When Sol Trujillo talks, people listen. And these days, the global executive and former CEO of telcom giants like US West, Orange and Telstra says Latinos are driving the growth of the U.S. domestic economy. Trujillo calls this phenomenon the New Mainstream Economy.
“I lived overseas for years running Orange and Telstra. When I came home in 2009, I saw diminished expectations for our country. Strong economic growth seemed normal before I left. Yet by 2010 many Americans had come to accept slower growth as a new normal.”
“But I am an American who happens to be Latino. We are optimists, and we believe in the future of this country. Sure enough, when I looked a little deeper at what was happening, I found a massive transformation underway: A New Mainstream Economy powered by the U.S Latino consumer, the U.S. Latino entrepreneur and the U.S. Latino worker who together were driving U.S. economic growth. Yet many Americans still believed that U.S. Latinos were a drag on our economy. The real story had to be told.”
One example of the New Mainstream Economy is Patricia Arvielo, who along with her husband Rick, co-founded the mortgage lending powerhouse New American Funding (NAF) in 2003. The Arvielos took NAF from a small company based in Orange County into one that currently has 140 offices and 2,400 employees nationwide, with a staggering servicing portfolio of $12 billion in home loans. It is one of the top 10 independent home mortgage companies in the country, and the largest Hispanic-owned mortgage lender.
Arvielo, 51, has been in the business for decades, starting at age 16 working for the credit reporting company Transunion. “I asked about the work of mortgage lending and I saw that they were making more money than me, so I decided to get a job in the mortgage lending industry,” she recalls.
It’s no coincidence that 51 percent of all home mortgages are taken out by Latino families, and Arvielo is helping drive that growth. NAF has been consistently featured as one of the best companies to work for and one of the fastest growing, while customer reviews are overwhelmingly positive. “Latinos desire homeownership far more than any other segment in the country. I saw that the Latino community was underserved and being taken advantage of, and we provide quality home loans for Latinos. We saw the emerging market. Latinos are it now,” says Arvielo.
According to the National Association of Hispanic Real Estate Professionals (NAHREP), Hispanics accounted for half of the growth in U.S homeownership between 2000 and 2014. In 2014, U.S. Hispanics were responsible for 40 percent of homeownership growth, more than any other group. “The home is the center of the Latino family and the Latino culture,” Gary Acosta, CEO of NAHREP, told TIME.
Trujillo explains the three pillars of the New Mainstream Economy – entrepreneurs, consumers and workers – combine to create a formidable economic force. Latinos comprise 17 percent of the U. S. population, with a purchasing power of $1.5 trillion, growing at $80-90 billion per year.
In the workforce, 75 percent of new workers by 2020 will be Latino. Additionally, 86 percent of new small businesses in the last half decade have been created by U.S. Latinos and are growing faster than any other group of entrepreneurs.
“This idea of Latino-driven economic growth is new to most people,” says Trujillo, “and it is mainstream because it’s no longer about being ethnic or niche. The facts and data are that these U.S. Latinos are drivers of the economy, that Latinos are the most entrepreneurial people in our economy, and the numbers that are being driving today are dramatic.Our demographics have changed dramatically in the last 20+ years, in particular driven by Latinos who are accounting for 50 to 70 percent of all growth in population in the United States. That is the New Mainstream Economy. It is powerful, and we can make it even stronger”
Arvielo agrees and believes it makes perfect business sense to see Latinos as the driver of the New Mainstream Economy. “To serve the Latino community will strengthen you and your company. The strongest voice in the country is the cultural voice, the diversity,” she adds. “There is no ceiling of opportunity here. In fact, there is so much business out there, especially for Spanish speakers. I don’t even have enough employees to keep up. We need more. It’s a great opportunity. We need to highlight more Latinos in business.”
As part of a concerted effort to drive this point home, Trujillo and former San Antonio Mayor and HUD Secretary Henry Cisneros founded the Latino Donor Collaborative (LDC), a non-profit, non-partisan organization tasked with changing the narrative about the Latino community in the U.S. and supporting even stronger Latino business growth. “It’s about rebranding the image of Latinos in the United States. A lot of times people get their information about Latinos from what the media is saying and we want to change that,” says Ana Valdez, LDC’s Executive Director, based in Los Angeles. “We go to people and show them that they are missing a huge market, that they are not good decision makers as business people if they don’t acknowledge the Latino market.”
Marcos Torres is a Managing Director at RBC Capital Markets in New York and an LDC board member. He faced many challenges growing up in the inner city. His involvement in LDC and other endeavors – such as mentoring young people – is intended to help increase the number of Latinos and Latinas in the business community: “Part of LDC’s mission is to try to achieve parity. We are less than two percent of corporate boards and less than three percent of CEOs. It’s a business decision. You need to be addressing this Latino market because if you don’t you’re not going to grow and you’re going to leave a lot of money on the table. So LDC was formed to influence the influencers, the decision makers.”
