Bloomberg’s Emily Chang on Solving Tech’s Diversity Problem

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

Bloomberg’s Emily Chang on Solving Tech’s Diversity Problem

Emily Chang is a best-selling author and host and executive producer of Bloomberg Technology. Earlier this year, she made waves with her book “Brotopia," an expose on how sexism became pervasive in Silicon Valley, despite its utopian ideals. Drawing on interviews with some of tech's biggest names, Emily shines a bright light on a big problem. In this episode, Emily joins Spencer at Zillow Group's San Francisco office to discuss her inspiration for the book, how the tech community got to this point and what we can do about it.


Press Play to hear the full conversation or check out the transcript below. You can also subscribe to Office Hours on Apple Podcasts and PodcastOne.

Spencer Rascoff: Good to see you all. I'm here with Emily Chang. Hello, Emily. Welcome.

Emily Chang: Hi. Thank you so much for having me. I'm happy to be here.

Rascoff: I'm excited to have you here as a guest and turn the tables. You're usually interviewing me, and I now finally get to interview you.

Chang: It's payback time.

Rascoff: So, let's take a step back and talk about the writing journey of why you decided to write this book, when you started, and what that research and writing process was like, and then we'll jump into some of the themes and discoveries from it.

Chang: Yeah, so, I anchor a daily show on Bloomberg Television, and that's been going on for eight years now, and when we first launched the show, my focus was getting people like you to come on, which wasn't always so easy. Now I think we've gotten there, but you know, over time, I sort of started asking more questions of my guests. “Well, what are you doing about this?" I mean, the tech industry has such a grave inequality, but no one was talking about it. I mean, women hold 25 percent of technical jobs across the board. They account for seven to eight percent of venture investors, and companies that are run by women get just two percent of funding. This is an industry that calls itself a meritocracy, and I highly doubt that women have just two percent of good ideas.

Rascoff: And when you were starting to focus on this, though, the world was not talking about it. This was before Me Too, before Time's Up.

Chang: These questions were very politically incorrect and they made people uncomfortable, which is why I didn't feel like I could ask them initially. And when I did, people would give the sort of politically correct answer, and then they would get off the set and then they would spill it. And so I knew that there was so much more there. And then at the end of 2015, I was interviewing one particular investor, who I talk about in Chapter 5 — very prominent, very successful investor — and they had no women in their US business at the time. And I said, “What are you doing to hire women? What do you think your responsibility is?" And he said, “Oh, well we're looking very hard, and I think we're completely blind to gender, race, sexuality — but, what we're not prepared to do is to lower our standards." And this was on television. And I know some people think that, but they don't normally say it on television. And that was sort of my Time's Up moment. And let's put aside what he said. Maybe it was a flip comment. Let's judge them on their actions. In 44 years, this firm did not hire a single woman investor.

This is an industry that styles itself as a place where anyone can succeed and, you know, my — that it's a sort of modern utopia where anyone can change the world and anyone can make their own rules. I think that can be true if you're a man. But if you're a woman, it's incomparably harder.

Rascoff: Okay. It's depressing, but we're going to change all that, and actually the fact that we're even talking about this, which would have been almost unheard of two or three years ago, is a start. So as you — what surprised you most as you started researching this at companies? I mean, you uncovered some awful, awful things — Harvey Weinstein-type awful. Was that surprising to you or, I mean, what was the most surprising aspect of the research?

Chang: And by the way, the book is — you know, it can be a hard read, but there are bright spots, there are villains, but there are also heroes. And so it's not entirely all depressing, and there's also concrete takeaway —

Rascoff: And there's solutions. And we're going to talk about solutions, yeah.

Chang: And things you can do. But yes, I was surprised, and especially with the behavior on the venture capital side where, you know, deals are done in one-on-one meetings, in one-on-one spaces and just how many women were so often put in these very uncomfortable positions. You know, after Susan Fowler's blog post came out, I had 12 women engineers over at my home for dinner who worked at a range of companies, big and small — Google, a couple of them worked at Uber — and you know, they're telling me about getting invited to strip clubs and bondage clubs in the middle of the day, and they felt like they couldn't say no. Or they were put in this position of, “Well, do I go and be part of whatever work conversations happen or do I not go and then I'm excluded from those conversations?" You know, I do think those are the more extreme and egregious examples, and the even bigger problem is the sort of systemic discrimination that creeps into every space simply because women are so outnumbered in this industry. And so they are often the only woman in a room over and over and over again. And they describe it as having to do this sort of constant emotional labor that they don't get credit for, which is like an entire second job that men don't have to do.

Rascoff: What do you mean by emotional labor?

Chang: Well, it's sort of feeling like they have to prove themselves over and over again, that people are sort of doubting why they're there, you know, fighting against these microaggressions that, again, it's things that are difficult to pinpoint and call out and say, “Hey, I'm being mansplained." Like, that sounds kind of odd, but it sort of wears on them. And I think that is the bigger problem. I mean, this is an industry that has been so male-dominated for so long that it can be difficult to sort of break that up and start fresh

Rascoff: And one of the things I was surprised by in the book was it wasn't always this way. At the beginning of technology, it was a much more equitable world in tech. So, describe what you found during your research.

