California mandates VC firms to release investments' diversity information
techcrunch.com
techcrunch.com
If there were a mandate to invest in companies with founders who had certain attributes, it would be the most literal possible tokenization of those people, as their companies would be traded among investors as compliance credits. Let me be the first to set up a superpac hedge fund that runs a secondary over the counter market for these shares that takes institutional money in VC firms and puts it into an opaque portfolio of these companies in exchange for a compliance blessing. It's so brilliant, the only real problem I have is what to name the polycule.
Given the investors need exposure to them for their portfolio compliance, it creates the incentive within the company to actually do nothing from a growth and product perspective, and just loot whatever investment money investors were trying to throw at them to achieve their own mandates.
Not only would it reinforce prejudices against people with said attributes because they have been set up to fail and actively rewarded for being corrupt with the investor money, it creates a layer of politically controlled front companies who effectively tax venture portfolios without any accountability for where the money goes. The data is all you need to create a de-facto private tax system with a political party as the beneficiary. This scheme has nothing to do with diversity.
[1]young men, brand name college, already based near Sand Hill Road, nerdy humour, not the sort of person that would shoot hoops... all the important stuff
young women, brand name college, already based near Sand Hill Road, nerdy humour, not the sort of person that would shoot hoops... all the important stuff
I really can’t think of any founder I’ve ever met who would not take a pot of money because of certain strings attached (though I’ve heard of extremely privileged founders who can say yes/no based on track record or reputation). In fact, I see founders contort their vision every which way to meet specific investment criteria.
Similarly, I don’t know any VC who at least wouldn’t try to be in compliance AND find good investments. Maybe they would try and then default to the perspective you’ve described but I think it’s much more likely they would try to cook the stats (given the overall lack of accountability in the space) before propping up some “token” founder-in-name-only (again, an assumption I’d challenge).
Edited for spelling.
Generally, the whole profession is degrading to a state where any kind of innovation is shunned upon and the only "innovation" is rehashing the same concepts in a slightly different and slightly more complicated way.
There are not too many "let's build a website in D" companies or anything which is not utterly boring, inoffensive, bland and lacking any creativity.
> preaching the benefits of technological conformism by saying everyone should use the popular and boring technology of the day.
This is a disingenuous way to describe the article.
The article is just saying that when you're writing important programs that matter for your business, use the most stable technology that has the features you need. Because it is stable, and has the most community resources. In other words, don't gamble your business on risky technology choices just because they're new.
That's difficult to argue with IMO, especially when the author explicitly endorses experimenting with personal projects.
Innovation == using new tech to solve problem and create value.
Of course, there are still no quotas. Just that, if you don't meet the non-existent quotas, that is evidence for the illegal discrimination prosecution against you.
However, these are private individuals funding private ventures with private money, as far as I know, so why the government should be involved at all in that process other than taxation isn't clear to me.
The Civil Rights Act didn't directly ban using IQ tests for hiring/promotions, yet that's how the courts eventually interpreted it [1]. More recently, a test specifically made to evaluate teachers was declared racist and discriminatory [2], mostly based on disparate pass rates, but in part also on requiring some "cultural knowledge". Ironic, since imparting culture is a large part of a teacher's job - outside of STEM, nearly all knowledge is culturally biased (i.e. there is greater emphasis on US history in the US than in Poland).
[1] https://en.wikipedia.org/wiki/Griggs_v._Duke_Power_Co.
[2] https://web.archive.org/web/20220714122944/https://www.wsj.c...
I guarantee you if IQ wasn't a measure that affluent white privately educated men did well at it would have never been adopted as a measure.
So it seems like the people who change like the wind here aren't those in favor of merits.
Even scientists who say the black-white IQ gap is not in part due to genetic factors agree that it does measure intelligence to some extent: that is, people with higher intelligence do better on average on IQ tests, even if each IQ point is not a numeral unit adding to your intelligence 'score.' All this said, why would you assume that people using this tests only are doing so for biased reasons?
[0]: http://harmful.cat-v.org/people/basic-laws-of-human-stupidit...
There are no explicit quotas. Every time someone is held out as not being diverse enough, there is a quota implied.
Is it a quota if I say a fair coin should yield heads at least 49% of the time? What about if I demand that a six-sided die have a normal distribution and not be weighted for cheating purposes?
In which case, yeah? Gender bias in medicine has proven negative effects both for patients and physicians. If we do everything right to knock down barriers, we should eventually see more male nurses and more male teachers. Why shouldn't we? What's wrong with a man being a nurse?
If a large pool of people like "we have a thousand employees" has a demographic balance that is wildly different from gen pop you at least need a good explanation for how it got that way. There are plenty of ways to explain it, but it's unreasonable to just assume "it's fine, I'm sure nothing bad happened" on faith.
This is a control freak / bureaucrat / authoritarian dream. Endless work to keep up with ever moving targets, and since everyone will be out of compliance at various times it means it’s ripe for selective enforcement.
Also, do you believe that different cultures/groups of people may have different preferences? Is it crazy to think that may affect their career choices and preferences? Should the state then mandate them to enter a profession at a higher rate?
I said "wildly different" on purpose, we're not talking about "your workforce is 45% female instead of 47% female" here. It really is big differences - like if you pull up a MS diversity report they're around 30% female when the US population is ~50% female. This is a big discrepancy. You can come up with lots of plausible explanations but if you want to be believed, shouldn't you have a little data? Or should we just shrug off the potential of massive inequality because it doesn't personally affect us as far as we know?
What I see is a lot of people terrified of simply releasing the data because the data will look, in many cases, very bad. I think if people want to advocate against any sort of intervention - perfectly reasonable to not want intervention - they should be able to support their case with data.
