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May 20, 2018
JIL L KICKU L
ALLISON GIST ER
JACQUELIN E ORR
Diversity and Inclusion
At the Los Angeles Cleantech Incubator
E
stelle Reyes walked quickly through the bright, open space at the Los Angeles Cleantech
Incubator (LACI). There were several last-minute items to complete and no time to waste. She
had just met with Neal Anderson, LACI’s Co-Founder and COO, to review his remarks honoring
former U.S. Small Business Association (SBA) Administrator Maria Contreras-Sweet. Glossy brochures
in hand, she greeted the caterer and made sure the boxed lunches included vegan and kosher options.
Despite the press for time, she cheerfully greeted each panelist as they arrived. As she walked one of
them to the restroom, she passed Tracy Gray and exchanged a knowing smile. Gray, one of LACI’s
Executives in Residence (EIR), had partnered with Reyes to plan that day’s program.
It was June 2017, and the event, entitled
Taking the Lead: Growing Women and Minority
Entrepreneurship in America, was the
culmination of a year of dedicated work aimed at
promoting diversity within the clean technology
(“cleantech”) sector. The goal of the event was
multifaceted. LACI wanted to position itself as a
community hub, drawing a wide variety of
stakeholders onto its campus in downtown Los
Angeles. In addition, LACI wanted to be seen as a
leader in diversity and inclusion efforts within the
technology industry. Lastly, the incubator needed
to promote its services to a wider audience and
improve the diversity of its pipeline of
entrepreneurs applying to be incubated.
Estelle Reyes, Todd Hitomi, and Tracy Gray at LACI
LACI had partnered with the Association for Enterprise Opportunity (AEO) and received
sponsorship from JPMorgan Chase & Co. and Dun & Bradstreet to produce the event. The program
would begin with the presentation honoring Contreras-Sweet, who oversaw SBA grant funding to LACI
in 2015 and 2016. LACI Project Manager Todd Hitomi would then segue into an introduction to diverse
Los Angeles tech startups and the LACI application process. Reyes was particularly excited for a panel
discussion about inclusive entrepreneurship, which would feature experts from fields ranging from
venture capital, microbusiness, tech-entrepreneurship, investment banking, and journalism. After the
panel, organized tours of the incubator’s campus would extend into the afternoon.
With a grin, Reyes watched the amphitheater fill to standing room only. She was proud of what the
Taking the Lead event represented. But her mind also swirled with challenges that needed to be
addressed. She wondered how to achieve the diversity and inclusion goals she and her team had set,
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Diversity and Inclusion at the Los Angeles Cleantech Incubator
and how to gain buy-in from the larger organization and community. She recalled a comment that Gray
had recently made, “I don’t know how to measure if there’s real progress. People are listening, but do
they hear?”
Snapping back into the moment, Reyes took three deep breaths to prepare herself to take the
microphone and welcome the crowd. As she exhaled, memories of the past year flashed through her
mind.
About the Los Angeles Cleantech Incubator
LACI was established in 2011 with the mission of helping “promising cleantech startups as they
create a green, inclusive economy for Los Angeles.” 1 The incubator’s focus was on “products and
services that advance sustainable or efficient use of resources.”2 LACI was created as a public-private
partnership with the City of Los Angeles and the Los Angeles Department of Water & Power (LADWP).
The incubator was incorporated as a nonprofit organization, although it served for-profit startup
companies. By 2016, LACI had worked with 72 portfolio companies and helped them raise more than
$150 million in funding.
In 2016, LADWP and LACI opened a state-of-the-art, LEED Platinum approved facility, the La Kretz
Innovation Campus. Facilities included an Advanced Prototyping Center which featured a 3D printing
shop, an electronics lab, biochemistry lab, CNC center, water jet center, welding shop, premium CAD
software, laser cutters, and an assembly bay and training center. The Center was designed for portfolio
companies to design, build, test, certify, and manufacture their products. Members of the public could
utilize the Advanced Prototyping Center through membership options. LACI’s campus was also open
to the public for weekly tours at no charge to participants. Located in the trendy Arts District area of
Downtown Los Angeles, the Campus was adjacent to Arts District Park, which housed a children’s
playground, a public art installation, performance space, and seating areas. In addition, the Center’s
water recycling program provided 10-15% of the park’s irrigation needs.
