The tech industry has grappled with a diversity problem for years, with little progress to show for it. For one tech CEO, the only way forward for the industry is clear.
“Accountability needs to happen,” Suneera Madhani, the co-founder and chief executive of billion-dollar fintech start-up Stax, tells CNBC Make It. She says government incentives or even mandates for tech companies and investment firms might be necessary to force the issue — because despite several years of tech leaders trying, and failing, to address the industry’s diversity issues, women and people of color remain woefully underrepresented.
Women account for about 32% of the tech industry’s workers — three percentage points less than in 1984, says a joint study by Girls Who Code and Accenture. Black and Hispanic workers hold about 9% of U.S. science, technology, engineering or math (STEM) jobs, despite representing 11% of the country’s workforce, according to the Pew Research Center.
Madhani herself is a rarity in the tech world: a 34-year-old minority woman leader of a start-up that’s raised more than $263 million in total funding. Women founders and people of color attract less than 1% of total venture capital funds, according to the nonprofit DigitalUndivided.
“Dialogue was great, but it’s not enough. We have to take action,” Madhani says. “The statistics are still the statistics … That is still absurd to me.”
Upping that start-up funding statistic is the first step to making tech more diverse, Madhani says, because it could meaningfully boost the number of women and minorities in tech leadership positions. Those women- and minority-led tech companies could then attract and retain diverse workforces, and inspire a new generation of diverse founders and company leaders, she adds.
“America is the center of the world when it comes to capitalism. We should hold our [venture funds, private equity groups] and investors accountable to make sure that we are breaking those statistics,” says Madhani, who hosts a podcast called “CEO School” aimed at inspiring more women to start their own businesses. “I don’t expect it to go to 50% overnight, but there should be more accountability here to make sure that they are investing in diverse founders.”
Studies show that diverse workforces often out-perform their competitors financially, while also improving employee morale. Madhani says she’s often felt “lonely as a woman” in tech, with a dearth of female leaders and mentors making her path significantly more difficult.
For example, she says, she was pregnant with the first of her two daughters when her company was seeking its Series A funding in 2016. At the time, multiple male mentors advised her not to mention her pregnancy to prospective investors, to avoid raising concerns about her ability to balance motherhood and leading a start-up.
She took their advice – something she now regrets – ordering mocktails while drinking with investors to avoid suspicion. Once she started showing, she says, the work-life balance questions started rolling in — even while her male co-founders received no such questions about their own family situations.
“I had to prove myself 10 times harder than the boys,” she says.
Madhani says those types of experiences are exactly why companies and investment firms need to be held accountable. One idea, she says: “Actually issue [state or federal] mandates, and say that a certain percentage of funds must go towards investing in underrepresented and diverse founders.”
She also suggests expanding supplier diversity programs, which some companies and governments use to make sure they’re working with a certain number of minority-owned third-party vendors.
“There’s a lot of work to be done,” Madhani says. “But action needs to happen. And accountability needs to happen in order for change to happen quicker.”
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