Chang: When you go back to the '40s and '50s, women actually played a huge role in the computing industry. Men were primarily the hardware makers, but women were pretty well-represented among software programmers. And they were programming computers for the military and programming computers for NASA, and it literally was “Hidden Figures" but industrywide. And then in the '60s and '70s, as the tech industry was starting to explode, they were so desperate for new programmers that they started doing these personality tests and aptitude tests to identify them. And the makers of these tests decided that good programmers “don't like people." Which makes a lot of sense, right? There's no research to support the idea that people who don't like people are better at this job than people who do, and generally, more men fit into that category, I will say. And this stereotype shut out more than half the population, and these tests were used for decades by companies as big as IBM.

Rascoff: Well, and there's still — you can argue they're not tests, necessarily, but they're still sort of used today in the way a lot of interviewing gets done.

Chang: Exactly, and so it — these tests basically solidified this sort of antisocial, mostly white male nerd stereotype that persists to this day, and then it got repeated in movies and popular culture. And, people sort of think, oh, you know, “Revenge of the Nerds," they created this stereotype, when in fact they were just repeating what they saw in the industry already. And so my argument is that the tech industry created its own pipeline problem. In 1984, women were earning 37 percent of computer science degrees. That has since plummeted to 18 percent where it's been flat for the last decade. And you see the same sort of trend with tech jobs.

Rascoff: And in medicine, for example, it's been quite the opposite.

Chang: It's been the opposite. And actually the implementation of Title IX in the '70s had the opposite effect in law and medicine, where women started charging into these fields and lowering the barriers to entry, but tech actually raised the barriers to entry. And you see the same sort of stereotypes and perception repeated to this day. Case in point, James Damore at Google, who wrote that viral memo where he argued that men are biologically more suited to this job than women, and he was just repeating the same sort of hostile, you know, mythical stereotype that those early programming tests perpetuated.

Rascoff: And yet I thought some of the responses to that were spot on where they talked about actually the importance of empathy, that what engineers are doing, what product people do, is they're trying to solve other people's problems. So, actually empathy is very important.

Chang: Absolutely. I mean, there's a great argument to be made that we need people who like people and care about people to be doing these jobs as well, but, you know, that overall we should have people of a variety of backgrounds building products that billions of people around the world are using. I mean, this is an industry — you guys are building the future. You're changing the way we live our lives, and so it makes zero sense for 95 percent of the decisions to be made by white men.

Rascoff: So, I think we can all agree that some of the things that you discuss here, whether it's the cuddle puddles (which is a term I'd never heard before I read your book and I never want to hear again) or, you know, VCs asking entrepreneurs to pitch them their business idea in a hot tub. I mean, these are obviously gross and inappropriate and disgusting.

Chang: I'm glad you think so.

Rascoff: But the more subtle forms of discrimination or things that impact employee engagement — let's discuss why diversity and inclusion is important. Like, what are the business outcomes that get changed if you have a more diverse set of people forming these decisions and building these products?

Chang: So, I fully believe that if we had, you know, more diverse teams create better products, make more money, are more innovative, and research proves that out. But just saying that can kind of fly over people's heads. So, I interviewed Ev Williams, for example, the founder of Twitter — co-founder of Twitter, and I asked him, “If you had more women on the early Twitter team, designing early Twitter, do you think online harassment and trolling would be such a problem?" And he was like, “You know what, I don't think it would be. We weren't thinking about that at all when we were building Twitter. We were thinking about all the wonderful and amazing things that could be done with it, not how it could be used to send death threats or how it could be used to send rape threats." And, you know, facial recognition technology is already a little bit sexist and a little bit racist and doesn't recognize women and people of color as easily as it does white men. And so I think, well, if women had had a seat at the table 10, 20, 30 years ago, maybe the internet would be a friendlier place, maybe video games would not be so violent, maybe porn wouldn't be so ubiquitous. And so I think there's an incredibly compelling business case here that this can impact product and product design, and you — you know, I know that you guys at Zillow are really focused on this and, you know, for the first time, you've added some pretty innovative information to your listings that has never been done before, right?

Rascoff: This is the Trulia LGBTQ protections. So, a round of applause, by the way, because this team built it.

[Applause]

Rascoff: Yeah, I mean, some other examples, I mean, Uber being built really without passenger or driver safety features, which now they're scrambling to roll out, I mean, probably if more women had been involved in the creation of Uber, perhaps it would have occurred to somebody that some of these people are going to do bad things to riders or to drivers.

Chang: I mean, it is astonishing that this is a company that's been around for almost a decade now and that only now are they thinking about these things. And actually it's so much harder when you are already at scale to go backwards and try to fix what is broken, which is why, you know, it's so much better if you start thinking about these things really early on, and then it's just easier as you go. And I hear from people so often, “Well, it's so hard; it takes so much time to find more diverse candidates." And you know, my answer is, “Well, this will save you time in the long run."

