The Net: A Loser on Race

Tech is harming itself by not putting enough minorities in the executive suite

Remember how the Internet was supposed to change everything? As it turns out, there's at least one thing it hasn't changed at all: the racial complexion of America's tech industry. During four years of covering the Net for BusinessWeek, I've sat down with more than a score of top-tier CEOs. Remarkably, just a handful have been black or Hispanic. And at tech conventions such as Comdex, or at analysts' meetings on Wall Street, precious few attendees look like me. "You'd think that people in technology would be more forward-thinking," laments Cheryl E. Mayberry, a black tech veteran from Chicago who founded NiaOnline, a Web site for black women. "But it's not happening."

It sure isn't. When it comes to promoting women and people of color to the upper ranks, Net companies have crept along slower than crippled crawdads. For the past three years, has identified the 25 most influential people in e-commerce. Our inaugural list showcased 19 white men, four white women, one Asian-American man, and one Japanese man. Not one was African American or Hispanic. This year the list includes just one African American, two women, and two Japanese. Hispanics were shut out again.

Lest you think the diversity dearth is a deficiency of, be assured that we searched worldwide for women and people of color who might qualify as e-commerce elite. But here's the reality: Few minorities and women have emerged as leaders at the Net's most powerful organizations. "There's an established network in the dot-com world that makes it harder for people outside that network to break in," says Elsa Macias, director of information technology research at the Tomás Rivera Policy Institute, a Claremont (Calif.) think tank. In fact, tech companies are worse than the norm. Women account for just 9.8% of officers at 56 top U.S. tech companies, according to researcher Catalyst. Yet they represent 12.5% of officers at the nation's 500 largest enterprises. In 1998, just 2.4% of the managers in Silicon Valley's tech industry were black and only 3.3% were Hispanic, says the Coalition for Fair Employment in Silicon Valley, an industry watchdog. More recent data are unavailable, but whatever smidgen of progress has been made is "a little late and a little slow," the Rev. Jesse Jackson told me recently.

Why does diversity matter? Forget for a moment issues of social justice. Think economics. The ethnic makeup of the U.S. consumer base is changing. Latinos have surged to 12.5% of the population from 10.3% a decade ago--nearly on par with blacks, at 12.9%. Black and Hispanic households with Net access are closing in on the 45% of white households online, according to Forrester Research. And let's not forget that we're talking about the Worldwide Web here. While 57% of Net users reside outside of North America, 20 of this year's 25 live in the U.S.

Companies with minorities or non-U.S. nationals in their executive suites stand a far better chance of meeting the needs of the diverse communities now online. For example, StarMedia, a Web site serving Latinos worldwide, employs managers from nine countries. That has enabled it to navigate subtle cultural differences, helping boost the site's unique visitors to 27.4 million last December from 12 million in June; revenues tripled to $61 million in 2000, says Gally A. Baron, Star's chief of staff. "Diversity can really drive a company to go further," says Baron, who is Brazilian. The time for change has come. Diversifying management is not only right, it's also key to winning the markets of the future.

By Roger O. Crockett

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