Startups have a complicated history when it comes to supporting women and underrepresented talent. Horror stories of fast-growing startups like Uber and Rivian failing marginalized groups are all too common. Google some variation of “startup,” “toxic bro culture,” and “lawsuit,” and a recent repackaging of the same discrimination claims will appear in the results. It’s just that prevalent.
It doesn’t have to be this way, and it shouldn’t. When it comes to diversity, equity, and inclusion (DEI), early stage companies are at an advantage compared to their more tenured peers. They have the opportunity to do things differently. Build things right from the start.
And most still don’t.
DEI gets deprioritized. Founders depend on their tight networks to grow their teams. There doesn’t seem to be enough time in the day to breathe, let alone gauge whether the environment you’re creating is toxic, inclusive, or somewhere in between.
I get it. I’m a startup founder and CEO, too. There are so many things competing for our attention every minute of every day that it often feels like adding one more concern just might cause the whole house of cards to fall flat.
DEI, however, is not that final card. It’s the one you lay first, the one that’s carefully hidden in the base of everything the best companies and founders do—and all of the above reasons not to prioritize DEI are excuses we founders make to keep from taking on one more hard task.
I spoke to other founders and leaders at five startups currently prioritizing DEI in hiring and culture-building about the ways they’ve navigated the “myths” founders choose to believe when avoiding DEI initiatives.
They all said basically the same thing: Putting DEI first is not just the right option; it’s the better option. But I’ll let them speak for themselves.
Excuse: We won’t be able to find enough talent.
In 2020, Wells Fargo CEO Charles Scharf famously stated in a Zoom meeting that the bank had trouble achieving diversity goals because there was not enough qualified minority talent, a statement he later apologized for after employees were rightfully exasperated. That “there is not enough talent” to commit to diversity hiring is a longstanding myth that rattles Fortune 500 CEOs and startup founders alike—but is debunked when leaders are committed to shaking up outdated recruitment practices.
Scott Voulgaris, cofounder of Vesta Housing, said limited talent was a concern for the construction startup initially, especially given theirs is a male-dominated industry, but “…the team unanimously agreed we could not compromise on finding diverse candidates who aligned with and would strengthen our culture and our team, even if it meant we would have to hire more slowly.”
Voulgaris said that early recruitment worry has abated since the company began prioritizing DEI. “We continue to receive numerous candidates from various groups,” he said.
“Additionally, we know we’re on the right track based on anonymous employee feedback, which is incredibly heartwarming and inspiring: ‘I’ve never worked with such a thoughtful, caring group of people who really care about diversity, inclusion, and making Vesta a place people want to work. What stands out for me is the open communication the team has and the opportunities to learn and grow. I feel comfortable voicing my opinion and constructively disagreeing with others…'”
Ken Ahrens, founder and CEO of Atlanta-based startup Speedscale, said the key to recruiting diverse talent to their organization has been broadening their search beyond their usual recruitment tools. “We look in every place we can to find candidates,” Ahrens said. “If you only look in a very small circle such as who you know and the first degree connections of your employees, you run the risk of not getting enough outside perspective.”
Just because you don’t see diversity around you doesn’t mean the talent isn’t there. Rather, lack of diversity is evidence that there’s a problem with your network, your biases during the recruitment process, or even your company’s culture.
Excuse: We don’t have the bandwidth.
For startups, time and resources are precious and hard to come by. I know this firsthand. And wholeheartedly embracing DEI initiatives can be daunting because breaking from routine does, by nature, eat up bandwidth. But the long-term benefits of taking the time to build an inclusive and psychologically safe environment far outweigh any early logistical speed bumps. Diverse teams are more creative, more varied in skillsets, and more productive, all factors considered to be the lifeblood of startups.
“Startups require a tremendous amount of creativity, and without a diverse team, you run the risk of creating an echo chamber,” Ahrens said. “You need many different perspectives and approaches, and this requires having a diverse organization.”
