Innovation
Women, African-Americans and Hispanics/ Latinos are unwanted in Silicon Valley
By Michael Hennigan, Finfacts founder and editor
Oct 17, 2013 - 6:02 AM

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President Obama at a dinner in Woodside, California, Feb. 17, 2011. Apple's Steve Jobs was on the president's left and Oracle's Larry Ellison was opposite him. Facebook co-founder Mark Zuckerberg was on the president's right.

It's not new news that women, African-Americans and Hispanics/ Latinos are generally unwanted by the tech elites in the Silicon Valley area of Northern California but following the announcement of Twitter's planned IPO (initial public offering) renewed focus has been given to the issue because of a public spat between Dick Costolo, Twitter's CEO, and Vivek Wadhwa, an Indian-born entrepreneur turned academic, over the lack of women on both the board of the micro-blogging site and its senior management.

Meg Whitman who used to run eBay, is head of Hewlett-Packard, Marissa Mayer, is the CEO of Yahoo!, while Sheryl Sandberg is the No. 2 at Facebook. However, the structure at Apple is the more common one, where women are a rare specie in the executive management. This week Apple announced that Angela Ahrendts, an American who is CEO of Burberry the British luxury fashion house, will become Apple’s third retail chief in as many years.

The New York Times says that about 49% of publicly traded information technology businesses have no women on their boards, compared with 36% of the 2,770 largest public companies in the country, according to GMI Ratings, a research firm.  Meanwhile, women made up 15% of those employed in software programming and other computer jobs in the 1970s, rising to 34% in 1990, according to the Census Bureau. But since then, in spite of two big booms, women’s share of computing jobs has fallen to 27%.

In 2012, 14% of S&P 1500 company board seats [pdf] are held by women, a three percentage point increase over six years.

Vivek Wadhwa asks in The Washington Post: Is there really a shortage of women who are qualified to be on technology-company boards?  It depends on how you define the qualifications.  "If the requirement is that board members must have strong technical skills, then yes, there surely is a shortage.  The pipeline is very weak, and fewer women than men are entering computer science."

This criterion is however disingenuous or dishonest. Wadhwa says: "Look at the composition of the Twitter board as an example."  As Connie Guglielmo reported in Forbes:

Of the 12 “executive officers and directors” called out as “Management” in Twitter’s Oct. 3 S-1 filing, only two—Costolo and Christopher Fry, senior vice president of engineering—have technical degrees.  The rest of Twitter’s executive officers and directors as of Aug. 31, listed on page 118 of the filing, have undergraduate degrees in a myriad of subjects, from French literature to East Asian Studies to Philosophy, while co-founders Jack Dorsey and Evan Williams, who serve on Twitter’s board, are college dropouts. There are also five MBA degrees in the mix, and the law degree obtained by the general counsel, the one woman on Twitter’s top leadership team (again, as defined by the executives and advisors it’s called out in the filing)."

Last November, the San José Mercury News reported that its analysis of Census Bureau data showed that the percentage of Asian tech workers grew from 39% in 2000 to just more than 50% in 2010 in Santa Clara, San Mateo, Alameda, Contra Costa and San Francisco counties combined.

At the same time, white workers saw their more than 50% majority of tech jobs in 2000 fall to nearly 41%.

California's Santa Clara and San Mateo counties were called 'Silicon Valley' by Don C Hoefler, a journalist, in a series of articles in 1971.

Hispanics and Latinos make up 27% of the population of Santa Clara County and African-Americans account for 3%.

African-American and Hispanic tech workers each saw slight decreases: Positions held by African-American tech workers fell from 2.8% to 2.3%; those held by Hispanic workers dropped from 4.6% to 4.2%.

An earlier analysis by the newspaper showed that of the combined work force of 10 of the Valley's largest companies - - including Hewlett-Packard, Intel, Cisco Systems, eBay and AMD - - showed that while the collective work force of those 10 companies grew by 16% between 1999 and 2005, an already small population of black workers dropped by 16%, while the number of Hispanic workers declined by 11%. By 2005, only about 2,200 of the 30,000 Silicon Valley-based workers at those 10 companies were black or Hispanic.

The share of women at those 10 companies declined to 33% in 2005, from 37% in 1999. There was also a decline in the share of management-level.

IT workplaces, including tech startups, can create hostile or unpleasant environments for women and people of color, leading to those employees seeking out other companies or even other industries for work.

A 2011 report states that biases inherent in the average tech workplace make it a less-than-inviting environment for women and minorities, who deal with negative workplace experiences, such as exclusionary cliques and bullying at much higher rates than do their male and white counterparts.

