IBJ gathered several tech leaders for a July 16 panel discussion about key issues in the industry, including access to venture capital, and diversity and inclusion.
The panel was Cummins Inc. Chief Information Officer Sherry Aaholm, Indy Women in Tech community engagement strategist Ariel Crawley, Vertex Intelligence CEO Tyler Foxworthy, TechPoint CEO Mike Langellier, Eleven Fifty Academy Chief Operating Officer Dewand Neely and Scale Computing CEO Jeff Ready.
IBJ tech reporter Anthony Schoettle moderated the conversation. Here’s an edited, partial transcript of the conversation:
Anthony Schoettle: As I was writing these comments, I harkened back to a conversation I had with Jeff about his founding of Scale Computing back in 2007 and Jeff had told me that he thought very seriously about not forming Scale Computing here in Indianapolis because of a difficult capital climate. Is the region finally getting the respect it deserves from venture capitalists?
Jeff Ready: Not yet, I think, is the short answer. However, I’ll couch that by saying it’s come a long way from where it was. So, I raised or went to raise my first round of venture capital with a company here in Indianapolis back in 1997, maybe, and there was really no real ecosystem here. I think today we have a pretty robust ecosystem of capital for early-stage investments, angel investments to smaller-seed and Series A rounds.
I think the difficulty still comes with later-stage venture capital. … Sometimes people publish lists of the companies that have raised the most venture capital by state. Scale popped up on that list a few times, but my competitors in my industry have raised four and five times as much capital on the coasts, so there is some distance to go in terms of that later-stage growth equity capital, but we are seeing some of those investments made here.
Schoettle: TechPoint put out a report recently showing that the capital-raises and venture capital market has taken a pretty serious gut-punch this year.
Mike Langellier: We did see decreases in dollar amounts amidst coronavirus of total amount invested—but actually the quantity increased. So, in that report that we released a week or two ago, in Q2 of 2019, which was a strong year, there were 15 investments in Q2. Actually, in Q2 of this year, there were 21.
In Q2 of this year, we had investors invest into Indiana companies from 16 different states, and so we are seeing that interest and investment from other places. Lessonly was a notable one, a $15 million round, and those investments for Lessonly, for example, came from New York, from Boston, from Paris. Vibenomics was another one; an Atlanta investor led that.
And then I also want to commend some of the local venture capital investment firms—take High Alpha, Allos Ventures, Elevate Ventures—because what I find is, when you peel the onion back, a lot of these rounds that did bring in capital, larger rounds from other places, oftentimes it was alongside local investors as well.
Schoettle: To put this in a little bit of context, last year, give or take, capital investment statewide totaled $358 million. In the same time period, San Francisco last year raised $11.2 billion, with a “B”; New York City, $4.3 billion; Boston, $2.8 billion. Tyler, is it reasonable to think that Indianapolis—I know we’re an aspirational city—could aspire to those levels at some point?
Tyler Foxworthy: Realistically, no, because there’s a principle called preferential attachment in networks which is colloquially known as the rich-get-richer phenomenon. So there’s this sort of pile-on effect that happens, but at the same time, we don’t need to be in San Francisco and we don’t need to be in New York to have a phenomenal quality of life, a vibrant technology ecosystem here, so I don’t think that trying to have an exact parity with those other economies should necessarily be the aspiration.
Schoettle: Of course, venture capital isn’t the only challenge we have here. The nation has been shaken to its core this spring and summer by the killing of unarmed African Americans, accusations of police brutality and the resulting protests, including those in Indianapolis. And pleas for social justice and attention to diversity issues have certainly intensified. … How important is it for local companies, tech companies, to be involved in social justice issues?
Langellier: It’s increasingly important. … I just think it’s the right thing to do. I think this is a unique time and one where we need to be more bold about not just being business leaders but also civic leaders. And I think … we’re an industry that’s creating lots of opportunity, lots of job opportunities, and at the heart of so many of these issues has been historical—not just racial injustice, but also imbalance of equity in a financial form of wealth and capital investment.
Dewand Neely: It is important. I think when you don’t make a visible stance, you run the risk of being perceived as apathetic, complicit, which can lead down to employee morale. … I think the more you step out on these things, make a stance and make it recognized that this is the right thing to do, just from a whole moral-cultures-type standpoint for your company as you’re wanting to grow and innovate and be a great place to work, that’s just part of the deed you have to do.