Men live shorter lives than women do that must mean there’s systemic discrimination against men.
In 2021 alone, over 100k people graduated with bachelor's degrees in computer science. That sample size is too small to approach general population demographics?
Okay, let's lower the bar. Why doesn't your staffing at least approximate the demographics of computer science graduates? Or even narrowing it further - let's say your startup needs the absolute best - people with PhDs in computer science? (According to the 2021 numbers, ~2500 people and 25% female)
You can argue over what the numbers should look like and how we should achieve those numbers but it's a cop-out to claim it's impossible or "too hard" due to a limited supply of hires.
Yes, because engineers don't follow general population demographics.
> In 2021 alone, over 100k people graduated with bachelor's degrees in computer science. That sample size is too small to approach general population demographics?
Yes. Again, that sample too does not follow population demographics.
> Okay, let's lower the bar. Why doesn't your staffing at least approximate the demographics of computer science graduates?
It does. Which is why I said "mostly" (but not exclusively) male. However that is not a "lowered bar", that is the only possible way things can work out. Unless you argue that a number of male engineers should be systematically doomed to never be hired in the name of equality, because otherwise we cannot reach your perfect demographic distribution.
92% of the 5840 occupational deaths in 2006 were men. Why isn't it closer to 50%?
Generals get promoted for having more women or people of color promoted under their command. When the casualty reports come in and white men are dying on the battlefield as disproportionate rate, double their demographics do we have generals saying "your race and gender distribution should at least vaguely resemble that of the general population" so we aren't going to send white men on the front lines anymore, we're going to get some diverse front line soldiers until our casualty rates look like America?
It is much better to enforce things by social expectation. Then enforcement measures can be changed piecemeal.
Until you make enemies with a public prosecutor or someone politically well-connected. Then all the legal ambiguity is turned against you.
There are, at least in US immigration. It's just not something Americans need to deal with, so it goes under the radar.
I don’t need to say anything more about them given the context of this comment
You are describing many people I've met, not one of them would be counted in these diversity reports.
> (ii) No adverse action will be taken against the founding team member if they decline to participate in the survey.
> (iii) The aggregate data collected for each demographic category will be reported to the department.
https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm...
Which is then reported to and retained by the state! Why the fuck would we maintain centralised databases of minorities?! What happens if Mississippi or Florida copy this precedent?
This is clearly well-intentioned but at the same time feels like a bad idea.
I have a startup. The team is 2 people including myself. If I have a friend in CA offer to invest, do I have to subject myself to reporting that my cofounder is LGBTTTQQIAP+? Or that we're both left handed? Or that we're both WASP as hell? Where does it end?
Is it though?
"You shall know a tree by its fruits."
If the result was shit, especially after repeated attempts... the intention was shit.
Also, why wouldn’t they specify a penalty? Why punt that to California’s already-burdened courts?
The current law appears to be about collecting data to help understand the state of the industry and its trends. They’re probably hoping that enough data will come in without a stink that they don’t have to chase down any holdouts at all.
Explicitly specifying a penalty means more political negotiating and more analysis about what statutory penalty structure suits the different potential offenders. If you’re hoping you don’t have to actively enforce the law at all, you can skip that.
how do you balance one with another?
just take the overreach as cost of doing good deeds improving real victims lives?
But, alas! the cat is out of the bag as it were. Because there's more than one side to an issue like this. So, when leading VCs and investors determined, companies run by Black women weren't getting very much startup funding at all, they lined up to support The Fearless Fund, a significant, though not exactly huge, capital pool for early funding of ventures started by women of color, which they describe as "bridging the gap" by which they mean, the extremely small number of women of color who ever get funding. Yes, probably it's for what they conceive to be PR reasons, but whatever, I would have thought that the goal being equality of opportunity, and there being no law specifically covering it, that would leave it to the realm of politics and bloviating. But not so!
Encourged by the current antipathy of our Supreme Court for anything resembling affirmative action, a conservative legal group has sued, claiming that racial preference of this kind is prohibited. As a former lawyer I would have asked, just what law prohibits discrimination in investing? Because most lawyers up to recently thought, it wasn't covered. But the clever conservative lawyers point to 42 USC 1981, a Reconstruction alway that asserts, all people are entitled to the same right to contract as White people have. (How they talked back then)
Now, say, this lawsuit against The Fearless Fund succeeds. Well, hmm, that would mean every VC investment decision is subject to section 1981, and yes, it would give non-white people the right to sue if they had evidence of bias in the funding decision. In other words, if it actually succeeds, this lawsuit charging discrimination against The Fearless fund, a rather extreme effort to prohibit totally voluntary efforts by some big time investors to remediate a pretty obvious problem of a minority group's lack of access to capital, wow! suddenly,a pretty major new legal issue for VCs and other private capital enterprises to deal with, in every investment decision they make. And if ever there was a deep pocket for lawyers to pursue...I drop a veil over the scene.
So, just to add this to the discussion, this conservative attack on The Fearless Fund seems to me a far more dangerous to VCs than this California law. Because, yes, folks, there are issues with discrimination in how investment firms hand out capital. I've observed some nasty instances first hand. Please don't live in a dream world where you think it doesn't happen. (I personally think, due to the extreme polarization of most people's beliefs on this subject, it's rather less than most liberals think and rather more than most conservatives do.) Nevertheless from my perspective, another set of legal rights is pretty clearly not the best way to address it.
Because, if The Fearless Fund can be challenged as discriminatory, so can any other fund, that's how it works (well more or less, anyway - nobody who knows anything about it would accuse our legal system of being excessively consistent.) And that's a far greater threat to investors than a somewhat voluntary reporting requirement for VCs.