The DEI Data Scientist with Paolo Gaudiano

Liz Tinkham (00:18):
Hi, this is Liz Tinkham and welcome to Third Act, a podcast about people embracing the third act of their lives with a new sense of purpose and direction. The third act begins when your script ends, but your show is not finished. Hi, everyone. Today I talk with Paolo Gaudiano, the DEI data scientist.

Liz Tinkham (00:40):
So how does a guy who studied aerospace engineering connect the dots to lead the field of simulation modeling to determine inclusion? As a college student, Paolo Gaudiano took a class on the cognitive functions of the brain, which led to a lifelong academic and professional interest in neural networks, AI, and statistical modeling. While working for ecosystems doing simulation modeling, Paolo had the opportunity to look at why inner city kids in Baltimore dropped out of high school.

Liz Tinkham (01:07):
The experience of working with these kids made Paolo realize how privileged he was as a White cisgender male. He subsequently devoted his life’s work to DEI, specifically looking at the issues of inclusion, which he believes most companies don’t understand. Today he combines academic research with both a nonprofit and for-profit company to advance the mission of improving DEIs in companies. So as a math minor and lifelong practitioner in the topic of DEI, I found Paolo’s data driven approach and his thinking on inclusion to be absolutely fascinating. Join me today as I talked to Paolo Gaudiano. So good morning, Paolo. How are you today?

Paolo Gaudiano (01:53):
Good morning, Liz. I’m doing very well. Thank you. How are you?

Liz Tinkham (01:56):
I’m great. And are you in the U.S. or Italy today?

Paolo Gaudiano (01:59):
I am back in the U.S. I’m in New York City. I came back about two weeks ago and I have to say, kind of missing Italy, but will be going back there soon enough.

Liz Tinkham (02:07):
Good thing. So before we get into your background, one of the things I find really interesting and I think it sets the context for the rest of your story is that you run three things at the same time, a for-profit and nonprofit and academic work. So tell us why three at the same time and how do you make that possible?

Paolo Gaudiano (02:26):
Well, it’s funny because when people tell you, one of the first things they tell you when you create a startup is that you have to focus and investors will never…and in reality the reason why I decided to do three entities is a combination of the fact that I’m now old enough that I’ve actually had experiences in all three fields and I really saw an opportunity to create synergies because essentially the academic work gives a combination of credibility quite frankly because being affiliated with the university gives people credibility, but it allows me to do some of the core research that would be very difficult to do in a more corporate or startup setting.

Paolo Gaudiano (03:02):
The nonprofit is because we recognize that a lot of the work that I’m doing really aims to make our society better, not just in terms of creating corporate DEI, but really in terms of understanding how diversity, equity and inclusion impact every aspect of society. And so that’s really the kind of work that requires a nonprofit framework and a nonprofit mindset. And then finally the startup, the for-profit startup, which is actually a public benefit corporation.

Paolo Gaudiano (03:28):
So it’s for profit, but with a public benefit mission included in the bylaws, that one is really focusing specifically on corporate diversity, equity, and inclusion. The three of them really feed off of each other. And so even though it is a lot of work, it’s a lot of extra juggling of things and keeping things in mind and just the sheer time that it takes, they really do benefit one another tremendously. For example, early on we were able to get a grant from a foundation through the nonprofit and we collaborated with the for-profits. So essentially it helped to generate some revenues on the for-profit side.

Paolo Gaudiano (04:00):
And then some of the work that we developed at the for-profit I was able to use to support some of the work in academic grant by using some of the technology that we developed on the for-profit side and so on. So I think of it as a three-legged stool where altogether I’m trying to create a field of diversity and inclusion research and I need all three legs of the stool to make it stable and to be able to do the support that I need.

Liz Tinkham (04:24):
Yeah. And I think it’s a really interesting model that I think some of the listeners are going to be interested in because we’ve had other people doing, I wouldn’t say the same thing in, well, just trying to move up sort of a purposeful mission forward. And so as we talk I think this will give people some really interesting thoughts and how to set it up. So you had an interesting academic background both as a student and professor because I’m going to kind of go back.

Liz Tinkham (04:47):
And I think you’re the first person I’ve interviewed whose academic background is really the first chess move in a long play to get where you’re at. So BS and MS and aerospace engineering. So you have a BS in aerospace engineering, but you didn’t want to build rocket ships. What did you want to do with that? So you went to Colorado. What were you going to do with that?

Paolo Gaudiano (05:03):
Yeah. So my undergraduate actually it was in the school of engineering, but it was applied math with distributed engineering background and I did start doing some aerospace work. What happened is that at the very tail end of my undergraduate I took a course from the electrical engineering department and aerospace department joint that I talked about the brain from an engineering perspective. This was kind of a brand new thing. It was at the early, early, early days of neural networks.

Paolo Gaudiano (05:29):
Well, the kind of the second phase of neural network in the ‘80s and I found a professor in the aerospace department that was looking for somebody to help him. And so I was able to get into a master’s in aerospace. So I continued my passion for aerospace engineering. I actually did some projects. We were trying to put what was called the getaway special kind of an experimental can on the space shuttle and we did it as a student team and I presented work at conferences.