Rascoff: When we first launched Zillow almost 10 years ago, our idea was to turn on the lights and set all this real estate information free — what people paid for their home, what homes were worth, et cetera. And part of that information set is the owner of the home. And so it was very natural for us to consider putting the owner's name on every home, 100 million homes in America. And we were getting ready to do that. Lloyd Frank, our vice chairman, and I thought this was a terrific idea. This is “set information free." And Kristin Acker, who's SVP of product and also very involved here in this office at Trulia, she said, “That's a terrible idea. There are stalkers out there that are going to use Zillow to figure out where their ex-wife lives and bad things are going to happen. And the first time someone gets raped or killed because they were able to find that information out through our site, that's going to be a really awful day." And having — in that case, it was gender diversity in the room and just give that totally different perspective was really valuable, and it allowed us to, I think, make the right product decision.

Okay, let's talk solutions and then we're going to ask — I'm going to ask you some questions that some of our employees submitted through Slack. What can we do about all this? We as a company, we as a society, you know, what's the answer?

Chang: So, first of all, I think change needs to come from the top, and we need CEOs and investors to make this a priority. And so that's why I'm so glad that you invited me here, I'm so glad you're talking about this, I'm so glad you're willing to admit the mistakes. And there are people in the book who are willing to talk about the things that they did wrong, and that's so important. Like, we all have biases, right? Whether you're the CEO or a product designer, you know, we all come at problems based on our own life experience, no matter what that might be, and I think we just need to recognize that.

If you just focus on raising awareness about bias, however, it's not necessarily going to have a huge impact. If you give people tools to combat their bias, that can have a big impact. So, whether that is, you know, not even starting an interview process until you have two female candidates and two candidates of color, or diversifying your recruiting team, or structuring your interview process so you're asking everyone the same questions rather than doing this sort of free-form thing where you sort of tailor the questions to, you know, who they are and, you know, that can obviously lead to bias because if someone looks “the part," you're going to ask them different questions than if someone doesn't look the part.

It's not just about hiring, though. It's about retention and progression and creating a culture where everybody can thrive. And so women are twice as likely to leave tech as men, and they're leaving, you know, 12 years into their career, which could be at this huge inflection point where they've got some real experience and could sort of skyrocket up, but at the same time, you know, they're having this sort of moment of, “Well, am I really feeling valued here?" And there's this perception that women leave because they have families or they're leaning back in their careers, but actually they're going to jobs in other fields. And so, you know, we need to make sure that you're not losing the women that you have. And so that's about creating a culture where everyone can feel included and comfortable and a place where they can be themselves.

And so it's — you know, I talked about structuring the interview process, but structuring review and feedback systems. Slack is an example in the book. Their motto is work hard and go home. They're like, “We're trying to hire adults here, not just kids out of college," and they're very focused on making sure that people can sustain careers over a long life. This is a super competitive industry. You know, talent — it's a war for talent. And so you don't want people just hanging around for a year and a half, you want them for as long as you can have them. And so there are so many things that I think also individuals can do, and I think we all need to listen better, we need to be having these conversations. I know they might make people feel a little bit uncomfortable. I kind of think that's a good thing right now to raise awareness.

And you know, I'm so grateful for the women who have spoken up over the last year and the collective courage that they have summoned, but this this is not just on women. This is on all of us, men too, and so if you see someone — I mean, I think mentorship and advocacy is so important. I know that's really important to you guys here. But if you see someone being interrupted or you see someone not getting an opportunity, call that out. It can be a lot easier for you to do it as a bystander or a witness than for the victim to say, “Hey, I'm being mansplained. Can you stop that, please?" So I just think there's so much that, sort of, we all can do to help each other on this to get to a better place.

Rascoff: Where we started on this journey, we, at Zillow Group, when we started focusing more on this issue, which was probably three-ish years ago, it actually started with employee engagement. You know, the first thing we did was we said, “OK, we have — we're sadly underrepresented in terms of diversity, but we're not nowhere. Let's actually see how engaged different sets of employees are." And the results were eye-opening and not good. Non-whites were less engaged. They felt less connected to the company, they felt less welcome, and that was the eye-opening moment for me. It was like we spend all this time, effort and money trying to get the world's greatest people into this company. It is incumbent upon us, not to mention that it's the right thing to do, but in terms of business results, I want all of these people to be doing their best work, and if they don't feel connected to the company, we should fix that.

And we've made huge strides in that regard.

The other thing that your comments made me think of was the culture-fit issue. Because a lot of this happens — the tip of the spear is the interview and recruiting. And we try not to talk about culture fit. I think culture fit can be code for hire people that look like me and dress like me and act like me. And so we talk a lot about core-value fit and assessing a candidate to see, do they fit to our six core values, not is it a good culture fit.

Chang: I have a new term for you: culture addition. So looking — it's like you honor your culture, you like your culture, but you're looking for people who are going to add to your culture and expand your culture. You know, and I love the core value ideas as well. And I think writing those down and communicating them to employees is so important.

Rascoff: All right, so a couple questions that came from employees via our Slack channels. From Megan Hansen, who works for Trulia in content strategy, she writes, “Any advice on how we can change a work culture that sees moms as moms but not dads as dads? Specifically, it seems that the work of childcare still falls to working moms, such as needing to leave early for doctors' appointments and daycare pickup, potentially because it seems less likely that working dads are also seen as caretakers while in the workplace."