They also have lower turnover, meaning diverse companies don’t waste time, money, and resources filling open positions. Based on my company’s (InHerSight) data, around 53% of employees are unlikely to stay at a company with visible or measurable DEI initiatives. And according to human resources company G&A Partners, such turnover costs companies around 50% of an employee’s annual salary to fill an open role. That number jumps to 100 to 150% for technical positions and up to 213% for C-suite positions.
Bo Han, founder and CEO of tech startup Buzzer, said hiring employees with shared values and diverse backgrounds has always been top of mind for the organization, and both employee feedback and, yes, their retention rate reflect their success in that arena.
“Our most recent survey indicated that 100% of respondents feel respected by their teammates; 97% of respondents shared they feel a sense of belonging at Buzzer; and we have a 91% retention rate,” Han said. “Additionally, nearly 50% of our team identifies as a person of color and over 40% of our engineering team are women.”
Excuse: We need to build our business first.
Like time, recognizing that DEI is a top priority remains a struggle for startup founders. Well-intentioned leaders might plan to focus on diversity eventually, but not yet. Later. Once they lay the groundwork for their business.
For small and growing organizations, there will never be a better time for DEI than immediately. Culture-building at any organization begins on day one, and uprooting toxic practices is far more challenging than building in inclusion ASAP. “We’re a small, passionate team who have come from companies large and small and from cultures inspiring and toxic,” Voulgaris said. “We’ve seen how hard it can be to change a ‘good ole boys’ club’ culture to one focused on DEI and know that to ingrain the values we each hold, we must keep DEI at the forefront from the get-go.”
Lucy Winterhalder, head of people at fundraising startup Givebutter, said focusing on diversity early on has been a core aspect of the company’s business strategy as well as how they support their team. “We believe the best way to support such a diverse customer base is to ensure that we have an equally diverse team supporting them,” she said.
Han echoes that sentiment. “It is not just the morally right thing to do, but it is simply good business,” he said. “We want our company, content offerings, investors, teammates, and board members to reflect our diverse communities and user base.” Good business practices and good people practices can, and should, go hand in hand.
Excuse: We don’t need DEI. Our company’s culture is already great.
Inclusion is not necessarily organic. When startup founders, or any company leaders for that matter, write off strategic and measurable DEI initiatives because they naturally have a so-called “great,” “perfect,” or “welcoming” company culture, my follow-up question is always: Says who? Without employee feedback at hand, both hard data and anonymous responses, they don’t have an answer beyond themselves—and they never will.
The truth is, leaders who lack information about their cultures are scared, scared that they’ll get feedback from employees that they don’t like or aren’t prepared to deal with. That unaddressed fear inhibits action and will show up in ways beyond DEI.
“There was no question that we would act intentionally to prove our commitment to DEI,” said Winterhalder. “What kept us up at night were questions like, ‘What if we say the wrong thing?’ DEI is iterative, I doubt we will ever not think about that. We had to be okay admitting that Givebutter had, and still has, work to do. That mentality freed us up to take action, get feedback, adjust, and learn for the next time.”
Tina Phillips, vice president of people, talent, and culture at insurance startup INSHUR, said she’s made it her personal mission to make all of the workplaces she’d worked for more diverse and hopefully more inclusive. But, the flip side is, “This has meant a lot of hard and sometimes extremely uncomfortable conversations, as well as examining my own privileges, biases, and ways of doing things,” she said.
INSHUR maintains an internal library of resources to guide their DEI journey. Janiene Farquharson, talent coordinator at the company, said leaders will know if they’re doing things right when they can point to people within their organization who aren’t afraid to speak up. In fact, they feel comfortable doing so.
“When you talk about DEI, you are really talking about people,” Han said. “People’s backgrounds, lived experiences, and their values. When someone identifies with a certain race, ethnicity, gender, or orientation, they cannot leave that at the door at work and they should never have to,” said Han, “That is why DEI is so critical and why we hire teammates who share these values and want to build a culture of belonging together.”
Ursula Mead is the CEO and cofounder of InHerSight.