‍

In a captivating episode of the podcast "Brilliant Thoughts with Tristan Ahumada," the host engages in a conversation with Mitch Kapor and Freada Kapor. The trio delves into their experiences at Lotus, a company that revolutionized the personal computer industry in the early 1980s. Lotus 123, their groundbreaking spreadsheet software, played a pivotal role in driving the adoption of PCs in businesses worldwide. However, their ambitions extended beyond product success, as they aspired to create a progressive and inclusive work environment. This podcast episode explores their journey at Lotus and their enduring commitment to fostering social justice and equity in the corporate world.

‍

Lotus: An Origin Story of Success

During the nascent years of the personal computer industry, Mitch Kapor founded Lotus, which quickly gained recognition for its spreadsheet software, Lotus 123. The unparalleled success of this program drove the adoption of IBM PCs and established them as an essential tool for businesses globally. Inspired by their achievements, Mitch aimed to make Lotus a trailblazer in creating an inclusive and progressive workplace culture. This vision led to the hiring of Freada Kapor, whose job description included spearheading efforts to make Lotus the most progressive employer in the United States.

A Social Justice Lens in a Corporate Setting

Freada Kapor, equipped with a Ph.D. in social policy and research, had a deep-rooted interest in workplace culture and the potential to create environments that bring out the best in individuals. Having a history of activism and a passion for social and racial justice, she saw an opportunity to apply her lens to a corporate setting. This endeavor aligned with her core belief that none of us are truly free until all of us are free. Freada's enthusiasm for the challenge ahead stemmed from her desire to advocate for those who faced bias, discrimination, and hate.

‍

Shifting the Paradigm: Proactivity Over Performative Measures

Traditional corporate responses to social issues often come across as reactive and performative. Freada highlights the common practice of addressing problems as an afterthought, prompted by tragic events or lawsuits. Instead, Lotus aimed to be proactive right from the start, viewing inclusivity and equity as integral components of their mission, rather than mere add-ons. This approach sought to create a genuine and sustainable culture of progress, challenging the prevailing corporate norms.

‍

Preventive Practices: A Novel Approach

Drawing parallels to the medical field's shift toward preventive medicine, Tristan Ahumada likens Lotus's approach to preventive practices in the business world. Rather than waiting for problems to arise and then addressing them, Lotus aimed to address potential issues before they could impact their employees and the company as a whole. Mitch Kapor emphasizes that while this concept may not be new in terms of human nature—remembering the adage "an ounce of prevention is worth a pound of cure"—it is novel for the business world.

‍

The Continued Pursuit of Gap Closing

As their lives intertwined over the decades, Mitch and Freada's mission expanded beyond Lotus. In the late 2000s, they delved into angel investing, aligning their investments with their personal values and commitment to closing the gap. This concept became central to their approach—an endeavor to close gaps that prevent individuals, especially those who are structurally disadvantaged, from realizing their full potential and accessing opportunities. Their mission was to challenge systemic barriers and create a more inclusive society.

Closing The Equity Gap

Freada Kapor Klein and Mitch Kapor, in their conversation with Tristan, highlight the opportunities they have found in investing with a gap-closing lens. They have discovered that there are numerous entrepreneurs across various sectors who are eager to build venture-scale businesses with a focus on closing gaps. These opportunities exist in fields like edge tech, fintech, health, workplace/job creation, and increasingly in climate and sustainability.

‍

The Kapors realized that many of these entrepreneurs were not being adequately served by traditional capital markets, and they were advised to remove any mention of impact or diversity from their pitch decks. By establishing themselves as investors committed to closing the gap, they attracted entrepreneurs who were aligned with their vision. This gave them a competitive advantage in the market and allowed them to work with like-minded founders.

‍

Furthermore, the Kapors measured their investment results over the first decade and found that they performed in the top quartile of all venture funds of their size, regardless of their approach to financial returns. This challenges the notion that social impact investments necessarily sacrifice financial returns. They wanted to dispel this myth and showcase the stories of successful investments that counter that belief.

‍

Their book, "Closing the Equity Gap," tells the stories of their investments and demonstrates that it is possible to achieve both social impact and financial success in the venture capital space.

‍

The Challenge of Accessing Follow-On Capital

Freada Kapor highlights the significant challenge that successful startups face when seeking "follow-on" capital as they grow. As these companies expand and require substantial funding, they often encounter traditional investors who prioritize monetary gains above all else. This pressure to compromise on impact and diversity becomes a major hurdle for these companies, limiting their potential to leverage the opportunities they've created.

‍

Overcoming Biases in the Investment Landscape

Mitch Kapor adds another layer to the discussion, pointing out biases prevalent in the investment landscape. He challenges the conventional notion that a prestigious educational background or impressive resume should solely determine an entrepreneur's potential for success. Mitch advocates for considering a person's "distance traveled," emphasizing their resilience and persistence in overcoming barriers. This approach provides a more accurate measure of entrepreneurial potential, fostering diversity and inclusion in the startup ecosystem.