Chang: So, I do think that work needs to be shared at home more equally if we want work to be shared at work. That's not the reality today. I think that so many of the things that women want at work dads want too, and, you know, both moms and dads are parents. I think it can start with benefits and having equal maternity and paternity leave policies and actually encouraging the dads to take it, because there is — I mean, just like there's — I know that I've taken three maternity leaves. I know how hard it is as a woman to leave for that period of time. And you know, I think for dads, there's still this sort of social stigma against taking that time off, and so I think that that can be really important in sort of starting to change those kinds of cultural norms.

I think flexibility is really important in making sure that work after work is valued, and so I leave to pick up my kids because my boss, the editor in chief of Bloomberg, has said people should feel okay going home and picking up their kids. But I get back online, and I do my work, and I want that work to count. We all want sustainable lives, and so making work work for people of all kinds should be the focus.

Rascoff: From Natalie, an engineer at Trulia, she writes, “In your book, you write about Sheryl Sandberg's response to your email. In addition to having women in leadership roles paving the way for more women in leadership roles, what else do you think is critical to successfully increasing female representation in the workplace?"

Chang: When I was pregnant with my first child, this was now six years ago, and it was just when that article “Why Women Can't Have It All Still" came out. And I was like devastated. I was seven months pregnant, I was having all these sort of conflicting emotions, “How am I going to do this? Maybe it's impossible," and then that article came out and I cried myself to sleep that night. And the next day — and the article really took aim at Sheryl. And I'd never met Sheryl at that point, and I just emailed her out of the blue. And I said, “You know what, I just want to say thank you for putting yourself out there on these issues." She had done her TED Talk and I had re-watched it, and it actually made a difference to me.

And she wrote right back, like in 15 seconds, and said, “Congratulations! Is this your first?" And I was like, “Yes," and wrote this sort of very overzealous response. And then she said “Here's my cell phone. Let me know if you ever want advice." And I was, again, shocked. And of course I didn't just call her cell phone. I found out who her assistant was, I figured — and I got time in her calendar in three weeks, and she called me on the dot. And I got a half-hour of uninterrupted time with her one-on-one — this is before “Lean In" — where she kind of gave me a little pep talk and was like, “You can do this. You will do this, and you need to do this. Like, you're going to keep working."

And I think that that sort of advice and mentorship is really, really important. But I've also had to seek it out, and so I ask those questions. And you know, there's so much that, sort of, we all can do to help other people that we see in these situations, and that really made a huge difference for me.

Rascoff: Question from a Trulia analyst, Ini Li asks, “How much do you believe in a person's ability to evolve some of their views?"

Chang: I think that it's — I believe in us, and I'm really optimistic. I mean, despite the title, I think that the smartest people in the world who are taking us to Mars and building self-driving cars and connecting the world, whether you're, you know, all the way up to the top, I think people — we're smart people. I think we can change, and I think part of it is the ignorance has gone on for too long. But at this point, we can — I've written 300 pages about it. We've been talking about it now for a year, like ignorance can only be willful. Like, we know this is a problem. And so I think people can change, and I think the business case makes a lot of sense, but it's only when the numbers really change that a real culture shift is going to happen. So, if you have 10 men around a dinner table, you swap out one man for a woman, the conversation might change a little bit. But if it's half and half, it's a completely different conversation. And that's when you will see the results. And, unfortunately, we just don't have a lot of great examples where, you know, places are 50-50 and you can see the results. But I do think it's going to take that sort of true number shift that will lead to a true culture shift where views will actually change.

Rascoff: I mean, you see this with other social movements, right? Whether it's the civil rights movement or America's acceptance of LGBTQ. I mean, there have been radical changes in just 30 years. And some of that is demographic and generational, but a lot of that is individual people changing their attitudes on these topics.

Chang: Becoming woke, if you will.

Rascoff: And I think we're seeing it in a very short period of time here because society has been so jarred by some of these scandals that it's — I mean, it's going to happen — hopefully at least people's attitudes will change faster. Now, it'll probably take decades for more equality to come into the workplace in terms of representation, but attitudes I think are changing.

All right, from an anonymous person, “Is there anything you didn't include in “Brotopia" that, in retrospect, you wish you had? And is there anything you wish you'd left out?"

Chang: I had a very high bar for what was going to be in print. And when you're taking on someone's career and life, you know, I don't take that lightly, and so everything was, like, fully vetted by multiple lawyers, and Bloomberg luckily was very, very supportive and very supportive of good journalism in general. I mean, I'm just — it was 500 pages and I had to cut it down to 300, so I'm more — I think about all the babies that are, like, lying on the floor that I could not include.

Rascoff: Anything you included you regret?

