The following interview is a conversation we had with Laura McGee, CEO of Diversio, on our podcast Category Visionaries. You can view the full episode here: $6 Million Raised to Help Organizations Measure and Improve DEI

Laura McGee
Thanks for having me, bet yeah, no problem. 

Brett
So before we begin talking about what you’re building, let’s start with a quick summary of who you are and a bit more about your background. 

Laura McGee
Great. So, I’m Laura McGee. I’m the Founder and CEO of Diversio. We were just chatting about how I’m Canadian by origin, but I live in New York now. Main job is running the software startup Diversio. And on the side, I do some nonprofit work. So on the board of Global Citizen, university of Waterloo, and a few other organizations. 

Brett
Nice very cool. And I saw that you’re the co chair of the what is it in Canada? The women’s entrepreneurship council. 

Laura McGee
Yes, the expert panel on women’s entrepreneurship. We have wrapped up our work primarily, but were focused on how do we get more capital, how do we get more business support to women who have founded some really great companies across the country. 

Brett
Nice very cool. And when you were building the company, did you view that as a requirement to move to New York, or do you think you could have built this from Canada? 

Laura McGee
I think I could have built it from Canada. And in fact, most of our engineering team, most of our operations are still in the country. But I felt it was really important to be local to a lot of our clients, in particular in the investment space, in the investment community, and not to mention, I mean, New York is a great city, so I was happy to move here. 

Brett
Nice makes a lot of sense. And two questions we like to ask just to better understand what makes you tick as a CEO, Founder, and as a leader, is there a CEO that you admire the most? And if so, who is it and what have you learned from them? 

Laura McGee
I would say the first and foremost is the former CEO of McKinsey, Dominic Barton. And he’s someone who I had the luck and the pleasure to work with really closely while I was in consulting. And he’s, to me, the epitome of a really inclusive leader, a really empowering leader who kind of meets from behind and really gets the most out of his team. 

Brett
Nice what was that like, going from consulting at McKinsey to starting your own company. That must be a pretty big shift. 

Laura McGee
I don’t think it could have been any different. I guess maybe if I went from like an er to running a software company, but I mean, moving from what builds itself and really is in the spirit of like large organizations, pretty entrepreneurial, to having all of the freedom and also the responsibility of the entire company’s. PNL was definitely a change. 

Brett
Nice. Makes a lot of sense. And what about books? Is there a specific book that’s had a really big impact on you as a Founder? 

Laura McGee
There have been a couple so and a little bit different. But the two, I would say as a leader, as an executive that resonated the most. One is called the Outsiders. It’s by William Thorndyke. And really interesting conclusion as he looked at some of the most lesser known but highly successful companies over the past, call it 2030 years, is that the CEOs were all really good at allocating capital and obviously broader view is allocating resources more broadly. So your top performers time your own time. And so I thought that was a really interesting way to think about being a CEO. It’s not just about being the most charismatic or the most hardworking. It’s really about making those smart decisions on where the company should move and focus. And then the second one, the CEO, I almost said my icon, my Hero is behind the Cloud by Mark Benyoff. 

Laura McGee
And I just think that the story of getting salesforce off the ground and all the hacky, scrappy, creative things that they did to gain market share was really interesting and inspiring. 

Brett
Yeah, that’s one of my favorite books of all time as well. I love the guerrilla marketing that Mark Benioff was doing in the early days and declaring war on software and taking that position was really clever. 

Laura McGee
Right. That iconic scene of all the salesforce staff standing outside of the San Francisco conference literally picketing against hardware. 

Brett
Exactly. Yeah. I think at one point, didn’t it say in the book he was considering driving a tank to one of the competitors conferences? But I think Legal pulled the plug on that, something along those lines. 

Laura McGee
You know what? I’m just surprised that he listened to Legal. 

Brett
That’s true. Very true. Nice. Well, let’s talk about what you’re building today. So can you give us a high level pitch on what the platform does and what problem customers are really paying you to solve? 