Paolo Gaudiano (05:54):
Eventually when the space shuttle challenger blew up that kind of put an end to that particular line of work. But half of my work in my master’s degree was really in neuroscience and computational neuroscience doing neural networks. So then when I went to do my PhD in cognitive neuro systems at Boston University, it was really very interdisciplinary, which is my background really trained me.

Paolo Gaudiano (06:16):
My interdisciplinary background was extremely useful because we were doing work that tried to understand how the brain works from a physiological perspective, how it impacts people from a cognitive and psychological perspective, and then how can you take some of those ideas and apply them in the real world with an engineering and mathematical mindset? So it was a perfect blend of all of the things that I had been able to kind of cobble together through my undergraduate and master’s degree.

Paolo Gaudiano (06:40):
And then I carried that into the first part of my academic career when I became a professor at Boston University and I was doing robotics, I was doing machine vision, but I was also studying memory and attention and things of that sort. So it was really, I loved it. To me it was like being a kid in a toy store where I could use a common set of tools and apply them across a variety of different areas that ranged from literally working with animals and doing experiments and all the way to building better cameras.

Liz Tinkham (07:10):
After you graduated and had your degrees did you go first academia because you told me you also always have been an entrepreneur. So talk a little bit about that as well.

Paolo Gaudiano (07:18):
I was an entrepreneur from my earliest days. I mean, I remember as a kid, when I was not even a teenager yet, growing up in this little town called [inaudible 00:07:27] in the mountains, a friend of mine and I built a cage and we raised pigeons and then we would sell pigeons to people. And then after doing my first year of college I had just moved to the states and my parents had sent me money for my second year of college. I ended up taking that money and using it to start an auto body shop with a friend of mine.

Paolo Gaudiano (07:46):
And so I loved working. My first career, my dream career when I was a kid, when I was a little kid I wanted to be a marine biologist. I loved animals and I loved the sea. When I got to be a teenager and I started school and started doing engineering I wanted to be an automotive designer. I wanted to be like an engineer and actually design cars. And then I fell in love with the brain. And when I fell in love with the brain, it kind of turned me upside down, but it literally did.

Paolo Gaudiano (08:07):
I had for about a year or so I ran an auto body shop and I’d been an auto mechanic for about a year in a row before that. So I was doing a lot of work with cars. And so when I became a professor, so I got my PhD. I had this great opportunity to become a professor because at the time I had joined what was a graduate program, but not yet a department. They became a department the year that I graduated with my PhD. I was the first person to get a PhD there and so they offered me to stay there as a professor and I did, but very quickly I figured out that as much as I loved the academic research and the teaching, I was very entrepreneurial.

Paolo Gaudiano (08:43):
I was getting a lot of grants and then I started to do consulting for some companies and I was given the opportunity to essentially head up a research lab in a company. And eventually after getting tenure I decided that I just wanted to follow the call of the siren of entrepreneurship. And so I left academia to become a full-time entrepreneur.

Liz Tinkham (09:03):
And what was your first venture that you did?

Paolo Gaudiano (09:05):
My very first venture is I joined the company called Artificial Life, which actually for those that know Artificial Life, it was really more about just using simple AI. We were building chatbots. We were doing natural language processing and-

Liz Tinkham (09:17):
And just to set context, when was this?

Paolo Gaudiano (09:20):
This would’ve been 1999.

Liz Tinkham (09:23):
Okay. So early days of chatbots.

Paolo Gaudiano (09:26):
So this was actually, in fact, they kind of predated a lot of this was before anybody was really doing that. And the founder was a German guy, kind of a visionary, a little bit crazy, but in a good way. And he wanted to build a large research center in Europe with a shape kind of molded after the media lab. And he asked me if I wanted to be chief scientist and run that. And so I saw an opportunity to do that and I decided I’m done with academia. I love the teaching.

Paolo Gaudiano (09:50):
I didn’t really like the lack of urgency and the lack of… Doing applied work was almost a dirty work at least in the fields that I was in. And so I left and I joined that company. It was called Artificial Life. That lasted only about a year or so. I didn’t like the way the company was run. I had some options that I was able to cash out. And then I started my own little consulting company, which was a terrible idea.

Paolo Gaudiano (10:14):
I tried to see if I could bring American investors to Italy to invest in small Italian technology startups, which was already a bad idea because I didn’t really know what I was doing and it was a terrible idea because then the Internet bubble burst and that left me completely high and dry. Exactly. So, well, 2001 was when the world fell apart. So I started that. I started my own little company. So I was with Artificial Life for one year in 1999. I’d been consulting with them for several years.

Paolo Gaudiano (10:42):
I was full time for one year and then in 2000 I started my own little company which fell apart in late 2001. And at that point a friend of mine, somebody that I’d met through my academic work, who was from France, he had just started a company in Boston and that’s where I was at the time. And so I talked to him and it sounded like an absolute perfect fit for me because it was looking at sort of the next level up from neurons. It was really instead of looking at neurons and cognition of individuals, it was looking at collective behavior in people.