Portfolio companies (PCs) were selected through a competitive application process, with an
acceptance rate of approximately 10%. All portfolio companies were in the cleantech industry,
providing hardware or service technologies to reduce greenhouse gas emissions, provide efficient
energy use, or more sustainably use natural resources. PCs included companies focused on electric
vehicles, sustainable construction materials, energy efficient lighting, and other manufacturing,
product, and service companies. Examples of PCs at the time included:
•
Ampaire: a company which was designing and developing high performance, zero-emission
aircraft to help improve efficiency and reduce aviation’s impact on climate change. The
company was also optimizing its system for integration into turboprop airframes in the air at
the time. In addition to creating zero emissions, the company estimated that its product would
reduce costs and create less noise than other planes.
•
Avisare: a procurement SaaS (software as a service) platform with a social mission to level the
playing field for all businesses to compete for contracts through RFP processes. With a goal to
enhance the bidding process, Avisare aided government entities and corporations in finding
Case Fellow Jacqueline Orr and Allison Gister, 2018 MS in Social Entrepreneurship, prepared this case under the supervision
of Dr. Jill Kickul, Clinical Professor of Entrepreneurship. This case was developed from field research and published sources.
Cases are developed solely as the basis for class discussion and are not intended to serve as endorsements, sources of primary
data or illustrations of effective or ineffective management.
Copyright © 2018 Lloyd Greif Center for Entrepreneurial Studies, Marshall School of Business, University of Southern
California. For information about Greif Center cases, please contact us at greifcases@marshall.usc.edu. This publication
may not be digitized, photocopied, or otherwise reproduced, posted or transmitted without the permission of The Lloyd Greif
Center for Entrepreneurial Studies.
2
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and vetting suppliers based on their needs while promoting environmental sustainability,
innovation, and diversity in the global supply chain.
•
Isidore Electronics Recycling (later acquired by Homeboy Industries to become Homeboy
Recycling): a company that offered certified e-waste recycling, data destruction, and IT asset
recovery services. As a social enterprise, the company provided jobs to individuals with barriers
to employment, particularly those who were formerly gang-involved or previously incarcerated.
LACI’s annual budget was just under $5.5 million, and the organization was funded through a
combination of earned revenue (such as PC fees for services, listed in Exhibit 1), philanthropic
contributions, and grants. In addition to its employees and Board of Directors, the organization had
more than 50 advisors and mentors for its portfolio companies, many volunteers, and a handful of
Executive in Residence (EIR) positions. EIRs were paid by LACI as consultants and came from
successful backgrounds as entrepreneurs or executives in high-growth businesses. In 2016, LACI
expanded its staff t0 approximately 30 employees, with several key hires that year.
Planting the Seeds of Diversity and Inclusion at LACI
One of the new hires in 2016 was Estelle Reyes, who stepped in as the organization’s first Director
of Community Engagement, tasked with enhancing community relations externally, as well as
internally with staff and portfolio companies. With a professional background in finance and education,
Reyes came to LACI after leading the Los Angeles office of the Network for Teaching Entrepreneurship
(NFTE), a global nonprofit organization focused on entrepreneurship education for youth from lowincome communities. Reyes described why she was eager to join LACI: “It is an organization in line
with my personal mission- to embody a spirit of self-discovery and empower others to achieve their
potential.”
Reyes was also attracted to the position because she and her hiring managers, LACI Co-Founders
Neal Anderson (COO), and Fred Walti (CEO at the time of Reyes’ hire) had a mutual interest in building
upon the diversity and inclusion (D&I)**efforts underway. Prior to Reyes’ arrival, the organization had
put in place some community engagement activities geared toward improving diversity within LACI
and its portfolio companies. LACI leadership felt that promoting diversity was the right thing to do, but
also understood the financial importance. McKinsey research from the previous year showed that
companies in the top quartile for racial and ethnic diversity were 35% more likely to have above-average
financial returns, and companies in the top quartile for gender diversity were 15% more likely to have
above-average financial returns.3 low financial returns
Yet, there was a lack of understanding about this opportunity in the business community,
particularly among investors. For instance, in 2016, less than 2% of venture capital funds went to
women-owned businesses.4 Meanwhile, from 2007-2016, the number of women-owned businesses in
the United States increased by five times the rate of the national average, with 79% of net new womenowned firms in that time period being launched by a woman of color.5 Also in 2016, the Center for
Global Policy Solutions released a report which stated that the United States was missing an estimated
1.1 million businesses owned by people of color (based on the relative underrepresentation of people of
color who owned employer firms as compared to the proportion of people of color in the labor force)
because of past and present societal discrimination, and that those missing businesses would have
produced an estimated 9 million additional jobs and $300 billion.6
*Diversity refers to
the presence of differences within a collective or group. In a business context, diversity
typically refers to the differences of personal identities of employees and stakeholders. Inclusion refers to all
individuals feeling a sense of belonging or being valued within a group or collective.
