Bloomberg – How do you get on a board of directors if you’ve never been on a board of directors?
Sheryl Sandberg and Marc Andreessen found themselves grappling with that paradox one day earlier this year. They were talking about workplace diversity when Sandberg, Facebook’s chief operating officer and the author of Lean In, pushed Andreessen, co-founder of the venture capital firm Andreessen Horowitz, to use his wide talent network to help make Silicon Valley look more like America.
Here’s what he came up with.
Andreessen marshaled the resources of his firm to launch and fund a basic-training program for an elite corps of promising, diverse candidates in what it means to be on a board—the legal obligations, the roles of the different committees, and more. The goal is to arm the participants—all women and minorities who have yet to serve on boards other than their own companies’—with the knowledge to take seats on corporate and start-up boards. The effort comes as tech struggles with its abysmal diversity numbers and Silicon Valley watches Kleiner Perkins Caufield & Byers, one of its storied venture firms, defend itself in court against allegations of gender discrimination.
This month, the first class of 40 would-be directors completed the course, developed with the Rock Center for Corporate Governance at Stanford University. The two-day immersion program included a mix of courses taught by Stanford law professors and panel discussions featuring sitting board members swapping war stories.
“We want everyone who is talented and determined to have a full opportunity to contribute to Silicon Valley and Valley companies,” said Andreessen, who led the development of Mosaic, the first popular web browser.
Boards searching for new directors typically want to see candidates who have already served on a board and know the ropes—a Catch 22 that prevents many candidates from getting their first seat. So Andreessen Horowitz, which has backed dozens of tech companies, including Facebook and Twitter, tapped its network of founders and co-investors, and friends such as Sandberg. It wanted names of high-potential women and executives of color who had yet to serve.
Among those they identified were Tristan Walker, founder and CEO of Walker & Co., a health and beauty products company for people of color, and Varsha Rao, head of global operations for Airbnb. Andreessen Horowitz is an investor in both companies. (Bloomberg LP, which owns Bloomberg Business, is an investor in Andreessen Horowitz.) When he introduced himself to the class, Walker said, he told them, “This is the most diverse group I’ve been in in a very long time.”
But is it credible for a Silicon Valley fixture like Andreessen to take up the cause of board diversity? White male partners dominate the executive ranks at venture firms, including Andreessen Horowitz and Kleiner Perkins, which is being sued by former employee Ellen Pao for discrimination. (Kleiner Perkins has denied Pao’s allegations.)
Asked why business should have faith that a Valley-based program could increase the number of women and minorities on boards, Andreessen said, “I think the only way to respond to a negative and reactionary question like this is that if critics have better ideas, they should get on them.”
For all the talk about diversifying the boardroom, there hasn’t been a lot of action, from Silicon Valley or anywhere else. Women hold only about 19% of the board seats of S&P 500 companies, according to research group Catalyst, and that percentage has scarcely budged in 20 years. Data released this week show that women of color represent only 3% of directors. Executive search firm Russell Reynolds Associates says about 8% of corporate directors are black, 4% Hispanic and 3% of Asian descent. Only a sliver of VC money goes to companies led by women.
Efforts to boost those numbers include the 30% Club, started in the U.K. to increase the percentage of women on FTSE 100 boards. It has helped increase female participation on boards by offering mentoring and convening working groups to share best practices on board diversity. The group, which has expanded internationally, has enlisted high-profile corporate and government officials in the U.K. to promote its message. (Peter Grauer, chairman of Bloomberg LP, is founding chairman of the 30% Club in the U.S.)
The boardroom boot camp comes amid heightened scrutiny of diversity in the Valley. The community prides itself on being a meritocracy, yet many people feel shut out of this land of opportunity. Women computer scientists, for example, feel unwelcome because of the “brogrammer” culture at tech companies. Fortune recently reported that women represent just 6.2% of directors on private companies with valuations of more than $1 billion. Among the companies with all-male boards: Uber, Snapchat, Tinder and Airbnb.
Sandberg said the solution can come from within Silicon Valley. Programs like the boot camp “show that leaders in our industry are not just waiting for the pipeline of future board members to be built,” Sandberg said. “Leaders are taking the initiative to find and train great people now.”
In fact, technology is already starting to drive changes in the composition of corporate boards. Ron Lumbra, who heads up the CEO and board services practice at Russell Reynolds, said boards typically recruit sitting CEOs or CFOs, but increasingly they also want at least one director with experience in cybersecurity, tech spending or social media. Executives with those skills often fall outside the traditional pipeline, presenting new opportunities for women and minorities.
Of course, Lumbra said, companies will always screen prospective directors to see if they “know the parlance around board issues.” And that’s where programs such as the one launched by Andreessen Horowitz can help.
Michel Feaster, CEO and co-founder of software company Usermind and another in Andreessen’s class of 40, said she valued the nuts-and-bolts instruction on corporate governance and board responsibilities, which she’s putting to use already. Sessions included A Primer of Legal and Fiduciary Duties of Directors, and Introduction to Corporate Governance.
“The first reason I wanted to take the class was to be a more effective leader of my own board,” Feaster said. “One of my weaknesses is that I don’t have a deep finance and operations background, and the sessions made me [think] about complementing my board with strong independent members.”
Walker, the health and beauty CEO, said the course helped him better understand the role his own board members play.
“Board members should not suggest to the CEO what to do when it comes down to making new products. It is the entrepreneur’s job to get to the right answer,” he said. He recognized that behavior on his own board, asking the right questions “to help me get to the right answers myself.”
Andreessen Horowitz plans to publish the names of all the participants in the pilot program on its website and hopes to offer the course annually. The idea is that companies will use the list as a resource, and that some of the inaugural class will find seats on public and private boards.
Walker said he recently was approached about a board seat by a private company board he declined to name. (“Don’t want to jinx it.”)
He looks pretty good: He’s a sitting CEO with tech experience and an influential network, and he can give leaders a different perspective based, in part, on his experiences as an African-American entrepreneur. And now he speaks an elusive language: board.
Posted on March 20, 2015
Written by Stephanie Mehta
Photo credit: Kuni Takahashi/Bloomberg
Bloomberg | Sheryl Sandberg and Marc Andreessen Are Sending Women to Boot Camp