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An Open Letter to Chris Sacca, Dave McClure, Travis Kalanick, and All of Silicon Valley

These 3 simple changes would make the high-tech startup world much more welcoming to women and minorities.

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BY Minda Zetlin - 03 Jul 2017

PHOTO CREDIT: Getty Images

This is an open letter, after two weeks of reading about sexual harassment scandals.

Dear Silicon Valley

We know you're very sorry about creating a culture that for decades has demeaned and excluded both women and people of color. Thanks so much for your multiple apologies. The question is, are you satisfied with your own apologies, or do you want to change things? If you do, I have a few suggestions.

It certainly has been a fascinating couple of weeks. It began with Travis Kalanick's departure as Uber CEO, in the wake of a blog post detailing the company's routine practice of protecting and concealing sexual harassment.

It continued with a piece in the tech website The Information in which women working in Silicon Valley described sexual harassment from Binary Capital co-founder Justin Caldbeck (who now also faces a lawsuit from a former employee). That was followed almost immediately by a New York Times piece in which no less than 24 female entrepreneurs described being sexually harassed. They named names. Not only Caldbeck, but also Shark Tank Shark Chris Sacca and 500 Startups Founder Dave McClure.

Two things happened almost immediately. The first is, the three VCs named are all leaving or "taking a step back from" their jobs. Not only did Justin Caldbeck--whose serial sexual harassment has been an open secret for years--leave Binary Capital, so did its two other partners, leaving the firm's future in doubt. Sacca didn't announce that he was quitting because he doesn't have to--he already retired earlier this year. As for McClure, he's handed the role of CEO to managing partner Christine Tsai, stepping back from daily operations, and getting counseling.

The second thing that happened is some of the most beautifully worded apologies ever seen on the internet. After initial responses that could be summed up as: "So I asked a few women out. What's the big deal?" every one of these guys has publicly taken responsibility for his actions, and said he was deeply sorry.

The apologies began with Justin Caldbeck, who wrote this as he announced an indefinite leave of absence from Binary Capital: "The past 24 hours have been the darkest of my life. I have made many mistakes over the course of my career, some of which were brought to light this week. To say I'm sorry about my behavior is a categorical understatement. Still, I need to say it: I am so, so sorry."

Chris Sacca, though he disputes the specific accusation in the New York Times story, also issued a lengthy apology for his part in making women feel unwelcome in Silicon Valley. "Listening to these stories, and being reminded of my past, I now understand I personally contributed to the problem," he writes. "I am sorry." McClure has just weighed in with the most recent and arguably the most eloquent apology of all, titled "I'm a Creep. I'm Sorry."

Don't get me wrong, these are all amazing developments and I'm heartened that these three men have been so quick to admit their faults and apologize for them. But now what? Silicon Valley, will you shake your collective head over the revelations, read the apologies, and go on about your business, relieved that three VCs who committed sexual harassment aren't in a position to do so anymore?

I hope not, because these three VCs are barely even the tip of the iceberg. Back when Susan Fowler's blog post about Uber first started causing ripples, another female Uber engineer, Aimee Lucido, blogged that the harassment Fowler described was standard throughout Silicon Valley and not unique to Uber. In fact, she said, she'd had a similar experience at Google, despite its very public efforts toward racial diversity and gender equity.

Silicon Valley, you have a fundamental problem: You are in thrall to the entrepreneurs who build billion-dollar companies, and to the VCs who bet on them. That's created a large cadre of people (and by "people" I mean white men from elite colleges) who can get away with just about anything. In fact, I don't think Kalanick's downfall was entirely due to Fowler's blog post, courageous though it was. Uber had faced a long string of serious problems: A self-driving car that ran a red light, a lawsuit for allegedly stealing the information to create that self-driving car, a scandal about software designed to deceive law enforcement in cities where the company was operating illegally, and video of Kalanick cursing out a driver. All this along with Fowler's accusations added up to a company that was not going to make as much on its IPO as investors were hoping, and that's why they stepped in to force Kalanick out. I suspect that if everything else had been going great, the company's investors and board would have shielded Kalanick from any fallout resulting from Fowler's post.

As long as the VC industry is built on a culture where Masters of the Universe such as Kalanick and Sacca have completely free rein, this mess will never be solved, because the Masters of the Universe will almost always be male. Many VCs have told me over the years that their strategy is to invest in founders they believe in more than ideas they believe in. People tend to believe in those who remind them of themselves--that's just human nature. And most VCs--especially those with the big funding startups need to go from scrappy newcomer to world domination--are white men. With those VCs' financial support and counsel, those white men who get backing are more likely than anyone else to become super-wealthy entrepreneurs, and of course the first thing most super-wealthy entrepreneurs do is turn around and become VCs. It's a closed ecosystem.

To change that, you'll need to do three things, none of them easy, all of them necessary:

1. VCs must publish the percentage of their funds they invest in women- and non-white-led startups.

Both McClure and Sacca go to lengths to explain how many startups they've funded that had women and/or people of color at the helm. While I'm sure that's true, it doesn't tell us any more than if Google said, "We have many women engineers." Well sure: With 57,000 employees and 40,000 engineers, several thousand are women, but they still only make up 20 percent of the company's tech work force. We know this because Google is among a few large tech companies that release these statistics every year. Those numbers let the world know the true state of diversity in those companies.

If VCs did the same with their funds, they wouldn't be able to tap dance around the issue with statements like this one from Sacca: "To date, I have invested millions of personal dollars in ten funds run by women and underrepresented minorities." It's starting to work, he adds: "They are backing companies that would likely be overlooked by white male investors."

He seems to say that if he just keeps doing what he's doing, and other VCs join him, eventually all will be well. But without specific numbers as to what percentage of his investment went to women and/or minority-led startups (as opposed to funds) we have no way of knowing how effective these efforts are. We need those numbers, and if you really are proud of the assistance you've offered women- and minority-led firms, you should be happy to share them.

Also, all Silicon Valley employers should stop the unconscionable practice of requiring employees and portfolio companies to sign agreements that prevent them from saying anything (or anything bad) about your company. In the last six months, two different lawsuits have claimed these agreements are illegal under California's whistleblower law. You're going to find yourself in court.

2. Hire more female VCs.

Many female founders are unable to get funding because the all-male VCs they pitched couldn't see the potential in products designed for the female market. That means you all are leaving money on the table when you could be backing potentially successful companies if only you understood their customers. The solution is simple: You need more women partners, especially in the later stage arena where large rounds of funding help get startups to the IPO finish line, and where women are particularly underrepresented. I'm sick of hearing that qualified women can't be found for such jobs. Ask Mitt Romney to send you a binder.

3. Create an organization where women can make anonymous complaints.

Right now, a woman who's been harassed or subjected to discrimination has only two choices: She can complain to HR, which as we've seen is often futile. Or she can file a lawsuit and hope she gets redress in court, although even if she wins, her career will be damaged for life.

There should be a third option: An independent organization where women and other discrimination victims could report the issues they've encountered. If the organization receives multiple complaints about the same executive, it could bring that information to his (or her) employer. If nothing else, it would end the fiction that "he's never done anything like this before."

Every one of the VCs who apologized has said they had no idea that they'd done anything wrong, or made anyone uncomfortable by their actions. The organization I'm imagining could let these executives know when they've crossed the line, without forcing their victims to go public with accusations. It could bring about real change, Silicon Valley.

I'm hoping that's what you want.