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Be open to seeing people different than yourself.
I SEE YOU

The simple shift in mindset that can help Silicon Valley advance equality

By Leah Fessler

Among the more contentious topics in Silicon Valley is an investment practice called pattern matching. It’s what it sounds like: If you’re a venture capitalist, find out which human traits, corporate makeups, and financial projections have proven most successful in tech, then go find founders and companies that replicate them.

There’s strong reason to believe that pattern matching results in institutional bias against founders who are women, people of color, or any profile besides that of a nerdy white dude in a hoodie, who just dropped out of a computer science program at Harvard or Stanford. If a black Mark Zuckerberg existed, pattern matching might drive diversity. But that’s not our reality yet—perhaps because black founders account for just 1% of VC funding received, and less than 3% of full-time employees on VC firms’ investment teams are black or hispanic.

Some investors are on a mission to reverse the homogenous and arguably racist outcomes that pattern matching can promote. Leading the charge is Silicon Valley’s most improbable VC: Arlan Hamilton, founder and CEO of Backstage Capital, a seed-stage VC fund investing only in companies with at least one founder who is a woman, person of color, or LGBTQ person.

Having risen from poverty to create her own VC fund, with no formal education or industry connections, and as a black, queer woman, Hamilton defies all Silicon Valley norms. She’s doing so successfully: Backstage has invested in 100 companies, with a general fund managing over $5 million. The firm is also launching a $36 million fund investing only in black female founders, $1 million at a time, which Hamilton calls “an it’s about damn time fund.” In 2017, women founders received just 2.7% of VC funds, and from 2012-2014 women of color just 0.2%.

Hamilton and Backstage were the subject of Gimlet Media’s newest season of the podcast Startup, which launched in May. At last weekend’s GimletFest, Hamilton appeared with Amy Standen, the Gimlet reporter who documented Hamilton and Backstage for six months. Amidst a fascinating, sometimes contentious discussion, moderator Shereen Marisol asked Hamilton whether she adopts pattern matching at her own fund.

“I do pattern match,” said Hamilton, “but instead of pattern matching for nerdy white guys in hoodies, I pattern match for myself.” By this, Hamilton doesn’t mean she’s pattern matching only for black, queer women, or people who’ve bootstrapped their way out of low socioeconomic classes. Instead, she clarified that she’s pattern matching for founders who share her grit and determination.

“So you’re looking for people who remind you of yourself,” Marisol said.

“No, I wouldn’t say I’m looking for them,” Hamilton replied. “I’m open to seeing them.”

It sounds like nuance, but these are in fact wildly different approaches. When you’re looking for diverse founders, you’re scouting from a pedestal. When you’re open to seeing diverse founders, you’re walking through life and work with your blinders peeled back; you’re engaging with different kinds of founders, regardless of demographics, at eye-level, checking your own biases rather than assuming that their backgrounds disqualify them or otherwise tell you anything about their aptitude or promise as entrepreneurs.

Hamilton similarly draws a distinction between investing in “underestimated founders” and “unrepresented minorities.” The first focuses on untapped talents and speaks to their financial potential, while the latter focuses on arbitrary benchmarks that may make the room appear more diverse, but won’t necessarily dismantle the underlying biases that made it so overwhelmingly white, straight, and male in the first place.