3
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Diversity and Inclusion at the Los Angeles Cleantech Incubator
Current events at the time also underscored larger societal tension. The hashtag and social
movement, #OscarsSoWhite, created in 2015, had been highlighting the lack of racial diversity in the
entertainment industry. The 2014 deaths of Michael Brown and Eric Garner, both Black men, had
fueled a national dialogue about racially motivated police brutality. The Equal Employment
Opportunity Commission (EEOC) had recently released a special task force report, which stated that
workplace harassment “on the basis of sex (including sexual orientation, gender identity, and
pregnancy), race, disability, age, ethnicity, national origin, color, and religion remain[ed] a persistent
problem,” that harassment often went unreported, and that even unreported harassment was costly for
companies.7
With this context, Reyes was eager to build on LACI’s programming by developing a more
comprehensive strategy to address and infuse D&I throughout the organization. She explained, “I was
excited about the opportunity to work with our team in building out our nascent D&I efforts, not only
because it is the right thing to do, but because it is a business imperative.”
D&I Efforts Taking Root
Reyes’ arrival also coincided with JPMorgan Chase & Co. awarding LACI with a $200,000 grant
through its Small Business Expansion and Workforce Readiness focus areas. The grant provided
funding for staff-driven efforts to create a more diverse and inclusive entrepreneurial community in
Los Angeles. As part of this funding, LACI also joined a cohort of incubators concerned with D&I. This
cohort served as an information network and learning community. In addition, through JPMorgan
Chase & Co.’s partnership with the Initiative for a Competitive Inner City (ICIC), LACI gained access to
data from other entrepreneurial support organizations. LACI could therefore benchmark its efforts
against other incubators located throughout the United States. Although LACI had been building upon
its D&I efforts, Reyes saw that challenges remained. “No LACI staff were devoted to D&I on a full-time
basis. And only one other person besides me had D&I explicitly stated as part of our professional
responsibilities,” she reflected.
That other person was Tracy Gray, one of LACI’s Executives in Residence, and an early champion of
the organization’s D&I efforts. In addition to her role as an EIR, Gray was also the Founder & Managing
Partner of impact venture capital firm, The 22 Fund (formerly The 22 Capital Group), and Founder of
the nonprofit, We Are Enough. Gray came to LACI with deep experience across many relevant
industries. She began her career as an engineer for the Space Shuttle program, and later worked in the
music industry, acted as an equity capital consultant to former Los Angeles Mayor Antonio Villaraigosa,
and worked in venture capital. Her time as a venture capital analyst in the early 2000s gave Gray insight
into the homogenous world of startups seeking venture capital. “As an analyst, I read 500 business
plans a month and there wasn’t a single woman or person of color in the bunch. I was the gatekeeper
and they just weren’t there.”
Gray was serving on the Board of Directors of a LACI portfolio company, Isidore Recycling, as well
as a nonprofit organization located at LACI, called MAKE IT IN LA. In mid-2016, the CEO of Isidore
Recycling introduced Gray to LACI’s Co-Founder and COO, Neal Anderson, at the reception desk.
Anderson asked Gray how she was enjoying her time at LACI. Gray replied, “Well, you have a problem.
It’s only white dudes. LACI doesn’t look like Los Angeles.”
This encounter began the process to recruit Gray as an EIR, with the hope that she could help guide
the D&I efforts that Reyes had recently begun leading. Gray was particularly adamant about improving
LACI’s D&I work, given that LACI was itself a nonprofit dedicated to ensuring an inclusive green
economy:
4
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The nonprofit sector is behind on diversity and inclusion efforts. When people think
they are already working for a good cause, they don’t try to be better at anything
else. Specific to cleantech, the environmental movement has also been very white
and upper-class. But the notion of environmental justice came from communities
of color.
With the JPMorgan Chase & Co. grant funding in place, Reyes and Gray built LACI’s Diversity in
Entrepreneurship Advisory Council, with leaders drawn from business, government, academia, and
community organizations. Reyes and Gray purposefully emphasized the diversity of the Council itself,
both in terms of the industries and individuals represented. The Council members offered perspectives
from this cross-section of industries in Los Angeles, and understood the nuances in their respective
fields to bring more diverse entrepreneurs to LACI’s programming. One such member was Dan Nance,
who had spent decades in the advertising business, previously running two of the top multicultural
communications agencies and aiding Fortune 500 companies in understanding and connecting to
African American, Hispanic, and LGBTQ communities. Nance realized that companies were becoming
increasingly savvy in connecting with diverse consumers, but were not using those insights internally
with their own employees. To address this need, Nance founded High Performance Edge to provide
executive coaching and organizational consulting in these and other areas. See Exhibit 2 for a list and
photo of all Council members.
