Every first-year design student with any experience knows that looking for the next great insight or innovation is a function of sampling a wide range of research subjects, using a sound method of inquiry, and creatively connecting shards of ideas into a whole insight. In other words, diversity cultivated and managed by smart people equals insight and innovation. So why is diversity such a tough sell in the Valley of Silicon?
I recently talked with Lisa Lambert, managing partner of The Westly Group, a venture capital firm in Menlo Park, about venture capital and diversity. Lisa has spent over 20 year working in venture capital and technology and she is uniquely placed to discuss the evolution of the industry as well as the role of diversity in running businesses big and small.
MG: What is the Westly Group?
LL: The Westly Group is a private venture capital firm that was founded in 2007 by Steve Westly. It originally started as a clean tech fund, and now we're focused on enterprise software and traditional IT investing, and sustainability/resource efficiency. So I think about it as the intersection of software, smart devices, and IoT.
MG: What else can you tell us about your investment focus?
LL: IoT is one of my domain focus areas. Most deployed systems are unconnected today, so they're not sharing data--not with each other or in the cloud. We are going to see a number of new enablers developed that will allow for more optimized businesses and communications once these systems are connected.
Artificial intelligence is another important area for us. We're at a perfect storm in the artificial intelligence world, where you've got a tidal wave of big data in terms of volume, variety, and velocity and cognitive computing concepts such as machine learning that enable systems to perceive, reason, and make decisions. These capabilities combined with the cloud, IOT, and Moore's Law, will change that way we utilize technology for many years to come. For me, Cognitive Scale is a company at the forefront of this AI world.
MG: Studies indicate that there's a greater amount of success for investments that have diverse teams--people of color and women. What do you think?
LL: Absolutely. I've done a lot of work to collect data to make the business case for why women added to boards and executive teams actually makes a difference--better profitability, better return on investment capital. And so the question is: why aren't we doing anything about it?
MG: Silicon Valley right now is getting beaten up as a place that's just unfriendly for women. Any thoughts on that basic indictment?
LL: The numbers of women in technical and non-technical roles in Silicon Valley are pretty small. That's also true for ethnic minorities. That leads to fewer women and minorities in the power positions in the industry. So yes, it is discouraging.
I think one of the challenges that women entrepreneurs have is that there aren't very many female investors. The National Venture Capital Association said in their last report, seven percent of investment professionals in the VC world are women. If you're a male then you're going to have networks that look more like you. Not just gender, but same socioeconomic background and universities.
If we can diversify the investment teams, you can shake that up a little bit. And if you've got 15-20% of your investment organization that are women, well guess what? Their networks look more like them, so you'll likely see more women led companies in their portfolios.
MG: In the design industry, we've been focused on diversity for a long time. I can remember 15 years ago when suddenly it was like, duh! We've got to pay attention to the needs of a diverse market.
LL: Women in America run 40% of small businesses. In tech, women run only 8% percent.
It's directly related to the fact that there's a lack of diversity in the investment teams. When the Intel Capital Diversity Fund launched in 2015, which I founded and pitched to the CEO of Intel, the perception was, and this was the common myth on Sand Hill Road at the time, women and minorities are not starting companies. We did our press conference on the diversity fund to let people know that we were investing in women and minorities, and in the first few months we got six hundred business plans. Six hundred!
There are a lot of people in venture capital who are doing quite well with the status quo. But I think we're missing an enormous opportunity.
MG: Let's look down the road. How do we break the status quo?
LL: One of the things I discovered with the Diversity Fund is when your CEO, founder or at least three executives on the CEO's team are diverse, the entire company is more diverse. They hire out of their networks, and so if you get three of the eight executives from under-represented groups, then guess what? You're going to have a much larger population of the total employee base that is diverse.
This is one of the reasons why in 2013 I started UPWARD, which is a global network for executive women with a mission to help accelerate the careers of executive women to the highest ranks. I think women can go a long way to help each other if we expand our opportunities at the top. The old paradigm of competing with one another for a few spots at the top is thankfully coming to an end.