‍

The Concept of "Distance Traveled"

Freada Kapor explains that the concept of "distance traveled" originated from her experience co-founding a scholarship program at UC Berkeley. She emphasizes the importance of recognizing that individuals' opportunities and advantages are often products of their birth circumstances rather than personal achievements. Freada encourages evaluating talent by considering where individuals started and how far they have come, independent of societal advantages. By adopting this lens, investors gain a better understanding of resilience and persistence as indicators of entrepreneurial success.

‍

Phaedra Ellis-Lamkins: A Story of Resilience

To exemplify the power of "distance traveled," Freada shares the inspiring story of Phaedra Ellis-Lamkins. Phaedra, a highly successful and profitable tech startup founder, defies conventional expectations. Coming from Cal State Northridge, a university that doesn't typically receive widespread recognition, Phaedra's journey demonstrates the impact of one's personal experiences. Growing up in a low-income environment, Phaedra was determined to make a difference. Her company, Promise Pay, focuses on treating low-income individuals with respect and dignity while helping them manage their utility bills. This dedication to addressing societal challenges stems from Phaedra's lived experiences and demonstrates the potential for positive change.

Creating Accessible Solutions

Tristan Ahumada adds to the discussion by highlighting the importance of accessibility in addressing societal issues. He acknowledges that individuals facing financial constraints often lack the time and resources to navigate complex online systems. Freada agrees and shares her own experience of struggling to pay a speeding ticket online, demonstrating the inaccessibility of simple tasks for those with limited resources. She explains that Promise Pay breaks through these barriers by providing a phone-based solution that focuses on trust and respect for customers. Their system assumes truthfulness and eliminates the need for extensive documentation, ensuring a hassle-free experience for low-income individuals.

‍

Inspiring Optimism through Entrepreneurial Resilience

Throughout the conversation, Freada and Mitch express their optimism, fueled by their interactions with resilient entrepreneurs. These individuals transform the hurdles they face into opportunities, focusing on making a difference rather than solely pursuing financial gain. By surrounding themselves with such individuals, Freada and Mitch maintain hope for humanity, even in times of societal divisiveness and economic uncertainty.

The Amplifying Effect of Technology

As they discuss the increasing divisiveness in society and its relationship to technology, Freada Kapor emphasizes that technology has become a significant accelerant of divisiveness in today's society. Prior to the prevalence of technology, people interacted with individuals in their local communities, places of worship, and other communal spaces. They had face-to-face conversations and recognized the shared humanity of those with different beliefs or opinions. However, the advent of technology and social media platforms has amplified the tendency to demonize those who hold opposing views, regardless of whether one identifies as right or left-leaning. The distance created by technology has made it easier to disregard the complexities and nuances of human experiences.

‍

Mitch Kapor builds on Freada's point by highlighting how technology has brought greater visibility to societal inequalities. He acknowledges his own upbringing in a bubble where he experienced prosperity and upward mobility. However, he recognizes that historically marginalized groups, including immigrants, people of color, and the LGBTQ+ community, have always faced adversity and exclusion. Divisiveness has been a long-standing structural factor in society. Technology has played a role in shedding light on these issues, making them more visible to a wider audience. This increased awareness presents both challenges and opportunities for taking meaningful action.

The Transition to a New Era

Tristan Ahumada reflects on the idea that technology has exposed the struggles faced by marginalized communities in a way that many people were previously unaware of. This newfound awareness poses challenges as individuals grapple with how to respond and adapt to the changing social landscape. It is a transitional phase where society is learning to navigate and understand the implications of these revelations. Tristan emphasizes the importance of exploring what comes next and how society can collectively address these challenges.

The Path Forward

Moving beyond mere talk, Freada, Mitch, and Tristan highlight the need for action to bridge divides and promote inclusivity. Recognizing shared humanity and engaging in constructive dialogue can help counteract the negative effects of technology-driven divisiveness. Building empathy, understanding, and respect for different perspectives is crucial to fostering a more united and compassionate society. This involves actively seeking opportunities to learn from and collaborate with individuals from diverse backgrounds, dismantling systemic barriers, and amplifying marginalized voices.

Their View on Social and Economic Justice

‍

Freada explains that they are not against capitalism but rather critical of the kind of capitalism that has been practiced. They believe in a better and fairer way of structuring the economy, providing equal access and opportunities in areas such as education, skills, and employment. This belief is reflected in the companies they invest in and the community of founders they support.

‍

Freada and Mitch emphasize the importance of aligning actions with words and actively working towards closing the gap between intentions and implementation. They strive to lead by example and ensure that their investments and actions are congruent with their beliefs.

‍

As an example, Freada mentions a company called Health Sherpa, founded by two individuals in response to the challenges faced during the implementation of Obamacare. Health Sherpa aimed to simplify the process of signing up for healthcare by leveraging technology. They developed a streamlined and user-friendly platform that reduced the sign-up process from 45 minutes to just five minutes. Their software now powers numerous healthcare websites and has helped millions of people access healthcare more easily.

How Does AI Bring Help to Social Economic Justice?

