Post Category → Hiring

Tech Bros, Pluralism, and the Startup Diversity Inquisition

Disclaimer: This post, like all posts on SHL, represents solely my personal thoughts and opinions; in this case with respect to a topic I have spent years thinking and writing about as a Mexican-American who works in “tech.” It does not purport to reflect the views of any of my colleagues at Optimal. It further in no way speaks for Optimal as an institution, or its workplace policies.

It’s impossible to write about such a sensitive topic without speaking about averages and generalities, because the topic of “diversity” derives from discontent over aggregate statistics of representation. As I state repeatedly in all my writings, while we speak and empathize about such generalities, we should aspire to treat “in real life” everyone as individuals; judging them by *their* specific performance and behavior, and how those factors impact the goals of any particular organization, group, or team. 

Related background reading:

What is “culture?” It’s much broader than a few simple categories like food and religion tied mostly to ethnicities or nationalities. Here’s one good definition from Merriam-Webster:

“the set of shared attitudes, values, goals, and practices that characterizes an institution or organization.”

Every group of people (however small or large) has a culture, and (indisputably) different cultures – different “attitudes, values, goals, and practices” produce different outcomes in different contexts. For small groups, we might call them subcultures or even microcultures. Walk into a Navy Seal training camp, and you will find a very distinct subculture. Walk up to a nurse’s station in a Children’s Hospital, and you will find another.

Is the latter subculture “better” than the former, or vice versa? More desirable? Reasonable people might respond, “Well, it depends” (on what you want, and different people want different things). Others might criticize the question entirely. Both of these subcultures are a valid and much-needed part of society. They exist to serve very different goals and overcome very different challenges. Trying to judge one as universally “better” than the other seems naive and counterproductive.

When you do, in fact, judge very different subcultures on a few simple variables, you’ll inevitably find what some would call “performance gaps.” But what exactly are these so-called “gaps?” If cultural diversity by definition means people who value and do different things, the fact that Culture X “outperforms” Culture Y on metric A or B is only a problem if we assume that different groups performing better or worse at different things must be “fixed.”

But is that not literally what cultural differences are? Go too far to “fix” those “gaps” and you are, again quite literally, asking one culture to change to become more like another. You are eliminating diversity.

Bad things happen when you take very complex societies, full of lots of different kinds of people serving different roles in different spaces, and allow the naive (but aggressive) to judge (and punish) everyone based on a few narrow metrics or values. The image that comes to my mind is the Spanish Inquisition. The Inquisitors took it upon themselves, as representatives (in their eyes) of God himself and the one true inviolable moral worldview, to “protect” society from deviant subcultures and people who violated that worldview.

There’s a plausible theory that the centralizing and dogmatic moral culture that enabled The Inquisition explains, in part, the much greater long-term “success” – economic, technological, military – of protestant societies (British) over those with deeper ties to the Vatican (Spanish, Portuguese, French). The more variation you can tolerate in your society – including variation of subcultures – the more likely you are to enable different teams to solve different puzzles/challenges, which will allow your society to win in global economic competition.

Protestantism gave Britain a leg-up over Spain by detaching the state from Rome, which created more space for diverse subcultures. America, a spin-off of Britain, went even further by separating church and state entirely, turbocharging the proliferation of spaces for subcultural experimentation. While we’re on this topic, let’s look at one of Merriam-Webster’s definitions of religion:

“a cause, principle, or system of beliefs held to with ardor and faith.”

Modernity has enabled a proliferation of “religions” – and therefore would-be Inquisitors – even if they don’t see themselves as such. The real value of separating church and state is not about avoiding the over-centralization of state power with solely traditional monotheistic religion. It is about avoiding all totalizing moral centralization – even secular “ideals” – because a diversity of subcultures with different worldviews makes a complex advanced society stronger (at least economically and technologically), so long as there’s rule of law that protects property, safety, and stability.

A bedrock of American economic and technological strength is a cultural immunity – at a national level – to Inquisitions of all stripes. That of course does not mean certain Americans aren’t constantly trying to be modern Inquisitors, but American national culture – reinforced by our federalist political structure and constitution – is pluralism writ large.

Rather than allowing anyone to step into every single space and impose their universal idea of what’s right and proper, we let 1,000 subcultural flowers bloom. Some of those flowers run schools. Some of them run militaries. Others make great art. Others build world-changing technology or financial markets. And to use a favorite modern meme phrase, we “Let them cook.” We don’t second-guess their cultural “recipes” from our cozy armchairs.

These groups/teams all look and behave, within their subcultures, very very differently; by necessity. Because different challenges require different (again) “attitudes, values, goals, and practices” and (unsurprisingly) different kinds of people are attracted to (or repulsed by) different “attitudes, values, goals, and practices.”

If an ideology ever materializes that tries to judge all of these diverse subcultures with the same simplistic yardstick, our freedom of speech enables a counter-ideology to push back. One such universalizing ideology gained a lot of strength in recent decades and set its sights on one of America’s crown jewels – its technology industry and elite startup subcultures. It’s of course DEI (Diversity, Equity, and Inclusion).

The massive irony of DEI, which I don’t think gets mentioned nearly enough, is that by trying to impose a particular definition of “diversity” within teams at a micro level, it ends up eliminating diversity of teams at a macro level. DEI designates certain team compositions universally unacceptable on moral grounds in the name of “diversity.” If every team must reflect the colors of the rainbow in its internal composition, then it logically follows that the only acceptable team is a rainbow team. The 999 other kinds of “flowers” must be burned to the ground.

Is that a desirable outcome? Do we really think that a country full of solely “rainbow teams” will solve every challenge we have, or even deliver on what (obviously) different people actually want in their lives?