Chang: No. I mean, I have an opportunity — we're coming out with a paperback in March, so I'm going to update it, I'm going to add another chapter, and I'm really excited to talk about sort of the impact that the book has had and the reaction, you know, good and bad. And I mean, for me, the reaction has been what I've seen as mostly positive, and I have been so encouraged by invitations to speak at tech companies, which I honestly did not expect. So you know, I've spoken at Amazon and Microsoft and LinkedIn and Google and places where they could have easily said, you know, “No, thank you. Your book is called 'Brotopia.'" You were one of the first to ask.

Rascoff: Well, but I saw you at a tech conference right when the book had come out, and there was so much heat, let's call it, and I said, “Are you persona non grata, like, at most of these companies, or are you still able to get people to come to your — do your show?" And it was too early to tell, I think, was the —

Chang: Yeah. I think there's a few people who won't be coming on, but you know what, no good change comes without some people feeling a little bit uncomfortable. And honestly, the vast majority of people, I think, are glad that I did it and probably respect me more for putting my voice behind this and, you know, I think some of the people who maybe aren't so happy, hopefully in the long run they understand.

Rascoff: All right, last question. What are the simple, easy, day-to-day things that we can do at work with our teams and at the company to improve equity and inclusion in our workplaces?

Chang: I mentioned listening. I think that's important. And also asking. I think we don't ask each other enough, “How are you doing?" And some people don't want to talk about their personal lives at work, and that's OK, but some people do. Sheryl Sandberg talks about this bringing your whole self to work thing, and it speaks to exactly what you said earlier, that if you don't feel like you can be yourself, you can't be your best self at work.

You know, I had someone who works at a startup tell me, “You know, I was talking to one of my employees, and I found out that both her parents passed away when she was really young." He's like, “I didn't even know. I felt so horrible that I didn't know that that's where she had come from." And those are the things that maybe we should know each other — know about each other.

You know, I think in general we do need to see more examples of female leadership, and maybe that means taking a chance on someone and training them for that role. We see people like Sheryl Sandberg and Marissa Meyer, and we think it can only be that way or that way. Those are the two versions of female success. And the problem is we don't have a lot of other examples, but women — you know, there are all kinds of male bosses, right? And there are all kinds of female bosses as well, we just don't see it enough. And you know, to the point you can't be what you can't see. Like, we can't be what we can't see.

I interviewed seven young girls, teenage girls, at the end of the book who've all learned how to code, and they're so excited to do their part to change the world, but they already have an idea of what they're up against. And, you know, they're in women in tech groups on Facebook, and they read the news and, you know, one of them said to me, “I mean, I heard that Travis was, like, meditating in the lactation room at Uber. What is that about?" And so, yeah, I was surprised. I'm like, “Wow, you guys know your stuff." So they can't be what they can't see.

Rascoff: Some things that I think we've done and can continue to do: Mentor people of all types. Do a great job in interviewing and recruiting. Focus on employee engagement so that everybody feels connected to the company, to the mission, they feel welcome. I'll say the obvious thing, which shouldn't have to be said, but just treat each other kindly and respectfully. Don't make inappropriate comments. Don't do illegal and dumb things. I mean, it's crazy that we say it, but apparently it needs to be said, so don't do that. And, gosh, there's so many more things. I really think the employee engagement is important here.

Also, actually, I think we need to do a better job at this company, and at all companies, of convincing white males why this is important. I'll just be direct and I'll say white males in that case, that there are a lot of people who probably think, “Oh, this doesn't affect me," or, “It's not my problem," or, “I didn't cause this." And I agree — I didn't cause it — but I do think it affects me, and I think it's important that white males understand why it's important to the company, why it's important to our colleagues and our peers, and how they can be part of the solution, even if maybe they weren't part of the problem. So, those are just a couple of my thoughts.

Emily, thank you for turning on the lights on this important issue, and thank you for being here.

Chang: Thank you for having me. Thank you all.

The post Bloomberg's Emily Chang on Solving Tech's Diversity Problem appeared first on Office Hours.

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This Torrance Startup Just Raised $1B to Mass-Produce Hypersonic Missiles

🔦 Spotlight

Happy Friday, Los Angeles.

Castelion has spent the past four years trying to prove that hypersonic missiles do not need to take decades to develop or cost so much that the military can only afford a limited supply.

Now comes the harder part: producing them at scale.

The Torrance-based defense startup raised a $1B Series C at a $13B valuation. The financing includes $800M in equity and a $250M revolving credit facility, making it one of the largest recent raises for an LA defense technology company.

JPMorganChase’s Strategic Investment Group, Andreessen Horowitz and Carlyle co-led the round. Lightspeed Venture Partners, Lavrock Ventures, Altimeter, General Catalyst, T. Rowe Price and LA-based Interlagos Capital also participated.

Castelion will use the capital to ramp production of Blackbeard, its low-cost hypersonic strike missile, while developing a longer-range precision weapon and new defensive systems. Hundreds of millions of dollars will go toward expanding manufacturing at Project Ranger, the company’s 1,000-acre production campus in New Mexico.

Image Source: Castelion

Blackbeard was designed in California, will be built in New Mexico and is expected to enter service in 2027. Castelion says it has already secured more than $500M in U.S. military contracts over the past 18 months and moved the missile from a clean-sheet concept to an official program in fewer than four years.

