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How, and Why, Y Combinator Got Serious About Diversity

This weekend YC hosts its second annual Female Founders Conference, the women-in-tech showcase. It's a worthy cause. And good business.

This Saturday, 800 startup types will gather in San Francisco to watch inspirational and biographical speeches by some of the brightest stars in Silicon Valley. Among the speakers are Adora Cheung of the cleaners-on-demand startup Homejoy, Kimberly Bryant of the Google-backed nonprofit Black Girls Code, and Danielle Morrill of upstart research firm Mattermark.

Two things distinguish this event from the kind of thing that you can see in hotel ballrooms across the Bay Area on pretty much any other afternoon: In an industry where women in technical roles are routinely outnumbered 9 to 1, men won't be allowed onstage or in the audience; and the organizer of the second annual Female Founders Conference is Y Combinator, which has not (at least until recently) been a loud voice in favor of gender equality.

Liz Wessel, a CEO in Y Combinator's current batch that I've been following thus far in 2015 as part of a series exploring the startup factory's evolving role within Silicon Valley, will be there as an attendee, but she won't be paying as much attention to the talks as she might like. Wessel, after all, is in growth mode. As I wrote last week, she and the employees of her recruiting startup, Campus Job, have relocated from New York to a house in Los Altos, California and are in the midst of a mad dash to add customers in advance of YC's Demo Day in late March. "For me, it's all about the fact that it will be full of people who have companies that need to hire," says Wessel. "It's a bunch of potential customers." She likes the idea of encouraging female entrepreneurship; it's just not what she's thinking about at the moment. "It's less about the 'female' and more about the 'founders,'" she adds.

Wessel isn't the target audience for Female Founders Conference; that would be up-and-coming female entrepreneurs who haven't yet applied to Y Combinator. In fact, Jessica Livingston, a YC partner and the conference host, sees the crowd in much the same light as Wessel: as a market. That's why Female Founders, which is free to attendees, doesn't devote much stage time to discussing gender politics and why men aren't allowed through the doors. "I want every seat in the house saved for a woman because they’re the ones I’m trying to inspire," says Livingston. "We want to increase our funnel of applicants."

Female Founders Conference had its origins in a 2013 email sent by Paul Graham—YC’s then-president and Livingston’s husband—suggesting "a startup school-like event for female founders with all YC speakers." Livingston, who'd long harbored a similar ambition, says Graham's email was "the kick in the butt I needed." (Shortly after proposing the event, Graham, who was succeeded last year as president by Sam Altman, found himself in damage control mode after seeming to shrug at sexism in Silicon Valley in an interview with The Information. Graham, Livingston, and other YC partners I've spoken with say that the timing of Female Founders had nothing to do with the mini-scandal, and the timestamp on Graham's email seems to confirm this.)

The brouhaha over Graham's comments aside, the conference has become a powerful centerpiece in a campaign to broaden YC's reach to include, not only greater numbers of women, but also founders from outside the U.S., people of color, and founders of startups far removed from the software world. Over the past year, Altman has published a manifesto on gender discrimination and Michael Seibel, a YC alum and the firm's first African-American partner, has written about attracting more black and Hispanic founders. Seibel also used a round-the-world trip with his fiancee to recruit international founders. Meanwhile, Kathrina Manalac, whom Graham hired in 2013 to broaden of YC's outreach efforts, has organized talks on college campuses as well a conference in London and a forthcoming one in Asia. The goal of all of these efforts is both noble and also a little selfish: "to get more, better founders to apply to YC," as Manalac explains.

The gains made so far are modest but significant. At the YC dinner I attended last month, the crowd was still largely composed of white guys, but the affect seemed less pronounced than it did when I visited in 2009. There were many more founders in their 30s—the stereotype of the YC founder as a Mark Zuckerberg-like boy genius feels increasingly outdated—and there were more women and people of color than you’d find at a typical Silicon Valley confab. The statistics bear this out: 4% of the startups in the winter 2015 batch have a black founder—a grim statistic to be sure, but an improvement over the rest of the industry, where, as reported by my colleague J.J. McCorvey, just 1% of venture-backed startups have a black founder. The current batch marks the first time Y Combinator has asked about gender on its applications, with encouraging results. YC accepted roughly the same percentage of companies with a female founder (a little more than 20%) as the percentage of applications it received with one, which suggests, at the very least, that it isn't discriminating in its admissions decisions. "We have a lot more work to do, but our hearts are in the right place," says Livingston. "We’re moving the needle in the right direction."

Last year's Female Founders Conference is already bearing fruit. "It’s what inspired us to apply," says Jennifer Kessler, who attended the conference last year with her cofounder, Chiara McPhee. Kessler and McPhee, who were accepted into YC in December, won’t say what their startup does—they’re taking part in a time-honored pre-launch dance that I’ll have more to say about in a subsequent post—but they were willing to tell me a bit about themselves. They’re both overachievers and veterans of industries not known for friendliness to women. Kessler is a magna cum laude math and cognitive neuroscience major from the University of Pennsylvania who worked at Merck; McPhee studied public policy at Duke and worked at Accenture and GridPoint. They met while earning MBAs at Stanford Business School, where they decided to start their company. In other words, Kessler and McPhee didn’t need to be inspired to become female startup founders; but they did need to be inspired to apply to Y Combinator.

"The thing that was really eye-opening was this lineup of speakers that we didn’t realize were affiliated with YC," says McPhee. "And then you walked in and it was shoulder-to-shoulder packed with women. It was truly remarkable to see."

Next week: A look at what comes in the Y Combinator goodie bag, and why companies are bending over backwards to reach YC's startups. This is part seven in a series.

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