Celebrating the equal dignity of the rainbow – all races, colors, religions, nationalities, genders, sexualities, etc. at a society-wide macro level (which we should do) is not even close to the same thing as mandating its representation at the micro organizational subculture (or industry) level, with no regard to the (demonstrably) varying “attitudes, values, goals, and practices” within each category and how that variation influences outcomes.

This is the classic paradox of cosmopolitan multiculturalism (what DEI promotes as “diversity”) v. pluralism, which has a long history in American political philosophy. A country with some Manhattans and some Salt Lake Cities, a California but also a Texas, is compositionally stronger because specialized “cultures” solving different challenges with space to “be themselves” outperform a singular mega cultural ideal applied uniformly in every space.

Imposing cosmopolitan so-called “diversity” everywhere actually magnifies homogeneity, because certain unique subcultures have “attitudes, values, goals, and practices” that are simply incompatible with those of others. They can’t be aggressive but also sensitive, competitive but also nurturing, rational but also emotional, innovative but also traditional, all at the same time.

Such a sterile culture would, at best, be average at everything and impressive at nothing. If you want top-tier athletes, artists, professionals, entrepreneurs, technologists, teachers, soldiers, intellectuals, pioneers, etc. then get comfortable with subcultural variation that, by necessity, chooses some ways of thinking and behaving over others.

In Diversity in Startups: Whining, Warring, Winning I wrote, from my background as a Mexican-American who grew up low-income, specifically about racial “diversity” in startups and the three strategies (Whining, Warring, Winning) adopted by activists, only one of which actually produces results in the long-run.

Complaining (whining) about how purportedly “unfair” it is that the ecosystem of VC-funded startups isn’t as racially diverse as some DEI activists would like doesn’t move the needle, because, unlike large corporations and wealthy universities, startups face uniquely amplified competitive pressures that make sustaining underperformance impossible. And yes, underperformance from URMs (under-represented racial minorities) really is (on average) a problem in the high end of tech industry recruiting.

Further, “warring” – in the form of lawsuits and PR campaigns – over racial diversity in startups is also counterproductive when there is not actual (non-performance-based) illegal discrimination occurring. Elite entrepreneurs and venture capitalists comprise some of the most intelligent, aggressively competitive, and pragmatically resourceful people on earth. They have numerous tactics to maneuver around DEI activists for protecting their high-performance cultures, including recruiting internationally from foreign countries to improve their “diversity statistics.”

The only viable strategy is (for those with the motivation and resources) helping “under-represented” founders and employees actually win at the same high-stakes and aggressively competitive game that everyone else is playing. This means putting the insults and weapons away, acknowledging uncomfortable “performance gaps,” and doing the work of actually helping people improve their performance at whatever it is you think they are “under-represented” in.

The thrust of this post is to apply the above logic not just to racial diversity, but to any number of kinds of “diversity” and “under-representation” in the tech ecosystem. Activists have once again taken to insulting and attacking “Tech Bros” and “Mediocre White Men” for what they see as an insular “Bro” subculture that prevents greater diversity from blossoming in the elite tech industries.

Apply the logic of those launching these attacks to the many other subcultures in our complex society, many of which could just as easily be (simplistically) criticized for not reflecting activists’ cosmopolitan ideals of “representation.” Do our Navy Seals, championship-winning sports teams, and award-winning entertainment industries, to name a few subcultures, internally reflect anything close to the demographic representation of our country? If not, why not?

Different challenges require team subcultures – with distinct “attitudes, values, goals, and practices” – tailored for those challenges. These subcultures are not arbitrary or artificially imposed, but logically connected to the tasks they are performing. No one walks into an Artist’s studio and wonders about the “performance gaps” between that Artist and Navy Seals in some contrived competition.

It should shock no one with a sober mind that different categories of people – races, ethnicities, geographies, ages, socioeconomic backgrounds, genders, etc. – have, on average, different spectrums of “attitudes, values, goals, and practices” (subcultures) weighted and toggled in all numbers of directions. That is literally what “diversity” is.

Yes, there is always variation within the categories at the individual level – which is why, despite being “under-represented” in any particular industry, all demographic groups still have some (minority) representation, but the level of variation is hardly the same across categories precisely because of culture – and also genetically determined personality traits. Thus, different teams tackling different challenges will inevitably have different proportions of representation depending on which subcultures in society they appeal to.

To demand that all “performance gaps” be closed is to demand that all subcultures (and people) become the same. It is, in other words, to demand that people stop being themselves, because their free choices guided by their unique subcultures produce (apparently) too much “disproportionate representation.”  If you are a fan of any reasonable flavor of freedom, this should terrify you. Ironically, many of the most egalitarian countries show wider “representation gaps.”

When any particular team, or even industry, is criticized as “too white” (sidenote: there are a lot of “not white” people in tech), “too male,” or too anything, such criticism should not necessarily be shut down entirely without good-faith examination, but it should be examined objectively and dispassionately. Because it is very possible such team or industry looks the way it does not because of some malicious cabal scheming to keep other people out, but because (i) that industry has specific challenges for which specific subcultures outperform, and (ii) certain categories of people better align, on average, with such (contextually) outperforming subcultures.

Realistically, this debate has been entertained in good faith by tech leaders for a very long time. Decades, with numerous strategies attempted for improving “representation,” usually to underwhelming results.

Because of the weak results over such a broad span of time, criticisms have devolved into hostile attacks; whining is gravitating towards warring, detectable in the overt insults against “tech bros” and such. This devolution is revealing what many in the tech industry have suspected for some time – that many (though not all) of the complaints about “bias” were not really about bias as understood traditionally in, for example, employment law literature.

The tech industry has done much soul-searching for actual illegal discrimination and bias, with valuable results at rooting out what actually existed (work is ongoing). But what many activists are really talking about when they speak of “bias” isn’t that under-represented peoples are being barred from work or denied merited promotions, but that tech industry subcultures are not sufficiently “welcoming” to the under-represented. That these subcultures must, out of moral obligation, become more appealing to outsiders.