Paolo Gaudiano (11:15):
And so looking at this idea of agent based modeling, but so it was a perfect continuation of what I’ve been doing before, but it was applied to real business problems. And the company was called Ecosystem and he invited me to join. I became the chief technology officer and later I was president and essentially ran the company for a few years alongside him. And that was another one of those. I loved it because I was doing a million different things. We worked with clients that range from Fortune 500 companies, Global 1,000, but also government agencies, also foundations.

Paolo Gaudiano (11:46):
And that’s where I had my first taste of working indirectly in diversity and inclusion. We did a project for the Kellogg Foundation in which we were trying to help underserved, underrepresented youth. They were especially what they were calling, I forget what the exact term was. So basically youth that from inner cities, et cetera, that would drop out of high school. And how do you get those people into a meaningful career when job out there the first thing to ask you is, do you have a GED?

Paolo Gaudiano (12:15):
And so we had developed a simulation that helped to understand how their individual talents and skills and not simply what’s on the resume, could help them to succeed in different kinds of jobs. And I had the opportunity to work with a nonprofit in Baltimore that was doing some phenomenal work. And I got to meet some of these kids and it was such an amazing experience to see these kids whose lives had been so, so different from mine and made me realize, made me aware of the privilege that I came from.

Paolo Gaudiano (12:46):
And it sort of helped me to understand some of the things that I had appreciated and understood in a very superficial way as a human being. And so that was kind of my first experience with that. That eventually was I think part of the founding reason why I got into diversity and inclusion a few years later.

Liz Tinkham (13:08):
Maybe explain it in layman’s terms because you’re going to segue into it with your companies. At that point you started, there was some connection or you were starting to draw correlations between looking at data analytics and diversity, equity and inclusion and more from an organizational perspective. So tell me if I have that right and what was the connection there that you started to see?

Paolo Gaudiano (13:30):
Yeah. That’s a really good question. The connection and while I like yes the way we fall under the rubric of data and analytics, it’s really a unique kind of analytics and the reason why it draw me to or the reason why I thought about applying it to diversity, equity, and inclusion is that we are using a methodology that essentially allows you to retain information and not only retain, but taking into account information about individuals, their behaviors, their attitudes, their reactions to things and simultaneously understand what happens at the level of the whole organization.

Paolo Gaudiano (14:06):
And I say organization, but it could be a city, it could be a school, it could be a family, it could be drivers on a highway. So this methodology allows you to maintain both. And the way we do that is that we build these computer simulations that are literally like Sims games, where you replicate the behaviors of individuals and their interactions and then you let the computer simulations show you what happens at the microscopic level. Now, why is that interesting and why does it relate to diversity and inclusion?

Paolo Gaudiano (14:31):
Well, most of the data analytics processes out there, they use statistical methods and statistical methods were designed specifically to hide detail about individuals and make you understand things at the population level. But that means that you lose all the details. So if I can tell you a statistic that only 3% of CEO, actually it’s less than that, only 3% let’s say of executives in the American industries are Black women. And yet they represent the much larger chunk of the population and you are left asking why?

Paolo Gaudiano (15:04):
What is actually happening? And then on the other hand, you have these stories about the horrible things that happen to Black women, the experiences that they have that are just so poignant, but it’s very difficult to connect those two. How do you go from the individual stories to the… And that’s what that methodology that we have is designed exactly to do that, because we can literally replicate what happens to every individual within an organization and see how their experiences and their interactions with each other and with their company leads to not only to their personal success or failure, but also to what the entire company is doing.

Paolo Gaudiano (15:36):
One day I had been personally very interested in diversity and inclusion. I’m an immigrant. Now I am White, cisgender, heterosexual male and I’m an immigrant, but I’m an immigrant from Europe. So that hardly counts as a disadvantage. But for personal reasons I’ve always been really intrigued and couldn’t understand why all these disparities existed and it really bothered me. And I always just think, gosh, it would be nice if I could find some way to bring my work into this.

Paolo Gaudiano (16:02):
And then one day I was sitting in the umpteenth time that I got into a session on how do we get more Black people into advertising or how do we get more people into engineering? And I was listening to these people’s stories and I was listening to, they would say, oh, here’s what happened to me. And it was just these poignant individual examples. And then when it came to solutions they’re like, oh, we need to change corporate America. We need to change the mindset. We need to change the education system.

Paolo Gaudiano (16:25):
And there was this huge disconnect. It was like, how do you go from one onto the other? And I literally had this light bulb that went off and I thought, well, the simulations that have been building I might be able to capture that. I might be able to capture how the things that happen to individuals that relate to diversity, equity, and inclusion may impact the success of organizations and the performance of organizations.

Paolo Gaudiano (16:46):
And so I literally dropped everything. This was in late 2015. I spent about a year doing research, building simulations, proving to myself that I was onto something and that was kind of the birth of my new career, if you will.

