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Archive for November, 2011|Monthly archive page

What Black Entrepreneurs Can Do To Fix Silicon Valley

In Business, Entrepreneurship, Interesting on November 1, 2011 at 1:09 am

I hate blogging. I haven’t blogged in over two years and there’s a reason for that. But an issue has emerged that is too important for me to sit back and watch unfold without offering a dose of perspective. You don’t need a Twitter fight to recognize that Silicon Valley exhibits bias in its investment decisions. And, while it’s great that CNN has made waves with previews of its upcoming show on the subject, you don’t need cable TV to tell you that, either. I could quote statistics or hide behind anecdotal accounts of who-said-what to-whom and when, but the end result is still the same. Silicon Valley has a race problem. The question before us is: what do we want to do about it?

I was proud when I read Dylan Tweney’s post about fixing the problem. It was refreshing to hear someone with clout acknowledge publicly what most Americans know, but hesitate to discuss. What also surprised me was his willingness to call out his peers who question or deny the existence of a problem. He showed great leadership in paving a path towards reconciliation across racial lines. I felt compelled to do the same in the spirit of cooperation. The truth is, Silicon Valley’s race problem wasn’t born in the Valley, it is really just a reflection of the last vestiges of America’s 400 plus race problem. The issues are deeper than we think and if we’re going to address it, we’re going to need to do it together. So the following is my advice to black entrepreneurs (existing, budding and otherwise) on what they need to do to fight racism in Silicon Valley.

Consider the history. Although we live in a post-racial society, Silicon Valley social DNA was formed many years before President Obama was ever elected. The majority of venture capitalists are in their 40s or older, which means they attended college during the tumultuous 1970s and 1980s. My undergraduate experience was rife with racial tension and it seemed like every few years, a new issue would occur to deepen the wedge of social distrust. The Stuart murder, the King beating and the Simpson trial all played a role in shaping our racial views and social alliances. While most people have moved on intellectually from that, our emotional networks and spheres of influence take longer to adjust. Just as African American students might have banded together at the “black table” for lunch, so to did our white counterparts who also dined and socialized in an unforced but segregated manner. College was never the melting pot it was designed to be. And divisions that formed along racial lines then, only widened once we got into the workplace. This explanation doesn’t excuse the racial isolation we experience. But it may help explain the reason blacks and whites remain divided on the role of race and bias in the decisions made on Sand Hill Road.

Lighten up. Some of the hostility we’re experiencing now is a tension arising from people who struggle to make sense of what they observe, relative to what they’ve long believed to be true. Don’t react. Let people work out their issues in the absence of public scrutiny. What disappointed me most about CNN’s interview with Michael Arrington was it captured an awkward moment without giving him a chance to reconcile any conflicting views on race, many of which had just emerged when he was introduced to a house full of black entrepreneurs. That moment created a great sound bite from which to generate buzz for the documentary, but I found it to be an irresponsible piece of journalism. When I say lighten up, what I mean is you need to give people time to process your existence, especially if it conflicts with the steady reinforcement of traditional images they’ve experienced of black people and of entrepreneurs. Mistakes are going to happen and black entrepreneurs will do themselves a disservice by succumbing to knee-jerk reactions.

What may sound like ignorance to you may very well be a moment of naive honesty for others. Don’t look for negativity where it doesn’t exist. Not everybody is against you, although it may seem that way. The temper of the times has changed and people from all backgrounds recognize the vulgarity of outright racism. When someone makes a comment that may be construed as insensitive, consider the context. As an example, being called “articulate” is, more often than not, an uninformed but genuine complement. Accept it as such. And let people make their mistakes. Over time, you’ll learn to discern the hateful comments from the ones borne of unfamiliarity. You’ve got to believe there is long term value in letting the other guy off the hook.

Be In The Present. When in Rome, do as the Romans do. And when in Silicon Valley, do as they do there too. Whether we admit it or not, we carry our culture with us and many aspects of black culture are counterproductive to our success. So we have to leave it behind. When I was growing up, my mother told me I had to be three times as smart as my schoolmates and four times as smart as colleagues to get ahead. What resulted is an over-achiever with a perfectionist attitude. This is something I fight hard to overcome. In entrepreneurship, great is the enemy of good enough. The time it takes to get a project from 20% to 70% is half the time it takes to take it from 70% to 90%. When speed of execution matters, we have be comfortable with projects at 70% of its theoretical potential. I heard someone say that “if you’re not embarrassed by your first release, then you released it too late.” I never understood what that meant until I finally released a beta version of HomeShopr. It sucks but it’s out. I’m actually proud to not be behind a LaunchRock Splash page as so many ventures remain.