How “welcoming” would the kind of person who gravitates toward the Navy Seals find the subculture of a set of Ivy League humanities professors, or vice versa? If a farmer from Iowa walks into a Greenwich Village coffee shop and feels “out of place” what precisely is the “solution” to that “problem” that doesn’t effectively eliminate one subculture’s right to exist? As we’ve established, subcultures across society and industries are rarely arbitrary. They’ve evolved requirements and expectations to solve specific challenges, and demanding with a ham fist that they adjust to make all outsiders more “comfortable” is to (at least in some cases) threaten their ability to do their jobs at the performance level they evolved for.

The “bros” (honestly there are a lot of very welcomed and high-performing women in this industry, just as there are many skin colors, but let’s run with the over-simplified metaphor) insist that the overall “startup” subculture of irreverence, aggression, bluntness and brashness, long working hours, unpredictable demands, social awkwardness, highly meritocratic hierarchies (see the insistence that 10x and 100x engineers exist), etc. are an organic necessity for the most chaotic and competitive early stages of high-value company creation.

One of their arguments is that the kinds of people willing (and able) to fight and win those early-stage battles – neuro-atypical (candidly) and therefore not in abundant supply – do not want the style of work environment that other kinds of people want. Note the nuance. They don’t have a problem with demographic outsiders per se. They have a problem with the (on average) preferences of those outsiders. Outsiders who can accept or acclimate to the existing subculture (and some certainly do) are welcome.

Some might say, “But this is who I am. Why should I have to change?” But is this not who they are as well? This is their team’s subculture. The parallels to broader issues of immigration and assimilation are obvious. As previously stated, pluralism acknowledges that you simply cannot appeal to anyone and everyone within the same space; not if you want any kind of productive cohesion. Subcultural diversity requires choosing A over B, and having another space where B is chosen. The beauty of America, in particular, is that there is a lot of space.

Defending a subculture within a space by no means tells you that you have to change. You are always free to find or create another space better suited to your preferences, if you don’t want to assimilate. It simply sets cultural conditions for entering that specific space; conditions often tied to what the space is designed to do.

Look throughout history and you will very often find pioneers and frontier-people who were attracted to competitive, chaotic, and stressful (but highly lucrative) environments; and who explicitly avoided environments they deemed as “soft” or “mid.” And those “frontier” environments virtually never reflect (proportionately) the full spectrum of society’s demographic composition, because people (and categories of people, on average) simply don’t want the same things.

Some might say that expecting all those who work on the “frontier” (chaotic, messy, risky) to be relaxed, diplomatic, egalitarian, and sensitive to others needs, at any level close to the broader population, is a self-contradiction. We can judge those “extreme” people harshly from our manicured spaces all we want; and yet without those people and their results, our own spaces would not exist. Careful what you (too aggressively) wish for. I could never be a Navy Seal. But I am very thankful we give them some space and “Let them cook.”

Another argument (often) made about “startup culture” is that these very early-stage companies going after extremely high-value market opportunities simply don’t have the time or resources to make their work environments more “welcoming” to a broader pool of people’s preferences, beyond removing clearly illegal behavior like discrimination and harassment. Devoting more time and resources to “softening” expectations means pulling time and resources away from beating other companies in a winner-take-all tournament with paper-thin margins for error.

The above arguments are not entirely disconnected. Some people prefer more aggressive expectations not necessarily out of aesthetic or philosophical opposition to softer cultures – they would never walk into an elementary school and demand that teachers “harden up” – but because they believe that their context and their team’s mission will be jeopardized if their specific subculture’s values and behaviors loosen too far. Different mission, different expectations.

It’s clear, however, that once companies are larger and more established (and therefore more financially secure), corporate cultures inevitably shift away from aggressive bleeding-edge expectations in order to appeal to (and recruit in higher volume from) broader audiences. It is not uncommon, once the “frontier” period of a company’s life has evolved into a calmer and less risky setting, for the self-styled “pirates” to either depart for more exciting environs (with their stock fully vested), or to isolate themselves from the growing roster of “normies” via more elaborate corporate hierarchies and lines of reporting.

All of this being said, the “tech bros” won’t (and don’t) stop anyone from trying to build an industry-defining company that is far more “welcoming” of those with other preferences and desires. What I am suggesting is that, after realizing that whining doesn’t work and that warring also doesn’t move many needles, activists demanding a more “inclusive” tech ecosystem jump right to winning. Compete. Prove the “arrogant” bros wrong.

If you dislike the so-called “bro culture” that pervades so many elite tech startups, and yet the industry defends its high-performance cut-throat values and behaviors (which still vary quite a bit), what is stopping you, together with other like-minded people, from competing with them? Whether or not this subculture, which activists so zealously malign, is truly insular (in an artificial and completely unnecessary way) is an empirical question that is wide open for testing.

What’s stopping you? You could pour more resources into resolving whatever barriers you believe are holding back more “inclusive” startup teams, but without unproductively insulting people already on the ground. As I’ve written before, there are undeniably structural issues at a societal level that play into some under-representation in tech. One of my core points, however, is that leaders within tech are not responsible for, and not capable of, “fixing” those complex societal issues. We’ve been blaming the wrong people, and some continue to do so.

When activists hear this response, many (not all) will fall back on what I referred to in The Weaponization of Diversity as unproductive “unfairness porn.” They’ll find 1,000 reasons why someone else is blocking their ideal of a more “inclusive” startup subculture – one which still overcomes the same extreme challenges and still produces the same elite results. This is understandably received with skepticism by industry practitioners who live within the hard realities of their markets and talent constraints. People actually doing always resent being talked down to by those who are merely talking and theorizing.