The internal D&I Team also began to gain traction. Gray reflected, “The staff really cares about the
issue [D&I] and they truly want to work in a place where inclusion and equity are the foundation. They
even come to our internal team meetings…and who wants to attend another meeting?!” Reyes and Gray
quickly recruited Todd Hitomi, a project manager who was part of the entrepreneurial services team,
to join the efforts. “We knew he would be key to engaging the portfolio companies, and besides that, he
was just a natural for this work,” Gray said.
Hitomi originally began his time at LACI as a volunteer. He had a background in community-based
education and engagement, along with what he called, “an accumulated social debt” [an internal
obligation to give back to society]. He was soon hired on staff as a project manager, becoming the
primary point of contact for LACI’s portfolio companies, and the first touch-point for entrepreneurs
considering applying for incubation at LACI. For Hitomi, D&I was important:
There is a theory that the more eyes on an obstacle or problem, the more robust the
new innovation will be. This is the root of open source mentality. Diversity, and not
just of skin color and gender, helps the PCs create more enduring and robust
companies, products and services. If you can have diversity in thinking, the natural
result can be diversity in representation. This creates a forum for an inclusive
environment.
With an established core group of staff and advisors, Reyes, Gray, and Hitomi thought about how to
begin their work. The D&I Team knew that the JPMorgan Chase & Co. grant came with reporting
requirements, which meant that LACI would need to detail how the funds had been used and what was
accomplished. They also knew that LACI staff would want to see evidence to better understand the
issues related to D&I. In an effort to address both imperatives, the group conducted a demographic
survey of staff and portfolio companies. Gray explained, “We anecdotally see or feel there is a problem,
but we needed to establish a baseline and then compare with the tech industry average, and be better
than that.”
5
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Surveying the Landscape
The initial results of the demographic survey showed that both LACI staff and portfolio companies
were more racially diverse than others in the JPMorgan Chase & Co. grant cohort. LACI also supported
more female founders than the broader tech industry average. Despite the positive results, Reyes, Gray,
and Hitomi were not tempted to claim success. The D&I Team convened to determine how to set goals
for improvement.
“There’s really no ‘north star’ or manual for how you start a D&I initiative. The D&I Team had to
make its own way and set its own goals,” noted Reyes. The first action was to take a deeper look at the
demographic data from the survey. First, the team removed the minority groups that were typically
over-represented in the tech industry from the dataset. They also reviewed the portfolio company data
and realized it was incomplete, as it did not differentiate between founders and employees. Hitomi
interviewed each founder and added information, including co-founders who were not initially counted
because they had not been working from the LACI campus.
With this refined dataset, LACI had a much narrower margin over the ICIC benchmark. Gray urged,
“We must do something bigger than patting ourselves on the back for the status quo. LACI should look
like Los Angeles [racially diverse, with large minority populations] – not Silicon Valley [the tech
companies of which were primarily dominated by white men].” Hitomi agreed, “My priority now is
making sure that our internal organization and our portfolio companies actually represent the
community we participate in.”
Understanding that more work was needed, the Advisory Council provided guidance in a goalsetting process to frame the work for the coming year. The group considered many facets of diversity,
including race, gender, and sexual orientation, as well as individuals with disabilities, formerly
ex-prisoner incarcerated individuals, and veterans.
Based on demographic data from the survey and some existing programming, the team decided to
focus first on diversity of gender and race. The D&I Team met with the Advisory Council to discuss
execution of a two-pronged strategy for 2017:
•
Increase the percentage of PC founders who were women and people from minority groups
typically under-represented in the tech industry
•
Recruit more women and people of color to serve as LACI staff and employees of PCs
The female founder PC goal was set at just under 40% to match the broader economy benchmark,
which was higher than the tech industry benchmark. For racial diversity, LACI set an ambitious goal
for LACI and PC staff to match Los Angeles County demographics: Latino (48%); White (26%); Asian
(14%); Black (8%); Other races (2%); Native Hawaiian and Other Pacific Islander (0.3%), and Native
American (0.2%),8 although they had no defined timeframe to reach this goal. Gray related the D&I
Team and Advisory Council’s vision, “We have incremental goals each year, but our ultimate goal is a
stretch goal to go beyond where the broader tech industry is.”
