Mark Madrid is a champion of Latino business
By Ana Radelat
Mark Madrid grew up in Friona, a small town in the Texas panhandle with a population of about 4,000. His parents were migrant workers who picked cotton, but now he is the CEO of the Latino Business Action Network (LBAN), a national nonprofit collaborating with Stanford University to boost Latino-owned businesses. Thousands of Latino entrepreneurs have benefitted from LBAN and Madrid’s tenacity and insight. “It’s been a journey, it’s been a journey,” he admitted.
Madrid, 48, learned the business of business by witnessing the transformation of his father, the son of Mexican immigrants who were also farmworkers. “My dad ended up pursuing entrepreneurship in his own right,” he said. “He opened his own welding service, which he owned for decades.” Madrid learned a hard lesson from his father who struggled for capital and suffered from a lack of social networks, as many Latino businessowners do today. “I can’t think of anything that is more honorable, that means more, than to serve small business owners like my father,” he said.
His zeal for entrepreneurship is a calling, and he thinks the drive to start a business is “in the DNA” of the Latino community. This passion is also ignited by a jarring disparity in the business world.
Madrid cites a Stanford Latino Entrepreneurship Initiative research report released this year. The report says the number of Latino business owners in the United States continues to grow significantly faster than the U.S. average. Over the past 10 years, the number of Latino business owners grew 34%, compared to 1% for all business owners in the U.S.
But there’s a catch. Latino-owned companies tend to remain smaller than non-Hispanic, white-owned firms, raking in average revenue of $1.2 million per year for those with paid employees. Meanwhile, non-Latino owned firms average annual revenues of about $2.3 million, double what Latino-owned firms take in.
Interviewed by LATINO at the height of the coronavirus crisis, Madrid said he was working to ensure Latino businesses did not get short-changed in stimulus programs that provided billions of dollars to small businesses, including the Paycheck Protection Program, an SBA forgivable loan program. “We’ve been left out before,” Madrid said, citing the federal government’s stimulus efforts during the last recession. “We want to right that ship, but it’s going to be a battle. It’s going to take every one of us working together to make sure that doesn’t happen again.”
Madrid admits his own shot at entrepreneurship failed. While he was working his way through college, the physical fitness buff and avid runner tried to start a personal training business. “Frankly, I failed. I failed at business,” he said. “It was a lot tougher than I imagined.” Yet he developed “good scars” from the experience. “I understood that undertaking a business means taking on managed risk and accessing external capital,” he recalls.
A graduate of the business school at the University of Texas at Austin, Madrid began his career on Wall Street, with JP Morgan. That banking career took off -- and it eventually brought him back home to Texas. “I was close to my childhood dream of becoming president of a bank,” he said. “I was one rung away from that.” But everything fell apart when the nation plummeted into the Great Recession of 2008, and Madrid said he was tasked to “take a lead role in closing the bank. … I was actually the one who handed the keys to the landlord.”
Out of a job, Madrid then volunteered at the Houston Hispanic Chamber of Commerce and eventually became its first-ever chief operating officer. That was a springboard for Madrid to move to Austin and become CEO of its transformed Hispanic chamber. The affable Madrid is a relentless architect and builder, which led to an invitation to head west to Silicon Valley and helm LBAN in a national leadership role.
LBAN funds research on Latino businesses and education-impact programs through a unique collaboration with the Stanford University called the Stanford Latino Entrepreneurship Initiative. Notably, Stanford Graduate School of Business Executive Education and LBAN produce the Stanford Latino Entrepreneurship Initiative Education-Scaling Program, an initiative that educates and mentors Latino businessowners who generate at least $1 million in annual gross revenue or have raised $500,000 in external capital. Madrid said 584 business owners have gone through the program over its four-year life. The entrepreneurs take an online, eight -week course and are mentored by a successful executive. They start their experience and graduate at Stanford Graduate School of Business.
Elizabeth Alegria, 39, a psychoanalyst and owner of two clinics in Texas was among those who graduated from the program last year. Growing up in what she calls an “ethnic enclave,” a colonia in south Texas, Alegria attended Columbia University to become a psychoanalyst, but learned little about the business world. Nevertheless, her practice grew at her Austin clinic and she opened a second facility in Round Rock. She’s looking to develop a third in Houston.