Laura McGee
Right. So Diversio, taking a big step back is really focused on helping companies become more inclusive, so more welcoming and more productive for employees of all stripes, no matter where they come from. And the genesis. The light bulb moment behind the company was talking to CEOs in the context of doing consulting about diversity and inclusion and hearing very consistently that leaders are at a point which took us a while, where they believe in the business case and the idea that a more inclusive company is going to drive more revenue, more profit, more productivity. That’s well established at this point, but where leaders fall down is they don’t know how to do it. And so kept hearing, I have no metrics, I have no data, I have no real targets. I’m throwing spaghetti at the wall with programs and training and nothing’s working. What really occurred to me, hearing that problem again and again, is there was no salesforce for diversity and inclusion. 

Laura McGee
There was no software platform that was helping companies strategize and operationalize on something that allegedly is the top three priority. And so the idea behind Diversio is creating a data driven platform that helps companies really operationalize their diversity and inclusion commitments. So that means data driven insights on what employees are experiencing in the workplace, helping you prioritize problem areas and pain points, really importantly, recommending solutions, really tactical, pragmatic, on the ground programs, policies that can solve the problem and then ultimately tracking results and helping companies report them out to a really growing set of stakeholders who actually care about this issue. 

Brett
And if you’re advising a company and they’re just building their di strategy, what are those top metrics that you recommend them to measure and to really focus on? Are there like one or two primary North Star metrics or does it just really depend on the company and the size of the organization? 

Laura McGee
So the metric that we anchor on is one that we developed internally. It’s called the inclusion metric. And what that reflects is the experience of, in particular, non dominant employees. So employees that fall into a demographic group that’s not in the majority in the kind of leadership ranks of an organization. And so you’re capturing in that metric not only representation, so making sure that you have a diversity of people at the company who are participating, but also are they having an equally positive, welcoming, enabling experience as folks that may be more represented at the company. 

Brett
Got it. Makes sense. And could you help me define the terms or navigate how to define the terms? Because I see Dei, I hear DNI, I hear a lot of different variations of this. What’s the actual term that I should be using and what should others be using as well? 

Laura McGee
Oh, it is the perennially moving target. Even the arrangement of the letters in the acronym is constantly moving. But we typically think of diversity, equity, and inclusion. So dei in no particular order, but those are the kind of guiding principles that we work towards. 

Brett
Is there a movement now to try to shift the order of those? Did I understand that correct? 

Laura McGee
We’ve seen like, indi, Di, D and I. I guess we haven’t seen eyes, we haven’t seen IDE yet, but I’m sure it’s coming. 

Brett
That’s funny. What about market categories? What are your views when it comes to market categories? Reading behind the cloud, I’m sure you must have some opinions there. So what are your thoughts? 

Laura McGee
The really interesting thing about diversity and inclusion is it really is, it transcends a lot of the typical traditional segments. So people often ask me, who do you sell to? Who’s your main buyer? And the assumption is that this is an HR solution, it’s an HR tool. But what we find is that often our buyers, or at least our champions, are from the marketing department because companies are realizing that their reputation and their brand for values and inclusion are really critical to their buyers. We get folks from the legal department who are responsible for reporting and EEOC compliance and making sure that the workplace is free from any harassment claims. They come to us and say, hey, diversity and inclusion is essential to the work that we do. And then finally we get board members and investors come to us and say, we have a big foothold in the investment community. 

Laura McGee
Like, look, we’re exposed to a broad base of companies and we know that inclusion risk could affect our portfolio in a really disproportionate way. And so we need to understand what the diversity and inclusion composition of our portfolio companies look like. So in terms of category, there’s all kinds of market reports about the D and I category being, call it $15 billion in Tam. We actually think it goes well beyond that. Just based on the number of companies that and number of roles that take. 

Brett
An interest makes a lot of sense. And if a company adopts the platform, what’s the rollout look like and what’s the time to value? Is this something that they can immediately put in place and see results within a week or a month? Or does this take a quarter or longer of data to really make it useful? 

Laura McGee
It’s a good question. It was a really big focus for us. I think what were trying to avoid is what a lot of companies and leaders feel, which is that diversity and inclusion is overwhelming and there’s so many problems and things that need to be fixed and sorted through. And so when we built the platform, we designed it to be number one, a super light lift to get it implemented. So typically it involves anonymous four minute pulse survey that’s in the field for two weeks, following which we generate a dashboard which provides not only insights, but also quick win recommendations that companies can implement to start to build that early momentum. And so typically what we find with our clients is they collect the data, pull together their leaders to understand, here’s our priorities. It might be mentoring women, it might be recruiting more people of color, it might be creating more mentorship opportunities for people with a disability. 