The D&I Team intended to activate Advisory Council members and staff members to help identify
PC candidates. They aimed to impact their employee diversity goal with various approaches, including
high school field trips, college internships, workforce development programs, and identifying best
practices for diverse hiring. Nance described the dual pressure to create long-term strategic plans while
also addressing short-term needs:
There were multiple open positions at LACI, which can have a large impact on a
small organization. The idea was not to wait to implement all of our ideas, but to
also create a safety net in the short term to make sure LACI didn’t turn away
6
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qualified candidates in the interim. We didn’t want to miss opportunities in
immediate hiring because we were waiting for perfection. So in a sense, the D&I
Team was building the plane as they flew it.
The D&I Team also articulated their desire to frame LACI’s internal operations and culture within a
D&I lens. LACI’s incoming CEO, Matt Petersen, hired in June 2017, later reflected on LACI’s goals, “It
is important to walk the talk rather than just saying D&I is important. How do you both support women
and people of color that are already part of the cleantech economy, and make it more attractive to
engage others to get them to participate?” The D&I Team and Advisory Council planned to spend 2017
trying to address that question.
Beginning to Bud
With the survey completed and goals set, Reyes, Gray, and Hitomi began 2017 focused on diversity.
While they remained a cohesive leadership team, Reyes and Gray prioritized internal activities, while
Hitomi focused on the portfolio companies. As a “staff-adjacent” consultant EIR, Gray had the ability
to speak more candidly with LACI leadership than her employee colleagues about progress and setbacks
in the D&I work. Later reviewing the D&I efforts, Petersen shared, “We are lucky to have someone like
Estelle at the helm of the work. It takes the right personality to be able to both pull and push, while also
being so encouraging. It’s rare to find that in one person.”
Internal Progress
Reyes, Gray, and Hitomi made an effort to involve other staff members in D&I initiatives. Gray
recounted, “At each of our Diversity in Entrepreneurship Advisory Council Meetings and internal D&I
Team meetings, we invited a new LACI staff member, called our ‘Guest Star,’ to get more engaged with
our efforts.”
In its early years, LACI relied exclusively on contracted human resource services. But in May 2017,
LACI hired its first full-time human resources manager, Jay Epelman, who had HR experience in
multiple industries. The D&I Team realized the opportunity this represented, and immediately included
Epelman in D&I initiatives. Epelman described that the D&I Team was most concerned with employee
recruitment, how it had been handled before, and how LACI would recruit going forward. “The D&I
Team wanted to make sure LACI was a place that diverse candidates would know they are welcome to
apply and that the organization would help them apply. And then we wanted to focus on inclusion, or
encouraging employees to feel included in the environment,” Epelman recalled.
In partnership with the D&I Team and LACI leadership, Epelman spearheaded the implementation
of some immediately actionable steps. The website was updated with staff pictures to show the diversity
of the workforce, and with photos from various events on campus. The statement about equal
opportunity employment was expanded beyond boilerplate legal language in small print at the bottom
of the webpage to a specific statement in larger font higher on the page. That statement read:
LACI is an Equal Opportunity Employer (EOE) and committed to building a more
inclusive ecosystem that integrates women, people of color, and other
underrepresented groups into the cleantech sector and the overall tech industry.
We strongly encourage applications from qualified applicants and members of
underrepresented groups. The information collected from the application helps us
ensure that we are meeting our goal of an equitable and diverse campus and
community.9
Epelman began to post job opportunities in multiple locations to reach more diverse candidates,
and scrutinized job descriptions to incorporate more inclusive language. Finally, in the job application
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system, Epelman added optional questions about gender and other demographic data to track who was
applying and which applicants were moving forward in the process.
Building the Pipeline
With the location of its campus in the heart of Downtown Los Angeles, and its status as a publicprivate partnership, LACI had always worked to engage and champion the local community. Reyes
described, “All programming is informed by the community. LACI has the ability to be a convener,
helping to connect the city and DWP [Los Angeles Department of Water and Power] with constituencies
in the community to share their perspectives.”
The D&I Team saw the broader community as both a resource and a pipeline for future LACI
employees and entrepreneurs to become part of the portfolio companies. To further diversify this
pipeline, Reyes formalized a high school field trip program, for which she also secured funding from
LADWP. The goal of the program was to introduce students from local high schools to LACI, as well as
to showcase employment opportunities in the cleantech industry. Student field trips became a natural
way for LACI to recruit interns.
