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Equity = Ownership: The bitwise industries formula

Johnathan Holifield, Senior Vice President, New Economies
Mike Green, Vice President of New Economies
Bitwise Industries

California

Between May 2020 and October 2022, U.S. companies have pledged more than $340B to support efforts that address racial equity and racial justice in America, according to a report published February 21, 2023 by the McKinsey Institute for Black Economic Mobility. The research was conducted to gain insight into how that money has been spent. However, the report offered inconclusive results.

Public and private sector policymakers, including government officials, educators, corporate executives, CEOs, and economic and workforce developers, have long sought ways to create sustainable economic mobility pathways that connect underserved humans to jobs that pay a living-wage. For the tech economy, the question at the heart of this noble pursuit has been resoundingly answered. One California-based tech company has deployed a proven model of success and is expanding across the nation. That company is Bitwise Industries.


A technology company conceived and built from the ground up with a mission to measurably advance representation in the tech economy. Bitwise Industries is a unique entity within the tech industry. This fast-growing creator of scalable digital solutions offers services in Salesforce, DocuSign, and Digital Product Development, and has one of the most tech representative workforce in the country.


Moreover, the outward expression of the company’s mission is its uniquely styled buildings. These distinct places house hundreds of employees, including paid apprentices, and are emblazoned with the company ethos: “No One Belongs Here More Than You!” 

 

Bitwise Industries has won numerous awards for its inclusive culture. Its co-CEOs have been featured in magazines, newspapers and TED Talks. Since its founding in Fresno, CA a decade ago by two friends whose grandparents are Mexican immigrants, Bitwise Industries has grown its footprint across 10 cities, the latest of which is the Southside of Chicago. It plans to expand to dozens of other cities over the next several years, with a priority focus on building tech ecosystems in “underestimated places” fueled by “underestimated talent.”

Fresno’s leaders offer strong support for Bitwise Industries’ intentional approach to developing inclusive equitable tech-based environments for underestimated humans. They have spoken publicly on how the City of Fresno has benefited significantly from the growth of the company’s tech-based workforce development ecosystem.

The Fresno Business Journal wrote on Feb 28, 2023:

Since its founding in 2012, Bitwise Industries has worked to revitalize the Downtown Fresno area, opening three centers, helping create more than 15,000 jobs and working to spread education and utilization of technology in underserved communities.

The success of Bitwise Industries in a relatively short period of time begs the question: Why haven’t more companies and anchor institutions that have access to more resources produced more equitable outcomes for underestimated and underserved humans?

The co-author of this article, Johnathan Holifield, has an answer. He is the author of The Future Economy and Inclusive Competitiveness: How Demographic Trends and Innovation Can Create Economic Prosperity for All Americans, which has an affirming foreword written by Jay Williams, former U.S. Assistant Secretary of Commerce for Economic Development. Williams lauds the book as an essential resource on economics that should be included in every institution of higher education. 

Holifield is also the Senior Vice President of New Economies at Bitwise Industries, leading the team that oversees company expansion into new cities and regions. He describes how Bitwise Industries’ success begins with making invisible opportunities visible and accessible: 

The tech economy bears none of the visible hallmarks of earlier economic eras, e.g., agricultural, industrial. So, tech ecosystem solutions are especially challenged by the enduring invisibility of the tech economy to underestimated humans. Bitwise Industries overcomes these challenges by affirmatively and intentionally offering underestimated humans new economic mobility pathways to tech. The company makes visible the tremendous opportunities of the tech economy, inducing interest, excitement, and access to an equitable pathway to ownership of marketable skills in the tech economy. 

Young female engineer concept. GUI (Graphical User Interface).

WHAT IS EQUITY? 

Of course, Bitwise Industries is not the first company to incorporate an equity strategy. There is no shortage of efforts across myriad cities and states to address the issue of equity. And there is no one-size-fits-all approach. Different cities and regions have deployed different strategies and tactics. 

Some of these include: Reparations efforts, Guaranteed basic income efforts, and corporate CEOs united for equity.

Despite numerous approaches to closing economic inequity gaps across America, it must be distinctly understood that to do so, with sustainable outcomes, underestimated humans must attain personal ownership stakes in the tech economy. 

The Bitwise Industries story is about its unique understanding of equity. The company not only reflects the fairness characteristic inherent in equity but strategically prioritizes equity’s equally important value of ownership.  

Across America today, notions of economic inequality have risen to a level of primary national concern. The equity narrative has substantially focused on matters of justice, impartiality, and even-handedness. For Bitwise Industries, however, the company’s expansion strategy is based on the formula: Equity = Ownership


Humans are America’s most valued asset. Closing economic inequity gaps requires cultivating the talent inherent in underestimated humans – think ALICE (Asset-limited, income constrained, but employed) populations – to align with growth stage industry sectors of the economy.


