- Silicon Valley has long had a diversity problem.
- Women, African-Americans, and Latinos are underrepresented in the tech industry and tend to be paid less than their white male counterparts.
- But the diversity problem is even worse than that; a new study found that the gender disparity in equity — or stock ownership — held by tech workers and founders is even worse than the pay gap.
- In Silicon Valley, stock holdings can be much more important and valuable than salaries.
- The disparity is important, because Silicon Valley’s ecosystem centers around startup founders who cash in their shares when their companies go public or are acquired.
It’s no surprise that the tech industry has a diversity problem.
But it turns out that the problem is much bigger than people in Silicon Valley and beyond may have realized.
It’s well known that women, blacks, and Latinos are underrepresented in tech companies, particularly in the upper ranks. It’s also well known that they tend to get paid less in salary for the same jobs than their white male counterparts. But the tech industry has a far larger divide that’s been mostly kept secret until now, having to do with the ownership of companies.
Much of the payoff that tech workers get from working in the industry comes in the form of ownership stakes in their companies, whether in the form of founders’ shares or stock options or restricted stock. It turns out that distribution of those shares is even more titled in favor of men than pay or representation within companies, a recent study from Carta found. And the underlying value of the shares is even more weighted in favor of men.
Women hold just 9% of the wealth linked to shares in tech startups
Carta offers an online service that helps companies manage their employee-owned shares and options. For its study, it looked at the private, venture-backed companies in its database. It didn’t have direct information on employees’ gender, but inferred it from their names, excluding those that were ambiguous. By definition, all the people included in the study held some sort of ownership stake in their companies; employees that don’t have options or shares in their companies aren’t in Carta’s database.
Women comprised 33% of the people in the study; in other words, they made up about a third of all employee shareholders. But their shares were worth just 9% of the total value held by all employee owners in the study. Of the $42.6 billion held by the startup founders or workers included in Carta’s study, just $4 billion was held by women.
Much of that imbalance is due to the paucity of venture-backed female founders and the value of the firms they lead. Women represent just 13% of all the founders in Carta’s database. And their share of the total value of founder-held shares is only 6%.
“There’s just a disproportionately low amount of capital going to back women,” said Jana Messerschmidt, another member of the #Angels group.
Women do better as employees than as founders, but they still are getting a raw deal when it comes to equity stakes in their companies. Some 35% of non-founder employees in Carta’s database are women. But their shares are worth just 20% of the total value held by such employees.
Put another way, women tech workers hold about 47 cents worth of equity for every dollar held by their male counterparts.
Startups don’t tend to bring on women until later
Women lag behind men in part because they tend to be a small minority of the early employees at tech companies. At firms with 20 or fewer equity-holding employees, just 29% are women, on average. Even at companies with 101 to 400 equity employees, women make up just 35% to 36% of those workers. It’s not until firms get to more than 400 workers that their portion of employee-owners who are women goes north of 40%.
By comparison, women comprise some 47% of workers in the total private US workforce.
Their low representation at early-stage startups is important. Early workers tend to get more valuable share grants than later workers, in part because they get in on the ground floor, when the company is usually worth very little.
Additionally, a disproportionate portion of the early hires at startups are engineers or developers, workers who are typically seen as vital to the startups’ success and often paid accordingly. Women tend to be dramatically underrepresented in such positions.
Startups generally wait until later in their development to fill out the departments where women are more prominent, such as marketing, human resources, and sales — and they tend to award them with fewer and less valuable shares.
“The amount of equity that’s given to employees decays over time,” said Henry Ward, Carta’s CEO.
The study had some notable shortcomings. Carta’s database doesn’t actually include equity holders’ gender. The company inferred gender from the holders’ names, excluding those from its study that were ambiguous. So the equity disparity could be somewhat bigger or smaller than what Carta found.
Additionally, the database doesn’t include any data about holders’ race or ethnicity. So, Carta wasn’t able to look at the equity differences among different groups. Those too are likely to be significant. African-Americans and Latinos have long been grossly underrepresented in the tech industry. And a recent study indicates that members of those groups tend to be in lower-paying positions on average than their white counterparts and, even accounting for that, tend to be paid less than whites in comparable positions.
This is more than just a problem for the 1%
To be sure, compared with other inequality problems the US faces, disparity in equity compensation and holdings may seem rather trivial. Many workers — particular those in lower-skilled jobs — don’t get health care benefits or sick days, much less stock options.