Reyes also took on the Women in Cleantech initiative, which was launched in Spring 2016 by LACI
VP of Development, Amanda Sabicer, with a goal to attract female entrepreneurs for networking and
learning opportunities, as well as to promote LACI’s incubation program among women. Sabicer was
aided by Linda Driscoll (Reyes’ key collaborator on community engagement efforts), and the two of
them shared a vision to create a safe space for women to connect, share best practices, and feel
represented in the cleantech industry. The initiative offered workshops in negotiation and building
organizational diversity, and connected female entrepreneurs in Los Angeles to offer each other
guidance and support. By managing the initiative, LACI expanded its own network of potential portfolio
companies, while building the capacity of local entrepreneurs.
Serving as the first point of contact in the process to become a PC, Hitomi leveraged his background
in community engagement and education to begin a series of outreach events. He had a goal of
connecting with historically black colleges and universities, Hispanic chambers of commerce, and any
other social groups or business organization that could have access to companies that were developing
cleantech technologies or solutions. Prior to these efforts, the application process for portfolio
companies was mostly passive; people and companies that already knew about LACI would refer others
within their networks. Hitomi recounted, “These companies tended to fit the more ‘typical’ tech
entrepreneur profile, which isn’t very diverse. There was an opportunity to create an active outreach
program to see how applications and portfolio companies from under-represented groups could be
bolstered.”
Hitomi followed up on larger events with smaller “Todd Talks,” [a word play on the popular Ted
Talk lecture videos] to reinforce the messages from the larger community events, and prepare
individuals for the application process, or provide resources to help ready them for future incubation
at LACI. “This process required a clear definition of cleantech and the archetype of the company LACI
is seeking. Companies must be scalable – not just an idea or a lifestyle company,” said Hitomi.
Struggles and Setbacks
After early momentum, Reyes, Gray, and Hitomi all experienced setbacks in their initiatives. Reyes
and Gray expressed some frustration with their ability to integrate the concepts of diversity and
inclusion throughout the organization. “Staff are thinking about these issues, but still think of D&I as a
side project. For instance, people on staff will send relevant articles about diversity only to the D&I
Team members, and not the entire staff,” Gray lamented.
8
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In another instance, job descriptions were posted with the newly-created diversity statement
missing, and instead used the boilerplate statement that did not emphasize LACI’s D&I goals. The D&I
Team felt that many staff at the organization valued D&I, but did not view it as critical to the success of
the organization. Reyes wondered how to reach those people, “In order to truly integrate D&I into
organizational practice, it requires a culture shift, and that takes time.”
While the outreach events and “Todd Talks” helped LACI reach previously unknown entrepreneurs,
there were staffing and financial constraints on Hitomi’s ability to engage further with many of the
entrepreneurs. He said, “LACI didn’t have the resources to create a pre-incubator program for
underrepresented founders. Some don’t know the vocabulary [that is needed in mostly-white tech
entrepreneur spaces], so we wanted to prep them on how to complete the PC application. This was a
vision that we aspired for.”
Nance (the previously referenced Advisory Council member) shared his impression of the challenges
to D&I efforts at the time:
The Advisory Council conducted an informal internal audit of D&I practices at
LACI. Early results showed that nothing was severely broken; there was an overall
openness to D&I at LACI. The problem was more that people didn’t know what to
do. It was not yet built into organizational culture and practices. The D&I Team
also felt scattered and overwhelmed. There was an urgency to gain traction for big
impact results at a larger level.
Further Growth
Reyes was proud of the D&I work she had undertaken in her first year at LACI. But she was
frustrated that the progress felt limited to her team, and not the entire organization. Reyes reflected,
“If anything keeps me up at night, it’s wondering how to infuse D&I across all of LACI. My goal is to not
even need a specific diversity team, because D&I is part of everyone’s work.” CEO Matt Petersen agreed,
“Our challenge is how to integrate this work throughout the organization and make it part of our core
values. D&I can’t just be an isolated issue. It must be a core part of our process.”
Before the D&I Team could influence larger organizational culture, they had to ensure that they were
in alignment themselves. Hitomi expounded:
I spend a lot of time thinking about the very definition of diversity and inclusion.
The D&I Team is generally in agreement with regard to our efforts, but I want to
make sure we all understand the “why.” Each person has their own personal
background, which in turn forms the actions of the group. It becomes easy to stop
challenging your own assumptions and those of the group. I want to be precise and
I often provoke intense discussion. Repairing injustice of the past and equalizing
for the future are two separate conversations, but not everyone believes that.
