Redfin, a Seattle tech-focused real estate firm that is preparing for a $100-million IPO, has enlisted the help of some venture capitalist friends in a campaign to diversify startup boards of directors.
Realtors earn salaries at Redfin — a departure from the commission-based compensation of traditional Realtors. Redfin charges a 1.5 percent listing fee for home sellers, saving home buyers commission fees on the traditional 3 percent commission. A portion of home buyers’ commission is refunded.
For its #DiverseFromTheStart campaign, Redfin enlisted big names in venture capital—DFJ, Greylock Partners, Madrona Venture Group, and Pioneer Square Labs—and Boardspan, a company providing software and advisory services for boards of directors, according to Xconomy.
“The venture firms will encourage new portfolio companies to recruit an independent, diverse board member within two years of institutional funding,” said Redfin CEO Glenn Kelman and chief technology officer Bridget Frey in a post outlining the initiative.
Like many high-growth, venture-backed companies, Redfin loses money. Annual revenue in 2016 grew 43 percent to $267.2 million, but the company recorded a net loss of $22.5 million, down from a $30.2 million net loss in 2015, Xconomy reported. After nearly 15 years in business, the company’s accumulated deficit at the end of the first quarter was $613.3 million, Redfin disclosed in its S-1 filing with the Securities and Exchange Commission.
Redfin, which recently filed for its IPO, hopes that getting more women in leadership roles from a startup’s inception will help companies avoid some of the cultural catastrophes that have beset some much larger companies already at scale, GeekWire reported.
“Without a change to the traditions of how startup boards are formed, we would expect VC-only boards to remain predominantly male for the foreseeable future,” Kelman and Frey said in a blog post announcing the campaign:
Redfin is joining forces with venture capital firms in Seattle and Silicon Valley that are committing to diversify high-technology company boards. The venture firms will encourage new portfolio companies to recruit an independent, diverse board member within two years of institutional funding.
We’ve already reported on a tripling in the rate of female board appointments to companies that have recently gone public … but there has been absolutely no change in the diversity of startup boards over the last year. And the problem, as we now see with large-scale companies attempting to become more inclusive toward women and people of color, is that a company’s culture is often formed by its first 30 people.
Recruiting a more diverse board at an early stage may be the last item on an entrepreneur’s list of priorities, but our experience building Redfin’s board … is that it puts the company on a different course, able to compete for a much broader range of talent over years and even decades … Redfin’s CEO, Glenn wishes we had recruited more women to our board sooner and, as we add board members, he is committed to bringing on more people of color…
The problem is that startup boards consist almost entirely of the investors who are backing the company. And these investors are almost entirely male.
A growing chorus of female voices in technology are going public with stories of harassment and discrimination in the male-dominated world of tech and tech funding, forcing the community to face realities about its inclusion problem, GeekWire reported. This has contributed to a tide of venture capitalists resigning over discrimination and harassment claims.
Penguin Random House stopped plans to publish a book co-written by venture capitalist John Doerr and BetterWorks Systems Inc. CEO Kris Duggan after Duggan was sued for sexual harassment and assault, Bloomberg reported today. Beatrice Kim, a former employee at BetterWorks, sued Duggan and two other executives alleging they created a hostile workplace for women.
Dave McClure resigned as a general partner of the 500 Startups seed investment group he founded in 2010, Axios reported on July 3. This followed accusations by several women of inappropriate behavior. In a July 1 blog post, McLure confessed, “I’m a creep. I’m sorry.”
This month, Ignition Partners Managing Partner Frank Artale resigned due to reports of “misconduct” involving at least one female employee, GeekWire reported.
When Binary Capital partner Justin Caldbeck made unwanted advances toward women who were seeking startup funding or advice — and they went public about it — it rocked the venture capital and startup world, Fortune reported. Caldbeck resigned.
Just a few weeks earlier, Uber’s internal investigation into allegations of sexual harassment led to CEO Travis Kalanick resigning and 20 of his former colleagues were fired.
This kind of behavior isn’t new, Fortune reported. What’s new is women are willing to name names, and, just as important, attach their own names to their accusations.
The good news is that the top-25 VC firms (based on number of deals) are getting more diverse as they bring on new partners, at least in terms of gender diversity, Redfin’s Frey and Kelman said. In a survey of 255 venture-capital appointments at these firms over the past four years, Redfin found that the female-to-male ratio of newly appointed partners (or directors, at firms without partners) has risen from 0.31 in 2013 to 0.47 in 2016.
