Update: Affirmative Action in Silicon Valley

two employees. They're all software engineers, and big surprise, they're all guys. A few months ago, Mitch started looking for a fifth employee, and he wanted that fifth person to be different from him and the rest of the team. And since this is a podcast and we can't just show you a picture of Mitch, we asked Mitch's sister Christina to describe what he looks like. He's always got some like really soft hoodie or two shirt on in jeans or corduroys. If he was walking down the street,

you probably wouldn't necessarily notice. He blends in pretty well. Basically, Mitch looks just like a lot of other people in Silicon Valley. He's young, he's white, he's straight, and he went to a top college. Yeah, he even has this neatly trimmed beard, and perhaps because he's a cyclist like the rest of San Francisco, he has a nice tan too. In Silicon Valley, most programmers are white and Asian men

who have computer science degrees from elite universities. But for Mitch's next higher he's committed to looking outside that pool of people. That's pretty unusual for a company of penny size. Some people would call it affirmative action hiring, because Mitch is going to be actively considering the candidates background when he's deciding who to hire. And it's a very touchy topic.

As we'll find out, not everyone agrees that it's the right thing to do him and I'm Ellen Hewitt, and this week Undecrypted, we're gonna be talking about something that every technology company says they want to do something about, which is diversity in the workforce. Well, they want to talk about it in these lofty slogans, but when you actually drill into the specifics, things start to get uncomfortable.

We found one of the few guys in the industry willing to speak completely openly, willing to get really uncomfortable with us, someone who's trying to do something to fix the lack of diversity and tech from within his own tiny startup. Oh cool, I look at this giant chess board. The guy's penny work in a small coworking space in downtown San Francisco. They're on a shoestring budget. It's really

not a glamorous place. They don't have free snacks. There isn't very good natural light, and their office is about the size of the bedroom room, A spacious, lovely I was telling her, I'm excited for her to see how like the other half of startups live, this is the don't spend a lot of money half of starposts. Inside this tiny office, there are four guys sitting side by side. My name's Mitch. I grew up in San Jose. I'm a mid twenties white guy. I'm Alex and I just

Stanford is American. My name's Andrew Dennis. I'm half black, half white. UM I'm married and I'm my dad. I am Jonathan and I was born in Taiwan and I grew up in Maryland. All four of them believe it's the right move for their company to be prioritizing diversity now, not because it's the right thing to do, they also believe it will help their product. Yeah, Penny is this app that links to your bank accounts and can give you financial advice based on your spending patterns. Here's Mitch.

As we were working on that core product, we were realizing, we're both two software engineers that grew up in the Bay Area. How are we going to get a product that does well in Montana and Kansas and Maine. And our answer to that was, we should be solving this by building out a diverse team that can empathize with people from different parts of the country, from different genders or different ethnicities. And you use the app by messaging this chat bot, this computer program that texts back and

forth with you. The chat bot is called Penny, and Penny has a female face. But at the beginning, everything Penny said was written by two guys, Alex and Mitch. Here's Mitch's fiance Lizzie Wagner, explaining one way that when awry, so they started to use a little bit of like a snarky tone. You know, when you use like a

winky emoji, it can also be considered flirty. So I told him I just read this conversation and I think Penny was flirting with me, and he was like, no way, it's a computer, it can't flirt, and I was like, no, it's a flirty conversation. He's like, this is exactly why we need more diverse perspectives, because Alex and I never

even thought about that comment being taken that way. And building a relatable chatbot is super important when you're guiding customers through something as personal and sensitive and daunting as your finances. When a user writes in and says, I overdraft a lot, how do you respond? And some people will respond with, well, they should stop spending that much money. Other people will put themselves in their shoes and say

that really sucks. That level of empathy doesn't come if everyone thinks and acts the same way in a room, They're all just gonna confirm each other's opinions of like, well, that person shouldn't be spending money they don't have. And Penny stands out from the rest of startups and Silicon Valley because it's focusing on hiring for diversity so early in the company's history. I think the default for early