Liz Tinkham (16:58):
So when you get a simulation back or when you do the simulations, let’s say you’re working for a company, how does the result of the simulation influence the behavior or actions that a company might take? Can you give us an example?

Paolo Gaudiano (17:14):
Yes, but I have to make a little bit of a clarification. The work that we actually do today with companies does not really involve the simulations other than showing how the simulations can help you to see the nexus between what you do to your individual employees or what your individual employees experience and what happens to you as a whole company. Now, why is that the case? Well, because what happened is that when I started doing this, I started to do a bit of consulting and we were pitching this to companies.

Paolo Gaudiano (17:41):
And one day I had a company say, this simulation is amazing. So the simulation would show things like if you have a company that is perfectly balanced between men and women, for example, and so it’s 50, 50, and you promote people fairly, it will stay 50, 50 forever. But if you introduce a tiny bit of bias in the way that people are promoted, where you give men a leg up, and as I always used to say not that ever happens in real companies, but what would happen in simulation?

Paolo Gaudiano (18:06):
And what you find is that lo and behold, if you just change one parameter, which is the probability of being promoted at each level, you end up with companies that look exactly what you see in real industry where you get 80% men at the top, and then maybe 70% at the manager level. And so on down where in some industry you actually have more women than men at the entry level and yet you get this kind of pyramid shape. And we were able to literally match data very accurately.

Paolo Gaudiano (18:30):
So that was a way for us to show, look, the fact that you’re doing something unfair to people is creating these incredible biases. So essentially your inclusion is influencing your diversity. And so we had a company that came to us and said, I want you to take this simulation and replicate my company. And what I realized is, I can’t do that. Because it’s not enough to know how many Black people, how many Hispanics, how many LGBTQ, how many women. I need to know what is their experience in the organization.

Paolo Gaudiano (18:57):
How is that shaped by the other people in the organization? Because ultimately these experiences don’t happen in a vacuum. It’s not that the building says, oh, look, there’s Black people coming. Let’s close the doors. It’s other people that are doing things. And so we had to take a step back and say, well, we need to measure the experiences that people have. And we need to understand how these experiences are different depending on your personal characteristics, on your identity traits.

Paolo Gaudiano (19:21):
So we developed this way of collecting information in a very interactive way from people. And as we did that, the first couple times we were like, wow, we’re measuring inclusion. We’re essentially defining inclusion as really exclusion. It’s about what are the things that are happening that make your experience different from somebody else? And we found this way of quantifying inclusion that completely revolutionizes the way that people think about their companies because now they see that it’s what actually happens on a day to day basis.

Paolo Gaudiano (19:48):
And then the simulation just kind of shows you in general sense how that impacts your organization, but it’s really understanding what does it mean to be a lesbian, Black woman in your organization. How is your experience different? What has happened to you? Who is making that happen to you? Is it your managers? Is it the leadership? Is it policies? Is it your peers? Is it your suppliers? Your partners, whatever the case might be. And so that’s what we do right now is we don’t really use the simulation per se other than as an educational element. But we go in and we measure inclusion of our companies. We essentially literally quantify that.

Liz Tinkham (20:25):
Which is so interesting because you were telling me really diversity, you think about diversity is just sort of a static count, correct?

Paolo Gaudiano (20:32):
Exactly.

Liz Tinkham (20:33):
How many Black people you have. How many women you have. And equity is more of a sort of what the outcome is.

Paolo Gaudiano (20:39):
Exactly, in a nutshell.

Liz Tinkham (20:42):
And on the inclusion side, so if you are able to look at that and see what the experiences are of people, are you able then to make recommendations to organizations about what needs to change?

Paolo Gaudiano (20:55):
Absolutely. And as I like to say, as you pointed out, yes. In a way, inclusion is about what you do. It’s about actions and behaviors. Diversity, if you think about it, it’s a snapshot. And when people try to force diversity by recruiting diversity, we think that’s a big mistake because you can hire all the people that you want from diverse backgrounds, but if they’re not welcomed they’re going to leave. And in fact, we see this all the time. With inclusion one of the things that’s very cool is that there are many companies that claim to measure inclusion and they do.

Paolo Gaudiano (21:25):
But what they tend to measure is this feeling of inclusion. They will ask things like, how included do you feel? Do you feel that your company has an inclusive culture? The problem is that those don’t really tell you why you may feel included at a level of seven out of 10 because your feeling of inclusion, your sense of belonging is the result of everything that happens to you in the workplace day in and day out. Instead, what we do is we ask about behaviors and experiences.

Paolo Gaudiano (21:50):
And because of that we can go back and we have this categorization system where we ask people to say, is it about career? Is it about compensation? Is it about your interactions with your colleagues? Is it about your work, life balance? And then by letting the data tell us where are the biggest disparities we can go back and say things like, hey, we find that in your company the experience of women relative to men is three times worse. They have three times as many problems as men.