Freada explains that they are not against capitalism but rather critical of the kind of capitalism that has been practiced. They believe in a better and fairer way of structuring the economy, providing equal access and opportunities in areas such as education, skills, and employment. This belief is reflected in the companies they invest in and the community of founders they support.

‍

Freada and Mitch emphasize the importance of aligning actions with words and actively working towards closing the gap between intentions and implementation. They strive to lead by example and ensure that their investments and actions are congruent with their beliefs.

‍

As an example, Freada mentions a company called Health Sherpa, founded by two individuals in response to the challenges faced during the implementation of Obamacare. Health Sherpa aimed to simplify the process of signing up for healthcare by leveraging technology. They developed a streamlined and user-friendly platform that reduced the sign-up process from 45 minutes to just five minutes. Their software now powers numerous healthcare websites and has helped millions of people access healthcare more easily.

How Does AI Bring Help to Social Economic Justice?

Freada and Mitch share examples of companies that are leveraging AI to address gaps and provide access to essential services. One example is Numerade, an online tutoring company that uses generative AI to create video answers for STEM (science, technology, engineering, and math) courses. By synthesizing high-quality video lessons using AI, Numerade can provide comprehensive coverage of subjects and textbooks, making tutoring more accessible and affordable.

‍

Another example is a company called Divergent, which offers services to families with neurodivergent children. Divergent uses generative AI to create expert guides on various topics that a family might bring up during counseling sessions. When a counselor encounters a topic they are not an expert in, they can quickly access a curated step-by-step guide generated by AI. Additionally, Divergent has developed a training app using chat-based AI to train counselors, providing interactive sessions and accurate feedback.

‍

These examples demonstrate the potential of AI to revolutionize software development and tailor it to specific needs. By utilizing AI tools and techniques, companies focused on closing gaps in education, healthcare, and other areas can directly apply these technologies to serve their communities. AI-powered solutions like Numerade and Divergent make services more accessible, affordable, and comprehensive, helping bridge socio economic divides.

‍

Lessons Learned

In the conversation about Chapter 10 of their book, Closing the Equity Gap, which discusses their "Lessons Learned", Mitch and Freada share what they have learned in their approach to investing and promoting social and economic justice. Mitch emphasizes the importance of a paradigm shift in thinking about investing, focusing on closing gaps and considering talent based on distance traveled rather than pedigree. He highlights the need for self-reflection, recognizing biases, and making small changes to create a different direction. Freada emphasizes that the notion of gap closing should be integrated into every aspect of an organization's functioning, not just investment decisions. She emphasizes the importance of inclusive capitalism, which benefits all stakeholders and ensures diverse perspectives are represented. 

‍

They also discuss how they have transitioned leadership to their younger partners, who bring different lived experiences and perspectives to the table. They address objections they face, such as the myth that investing for impact or diversity leads to lower financial returns and the biases and stereotypes they encounter. They also acknowledge the challenge of navigating the cultural divide in conversations about improving traditional investment thinking.

‍

Overall, the lessons learned include the need for a shift in mindset, embracing inclusivity, recognizing biases, and actively working toward social and economic justice in every aspect of business and investment practices.

About Mitchell Kapor:

Mitchell David Kapor, an American entrepreneur and pioneer in the personal computer software industry, co-founded Lotus and played a pivotal role in developing the Lotus 1-2-3 spreadsheet. He actively engages in digital rights activism as the co-founder and former chairman of the Electronic Frontier Foundation. Kapor is also an investor, supporting startups through Kapor Capital and promoting diversity and inclusion in the tech industry. His involvement with SMASH further demonstrates his commitment to equal opportunity in education and the workplace. 

‍

Recognized for his contributions, Kapor has received prestigious awards, reflecting his dedication to technology, digital rights, and social impact. His story inspires aspiring entrepreneurs and advocates alike.

About Freada Kapor Klein: 

Freada Kapor Klein, an American venture capitalist, social policy researcher, and philanthropist, is recognized for her efforts to diversify the technology workforce through activism and investments. As a partner at Kapor Capital and the Kapor Center for Social Impact, she promotes diversity and inclusion in the tech industry. Kapor Klein authored the book "Giving Notice: Why the Best and the Brightest Leave the Workplace and How You Can Help Them Stay," shedding light on the reasons people leave corporate America. With a background in victims advocacy, she joined Lotus Software in 1984 and later founded the consulting firm Klein Associates.

‍

As a partner at Kapor Capital, she focuses on investing in companies that prioritize diversity, particularly in education, health, and consumer finance. Kapor Klein also established the Level Playing Field Institute, which promotes computer science participation and operates the Summer Math and Science Honors Academy (SMASH) for underrepresented high school students. She contributes to studies on racial and gender disparity and advises organizations like the World Bank and the United Nations. Kapor Klein co-founded Project Include, a non-profit organization that provides customized HR advice to startups. She is an advisor to Crossculture VC and serves on the board of the Berkeley Foundation. Known for her vocal stance on inclusion, she has criticized technology companies for their handling of sexual harassment issues.

‍