If you have not read the New York Times article, “Brands to Ad Agencies: Diversify or Else,” you should. The similarities between the Startup and Ad industries are pretty uncanny, except the fact that Silicon Valley looks like this…
And Madison Avenue looks like this…..
In reference to major brands demanding that agencies diversify their teams, the article states, “The efforts reflect a growing concern among marketers that Madison Avenue’s largely white, male leadership may be hindering their efforts to connect with American consumers.” Kudos to Verizon, HP Inc. and General Mills for taking a stand!
In the startup world, there should be (and I hope is) a growing concern among LPs (the folks that fund VCs) that Silicon Valley’s largely, white leadership may be hindering their efforts to connect with – and fund – entrepreneurs/founders. Of course, LPs are mostly white men themselves, adding another layer of complexity to diversifying the startup ecosystem.
Hopefully, the statistics coming out of recent studies will help impact true change. Here are a few:
• Women led startups receive less than 3% of VC funding, yet we know from a Babson study, among countless others, that women women-led, VC-backed tech companies bring in 12 percent higher revenue than similar male-led companies and have a 35 percent higher return on investment.
• Only 7% of VC partners at the Top 100 firms are women, yet a recent study in partnership with PE Hub, VCJ, Women VC, showed that the overall performance of female VCs’ portfolio companies is 3.78x, ahead of the overall industry average. In addition, having more female investors is important, as they are 3x more likely to invest in startups with a woman as CEO.
The NYTimes article also states that, “In order for us to create work that’s more connected with the consumer, it needs to come from a deeper connection to what’s going on in society and what’s going on in culture.” Nothing has the potential to be more transformative to society and culture than technology innovation. Funding and supporting a diverse set of founders and investors (women and people of color) is imperative. The same goes for hiring women and people of color at the big tech companies. By improving diversity across the entire technology ecosystem, we will facilitate more, and better, innovation across the board.
The good news is that both industries have been under intense press scrutiny for the last few years and now seem to be taking action. With major brands leading the way in advertising and folks like Melinda Gates tackling diversity in tech, we are certainly moving in the right direction.
May both industries learn from each other and move forward quickly to impact change. We will, as a society, be better for it.