That timeline is central to Castelion’s pitch. Traditional defense programs are often associated with long development cycles, limited production runs and eye-watering costs. Castelion is applying the rapid testing and vertically integrated manufacturing approach popularized by commercial space companies to weapons production.

But a $13B valuation changes the standard. Castelion is no longer being judged as a promising startup with an impressive prototype. It is being funded like a company expected to become a major part of the American defense industrial base.

The question is no longer whether a startup can build a hypersonic missile. It is whether one can manufacture thousands of them without losing the speed, discipline and cost advantages that made it disruptive in the first place.

For LA’s defense ecosystem, that shift matters. The region has become home to a growing number of companies promising to modernize how America builds critical hardware. Castelion now has the capital, contracts and facilities to show what happens when that promise reaches the factory floor.

The next test will not be in a pitch deck. It will be in production.

More from this week’s LA startup and venture scene below.

🤝 Venture Deals

    LA Companies

    • Long Beach based Ampaire raised a $19M Series B led by DiamondStream Partners, with strategic participation from Alaska Star Ventures and IAGi Ventures, bringing its total funding to $68M. The hybrid-electric aviation company will use the capital to expand flight operations, produce additional Eco Caravan aircraft, advance regulatory certification and scale its manufacturing capabilities. - learn more

    LA Venture Funds
    • SUM Ventures participated in AssistMe’s €6.5M funding round, which was led by CRB Health Tech and Vorwerk Ventures and included several returning investors. The German care technology company will use the capital to expand across Europe, prepare for a U.S. launch and further develop alea, its digital platform for supporting caregivers and improving nursing-home operations. - learn more
    • CIV led Hypercubic’s $5.3M seed round, with participation from Y Combinator, Afore Capital, Pioneer Fund, Multimodal Ventures and several angel investors. The San Francisco startup will use the capital to develop AI agents that can analyze, document and rewrite decades-old COBOL systems, helping enterprises modernize critical mainframe software faster and with less risk. - learn more
    • Plus Capital participated in Wispr Flow’s $280M Series B, led by Menlo Ventures and joined by existing and new investors, valuing the AI voice company at $2B. The funding brings Wispr’s total capital raised to $361M and will support its expansion beyond dictation into meeting tools and proprietary speech technology, including its new Canto model. - learn more
    • Alexandria Venture Investments participated in Leal Therapeutics’ $30M Series A extension alongside new investor Eli Lilly and returning backers including OrbiMed, Newpath Partners and SV Health Investors’ Dementia Discovery Fund. The biotech company will use the funding to advance clinical trials of LTX-001 for schizophrenia and LTX-002 for ALS, with initial schizophrenia trial data expected by year-end. - learn more
    • BroadLight Capital participated in Higgsfield’s $400M Series B, led by DST Global and joined by investors including Goldman Sachs Alternatives, Smash Capital, Fifth Wall and Intel Capital. The AI video and image platform, now valued at $5.4B with $700M in annualized revenue, will use the funding for R&D, global infrastructure, AI hiring and international expansion. - learn more

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      Why Samsonite Just Paid $178.5M for BÉIS

      🔦 Spotlight

      Hello, Hello.

      This week, one of LA’s most recognizable consumer brands packed its biggest bag yet.

      Samsonite Group has agreed to acquire an 85% stake in BÉIS for $178.5M, valuing the Los Angeles-based travel and lifestyle brand at approximately $210M. The deal is expected to close in Q4, pending regulatory approval.

      Founded by actress and entrepreneur Shay Mitchell and incubated by LA-based Beach House Group in 2018, BÉIS has grown from a digitally native luggage startup into a profitable business that generated approximately $210M in sales last year. Along the way, it built the kind of fiercely loyal online following that legacy brands spend years and considerable marketing budgets trying to manufacture.

      Image Source: BÉIS

      That may be the most interesting part of this deal. Samsonite is not simply acquiring another luggage line. It is buying access to a younger, predominantly female customer base, a sophisticated direct-to-consumer operation and a brand that knows how to turn social media attention into actual sales. The suitcases are useful; the cultural relevance is the real carry-on.

      BÉIS will continue operating as a standalone brand under CEO Adeela Hussain Johnson and its existing management team. Mitchell will retain a 15% ownership stake and continue guiding the company’s creative and product vision, while Samsonite brings the global distribution, sourcing and logistics infrastructure needed to take the brand further.

      For LA’s startup community, the acquisition is another reminder that valuable technology companies do not always look like software companies. BÉIS built its advantage through digital distribution, community and an unusually sharp understanding of its customer. Now, one of the world’s largest luggage companies wants what it created.

      Sometimes the strongest exit starts with knowing exactly what people want to pack.

      More from this week’s LA startup and venture scene below.

