Co-authored by Alex Gachanja
As captured in USV Thesis 3.0, the potential to leverage networks is a core component of our investment criteria. Over the years, it has become clear that diversity within networks builds better businesses. Organizations with diverse teams are 8x more likely to have overall better business outcomes, 3x more likely to be higher performing, and 2x more likely to meet or exceed their financial targets.
One annual project we conduct is compiling portfolio-wide benchmark data around policies, resources, and strategies specific to diversity, equity and inclusion, with the goal of providing our portfolio with shared knowledge, experiences and insights to hopefully help them build better businesses. Previous surveys (2018 and 2019 results) honed in on specific, quantitative questions around a company’s data collection process, as well as employee perception and inclusion experience.
This year’s objective was to give CEOs and HR leaders a repository of data to answer the question, “how does my company and our current DEI initiatives compare to other USV-backed companies similar to us?” For the first time, we partnered with CultureAmp to collect and synthesize both qualitative and quantitative data from our portfolio.
Here is a detailed report of the survey’s findings as well as some key takeaways and action items below:
Ways to Support Companies
The survey was conducted in May of this year and 66% of our portfolio companies participated. Here are four categories that stood out in the results as areas where our companies need support.
1. Talent
Many of our portfolio companies have highlighted building diverse teams as a priority. However, only 36% of respondents have a diversity strategy and less than ⅓ have resources dedicated to DEI-specific initiatives. Most of the feedback we heard is that leaders and hiring teams either aren’t sure what to change in their current processes, or need additional help surfacing external partnerships or recruiters to broaden their access to talent.
Overall: Companies want recommendations and strategy support for recruiting and hiring diverse talent. Ex. talent pipelines, vetted recruiting agencies, and fruitful partnerships
What USV Is Doing:
- We’ve started to do our small part and, as a firm, in the last 6-12 months, approximately 19 out of 82 of our boards have added a diverse board member. This is in part due to a USV partner being replaced by a member from an underrepresented background.
- This year, USV has launched a 3 Year Fellowship with Pursuit that will create pathways for new talent from underserved backgrounds to not just land a career in tech, but really thrive at a company.
2. Training
Access to knowledge is an essential component of providing employees with the right tools and frameworks for an inclusive culture. Beyond the recruiting stage, 42% of respondents said their company offers diversity, equity, and inclusion training to employees. We believe that it is not enough to merely hire great talent, but it is equally important to cultivate an inclusive and supportive environment to retain talent. There are countless trainings that can help teams hone their skills in developing and maintaining a diverse and inclusive workforce; many just need help deciding which ones will be the most impactful for their organization and access to providers.
Overall: Companies want access to effective training, highly qualified trainers, facilitators, and subject-matter experts. They also want access to cross-company, external learning and development offerings. Ex: Unbiased interviewing, Unconscious Bias & Conscious Inclusion, and Allyship training
What USV Is Doing:
- Since 2017, we have hosted bi-annual Diversity, Equity and Inclusion Summits in New York, SF and remotely. With over 150 participants, these half day sessions highlighted peer-led breakout sessions and included case studies as well as transparent, closed-door Q&A sessions.
- While we could and will be doing more here, in the past we have partnered with external facilitators to host trainings that cover Allyship, Designing a Culture of Compassionate Anti-Racism, and Sexual Harassment and Sensitivity Training.
3. Data
Data is a critical component to driving a company’s efforts forward. Data also enables teams to see how projects and initiatives are, or are not, succeeding. Some teams have voiced their difficulties in knowing what data to collect, what metrics to put in place, and how to quantify the company’s development. While the below chart does not include quantitative data, CultureAmp helped us develop DEI maturity benchmarks broken down by funding round:
Overall: Companies want to collect and compare their metrics to companies similar to them. According to the survey, only 38% of respondents currently use industry benchmarks in order to make diversity decisions. Moreover, when it comes to leadership, only 12% of respondents collect demographic information from board members. Within this pool, the survey shows that 64% of companies have a woman on their board of directors and 47% have a person of color. Collecting more of this data will reveal best methods to support our portfolio companies on their DEI efforts. Ex. Provide portfolio-wide benchmark data including metrics and comparable goals as well as opportunities to measure their own progress in relation to their peers.
What USV Is Doing:
- Every year since 2018 we have conducted and shared the aggregated results of an Annual Portfolio-Wide DEI Survey.
- While we do our best not to be prescriptive or assume that companies approach DEI initiatives the same way, we plan to provide more opportunities for companies to connect and share data-centric insights and frameworks.
4. Dialogue
Company leaders would like to join communities where they can connect with peers and build relationships in a trusted environment, discuss DEI best practices and current challenges, and crowdsource insights and information. This component speaks directly to the goal of conducting this survey and we are excited to see the potential of increasing the speed of knowledge shared across our network.
Overall: Companies want not only access to data, but also access to leaders who are going through similar processes and challenges or who are one step ahead of them. Ex. Portfolio roundtables highlighting 1-2 companies and their roadmap, cross-disciplinary DEI Summit, Post-Survey results session with CultureAmp
What USV Is Doing:
- Over the last 4 ½ years, we have organized over 50 DEI-focused conversations for our portfolio network. These discussion formats include in-person summits, virtual roundtables, post-survey result reviews, and DEI-focused case studies.
Looking Forward
This survey has provided insight into what directions we can take in pursuit of our goal to support our portfolio companies on their diversity, equity, and inclusion initiatives. Specific takeaways include (1) continuing to add portfolio board diversity where possible, (2) aggregate and share out vetted talent partners and facilitators, (3) host DEI-focused roundtables and portfolio wide training, and (4) surface more quantitative metrics and benchmarks for comparison data.
Now, thanks to the candid feedback from most of our portfolio, if a CEO, HR leader, or hiring manager were to ask, “How does my company and our current DEI initiatives compare to other USV-backed companies similar to us?”, a roadmap can be found here. Moreover, we as a firm will be disclosing more of our internal research and progress publicly in order to share how we are measuring “success” and how we are holding ourselves accountable.