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Over the last few weeks, I have had the opportunity to speak at the T3 Conference in Florida, which attracted many of the most influential people in residential real estate, and at Yale University for a large start-up and venture capital event. At each event, I surprised the audience when I explained how the issue of diversity has been framed incorrectly, and has for the most part alienated the business community. I explained that while most companies say that diversity is a priority for them, privately they consider it an issue of compliance and regulation. They view it as policies that are imposed on them…and who likes that? When business people think of regulations, they think of cost burdens and the unfortunate price of doing business. Business execs put it in the same category as liability insurance and sexual harassment training; necessary, but not fun. Companies may publicly state they love diversity, but as with all compliance and regulations, the goal is to do just enough to stay out of trouble, and to spend as little money as possible.
My session at Yale University was titled, “Doing Business with America’s New Mainstream”. It was Sol Trujillo who first coined the phrase “New Mainstream”, so it’s nice to see it becoming more widely used. I enlightened the audience made up of professors, students, and investors at Yale that when the business community thinks about diversity, unfortunately, they don’t think about growth, market share, or profit; they think about cost burden and reputational risk. I further explained that Latinos and other diverse segments will account for almost 100% of economic growth in the coming years and that the data that supports that hypothesis was indisputable. Even the most sophisticated business leaders are surprised when they are confronted with the data. We live in a capitalistic society, and while philanthropy and good deeds are commendable, they are typically neither scalable nor sustainable. Essentially, if we want to see our diverse communities thrive, our initiatives must be economically viable, and the language we use must inspire an enthusiastic reaction from the business community.
I got into the venture capital business because I see a direct connection between entrepreneurship and closing the racial wealth gaps in America. I have seen first-hand that when Latino-led businesses achieve scale, it not only creates wealth for the founders, employees, and investors of those companies, it attracts more capital into Latino markets and prompts large companies to hire more Latinos and invest more money into diverse communities. Making that happen starts with the language we use. If we frame the issue of diversity as the “right thing” to do versus the “smart” thing to do, or better yet, the “profitable thing” to do, the outcomes we seek will be better and will come sooner.