Laura McGee
And then here’s the two or three programs that we’re going to implement over the next quarter, two quarters to solve those problems. And then three months, six months later, they start seeing the results as employees report higher levels of inclusion. And at that point, typically our clients are excited, empowered, and they start setting three year goals, which are those longer term, more systemic areas that take time, but ultimately could transform the business. 

Brett
Got it. Makes a lot of sense. And in terms of traction and adoption, are there any metrics that you’re okay with sharing? 

Laura McGee
Yes, we’ve grown significantly, if you can imagine, over the past four years. So 2020 was a turning point in this industry for a lot of reasons. Everything from the racial equality movement to work from home with the pandemic. And so we’ve grown now. We have clients operating across about 35 countries, obviously with a big footprint in north America and Europe. We’ve got about, I guess over 200 enterprise clients and about 400 SMB and individual clients. Everything from the world bank and accenture denon honda, to state street and Canada pension plan. So really running the gamut in terms of the companies that we work with and the geographic footprint. 

Brett
Yeah. And I see those big name logos on the website. Any insights into how you’re able to land such well known and impressive logos? That’s always the hard part that I think a lot of founders face when they try to move into the enterprise is how do you get them to take a risk on a startup? So what was your secret sauce there? Or what do you think contributed to your success there? 

Laura McGee
You know, it’s funny, as a Founder now, I kind of look back and think through, would I take a chance on an unvalidated software program? But it really was a combination from the beginning. I mean, Anya and I, my Co-Founder, we didn’t have capital when we started the company, so we had to bootstrap. And the hidden benefit of bootstrapping is you find yourself building a really great product, because if you don’t have money to spend on acquisition, the product really has to sell itself. And so early on, we innovated around recommendations. For example, so we have the world’s only longitudinal data set on what actually works to create a more inclusive workplace, and then really invested ourselves in user experience with our early adopter clients to make sure that the platform told a story and could help them gain executive buy in and celebrate their efforts. 

Laura McGee
So I think the product was one aspect, and then, if I’m being very honest, were scrappy. We had to be. And so we kind of took meetings and asked for intros wherever we could get them. And then were able to form a few partnerships with like, YPO, for example, early on that helped us get introductions and then build some of that early traction. 

Brett
Makes a lot of sense. And just in terms of the general landscape, there’s obviously a lot of noise around diversity and inclusion tools and platforms. And I feel like TechCrunch every week has a new company that’s being funded to try to do some part, be part of this problem in some way. What are you doing to really rise above all that noise and stand out? 

Laura McGee
Well, I think first thing is, honestly, the more the merrier in this space. I think it’s a great point of validation that companies are ready to really take the topic seriously and allocate spending. So we are very excited to see more recruiting tools and culture tools and pay equity tools come onto the market. I think for us, where we stand apart is our ability to really translate insights and progress into metrics that are widely recognized. So our inclusion metric, as we talked about earlier, not only helps kind of rationalize and clarify a company’s diversity and inclusion strategy, but also is highly recognized by investors who are now asking for this data. And so I think investing in both sides of that coin has helped us gain a really sticky advantage over maybe some other platforms. 

Brett
And how would you describe the state of diversity and inclusion today, just in general across organizations? Obviously it’s had a lot of attention, I’m sure since 2020 when you started. But what is it like today? Are we actually seeing improvements or how would you describe the state of diversity and inclusion today? 

Laura McGee
So that’s a trap, I would say. We’re not living in a paradise where all of a sudden there’s equal opportunity for everyone. Definitely there’s been more attention, which I think is a great first step. What we’ve seen, at least in our client base, is really meaningful improvements when the company takes a data driven and really focused approach to programming. So one example, I just was talking to them last week, one of our financial services clients, over a twelve month period saw a ten point increase on their inclusion score, which is out of 100. That’s top tier, top quartile. And the way that they did it is they had three really clear pain points that were unique to their business. One was around advancement of women, so promoting women and making sure that they had champions and advocates. One was around mental health and making sure that there was flexibility and kind of lifestyle supports for people who have mental health conditions. 

