stepping up to foster diversity in their portfolios. They are committing to invest in more women founded companies, hosting “diversity events”, making the Decency Pledge and some are creating special funds for diverse entrepreneurs. I believe many VCs are sincerely interested in this effort and not just creating PR tactics to position firms to appear supportive. While those efforts are important to further the cause (don’t stop doing them!), I challenge them to set the bar higher; implementing hard accountability metrics for diversity in their firms and in their portfolio companies. To not be complacent in the reality that it’s “hard to find qualified  candidates from underrepresented groups”, but rather force change to happen. Here are a few suggestions:

  • Mandate that your partnership be a diverse team. Studies continue to come out on how diversity in investment teams have stronger exit outcomes. Get scrappy and find ways to build diverse teams for your firms. The more diverse your team, the more likely your firm, will attract a more diverse group of entrepreneurs into your deal flow. And don’t stop at one – keep forging ahead and strive for a more balanced group of partners; a token diversity hire isn’t enough. Also, each partner from an underrepresented group on your team allows for more diversity on your portfolio companies’ boards. While there’s great debate on whether there’s a direct correlation with diversity on boards and company performance, it is a sure thing that diverse boards add new perspective and new ideas to help the organization succeed.
  • Refuse to fund a non-diverse team (!). Yes, you may have to get your LPs to sign off on this, but many LPs are now pressuring the funds they’re in to push harder on the diversity front. So, take the lead, be proactive and tell them you’re holding the bar. Even if it means an initial slow down on deal flow and longer lead times to exit. The data proves that those investments are far likely to pay off in a bigger way than the non-diverse team investments you’re making today.
  • Set your portfolio teams up for success and help find candidates from underrepresented groups for your investments. Extend runway with a bridge loan or other means until the company has had at least six months to try to shore up their team. Make this a priority of your firm. This too is likely to improve deal flow if you offer this type of support to entrepreneurs as many entrepreneurs are not even coming to you because they don’t have the requisite co-founder, never mind a co-founder/founding team that is diverse.
  • Cover the cost to augment teams during the recruiting process. Not only encourage your portfolio companies to bring in consultants/contractors from underrepresented groups as part of their core team until they demonstrate diversity in their teams, but pay for it! Invest in your teams beyond the equity round.
  • Note to Founders: Depending on urgency to raise capital, you might consider refusing to take money from funds that don’t walk the talk – will your board be diverse? Would non-diverse investment group allow you to fill their board seat with an alternate who brings diversity into the board? The more senior candidates you are courting to join your company will examine board composition carefully – especially if your investors play an active role in the day-to-day of your company (It happens more than we think!). How hard are you willing to work to get a diverse board? Also consider creating a seat for an independent board member from day one to be used if needed to round out your team.

Beyond The Leadership Team And Investors

How are you set up to source for and hire diverse teams? Are you looking in all the right places? In 2015, I wrote a whole primer on hiring for startups (much of which is also applicable for later stage companies), but here are some specific tips on getting creative on hiring for diverse teams:

  • Diversity in your interview panel: Most hiring managers these days know it’s ideal to have a diverse interview panel to help sell a candidate on the role and company, but if your team lacks diversity, consider augmenting the interview team with diverse “community” members – either from other teams in your company or by inviting board members, advisors, friends of the company, etc. to participate. More good info on the hiring process for diversity here.
  • Join, sponsor or network with diversity orgs: There are countless non-profit organizations that cater to diversity hiring causes. For example, joining the National Center for Women in Technology’s Entrepreneurial Alliance which is designed for both startups and incubators/accelerators, provides access to job forums, invitations to their events and connections with over 600 other membership companies. Blackengineer.com has a jobs board, as does lgbtconnect.com. There are loooong lists of other organizations you can tap into to support diversity hiring efforts here, here and here.
  • Bring on Diverse Contractors: To me this is a win-win. You can start getting some work done and having diversity in the office can allay concerns when members of underrepresented groups come in to interview. I’ve heard countless stories of a candidate going for an interview and saying “the whole office was dudes or all white” …you get the visual. I’ve also heard many stories of contractors who fall in love with the company they’re working with (and vice versa) and join full time! (and as noted above, maybe you can get your investors to pay for it!).
  • Never miss the opportunity of a passive candidate: So many companies fail to build diverse teams because they wait for applicants vs. seeking out great people. Troll LinkedIn, go to meetups related to your company’s area, hire sourcers to look for great candidates who may not even know they might want a change until they get a call from your company! Don’t wait for these candidates to come to you.

The First Diverse Hire

Once you reach success and start to hire diverse team members, remember, for many of them, they may be the first one – whether it’s at your company as a whole or perhaps just in one team. There can be an ominous feeling when one thinks they’ve been courted or hired as the token diverse candidate/employee. What will you do to ensure that they are set up for success?

  • Acknowledge the problem from the start. The first time you diversify your team, especially for a small company, the individual will know they are bringing diversity to the table. Speaking from experience, it’s fine to call it out, as long as it’s clear that this is not THE reason they are in consideration. Needing a strong technical leader, or someone who has specific domain expertise is the priority, diversity is simply a value add to the team/company…but don’t dwell on it.
  • Consider how you operate today and whether there are any conscious or unconscious biases towards the current homogeneity of your company/team. Are there activities that happen at work or after hours such as fantasy leagues, spa trips or perhaps even non-family friendly activities that keep the first diverse hire from feeling comfortable or the outlier? Does your office decor offend or intimidate? Carefully examine how your company culture, rituals and environment is setup to be as friendly as possible.
  • You’re not done – the first hire that creates diversity in your team should not check a box and then you move on. Keep at it and for God’s sake please do not make that hire the ambassador for all future diversity activities! It is still the hiring manager/leadership team’s responsibility to keep the momentum.
  • Finally, focus on retaining those great hires.

