At a recent demo day of an incubator / accelerator, the show of entrepreneurial prowess could not be better. Founder after founder walked up on stage, in 2.5 minutes and 5 slides, described how their startup will change the world. Thunderous applause and woohoos followed each pitch. Noticeably, the ratio of women founders was low – around 10% (or 5 of the 50 startups). Why didn’t we see more women founders? Is it lack of motivation?
What motivates founders: I found an interesting study in the book “The Founders Dilemma” by Professor Noam Wasserman of Harvard Business School. He presented data from 27,000 entrepreneurs and summarized the motivations of founders as follows:
Top motivations for male entrepreneurs (in 20s):
1) Power and Influence
3) Managing People
4) Financial Gain
Top motivations for women entrepreneurs (in 20s):
2) Power and Influence
3) Managing People
The only difference between the genders = motivation for financial gain. Women were never in it for the money, and that seems as an evident starting point. In 30s and 40s, male motivations remained consistent across decades while for women, the only one motivation that changed was altruism (“variety” popped up in 30s and “intellectual challenge” in 40s).
So if 3 of 4 motivations are the same between men and women, why do only 1.3% VC backed startups have a female founder? The analog in the world of education would be – everyone aspires for a college degree but when you see the graduating class, its heavily skewed. What happened during the application process? What’s missing?
The Founders Chasm: I am tempted to believe in a crowded playground (essentially dominated by men), there is not much room. If we stop the jostling around and take a deep breath, we start to notice interesting trends. How many incubators and accelerators believe in encouraging women founders? This is particular hard when the incubators success is also measured by – you guessed it – financial gain. This becomes a self-perpetuating whirlpool of testosterone and money. And when most VCs are men, you can only exasperate the situation.
In a fascinating study called “Women at the Wheel: Do female executives drive start-up success?” (Sep 2012, Dow Jones Venture Source) the authors analyzed 25 years of historical data, from 20,000 VC backed companies between 1997-2011 which had over 150,000 executives. They found that only 1.3% of startups have a female founder, 6.5% has a female CEO and only 20% have one or more female executives.
Yes, women can make money too: According to the Dow Jones study, the overall median proportion of female executives in successful VC backed companies is more than 2X that of unsuccessful ones - 7.1%, compared to 3.1% at unsuccessful companies. Yet while women can be a part of success, they are often second-in-command. Notably, these companies had more females as VPs than C Levels: 15% VPs to 8% C Levels. The study summarizes that companies with an executive team composed of 5% to 25% female executives are successful. Is a “one in five” ratio enough? How does success scale when you have two in five?
The ratios are getting worse: In 2005, more than half = 59% startups had at least one female executive. In 2011, the number had dropped to an abysmal 24%. That’s three of four startups with no female executives. The ratios should have improved over time but startups were clearly a male dominated fraternity. By default, we take the easy way out and call someone who thinks, looks, acts like us – someone we know. A thoughtful mix of talent, gender and viewpoints is often not the case. But rather than beat the same drum, lets explore solutions – or how men can lean in.
As I mentioned in my earlier post, we don’t need more studies and data to prove the fact that women add immense value to startup ecosystem. What we need are bold men, willing to step up and proactively address the obvious:
(a) Can we men lean in? The short answer is not yet – you see, we men are terribly afraid of being perceived as weak, wussy or weepy. I’d rather fight and slay a giant dragon, jump off rooftops rather than be ridiculed by my mates in the locker room. Yet some VCs like Brad Feld (as chair of National Center for Women & Information Technology) have taken a bold stance and stepped up to the cause of gender diversity. Others are waiting in the wings – if someone steps up first, then the rest of them will. Interestingly, a study shows that most men start to think about gender diversity when their first daughter is born. This is not about being strong or weak – but about our future generations. Its being observant of our own shortcomings and being willing to see the possibilities. If we get to the pot of gold but miss a gorgeous rainbow along the way, what good is that?
(b) “Listen in” before you can “lean in”: As my wife often reminds me, you can listen better once you stop talking. I am guilty of that! And the same goes at the workplace – do we let our women colleagues speak often and speak enough? If not, how can we men remedy this? A Japanese colleague at my workplace would never say anything in our meetings. I asked him, ”How come you don’t contribute your ideas?” He smiled a Buddha-like smile and said, “I cannot fill water in a pot that pretends to be full.” Ouch – that hurt, but I made sure I asked for his views in every meeting after that!
(c) How to “lean in” better? If we want our daughters to be respected, rewarded and succeed in the workplace, we can start by watching the obvious datapoints:
i) What is the gender diversity ratio at your workplace? If its skewed, know that it may be a subconscious bias. Instead of blame, course correct – pay more attention to the female candidates. But you have to encourage women to apply.
ii) Women don’t apply for jobs unless they meet as much as 80% the criteria for a job position. And men apply when they barely meet 30% of the criteria. How does that impact your application screening and review process? (Note to women: It’s ok to apply when you are at 40%. That makes you 10% better than men ;-))
iii) Are women rewarded financially, and intellectually (as in – are their views invited, accepted and implemented?) as equals?
My only regret is that no man in corporate America has stood up yet and declared, “We are going to Lean In.”
I believe startups can do this much more easily. After all, startups are all about solving big problems, changing the world and as a nice byproduct, getting to that pot of gold. Solving for gender diversity is a big, complex problem but has no pot of gold. Thus it’s ignored. Somewhat like climate change, it’s an infinite problem. It has no boundaries and no ownership. The onus of fixing it lies not with women. It lies with men.