Paolo Gaudiano (22:21):
And a lot of the problems happen to be related to the way that meetings are held because women tend to be excluded from meetings and because they complain about constantly being interrupted whenever they speak to your meetings. When you get that level of granularity you can say, here’s what you should do. Create a program. First of all, tell your managers to keep a list of everybody that should be invited to every meeting and make sure that because a lot of times what happens that it’s inadvertent.

Paolo Gaudiano (22:45):
It’s those unconscious biases it’s, oh, I’m going to invite, let’s get John and David and Mark. And it’s all of a sudden Lisa and whoever is not getting invited. And so that’s one example. Or maybe we can say, here’s a very simple technique during the meetings, keep track of who is talking. And if you see that certain people are interrupting, et cetera, you need to step in and you need to do something about it. So it would be a very… But other examples might be, hey, we’re finding that this particular group of people maybe people of color are complaining way more about career opportunities.

Paolo Gaudiano (23:18):
And it turns out that your promotion process is, again, we find that, hey, lo and behold, your performance reviews are done qualitatively by managers which allows their unconscious bias to creep in and that’s creating the outcome is that you’re promoting White people at a much faster rate than people of color. And so now you need to basically review the way that you’re doing or change the way that you’re doing promotions and performance reviews to make sure that you’re removing that bias.

Paolo Gaudiano (23:43):
So we can give really, really granular advice. And honestly we’re a bit skeptical about the whole unconscious bias training for two reasons. One of them is that we live as human beings because of our biases. And having studied both cognitive science and psychology, they don’t just depend… It’s like you need to look at something and be able to say, this is a chair. So anything that has four legs, you can look at a wheelchair and recognize it as a chair. Why is that?

Paolo Gaudiano (24:10):
Well, because we have a bias because we categorize things as chairs. So our brain automatically when you see someone whose skin is darker unfortunately our brain instantly kind of distinguishes on that criteria and says, you’re a different person from me. You can’t fix that. You cannot change that. But what you can do is you can make sure that your decisions are not going to be able to influence the experience of that person because of their skin color.

Paolo Gaudiano (24:38):
And that really takes two things. It takes an awareness on your part of the fact that this bias may exist, but more importantly it takes your company not allowing those kinds of biases to actually ripple through the organization. So how do you do that? Well, you create processes and you look for any way that subjective biases can potentially taint the process. And you would be surprised how often we do that inadvertently. For example, hey, we’re going to hire from Ivy League schools.

Paolo Gaudiano (25:05):
Well, guess what? If you hire from Ivy League schools you’re introducing a bias in the process because Ivy League schools tend to be very homogeneous. Or I’m going to use this recruiting firm, but it turns out that the recruiting firm is mostly White people. Well, clearly they’re not going to know where to look for candidates from a different background and they’re not going to know how to evaluate them.

Paolo Gaudiano (25:24):
So there are a lot of ways that biases can creep into your processes. We can pinpoint where those are actually making an impact and then you can go back and say, aha, this is the problem, but now it’s no longer, oh, my problem is that Black people have a lower level of belonging than White people because that doesn’t really tell you anything. It’s like, duh, we know because they’re leading the draws.

Liz Tinkham (25:47):
Over the last couple years since the racial reckoning that’s gone on with the death of George Floyd, have you seen companies embrace your notion of inclusion more and have you seen forward progress? Over the last years have things gotten better?

Paolo Gaudiano (26:06):
I would say yes and no. I think certainly there’s been a general increase in the demand for solutions. The problem is that there has been a huge boom in the number of people offering a staggeringly wide range of services. And the problem is that because there are no standards because there is no organizing body or regulatory body, what’s happening is that companies don’t know where to turn. And to be very candid, the quality of the services that are being offered varies dramatically.

Paolo Gaudiano (26:41):
I mean, this is true. It’s a bit of a bubble and every time that you see a bubble of any sort, this is a problem that you have that you go through and it’s a necessary process because you want to essentially create a lot of variety. And then over time what’s going to happen is that things are going to get weeded out and you’re going to have some of the best of breed are going to survive. So on the one hand there’s been more interest.

Paolo Gaudiano (27:02):
On the other hand, it’s been challenging to kind of keep above the noise level and having people recognize it. Now, what I can tell you is that because we started to do this, well, we started to do this before George Floyd and we already had a couple of clients that had worked with us. We got a lot of word of mouth recommendations. We had a lot of people that heard about what we were doing and when they see the quantitative aspect of it, and in particular, when they see that we’re moving beyond just calculating diversity and representation, there is a lot of interest in that.

Paolo Gaudiano (27:33):
And so we’ve been fortunate, but I have to say it’s a bit concerning because we’re starting to see backlash. We’re starting to see companies that are using coded language like, oh, it’s time that we get back to our core mission now. And when you hear things like that it’s like that. And you hear people more blatantly saying things like, oh, I’m a White man and I’m being discriminated against because I’m White. I didn’t get promoted because they had to do a diversity hire. And those are flawed arguments, but they’re very easy to fall victim to those arguments.