Measured by revenue, the Information industry (i.e., the tech economy) is the eighth largest in the U.S. at $2.3T in 2023. Tech plays an increasingly vital role in nearly all other sectors, such as healthcare, advanced manufacturing, transportation, education, and energy. One of the surest ways to overcome economic inequity is to gain personal ownership of marketable skills in the tech economy. 

It is difficult to imagine any asset with the potential to appreciate more in value than the marketable tech skills of underestimated humans. Meaningful upward economic mobility begins with accessing job opportunities through tech apprenticeship employment, acquiring ownership of tech skills, and demonstrating high quality capability (an appreciating asset) that can lead to higher wage incomes.

EQUITY = OWNERSHIP 

Increasing the incomes of underestimated humans improves their ability to acquire ownership of fixed appreciating assets, such as lands, homes, businesses, and intellectual property, which are building blocks of wealth. The potent combination of ownership of personal appreciating assets (tech skills) and fixed appreciating assets can translate into opportunities for wealth creation that closes economic inequity gaps. 

In the same way that equity confers upon the holder an ownership stake in a home, business or financial instrument, tech skills confer upon the holder an ownership stake in the tech economy. That is how the simple equation, Equity = Ownership, is tangibly expressed for real-life effect.  

One of the nation’s top economic research consultants is sounding a national alarm. In its analysis of how companies have invested in efforts to address racial equity, McKinsey declared, “It’s time for a new approach to racial equity.”

The events of this year are emblematic of long-standing inequities and are rooted in a long history of systemic discrimination. According to the Federal Reserve, the typical Black American family has eight times less wealth than a white family. The racial wealth gap has profound consequences, both for Black families and for the US economy; our previous research revealed that it will cost the US economy between $1 trillion and $1.5 trillion in GDP output each year.

Despite all this—and in part because of all this—2020 has also emerged as a moment of opportunity, a possible inflection point for addressing inequity in a profound way. The global protests following the killing of George Floyd demonstrated the widespread awareness of inequity and a willingness to do something about it. Fortune 1000 companies have responded…. But how can this potential be tapped in a way that delivers meaningful, systemic change?

We at McKinsey don’t have the answer to that question. But over the past few months, we have spoken with many leaders of organizations whose goal is to promote racial equity, as well as leaders of organizations that address similar issues, which once seemed intractable. 

Serious African American adult mentor training young millennial intern at laptop, explaining. Boss explaining work task to new employee at workplace. Coworkers discussing project issues in office

MEASURING EQUITY 

To achieve sustainable equity outcomes, measuring progress is key. Beyond the affirming rhetoric of public support for equity as ideological policy, aspiration or program, it is essential for companies and local economic stakeholders to collectively identify a visionary destination at the local or regional level, which investments in equity outcomes hope to reach. 

Company CEOs and the stewards of local economies typically value what they can measure, and measure what they value. Ownership of marketable tech skills among underestimated humans can be measured at the local level. And such ownership increases the capacity for individuals to compete in a fast-moving tech economy while adding much-needed quality talent in local ecosystems for employers competing in evolving markets. 

Ownership of marketable tech skills is a key starting place for individuals whose 20th century inheritance put them on the poverty side of the tracks. The question is how do underestimated humans gain access to 21st century tech-based marketable skills while managing the challenges of life that sustained poverty delivers. Bitwise Industries provides a proven pathway.

Measurable equity metrics should support, link to, and advance local tech economy objectives. They should not be isolated, standalone activities. Rather, they should be embedded in, and become part and parcel of, successful tech economy development strategies. Accordingly, equity strategies and metrics should follow and build on—not replace—existing local metrics, with an exclusive focus on measuring the productivity of underestimated humans and measurable outcomes of ownership. 

MAKING THE INVISIBLE VISIBLE

Perception is another key factor that must be addressed. There are pervasive perceptions by many stewards of local economies that humans living at the bottom of the economic ladder lack the talent, work ethic, and competitive drive to be productive workers or that their moral turpitude precludes them from contributing high value to growing companies in the tech economy. For more than a decade, Bitwise Industries has demonstrated those perceptions are wrong. 


Unfortunately, far too many stewards of local economies have leveraged rising interest in the issue of equity by offering to “listen more” to what disconnected populations are saying they want. This is a troublesome position, given the fact that those who understand the complexities of a tech-based innovation ecosystem are not offering what they know to be the truest value of equity: equitable ownership in the American dream of prosperity.


On the other side of the track, disconnected populations who have been subjected to economic deprivation for generations, lack awareness and knowledge of tech-based innovation ecosystems. They are not asking for equitable access and ownership because they lack insight and understanding of how tech-based economic ecosystems operate, which typically have a high degree of investments from government and philanthropic institutions. Underserved and disconnected populations are not exposed to the activities of tech-based innovation ecosystems on a regular basis. 

In poverty-stricken communities, far too many youth begin and end their K-12 educational pathway with little or no understanding of the tech-based society into which education will inevitably thrust its ill-prepared graduates. Disconnected populations hope to be included in the tech economy in some way, but the invisibility of the tech economy renders elusive those opportunities. Residents have not yet proactively demanded an ownership stake in the tech economy because they lack sufficient awareness of it. Moreover, they also often lack awareness of the significant investments by governments and philanthropy, which have obligations to practice inclusive and equitable economic development.