stage companies is not necessarily an aversion to diversity. It's not an active process of saying we are only going to hire people that look and sound just like us. It's the idea that we want to move fast, and the fastest way to hire people is to pull from our network. They get this big paycheck from a venture capital firm and they say, great, we're going to spend it immediately. They expand their team from two or four

people to eight or twelve. If you punt the issue of diversity down the line, it becomes much harder because when you have eleven men on your team on a twelve person team, it becomes a hostile work environment for women trying to enter into that team. When you have a group of all white or all Asian people sitting in the same room together, it makes it hostile for other minority groups to join that environment. These kinds of

companies really do exist. We talked to Jennifer Barbattini, as software engineer who interviewed with Penny in September, though she didn't get the job. I remember there was one company that I interviewed with. It was a smallish company like fifteen to twenty. They had ten engineers. All ten were male.

And all ten were from Stanford, and I was like, I don't know if I'm a good fit here, like, and the hiring person was telling me, We're we're trying to be diverse, and I'm like, well, okay, but still like this is a little intimidating. I don't have a Stanford credential. Um, I'm I'm definitely not. I can't brow talk. If it's a problem at a startup with twenty people, imagine what it's like at a Google or Facebook or Twitter.

They have thousands, sometimes tens of thousands of employees, only about thirty are women, and only about six percent are black or Latino. These companies can hire only people from those groups for the next year and their numbers would barely move. So it makes sense to start early. But the problem for startups is the pressure they're under in

the very early days. You have maybe a year of funding in the bank, you have a bunch of competitors, and if you can't hire quickly to build quickly your toast. The consensus opinion is start worrying about it. When your product is successful enough that you know that you're going to be building out a team for the long run. Even someone like Mitch, who's really determined to focus on this. He's run into a lot of obstacles. Remember, Mitch isn't

this diversity or HR expert. He's just a programmer trying to figure it out as he goes along. From a macro perspective of actively pursuing diversity, I'm almost but implementation wise, I'm i am just throwing darts on board and and hoping that we'll learn enough from those to get better. Every Monday, Mitch logs onto recruiting sites like angel Lists, Hired, and Triple Bite. He's looking for candidates or approach, and

he'll spend one or two hours on each platform. He said it takes him maybe six hours on Monday to do that outreach, and then the follow up throughout the week brings his time to about fifteen hours every week just to fill one role. We spent one such Monday with Mitch. As you look through a fresh badge at candidates. These ones he found and hired this week, there were

forty two that matched to search criteria. The very first candidate has really which is great, comes from a university I've never heard of, also great, and then has experience in different areas and you see the person's photos, and you see the person's photo and their name, UM, and actually what salary they're interested in, which is pretty interesting.

So I will start looking through this. Fortunately, when you have forty two people every week on this platform, plus the hundreds across, a lot of startups look at these sites when they're trying to hire. But after a while, Mitch realized that these job sites, they're only good for finding a certain kind of candidate. Angel List is great, UM, but not a good place to look for diversity. Same with many of the hiring platforms that we tried. H I've asked them about that in the past, and the

typical answer is, sorry, this is just what's available. This is the pool of candidates. It's predominantly male, it's predominantly white, orasan. So Mitch started to look for ways to find people with more varied profiles, things like newsletters and meet ups for women and engineering. He also looked for new graduates from coding boot camps, which teach you how to code in a short period of time. These people tend to come from unusual backgrounds, but boot camps didn't turn out

to be particularly helpful for Mitch. He found that a lot of these graduates didn't have enough experience to start contributing right away, and Penny, as a young startup, doesn't have the resources to train them. To apply to Penny, you have to complete a coding questionnaire, kind of like a TACOME test. And Mitch found that some people who

started it weren't finishing. And a lot of the people who were dropping out were people who didn't have computer science degrees, or were women, or were programmers of color, and it was often these candidates that Mitch was most interested in. Mitch suspect did it might have something to do with a lack of confidence, Like these people with non traditional backgrounds are taking themselves out of the running

before they even tried. Maybe the job description will say you have to have at least three years of experience, and let's say often the men with two years of experience will apply anyway, but the women wouldn't. So Mitch he tried something new. Before the break, Mitch had a realization that the very candidates he was interested in were taking themselves out of the running, maybe because they didn't think they would get the job anyway. Here's what he