      🤝 Venture Deals

        LA Companies

        • Heaviside Industries raised a $60M Series B to accelerate the development and production of its autonomous precision munitions for U.S. and allied forces. The company also announced a strategic partnership with defense manufacturer Nammo, combining Heaviside’s autonomous weapons technology with Nammo’s expertise in propulsion, warheads and large-scale munitions production. - learn more
        • Alex Cooper and Matt Kaplan’s media company Unwell received its first outside investment from WTSL, giving the profitable business a $500M pre-money valuation. Unwell, which reaches a reported 70M women each month through podcasts, film and television, live events, consumer products and a creative agency, will use the capital to pursue acquisitions, make investments and expand into new business lines. - learn more
        • Neros raised a $250M Series C at a $2.5B valuation, with participation from LA-based Interlagos, MANTIS Venture Capital and Thiel Capital. The El Segundo defense startup will use the funding to scale its autonomous strike and interceptor drone programs, expand production and strengthen its domestic supply chain as demand grows from the U.S. military and allied forces. - learn more
        • FriskAI raised $3.6M from MaC Venture Capital to expand its observability and security platform for AI agents. The startup helps companies monitor what autonomous agents do in real time, giving teams greater visibility into agent behavior and helping them identify errors, risks and unexpected actions. - learn more
        • Diald raised $1M in follow-on funding led by Feedback Ventures, bringing its total funding to $4.75M. The company also launched a rebuilt conversational AI platform that lets commercial real estate investors create pro formas and evaluate zoning, permits, neighborhood sentiment and other property risks through plain-language prompts. - learn more

        LA Venture Funds
        • Alexandria Venture Investments participated in Khartis Therapeutics’ $50M Series B, led by Forge Life Science Partners, bringing the San Diego biotech’s total funding to $95M. Khartis will use the capital to advance its lead oral treatment for thyroid eye disease and expand its pipeline of small-molecule immunology drugs. - learn more
        • Finality Capital Partners co-led Entravel Group’s $7.5M funding round alongside Ethereal Ventures, with participation from GSR, Varrock, G1 Ventures, Seier Capital, Veris Ventures, Funfair Ventures and WTG Ventures. The traveltech company will use the capital to expand its white-label hotel-booking infrastructure beyond crypto platforms and develop a stablecoin-powered system for settlement, treasury and working-capital financing. - learn more
        • Regeneration.VC participated in Clarity Systems’ $4.4M seed round, led by LMnT Ventures and joined by Humba Ventures and Massive Technology Ventures. Clarity uses X-ray imaging, computer vision and AI to detect counterfeits, product swaps and other forms of returns fraud in seconds without opening the package. - learn more
        • CIV participated in AGent Energy’s $11M Series Seed round alongside existing investor Zero Infinity Partners, with Spero Ventures and MassMutual Ventures co-leading and Intrepid Investment Management also joining. The Houston startup uses AI-powered hardware and software to turn largely idle backup generators into on-demand grid capacity during emergencies, and the new funding brings its total raised to $17M. - learn more
        • Smash Capital co-led CodeRabbit’s $143M Series C alongside Atomico, valuing the AI code-review company at $1.5B. CodeRabbit will use the funding to expand internationally and develop its new Agentic Change Management platform, which helps companies review, govern and monitor software created by both humans and AI agents. - learn more
        • Multiball Capital backed Soctera’s $4M seed round alongside Anorak Ventures, with additional participation from 9Yards Capital, Mana Ventures and Red Bear Ventures. The Cornell spinout will use the funding to develop heat-efficient power amplifiers designed to improve the range, signal quality and reliability of radar, electronic warfare, satellite and telecommunications systems. - learn more
        • WndrCo participated in Genera’s $10M seed round, which was led by First Round Capital and also included BoxGroup, Carpenter Capital and Success Venture Partners. Genera will use the funding to scale its AI platform, which automates the often labor-intensive process of deploying enterprise software, including customer discovery, data migration and system configuration. - learn more
        • M13 co-led Baselayer’s $20M Series A alongside Koro Capital, bringing the fintech startup’s total funding to approximately $47M. Baselayer will use the capital to enhance its AI-powered platform, which helps banks, fintech companies and government agencies automate business verification, risk assessment and fraud monitoring. - learn more

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          Two LA Startups Raised $2.37B to Build What AI Needs

          🔦 Spotlight

          Happy Friday, LA.

          The largest checks in tech are increasingly going toward companies trying to build their way out of America’s biggest physical constraints.

          This week, two Los Angeles startups raised a combined $2.37 billion in equity to tackle two particularly urgent ones: how the country manufactures critical hardware and where it will find enough electricity to power the AI era.

          Torrance-based Hadrian is building highly automated factories for defense and aerospace. El Segundo’s Valar Atomics wants to manufacture nuclear reactors at scale. Different industries, same underlying bet: the next generation of technology will depend on our ability to produce physical infrastructure much faster than we do today.

          Hadrian raised $1.37 billion in Series D funding, bringing its valuation to $7.87 billion. The company plans to use the capital to open new factories, expand research and development, and increase its capacity to produce critical defense, aerospace and industrial systems.

          Hadrian’s pitch is straightforward, if wildly ambitious: America needs to relearn how to build things and build them quickly.

          Its factories combine skilled workers with AI, robotics and proprietary software to manufacture precision components and, increasingly, complete mission-critical systems. Its customers include defense giants such as Lockheed Martin and RTX, along with newer players like Anduril.