Similarly, some activists will resort to making arguments for national regulation of “inclusiveness.” If, their argument goes, the federal government would simply step in and mandate across the board more “inclusiveness,” then everyone would have to follow the same “diversity” requirements and face the same constraints. This obviously ignores the harsh reality of international competition. It’s all well and good to federally mandate that your Navy Seals (figurative and literal) be more “welcoming,” until they step on an actual battlefield against a nation that simply said, “Let them cook.”

Demanding that the startup ecosystem reflect the cosmopolitan “diversity” ideals of DEI activists is not going to work, just as it doesn’t work to demand that any mission-driven subculture lose its organically evolved “attitudes, values, goals, and practices” because some armchair outsider on a moral crusade said so. But taking a pluralistic approach to startup culture – with a mindset of experimentation, not dogmatic mandates – should be celebrated.

All the aggressive talk of “tech bros” and “mediocre white men” seems somewhat misplaced to many people who actually work in the industry. There are a lot of skin colors, nationalities, religions, etc. And yes, there are many very impressive women, even if they are not quite as represented as many of us would like. There’s even quite a bit of variation of cultural attitudes toward other issues like work-life balance, remote work, etc., reflecting the fact that because different businesses face different challenges, some harder than others, not everyone needs to be as cut-throat as the industry’s most aggressive champions.

It should also go without saying that true discrimination that judges people by how they look or where they come from, and not on their actions and performance, should always be rooted out. Candidly, demonizing “white men” and “bros” (ludicrously over-generalized categories) is itself (in my opinion) an immature racial and gender bias that is almost certainly counterproductive; and potentially illegal. Who wants to work with people who openly display hostility toward a meaningful segment of the team?

The organic cultural diversity and compositional variation in our society, with all of its historical, socioeconomic, and other imperfections, means that certain ideals of perfect “representation” will probably never be fully met, because that would require forcing people to become something they aren’t and (in many cases) don’t even want. But all individuals deserve a chance to show their stuff and not be assumed to represent the statistics of their unchosen demographic categories.

From my perspective, pluralism – including startup pluralism – embodies an extremely valuable form of intellectual humility and pragmatism. It does not tell anyone that they are right or wrong all the time, in every context. It is not universally “woke,” “anti-woke,” or anything in between.  Instead, it forcefully pushes back against anyone who tries, with guns blazing, to recklessly impose simplistic ideals onto a highly complex, nuanced, and sub-culturally diverse world.

In other words, it shuts down Inquisitions. It respects the varied judgment and expertise of leaders actually doing the work in the face of hard talent constraints and demands, while significantly discounting – though not fully silencing – the opinions, however well intentioned, of armchair critics.

All else being equal, we’d all love a more “inclusive” tech ecosystem. But all else isn’t equal. Constraints, tradeoffs, and priorities exist. Different “attitudes, values, goals, and practices” produce different outcomes, and that requires sorting different people into different subcultures and teams. When all else isn’t equal, in the end, win.

*All images, though none of the writing, generated with ChatGPT-4o. 

Diversity in Startups: Whining, Warring, Winning

Recommended Reading: The Weaponization of Diversity

Almost two years ago I wrote a lengthy personal essay regarding my own story growing up as a low-income child of Mexican immigrants, weaving through the American educational system (UT Austin, Harvard Law), and eventually finding success in startups and venture capital as a managing partner of an elite boutique law firm specialized in that field. In that essay I described the significant cultural divide I observed growing up in the latino community in Houston, between the educational expectations I had at home driven by my elite college educated Mexican mother, and the cultural values of my latino peers; all of whom came from blue collar and laborer backgrounds.

We lived in the same neighborhood and were all lower-income, but our home cultures were starkly different. Many of my latino friends found my study habits extremely peculiar and aberrant from how they felt a latino child “should” grow up. As a result I was often labeled a “coconut” (brown on the outside, ‘white’ on the inside).

In that essay I applied my own childhood observations to research I’ve reviewed regarding the under-representation of certain minorities in various high-performance professions (tech entrepreneurship, elite law, etc.), as well as to my observations as an adult responsible for recruiting lawyers into our firm. My general thesis is that “warmongering” over diversity in these industries has resulted in two very negative dynamics.

First, it leads to the silencing of many people – good, very much not racist, progressive people – who see a clear causal relationship between home culture, including childhood educational values, and under-representation in elite industries dependent on compounding education and training; like tech and law. For fear of being penalized personally and professionally, these people avoid contributing constructively to the discussion, and as a result the general topic of diversity becomes dominated by stale and exhausted narratives suggesting that “racism” and “unconscious bias” are supremely explanatory for disparities. Because these narratives are (flatly) wrong, the results of their non-solutions are disappointing.

Second, aggressive pressure to increase representation in elite industries leads employers, investors, and other decision-makers to make rushed hirings, promotions, and investments in URM (under-represented minority) candidates. Because the market isn’t nearly as irrational, discriminatory, and “racist” as many people make it out to be, a significant portion of those individuals who are elevated by these “affirmative action” initiatives end up very visibly underperforming. That underperformance ends up reinforcing stereotypes (bias) in the minds of observants. In other words, it backfires. Being overly aggressive and simplistic with increasing representation of URMs in highly competitive meritocratic industries, when their under-representation broadly is actually reflective of real performance issues (on average) in the marketplace, ends up harming those same groups in the long-run by strengthening stereotypes that we should instead be strategically and methodically weakening.

The essay is long for a reason. This is an extremely sensitive and nuanced topic, and to give it its due requires time and depth. For that reason, I respectfully ask that anyone bothered or offended by the above paragraphs please actually read the essay, to understand the real point I am making. It is not victim blaming. It is not pretending socioeconomic inequality isn’t a problem. And it most certainly is not pretending that racism and discrimination do not exist at all in our society. Rather, it is an honest attempt to explain why, all else being equal, focusing on racism and “unconscious bias” as the primary reasons why URMs, like American Latinos, are under-represented in elite industries has been incredibly unproductive, even counterproductive, and it will continue as such until we inject some sincerity and reality into the discussion.