decided to do about it. When we get the sense that somebody has either a confidence issue, like just doesn't think they're a good fit for the position or doesn't think they have the skill set required, we will have a lot more contact with that person to assuage their fears. That may mean a phone screen much earlier in the process, It may mean more check in emails. That helped him shepherd more people through the whole process, not just the

ultra confident ones. And that was a small success, but it all came at a real cost in the form of Mitch's time. The fifteen hours a week that Mitch was spending on recruiting, that's fifteen hours he's not coding or troubleshooting or mentoring his team. Mitch said it was worth it, but you can see why a lot of other founders in his position wouldn't really have the time to do this. And that brings us to the most

controversial part. When you get to that final stage, would you pick one person or another because they're a minority candidate? What would you do? I talked to Jay Shriney Vassan. He's the CEO of Spoke, which is a nine person enterprise startup in San Francisco. Like Mitch J says he wants a diverse team, but he said he's not comfortable with making someone's ethnicity or gender one of the reasons

why he's hiring them. He explicitly did not factor that into the final decision because I think that's unfair to us as well as the person being hired. UM. At the end of the day, UM, we want to have the best people possible for each role in our company, and this makes sense right. Picking someone in part because of what they look like can even be seen as employment discrimination, or it can feel patronizing to the person who was hired. These are the kind of counter arguments

you hear a lot in Silicon Valley and elsewhere. But we asked, Mitch, here are two hypothetical candidates equally strong, encoding and other important values at Penny, but one's a white guy and the other has a less typical background. Who would you hire? You just said that they're equally qualified. What we're saying is that the the people that were interested in hiring were weighing them across all these factors, and so somebody with a diverse background and a totally

different perspective, in our opinion, is more qualified. For the position that we're trying to fill. Giving us a perspective that we've never considered helps the product more than somebody that has our same perspective but as good at engineering. Did you have put back from people who felt like, what's unfair? Should I be punished for going to Stanford? Right? What's exactly that should I be punished for going to Stanford?

It's it's something that I don't have a good answer to, other than the entire playing field is leaning in your direction. I know that it can feel like in that specific and sense um you're being discriminated against or you're somehow unfairly disadvantaged, but you are unfairly advantaged everywhere else in your life. So it's just, uh, it's just a slight tilt of the playing field a little less in your favor, um,

which I'm okay with. I can I can sleep easy at night knowing that, knowing that if you graduated from Stanford you're going to be fine. I'm not worried about you. And we just heard Mitch laughing there, But you can tell just how carefully and deliberately Mitch has been choosing his words through this whole interview. His face was flushed. You could really tell that he was nervous. And I don't blame him here. We are shoving a mic in his face asking him to talk about gender and race

and all these other things that are so touchy. The things going on in my mind are I need to be careful about this. I know that people are going to look at me and say, you're just some white dude rattling off about diversity, but you have no idea what you're talking about. That may be true. I may not know what I'm talking about, but I want to get that conversation going so that I can learn, so that the rest of our team can learn, and so

that um we do better moving forward. We're basically just saying, you know, Allen, I really can't remember the last time I was this nervous trying to come up with the most delicate way to pose these questions. Me too, and Aki. You and I are both women of color, you're also gay. It really makes you think back to every time you've ever been offered a new job. Yeah, and I guess until now this has all been theoretical. But when we went in to interview the Penny team, they were in

the final stages with one candidate. They were talking to a woman and she's of Indian descent. While we were in the Penny office, we got the team altogether in a room and asked them what they thought of her. Yeah, they all thought she would work well with the team, but she lacks some techical experience. Specifically, she wasn't fluent in the main programming language that Penny is written in. On top of that, the company was about to enter

a really busy period. Great culture fit. It's somebody that we would all gladly have in the room working with us, because she's articulate and well thought out, and it is very responsive to feedback. How do you weigh that with the fact that she has no experience shipping production Ruby code, which is the language that we write in UM, but seems to have the aptitude to pick that up quickly. Well,

