Note: The following is an excerpt from the chapter titled "Using Data to Build More Diverse, Equitable, and Inclusive Startups" (Mattingly, Grice, Roberson & Colley, 2024) within the book Data-Driven Decision Making in Entrepreneurship: Tools for Maximizing Human Capital (Blacksmith & McCusker, 2024)
🚗🔥 Following multiple sexual harassment allegations, fostering a toxic “bro culture,” harassing his own drivers, and taking measures that seemingly supported the “Muslim-ban” enacted by the Trump administration in early 2017, Uber’s co-founder and first CEO, Travis Kalanick, was ousted. Despite Kalanick’s departure, the #DeleteUber campaign nonetheless resulted in short-term (i.e., more than 200,000 lost customers) and long-term damage (i.e., poor reputation and lack of trust) the company is still recovering from to this day (Siddiqui 2019, Wong 2017).
💸😠 After dis-banning its diversity, equity, and inclusion team and function, the cryptocurrency startup, Basecamp, lost a third of its staff due to the perception that the company does not value its people, especially those from underrepresented groups (Uhereczky, 2021).
👩🏿🤝👩🏽💰 Women only receive about 3% of venture capital funding, with Women of Color receiving less than 1%. Relatedly, white men control 93% of venture capital (VC) funds, whereas only 0.2% of VC partners are Black or Latino women (Houser and Kisska-Schulze, In Press).
The above examples are just the tip of the iceberg when it comes to the current state of the entrepreneurship ecosystem as related to diversity, equity, and inclusion (DEI), especially with the treatment of vulnerable and underrepresented groups.
Entrepreneurs and venture capitalists should be tuned in to DEI for reasons such as litigation prevention, the ethical case of caring for others and reducing harm, and the impact DEI has on strategy, finances, talent, and culture (e.g., Blackwell et al. 2017, Cassells and Duncan 2020, Rohwerder 2017, Turner 2018).
Getting DEI right is imperative to the long-term success of a startup. Fortunately, startups have a leg up compared to their larger, more well-established enterprise counterparts. Startups are in an advantageous position for implementing DEI best practices due to their agility, speed to scale, and fluidity of a culture that is yet to solidify its difficult-to-change, non-inclusive status quo (Ely et al. 2011, Paternoster et al. 2014).
When it comes to advancing DEI efforts, startups are like jetboats. Compared to the “Titanic” bigger, more established organizations, startups are small and agile—they can swiftly change directions (like deciding to embed DEI into their people operations function as they build it) and easily pivot when they miss the mark (like realizing that their first few board members all share the same identity and committing to diversifying its board moving forward).
Speed is another way startups are like DEI jetboats. Although DEI is a long-term journey, a
high-growth startup is in a unique position to quickly diversify its talent compared to larger companies with a relatively stable workforce that has little to no turnover.
When a startup cannot hire fast enough, there is no excuse not to do all in its power to fill those empty seats with people who represent the population it serves.
For example, imagine a startup recognizing its lack of gender diversity and decidingd to actively recruit more women. After investing in more gender-inclusive recruiting practices, they tracked how the demographics of their applicants changed over time. While more women applicants were indeed applying—and getting hired! —their data also showed that the number of BIPOC (Black, Indigenous, and People of Color) applicants were now decreasing, across all genders.
As it turns out, only focusing on gender diversity hurt this startup’s image among BIPOC candidates (e.g., only seeing white women in recruitment materials or at hiring events). Fortunately, the startup is still hiring rapidly and can quickly integrate more intersectional approaches to its recruitment methods and begin balancing out the numbers.
Because of its speed and agility, the startup jetboat can immediately pivot its recruitment strategy to appeal to both women and BIPOC applicants and more effectively diversify its homogeneous workforce. And gender and race/ethnicity are only the start (more on identities and demographics startups should measure later in this chapter).
Now, apply the same recruitment example to a corporate Titanic. Deciding to make any change to the recruitment process would require far more influencing, multi-level approvals, planning, coordination, and overall effort to pull off.
The process of adapting a well-established selection system would require more than just resources, it would take much longer time to implement and see any tangible results. And when change does not happen soon enough, the ship is left vulnerable to hitting DEI icebergs, as the executives shared at the beginning of this chapter.
On the other hand, committing to DEI early on can help startups in the long run, rather than trying to clean up a toxic culture once it is too late. Startups have much to gain by getting DEI right from the onset, including the competitive advantage of a more committed and innovative workforce, bigger financial gains, attracting and retaining top talent, and fostering healthier workplace cultures compared to startups who do not choose to embed DEI into their overall business strategy.
Read the entire chapter within the book Data-Driven Decision Making in Entrepreneurship:
Tools for Maximizing Human Capital, Edited by Nikki Blacksmith & Maureen E. McCusker
Ready to unleash the power of DEI at your organization? Reach out today:
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