Valley of change: 500 Startups’ McClure apologises, Christine Tsai takes over as CEO

3 Jul 2017

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After a watershed week of revelations about inappropriate behaviour among Silicon Valley’s elite investors, seismic changes are afoot.

The behaviour of Silicon Valley tech investors towards women founders has been one of the area’s dirty little secrets until now, due to fear of reprisal or ostracism.

Allegations of sexual harassment in the Valley are nothing new but only in recent years has the issue been tackled head-on by individuals who have stood up for their beliefs. This includes Ellen Pao, who took on her former employers at Kleiner Perkins Caufield Byers in court, and Susan Fowler, whose blog post contributed to the stepping down of senior management at Uber as a result of its toxic work culture.

‘The change I want to see is a start-up environment where everyone, regardless of gender and background, feels welcome and safe’

In recent days, The Information reported disturbing accounts of the behaviour of prominent investors from Silicon Valley, as told by several women entrepreneurs.

Another report in the The New York Times detailed how women were warned about speaking out and that doing so might lead to ostracism in the investment community.

The revelations indicate an enormous abuse of power by investors at a time when the imbalance in investment in women-led companies is painfully obvious.

According to PitchBook, women entrepreneurs received $1.5bn in funding last year, compared with $58.2bn for men.

The inequality runs deep across the entire culture of the tech world. A new Harvard Business Review investigation even highlights how women were asked different questions from their male counterparts at prominent tech events and pitching competitions.

Decency pledge

Not only have the revelations triggered an outcry and encouraged more women to speak out, they have sparked seismic changes in the investment scene.

This has led to the collapse of Binary Capital, a firm led by Justin Caldbeck, who was accused of sexually harassing entrepreneurs while he worked at three different venture firms, often during presentations by women entrepreneurs.

The revelations also have prompted apologies from Chris Sacca of Lowercase Capital and Dave McClure of 500 Startups.

Several of Silicon Valley’s leading venture capitalists and technologies, including LinkedIn founder Reid Hoffman, have called for investors to sign a “decency pledge”.

In the case of 500 Startups, McClure will no longer be in charge of day-to-day operations following an internal investigation, and he will also receive counselling.

“I made advances towards multiple women in work-related situations, where it was clearly inappropriate,” McClure wrote in his blog.

“I put people in compromising and inappropriate situations, and I selfishly took advantage of those situations where I should have known better. My behaviour was inexcusable and wrong.”

McClure’s co-founder at 500 Startups, Christine Tsai, has recently taken over the CEO role. She said McClure’s behaviour was unacceptable and not representative of the venture firm’s culture.

“The actions we took weren’t easy, but it was critical to us that we uphold our culture and values – even if it meant asking my co-founder to step aside in order for 500 to grow stronger,” Tsai said.

“That said, I’ll echo what many are already saying. As much as we want to be part of the solution, we clearly have also been part of the problem. Undoubtedly, there are ways I could have done more or acted sooner.

“The change I want to see is a start-up environment where everyone, regardless of gender and background, feels welcome and safe; where sexual harassment or discrimination will not impede great talent from producing great impact,” she said.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years