Changing culture at LACI and beyond is a long game—we cannot think it will
happen overnight. One session [for staff training or professional development]
won’t do it. It’s an overlay of multi-generational influences. But we need agreement
on how we behave with new people coming in [LACI employees and portfolio
companies]. We must have a moral structure to define the culture.
In addition to this challenge, and despite the organization being better than the industry average,
LACI was still confronting its own shortcomings regarding diversity. The Board of Directors was mostly
men, and the chief-level leadership team at LACI was comprised entirely of white men. Gray was the
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Diversity and Inclusion at the Los Angeles Cleantech Incubator
only black EIR or staff member. The D&I Team wondered how to create mechanisms to improve the
diversity of their staff, leadership, and PCs. Gray contemplated:
It’s not that there are no best practices to draw from– there are plenty. But because
organizational cultures are so unique and created by people, there is no ‘one size
fits all.’ There are some practices that we pulled from the ICIC study, “Creating
Inclusive High-Tech Incubators and Accelerators.” For example, you must be
intentional and market to women and people of color. It can’t be ‘if you build it, they
will come.’ Women and people of color are also less likely to try again when they
are told ‘no.’ We are so used to hearing ‘no’ that we just feel it won’t change. That’s
why Todd works so hard to point these entrepreneurs to other assistance programs
and tells them to come back when they get to a certain point. I’ve seen entrepreneurs
come back six months later and I KNOW it’s because Todd has stayed in touch.
When I’m super frustrated and feeling like two steps backwards, seeing how Todd
keeps people engaged makes me forget [those feelings].
Given the limited staff time and resources available for recruitment, the team needed to be strategic
in their efforts to seek more diverse candidates and potential PCs. In addition, they discussed whether
and when to focus on other types of diversity beyond gender and race.
Lack of diversity sometimes fed into an inclusiveness issue at LACI, as well. Gray explained, “It is
exhausting to have to be the one to constantly point out the issues [about the shortcomings at LACI and
in the broader culture] and have the de facto educational role within the organization. I wonder if
people get numb and stop hearing me, and then I get mad that I have to moderate what I say.”
With the guidance of the Advisory Council, the D&I Team had been thinking about how to shift their
focus beyond diversity, to also prioritize inclusion. The Team therefore planned to host inclusive
leadership workshops later that year for LACI staff and PCs. But they knew that in order to be effective
in their long-term plan, they had to foster a culture in which diversity could thrive. “Getting a handle
on inclusion is more difficult than diversity. The metrics aren’t as clear. It is challenging and essential
to understand the inter-dynamics of culture. At LACI, we have staff, portfolio companies, and
nonprofits which all have their own internal cultures and don’t always interact with one another, so it’s
even more complicated,” Nance shared.
Similar challenges loomed large outside of LACI. “Cleantech, and tech in general, remains a largely
white-male dominated culture. This is true of the funding side too. It’s an endemic challenge. To help
encourage a shift, funders and investors need to do more to find and invest in female founders and
people of color,” Petersen asserted. Reyes, Gray, and Hitomi knew that their D&I efforts at LACI needed
to extend to the broader industry. As a community-oriented nonprofit incubator, they wanted to find
ways to be influential beyond their own organization. LACI had begun to receive significant attention
for their work in cleantech, and the D&I Team contemplated how to best capitalize on this opportunity.
The team had experienced success with strategic partnerships in the past, and they knew there was
potential to create more. However, they also knew that such partnerships typically involved significant
staff time, which was already limited. They could also invest more in community outreach and events,
such as Taking the Lead. Given its roots in the public sector, LACI could also move into policy and
advocacy work. They knew that whatever they pursued must be in alignment with LACI’s larger
strategic goals.
Conclusion
As the Taking the Lead event wound down and the energy faded from LACI’s amphitheater, Reyes,
Gray, and Hitomi poured some leftover coffee into their reusable mugs. They were exhausted, but the
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day had been validating and motivational. People from many different business sectors across Southern
California had attended, and the speakers and audience members reflected the various types of diversity
that the D&I Team and Advisory Council wanted to promote. Nance, who attended as an audience
member, reflected, “I was incredibly impressed by the caliber of talent and insights that were presented
at the event. It really represented the potential for LACI as they began to leverage D&I as a strategic
growth tool. You could see and feel that in the room.”
