Backlash builds against sexual harassment in Silicon Valley

The upheaval over sexual harassment in the technology startup industry mushroomed this week, with the resignation of a prominent Silicon Valley investor who said he had been “a creep” and more women saying they would come forward to talk about their experiences.

Dave McClure, the founder of startup incubator 500 Startups, said he was stepping down on Monday after The New York Times reported last week that he had come onto a woman who was applying for a job at his firm. McClure apologised for his behaviour over the weekend, in a post titled “I’m a creep. I’m sorry.” Another partner at 500 Startups, Elizabeth Yin, also resigned this weekend, saying that she was quitting after the firm had covered up a separate harassment episode by McClure.

Several other startup investors have also issued mea culpas for not doing enough to prevent sexual harassment, with some around the world beginning to strategise over how to avert the episodes in the first place. The New England Venture Capital Association, a trade group, last week invited its members to sign an anti-discrimination and sexual harassment statement. In Australia, startup entrepreneurs also issued a statement condemning the behaviour.

And female entrepreneurs, emboldened by the support, have over the last few days become more willing to share their stories.

“Women are more empowered than ever to not tolerate these things,” said Sarah Kunst, chief executive of fitness startup Proday, who was propositioned by McClure after he had begun talking with her about a possible role at 500 Startups. Kunst said there were now “countless discussions” among women about speaking publicly about their experiences and how to end the behaviour.

The furore follows a string of revelations about how venture capitalists have mistreated women entrepreneurs over the years, an issue that was in the past largely swept under the carpet. The disclosures gained momentum after the implosion last month of a small venture firm, Binary Capital, whose partner, Justin Caldbeck, apologised to women after several spoke on the record about his behaviour. The New York Times also spoke to more than two dozen female entrepreneurs who described unwanted advances, touching and sexist comments by investors.

For years, the startup and venture capital industry – which is predominantly male – has been immune to criticism about its behaviour because the industry has created immense wealth by churning out hit companies, such as Facebook, Snap and Uber. The backlash now suggests that those successes are no longer enough to excuse the anything-goes conduct of some investors and entrepreneurs.

With more women willing to speak openly about harassment and discrimination, Kate Mitchell, a founder of a Silicon Valley venture firm Scale Venture Partners, said the industry was facing “a tipping point”.

“The fact this behaviour is pervasive and what we know seems to be the tip of the iceberg has made us understand the difficulty and reality of our challenge,” Mitchell said. “Actions need to be more aggressive and more all-encompassing than what I previously thought.”

But even as the movement to grapple with harassment gathers momentum, some venture capital firms are privately grumbling about having to deal with the issue, said some investors.

“Some men have the feeling that the conversation has turned into a witch hunt,” said Aileen Lee, a founder of Cowboy Ventures. “They’re asking when people will stop being outed.”

That attitude belies a lack of understanding about the issue, some entrepreneurs said. Even though “we’ve accepted why it’s so important for a boss to not hit on someone who reports to him, many people still don’t understand that those same power dynamics play out when founders seek to network or raise money,” said Kathryn Minshew, founder of The Muse, a company that helps women find jobs.

A few years ago, Minshew told Wired about how she had been treated in the startup ecosystem. Over the last week, she also told The New York Times that she had been harassed by male investors – whom she did not name – on multiple occasions.

In one instance, she met an investor at a conference and set up a time to discuss her company. That day, the investor’s assistant said he needed to move the meeting to the evening. At the meeting, he got very close to Minshew and put his arm around her. In another instance, an investor suggested the two sleep together after his firm had signed an agreement to invest in Minshew’s company, but before the cash was in the bank. She was unable to accept his money after that episode, which jeopardised her ability to fund her company.

“It feels like the industry’s acceptance and tolerance of this behaviour is changing,” Minshew said. “I really appreciate how people in the industry are standing up and saying no, this isn’t OK.”

At 500 Startups, McClure’s resignation was spurred not only by Kunst’s coming forward, but by a separate internal report in April that said he had sexually assaulted an employee, according to a resignation letter by Yin, the 500 Startups’ partner who stepped down over the weekend. Her letter was obtained by The New York Times.

The sexual assault claim moved 500 Startups’ management to remove McClure from day-to-day operations of the firm in May, according to Yin’s letter. But employees were told the change happened because of growth issues, according to the letter. McClure continued to be active in the company’s Slack channels, weighing in on firm decisions, according to screenshots of the conversations that were reviewed by The New York Times.

After the newspaper reported on McClure last week, he wrote on the 500 Startups’ Slack channels that he had “not assaulted anyone (that I’m aware of)”. Aman Verjee, chief operating officer of 500 Startups, also told colleagues and employees that there had been “no formal finding of harassment” and “no legal complaint against 500 or Dave.”

Investors in 500 Startups were not alerted to the change in management at the incubator until after The New York Times published the information on McClure and Kunst, according to Brad Feld, an investor in 500 Startups. The firm also said last Friday in an email to investors, which was obtained by The New York Times, that McClure “will continue to be a significant contributor to the future success of 500.”

On Saturday, McClure posted his public apology. “My behaviour was inexcusable and wrong,” he wrote.

But that day, the firm’s leaders held a heated phone conversation, in which McClure admitted to initiating unwanted physical contact with the unidentified employee, according to Yin’s letter.

Yin declined to comment. McClure did not immediately respond to a request for comment. Axios earlier reported Yin’s letter.

In a statement on Monday, 500 Startups said that it learned of “allegations related to inappropriate behaviour by Dave McClure” in April, and that it immediately began an internal investigation, which led to McClure’s stepping back from responsibilities. “Due to the sensitivity of personnel issues and the privacy of all involved, the investigation was kept confidential,” the firm said.

In her letter, Yin wrote, “I cannot support the lack of transparency and propagation of misinformation at the management level at this company.”

More revelations emerged against McClure on Monday. Cheryl Yeoh, an entrepreneur in Malaysia, posted online about being propositioned by McClure in 2011 and assaulted in 2014.

“If someone uses their power as a VC to make repeated sexual, physical advances on women in a professional context, that goes way beyond being a creep,” she wrote.

In response, 500 Startups said, “We appreciate Cheryl speaking up and realise how upsetting and painful it is for her to have gone through that experience and have the courage to speak up.”

© New York Times