          The company has come a long way from simply making aerospace parts. Hadrian is positioning itself as a piece of America’s industrial infrastructure, offering manufacturers a way to rapidly scale domestic production at a time when wars abroad, strained supply chains and growing defense demands have made the country’s manufacturing gaps increasingly difficult to ignore.

          Investors are clearly buying the argument. The new round comes just over a year after Hadrian raised $260 million, suggesting that “reindustrialization” has officially graduated from venture capital buzzword to billion-dollar investment thesis.

          Meanwhile, roughly 15 miles away in El Segundo, Valar Atomics is moving even faster than its enormous ambitions suggested.

          When we last wrote about Valar, the company was reportedly raising $450 million at a $2 billion valuation and racing to prove that nuclear energy could move on AI’s timetable. Now, it has closed a $1 billion Series B led by Sequoia Capital, secured an additional $200 million credit facility and reportedly reached a $6 billion valuation.

          Valar is developing standardized, factory-built nuclear power plants designed to avoid the enormous costs and decades-long construction timelines associated with traditional nuclear projects. Its goal is not merely to build a working reactor, but to eventually manufacture fleets of them.

          That ambition also sounds considerably less theoretical than it did when we first covered the company. In June, Valar’s Ward 250 reactor achieved a self-sustaining nuclear reaction. Just one week later, the company demonstrated the reactor generating electricity to power an Nvidia Blackwell system. Valar now says the new funding will help it move from proving its technology works to producing reactors at scale.

          The timing is no coincidence. AI’s enormous appetite for electricity is forcing the tech industry to confront a basic reality: the cloud still has to plug into something. Training models and operating massive data centers will require far more reliable power, and nuclear energy is rapidly becoming one of Silicon Valley’s favorite answers.

          Hadrian and Valar may be solving different problems, but their unusually large rounds point to the same shift. AI can design, predict and automate, but it cannot manufacture a missile component or generate a megawatt of electricity on its own. That requires factories, energy systems, supply chains and a great deal of capital.

          For years, venture-backed companies competed to build the software layer. Now, some of the biggest bets are being placed on the infrastructure underneath it.

          The future may run on AI. But first, someone has to build what keeps it running.

          More from this week’s LA startup and venture scene below.

          🤝 Venture Deals

            LA Companies

            • Endeavor Optical Networks emerged from stealth with $10.75M in seed funding from General Catalyst and Andreessen Horowitz to develop a satellite network that uses lasers to move data between continents. The startup plans to use the capital to build an optics lab, hire engineers and conduct ground testing ahead of a demonstration satellite launch targeted for late 2027. - learn more
            • Actualyze AI emerged from stealth with a $7M seed round backed by Storm Ventures, Canaan Partners, Morado Ventures and AME Cloud Ventures. Its platform gives enterprises a central control layer for managing AI usage across teams and applications, helping them enforce security policies, track spending, route requests between models and maintain audit trails. - learn more
            • Blaze.tech raised $8.5M in pre-seed funding led by Friale, a healthcare-focused venture firm founded by the family behind HCA Healthcare. The company helps digital health startups, providers and payers turn AI-generated prototypes into HIPAA-compliant software for uses including e-prescribing, EHR integrations, telehealth and auditing. - learn more

            LA Venture Funds
            • Canon Capital participated in Oligo Security’s $60M funding round alongside Ballistic Ventures, Greenfield Partners, Lightspeed Venture Partners, Red Dot Capital Partners, TLV Partners and other investors, bringing the cybersecurity company’s total funding to $140M. Oligo will use the capital to accelerate product development and expand its global go-to-market operations as it helps organizations detect and block software exploits in real time. - learn more
            • Matter Venture Partners participated in Volta’s seed and Series A financing alongside Azora, Andreessen Horowitz, Altimeter, NVIDIA and Michael Dell’s family office, valuing the AI infrastructure startup at $2.4B. Emerging from stealth, Volta plans to use the backing to develop and operate large-scale AI data centers, supported by a $5B infrastructure financing program with Azora and a $10B European compute partnership. - learn more
            • Cedars-Sinai participated in Cirrus Therapeutics’ expanded seed financing through its Intellectual Property Company, bringing the ocular immunology biotech’s total funding to $14.7M. Cirrus will use the backing to advance its gene and cell therapy pipeline, including a lead treatment for geographic atrophy, while a new collaboration with Singapore Eye Research Institute and Duke-NUS will support research, clinical development and expansion across Asia-Pacific. - learn more
            • Strong Ventures made a follow-on investment in Ready Robust Machine’s ₩13.4B Series B, which was led by Quantum Ventures Korea and brought the heavy-equipment technology company’s total funding to ₩22.9B. The company develops energy-recovery systems for hydraulic machinery and will use the capital to build out mass production, expand its data services and enter the Japanese market. - learn more

            LA Exits

            • Artium has been acquired by global consulting firm AlixPartners, bringing its expertise in building enterprise-grade AI agents for clients including BNY Mellon, Mayo Clinic and eBay to a broader global platform. The company will continue operating as a distinct team under the name Artium by AlixPartners, retaining its founders, employees, methodology and research relationships. - learn more

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