Freada Kapor Klein, a venture partner at Kapor Capital, who is also the founder of the advocacy group, Level Playing Field Institute, wrote last year that "ideas for startups born of different lived experience, new approaches to problem-solving and managing -- can only be achieved if we loosen the grip of the belief that there is one best way to run a meeting or run a company. Similarly, the belief that there is a clear best qualified candidate for every job holds a grain of truth but also leaves room for bucketfuls of hidden biases."

She added:

I founded the Level Playing Field Institute, which recently studied [pdf] the impact of hidden bias in tech workplaces, both large companies and startups.

What was striking was the degree to which engineers and managers in the same companies have day-to-day experiences that dramatically diverge. Even though they’re often are on the same team or in the same department, some feel respected and encouraged, while others feel excluded and ignored.

These views aren’t randomly distributed across the group of engineers and managers - - they strongly diverge by race and gender."

Eric Ries, the author of 'The Lean Startup' wrote in the TechCrunch blog:

What accounts for the decidedly non-diverse results in places like Silicon Valley? We have two competing theories. One is that deliberate racisms keeps people out. Another is that white men are simply the ones that show up, because of some combination of aptitude and effort (which it is depends on who you ask), and that admissions to, say Y Combinator (YC), simply reflect the lack of diversity of the applicant pool, nothing more.

The problem with both of these theories is that the math just doesn’t work.

It’s a fact that the applicant pool to most Silicon Valley startup schools and VCs is skewed. Could this be the result of innate differences between white men and other groups? The math simply doesn’t hold up to support this view. Think about two overlapping populations of people, like men and women. They would naturally be normally distributed in a bell curve around a mean aptitude. So picture those two bell curves. Here in Silicon Valley, we’re looking for the absolute best and brightest, the people far out on the tail end of aptitude. So imagine that region of the curve. How far apart would the two populations have to be to explain YC’s historical admission rate of 4% women? It would have to be really extreme.

.....There’s one last piece to this puzzle that science can help us with. It goes by the rather unfortunate academic name of stereotype threat. But a confusing name doesn’t make it any less real. It turns out that when people are in a situation that defies stereotypes, reminding them of the stereotype diminishes their performance. In one study from NYU, students were given a math test. Asking men and women questions about their gender beforehand increased the performance gap substantially. 'Priming' students with questions about other aspects of their identity, did not. This result has been replicated in many, many studies.

I think this helps explain why asking more minorities to apply to these programs doesn’t work. Consciously thinking about proving a stereotype wrong impairs performance. So it’s entirely possible that a completely objective assessment of the performance of candidates in an application process will show minority candidates doing worse, because they are literally cognitively impaired."

Vivek Wadhwa told TechCrunch TV in 2012 of a smattering of sexists and racists at large venture capitalist firms who, he says, kill the deals that fund minority-led startups. These “arrogant people who think they are gods,” he said, they are the bigots who are undermining the meritocratic foundations of Silicon Valley.

Immigrant entrepreneurs from countries such as India and China are of course not free of bigotry either and the high percentage of Asians working in the big tech companies partly reflects that reality together with the preference of tech managers for immigrants.

Growing inequality

Wage inequality in San José, the biggest urban centre in Silicon Valley, is second highest in the United States.

Amidst one of the wealthiest regions in America, the city has struggled for years with austerity.

The New York Times says that the metropolis of nearly a million residents is the third-largest city in California and now spends one-fifth of its $1.1bn general fund on pensions and retiree health care, and the amount keeps rising. To free up the money, services have been cut, libraries and community centers closed, the number of city workers trimmed, salaries reduced, and new facilities left unused for lack of staff. From potholes to home burglaries, the city's problems are growing.

"We're Silicon Valley, we're not Detroit," said Xavier Campos, a Democratic city councilman representing San José's poor East Side. "It shouldn't be happening here. We're not the Rust Belt."

The Times adds in another piece that in the past, the tech industry created middle-class jobs and lifted the overall economy of Silicon Valley. But as tech companies have shifted manufacturing and midlevel jobs overseas over the years, highly paid workers have increasingly clustered there. Per-capita incomes have been rising even as median incomes have decreased for five years in a row, according to Joint Venture Silicon Valley, a private organization that co-publishes an annual report on the region.

Silicon Valley is an expensive place for poor people.

Sales figures for single-family homes in Santa Clara and San Mateo, the two main counties in Silicon Valley, show median prices have risen about 30% in the past year while the inventory of available homes has fallen by roughly half, according to an analysis of local multiple listing service data by the Silicon Valley Association of Realtors. The median prices for March - - $735,000 in Santa Clara and $925,000 in San Mateo -- "only hint at the current market’s frenzy."

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