Business

Mark Cuban’s case for diversity in business: “I like to invest where people don’t look”

Almost all companies include diversity in their values ​​or mission statements. After all, embracing diversity is the right thing to do (or, if you’re cynical, at the very least the right thing a company should appear assess.)

But just in case you need it, there’s a fundamental reason to value diversity, both in the people you employ and, more broadly, in the investments you make.

Let’s start by investing in startups. During an appearance on the The problem with Jon Stewart Podcast, Cuban said:

I have invested over $50 million in funds and businesses of people of color, men and women, because I believe there is a unique opportunity here. I like to invest where people don’t look.

Hopefully some of these transactions turn into something big and someone comes along and says, “You white people missed the mark. Now it’s people of color who are in a position of power because you weren’t watching when the demographics of the whole country changed…(while) you were trying to exploit what was already there.’

The statistics confirm the Cuban position. According to an article published by the National Bureau of Economic Research, even though immigrants represent only 15% of the American population, they represent 25% of business founders. Moreover, 30% of all American innovations since 1974 have come from immigrants.

And then there’s this: Another study shows that more than 50% of all “migrant inventors” (people who move to another country and then make something up) land in the United States

All of this means that the number of immigrant inventors and small business founders is only expected to increase over time.

As the researchers write, “the results suggest that immigrants seem to ‘create jobs’ (increase labor demand) more than they ‘take jobs’ (increase labor supply work) in the American economy”.

Cuban then moves on to discuss the power of a diverse workforce:

I’m not going to lie and say that I’ve always had a very diverse workforce. This is simply not the case.

But I try to be very disruptive in the businesses I go into, and to be disruptive you have to be aware of what’s going on in the world and research where those opportunities are.

It took me a while to realize that if I hire people from the Indian community in Dallas, which is the sixth largest Indian community in the country, I’m going to sell a lot more to that community because they know the community . (The same is true) if I hire veterans, people of color, women of color, people who represent the LBTQ community…it just makes good business sense now.

In short, embracing and expanding diversity isn’t just the right thing to do — or, as Cuban calls it, “a sign of virtue.”

It’s also, as the country’s demographics continue to change, a smart business decision. Diverse work teams – with a range of perspectives and life experiences to draw from – solve problems faster, make better decisions, and create superior quality products.

Diversity helps team members questioning (in a good way) the assumptions of the other instead of creating an echo chamber for similar ideas.

And, again, if you need a fundamental reason, the proof is in the numbers: ethnically diverse businesses are 35% more likely to financially outperform industry medians.

And lots of research.

The opinions expressed here by the columnists of Inc.com are theirs and not those of Inc.com.

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