Latino Tech Startups: inherently more diverse?
Are Latino startups more diverse and inclusive than startups founded by non-Latinos?
Latinos are the youngest and fastest growing demographic in the U.S. and represent $1.5 trillion of the consumer market. Yet their presence in tech culture is made so invisible (less than 3%) that not one has been casted in the first three seasons of HBO’s Silicon Valley, a sitcom about a fictitious startup founded in California and managed by white men and women, and where minorities play the role of workers or butt of ethnic jokes.
Come to think of it, maybe it’s a good thing that Latinos haven’t made their debut on Silicon Valley just yet. However, it’s a shame that their stories and startups are not highlighted more often considering the lack of diversity in tech.
Although there isn’t any research yet on the subject, the Stanford Latino Entrepreneurship Initiative (SLEI) is harnessing the power of data and networks to build a database that can help answer questions tied to, among many other things, diversity in tech. For example, last year’s findings by SLEI debunked the myth that Latino Owned Businesses (LOBs) primarily serve other Latinos. Their research also shed light on why many LOBs stay small and don’t ever scale.
The Stanford Latino Entrepreneurship Initiative (SLEI) is a collaboration between the Latino Business Action Network (LBAN) and Stanford University, housed within the Stanford Graduate School of Business.
When data debunks false assumptions.
Prior to SLEI’s research, experts suspected most LOBs were small because they mostly served Latino consumers and were concentrated in non-growth or slow-growth sectors. However, neither of these cases have turned out to be true. In fact, only one out of five LOBs mostly serve Latino consumers while one out of three mostly cater to non-Latino consumers. In addition, most LOBs are overrepresented in four of the top five growth sectors of the U.S. economy. They are still underrepresented in tech.
Limited access to capital is one explanation proposed by SLEI as to why LOBs stay small. Data shows that financial institutions show little support for Latino entrepreneurs who often have no choice but to accept poor bank loans or depend on credit cards for their startups. Fortunately, SLEI is attempting to tackle the unique challenges facing LOBs by offering several dozen Latino entrepreneurs the insights, networks, and access to capital contacts they need to scale their businesses through the Stanford Latino Entrepreneur Leaders Program.
Drawing from my own network.
Though there is no significant dataset to support the claim that Latino startups represent a diverse workforce, there are two examples that come quickly to mind. Maybe you know of some other ones?
Shoe Lovers Inc., founded by Felipe Servin in 2014, is the world’s largest online community for Shoe fashionistas. The company is based in Berkeley and less than a year ago pivoted from an e-commerce website to an online community. Over half of Shoe Lovers’ employees are Latino or Latina, including engineers and developers. The second example is Stars Therapy Services, a premier therapy and early intervention company who convinced one California county to digitize reporting practices for early intervention services. Though not technically a “tech” company, Stars recently leveraged technology, again, to streamline their remote services and expand their reach through proprietary software. Their entire management team is Latin0 and predominantly female, and so is more than half their workforce. Both companies are still considered small LOBs because they have less than 50 employees, but their workforce, unlike most startups or established tech companies, do a better job at resembling California’s diverse demographics than most other tech startups.
SLEI’s 2015 report represents the first step to improve our understanding of Latino entrepreneurship and its contributions to diversity en mass.
The SLEI report underscores the potential economic impact LOBs can have in the U.S. economy if their challenges are addressed and opportunities encouraged. This is why SLEI is investing further into their research and is in the process of building the largest database of its kind to help researchers better understand the state of LOBs in order to maximize their impact on the U.S. economy as they continue to grow.
From 2007 to 2012 Latino businesses accounted for 86% of all new businesses in the U.S.
Latino businesses are growing faster than non-Latino businesses. Hence, greater attention will be given to LOBs in the coming months and years if it turns out that LOBs hire and serve more diverse populations than any other business across major sectors. This will be especially true for the tech industry if Stanford’s forthcoming database suggests that Latino tech companies, like Shoe Lovers or Stars Therapy Services, are better at hiring a diverse workforce than non-Latino tech companies. If this is indeed the case, executives and managers should start taking notes now from their Latino counterparts because a more diverse workforce is good for everyone.
Are you a Latino Owned Business or do you know one?
If so, Stanford’s Latino Entrepreneurship Initiative is compiling a comprehensive database and needs every LOB you know to fill out their survey, regardless of industry. Without the participation of LOBs in SLEI, we can never know how best to serve all business owners in an increasingly diverse nation.
Take the survey at https://goo.gl/Hv5hP6
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