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The Diversity Windfall

SUB As more companies seek a diverse workforce, entrepreneurs see big opportunities to help

3 Minute Read

What you need to know: 

  • Businesses with the most ethnic diversity and gender diversity outperform their peers by 33% and 21%, but many industries struggle with finding and hiring diverse talent. 

How you can capitalize: 

  • Create a service that matches skilled workers without gender or racial bias in a specific industry. With a proprietary algorithm that helps eliminate bias for the hiring of temp and gig-worker jobs, Tilr is on pace to make $10m in its 4th year of business. In addition to matching potential employees with clients, Tilr also handles training, payments, and other related duties.
  • This table from the US Bureau of Labor Statistics indicates the racial and gender diversity of more than 100 industries, offering hints of diversity gaps where entrepreneurs could get involved. Among the least diverse industries: construction, media, and law.

* * * * *

In its fourth year of business, Tilr is set to make $10m. Entelo has raised $40m in funding. How are they doing it? By helping other companies and industries become more diverse. 

The last few years, America has discovered that diversity is not just a social good but can provide an economic boost to companies. McKinsey found that businesses in the top quartile of ethnic diversity perform 33% better than their peers. For gender diversity, the top quartile performs 21% better. 

Yet diversity is an ongoing struggle in multiple sectors. That same McKinsey study found that minorities and women were greatly underrepresented in many industries, especially at executive and leadership levels.

Startups like Tilr and Entelo that help existing companies identify and hire diverse talent through unbiased algorithms can fill a need while also being part of a positive movement. Entelo makes software that helps companies in numerous industries find diverse candidates and hide common forms of bias throughout the hiring process.   

This case study focuses on Tilr, a startup seeing 100% year-over-year growth that uses an algorithm to reduce bias in the hiring of gig economy workers. There’s plenty of room for entrepreneurs to get involved building a product that targets specific industries lacking in diversity. Industries like law, education, and food service are among those in which diversity remains a major struggle and offer an opening for entrepreneurs.    

Case study 

Tilr’s mission is eradicating bias in the gig-worker economy by matching workers with companies seeking new employees. Tilr gets paid by the companies and lets prospective employees sign up for free. Tlr handles the hiring process, payroll, and training for the employees.   

Tilr also has a product called talent compass that companies can use to measure how well they are taking advantage of their workers’ diverse skill sets. 

How it achieves diversity: By taking titles out of the hiring process. “We absolutely believe that titles are one of the reasons that bias exists,” says Tilr CEO Carisa Miklusak. “Our algorithm literally matches someone based on skills rather than titles.”

So if a candidate has the skills that matched with a particular job but has not held that particular job before they will be identified as a potential match. “The algorithm works so that it is based on skills first but ensures that a good diverse group gets picked,” Miklusak says.  

How it makes money: Tilr charges clients only when they hire employees. It charges 25% on the hour, plus $1 an hour booking fee. If an employee makes $10 an hour, a client would pay Tilr $13.50 an hour — the hourly rate, plus $2.50 for the 25% and $1 for the booking fee. Tilr would then pay the employee $10 and keep $3.50.   

The company was beta-tested starting in 2016 in Cincinnati with $1m in seed funding. The first year it had about 30 clients, all local. It now has about 500 clients in 25 cities, with 52k employees and prospective employees using the service. 

Revenue 

  • Year 1: $400k  
  • Year 2: $800k
  • Year 3: $5.4m
  • Year 4 (projected): $10m    

How they built the business: Miklusak says Tilr didn’t spend on marketing its first 2 years. The company’s employees went to trade shows and conventions. They signed up workers on the spot. They also met with local chambers of commerce and community groups, which introduced them to major companies. 

More recently, Tilr hired in-house sales staff and also used CareerBuilder to sign up with channel partners and find more clients.      

The opportunities 

There are numerous industries that could use a third party to help them diversify. 

This table from the US Bureau of Labor Statistics shows the gender and race characteristics for hundreds of industries, allowing entrepreneurs to find major diversity gaps. 

Here a few highlights of industries particularly lacking:  

  • Food service managers: 51% male, despite women accounting for 55% of workers in food services, including more than 60% of servers, bartenders, and waitresses. Chefs and head cooks are also 78% percent male, even though women account for 42% of lower-level cooks.   
  • Attorneys: 88% white, despite current law students being 61% white. Although the biggest law firms devote massive resources to recruiting, many small and medium firms, which comprise much of the legal profession, lack a sophisticated recruiting process.
  • Construction: 87.5% white 
  • Media and PR: Both are above 80% white. 
  • High school teachers: 88% white, with college professors at 75% and elementary teachers at 83%.
  • Aircraft pilots: 92% male, despite higher percentages of women pilots in other countries and an acknowledged push by the industry. 

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