Editor’s note: Dr. Paul Judge is a serial entrepreneur and investor. He is chief research officer at Barracuda Networks, co-founder and Chairman of Pindrop and Limitless Smart Shot, and previously led three companies to successful exits. Follow him on Twitter.
A few months ago Facebook’s initial public offering became the largest tech IPO in history initially valuing the company at over $100 billion. More than 70 percent of African Americans online have used Facebook or other social networks[i]; however there were none on stage in the cast of newly minted billionaires ringing the NASDAQ bell. Many have raised the question of who is or will be the black Mark Zuckerberg? That question translates to who are the successful black technology entrepreneurs?
For the last year, there has been great debate about blacks in Silicon Valley’s technology industry. This argument was fueled by a CNN program called Blacks in America: The New Promised Land — Silicon Valley.
The program showed Michael Arrington, the founder of TechCrunch and an investor, stating that he did not know any black entrepreneurs. In response, some people called him a racist, others said Silicon Valley is racist, and others concluded there are no qualified black technology entrepreneurs.
I sat on the sidelines until now reading article after article written on this topic, many of which were fueled by anger or lacking relevant insight.
I am taking a break from building companies to comment. I am a successful technology entrepreneur. And you might have noticed that I am black. I never previously broadcast that I’m a “black entrepreneur,” as my focus has been on success and I do not find my skin color relevant to the source code I write or to the purchase orders I receive.
It is, however, difficult to sit by and watch misinformed views on the intersection of two things that I know well: 1. building technology companies and 2. being black. Misinformation and improper conclusions will only make the situation worse, which is counter to the goals of people on both sides of the debate.
Here I share three opinions on the ongoing debate about blacks in Silicon Valley and then three suggestions on how to improve the state of blacks in Silicon Valley.
1. Underrepresentation does not equal racism
One uninformed comment about black entrepreneurs started the debate, which grew into a discussion of black underrepresentation in Silicon Valley.
I’m going to state what should be obvious. Underrepresentation does not equal racism. Nor does underrepresentation equal lack of ability. A group can be underrepresented for various reasons, including lack of interest, lack of knowledge, and lack of access.[ii]
If underrepresentation equals racism then the NBA is racist against whites because only 17 percent of the NBA players are white even though whites make up over 70 percent of the U.S. population.[iii] Even with this underrepresentation, it is understood that the NBA is not racist against white men.
The white underrepresentation also does not mean lack of ability. There are many examples such as Steve Nash, Dirk Nowitzki, Larry Bird and Jerry West to quickly dispel that notion. My point is that there are many contributing factors to underrepresentation instead of blaming racism as the broad explanation. This is a critical point because those other factors can be affected by individuals interested in impacting the situation.
2. CNN’s “Blacks in Silicon Valley” was not representative of blacks in Silicon Valley
I appreciate Soledad O’Brien and CNN making the effort to highlight positive images of blacks in America. But, they missed half the story. CNN focused on individuals trying to build companies, not black individuals that have built companies and are living the Silicon Valley dream.
Thus viewers concluded there are no successful blacks in technology and that the TV show’s entrepreneurs were the first blacks to try to build tech companies. Wrong.
That is like doing a show on blacks in the comedy business by visiting a random local amateur night. Certainly you will find talented hardworking people, but you will miss the entire spectrum of black comedians that have been successful over the years and continue to be the leaders in their field such as Eddie Murphy, Chris Rock, and Whoopi Goldberg.
I applaud and support the goals of NewME Accelerator but the TV show was an incomplete story. The actual story of African Americans in Silicon Valley starts with pioneers like Ken Coleman and Roy Clay. It includes executives such as John Thompson, CEO of Virtual Instruments and ex-CEO of Symantec; David Drummond, chief legal officer of Google; and Shellye Aarchambeau, CEO of MetricStream. It also includes African Americans at successful startups such as Tristan Walker, formerly director of business development at Foursquare and now entrepreneur-in-residence at Andreessen Horowitz, and Michael Seibel, founder and CEO of Socialcam.com. It involves African American venture capital investors such as Charles Hudson of SoftTech VC and Lisa Lambert of Intel Capital.
3. Greed trumps race
During the “Blacks in America” debate, people screamed “racist” as if they were screaming “thief,” but the reality is that being a racist is not illegal. I appreciate civil rights leaders who fought for the opportunities minorities and women now have. My point is that in many cases people spend too much energy complaining that the playing field is not completely level instead of spending that energy playing on the field and leveraging the opportunities. Oprah Winfrey offered guidance when she said, “Excellence is the best deterrent to racism or sexism.”
