Diversity problem means big business.
SAN JOSE, Calif. — It’s one of the tech industry’s biggest embarrassments. But for a handful of startups, Silicon Valley’s lack of diversity is also a moneymaking machine.
Capitalizing on the pressure Bay Area tech companies face to hire and promote more women and people of color, a new class of startups has emerged peddling diversity-focused services. Some offer recruitment tools intended to find job candidates outside the pool of white male applicants tech companies usually turn to, or they sell software that helps companies analyze their diversity metrics and determine where they need to improve.
It’s unclear to what extent these new technologies can solve Silicon Valley’s diversity problem, but they’re tapping into a potentially lucrative market. The annual diversity reports released by major tech firms have shown little improvement, despite the companies’ promises to make their workplaces more inclusive.
“Diversity is both a big problem and opportunity,” said Eric Kim, co-founder and managing partner of venture capital firm Goodwater Capital.
San Francisco-based recruiting startup Teamable, for example, says it recently helped Lyft diversify its engineering team. The percentage of Lyft engineers who belong to underrepresented groups has doubled since the ride-hailing company started using the service, Teamable co-founder and CEO Laura Bilazarian said.
These startups are addressing a clear need. Federal investigators earlier this month revealed they have accused Google of paying its female employees less than its male employees — a charge the company denies. And Uber in recent weeks has faced intense backlash over allegations that the company did nothing to stop sexual harassment against female employees. In its first diversity report, the ride-hailing company last month said women fill just 15 percent of its techrelated roles — and many Silicon Valley tech companies don’t do much better.
Teamable, a 3-year-old startup that earlier this month said it brought in $5 million in its first fundraising round, uses technology to make employee referrals more inclusive. With their permission, Teamable’s software mines employees’ LinkedIn, Facebook, Twitter and other accounts, hunting for potential hires, and emails candidates who might be a good fit. The service is based on the idea that in-house referrals tend to lead to successful hires, but if a company already is full of white men, those employees are likely to refer more white men. Teamable attempts to bring forward candidates that might otherwise have been overlooked.
Software company Medallia says in the six months since it started using Teamable, the company has seen 700 referrals and made 63 hires — 23 percent of which were women or underrepresented minorities.
“Teamable became a great way to look at how we scale our employee referral program,” said Mike Podobnik, Medallia’s head of talent acquisition, “and quite frankly actually do something about hiring diverse candidates, which is a huge challenge.”
Other Silicon Valley tech companies, including Facebook and Airbnb, use Jopwell — a recruiting platform that serves African-American, Latino and Native American job candidates. The 2-year-old startup is benefiting from the recent push in Silicon Valley to make diversity a priority, said co-founder and president Ryan Williams.
“That has been a major positive piece of momentum for our business,” he said. “It was right around when we launched that companies were starting to disclose diversity numbers.”
San Francisco-based Blendoor offers a similar service. The startup has a database of more than 10,000 job candidates — 68 percent of whom are women — and it offers their profiles to prospective employers without names or photos, removing the potential for unconscious bias.
PayScale, a startup that analyzes employee compensation data, last year introduced a new tool that makes it easy for employers to root out gender wage gaps in their company. Not only can employers see whether women are making less money than men with the same job titles, they also can see whether women hold disproportionately fewer high-paying titles.
PayScale’s leadership team decided to add that feature after seeing tech companies struggling to analyze inequities in compensation. It can be difficult to spot real discrepancies in salary data — because of the need to control for legitimate differences such as years of experience and education — and many companies turn to expensive consultants to get those metrics, said Lydia Frank, vice president of content strategy at PayScale.
But none of these services alone can make Silicon Valley a more inclusive environment, Kim cautioned.
“I don’t think a problem this big can be solved by a singlepoint solution,” he said. “I think it’s a good complement to other ways of solving the diversity gap, but we can’t rely on it solely.”