Tech workers, meanwhile, are generally well compensated overall, regardless of how many options they get. And when you’re talking about founders, you’re often talking about people in the top 1% of income earners.
But the disparity does matter, at least in terms of its downstream consequences. Much of Silicon Valley’s ecosystem is built around the equity held by successful startup founders. Those founders often take their payouts when their firms are acquired or go public and use them to create other firms or to fund other entrepreneurs through so-called angel investments.
Many also join venture capital firms, where they help determine which of the next generation of startups get funding, or sit on tech company boards, where they help shape the composition of executive teams. They also often use their startup payouts to set up foundations that give out money to their preferred charities.
Silicon Valley is a clubby place. Founders tend to hire people who look like them, went to college with them, or run in the same social circles. VCs tend to invest in companies with founders that either look like them or look like founders who succeeded in the past. In both cases, the people who get funding or top positions tend to be male and white or, to some extent, Asian.
And that’s become something of a cycle. White male VCs fund startups run by white men who, when they cash out, become VCs who fund the next generation of white male entrepreneurs.
So the disparity in equity in Silicon Valley doesn’t just affect who’s seeing the big bucks when a company goes public, it also affects who gets funded the next time around, who gets hired, what products and services are developed, and what communities see investments.
“In Silicon Valley, money from a successful exit is about more than just wealth,” said Sladden. “It’s the power to shape and choose the products and institutions that shape Silicon Valley the for next generation.”
Public officers above 58 years and with pre-existing conditions told to work from home: The Standard
Head of Public Service Joseph Kinyua. [File, Standard]
In a document from Head of Public Service, Joseph Kinyua new measure have been outlined to curb the bulging spread of covid-19. Public officers with underlying health conditions and those who are over 58 years -a group that experts have classified as most vulnerable to the virus will be required to execute their duties from home.
However, the new rule excluded personnel in the security sector and other critical and essential services.
“All State and public officers with pre-existing medical conditions and/or aged 58 years and above serving in CSG5 (job group ‘S’) and below or their equivalents should forthwith work from home,” read the document,” read the document.
To ensure that those working from home deliver, the Public Service directs that there be clear assignments and targets tasked for the period designated and a clear reporting line to monitor and review work done.
SEE ALSO: Thinking inside the cardboard box for post-lockdown work stations
Others measures outlined in the document include the provision of personal protective equipment to staff, provision of sanitizers and access to washing facilities fitted with soap and water, temperature checks for all staff and clients entering public offices regular fumigation of office premises and vehicles and minimizing of visitors except by prior appointments.
Officers who contract the virus and come back to work after quarantine or isolation period will be required to follow specific directives such as obtaining clearance from the isolation facility certified by the designated persons indicating that the public officer is free and safe from Covid-19. The officer will also be required to stay away from duty station for a period of seven days after the date of medical certification.
“The period a public officer spends in quarantine or isolation due to Covid-19, shall be treated as sick leave and shall be subject to the Provisions of the Human Resource Policy and procedures Manual for the Public Service(May,2016),” read the document.
The service has also made discrimination and stigmatization an offence and has guaranteed those affected with the virus to receive adequate access to mental health and psychosocial supported offered by the government.
The new directives targeting the Public Services come at a time when Kenyans have increasingly shown lack of strict observance of the issued guidelines even as the number of positive Covid-19 cases skyrocket to 13,771 and leaving 238 dead as of today.
SEE ALSO: Working from home could be blessing in disguise for persons with disabilities
Principal Secretaries/ Accounting Officers will be personally responsible for effective enforcement and compliance of the current guidelines and any future directives issued to mitigate the spread of Covid-19.
Uhuru convenes summit to review rising Covid-19 cases: The Standard
President Uhuru Kenyatta (pictured) will on Friday, July 24, meet governors following the ballooning Covid-19 infections in recent days.
The session will among other things review the efficacy of the containment measures in place and review the impact of the phased easing of the restrictions, State House said in a statement.
This story is being updated.
SEE ALSO: Sakaja resigns from Covid-19 Senate committee, in court tomorrow
Drastic life changes affecting mental health
Kenya has been ranked 6th among African countries with the highest cases of depression, this has triggered anxiety by the World Health Organization (WHO), with 1.9 million people suffering from a form of mental conditions such as depression, substance abuse.