Never content to rest on their laurels, the team also knew that they had more to tackle. The trio
discussed their goal to build a more inclusive ecosystem to integrate women, people of color, and other
under-represented groups into the cleantech sector and larger tech industry. For the past year, they
strove to embrace diversity as an organizational value. They knew that they needed to continue to
improve in this endeavor, but also that they needed to move beyond diversity and prioritize inclusion
as well. “Once you attract diverse talent, you have to retain them. You don’t want to be a leaky bucket,”
Gray remarked. Hitomi added, “We need to think about how to measure success. Our diversity goal has
clear metrics—diversity based on representation. But inclusion is much fuzzier. How is it defined and
then quantified? If we are successful, everyone at LACI and our PCs will feel safe representing their
points of view.”
Although they recognized that cultural change involved many factors and required patience, Reyes,
Gray, and Hitomi felt urgency. They sat down to draft an agenda for their next D&I meeting. They had
just received the results from their 2017 demographic survey (see Exhibit 3). As they entered their
second year of dedicated work together, they wanted to have meaningful, measurable action items to
continue to improve diversity and inclusion within LACI, across portfolio companies, and throughout
the La Kretz Innovation Campus network and the broader cleantech industry.
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Diversity and Inclusion at the Los Angeles Cleantech Incubator
Exhibit 1: Services Provided to LACI Portfolio Companies
2017 Services for PCs
•
Business Planning
•
Pre-Audit Readiness
•
Investor Identification
•
Industry Database Access
•
Comps Analysis
•
Investment Structuring
•
Deal Doc Templates
•
Investor Relationship Management
•
Discounted Legal Partner Rates
•
Direct Deal Negotiation
•
Coaching and Partnership with an EIR
Source: LACI
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Exhibit 2: 2017 Diversity in Entrepreneurship Advisory Council Members
•
Tracy Gray (Chair) – 22 Capital Group LACI
•
•
David Alba – GRID Logistics, LACI portfolio
company
Michael Kelly – LA Coalition for the Economy
and Jobs
•
Vivienne Lee – REDF
•
Brence Culp – LA24 (now LA28)
•
Jorge Madrid – Environmental Defense Fund
•
Zita Davis – City of Los Angeles
•
Dan Nance – High Performance Edge
•
Linda Driscoll – LACI
•
Estelle Reyes – LACI
•
Monique Earl – LA Department of
Transportation
•
Tom Soto – LACI Board Member
•
•
Christine Harada – Former Chief Sustainability
Officer with the Obama Administration
Daniel Tellalian – Avivar Capital
•
Todd Hitomi – LACI
•
Sky Kelley – Avisaire, LACI portfolio company
•
Kecia Washington – LADWP
Advisory Council Members. Todd Hitomi third from left, Estelle Reyes far right, and Tracy Gray second from right.
Source: LACI
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Diversity and Inclusion at the Los Angeles Cleantech Incubator
Exhibit 3: Demographic Data for LACI and Portfolio Companies
Entrepreneur Diversity Measures
Founder Demographics by Gender and Race
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
ICIC Benchmark
LACI Portfolio Companies Baseline
8 high-tech
November 2016
incubators/accelerators across the
U.S.
Female Founders
LACI Portfolio Companies June
2017
People of Color Founders
Employee Diversity Measures
Demographics by Gender
70%
60%
50%
40%
30%
20%
10%
0%
U.S. Workforce 2015
LACI Employees November 2016
Female
LACI Portfolio Companies
November 2016
Male
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Diversity and Inclusion at the Los Angeles Cleantech Incubator
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Exhibit 3: Demographic Data for LACI and Portfolio Companies (continued)
Employee Diversity Measures
Demographics by Race and Ethnicity
60%
50%
40%
30%
20%
10%
0%
Los Angeles Census 2015
Hispanic
LACI Employees 2016
White
Black
Portfolio Companies 2016
Asian
Multi-Racial
Source: LACI
1 LACI Website <https://laincubator.org>
2 LACI Website <https://laincubator.org>
3 Hunt, V., Layton, D., and Prince, S., “Diversity Matters,” 2015. McKinsey & Co.
4 Zarya, V., “Female Founders Got 2% of Venture Capital Dollars in 2017,” January 31, 2018. Fortune.
5 The 2016 State of Women-Owned Businesses Report. American Express OPEN
6 Austin, A., “The Color of Entrepreneurship: Why the Racial Gap Among Firms Costs the U.S. Billions,” April
20, 2016. Center for Global Policy Solutions.
7 Feldblum, C. and Lipnic, V., “Report of the Co-Chairs of the EEOC Select Task Force on the Study of
Harassment in the Workplace,” June 2016. U.S. Equal Employment Opportunity Commission.
8 US Census Bureau ACS, 2015; note that numbers do not sum to 100 due to rounding.
9 LACI Website <https://laincubator.org>
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