Also, THERE IS NO SUCH THING AS STEALTH MODE. A common behavior amongst African Americans is to keep their ideas close to the vest. This usually occurs out of fear of it being ripped off or out of doubt that it’s worth discussing at all. In either case, this line of thinking is counterproductive. If you’re operating under the radar, most VCs will assume you lack the confidence to stand by your convictions. As a result, they won’t, and shouldn’t, waste their time with you. And you will have made a bad first impression from which it takes time to recover. Be present and be willing to sometimes make a fool of yourself. There is no shame in having made a bad assumption. If you recognize it quickly and pivot, you won’t be penalized. The myth of the perfect idea is simply that. Your startup has flaws, my startup has flaws, they all do. But the quicker you subject yourself to the scrutiny of the market, the quicker you’ll gain external feedback, identify any major flaws and refine the idea. Don’t lock yourself out of that valuable feedback loop.

Expand your network. If you know another startup founder, ask them for feedback on your startup. The best advice I get is from other founders who want me to succeed. Don’t be afraid to ask for an introduction to others; most people have at least one contact to share. Then go talk to them and so on. Over time, you’ll develop a robust network, some contacts you’ll keep for yourself, some you’ll share. From time to time, it also makes sense to network beyond your comfort zone. I call this venturing into the “unknown unknowns.” The easiest way is to attend a meetup and talk to total strangers. Meeting people is not an art, it is a science and anyone can do it. When I walk up to someone I don’t know, I just look them in the eye and say name name, that I’m working on a digital grocery list and I ask the magic question, “What do you do?” That is usually enough to get a conversation started. A great place to engage new people is at a co-working space. I am also a big fan of meeting strangers via office hours. The bottom line is, you have to be comfortable striking up conversations with total strangers and converting them into allies. The more people you know and the more who know you, the more likely they are to extend certain courtesies they wouldn’t extend to a stranger.

Temper your expectations. Horny men & women have sex on the first date, VCs don’t. If the first time you meet a VC is the day you pitch to him or her, don’t expect them to write you a check; it doesn’t matter how great you are. Very few VCs invest in points, they invest in lines. So help them construct a two-dimensional data set that best describes you. Many investors attend tech events, meetups, pitch nights and demo days. These are the best times to speak with them and establish a first data point on their radar of possible deals. If you see them on a panel, ask an interesting question. If they blog, tweet about a contradiction you’ve observed. Be smart and get noticed. By the time you’re ready to pitch, you won’t be pitching to a total stranger, you’ll be pitching to a stranger who might have heard of you. It’s a start.

Get noticed. If you really want to get noticed, get out in front, way out in front. Every tech community needs leaders to run the myriad of events that holds it together. During Internet Week, or Social Media Week, or Entrepreneur Week, Blogger Appreciate Week or I Hate This Week Week, plan one of the events. Investors say they’re not impressed with entrepreneurs who waste time managing a meetup group but there is merit in demonstrating a willingness to lead and an ability to execute.

Respect the source. The funding bottleneck for most African American entrepreneurs occurs at the seed through Series A stage of capital raising. Unfortunately, these are the riskiest stages and there is no community reinvestment imperative in venture investing. If an investor’s source of funds is from the sale of a business or from generational wealth, they are under no obligation to invest it in a racially diverse or representative manor. Charity and guilt are poor arguments for justifying an investment decision… so don’t suggest them. Unless you’ve got pictures of the investor in a compromising position, you’re only left with making the strongest business case possible to attract investment dollars. This requires you to refine your concept even further, prioritizing pain points, layering feature sets, developing multiple revenue models, accelerating scalability and incorporating defensibility measures every step along the way. If you’re not familiar with any of those words, please consider attending my Art of Pitching workshop next spring (#shamelessplug).

Stay the course. Even if you do all the things mentioned above, there is no guarantee you’ll get funded because, as we stated above… Silicon Valley has a race problem. The hardest part of entrepreneurship is knowing when to pivot, when to give in and when to stay the course. This is largely a function of the size of your wallet, the strength of your support group and the depth of your convictions. But if you choose to stay to course, please know you’re not alone. I am in the same boat with you and so are many other entrepreneurs, black and white.

What I hope comes that out of the current debate is a widespread acknowledgement of a problem and a comprehensive strategy for addressing it. Amidst the initial hostility, I am encouraged by an air of unity that is fighting to emerge. The economics also favor greater inclusion. Venture capital returns have slid in recent years. I strongly believe the lack of diversity in the pool of ideas that get funded plays a role. While there may be an economic imperative for Silicon Valley to change its ways, it isn’t going to happen over night. But I believe it will happen. The question is how long will the current base of investors continue to hide behind a veil of bias to avoid admitting that the best ideas don’t always emerge from the usual suspects, namely young white males. Only time will tell.

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