Paolo Gaudiano (28:07):
And we’re starting to see a lot of that. So it’s a bit concerning and our only hope is that by focusing on our target are White male, heterosexual, cisgender leaders of companies that need to understand two things. One, how the lack of diversity and inclusion is negatively impacting the organization. And two, how increasing the level of inclusion is going to help them to create not only more diverse organization, but one that performs at a superior level.

Liz Tinkham (28:39):
I want to go back now to the beginning, which is your interesting sort of third act, which again, it’s probably you’re going third of 20 acts. So now you have three things that you’re doing to do this, the social benefit corporation, you’re doing academic work, and you’re doing the nonprofit. So now that we have a better understanding of what you’re doing, talk about how those three things now weave together to move the ball forward.

Paolo Gaudiano (29:00):
The for-profit came first, but the academic side came shortly thereafter because from my past experience with Ecosystem, with other companies, I recognized that it’s impossible to create a product company that is also a research company. And so I knew that there was a need to have some way of doing core research that would not be tied to corporate interests, that would not be focusing on let’s get the next client and let’s finish a product for them.

Paolo Gaudiano (29:27):
So I teamed up with an amazing, amazing woman Dr. Gilda Barabino who at the time was the dean of the school of engineering at City College of New York and is now the president of Olin College of engineering in Massachusetts. And we hit it off immediately. And she being an engineer, and being a Black woman, being one of the most distinguished people I’ve ever known. I mean, this woman is in the National Academy of Engineering. She’s gotten presidential awards.

Paolo Gaudiano (29:50):
She’s the current president of the AAAS, which is one of the most distinguished organizations in science. And as a Black woman she’s one of the only in so many different areas. And so we teamed up and we got some funding from the National Science Foundation. We started to organize an annual conference and we created this small research lab. And then when she left to move to Olin, I’ve kind of shifted now more affiliated with that New York University, but really it’s about creating an academic field.

Paolo Gaudiano (30:20):
So we have a large conference that we do every year called the diversity and inclusion research conference. This year we’re expanding it to be more ongoing webinars rather than just one single event. But there’s the combination of creating the credibility of a field and doing the core research. So that was the academic side. The for-profit came a little bit later when we realized that we were focused initially on corporate DEI, but it became very apparent very quickly that diversity, equity, and inclusion is something that is ubiquitous.

Paolo Gaudiano (30:50):
And what I mean by that is there is virtually no area of society that I can think of in which the color of your skin, your gender, your sexual orientation, you’re having a disability or not, does not impact your outcomes. In other words, to put that turn around, your personal characteristics influence everything that you do in life. Every single thing that you do in life from healthcare, nutrition, safety, transportation, housing, every area needs a methodology, in my opinion, to quantify the link between individual experiences and outcomes.

Paolo Gaudiano (31:27):
So when we talk about root causes and we look at societal disparities, we are basically looking at the output of the system. We’re saying, as a result of things that we don’t understand, Black people their wealth level is a tiny fraction and of the wealth level of White people. Why the hell does that happen? And then if you can start to think about using our computer simulations and our research to get to the root cause and start to understand how specific things that are happening, whether it’s education, whether it’s housing, whether it’s transportation, et cetera.

Paolo Gaudiano (32:00):
So I saw an opportunity to apply the same methodology to address a much broader set of problems, but ones that are not necessarily things that you can go and ask a company to pay you for it. But they’re more the kinds of things that either a government agency or a foundation may support. And a nonprofit structure seemed to make a lot more sense for that. And in fact, in particular we had an opportunity to work with a Kaufman Foundation to start to look at entrepreneurship.

Paolo Gaudiano (32:24):
And entrepreneurship is the economic engine of our society and there is evidence that it’s becoming increasingly homogeneous and that they’re increasing disparities between groups of people. So if you’re a White man, it’s much easier to become an entrepreneur, and it’s much easier to get funding, and it’s much easier to be successful than if you’re, let’s say, a Black woman. Why is that the case?

Liz Tinkham (32:45):
That’s been going on for years though, right?

Paolo Gaudiano (32:47):
Yeah. But there is evidence that it’s getting worse. It’s getting worse. We applied for and received the grant from the Kaufman Foundation to study that. In fact, we ended up getting two separate grants from the Kaufman Foundation. One of them was more to study the problem. The other one was more to educate startup entrepreneurs about the value of diversity and inclusion. And to take advantage of those grants it really made a lot more sense to be set up as a nonprofit than a for-profit.

Paolo Gaudiano (33:11):
And so that was part of the tactical motivation for creating a nonprofit at that particular time. So we incorporated the nonprofit, the for-profit in 2017, and then we, and I say we because I have a team of co-founders, and then we incorporated the nonprofit in 2018, and then we got the 501C3 Certification from the IRS in early 2019 and that’s ARC. And now ARC is also the one that’s coordinating the annual conference in conjunction with New York University.

Liz Tinkham (33:41):
And then Aleria is doing what? That’s the social benefit?

Paolo Gaudiano (33:45):
That’s doing the corporate. Right now the focus is 100% on measuring inclusion. In the long-term I can see us becoming a platform that is really more of an end-to-end strategic planning platform for diversity and inclusion. Now it’s really, we started that way, but then we realized we’re building a space station for people that are still riding the bicycles down on earth.

