Black CEO’s Battle for His Company and Reputation Raises Question: Are Successful Black Founders Being Forced Out of Their Businesses?
It’s been a long year for Brian Brackeen. He is the founder of Kairos, a facial recognition technology company. Brackeen raised $13 million for Kairos and garnered heaps of publicity and accolades for steering his company to success. Yet, he was fired by his board of directors and then embroiled in a legal skirmish that turned nasty.
Brackeen’s recent battle for his company and his very reputation stirs up troubling questions about white investors and their treatment of the black founders of companies in which they invest—when they do invest in black businesses, that is.
Not too long before Brackeen’s ousting, he was outspoken about his refusal to sell his facial recognition technology for the use of law enforcement, citing issues with racial bias.
“For law enforcement systems relying on Face Recognition to identify suspects using mug shot databases—accuracy, particularly in the case of dark-skinned people, can mean the difference between disproportionate arrest rates and civil equality,” he wrote in a blog post in 2018.
A lawsuit Brackeen filed against the Kairos board and reviewed by Black Enterprise, alleges that an investor pressured Brackeen to reconsider selling the company’s tech to law enforcement and that a “fundamental clash” ensued, setting the board and investors “on a mission to push Brackeen out of Kairos.”
Then things got ugly. Members of the board accused Brackeen of being a thief, even creating an itemized list of purchases they claim were charged to Kairos and had nothing to do with company business. They accused him of using company funds for unauthorized trips, meals, and other expenses that some would say many CEOs routinely charge to corporate accounts.
Brackeen denied the allegations and filed a countersuit. “It became clear to me that not only did they file a blatantly exaggerated, sensational lawsuit against me exclusively to justify terminating me—they filed it to gain what they perceive as leverage against me in order to force me to work for free,” he wrote in a letter to his investors.
“The allegations of theft, etc. are manufactured justifications for their attempted termination of my contract.”
Forward almost a year later, Brackeen and the Kairos board reached a settlement in court. Brackeen remains a shareholder and is still recognized as the company’s founder. Both sides have dropped their lawsuits.
Now, Brackeen has time to focus on his new venture, Lightship Capital, where he is a general partner, and also to focus on the racial implications of being forced out of the company he built and what that means for other black founders who launch companies that turn into successes.
Breaking Out a Racist Stereotype
Asked about the quickness of the white investors and board members to resort to publicly calling a black CEO a thief—a racist stereotype of African Americans, Brackeen has a few pointed words on the matter.
“Founders of color and women are under-invested in,” he says. “For those that are able to overcome that huge hurdle, they are then squeezed from the other side.”
Brackeen points to examples where white founders engaged in egregiously crass behavior—think of Uber founder Travis Kalanick and the time he took his employees to an escort bar in Korea; when Uber violated the privacy of a woman who had been raped by an Uber driver in India; and other reported acts of bad behavior.
Or Papa John’s founder and former CEO John Schnatter criticizing NFL players kneeling in protest during an earnings call, and also using the “n-word” during a company conference call.
It often takes time and a lot of PR nightmares before white founders are asked to resign from the companies they started.
In fact, The New York Times featured an article “Why Companies Like Uber Get Away With Bad Behavior?” with the observation that these [white] founders of successful startups are treated with kid gloves, even when they act out. And they are often allowed to resign, as in the case of Kalanick, and are hardly ever outright fired as Brackeen was.
Black Founders Less Valued, Even When Successful
When it comes to founders of color, “We are either not getting great representation or we don’t have VC’s (venture capitalists) on our side,” says Brackeen. He says that black founders are often seen as disposable to white investors and stakeholders.
“There is a disrespectful assumption that somehow a black CEO’s success is luck and a white CEO’s success is of skill,” says Brackeen and that boards and investors may be of the thinking that a black founder or CEO is easier to replace.
The disadvantages and bias founders of color face are why Brackeen is focused on Lightship Capital. “It’s a 20 million VC fund and a real estate fund—we are literally buying the block back,” he says.
“I think Marc Andreessen has been very much on Mark Zuckerberg’s side,” says Brackeen. Andreessen is the co-founder of investment group Andreessen Horowitz which is a major Facebook investor.
“Every single time there is a flare up at Facebook, and I have a lot of problems with Facebook, but surely as a way an investor treats their founder, Marc Andreessen has done right by Zuckerberg, even when [Zuckerberg] is wrong,” Brackeen says.
That ‘ride-or-die’ investor/founder relationship is what Brackeen hopes to forge between Lightship Capital and black founders.
“We want to be the Andreessen Horowitz for founders of color. If we do board seats, we want to invite the founders more often; make sure they have certain documents. We will always get the CEO a seat on the board.”
Eric Kelly, the chairman and CEO of Silicon Valley tech company Overland Tandberg, has also witnessed bias in the way black-owned businesses are dealt with.
“Black-owned businesses are behind the protection curve,” said Kelly in a recent interview with Black Enterprise. He says that often when it comes to black businesses, “They bet you are going to fail.”
Brackeen says Lightship Capital already has companies in its portfolio and plans to invest in 20 companies this year.
“We do multiple rounds; we invest as they mature. Again, black founders have a hard time getting A series [rounds]—we have to bridge them longer.”
His purpose is to also help black founders by any means necessary. “Any founder who has a significant term sheet” or one who may have questions about documentation related to funding their business, can reach out to Brackeen for help.
“I would be happy to look. I think any of us [in the black VC community] would be willing to look. No charge, no nothing,” he says.