How Silicon Valley’s Diversity Problem Created A New Industry

In the last two years, diversity practices at major Silicon Valley tech companies like Google, Facebook, and Twitter have been held under a microscope. The big question everyone seems to be asking is “Why are these companies overwhelmingly made up of white men and what can be done to cultivate more diverse talent?”

To address Silicon Valley’s continued failure to both hire and retain workers of color, a small market of recruitment tech and workplace collaboration applications have cropped up to show them the way—and profit in the process. Call it the “diversity market.”

The majority of these companies popped up in 2014, the same year many tech companies first started opening up about who they were employing. Since then others have joined the flock.

This scrutiny started when these companies started releasing diversity statistics (a move that was arguably incited by Pinterest’s Tracy Chou). With each of these data dumps came a sermon on the virtues of diversity in the workplace and pledges to do better. Yet, since 2014 tech companies have failed to substantially grow the number of black, Latino, Native American, and female employees in their ranks. Google is still 70% male and 2% black. Twitter’s leadership is 72% white, 28% Asian. Only 16% of Facebook’s tech team is comprised of women.

To move the needle, major tech firms can now hire a plethora of startups to help them manage their diversity problem. Blendoor and Interviewing.io host blind matching and interviews. GapJumpers connects companies with applicants based on a series of tests that rate specific skills. Quantize analytics will use data about past employees to predict who their successors should be, effectively stripping out human bias, says cofounder Khary Francis. “It helps to cast a wide net,” he says. “We’re making it possible for people to pay attention to the applicants that they’re not paying attention to.”

If a company specifically wants a listing of minority candidates, there are startups that will do that too. Jopwell and Entelo allow businesses to suss out Latino, African American, and Native American job hopefuls. Textio will craft job descriptions that attract a spectrum of candidates and Sparc will make videos to promote and market existing workers of color and women to prospective employees. Meanwhile, Ellen Pao’s data-driven initiative Project Include focuses on managing talent once it’s already in house. The organization combines data analytics and training to push companies to make their workplaces more inclusive and offers up recommendations for how to add diversity to a vanilla staff.

While it might not seem like it, this market doesn’t entirely hinge on Silicon Valley’s desire for more diverse recruits. After all, not all tech companies have difficulty being diverse. It turns out that even companies that have been investing in diversity for decades are in need of technology to refine their operations.

“Every other part of big organizations has had a digital transformation,” says Eileen Carey, cofounder of Glassbreakers, a technology for managing diversity-aimed resource groups. “Sales has Salesforce and there’s accounting software and there’s software for making appointments. You don’t even need an assistant anymore.” Diversity management, Carey says, needed a technological overhaul.

Her company, Glassbreakers, has developed software that taps into email clients to connect employees to appropriate mentorship opportunities or networks. It’s designed to help recent hires at giant companies with diversity initiatives already in place to find their people.

Other startups are using tech to stamp out unconscious bias in the workplace. Unconscious bias is a prejudice a person may not be conscious they have. For instance, a manager might pass over certain employees because of an unknown bias. Those employee won’t feel empowered to speak their mind when their ideas are routinely dismissed. As others have reported, it’s not easy to address through training. To that point, Baloonr has created a platform for anonymously polling team members. The premise is that people, regardless of background, will be more inclined to give feedback or make proposals if they don’t feel judged. Likewise, managers and groups will be more likely to let the best ideas rise to the top if they don’t know where it’s coming from.

A team comprised of people from different ethnic, educational, and financial backgrounds stand to bring a different perspective into the mix—and that can have big pay offs. Recent studies tout better products and fatter revenues at workplaces with diverse staff members. The key takeaway is that a variety of perspectives leads to better work.

“Really what people are talking about is cognitive diversity. They want people who come from different walks of life,” says Jonathan Kestenbaum, executive director at Talent Tech Labs, an incubator for talent management startups.

Regardless of whether companies are compelled by the potential benefits of diversity reports or are responding to public pressure, they’re putting their money where their mouth is. Since 2015, Google has pledged to spend $150 million on diversity initiatives. Intel, $300 million. Apple, $50 million.

Though it’s too early to tell if these investments will pay off, there’s some evidence they might—if these companies are really committed to diversity. Entelo says that among its clients, those with explicit interests in bolstering diversity are three times more likely to hire a diverse candidate and big companies want to make those hires. Those with revenues topping $500 million are five times more keen to hire someone from a less common background, Entelo’s data shows.

What makes the diversity market as a whole promising, is that it isn’t just focused on one aspect of the talent management stack, if you will. With a variety of startups fulfilling different components of an overall diversity program, together they just might make a difference.

Related Video: How To Start Fixing Tech’s Diversity Problem