Alegria wanted to learn how to scale her growing business – which means how to handle an increase in sales, work, or output in a cost-effective, reasonable manner. “I wanted to learn about the scaling formula and I wanted to connect with a large network,” Alegria said. “Sometimes the process of entrepreneurship is very isolating.”
Although she does not need to raise capital right now, Alegria said the LBAN “kickoff” event for every new cohort includes a dinner with program alumni – as well as angel investors and bankers. She was assigned a mentor who owned a large range of businesses, including psychology, finance and real estate interests. Those mentors are “world class,” Madrid said.
Pat Martinez is one of them. President of a Charlotte-based management consulting firm called Leadership in the Clouds, Martinez has mentored 10 of the entrepreneurs in the LBAN program. She joined the program after someone she knew who was serving as a LBAN mentor phoned her and said “Pat, I know you would be a great mentor. I know you are interested in paying it forward.”
Of Madrid, Martinez said “his energy is infectious, his leadership is spot on.”
A tenet of the program, promoted by Madrid, is for the graduates of the Stanford scaling program to “do business with each other and get business for each other.” And if a mentor does not have an answer to something, they find someone within the system who does, Martinez said.
A Puerto Rican from New York, Martinez said she had to reinvent herself when she moved south because of her husband’s job. That taught her lessons she is now sharing with others, including how to put your foot in the door. “If they don’t let you in the front door, you find the side door, the back door, you find another entry way,” she said.
Martinez said she spends at least 90 minutes on the phone each week with whomever she mentors, and those Latino entrepreneurs have included restaurant and construction company owners as well as a founder of a nonprofit. “The end result is that you are helping someone scale up,” she said.
Friends and colleagues soon realize Madrid is a complex individual as well as a Type A super achiever. “He divulges a little piece of himself each time we talk,” Martinez said. Beside his work at LBAN, Madrid is an Honorary Colonel of the U.S. Army, founding member of the Silicon Valley Business Journal Leadership Trust, and member of the Forbes Nonprofit Council. Despite his hectic schedule, he devotes time to Latino student groups and generously mentors many young people. This inspired the Mark L. Madrid Scholarship, awarded to Latino and Latina college students who major in business at the University of Texas at Austin, the University of Notre Dame, and Texas State University. The San Francisco Business Times named Madrid one of ten OUTstanding Voices in the Bay Area for his advocacy for a safer, more inclusive space for LGBTQ employees and the United States Hispanic Chamber of Commerce named him the 2017 LGBT Advocate of the Year.
Madrid said Latinos are drawn to entrepreneurship because they have ganas, “and are resilient as hell.”
While Latino businesses are central to the nation’s economy, once again there’s a disparity. The Stanford Latino Entrepreneurship Initiative report states that, collectively, Latino-owned companies that employ others generated about $470 billion in revenue and employed over 3.2 million people in 2016. Taken as a whole, U.S. business owners enjoy better financial well-being than wage earners. However, the report found, this advantage does not exist in the Latino population, where wage earners have slightly higher financial well-being than entrepreneurs, even though they have lower incomes and home ownership rates. That’s because these advantages are offset by lack of health insurance coverage.
Only 63% of Latino business owners have health insurance, the lowest rate of coverage of any demographic group. “This leaves a significant portion of Latino entrepreneurs, and their families, at risk of a potentially debilitating financial outcome in the event of a healthcare crisis,” according to the report.
So, there’s plenty of work to be done, and Madrid is ready to do it. Despite the coronavirus’s blow to Latino entrepreneurs, Madrid maintains his trademark optimism. “Even in this pandemic we will graduate the 9th and 10th cohorts in 2020!” he exclaimed. “It will be a historic and legendary achievement. It is bold and resilient testament to our Board of Directors, chaired by Victor Arias with Professor Jerry Porras serving as Chairman Emeritus and the most dynamic team, Jennifer Garcia and Elian Savodivker, in the country. At the beginning and end of the day, our priorities and energies are laser focused on who we serve, U.S. Latino and Latina entrepreneurs. It is the highest honor imaginable.”