The LDC conducts outreach to tell the story of Latinos as the drivers of the New Mainstream Economy and partners with universities and other organizations to conduct research, calling it the Latino Data Project. “It’s about getting the word out on the economic power of the Latino community, but it’s also about boosting U.S. economic growth by closing the lingering gaps between Latino businesses and the larger business community. For all of their success, Latino businesses do not have the same access to growth capital and business networks that others have,” adds Valdez.
One such study was undertaken by Stanford University together with the Latino Business Action Network (LBAN), a non-profit founded by Dr. Jerry Porras, co-author of business best-seller Built to Last: Successful Habits of Visionary Companies and Professor Emeritus at Stanford’s Graduate School of Business. It found that if Latino-owned businesses averaged the same annual sales as non-Latino companies, nearly $1.4 trillion would be added to the economy. Even though Latino businesses are growing more than others, they still generate less revenue than non-Latino ones -- $156,000 annually for Latinos compared to $573,000 for non-Latinos. It also found that more than half of the businesses it surveyed are “staying stagnant” or growing slowly, and that this reflects a “disconnect between goals and reality.” One of the barriers to grow among Latino-owned businesses was a lack of knowledge of resources available to help small businesses, including the Small Business Administration (SBA).
In fact, the study revealed that while Latino business owners expressed a desire to grow, many were not exactly sure how to go about reaching that goal. Latino businesses tend to rely more on credit cards and family and friends for capital compared to non-Latino businesses, and less than one percent of venture capital funding goes to Latino businesses. That creates what the study – which surveyed nearly 2,000 Latino-owned companies – calls “an opportunity gap” that keeps Latinos from not only getting to the next level but growing in the long term. A new report will be released in January, with plans to release updated information annually.
“This is an extremely reputable data partnership with Stanford that we can use to show and highlight the economic leverage that we have,” says LDC’s Valdez. “Some people tell us wow, we didn’t know this, and that’s how we’re changing the conversation about the Latino community.”
“There are many Latino companies, but they are small, so our view is that in order to increase the wealth in the community, we need to focus on increasing the size of Latino companies,” says Porras.
Trujillo sits on the board of the Stanford initiative, as does David Segura, CEO of Vision IT; Frank Ramirez, CEO of Ice Energy; and other business leaders. “Our target is to grow large companies, to help companies become really large and move away from having a large number of very small companies. We believe that with the large companies, that will not only increase employment but increase wealth and increase influence in the functioning of our society,” said Porras, adding that one of the key elements of the program is not only helping entrepreneurs grow their businesses but create a network of paying it forward that benefits everyone. “We say promote business with each other, and get business for each other, and it’s something they are already doing.”
Stanford also offers a fellows program for Latino entrepreneurs. The six-week course, which began last fall with 78 entrepreneurs, has the goal of helping them grow and close that “opportunity gap” mentioned in the report. It includes a variety of discussions, meeting, and consultations, including what fellows have called an invaluable part of the program – learning not just where the money is to help their business endeavors, but also what kind of funds are out there depending on their business goals. The program picks up a majority of the costs, and participants are asked to pay only $500.
A recent graduate is Jennifer Elena, founder of the JElena Group, a marketing a public relations firms with offices in Washington, D.C., and San Jose, CA who says she opened her firm because she felt general marketing firms weren’t reaching Latino audiences effectively. The Stanford program gave her a boost, she says: “It’s very intensive but very manageable and built around busy lifestyles. It’s about how you think big in order to scale your business, and it’s not just about growing but also about how to stay profitable.”
Elena, whose previous experience includes international public relations campaigns and consumer education efforts, said it gave her the confidence to move her business to the next level, and exposed here to an invaluable network of mentors, venture capitalists, marketing experts and others that she and other graduates of the program can access at any time.
“There is a market value to diversity. It’s not just about a social responsibility anymore. There are market opportunities and money out there, and they need people like us to be knocking on corporate America’s doors and tell them you have great information and we deliver it for you. It was an incredible honor to be in the program,” she says.
Trujillo concludes that changing the narrative regarding the importance if U.S. Latinos to our Mainstream Economy signifies the direct and strong correlation between U.S. domestic growth is highly dependent on the growth and success of Latino consumers and Latino entrepreneurs and the Latino workforce. Thereby leading to what Trujillo calls the New Mainstream Economy.
“The conversation about Latinos is no longer about how poor and uneducated and down in the dumps they are, and it’s not about the glass being half empty,” he says. “The glass is half full for Latinos and it’s rapidly getting fuller. We all want to see our country grow and thrive. The good news is that Latinos are already drivers of our country’s prosperity. And we have much more room to grow and to accelerate U.S. domestic growth, today and even more dramatically so in the future.”