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Protocol | Enterprise
Your guide to the future of enterprise computing, every Monday and Thursday.
February 8, 2021
Thanks for reading — we'll be back Thursday.
Welcome to Protocol | Enterprise, your comprehensive roundup of everything you need to know about the week in cloud and enterprise software. This Monday: the AI field has a diversity problem, the regulatory battle pitting fintechs against legacy banks and John Chambers says Silicon Valley is "in real trouble."
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The Big Story
Diversity in AI is awful
The field of artificial intelligence is too white. And while more can be done, startups and education providers are taking steps to address the root causes.
Much has been written about the issue of race and AI, especially the lack of diversity in the data sets that power the algorithms increasingly used by enterprises to do everything from plotting future inventory to screening job applicants. But the problem extends far beyond the technology itself.
Black leaders are largely nonexistent in exec teams of many AI startups. A Protocol analysis of 40 companies, randomly selected and varying in size from the largest players like UiPath to smaller upstarts, found just three Black executives with a C-suite title.
- "Particularly in the area of AI, the lack of diversity among professionals with hiring abilities, as well as in C-suite offices, explicitly or implicitly deters them from actively recruiting people of color," said Brookings Institution senior fellow Nicol Turner Lee. "This is a very incestuous culture … and no one is taking account because there is no one to check that behavior."
- The list is not comprehensive of the entire industry. And there are notable exceptions to the trend, such as Aicha Evans, the CEO of Amazon-owned autonomous vehicle startup Zoox.
- Still, take OpenAI, one of the most prominent organizations in the industry: It doesn't have a single Black person on its leadership team.
- When asked, OpenAI said: "We recognize that we need to do a better job of recruiting Black researchers, scientists and underrepresented talent across the board. To address this, we heavily weight our recruiting activities, including investing in external resources, to engage underrepresented candidates for all roles and leadership positions."
- Or look at Indigo Ag, which has raised $1.1 billion and commands a $2.7 billion valuation, per PitchBook, making it one of the more well-funded AI startups. Of the 12 executives listed on the leadership page, not a single one is Black — there appear to be no people of color among them, either. That extends to the board of directors as well.
- "We recognize we have a lot of work to do in establishing a more diverse executive team and we are committed to doing better," the company said in a statement. "DEI has been built into multiple facets of our organization in recent months — from recruitment, to ensuring fairness and equity in performance reviews, decision-making and salaries."
Silicon Valley has struggled to reckon with this issue for years now. Out of 1,537 startups analyzed by talent discovery startup Hallo, for example, just 40 had Black founders, per its fourth-quarter diversity report. And the lack of representation has a cascading effect that can dissuade individuals from pursuing a career in the industry, according to Hallo co-founder Vern Howard.
- "There's a massive amount of folks who are African American that don't see people who look like them in these positions," he told Protocol. "It's a huge problem."
Still, some founders see the racial justice movement that followed the the murder of George Floyd last year as a turning point, particularly among venture capitalists in Silicon Valley.
- "There are obstacles, under-representation, forms of bias at every step of the way," Forethought's Deon Nicholas said. But, he said, "the VC and tech industry is moving in the right direction."
One big problem is the lack of social capital among Black entrepreneurs.
- When founders are trying to get startups off the ground, they often turn to their network for seed funding. The same is true when going to pitch venture capitalists for later rounds. For instance, those who graduated from well-regarded institutions, Howard argues, have more robust connections given the inherent network of other successful alumni.
- "If you're basing your investment decisions … on social capital, then there's a huge lack of representation," said Howard.
- He's trying to solve the problem with Hallo, a digital platform that helps connect companies find more diverse job candidates.
But it's not just funding. Educational barriers remain as well. While Black college attendance rates are increasing, the number of STEM graduates remains low. And if you look at a top tech college like MIT, which has a track record of producing successful entrepreneurs, Black students accounted for just 129 of the overall 3,514 degrees awarded from July 2019 to June 2020.
- The rise of online schooling outside of standard four-year academic institutions is providing an alternate avenue. Overall enrollment in such programs is growing, but the challenge still remains getting a job in the field.
- One example of how things are changing: Codecademy is partnering with Black and Brilliant Advocacy Network co-founder Tony Effik on a new initiative, slated to be announced later this month, that's targeted towards the aspiring Black technologists.
- Focused on AI, the 10-week educational program includes topics such as starting a business and user design. Enrollees are also paired with an outside coach to provide career guidance and other advice.
- "We're not necessarily training them to [just] be engineers," Effik told Protocol. "There is going to be an array of jobs that come out the back of this … but you need a foundational layer of technical skills."
Given AI is poised to play an even greater role in our lives — and, in many ways, often without us even knowing — the need to fix this problem is more pressing than ever. Some people are already trying, but there's so much more to be done.
— Joe Williams
A MESSAGE FROM PHILIPS
One thing we have realized is that COVID-19 has accelerated three transformational trends that already existed before the pandemic, but are now dramatically reshaping healthcare: the concept of a networked healthcare system, the increasing adoption of telehealth, and the idea of virtual care and guidance. At the same time, we have seen consumers becoming much more engaged in their personal health and that of their families.
This Week On Protocol
Banks vs. fintechs: An under-the-radar battle is raging between legacy financial institutions and upstart fintechs over who should have access to key consumer data. The story, by my colleague Tomio Green, is an excellent example of the kind of reporting readers can expect to get with our new Protocol | Fintech vertical. Sign up here for the newsletter, news alerts and access to events and research.
A California exit: When John Chambers says you're in trouble, you probably are. The legendary Silicon Valley executive is raising the alarm over the growing California exodus to Austin, Miami and elsewhere. While he's not "actively involved" in an effort to recall Gov. Gavin Newsom, Chambers makes it clear he's ready to vote for change.
Bill McDermott works his magic: The former SAP CEO is trying to lead ServiceNow through its next phase of growth, but that trajectory is increasingly butting the company up against rivals like Salesforce and Microsoft.
Coming up this week
Most of the major earnings announcements are in the rearview mirror (yay!). And it's a stellar week for conferences.
Feb. 9: Twitter and Cisco report earnings. Salesforce kicks off its "Salesforce World Tour" event.
Feb. 10: Thomas Kurian speaks at the Goldman Sachs Technology and Internet Conference, along with Bill McDermott and a slew of other high-profile execs. And tons of great speakers will present at MIT Technology Review's Future Compute conference, including AWS Vice President Bill Vass and Microsoft Azure CTO Mark Russinovich.Feb. 11: Cloudflare reports earnings. Future Compute continues with IBM CEO Arvind Krishna and Google Cloud GM Shailesh Shukla.
Around the Cloud
- IBM is partnering with Palantir, the first of its kind for the controversial data analytics company, with the aim of helping enterprises deploy AI.
- Dropbox has a gender discrimination problem, according to present and former employees.
- Docker's giving Docker Distribution to the Cloud Native Computing Foundation to give it "a broader group of maintainers."
- Twitter beefed up its partnership with Google Cloud, moving its offline analytics, data processing and machine learning there. Reminder: Google still trails AWS and Microsoft.
- Speaking of the Big Three: They all spent a ton of money last year on capital investments.
- Unsurprisingly, facial recognition came with major privacy implications. Here's how it all went wrong.
- Microsoft joined a plethora of other companies in refusing to give political donations to lawmakers that protested Biden's win.
- Nexthink raised $180 million in Series D funding at a $1.1 billion valuation, fueling more competition in the heated employee experience software market.
- Sapphire Ventures raised $1.7 billion to invest in enterprise tech.
Thanks for reading — we'll be back Thursday.