Paolo Gaudiano (34:07):
And so when we saw that a very big missing step was measuring inclusion and we realized that there is a huge need for a solution that measures inclusion, we started to focus on that and I can see that in maybe five years we’ll be able to get to a point where we’re expanding that and building the simulation into it and actually turning into and kind of an end to end strategic platform. But right now companies frankly are not ready for that yet. They’re still struggling with, oh, what is the business case for diversity, which I dislike that very notion because what is the business case for being homogeneous?

Paolo Gaudiano (34:43):
Tell me any, I mean, if you think about it, I mean, think about in finance portfolio management what do you do? You diversify your assets to maximize your returns. And in marketing, programmatic advertising helps you to diversify your marketing assets to maximize sales, inventory. We do optimization and diversification of everything, but when it comes to people we’re like, oh, homogeneous is fine.

Paolo Gaudiano (35:04):
And like, what the hell? Why would there be any reason to think that homogeneous company is going to be the best configuration possible? I mean, it’s so blindly obvious that that’s not the right way to do it, but the problem is that we haven’t had tools to help us quantify the value of being more diverse. And that’s essentially what we’re trying to build in long-term is a portfolio management tool for your human capital. Diversify your human capital.

Liz Tinkham (35:27):
When I was working at Accenture because when I was coming up really focused on women because there were so few and I used to say to the guys like we’re pulling the best people ostensibly to work at Accenture, but we’re leaving out 50% of the population by not considering women as part of that. And I said, you don’t think that there’d be some superstars in that whole group. So wouldn’t that be a competitive advantage to pull from that pool as well? I mean, it was just so freaking obvious. So dumb.

Paolo Gaudiano (35:57):
Yeah. It’s crazy. And that’s just the beginning of it because there’s a supply and demand issue. I mean, if you shrink your supply then you’re going to pay more money and you’re going to have to scrape the bottom of the barrel to get… And you’re going to end up with lower quality talent. Unless you believe firmly that men are vastly superior to women and if you believe that then whatever you got a problem, but that’s it. But unless you believe that, then it makes no sense.

Paolo Gaudiano (36:27):
It makes no sense because it’s why and same thing with people of color, same thing with people with disability, same thing with people with different sexual orientations, unless you believe that there is a unique superiority then you’re crazy because you’re basically leaving untapped talent, which means that you’re going to end up paying more for the talent and you’re going to get lower quality. There’s no two ways about it. You can prove that mathematically.

Liz Tinkham (36:54):
So the three things intersect. I totally understand why you’re doing it. As you look forward, where do you see yourself headed in the next five years?

Paolo Gaudiano (37:03):
I wish I knew. Maybe headed back to Italy and take a bit of vacation sometimes. I’d like to do that. But no, I think right now we are hitting an inflection point at Aleria on the for-profit side. We were accepted a few months ago into the Techstars, Aquatech Accelerator, which if your listeners may be familiar with Techstar, it’s one of the largest and most well-known accelerators. Aquatech is one of the accelerators that was just started this year for the first time.

Paolo Gaudiano (37:31):
That looks like companies that are using technology to address issues of equality, diversity, inclusion, et cetera. We were fortunate to be selected in for the founding cohort. My two co-founders Lisa Russell and Arshiya Malik are actually in Baltimore as we speak getting ready for demo day for that. That was phenomenal and as a result of that we’ve gotten some investments already. Actually we’re going to be doing a substantial round in a few months.

Paolo Gaudiano (37:54):
That’s really going to help us to create a much better platform that is much more scalable. And to move from what right now is essentially technology assistant consulting, if you will. We have a technology platform, but there’s a lot of consulting behind it. We want to move to a model where there’s always going to be a bit of consulting because you have to do that, but we want to build kind of a recurrent revenue model where you basically have a platform that will allow you to measure inclusion in real time all the time so that you can actually see how the initiatives that you’re implementing have an immediate impact on your organization.

Paolo Gaudiano (38:25):
And so that’s where we’re going with Aleria. My expectation is that we’re going to grow pretty crazily for the next two years. Well, really for the next year it should be pretty rapid growth. And then eventually, as I said, we want to standardize what we do and eventually move into more and more strategic level capabilities with a platform. On the nonprofit side, it’s been a bit of a struggle trying to find a balance between not getting scattered and focusing on one thing.

Paolo Gaudiano (38:54):
So there are a couple of projects that we’re working on and most of them right now are really focused on entrepreneurship because that’s where we had success early on and that’s because we think that there’s so many really, really important problems that have to be solved on the entrepreneurship side. So right now we’re continuing kind of the educational series that we started. There is a lot of interest in that from startups and accelerators and incubators, et cetera.

Paolo Gaudiano (39:17):
And we’re also looking at developing a platform to standardize the collection management and sharing of DEI data from entrepreneurs. We think that’s a huge problem is that right now there is no standard way of asking people about DEI questions in entrepreneurship. So if you ask 10 venture capital firms or 10 accelerators what data they collect you’re going to get 10 different answers. And by the way, five of them will say, we don’t collect any data. So that’s on the nonprofit side.