The purpose of this post is to be less theoretical and analytical than the original essay, and more practical. How should founders, CEOs, and Boards of Directors in the startup ecosystem respond to concerns about diversity and the under-representation of certain minority groups? How can they empathetically listen to the variety of voices on this topic, while constructively and safely fulfilling their fiduciary duties to maximize the performance and success of their businesses? To cover this topic, I’m going to touch on three categories of approaches advocated by “diversity activists” in elite industries (including tech startups) – whining, warring, and winning – and why it’s in the interest of both key decision-makers and under-represented minority groups to steer discussion and action toward the third.

Whining

This post assumes the perspective of my original essay; those claiming that “racism” and “bias” are the main drivers of under-representation of URMs (or at least of American Latinos specifically) in elite industries are flatly, demonstrably, wrong. Of course isolated instances of racism and discrimination can be found in a country of 300 million people, just as they can be found all over the world. These isolated cases are unacceptable, illegal, and deserve to be addressed forcefully.

But pointing to a limited number of isolated anecdotes does not in any way demonstrate that the startup ecosystem as a whole is racist. We are talking about an industry full of thousands of individual companies, and hundreds of venture capital funds, all led by highly educated and progressive people from an enormously diverse set of ethnicities and nationalities. These people are not all racists, and they would be punished financially by market competition if they were neglecting high-performing undervalued talent that competitors could then recruit or invest in.

In fact, the startup ecosystem is one of the most diverse (in terms of skin colors, surnames, ethnicities, etc.) industries you will find in America. Its diversity is part of what drew me to that kind of work in the first place. Not only is the industry incredibly diverse, it is so starved of high-performing talent that it has had to bid average salaries far above other industry norms, and aggressively recruit internationally, in order to fulfill demand; stretching even further the credibility of the suggestion that tech companies would, simply out of irrational prejudice, ignore millions of high-performing candidates available for work.

The industry is, however, fiercely, almost olympically, competitive and meritocratic; by necessity. We are talking about very small entities, with very limited budgets running usually at a perpetual operating loss, in hyper-competitive markets often filled by incumbents 100x in size, and funded by high-risk investors with high-stakes expectations of returns from their own LPs. The room for error in this segment of the economy is smaller, and the cost of underperformance is higher, than anywhere else in the market.

Saying that underperformance is the main reason URMs are under-represented in elite industries, like tech startups, is not a slam dunk argument for silencing debate; much like it isn’t in other policy discourse about race and social justice. In other parts of the economy, like universities and government, there are many activists who will argue that even if URMs underperform, organizations are responsible for elevating them anyway. This is, in essence, the argument for “affirmative action.”

The affirmative action debate in the university context gains its legitimacy from the fact that most universities are non-profit entities with missions that can be tied very closely to broader issues of social justice and fairness. Elite universities also in particular have large endowments, and spend at least 4-years with students – a fair amount of time to “catch up” – before those students enter the marketplace. Thus it takes some rhetorical gymnastics for an elite university with an endowment the size of a small country’s GDP to say that it can’t “afford” to accept and train some number of underperformers in order to pursue some higher-level societal goal.

As we move from large elite universities to large for-profit employers, the argument for “affirmative action” begins to reach stronger resistance, but not so much that there isn’t room for reasonable debate. Once a company has reached a market capitalization of, say, $25 billion, with thousands of employees and layers of staff, the idea that it too “can’t afford” to incur some costs to pursue a broader societal concept of “fairness” is far from obvious. This is why various “diversity initiatives” are not uncommon in large companies. You see them in law as well, with “diversity fellowships” in the AmLaw 100.

Gains have been made in improving the representation of URMs in large, for-profit companies, particularly at entry and mid-level positions. But activists are now starting to turn their attention to the C-suite, noticing that far smaller gains have been made there. And this is where the very real challenges and constraints of startups and much larger companies start to look similar, in terms of their legitimate inability to afford substantial underperformance. Underperformance from a CEO or CFO is catastrophic at a Pfizer or an Apple just as it is at a far smaller startup. Your views about social justice and fairness may have some legitimacy and weight in the non-profit university context, and in some market contexts, but that legitimacy ends when it starts threatening entire companies and industries, on whom millions of peoples’ livelihoods, and the economy at large, depend.

What’s a word used to describe situations when someone makes strong complaints for X or Y, often citing “unfairness,” and yet the justified response is that it simply can’t and won’t be done? Whining. I understand some people may object to my use of this term as being overly dismissive and offensive, but I nevertheless think it accurately captures the tone and language often encountered by key decision-makers in the startup ecosystem when “diversity” is used as a reason to question their judgment.

In this context, of high-stakes startups and venture capital, we aren’t talking about the right to any kind of employment, or the right to use a particular essential facility or public resource. We’re not talking about civil or human rights; the contexts in which morality and fairness really should override all other concerns. Far more often, we see someone already earning a relatively comfortable salary in a white collar job using “diversity” as a reason why they should be earning an even higher salary in a more senior position. Or someone already in the top quartile of education and income nevertheless arguing that they should receive millions of dollars in private funding for their business, because they are “diverse.” In other words, here “diversity” looks far less like a legitimate, authentic moral argument for societal fairness, and more like a rhetorical device for self-promotion and advancement.

I’m sorry, but Cesar Chavez fought for oppressed very low-wage farm workers. His spirit should not be invoked while discussing whether or not a software engineer or lawyer deserves a promotion. Speaking as someone who grew up surrounded by true low-wage laborers, let’s not hijack their challenges and the moral force of their causes for high-class soft-handed gains.