Laura McGee
And one was around really recruiting and hiring, in particular black employees. And they recognized those pain points, they aligned around them and then they meticulously, solved them or at least started to make progress. And the cumulative impact of solving those programs drove like a real meaningful impact in the business. 

Brett
Nice take a note of Sense and another question for you. On my end as a podcast host, I’ve made a big push to improve my own diversity, especially when it comes to having more female founders on. And as I’ve been going through that, I’ve been disappointed and shocked to see that there’s just not that many female founders of venture backed startups what’s that like for you, being a woman in this space? And what can we do to get more involved and have more women become venture backed founders and CEOs? 

Laura McGee
That’s a great question. I’m glad you asked. We do a lot of work with BC firms who are, to be honest, and I’m so behind this, often their biggest driver is they want deal flow. And the data shows that female founders tend to start more profitable businesses, more sustainable businesses, lower risk businesses. And so a lot of our BC clients are like, look, great quality. Deal flow is hard to come by. We want to expand our horizons. We know there’s probably some bias at play because most of our investors are men. So what do we do? How do we get out there and source more female founders? And so I think in terms of what we advise them is expand your networks, expand your idea of what a successful company looks like. Try and get away from markets that you’re personally aware of because you personally feel the problem and expand your horizon and really your empathy around what other individuals might be facing. 

Laura McGee
My favorite example is like reproductive health. One of my kind of favorite startups is helping women with egg freezing, which is a huge trend in my cohort, in my friend group, but most of my male investor friends, it doesn’t really resonate. 

Brett
Well. 

Laura McGee
That’s a huge market opportunity that if you’re not focused on that community, you’re just going to miss the startups. So I think just expanding your horizon in that way. And then on the female Founder side, the unfortunate reality, I think for us, my ANI and I, is that we really did struggle to raise capital early on. And the pushback that we got was that we don’t believe that this market is maturing fast enough. We don’t think that companies are really spending money. We don’t think that people really care about diversity and inclusion. It’s all lip service. And so what it took for us was pretty unreal metrics. We needed better than top quartile growth metrics, we needed better than top quartile cogs, we needed better than top quartile capital efficiency. We really needed a pluses across the board. And I mean, the good news is once you get there, it’s not difficult to raise capital. 

Laura McGee
I think it’s just unfortunate that women do tend to have to demonstrate performance, whereas men are often back for their ideas. 

Brett
Yeah, makes sense. And are you seeing that change overall? From my end, what I see, at least in the numbers and the data that comes out every six months or every quarter is it doesn’t really seem like there’s that much progress being made. So from your perspective, is progress actually being made or is that just kind of BS at this point? 

Laura McGee
I mean, I’m a data driven person and if you look at the objective data, it’s like incremental at best. So we’re talking about is 2% of venture capital going to women or 3%, and then we’re celebrating when it’s like 2.5. So I would say, like, statistically not really. What I’m excited about though is we’re seeing that a lot of institutional investors are getting quite bold about the data they’re requesting from their venture capital and private equity recipients. So you have like the Ontario Teachers pension Plan, for example, and any other institution who’s part of ILPA is using the new due diligence form which requires or asks GPS to collect data on their portfolio company representation. And so what that means is that if you are, I don’t know, Andreas and Horowitz, and you’re going to raise fund, I don’t know, 15 from call it Columbia Endowment. 

Laura McGee
Columbia Endowment is saying, okay, but first I need to know what is the gender representation of the founders in your portfolio? And as they gather more benchmarking data and start to ask questions on that front, I think that’s a really important pressure point for these funds to really take action because the data is starting to mean something interesting. 

Brett
So it’s top down coming from the LPs, pressuring the GPS to make this a priority. 

Laura McGee
Exactly. 

Brett
Feel like that probably makes no sense if people don’t know what that is. So limited partners and general partners. 

Laura McGee
Yeah, no, exactly. That’s true. I don’t know, this is probably kind of gibberish to a lot of your audience, but that’s exactly right. 

Brett
Yeah, we’re getting all the buzzwords here. LPs. GPS. Dei Nice. Well, that makes a lot of sense, and that’s good to hear that pressure is coming from the top down. It seems like that top down approach is working in a lot of other ways, I think, as well. Right. I’m seeing more and more LPs are putting out statements just about their portfolios and wanting to focus more on ESG investments. So it seems like that’s working to some extent. 

