Jesse's New Target: Silicon Valley

High-Tech Land claims it's a meritocracy. So where, Jackson asks, are all the blacks and Hispanics

Jesse Jackson has seen the future of his push to win a bigger piece of prosperity for people of color--and it's in Silicon Valley. Whether this self-proclaimed meritocracy needs the sort of pressure for minority inclusion that Jackson has brought to bear on Wall Street and elsewhere is debatable. But there is no question that Jackson is taking his economic road show to the vibrant heartland of the New Economy, where whites command more than 90% of the CEO jobs and board seats at the top 150 public companies.

Jackson's Rainbow/PUSH Coalition has bought about $100,000 worth of stock in 50 of the biggest high-tech corporations. That gives Jackson entree to annual meetings--a tactic he has used before. Later this summer, Jackson plans to open a staffed office in San Jose. He is recruiting an advisory board of top Valley executives to suggest ways to increase black and Hispanic participation in the region's high-tech work force-- currently at 3.7% and 8.4%, respectively. And this fall, again mirroring his efforts on Wall Street, Jackson intends to host a conference that will address ways to better educate blacks and Hispanics for jobs in high tech.

UNABASHED. But the pragmatic culture of Wall Street, which at least appeared to respond to Jackson's exhortations, is a far cry from the bootstrap mentality of High-Tech Land. More important, Silicon Valley already has a diverse work force. Some 31% of the tech industry's engineers and professionals are Asian, and the Valley is a major employer of immigrants. Several have gone far in the Valley, such as Sun Microsystems co-founder Vinod Khosla, a native of India and now a venture capitalist.

Jackson acknowledges this but is pushing for corporations to reach beyond their traditional networks to tap minority-owned businesses--as money managers, lawyers, ad agencies, and vendors, thus widening their pool of money and talent. The peripatetic cleric, however, has little experience in the ways of the Valley. Here, among rolling foothills and million-dollar tract houses, financiers pumped $4.5 billion into 786 ventures last year--numbers that dwarf startup investments anywhere else on earth. And the region is unabashedly proud that it has generated more than a third of the country's economic growth since 1995.

To its denizens, techdom thrives precisely because it is such a free market. Unfettered competition reigns; big government, regulation, and affirmative action are disdained. T.J. Rodgers of Cypress Semiconductor Corp. and Ronald K. Unz of Wall Street Analytics Inc. were among the biggest backers of California's Proposition 209, the anti-affirmative action law passed in 1996.

Jackson scoffs at the idea that the Valley is a true meritocracy. "Everybody tells that lie," he says. But Valley execs are fervent. Says John T. Chambers, CEO of Cisco Systems Inc.: "We don't care what your sex is, how old you are, who your parents are, or your country of origin. If you're good, we love you." Rodgers of Cypress contends that Jackson's race-based demands are "striking at the heart of what makes the Valley successful." Told that Jackson is focusing on the Valley precisely because of its unparalleled prosperity, Scott G. McNealy, CEO of Sun Microsystems Inc., says: "If that's the case, it's terrorism."

But not every Valley exec agrees that Jackson should butt out. Frank S. Greene, CEO of New Vista Capital; Robert E. Knowling, CEO of Covad Communications; Roy Clay of Rod-L Electronics; and Kenneth L. Coleman, a senior vice-president at Silicon Graphics Inc., are all African Americans--and all part of Jackson's inner circle in the Valley. "There's big denial," says Knowling. "It's all about public image and big egos." Blacks, he adds, "have not had representation and won't get a part of the value creation unless they're sitting in board of directors seats."

Edward W. "Ned" Barnholt, the white CEO of Hewlett-Packard Co.'s soon-to-be-spun-off test-and-measurement unit, who has met with Jackson, says: "He's putting the spotlight on [the diversity issue] and...I hope that will bring about change."

Certainly, the demand for qualified workers is huge. Currently, some 30,000 jobs in the Valley--out of about 480,000--are unfilled. And a great many positions are being taken by foreigners: Congress raised the limit for temporary work visas from 65,000 in 1998 to 115,000 in 1999 largely to accommodate high-tech demand. The ceiling was unexpectedly hit in June, and tech execs want to raise the limit to 200,000 for the year 2000.

That infuriates minority advocates. They point to Bureau of Labor Statistics data that show more than 300,000 African Americans and Hispanics hold engineering and scientific jobs. "That blows away the whole argument that there aren't enough qualified blacks," says John Templeton, director of the Coalition for Fair Employment in Silicon Valley, which promotes minorities in business. Maybe. But while recruiters concede they visit state and predominantly black schools less often than top-20 colleges, just 7.2% of engineering and computer science degrees went to blacks and 5.9% to Hispanics in 1996, says the National Science Foundation.

STREET VICTORIES. How Jackson aims to bridge the high-tech education gap of African Americans and Hispanics beyond raising awareness of the issue remains unclear. In fact, one of the frequent criticisms of Jackson's techniques is that they are heavy on showboating and light on follow-up. For example, the long-term effectiveness of other Jackson initiatives, such as the Wall Street Project, is open to question though he can point to several victories.

Two years ago, for the first time, the New York Stock Exchange closed on Martin Luther King Jr.'s birthday, in part because of pressure from Rainbow/PUSH. And Jackson's jawboning has gotten a handful of his favorite minority investment banks--such as Blaylock & Partners--signed up as co-managers of high-profile debt and equity underwritings, including AT&T's $8 billion bond offering and initial public offerings by Pepsi Bottling Group and Goldman, Sachs & Co.

On the Street, however, Jackson enjoys the backing of Sanford I. Weill, the co-chief executive of Citigroup, and Richard A. Grasso, chief executive of the NYSE. They have opened doors for Jackson and co-sponsored two high-profile conferences attended by Bill Clinton. The President says he "strongly supports" Jackson's efforts to get Wall Street and now Silicon Valley to hire more minorities. "I think he deserves a lot of credit," Clinton says.

In Silicon Valley, Jackson has no guardian angels like Weill and Grasso, though he is making high-level contacts. Intel CEO Craig R. Barrett has agreed to meet with Jackson in coming weeks. And in a mid-April visit to Apple Computer Inc.'s headquarters, Jackson says he pressed CEO Steve Jobs to include minorities on his board. When Jobs said Apple had a color-blind approach to business, Jackson says he countered: "The price you pay for blindness is not being able to see opportunities." Apple declined to comment for this story.

As Jackson sees it, corporate executives' "cultural blinders" prevent them from recognizing markets. For example, African Americans spend $3.8 billion on computer and consumer electronic gear, according to Target Market News, a Chicago report on black buying power. "We're trying to stop companies from boycotting the market," Jackson says. "They're the ones building the wall."

Is Jackson calling Valley execs prejudiced? "We can't be prejudiced or we'd be out of business tomorrow," fumes Rodgers. "When Jesse makes a generalization about business, it's the same kind of stereotyping that he's done in the past. He's screwing with my company, and he's screwing Silicon Valley."

For his part, Jackson vows that "we will not rest until the boards and the money managers and the employees look like the customer market." In Silicon Valley, that promises to be a long, hard slog.