Paolo Gaudiano (39:43):
On the academic side I’ve been dreaming about having the time to teach a course on these topics. And actually I may have an opportunity to do that at NYU next year, remains to be seen. And we have this conference and these webinars that we organize. So that’s right now I’ve sort of lowered my level of activity on the academic side just because it’s been insane managing the other two sides of things.

Liz Tinkham (40:07):
I was going to say, is it because you need to sleep?

Paolo Gaudiano (40:10):
Yeah. And it’s a little bit of that, but I’m hoping… Right now the three-legged stool has felt more like a roller coaster where it’s like, oh, one of them is doing great, the other ones are kind of dormant. And it’s been kind of up and down, but I’m hoping that in the long-term as things get stable and independent and require less and less of my focus, which already by the way my two co-founders at Aleria are amazing and they’re really doing the bulk of the work right now.

Paolo Gaudiano (40:35):
I mean, I’m very heavily involved and I’m getting more involved now because of the particular time that we’re in. But my goal is to get to the point where each of these entities there is actually teams of people doing things so that it becomes very stable and self-sustaining independently. And that will hopefully give me more time frankly to play and do what I like doing because I like doing the research and I like coming up with the ideas. I am not nearly as excited about or as good at kind of organizing, planning, structuring. That’s not really my forte. I don’t like that very much.

Liz Tinkham (41:08):
So I almost titled this podcast, I’m not done yet, because this is the way I feel about things. So what aren’t you done with yet?

Paolo Gaudiano (41:13):
I’ve been a serial entrepreneur since 1999 and, well, technically I was a bit of an entrepreneur before that. I’ve been involved with five or six startups in various roles. I have never had really a successful exit and it’s not just for the money. I mean, that money would be really nice, but I’ve yet to achieve that sense of I’ve done something really amazing that got external validation where I’m clearly creating value for society.

Paolo Gaudiano (41:38):
And so I would say my biggest ambition is to get Aleria to the point where it is a really successful, self-sustaining, large organization. I want to see that happen. I think that that’s one piece that I would be dissatisfied if that didn’t happen. And then beyond that I’m cursed with ideas. I have so many ideas that I-

Liz Tinkham (42:05):
Cursed with ideas.

Paolo Gaudiano (42:06):
Yeah. I have to say I’m a little bit disappointed that it I’m almost 60, I’m turning 60 this year and I thought that by now I would be in a position where I would have enough of a financial and other kinds of stability to just people to kind of play, have an idea lab. Literally there was a company called Idea Lab a number of years ago. I think it probably still exists and I kind of envy that. I would like to be in a situation where I can just play with ideas and have support and teams where I can say let me take the core of idea, let’s shape it a little bit together and then you go off and run with it. That would be my dream. That’s what I want to do with my retirement.

Liz Tinkham (42:44):
Got it. We’ll check back with you. So your work is so fascinating and clearly making a difference and I know our audience is going to love the story and want to find out more. So in addition to your LinkedIn, where else can we find out about your work and we’ll publish it in the show notes?

Paolo Gaudiano (43:00):
The best place would be so aleria.tech, T-E-C-H is the website for Aleria and I recommend people go there. And that’s been maintained by other people, which means that it’s probably always up-to-date. Then there is aleriaresearch.org. Aleria Research and when we created ARC it was my fault. I take full blame for the fact that I had this brilliant idea of calling it Aleria Research. And then because of the way when incorporated New York you have to use Corp at the end or Inc, and so it was Aleria Research Corporation.

Paolo Gaudiano (43:33):
And initially the similarity the names confused the hell out of people. So now we just call it ARC because they’re two completely separate entities. I mean, yes, we collaborate, but they’re completely separate entities. But the website unfortunately arc.org was already taken. So we have aleriaresearch.org for the nonprofit. We have a website for the academic stuff, but that’s really kind of outdated so I would almost rather not share it.

Paolo Gaudiano (43:55):
The last thing is that if you go to Forbes, and I have not written for Forbes in about four months because of personal reasons, but I’m going to start writing again very soon, but I’ve written probably 100 blogs for Forbes in the last four years. And so if you just go to forbes.com and you look up my name Gaudiano, there’s not that many Gaudiano writing for Forbes. Actually there’s only one.

Liz Tinkham (44:13):
Got it. We’ll put the link in there too. So thank you so much for being on the show and for all the great work you’re doing.

Paolo Gaudiano (44:19):
Thank you, Liz. It’s been a real pleasure, quite an honor to be part of the podcast and I look forward to speaking with you again.

Liz Tinkham (44:28):
Thanks for joining me today to listen to the Third Act Podcast. You can find show notes, guest bios and more at thirdactpodcast.com. If you enjoyed our show today, please subscribe and write a review on your favorite podcast platform. I’m your host, Liz Tinkham. I’ll be back next week with another guest who has found new meaning and fulfillment in the third act of their life.