Make diversity a priority. Hold yourself, your team, your investors and your board accountable. Set standards, get scrappy and change things for the better.

This is a war on for diverse teams. Treat it that way.

Reply in the comments if you have other creative suggestions on how to win the war on creating diverse teams.

Step One: Investing in the Minority

Once, in my first few weeks in the early days at Akamai, I was pulled aside and told I had to stop wearing suits every day because people thought I was looking for a new job. I promptly went out and bought five new pairs of jeans and mothballed my vast array of suits and dresses. I wanted to be sure I was taken seriously as a senior member of a technology organization. Now here I was, 15 years later, asking myself if jeans were OK to wear to a program I was invited to attend at Stanford Law. The event was hosted by a16z and is designed to prepare future corporate board members of venture backed companies. I’m a big believer in the value of strong first impressions and, like it or not, what we wear is part of that first impression.

I sought advice from a friend who’s been a senior leader at a few top technology companies in the valley. Her opinion is that jeans “are part of a wardrobe that connotes technical competence. Dressing like a stereotypical engineer offsets the fact that I’m female; people can place me as an engineer in spite of my gender. And the converse is true as well – jewelry, high heels, emphatic makeup, skirts, scarves – most garments that emphasize femininity also connote non-technical because they connote femininity.” However, she goes on to say “being female, of course, still connotes ‘not a leader’ just like it does ‘not technical’ so you’re still going to have to dress like a guy to get intuitively bucketed as leader instead of an admin.” This last part struck me because the guys I know, in our field, who are some of the best leaders I have had the pleasure to work with, routinely wear jeans; not just to go to work but on stage and in executive meetings.

So what does this have to do with “Investing in the Minority”?

As noted above, the program I was about to attend was to prepare future corporate board members. I knew I was invited along with another CEO friend of mine from Boston in part because we were women, but I thought it was to round out the attendee list. We are often the token “nerd chicks” in our circle of professionals. So, while I was stressed about walking into a room full of white dudes in suits and being taken seriously (on first impressions because of what I wore), it turned out to be a totally moot point. As soon as I arrived, I knew this was about getting a new class of highly diverse board members and no one cared about what we wore. The room was ~75%, ethnically diverse, women and of all the male attendees, I counted only two white dudes. Most of the presenters were, however, white dudes (and most of these white dudes were wearing jeans), but they had clearly been tutored on balanced use of pronouns and were careful not to patronize or overtly call out the diversity in the room.

Audience diversity and wardrobe aside, what was really striking was that a16z put a stake in the ground that they are intent on solving the dearth of women and diversity on corporate boards by training up a bunch of us for the job. This realization reminded me of a recent conversation I had with a founding CEO and CTO duo who want to hire more women engineers. Women were applying for their job postings and they were great fits for this company, but they were finding that most of these women were not “technical enough”. I questioned whether there was unconscious bias at play or whether these women were really not as technically competent for the roles they were hoping to fill. The founders insisted these candidates were great in every way, but they just didn’t have enough coding experience. Just like a16z is investing in diversity for boards by training us up, I pushed these founders to invest in these women engineers. If they are great in every way, but just don’t have enough experience, give them that experience!

Which leads me to think more about this group of newly enlightened future board members. Now that we have been schooled in the duty of care and the duty of loyalty, who is taking the next step to actually get us onto boards? This is no different than the very capable women engineers who just need hiring managers to give them a chance, and perhaps some training/mentoring, so they can get experience. Unless we are actively marketed, recruited and given a chance to sit on boards, this investment in us as minorities is for not. I am not saying that we sit back and wait for others to do the work for us. I will definitely tap my board and others to make sure they know I am now even more prepared to take a board seat than I was with “just” my 25+ years of experience in management in startups and mature companies and from sitting on three different non-profit boards. However, I do think it’s incumbent upon a16z and others who aspire to support and foster diversity on boards and in corporations to seek us out and take a chance on us.

A16z made it clear in their invitation to this event that they are not guaranteeing us board seats. I get that and nor should they as we each need to stand on our own and demonstrate what we can do. However, they should, IMHO, commit to Step Two:

  • Create a directory of newly minted “board ready” professionals who have completed programs such as the one offered by Stanford Law
  • Upon election to a board, provide a mentor directory to those who have completed the program so we can have an experienced, trusted advisor or two to call upon in our first year of board service [Note: They may have to sign an NDA to do this, but if they are trusted professionals without a conflict, this should be a reasonable ask.]
  • Pressure their portfolio companies, current boards they sit on, and others in their networks to take a chance on us, or perhaps if not already oversubscribed with board observers, let us observe so we can start to get real board experience.
  • Finally, track our progress. Where are we in 9-12 months? Are we sitting on a board? Did anything we learned in this program become valuable in our first months as board members? Did we make an impact? As Professor Daines noted in his lecture last week, not enough research has been done on corporate board governance – especially on VC backed companies – so let’s start capturing the data now.

I am truly grateful for the invitation to participate in the program last week and hopeful I can leverage what I’ve learned on a private or public board soon. Much thanks to Marc Andreessen, Ben Horowitz, Margit Wennmachers and their team for taking the time to organize and participate in last week’s program!

…and for those wondering “but she never said what she ended up wearing??!”, I wore jeans.

Got ideas about how to foster more diversity on corporate boards? Please reply with a comment!