For Black CEOs in Silicon Valley, Humiliation Is a Part of Doing Business

A questionable piece of advice often given to Black business leaders: Hire a White wingman.

Will Hayes has grown accustomed to an awkward start to business meetings. On numerous occasions, venture capitalists would confuse Hayes, the head of software company Lucidworks Inc., with another man on his executive team. The investor would introduce himself, extend a handshake to the other guy and say, “Good to meet you, Will.” It’s strange because they don’t look alike. Also, Hayes is Black, and his deputy is White.

This happened so many times, in dozens of meetings over many years, that Hayes and his longtime colleague, Keith Messick, say it’s no coincidence. Such unintentional instances of racism, they say, have become a routine—and insidious—part of doing business at a Black-led company in Silicon Valley.

Protests over the death of George Floyd at the knee of a White police officer in Minneapolis are triggering a global conversation about race. Technology companies and VCs have responded in recent weeks with messages of solidarity, offers of mentorship and more than $300 million in contributions or investments toward minority groups. Inside company chat rooms and video-conference meetings, workers are challenging their employers to hire and fund more people of color, who are woefully underrepresented at tech companies.

Black entrepreneurs say they are encouraged by the movement but deeply skeptical that the industry will change. Interviews with 20 Black tech leaders depict a position of power that can sometimes feel powerless. Repeated assumptions that they’re not in charge of their own companies, a common experience among Black chief executive officers, can instill a lingering sense of self-doubt. They describe a career of subtle slights or outright discrimination in which they face regular inquisition about their credentials and peculiar suggestions to hire a White business partner to make investors more comfortable. One says he carries around a notebook emblazoned with the logo of his alma mater, Stanford University, to fit in.

Adding to the insult, Hayes finds himself at a distinct disadvantage in meetings that open with a case of mistaken identity. Venture capital is based on relationships, and investors aren’t typically primed to write a check when they feel unsettled. “You see it in the body language, you see it in the lack of questions and engagement,” says Hayes, 39. “They can’t wait for this meeting to get over.”

For nearly four years, Hayes would attend investor meetings alongside Messick, the former chief marketing officer at Lucidworks. VCs are trained to look for patterns in startup founders, Messick says, and there aren’t many Black Mark Zuckerbergs. “Years and years of a Black guy and a White guy walking in the room, and the White guy is the CEO,” Messick says. “Whether malicious, whether negligent, it was always awful.”

The roots of racism extend deep in Silicon Valley. Leland Stanford, the founder of the area’s preeminent university, ran for California governor in 1859, just before the dawn of the Civil War, declaring, “I prefer the White man to the negro.” More than a century later, in 1974, the founder of one of the Valley’s seminal tech companies, William Shockley of Shockley Semiconductor, appeared on the television show Firing Line. There, he asserted that African Americans were socially, intellectually and genetically inferior to White people.

Thirteen percent of the U.S. population is Black. Yet, from the infancy of the internet in 1990 to the unicorn era of 2016, 0.4% of people who received venture capital were Black, according to a study by Harvard University. The problem with that funding gap isn’t just that it’s unfair, entrepreneurs and researchers say. It also puts in perspective the Valley’s penchant for products that appeal to a narrow slice of the populace and in some cases—such as in artificial intelligence or health care algorithms—discriminate against people of color.

For Black founders, the challenges manifest well before the business even gets off the ground. Entrepreneurs often start by drawing from their own savings accounts and asking family and friends to invest. Black families in the U.S. have an average net worth of $17,600, about a tenth of that of White families, according to Federal Reserve research. “A ‘friends and family round’ doesn’t exist for Black founders,” says James Norman, who established and runs a tech startup, Pilotly Inc. “You come from a different place.”

Norman and other Black entrepreneurs find themselves needing to establish authority in ways their White counterparts don’t. “We can’t come in the room wearing a hoodie, not using our words properly, not sitting up, not looking you in the eye. We’re not going to be taken seriously,” Norman says. He decided to invite his friend, a White man who graduated from the Massachusetts Institute of Technology, to presentations with prospective investors. Having him there gives the meeting “a good start,” Norman says. “Ultimately, I’m the one pitching.”

Black-led companies need to be much further along before VCs take them seriously, Norman says. That forced him to be more disciplined with finances than the typical tech startup. “Knowing my access to capital is not going to be the same as everyone else,” Norman says, “I have to approach my money management differently.” Norman’s company sells software to measure audiences’ reactions to video used by Amazon.com Inc., Netflix Inc., NBC Universal and ViacomCBS Inc. Norman has raised $1 million from investors over the last five years, and the company is profitable, he says.

In the interviews, Black startup leaders declined to identify offending investors, partly because they say the problem is systemic and also because they feared speaking out would harm their fundraising prospects. Many expressed hesitations about talking publicly, and several requested anonymity because they didn’t want their race to overshadow their credentials.

“Why this article for 2020 Blog??? There is a segment of our minority community where offsprings are college grads with ambitions to success but after the fight to gain that education they are still under pressure as minorities backlash in this country. They will need our support even more but we have to be responsive to making them aware of obstacles in their upward trajectory.”