For the gay, immigrant co-chief executive of soon-to-be-public Shift Technologies Inc., it was important that the board of his company not be made up of a majority of straight, white men.
When George Arison tried to make that a reality, though, he hit a wall.
“The first set of lists, it was really hard to find people to put on them,” Arison — who is married and raising two 1-year-olds while also going through the process of taking his San Francisco-based company public via a special-purpose acquisition company, also known as a SPAC or blank-check company — said in one of a series of interviews with MarketWatch that provided an inside look at the SPAC process . “The people [I] know are mostly men.”
California companies like Arison’s don’t really have a choice when building a board, though. State law requires that boards of publicly traded companies with headquarters in the state that have six members or more must have at least three women by next year. In addition, a law signed by Gov. Gavin Newsom last month will also require boards to have at least one member from an underrepresented race, ethnicity or the LGBTQ community by the end of next year. Shift’s board will be in compliance with both laws from the start.
Arison, who said he is no fan of government-mandated “quotas” and prefers corporate actions that drive change, said it was “critical” to find women for Shift’s board because data show that companies that have female directors perform better. Besides, the company should “represent all the people you cater to,” he added.
Enter Lindsay Trout, a recruiter for executive search firm Egon Zehnder, who has increasingly been tasked with finding candidates from underrepresented groups. Last year, two-thirds of her company’s board placements were “diverse,” meaning the directors who were hired were from some sort of underrepresented group.
“What is the case now, in order to kind of broaden your talent pool, you look more broadly,” she said. “A lot of people are having first-time director roles vs. the same groups of people rotating in and out.”
Shift, which could go public as soon as next week, has eight members on its board, three of whom are women.
Victoria McInnis, a veteran of General Motors Co. GM, +2.29% who brings audit and tax expertise and was an audit chair for VectoIQ, the SPAC that recently completed its merger with electric-truck maker Nikola Corp. NKLA, -3.81%, is one of two women who joined the board last month.
“George’s approach about being purposeful [in finding women for the Shift board] was refreshing and genuine,” McInnis said in an interview with MarketWatch, in which she noted that it was unusual to be contacted for a board position by a recruiter because “often you get a call from someone you know.” She also liked that “the word ‘fit’ didn’t come up because it’s so frequent that you hear the word diversity but also the word fit” — which can reflect a lack of true commitment to bringing in someone who may think differently or have different experiences.
Arison said that as he has gone through the SPAC “roadshow” process, he has spoken to about 150 investors.
“Only 10 of them had a woman in the call,” he said. “That’s insane when you think about it. I don’t want my daughter growing up 25 years from now having to face that situation.”
Shift’s board contains just one non-white director (Indian-American Manish Patel of Highland Capital Partners, which is an investor in Shift). But it’s not for lack of trying, Arison said.
“We’ve done our best to include men and women, straight and gay as well as immigrants and people of different ethnicities, heritages and races on our board,” said Arison, an immigrant from former Soviet republic Georgia. He added that the board will continue to evolve and its makeup will change.
One challenge the company ran into as it searched for directors: the business it’s in. Some women, including minority women with whom Shift talked, weren’t “excited about cars,” Arison said.
“Clearly, it’s a heavily male-dominated industry,” McInnis said. But having come from GM, she said she has a “genuine” love for cars, and that she finds Shift’s business model “fantastic” because of the accessibility it provides.
“When I think used car, I think dealership, or meeting a stranger,” she said. Shift — which buys and sells cars in California (Sacramento, San Francisco and the rest of the Bay Area, San Diego, Los Angeles), Oregon and is expanding to Washington state — delivers cars that would-be buyers can test drive from their own homes.
Shift would not disclose the demographics of its total workforce of about 475, with Arison saying that there’s a broad spectrum of people who work at the company. They include concierges who bring cars for customers to test drive, mechanics, salespeople and more. He said the company’s leaders in finance, legal and marketing are all women.
“Board recruiting is really different from workforce hiring,” he said. “Relaxing some of the constraints is really important.” Those constraints include having previous board experience, or being local. McInnis, for example, is in Canada.
“Our board meetings for the next 12 months are going to be virtual anyway,” Arison said.