My advice to key decision-makers when they encounter this kind of argument is to focus on specifics and context. Is the argument being made that this particular individual has been judged by different performance standards than those applied to other similarly positioned individuals? That is illegal, and should be addressed immediately. But if that isn’t really the argument – and it often isn’t – but rather someone is trying to claim an entitlement to “affirmative action” treatment from a startup, return to the specific context in which it is being raised.

We are not an elite non-profit university with a billion-dollar endowment and years to help someone catch up on performance. We are not a Fortune 500 company with enormous insulation in the market to absorb the costs of helping someone meet performance standards. We’re a startup trying to survive and fulfill our obligations to our employees and investors to build a successful business in a hyper-competitive market. For that reason, we need performance today, and those who can’t perform today are not the responsibility of startups. In this context, expecting a private business to absorb the cost of fixing enormously complex and nuanced social and historical issues is unreasonable and unsustainable.

Many intelligent, thoughtful, progressive people who support upper-income diversity in far more appropriate and sustainable contexts will understandably draw a hard line when asked to risk the survival of their own businesses and careers for such a cause; the equivalent of levying a tax on people who simply do not have the means to pay it. We need to leave space for people agreeing on the goal of greater diversity to still be open and honest about the very real problems with specific tactics for achieving it.

Warring

When mere arguments and complaints about “fairness” have not resulted in the action that diversity activists want to see, the most aggressive have turned to weaponizing and politicizing diversity. In other words, they start using economic punishment as a way to force private market actors to improve their “diversity numbers.”

For very large consumer-focused companies, weaponizing diversity can take the form of public shaming and threats of economic boycotts. Activists may put together statistics about “disproportionate representation” at X or Y company, and fund a PR campaign to make those numbers highly visible. Public backlash then results, with consumers withholding their purchasing dollars, and the company responds by increasing their hiring of the appropriate groups. This is effectively politicizing hiring, by making it no longer simply about the productivity of the individual candidate, but about how that candidate’s characteristics feed into statistics that then impact the public image of the company, which then impacts the purchasing of the company’s products and services, and ultimately benefits the bottom line. It can be highly effective in some mass-market contexts.

In more private areas of the economy, this sort of weaponization can take the form of channeling investment dollars or referrals of work depending on a particular company’s “diversity statistics.” For example, very large Fortune 500 companies who have responded to their own weaponized diversity incentives by upping “diverse” hiring in their ranks, can make sending legal work to X or Y law firm dependent on that firm meeting certain diversity statistics for its own roster of lawyers. Activist limited partners of venture capital funds have started this tactic as well, pressing the venture partners that they fund to improve the “diversity” of their portfolio.

This is where benign pushing for diversity now becomes much more aggressive shoving. Do it, or it will cost you money that we control. Is it effective?

As I mentioned in my original essay, no one engaging in a serious discussion about diversity issues argues that high-performing URMs simply do not exist. That would be racist, but no one is saying that. What they say is that for historical, socioeconomic, and (importantly) cultural reasons high-performing URMs are much harder to come by in the market. What happens when you have a scarce resource for which demand is subsidized with economic incentives? Those who can pay top dollar are able to obtain it, and those who can’t don’t.

Already elite companies, capable of paying the highest amounts of compensation, absorb the more limited number of high-performing URMs; high-performers who wouldn’t have had trouble getting work to begin with. These companies are then able to promote how “diverse” and progressive they are, as if their superior cultures are the reason they are so “inclusive.” Weaker and smaller companies (startups?) can’t afford to bid away those in-demand high-performers from the deep-pocketed elite, and so they end up being less “diverse.” Calling one “inclusive” and the other “racist” completely misses the mark of what is actually happening. It’s about money.

It’s unclear that, even at large companies, using sticks and stones for diversity has moved the needle much on the core issue (the supply of high-performing URMs) other than creating a bidding war for the already-existing high-performers in the market; a war which benefits those able to pay the highest comp packages. There is, however, an emerging strategy that both large companies and startups are increasingly adopting in response to aggressive warring over diversity, and it almost certainly wasn’t intended by activists.

Have you noticed how in recent years the startup and tech ecosystem has dramatically increased its involvement in both Africa and Latin America? There are surely a number of reasons for this, but one big reason is companies realized that international hiring is a highly effective way to disarm some of the strongest rhetoric from diversity activists. If you know there are complex social, historical, cultural, etc. reasons why it is not feasible to dramatically increase your domestic (US-side) URM recruiting and investment without running up against very costly performance issues, but you also know that you really aren’t racist and that skin color and ethnicity are not drivers of your decision-making, there is a growing industry more than happy to help you recruit highly qualified talent directly from Mexico, Chile, Argentina, Nigeria, Kenya, and Ghana, among other countries full of ambitious, driven prospects.

Because American companies can pay so much better than local industry in those countries, they can recruit among the cream from their very large populations. Also, those populations aren’t subject to the historical, cultural, and immigration selection dynamics that are the core backdrop (see my essay) of why American URMs struggle disproportionately with performance in education-driven technical industries. Google and tomorrow’s Googles want diverse high-performing talent, but they are not fools, and will recruit directly in Mexico City or Lagos before diversity warriors force them into hiring US-side underperformers that they can’t even acknowledge as underperformers (and thus in need of extra training or lower-level roles) because someone will accuse them of being racist.

Thus we are seeing tech companies and startups increasing their “diversity” with more international talent. Is this a “win” for diversity? It depends on whom you ask. If the goal was simply to increase the number of latino and black people in tech and startups, then yes it is definitely a win. But if the goal was to increase hiring and investment in American under-represented minorities, then no, much less progress is being made. Such little progress will continue until activists are willing to put down their weapons, and let industry be honest about the real causal relationships behind disparities. Until that happens, no one should blame founders, CEOs, and Boards for taking a logical path, via international hiring, that proves they aren’t racist, while still fulfilling their obligation to recruit high-performing talent that furthers the survival and success of their companies.

