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California mandates VC firms to release investments' diversity information
- Booktrope 3y agoUnderstandable in this context that comments would be very negative about looking at statistics relating to race, gender, national origin, etc. of how investors place money. After all, the start-up world is economics at its most meritocratic (is that a word? well it should be). And any constraints of this kind on how investors place their money is gonna have some downsides, many of which are discussed here, if at times in a somewhat overwrought way. Plus, yes, we've seen pretty nasty issues with affirmative action in other contexts, which we wouldn't want to replicate here. But, alas! the cat is out of the bag as it were. Because there's more than one side to an issue like this. So, when leading VCs and investors determined, companies run by Black women weren't getting very much startup funding at all, they lined up to support The Fearless Fund, a significant, though not exactly huge, capital pool for early funding of ventures started by women of color, which they describe as "bridging the gap" by which they mean, the extremely small number of women of color who ever get funding. Yes, probably it's for what they conceive to be PR reasons, but whatever, I would have thought that the goal being equality of opportunity, and there being no law specifically covering it, that would leave it to the realm of politics and bloviating. But not so! Encourged by the current antipathy of our Supreme Court for anything resembling affirmative action, a conservative legal group has sued, claiming that racial preference of this kind is prohibited. As a former lawyer I would have asked, just what law prohibits discrimination in investing? Because most lawyers up to recently thought, it wasn't covered. But the clever conservative lawyers point to 42 USC 1981, a Reconstruction alway that asserts, all people are entitled to the same right to contract as White people have. (How they talked back then) Now, say, this lawsuit against The Fearless Fund succeeds. Well, hmm, that would mean every VC investment decision is subject to section 1981, and yes, it would give non-white people the right to sue if they had evidence of bias in the funding decision. In other words, if it actually succeeds, this lawsuit charging discrimination against The Fearless fund, a rather extreme effort to prohibit totally voluntary efforts by some big time investors to remediate a pretty obvious problem of a minority group's lack of access to capital, wow! suddenly,a pretty major new legal issue for VCs and other private capital enterprises to deal with, in every investment decision they make. And if ever there was a deep pocket for lawyers to pursue...I drop a veil over the scene. So, just to add this to the discussion, this conservative attack on The Fearless Fund seems to me a far more dangerous to VCs than this California law. Because, yes, folks, there are issues with discrimination in how investment firms hand out capital. I've observed some nasty instances first hand. Please don't live in a dream world where you think it doesn't happen. (I personally think, due to the extreme polarization of most people's beliefs on this subject, it's rather less than most liberals think and rather more than most conservatives do.) Nevertheless from my perspective, another set of legal rights is pretty clearly not the best way to address it. Because, if The Fearless Fund can be challenged as discriminatory, so can any other fund, that's how it works (well more or less, anyway - nobody who knows anything about it would accuse our legal system of being excessively consistent.) And that's a far greater threat to investors than a somewhat voluntary reporting requirement for VCs.
- deleted 3y ago[deleted]
- starbase 3y agoThere's nothing VCs and founders like more than an annual discussion of their sexual preferences.
- cjdrake 3y agoCollection of information about "sexual orientation" seems like a textbook HR violation. How is anybody supposed to comply with this?
- wilg 3y agoMaybe people are just allowed to decline to state it?
- kevingadd 3y agoEvery time I've been asked to fill out a demographic survey at work, or during a job application, there's always an option to decline to provide the information. I would expect the same to be true here. If it weren't I don't see how they would win a court case to defend it.
- JumpCrisscross 3y ago> nothing VCs and founders like more than an annual discussion of their sexual preferences Which is then reported to and retained by the state! Why the fuck would we maintain centralised databases of minorities?! What happens if Mississippi or Florida copy this precedent?
- SenAnder 3y agoWe've come a long way since the Civil Rights Act of 1964. When it was debated, the great liberal Democrat Hubert H. Humphrey himself stood on the Senate floor during debate on the measure and declared: “I will start eating the pages” of the law if anyone can find a clause that calls for quotas, preferences or racial balance in jobs or education - https://www.latimes.com/archives/la-xpm-1995-02-20-mn-34094-story.html https://www.latimes.com/archives/la-xpm-1995-02-20-mn-34094-... Of course, there are still no quotas. Just that, if you don't meet the non-existent quotas, that is evidence for the illegal discrimination prosecution against you.