While disconnected communities are failing to demand ownership outcomes, those who fully understand the value of equity as ownership seldom offer such opportunities to underserved and disconnected residents. This failing dynamic must be upended. The communication gap must be bridged. 

The McKinsey report declares the nation is at an inflection point. The challenges of rapidly evolving demographic shifts in America and the exiting of Baby Boomers from the workforce, while the rest of the world’s nations are increasing their competitiveness across all industries, compels employers and other tech economy stakeholders to invest in sustainable solutions that address the growing need for reliable and sustainable tech talent development pipelines across a multicultural society. Bitwise industries is demonstrating a scalable model.    


Making visible an invisible tech economy requires intentionality, strategic communications, and a prioritized focus on cultivating untapped talent on the disconnected side of the tracks.


This is one of the keys to success for Bitwise Industries. The company’s value proposition to cities seeking to improve productivity among their most disadvantaged and vulnerable populations is that it will build inclusive tech ecosystems upon a foundation of economic mobility pathways that connect underestimated talent to career opportunities in the local tech economy. 

ECONOMIC MOBILITY PATHWAY

That is no easy task. If it were, Bitwise Industries would be joined by numerous other tech companies in a collaborative effort to scale up the impact it has made in the regions to which the company has expanded its business. 

Starting with the top leadership and throughout the company, Bitwise Industries exercises a daily priority to honor and respect every human we encounter (internally within the company and externally across our network of partners and associates and new people we meet) with equal value. 

The company’s distinct economic mobility pathway is developed around a framework of Apprenticeship Employment. Bitwise Industries pays a living wage to apprentices to learn while they earn. Wages vary based on location, with an average annual apprenticeship income of about $35K. Apprentices become Bitwise Industries employees, eligible for company benefits (which are considerable). 

At the end of the apprenticeship participants have gained real-world experience, acquired in-demand tech skills and will either become Bitwise employees or work for other companies across the broader tech economy. Starting salaries vary, but on average, they earn about $62K/year. After three years of tech employment, salaries increase to an average of $80K. 

TARGET MARKET

Although most anyone can participate in an Apprenticeship Employment pathway, the target market are those living at the bottom of the economic ladder, often considered ALICE humans. The typical income of someone starting out in the Bitwise Industries prior to apprenticeship training path is $21K. The company partners with local community colleges, workforce development programs and even high schools to co-create curriculum that local partners deliver as pre-apprenticeship training, which dovetails into Bitwise Industries Apprenticeship Employment pathways.

The timetable for an individual to matriculate from pre-apprenticeship training into a Bitwise Industries Apprenticeship Employment path and through to full-time employment in the tech economy is on average less than 18 months. During on-the-job training, Bitwise Industries surrounds apprentices with wraparound services, i.e. childcare, transportation, success coaching, mentoring and a steady diet of encouragement and support in an environment where everyone is treated with equal value as humans. 

The question often asked, once the momentary pause of incredulity has passed, is what credentials or cost is required to apply for pre-apprenticeship training. The answer is simple. If an applicant can speak English, Spanish or Hmong and have basic math skills and a desire to learn and work hard, there’s a small initial cost to cover essentials. If the applicant can’t afford it, Bitwise Industries can subsidize or cover the cost. Ninety percent of pre-apprentices receive financial assistance. 

TECH ECOSYSTEM BUILDING

Economic mobility pathways are just the ground floor of what Bitwise Industries does. As tech ecosystem builders, the company co-locates entrepreneurs in its buildings along with small businesses, like cafes and restaurants and others. Its buildings also offer co-working areas, offices and space to host community events. Local organizations and businesses become tenants in Bitwise Industries buildings. In addition, there is also the company’s equity investment arm, which invests in local startup founders.


“In the Bitwise Industries ecosystem, there are no wrong doors,” said Holifield. “Whichever door you walk into, someone will be able to direct you to where you need to go. That’s the hallmark of an ecosystem.”


Mike Green
Vice President of New Economies at Bitwise Industries

Mike is a cultural economist and strategist, co-founder of the National Institute for Institute Competitiveness, co-founder of Common Ground Conversations on Race in America, co-author of "Media Innovation and Entrepreneurship" (a textbook used in more than 30 colleges and universities), and co-author of "A Playbook for Improving Diversity and Inclusion in Entrepreneurship Centers" published by the International Business Innovation Association (InBIA).

Jonathan Holifield
Senior Vice President at New Economies, Bitwise Industries

Johnathan leads Bitwise Industries expansion into underestimated cities across the U.S. Prior to Bitwise, He served as Executive Director of the White House Initiative on HBCU and Advisor of the Domestic Policy Council from 2017 to 2021. He authored The Future Economy and Inclusive Competitiveness: How Demographic Trends and Innovation Can Create Shared Prosperity for All Americans.

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