International hiring and investment is a very effective near-term tool for improving the diversity of the startup ecosystem, even if it’s not the result that warmongering activists actually wanted to force decision-makers into.

Winning

We are thus faced with the fundamental tension in the diversity debate as applied to startups, and other high-performance, high-stakes industries. Diversity and increasing representation of minorities is a categorically good thing in an abstract sense. You will be hard-pressed to find someone actually say, publicly or privately, that they’d prefer a less diverse startup ecosystem. That would be inane.

But startups operate in the most competitive, high-stakes, low-margin-of-error segment of the modern economy. Arguments and tactics used by diversity activists that have found some success in universities, and even in large companies, face a fundamentally different set of constraints and realities in the startup economy. As I said in my original essay, and I will repeat here, if you want to see more URMs in startups, you need to actually help them win.

Whining and warring will not materially move the needle on diversity in a startup ecosystem that simply cannot safely absorb underperformance in the way that universities and massive companies can. Winning will. Unambiguous, credible, level-playing-field winning. You know who really doesn’t care about representative disparities, and judges a startup’s products and services purely on their objective merits? Their customers. There is no more brutal judge of performance than the open market, and for that reason no one does URMs any favors by acting as if affirmative action special treatment should continue well past the educational system and into the for-profit marketplace. When results, and only results, silence all other factors, help people actually deliver.

The most honest and effective diversity activists in tech and startups do not adopt childish arguments suggesting that hundreds of founders and VCs are “racists.” Nor do they suggest that highly competent and progressive executives are ignoring high-performing talent out of some dramatically oversold armchair idea of “unconscious bias.” Rather, they understand performance gaps are real, and are doing the work of filling those gaps; via additional resources, training, and networks applied to under-represented candidates. This is a perfect corollary to how elite universities who’ve adopted affirmative action policies didn’t do so by simply throwing sub-qualified URM students into their schools and hoping for the best. They thoughtfully implemented extra training and resources to help those students “catch up” to the performance of the rest of their student bodies.

This costs time and money. As I’ve emphasized, elite universities are very large, very rich orgs with plenty of time and money to pursue higher-level societal goals. The vast majority of the players in the startup ecosystem simply do not have the time or resources to play a material role in this process. For completely understandable reasons, they can only afford to recruit and invest in today’s winners, with the ethnic or racial makeup of their teams and portfolios being neither here nor there. That is their mandate. It doesn’t make them racists or jerks. It makes them pragmatic, normal businesspeople with a job to do.

But tomorrow’s winners, including those who are under-represented minorities, are being trained, built, and elevated by honest people who aren’t shying away from uncomfortable realities. They aren’t throwing colleagues and friends under a bus with slanderous labels. They also aren’t pretending that feel-good messaging, “bias workshops,” or public guilting and shaming of decision-makers are the key to success for URMs in a highly competitive market economy. They’re addressing the game actually on the field, and putting in the time and resources to help URMs win it, under the same rules everyone else plays by.

We all want to see a more “diverse” startup ecosystem, in every sense of the word. To get there we need less whining, less warring, and good people willing to put in the work and honesty to ensure there’s far more winning.

Startups, Politics, and “Cancel Culture”

I wrote The Weaponization of Diversity a little over a year ago. It was a combination of both my personal story growing up as a low-income latino raised by a single mom and eventually making it into the elite strata of the legal profession, combined with a more philosophical expression of how I see a lot of the rhetoric around diversity initiatives in high-stakes fields (law, startups, tech) leading to counter-productive consequences. It is an extremely complex, sensitive, and nuanced issue that doesn’t lend itself to easy summarizing, but nevertheless a quick break-down of my viewpoint is:

A. Growing up in a low-income Texas neighborhood filled with American latinos, but excelling in advanced coursework from an early age, I was criticized regularly by latino peers for my discipline in academics; referred to often as a “coconut” (brown on the outside, white on the inside). This was a tacit acknowledgement that my family’s home culture was a very different “Mexican” from what American latinos themselves consider the norm.

B. History and geography have led to various selection mechanisms that have made cultural values, including about early academic effort in childhood, significantly varied across ethnic groups in America. That variance correlates dramatically with relative performance and representation in high-performance careers, most of which are reliant on compounding education and skills; and in the case of the highest risk careers (like entrepreneurship), generational building of wealth and resilience.

C. With respect to American latinos specifically, the strata of latin american populations that place a high emphasis on advanced education are far more likely to stay in their home countries, with lower-income and working class latin americans far more likely to emigrate to the United States. The exact opposite dynamic has been the case for the most successful ethnic groups in America, such as Indian or Taiwanese Americans, who on average place extreme emphasis on childhood education. Nevertheless, pockets of very successful sub-cultures within under-represented broader groups in America  – like Nigerian and Cuban-Americans – reveal how ascribing low representation to racism in high-performance industries is too simplistic, and how family culture is a significantly under-discussed variable.

D. Our unwillingness to allow honest people to bring issues like this up in diversity discourse, and instead weaponize accusations of racism against anyone who won’t toe the dominant line, has caused the entire discussion to stagnate around more politically correct, but far less impactful policies; like “trying harder” to find qualified candidates.

E. Large organizations with dominant market positions are privileged in this whole dynamic relative to smaller orgs facing extreme competition (like startups), because a substantial buffer of resources allows them to absorb the negative consequences of non-meritocratic recruiting (while enjoying the PR benefits) without substantially threatening their companies.

F. Very elite orgs with attractive compensation packages (including equity) are also privileged in that they can attract the more limited number of high-performing URMs in the market, even when “inclusiveness” has nothing to do with why URMs join those companies. Thus the logic that “greater diversity (in the sense of more under-represented minorities) leads to higher performance” often gets the causality backwards, in that the (already) best companies can use their weight to recruit away high-performing URMs from lower-performing companies.