- outlace 3y agoIt looks like this is just a reporting requirement and no quotas are mandated. I imagine the intent is to indirectly push companies to improve diversity through embarrassment by public numbers. However, these are private individuals funding private ventures with private money, as far as I know, so why the government should be involved at all in that process other than taxation isn't clear to me.
- Ferret7446 3y agoI'll invoke Godwin given the obvious connection, the Jews "only" had to wear stars. Similar situations happen again, and again, and again throughout history, and those that forget history...
- pauldenton 3y agoMore direct comparison would be Jews were excluded from Colleges for the same reason Asians are excluded today https://en.wikipedia.org/wiki/Universities_and_antisemitism https://en.wikipedia.org/wiki/Universities_and_antisemitism Fears of overrepresentation. Doing too well on the grading standards
- SenAnder 3y agoThis is one step in a long march. If you can remember this march, the next step is obvious. The Civil Rights Act didn't directly ban using IQ tests for hiring/promotions, yet that's how the courts eventually interpreted it [1]. More recently, a test specifically made to evaluate teachers was declared racist and discriminatory [2], mostly based on disparate pass rates, but in part also on requiring some "cultural knowledge". Ironic, since imparting culture is a large part of a teacher's job - outside of STEM, nearly all knowledge is culturally biased (i.e. there is greater emphasis on US history in the US than in Poland). [1] https://en.wikipedia.org/wiki/Griggs_v._Duke_Power_Co https://en.wikipedia.org/wiki/Griggs_v._Duke_Power_Co. [2] https://web.archive.org/web/20220714122944/https://www.wsj.com/articles/black-latino-teachers-collecting-835-million-in-discrimination-lawsuit-11657800508 https://web.archive.org/web/20220714122944/https://www.wsj.c...
- threatofrain 3y ago> (i) The founding team member’s decision to disclose their demographic information is voluntary. > (ii) No adverse action will be taken against the founding team member if they decline to participate in the survey. > (iii) The aggregate data collected for each demographic category will be reported to the department. https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240SB54 https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm...
- JumpCrisscross 3y agoSo a New York VC with one Californian investment would be required under California law to report on their Massachusetts-based founders? Or is it just in respect of their Californian nexus? Also, why wouldn’t they specify a penalty? Why punt that to California’s already-burdened courts?
- swatcoder 3y ago> Also, why wouldn’t they specify a penalty? Why punt that to California’s already-burdened courts? The current law appears to be about collecting data to help understand the state of the industry and its trends. They’re probably hoping that enough data will come in without a stink that they don’t have to chase down any holdouts at all. Explicitly specifying a penalty means more political negotiating and more analysis about what statutory penalty structure suits the different potential offenders. If you’re hoping you don’t have to actively enforce the law at all, you can skip that.
- kyleyeats 3y agovictimhood ideology + government = hate ideology
- kevingadd 3y agoVictims are an actual thing that exist, you realize
- deleted 3y ago[deleted]
- wellthisisgreat 3y agoso is victimhood how do you balance one with another? just take the overreach as cost of doing good deeds improving real victims lives?
- kevingadd 3y agoThat's how law enforcement generally works in the US, yes. We accept the risk that some innocent people will be punished in order to enforce law, and put safeguards in place to try and prevent it. You can disagree with that of course.
- pauldenton 3y agoSure, but victimhood is selectively enforced. https://www.washingtonpost.com/news/worldviews/wp/2016/07/07/canadian-judge-punching-a-caucasian-and-yelling-i-hate-white-people-isnt-a-hate-crime/ https://www.washingtonpost.com/news/worldviews/wp/2016/07/07... There are protected groups and unprotected groups. When people believe that sexism is only something men do and racism is only something white people do, you're going to get unequal treatment under the law. Law not being as blind as people wish. It turns into the law being applied differently when it comes to holding classified documents depending on if you have a (D) or an (R) after your name
- deleted 3y ago[deleted]
- omscs99 3y agoMeanwhile someone joined my team a couple months back and is getting paid to literally do nothing and take sick days every other day I don’t need to say anything more about them given the context of this comment
- fineIllregister 3y agohttps://xkcd.com/385/ https://xkcd.com/385/ You are describing many people I've met, not one of them would be counted in these diversity reports.