the answer is we don't know, so ACKI. When we visited Mention his team, everything that they were saying seemed pretty reasonable to us. Yeah, I thought he was a really thoughtful guy. I was just genuinely impressed. But we're not experts on this either. So we outlined Mitch's philosophy and tactics with my Von Hutchinson, a former labor lawyer who is now a concip Bolton helping smaller startups on diversity and inclusion. You get an A for enthusiasm. Mitch

for this letter grade, I would give him a beat. Um. I think that he's doing some of the right things. Um, he's taking a couple of risks, but he could take bigger risks. I think that he could definitely educate theself a little bit more. Just come through the resources and see what's out there. My Van said that in the long term, Penny should build relationships with organizations that are trying to bring more underrepresented groups into tech host dinners

and meetups and that kind of thing. But she also gave Mitch some practical advice for right now, like put your pledge to diversity on your company's landing page, not just on your job spage. Consider bringing in an expert to help guide you instead of trying to figure it out for yourself. And when you hire minority candidates, don't expect them to do the work of recruiting diverse candidates for you. I'm real happy there are guys out here like Mitch. I think, Um, sometimes we see guys like

Mitch don't stay like Mitch for very long. I think it's going to be in the next few years it's going to be really hard to hold those values and not to succumb to the temptations that are going to be abound in the industry when it comes to making the final call on who to hire. My Vaughan said, Mitch is taking the right approach by focusing on the different perspectives that a candidate would bring to Penny. I don't think that you should hire someone just because they're

black or just because they're a woman. That will fill a short term goal, but that's not going to pay off in the long run. And I feel like so often we we equate identity with experience and it's not the same thing, although sometimes they're tied, right, So I think if you can figure out a way to really capture that, to capture the experience part of the identity as opposed to just the identity in a vacuum, like that's when you're kind of like more set up for

a six US, Which brings us to our climax. Did Mitch, Alexandrew, and Jonathan hire the female programmer? We followed up with them in late November, and even though they were approaching a busy time, they decided to give her an offer. Her name's Vertica Shrivastav, and we met her just a few days after she accepted Penny's offer. She told us that as she's met with all these different companies, she

knew she was likely going to be an outlier. I made it a point to ask Um how many female engineers they had, and after I started asking, I realized it made people uncomfortable. I didn't mean I didn't mean it as like a point of superiority. I just wanted to know how many female engineers because it would affect me as someone joining their team. And it made people uncomfortable. UM. They kind of be like, you know, well we had this engineer. She left UM, but she didn't sense that

same discomfort at Penny. I had asked him a question UM, saying that companies always asked me why am I interested in them? I think it's only fair for me to ask UM, why are you interested in me? And I like that They didn't like tiptoe around the fact that

I'm a female engineer. They're like, diversity is something that's really important to us, and you're clearly different because you're female, and then also listed like other things that were a little different about me than I guess the average software engineer. So like that. They're honest about that, and they're not trying to just because I'm a girl got out of the team, like they saw something more in me other than just that I'm a female. Fortica starts this week,

but Mitch's work isn't over. Wi Bond, the diversity consultant, told us that it's not going to be enough to just hire candidates with minority backgrounds. The hardest part is making sure that the new hire feels like a real and necessary part of a team with challenging work, but

also the right amount of support. It's a difficult balance, Mitch just success in the long term ultimately depends on whether Vertica stays and thrives at Penny and down the road, whether the different people Mitch keeps hiring will make the app more useful and enjoyable to everyone, not just people in the Silicon Valley bubble. Okay, silent, it is June now because birth con. She's been good. She's still at Penny.

I talked to her and Mitch this week and asked her, you know, what her experience was like, and I was surprised. She told me, you know, the first um part of her time there, she felt actually pretty uncomfortable, pretty because she was the only woman there. Yeah, and I think because her engineering background was different. I think she just

you know, she didn't have a background in fintech. Uh. But she told me she was really touched by how much the company really tried to make sure she understood they felt she belonged with them, she was part of

the team, that kind of thing. So, you know, for example, they eat lunch together every day, and she said that even though the conversation could sometimes move to topics that she wasn't that interested in, she noticed that at different points, you know, different coworkers of hers would notice and try to move the conversation back to something that we could that they could all participate in. So they made a

real effort. Yeah, and she felt like, you know, they were the ones who were really pushing the message like, yes, you're part of the team. And if anything, she said, she was the one who was nervous about it or or unsure that that was that that was the correct thing to do. And she also said, you know, Mitch made some changes to his leadership style to accommodate her as well, Like she had told him at one point a few months in that you know, he's really excitable.