G. There is also often a sleight-of-hand with the term “diversity” because much of the data on high-performing diverse teams is not speaking specifically about URMs, but about a broader definition of “diverse.”

H. While the high-performance startup world is extremely diverse in the broad sense of the term “diversity” – including all nationalities, ethnic groups, gender and international diversity – it also reflects the under-representation of specific groups (including American latinos) that we see in other fields like law and medicine.

I. But unfortunately the fierce competitiveness of early-stage business competition, and the lack of buffer resources that large organizations have, make startups unable to play the politically correct politics of larger and more elite orgs. They simply cannot afford to hire – especially among their executive teams – for anything other than merit, and yet they can’t compete on compensation for the high-merit URMs who are taken up by A-level companies. This makes the more nuanced aspects of the diversity discussion unavoidable when discussing startups.

J. Just as in other areas of the economy, overly aggressive “diversity” initiatives – like diversity startup accelerators – have unfortunately in many cases backfired, with highly visible under-performance of the teams/people actually reinforcing negative stereotypes. Failing to address the real (even if uncomfortable) issues thus hurts, instead of helps, many under-represented groups.

K. Politicized warmongering over diversity, instead of balanced and fair discussion, is thus not only damaging to under-represented minorities like American latinos, but it’s particularly damaging to highly competitive early-stage startups in ways that it’s not for larger businesses.

The point of this post is to tie the above perspective into another issue that has been coming up lately; “cancel culture” and political disagreement within an employee roster. Some very large tech companies, like Apple and Google, are known for having pockets of employees who are extremely politically vocal during their employment hours, and in some cases have even gotten other employees fired not because of any behavior by the terminated employees on the job, but because of what amounts to disapproval of political values or other issues. Thus one segment of the employee roster “cancels” the hiring of someone that they don’t want to work with.

In response to this issue of hyper-politicized employees, companies like Coinbase and Basecamp have come out with clear policies that attempt to shut down this dynamic, by emphasizing that work is for work, and that political discourse should be left out of it. This has understandably led to – and they knew it would – some loss of talent as employees who would prefer the ability to vocalize their political views more openly move to more accommodating companies. Nevertheless, the executives at those companies felt the upfront pain was worth avoiding more long-term misery of low productivity and chaos within the employee ranks.

I think an important point to make to all who follow this issue is that, at some fundamental level, “cancelling” certain people for behavior that many others, but certainly not everyone, find abhorrent is unavoidable at any meaningfully-sized company. If you fire someone for wearing a swastika on their shirt, or for catcalling women, or telling a gay employee that they’re a sinner, a million protestations about how this may be “cancel culture” doesn’t change the fact that it’s the decent, right – and in many cases legally required – thing to do.

In reality, “cancelling” is not the problem. Ambiguity is. Ambiguity that gets filled by certain people on the employee roster who really should not be authorized to perform that role. The reason countries have things like unambiguous constitutions and laws, and hardened hierarchies to enforce them, is that the alternative is unpredictable and chaotic mob rule (even if democratic mob rule) that destroys value and makes it impossible to build the kind of stability that promotes society. The tragedy of what many people call “cancel culture” isn’t so much that certain behavior can get you canceled (it most certainly can), but the vacuum of leadership within organizations that allows termination decisions to be so surprising, erratic, and seemingly driven by unaccountable mobs.

Why is it that the most democratic countries in the world never have militaries run as internal democracies? Because democracies have all kinds of benefits, but meritocratic promotion and speed of execution – which are essential when losing means you are “game over” dead – are not among them. In a hyper-competitive environment, you do what has to get done to win and survive, and that’s often not the “popular” or “fair” (in the judgment of the masses) choice. In competitive business, as in war, hierarchy beats democracy. Every single time.

That being said, remember that not every company has to compete in the same way. Very large dominant companies with fat balance sheets and margins can afford to be a little more political than hierarchical, for PR reasons. Just as companies like Apple, Google, etc. can afford to promote various initiatives that may put democratic popularity above hard meritocracy, they can also afford a little more politicized chaos and employee mob rule “cancel culture” in their companies. If 5% of their employees devote substantial time to politicized initiatives, or even getting certain unpopular new hires fired, it’s not going to change the overall performance of a trillion-dollar company.

But for an early-stage startup, completely different story. Ambiguity in the values and culture of the company, and resulting chaos from certain lower-level employees taking it upon themselves to decide who should be hired or promoted, can quickly sink a young startup with limited resources facing stiff competition in the marketplace. Freedom of association and at-will employment mean your employees can simply choose to leave if they disagree strongly with a decision you made about hiring or promoting someone. There’s no getting around that. The only sustainable defensive measure is ensuring everyone understands on Day 1 what your company’s values and policies are, so this kind of reckoning day hopefully never materializes.

This is not a left/liberal or right/conservative politics issue. It’s a general business issue. Young startups need well-understood and enforced (hierarchically) values, and (as they grow) in many cases written-out policies, as to what merits an offer letter, a promotion, or cancellation (termination) in their company. This leaves plenty of room for pluralism, as different companies can sort themselves out as to what they find acceptable in their business environment, including the level of political discussion that’s acceptable. There’s no single answer, but not having any answer definitely won’t work.

I don’t believe more liberal, conservative, libertarian, or highly apolitical startups will have a universal competitive advantage in the market. But I do believe that those who don’t put much thought into this aspect of their culture at all, and don’t enforce (or defend) their chosen culture with a clear hierarchy, will lose (as a result of internal disagreement and chaos) to companies with a more cohesive identity and power structure.

Whether you want to be more like Google, like Coinbase, or something in-between in building your company’s culture is up to you and the rest of your founders. Just be clear and unambiguous about it, so that the employees who choose to join you know what they signed up for. The greater long-term alignment will allow your team to focus more on executing the mission, instead of executing fellow colleagues.