- brocklobsta 3y agoI don't like how diversity seems to default to racial diversity. The diversity I like is more perspective based. Someone willing to challenge my assumptions, constraints, and train of thought, not just a different color of skin.
- pauldenton 3y agoIn the age of Experts, Diversity of Thought is Misinformation we need experts to clarify and dispel
- Pannoniae 3y agoYes, and we don't have much diversity of thought. There is another story on the frontpage now - preaching the benefits of technological conformism by saying everyone should use the popular and boring technology of the day. Generally, the whole profession is degrading to a state where any kind of innovation is shunned upon and the only "innovation" is rehashing the same concepts in a slightly different and slightly more complicated way. There are not too many "let's build a website in D" companies or anything which is not utterly boring, inoffensive, bland and lacking any creativity.
- digging 3y agoThis is a terrible misrepresentation of the post regarding the use of stable/boring tech.
- Pannoniae 3y agoHow come? It might be a bit simplistic but I feel like I captured the grand meaning of it.
- digging 3y agoI don't agree, I feel you misrepresented the tone and the meaning by twisting it into: > preaching the benefits of technological conformism by saying everyone should use the popular and boring technology of the day. This is a disingenuous way to describe the article. The article is just saying that when you're writing important programs that matter for your business, use the most stable technology that has the features you need. Because it is stable, and has the most community resources. In other words, don't gamble your business on risky technology choices just because they're new. That's difficult to argue with IMO, especially when the author explicitly endorses experimenting with personal projects.
- motohagiography 3y agoOne can both be for equality and recognize this mandate sets the stage for flagrant corruption. If there were a mandate to invest in companies with founders who had certain attributes, it would be the most literal possible tokenization of those people, as their companies would be traded among investors as compliance credits. Let me be the first to set up a superpac hedge fund that runs a secondary over the counter market for these shares that takes institutional money in VC firms and puts it into an opaque portfolio of these companies in exchange for a compliance blessing. It's so brilliant, the only real problem I have is what to name the polycule. Given the investors need exposure to them for their portfolio compliance, it creates the incentive within the company to actually do nothing from a growth and product perspective, and just loot whatever investment money investors were trying to throw at them to achieve their own mandates. Not only would it reinforce prejudices against people with said attributes because they have been set up to fail and actively rewarded for being corrupt with the investor money, it creates a layer of politically controlled front companies who effectively tax venture portfolios without any accountability for where the money goes. The data is all you need to create a de-facto private tax system with a political party as the beneficiary. This scheme has nothing to do with diversity.
- metalforever 3y agoLook at the statistics of who gets funded again .
- singleshot_ 3y agoPerhaps I am missing something, but this magic entity you seek to form — why would it be a superPAC? What utility would that bring you in this circumstance?
- motohagiography 3y agoBecause as the main shareholder for the portfolio, the PAC would have the board seats to install the CEO and executives in each company, who could be trusted to return the money to the PAC and its causes in exchange for skimming the lucre and keeping the scheme going. It's a patronage operation.
- shipscode 3y agoVCs will just create DEI programs with less funding than their main operations to pad the stats.
- shmde 3y agoAs a Non American reading the article title Vs what it actually is felt like an O'Henry surprise ending. Also why is America so obsessed with race ?
- fineIllregister 3y agoBecause we have a lot of people who are oppressed based on their race. The real question is why is America so obsessed with oppressing people based on race?
- december456 3y agoNon-American, simple answer: political tool.
- porkbeer 3y agoIts being used to substitue for the actual income and class disparity.
- zoklet-enjoyer 3y agoI'm looking for a disabled woman of color as a co-founder
- NickC25 3y agoWhile no quotas are mentioned, it does seem like this is the tip of a very slippery slope. This is clearly well-intentioned but at the same time feels like a bad idea. I have a startup. The team is 2 people including myself. If I have a friend in CA offer to invest, do I have to subject myself to reporting that my cofounder is LGBTTTQQIAP+? Or that we're both left handed? Or that we're both WASP as hell? Where does it end?
- 0xbadc0de5 3y ago> This is clearly well-intentioned... Is it though? "You shall know a tree by its fruits." If the result was shit, especially after repeated attempts... the intention was shit.