For example, instead of piling onto the attacks on Arrington, I opted instead to introduce him to a black entrepreneur: me. I wrote a friendly note and introduced a hot startup that I would like to pitch to his investment group. That did not result in a meeting but most investors are quite busy so rather than blame that on race and lose focus, we pressed on and raised an impressive round.
“Greed trumps race,” wisely remarked Ben Horowitz recently during a panel on diversity in Silicon Valley hosted by his firm, Andreessen Horowitz. Not only did I borrow it for the title of this article, but I have also witnessed this phenomenon over the years. Kanye West put it another way, “Heard Yeezy was racist, well, I guess that’s on one basis, I only like green faces.”
1. Risk equals reward
In tech businesses, high risk is balanced by high potential. If your idea attracts a small niche and they pay little for it, it will not scale. Do not focus on how your idea can make a million dollars; instead focus on how it can make a million dollars a day.
Choose a problem that is sufficiently big but that you can actually tackle. One mistake that I see people make is choosing a problem that is so big that they have no reasonable path to making it happen. Break a big idea into stages. Mark Zuckerberg started Facebook with a simple social fun website, turned it into a destination for Harvard — then other schools — and then a global social network.
In the Valley it is well understood that ideas are worthless and that execution is what builds value. It is what separates the haves from the have-nots. Steve Jobs said, “I’m convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance.” I had to take a position well below my capabilities to get in the door as one of the first 10 employees at CipherTrust. Within a year I designed the flagship product and was responsible for the engineering, product management and R&D divisions. Then I became chief technology officer and continued to help lead our company to a successful $270 million acquisition.
2. Increase the pipeline
While speaking to a second grade class at a predominantly black elementary school, I asked students what they wanted to be as adults. They said football player, basketball player, rapper, and music producer. Only one kid said anything in sciences, stating that he wants to make video games.
The reasoning behind such skewed ambitions begins at home. That is where kids consume images of fame and fast money and see adults recite rap lyrics and fathers wearing jerseys bearing other men’s names. Many blacks can name the last three platinum rap albums and basketball’s “Big Three,” but not three black scientists. And it’s not just about money because more times than not the three black scientists have a higher net worth than the three rappers or athletes. In extreme cases, the amount of wealth created by just one founder of one technology company can surpass the salary of an entire sports league. For example, Facebook’s Zuckerberg is worth about $12 billion from the company that he started in 2004. This means that he’s made about the same as the total salary of every NBA player on every team for every year from 2004 to 2012.
To follow in the footsteps of Silicon Valley greats requires a serious focus on the sciences. Most of the greats in Silicon Valley were technologists such as Steve Jobs, Bill Gates, Larry Page, Sergey Brin, Andy Grove, and Jeff Bezos. This does not just happen by putting on a suit and showing up at a VC office. This happens after years of study either independently or in school. There are no shortcuts. It is true that this is a high-growth high-risk business and success can happen relatively quickly, but it does not happen without great effort.
Blacks comprise 13.6 percent of the U.S. population, but only earn 9.8 percent of bachelor degrees in computer science (CS), 4.7 percent of CS masters degrees and 1.8 percent of CS doctoral degrees.[iv] We must increase black interest in, and pursuit of, CS and other science, technology, engineering and math (STEM) educations. Otherwise the talk about boosting black representation in high tech is pointless. As Peter Drucker once said, “The best way to predict the future is to create it.”
3. Silicon Valley is about creating something from nothing
Blacks are a creative people, and writing software is an art. Its creation is a near-pure translation of thought into value. Raw materials, land or money, which were historically difficult for African Americans to acquire, are not needed to write software. Open source and software-as-a-service create an environment that allows even more efficient creation of products and companies.
The CNN program overstressed acquiring funding instead of focusing on what really matters: building product, gaining traction and achieving revenue. Venture capital and angel investment is a means to an end, not the final destination. From there you have to continue to build significant value in order to deliver impressive returns to your investors and other shareholders.
Information technology is polarizing the workforce into high-skill, high-wage and low-skill, low-wage sectors, and fuels the creation of wealth unlike anything that the world has seen in decades. The fastest-growing young firms (3-5 years old) account for less than 1 percent of all companies but generate 10 percent of new jobs annually.[v] Venture-backed companies annually generate revenue equal to 21 percent of the U.S. GDP.[vi]
The software business allows people to start with nothing yet finish with everything. There are hundreds of examples of this. One study showed that immigrants founded 25 percent of U.S. venture-backed public companies even though they only represent 8.7 percent of the U.S. population.[vii] The background image on my phone is a photo of a bank advertisement that says “two-thirds of the world’s billionaires made their fortunes from scratch.”