Laura McGee
Yeah, I think I’m hopeful about that trend. 

Brett
Nice, that’s good to hear. And another question for you as you’ve brought this idea to market, what’s been your greatest challenge that you faced and how do you overcome it? 

Laura McGee
You know what’s funny, I think two challenges come to mind. One is and we kind of really do our best to mitigate this, but there is often a fear of tackling diversity and inclusion. And it’s very simple. People are worried about saying the wrong thing and getting trash for that on Twitter or internal Slack channels, whatever it is. So I think there’s this fear that if I don’t get it perfect, then I should not try, because the downside of getting it a little bit wrong is it’s worse than the do nothing. And so we try to cultivate a mentality of like, look, nothing is going to be you’re never going to flip a switch and suddenly know what all the letters in LGBTQ two plus stand for. It’s a learning process. So the idea is start with one area, nail it, go to the next area, nail it, and by the way, you’re going to try programs, you’re going to make statements that’s all a little bit flat, but it’s supposed to be an Iterative process. 

Laura McGee
So I think that internal fear, which is a really human emotion, has been one of the inhibitors. Luckily, I do think the external pressures are great enough that I think folks are kind of overcoming that. And so I think the second challenge has been around the downside of this being a really transcendent priority is that there’s a lot of people who want to have some sort of input. And so you’re kind of trying to close a deal and you’ve got legal all over you. You’ve got marketing who wants to be involved, you’ve got the CEO who has a personal interest because he or she is personally making commitments. So it can be kind of a lot of organization to work through, but obviously worth it once everyone’s aligned. 

Brett
That makes a lot of sense. And last couple of questions here for you. What excites you most about the work you get to do every day? 

Laura McGee
Oh, the impact on employees. One of my favorite parts of the work week and definitely the month is we’ll do like a monthly all hands meeting. And that’s an opportunity for our client success team to come forward with stories and real quotes from employees about how our work has helped them. So one of my favorite examples was we had a West Coast, I think it was medical insurance company client, very traditional, had been managed in a very traditional way for 60, 70 years. And we discovered that their LGBT employees really felt excluded, in particular their trans community. And nobody was comfortable being out at work at all. And that was really affecting mental health, it was affecting performance. And so we had recommended basically a whole action plan around LGBT inclusion, which had not even been on their radar until our assessment kind of surfaced. 

Laura McGee
The Red Boxes and the management team really took it seriously. Implemented a whole bunch of programming around Pride, implemented new forms of parental support, parental leave, trans care, et cetera. And the feedback that came from employees the next time we ran the survey was so emotional, really deeply affecting in terms of their experience being meaningfully different and them having a completely renewed confidence in their careers. It’s that kind of story that I think reinforces for all of us. Like we’re having a real impact on people, not just on budgets and profits and all that good stuff. 

Brett
That’s amazing. And yeah, it must be fun to work on something with such impact. This isn’t just like a better chat bot or a better email tool. This is something that’s really changing people’s lives. So that must be amazing. 

Laura McGee
Yeah, although we did just build a chat bot and it was great. 

Brett
And if we zoom out into the future, what’s the three year vision for the company? 

Laura McGee
So we are aiming to be the best and the most widely used Pi platform for HR professionals. So we are kind of consistently growing our product suite. Improving the product touch every aspect of the employee lifecycle, everything from applicant tracking to data collection, to programs and systems to on a roadmap is an exciting new engagement tool. And so our goal is to help leaders really integrate and incorporate diversity and inclusion into the entire lifecycle of their staff. 

Brett
Nice. Love it. And that’s certainly exciting. Unfortunately, that’s all we’re going to have time to cover for today. But before we wrap, if people want to follow along with your journey as you build, where’s the best place for them to go? 

Laura McGee
I would go to At, Diversio Global on Twitter or Diversio on LinkedIn and our website, www.diversio.com. 

Brett
Awesome. Well, thanks so much for your time. I really appreciate it. It was really fun hearing about what you’re building and I wish you the best of luck in executing on this vision. 

Laura McGee
Thanks so much for having me. 

Brett
Yeah, take care. 

Laura McGee
Take care.