Lesson From Uber: The People Who Fund Inequality Need To Be Held Accountable

Written by Vivek Wadhwa

Global entrepreneurs still worship Silicon Valley’s idols and aspire to be like them.

The downfall of Travis Kalanick should teach them that they need better role models. They need to stop looking up to the spoiled brats that lead some of the Valley’s most hyped companies and the investors that fund their misbehavior.

Kalanick’s ouster from Uber is literally watershed for Silicon Valley, something that is shaking up its venture capitalists and entrepreneurs.

For too long, its elite have gotten away with sexism, ageism, and lapses in ethics. Its cult of the entrepreneur idolized arrogant male founders who plundered money and sank companies. The more money they raised and lost, the higher the valuations their companies received and the more respect they gained. Corporate governance and social responsibility were treated as foreign concepts.

Uber is not the worst company in the tech industry; it was just the most visible and the one that got caught. Its investors have been humiliated for having their heads in the sand. This is because it has long been clear that Uber needs management that is more responsible.

It started in 2013 when complaints about male drivers assaulting female passengers met with denials of responsibility by the company. Then followed sexist “boober” comments by Kalanick, ads in France that pitched attractive female drivers, suggestions by an Uber executive that he would dig up dirt on a journalist, and then the rape of a woman passenger in New Delhi partly caused by a lax screening of drivers.

Through all of this, Uber investors supported the company and ignored the ethical lapses. All that seemed to matter was that valuations were rising and business expanding. When it was revealed that an Uber executive had secured a copy of the medical report of the Delhi rape victim and shared it with Travis Kalanick and they both wanted to discredit her, they should have been fired.

Yet things only reached a boiling point when allegations by a woman employee about rampant sexism and sexual assault at Uber headquarters went viral. And when a board member illustrated the root of the problem by making a sexist remark at a meeting about eliminating sexism. The board was finally compelled to do something it should have done years ago: force Kalanick out and clean up its own act.

To be fair, there is outrage about this in Silicon Valley. And there are many technology companies that are, in this regard, exemplary, including Salesforce, Microsoft, and Facebook.

They are going to extremes to correct problems that they found to exist in their ranks. I know from discussions with Microsoft CEO Satya Nadella how hard he has been working towards diversity.

The downfall of Kalanick presents valuable lessons for global entrepreneurs, not just those in Silicon Valley. With the help of Arianna Huffington, Uber is working on reforming itself. And if Uber can do it, so can the U.S.

To begin with, the people who fund the offenders need to be held accountable and the boards need to be made diverse.

The Diana Project at Babson College documented that as of 2014, 85 percent of all U.S. venture capital–funded businesses had no women on the executive team, and only 2.7 percent had a woman CEO. The number of women partners in U.S. venture-capital firms had also declined to 6 percent from 10 percent in 1999.

And then there is the problem of age discrimination.

In most industries in the U.S., discriminating on the basis of gender, race, or age would be considered illegal. Yet in the tech industry, VCs brag about their “pattern recognition” capabilities.

They say they can recognize a successful entrepreneur when they see one. The pattern always resembles Mark Zuckerberg, Bill Gates, Jeff Bezos, or them: a white nerdy male. Women, blacks, and Latinos need not apply. VCs openly admit that they only fund young entrepreneurs; they claim that older people can’t innovate.

Women, blacks, and Latinos need not apply. VCs openly admit that they only fund young entrepreneurs; they claim that older people can’t innovate.

The money that VCs invest is not their own. It is raised from pension funds, universities, and state governments. VC firms must be required to provide public disclosures about the diversity of the companies they invest in — including the gender and age of the executives. They must have a diverse set of investment partners, without sugarcoating the numbers using inflated titles for junior associates.

All tech companies must take heed of the report that was put together by former Attorney General Eric Holder for Uber. There are obvious procedures to employ in making diversity a priority: such things as blinded résumé reviews, interviewing at least one woman and one minority candidate for each open position, limiting alcohol at work events and in the office, and banning employee–manager relationships.

This article was published with the permission of Vivek Wadhwa. This is a version of an article that appeared in India’s Economic Times.

Sign up for the Moguldom newsletter — the most compelling business news you need to know about reversing inequality in tech, delivered straight to your inbox.


About Vivek Wadhwa
Silicon Valley-based Vivek Wadhwa researches exponentially advancing technologies that are going to change the world. He teaches entrepreneurship and public policy at Stanford, Duke, and Emory universities, and is vice president of innovation and research at Singularity University. He is an advisor to governments, mentors entrepreneurs, and writes columns for The Washington Post, Bloomberg BusinessWeek, and Prism Magazine (American Society of Engineering Education.) Wadhwa founded two software companies before joining academia in 2005. He was recognized as an Outstanding American by Choice by the U.S. government in 2012 for his commitment to "common civic values that unite us as Americans." He was named a Top 100 Global Thinker in 2012 by Foreign Policy Magazine. He is the author of "The Immigrant Exodus," "Innovating Women," and "The Driver in the Driverless Car: How Our Technology Choices Will Create the Future."

View Comments