Tech’s DEI backlash is here

“Should I go public with the story about the time I was told I can’t be promoted for being a white man?” Shaun Maguire, a partner at Sequoia Capital, tweeted recently.

The responses to his tweet are split between the two factions that have appeared within venture in recent years: those who support diversity, equity and inclusion (DEI) efforts, and those who do not. Wealthy power players like Peter Thiel and Elon Musk have been very outspoken against the premise of DEI, with their thoughts shared and spread widely throughout the ecosystem.

“DEI must DIE. The point was to end discrimination, not replace it with different discrimination,” Musk recently tweeted before responding to himself saying, “‘Diversity, Equity and Inclusion’ are propaganda words for racism, sexism and other -isms. This is just as morally wrong as any other racism and sexism. Changing the target class doesn’t make it right!”

DEI is a framework to help create more conscious workplace initiatives to help marginalized communities. These initiatives include ensuring a firm or company attracts a diverse pool of talent, hires and promotes people without bias, and fosters positive working environments so all individuals can thrive. DEI received a lot of support after the murder of George Floyd back in 2020, but support has waned these past few years.

It is supposed to be an overarching effort aimed at helping all disenfranchised groups, but when it is targeted, it is usually for racial reasons. Since affirmative action in education was overturned this year, founders and investors knew that the industry would find an excuse to go back to how things were, would find an excuse to stall or dismiss the little progress made these past two years. In a sense, they were right, and the decreased DEI support in business and tech has created ripple effects, including the defunding of DEI programs by Big Tech giants Meta and Google.

Sequoia and Maguire did not respond to requests for comment by the time of publication.

Veni Kunche, the founder of Diversify Tech, said back in 2020, she saw a spike in the number of people wanting to work with her company, which helps connect companies to diverse talent pipelines. But come 2022, she saw a complete reversal. “I was honestly confused, as I hadn’t changed anything in how I ran my business,” she said. “Then, I slowly started noticing some patterns.”

Kunche pointed out that when big names like Basecamp and Coinbase enforced “no politics at work” measures to prevent talking about social issues in the office, they were shamed in public but were praised behind closed doors. Meanwhile, she added, DEI budgets were cut, department heads were laid off, and self-proclaimed allies stopped showing support. CNBC reported that DEI-job-related postings declined 44% compared to last year, and Google and Meta made cuts to the employees in charge of recruiting workers from underrepresented backgrounds.

Devon Horace, an angel investor, said a lot of DEI consultants and agencies have started closing their doors. Firms big and small that once pushed for hiring more diverse founders and backing diverse companies have also moved on. “Many have let go of such talent, shifted their responsibilities, and/or stopped supporting them entirely,” Horace said.

It was easy at first to brand this waning support and backlash as a result of the bear market, but Joelle Emerson, a former civil rights lawyer and founder of Paradigm Strategy, feels people’s concerns about DEI have morphed into “more dangerous rhetoric that mischaracterizes what DEI work is and what its goals are.” This implies that “people were getting unfair advantages, when in reality, those founders and investors have faced many barriers to success and are still very underrepresented in their respective positions,” she told TechCrunch+.

Some of these sentiments are playing out in other ways. For example, the American Alliance for Equal Rights sued Fearless Fund earlier this year for running a business grant program aimed solely at Black women, alleging that it was discriminatory. Such lawsuits could have a lasting impact on venture; indeed, founders and investors told TechCrunch+ that the lawsuit has already created an added risk for those looking to focus on diverse communities.

“There are two camps here,” Emerson said. “The first is companies that never really wanted to do DEI, and the legal landscape and economic downturn gave them an excuse for abandoning their efforts. The second is what I am more concerned about: companies that want to build more diverse, equitable and inclusive workplaces but are worried if their efforts could be targeted.”

Framing DEI as its own form of discrimination, as Musk tweeted, is “inaccurate and dangerous framing,” Emerson said, since DEI methods do not give one group advantages at the expense of others. Black founders have never received more than 2% of all venture capital funding, and businesses founded by Black women do not last more than five years. The main benefactors of affirmative action and DEI policies overall are actually white women.

“One of the easiest ways to derail a program designed for equal justice is to target the most vulnerable groups in a society,” Walter Greason, a history professor at Macalester College, told TechCrunch+. “Critics know that there is a historical and contemporary resentment against opportunities for African Americans, [so] making Black people the target of public outrage is a fast way to advance their agenda.”

When implemented well, DEI actually levels the playing field by addressing the needs of all people. But as with any other initiative that aims to have as wide and significant an effect as DEI initiatives do, change is hard to bring about if you’re not using resources wisely and targeting the most important problems first. That requires data and tracking.

Emerson said tracking metrics and data is critical to understanding the gaps one is trying to solve: It’s how a firm would know if there are gaps in hiring, promotions, pay or sentiment, which would indicate if one group of people are having a worse experience than others. Of course, DEI initiatives appear in many forms, but they usually help create better business outcomes, she said.

“I often see people’s misconceptions change when we show them how the work can be measured.”

Greason thinks the backlash against DEI started long before 2022. He said it was popularized by the MAGA movement in 2015. Notably, in 2020, President Donald Trump attempted to ban diversity training among federal workers, including learning about systemic racism.

President Joe Biden has since reversed Trump’s executive order, but this is only emblematic of a deep-rooted tension that goes far beyond tech. DEI backlash is happening in areas from fashion to medical care to academics. The Small Business Administration and the Minority Business Development Agency are also being sued for offering grants to people from “socially or economically disadvantaged” backgrounds.

“When all of us come to understand that our freedom is connected to our efforts to empower each other, we can break these systems of exclusion that have historically crippled human civilization,” Greason said.

That’s going to be hard to pull off, given that the loudest critics in this space are among the wealthiest people in the world. Right now, Greason and Kunche said the only way forward is to speak out openly, creating hope, not fear.

After all, it’s not uncommon to see backlash during fights for progress.

This piece was updated to add more stats about the DEI backlash in tech.