Globally, one in four people is affected by mental or neurological disorders at some point in their lives, this is according to the WHO.
Currently, around 450 million people suffer from such conditions, placing mental disorders among the leading causes of ill-health and disability worldwide.
The pandemic has also been known to cause significant distress, mostly affecting the state of one’s mental well-being.
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With the spread of the COVID-19 pandemic attributed to the novel Coronavirus disease, millions have been affected globally with over 14 million infections and half a million deaths as to date. This has brought about uncertainty coupled with difficult situations, including job loss and the risk of contracting the deadly virus.
In Kenya the first Coronavirus case was reported in Nairobi by the Ministry of Health on the 12th March 2020. It was not until the government put in place precautionary measures including a curfew and lockdown (the latter having being lifted) due to an increase in the number of infections that people began feeling its effect both economically and socially.
A study by Dr. Habil Otanga, a Lecturer at the University of Nairobi, Department of Psychology says that such measures can in turn lead to surge in mental related illnesses including depression, feelings of confusion, anger and fear, and even substance abuse. It also brings with it a sense of boredom, loneliness, anger, isolation and frustration. In the post-quarantine/isolation period, loss of employment due to the depressed economy and the stigma around the disease are also likely to lead to mental health problems.
The Kenya National Bureau of Statistics (KNBS) states that at least 300,000 Kenyans have lost their jobs due to the Coronavirus pandemic between the period of January and March this year.
KNBC noted that the number of employed Kenyans plunged to 17.8 million as of March from 18.1 million people as compared to last year in December. The Report states that the unemployment rate in Kenya stands at 13.7 per cent as of March this year while it stood 12.4 per cent in December 2019.
Mama T (not her real name) is among millions of Kenyans who have been affected by containment measures put in place to curb the spread of the virus, either by losing their source of income or having to work under tough guidelines put in place by the MOH.
As young mother and an event organizer, she has found it hard to explain to her children why they cannot go to school or socialize freely with their peers as before.
“Sometimes it gets difficult as they do not understand what is happening due to their age, this at times becomes hard on me as they often think I am punishing them,”
Her contract was put on hold as no event or public gatherings can take place due to the pandemic. This has brought other challenges along with it, as she has to find means of fending for her family expenditures that including rent and food.
“I often wake up in the middle of the night with worries about my next move as the pandemic does not exhibit any signs of easing up,” she says. She adds that she has been forced to sort for manual jobs to keep her family afloat.
Ms. Mary Wahome, a Counseling Psychologist and Programs Director at ‘The Reason to Hope,’ in Karen, Nairobi says that such kind of drastic life changes have an adverse effect on one’s mental status including their family members and if not addressed early can lead to depression among other issues.
“We have had cases of people indulging in substance abuse to deal with the uncertainty and stress brought about by the pandemic, this in turn leads to dependence and also domestic abuse,”
Sam Njoroge , a waiter at a local hotel in Kiambu, has found himself indulging in substance abuse due to challenges he is facing after the hotel he was working in was closed down as it has not yet met the standards required by the MOH to open.
“My day starts at 6am where I go to a local pub, here I can get a drink for as little as Sh30, It makes me suppress the frustration I feel.” he says.
Sam is among the many who have found themselves in the same predicament and resulted to substance abuse finding ways to beat strict measures put in place by the government on the sale of alcohol so as to cope.
Mary says, situations like Sam’s are dangerous and if not addressed early can lead to serious complications, including addiction and dependency, violent behavior and also early death due to health complications.
She has, however, lauded the government for encouraging mental wellness and also launching the Psychological First Aid (PFA) guide in the wake of the virus putting emphasis on the three action principal of look, listen and link. “When we follow this it will be easy to identify an individual in distress and also offer assistance”.
Mary has urged anyone feeling the weight of the virus taking a toll on them not to hesitate but look for someone to talk to.
“You should not only seek help from a specialist but also talk to a friend, let them know what you are undergoing and how you feel, this will help ease their emotional stress and also find ways of dealing with the situation they are facing,” She added
Mary continued to stress on the need to perform frequent body exercises as a form of stress relief, reading and also taking advantage of this unfortunate COVID-19 period to engage in hobbies and talent development.
“Let people take this as an opportunity to kip fit, get in touch with one’s inner self and also engage in reading that would help expand their knowledge.