Home Think Diversity at Your Startup Will Improve as You Grow? Think Again

Think Diversity at Your Startup Will Improve as You Grow? Think Again

“It’ll fix itself as we grow” is a legitimate answer to many startup struggles. Talent acquisition, branding, and procurement all tend to be easier for larger firms than smaller ones. Diversity, however, is not.

In a recently published research report, STELLARES, an AI-based talent acquisition platform, found that early-stage companies are just as homogeneous as enterprises. By collecting data on employees at more than 13,000 U.S.-based tech companies, STELLARES discovered that companies at the seed stage have the same proportion of female employees — 34 percent — as their post-IPO peers. In fact, companies at the seed, A, B, C, D, pre-IPO, and post-IPO stages differ by no more than 10 percentage points in terms of female employees, employees of color, females on the leadership team, and females on the extended leadership team.

How does STELLARES explain those similarities? Roi Chobadi, CEO and co-founder, attributes it to “divertia,” which he defines as the momentum the early team’s demographic makeup generates for its subsequent hires. “Companies’ demographic DNA persists,” Chobadi says, pointing out that referrals and so-called “cultural fits” tend to look like existing team members. “It’s a perpetual cycle that keeps repeating until someone does something to stop it.”

Conventional Silicon Valley wisdom focuses on execution, growth, and product-market fit in the earliest stages of startups, relegating diversity as something to go back and “fix” later. Chobadi argues that if diversity is a goal, you should do the opposite, and early-stage startups are at the ideal stage for solving diversity issues. “If all you need is 40 percent of headcount to be diverse — and then divertia will keep you on the path of diversity — you only need eight people if you’re a 20-person team,” he says. “But when you’re a 2,000-person company, meeting that same goal takes 800 hires, which is much harder.”

Look Away From Lookalikes

So how can entrepreneurs hire for heterogeneity? Four strategies stand out:

1. Don’t default to your friends.

Your inner circle may be the obvious place to look when you’re staffing your startup, but beware: Its members probably look an awful lot like you. Although the Public Religion Research Institute found that 75 percent of white Americans have an all-white social circle, the researcher noted similar tendencies among Americans of all racial and ethnic backgrounds.

Before hiring a cast of your clones, fight the tendency to turn to your existing relationships. “Your commitment to diversity as a CEO needs to start at the very beginning, from your very first hire,” urges Manu Smadja, co-founder of edtech startup MPOWER Financing. “This is also when it’s hardest, because diverse and inclusive hiring rarely happens organically.”

Although Smadja says that hiring from your inner circle has advantages like value alignment and an existing relationship, he points out that it’s possible to hire for vision and values outside your inner circle. Start by checking out startup job boards, where you can evaluate strangers to ensure an even playing field.

2. Hit up diversity hotspots.

Rightly or not, a survey by venture group First Round Capital concluded that many tech entrepreneurs have given up hope on improving the industry’s diversity figures. A plurality of respondents said they think it will be 11 to 20 years before the tech sector looks like the general population across both race and gender.

While most founders blamed the “pipeline problem,” with 36 percent attributing diversity issues to few minorities entering the industry, the second largest group attributed it to unconscious biases in hiring. A distant third set of founders cited non-diverse recruitment practices in university STEM programs.

Whether the problem is one of pipelines, unconscious biases, or recruitment practices, the here-and-now solution for entrepreneurs is the same: Hire from historically black colleges and universities and traditional women’s colleges. When most of your interviewees come from underrepresented groups, chances are good that you’ll find the right person among them.

3. Retool your recruitment ads.

If you post ads on job boards, take a look at them. Do they use masculine adjectives like “competitive,” “strong,” or “fearless”? If so, they may be bringing an outsized share of male applicants to your door. Research published by augmented writing platform Textio showed that the way in which a job ad is worded can dramatically affect the gender breakdown of its applicants.

If you doubt that diction choices are that powerful, consider what Atlassian found when it tried Textio’s software on its own job ads. After replacing masculine terms in its job ads with more feminine ones, the Australian software company increased the number of women hired for technical positions by 80 percent over the course of a year.

Want to put your own job ads to the test? Try the free gender decoder for job ads. The tool draws from the list of gender-biased words in a study published in the Journal of Personality and Social Psychology titled “Evidence That Gendered Wording in Job Advertisements Exists and Sustains Gender Equality.”

4. Make interviews more objective.

What can you do to promote diversity beyond hiring from a more diverse pool of candidates? Leela Srinivasan, CMO at Lever, suggests standardizing the criteria used to evaluate those candidates. “It’s an ongoing source of astonishment to me that, given the widespread consensus that hiring is really important for success, startups spend comparatively little time, effort and resources training employees to make objective hiring decisions.”

Thoughtful interviewing guidelines, Srinivasan argues, are a low-effort way to minimize the impact of hiring biases. Without those guidelines, she says many people unknowingly evaluate candidates in ways that inhibit diversity. “A prime example is choosing to reject a candidate because they don’t feel like ‘a culture fit’ for the organization, which is often code for ‘they didn’t really seem like us’ or ‘I wouldn’t enjoy hanging out with them,” she says.

For each role that needs to be filled, create a guide that applies to all candidates. Don’t insist that interviewers use it as a word-for-word template — organic conversations are valuable sources of candidate information, too — but ask that they collect answers to the listed questions. Be sure, too, that your guide includes a rubric for evaluating their responses. How, for example, might an “A” answer about the applicant’s teamwork experiences differ from a “B” one?

All too many founders assume that, as they grow their team roster, their diversity will naturally improve. In reality, companies build on what they have. That’s why the best time to dedicate your company to diversity was before your first hire; the second best time is before your next one.

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

Brad Anderson
Former editor

Brad is the former editor who oversaw contributed content at ReadWrite.com. He previously worked as an editor at PayPal and Crunchbase.

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