Sherry Aaholm: One of the things that’s really important is, you want every person who is in your organization to bring their whole self to work. And I think one of the learnings that I know I personally have gotten out of what has happened in talking to my diversity employees is, they haven’t been doing that for a long time. They have often been telling me what they think I want to hear and not what really is happening, and I’m not getting the full potential of those employees in my workplace because of that. So this is really important for us to lean into this and to really embrace it head-on and be willing to talk about it.
Foxworthy: I think another factor that really should be [discussed] … is, how do we grow tech companies? When I started my business, I started contacting my friends and people in my network and people that I worked close to. And then, you hire a manager, that manager hires the people that they worked with, and so on and so forth.
Langellier: We’ve seen this in our university recruitment efforts. … One of the big insights that we learned is that, when we reached students of color and students of other kind of diversity characteristics, they found out about the program, the Xtern program, differently. And so what it led us to do is to change our behavior and say, “Don’t just go to the career fair and don’t just go through career services, because actually there are many other subcommunities inside of the university that actually get their news, find out about opportunities, build their relationships differently.”
Aaholm: We’ve had to change the way we look at things intentionally [at Cummins] … not just saying we’re not recruiting at your alma maters anymore, we’re actually recruiting at very differing events than what we would’ve done historically and actually changing the recruiting process.
One of the things we started implementing is diverse slates [of candidates], and over the past probably half a year, we’ve been doing that and really pushing that; we began to change and bring in diversity. But it’s taken longer. So I have said to my team, “You can’t hire the first person that applies who is qualified. You need to bring the slate in.” And it takes more work to do it.
We definitely have seen a change in outcomes. In the past six months for my leadership team, there’s been about nine positions we hired; seven of them are diverse.
Schoettle: Is it more important for tech companies to take a public stand on social-justice issues and make an outward statement? Or is it more important first for companies to do more work from within to become more diverse and put minorities in positions of power?
Crawley: It’s both. You can make a statement, but if you’re just making a statement to make sure that you get out of the frying pan, then don’t make the statement.
There are a ton of companies that could be doing more hiring, which everyone talked about on the stage. But I would also encourage companies … to also look at the culture of your organization. Because, if you’re putting someone who is a person of color into a culture that isn’t going to fit for them, you’re not only running that person possibly out of tech [and] also out of your building, but also, what is that doing to invite others into that environment?
Langellier: We have to benchmark where we are. And so we at TechPoint released a statement several weeks ago with five commitments that we were making, but one additional one that we’ve made since then was to publish an annual diversity report. We got a lot of interest from companies and a willingness to contribute toward a diversity report so that we can ultimately start from a place of, where are we and where’s the gap between getting our employer-employee base representative of the communities that we live in or better?
The second thing, there’s a common mantra in tech of, “Move fast”—usually, “Move fast and break things”—and I think that we’re at a place now where we can’t let that become an excuse for not taking a longer view to talent development. I think that, “Move fast,” can become an excuse for, “I need to hire somebody right now and so I’m just going to get who I can get quickly,” which leads us to reach back into our traditional network and reinforces, compounds the problem that we have today. There are solutions to this and I think one of them that we have to really evaluate and lean into as a community [is], we have to bring industry and education together in more of a closely knit, integrated fashion than what it is today.
Crawley: And I would also encourage companies to look at different organizations as well. … So there’s Urban League that has STEM workshops within the schools that could partner with Eleven Fifty [Academy] to create that pipeline, that could work with other organizations such as Infosys or Cummins to help create to make sure that that diverse pipeline isn’t just starting … when they’re coming across graduation. It could’ve started when they were in sixth or seventh grade.
Schoettle: I had the pleasure of interviewing Angela Freeman, who is an African American woman who spent years at Lilly. She’s an accomplished scientist; now she’s a lawyer with Barnes & Thornburg. One thing she said is, a lot of minorities and a lot of Black people in particular get this message that, “Math and science isn’t going to be for you.” So, Ariel … by the time they get to a place like Ivy Tech, are they even considering tech as a professional outlet?
Ariel Crawley: I think that’s slowly starting to change now with the interest of STEM that we’ve seen recently in K-12. But also … going back to resources: If I live within certain communities of Indianapolis, going to Conner Prairie for our Ignite Your Superpower event where young girls get to learn about STEM in middle school and high school as compared to inner-city schools that maybe don’t have those resources to be able to leave the building or even the resources to have organizations come in and talk to those students. So I would say that, yes, we’re still seeing that.
One of the things that I think Ivy Tech and even Eleven Fifty is doing is to introduce that at an earlier age—so not even just looking at people who are maybe making that transition within their career but also going to high school and saying, “Do you know what you want to do?” “No, I have no idea.” “OK, come think about us, come with us.”•