He really he talks fast and things out loud. He was really outgoing. Yeah, and she said he you know, she told him at one point, you know, when people speak loudly, it makes me feel like there's not enough space for me to give my ideas, or it makes me,

you know, sort of pull back. And she said she noticed Mitch tried really hard to speak more softly when he was talking with her, and even though she was a little embarrassed that that change had to be made and had to be asked for, she was grateful that it was something that people really put effort into changing so that she could work there as well as everyone else.

One of the things that Mitch talked about in our original episode was that hiring for diversity is not just the morally right thing to do, it's also a good business decision. And I'm wondering if hiring Vertica was a good ended up being a good business decision for him. I think he would agree, He said, for example, you know, she would have prospective and ideas that he would have

never come up with him self. So he cited this time when they were talking about checking accounts and saving accounts, and he and the other guys had sort of assumed most people knew the difference between these two Rota chimed in and said, you know, actually I only recently learned the difference between these accounts. Maybe we should include an explanation for our users, and they did, and um, a lot of users clicked on, you know, wanting to know more.

And so he was shown, you know, her perspective was actually correct. They had made an assumption about their users that turned out not to be so true. And so I think he was really grateful that having people just with a different background, a different experience, which show small things like that that could still be really important to

how someone uses their product. It's been a year and a half since we first aired that episode, and a lot has happened since then in Silicon Valley and also other industries too, about the way we think about women in the workplace. I'm wondering if he sensed if Mitch had changed his thinking at all about the way he thinks about diversity. I think he probably stands in about the same position. You know, he's pretty committed to the

ways that he views it. I think it's, you know, speaking as a reporter, it's been interesting to view how both you know, the me too conversation has led us to hear a lot more stories about how harassment in the workplace holds women back or affects the workplace dynamics. And then we also I think I've been getting more people speaking up on the other side, white men who say that they are starting to be discriminated against by

over zealous diversity efforts, like the former Google engineer. Yeah, James damm or Is is really sort of a big player in this. And it's just been kind of crazy to watch these two conversations come out at once and and see how those are playing out. So I think if you're a CEO today, you're weighing a lot of different questions about how to approach diversity and inclusion at your company. So do you think there's anything that those CEOs can learn from a dis experience. I think just

that diversity and inclusion is a lot of work. Uh, Mitch put in a lot of work to hire EVERTHCA and a lot of work afterward to make sure she felt comfortable and included. He told me that he feels like it would have saved him time, you know, if he was doing more hiring in the future, now that they have a better idea of this process, now that there already is a woman at the company. Yeah, and that they know, you know, they've made some changes to

their process to help make it more accessible to different groups. Uh. But Penny was actually acquired in March by Credit Karma, so they won't be doing that same kind of hiring anymore. Uh. Yeah, the whole team went over to start working at Credit Karma, including Brethica, including birtha um and so now they're developing a chat functionality for Credit Karma, which is a much bigger company. So he's in a little bit of a different position now he's not CEO of his own company.

But I think he definitely feels like the effort he put in for that first hiring process is something that he would have been able to reuse if he'd been doing it again in the future. Well, best of luck to Mention and his team, and thanks for that update. Ellen. Yeah, you're welcome, and that's it for this week's episode of Decrypted. Thanks for listening. Do you have a story about diversity in Silicon Valley? You can send us a message at Decrypted at Bloomberg dot net or I'm on Twitter at

Ellen Hewitt and I'm at aki Eto seven. If you enjoy listening to Decrypted, please recommend us to your friends, and if you have it already, take a moment to write and review our show. This really helps us find new listeners. The original episode was produced by Pia get Cary, Liz Smith and Magnus Hendrickson. And thanks to topor Foreheads for his help on this update. Francesco Leavie is the head of Bloomberg Podcasts. We'll see you next week. Table of the Abacus Robert, the last of Man of Ragus