The Good, the Bad and the Ugly: Tech Start-Ups and Gender

The recent messages on tech and women have been mixed. On the dark side, insensitive chauvinist comments at a tech conference made by a couple of guys in the audience were overheard by a fellow attendee who happened to be a woman. She then took a pic of the offending individuals, posting that and the comments online.

In the ensuing maelstrom, one of the guys was fired by his employer - and then so was she by hers.

Lots of explicit and implicit rules were broken in what we hesitate to call 'the process' surrounding that incident but it served to bring out of the shadows - again - an issue that has plagued the tech 'brogrammer-hood' for some time. That of the role of women in tech.

Meanwhile, new research, both anecdotal and academic suggests that tech start-ups founded by or including women in significant roles may perform better than those founded exclusively by men. As the following article explains, there are some methodological questions about the research and about whether there is enough relevant data to really draw a conclusion. But the larger question is why women are even an issue in this industry.

Women constitute approximately 51 percent of the population in Europe and the US. Their success in academia (60 percent of US college and university students), in the professions and in politics can no longer be gainsaid. Putting emotion aside, this means they are a significant and growing market for tech products and services. Anyone who ignores, let alone gratuitously offends them has an economic death wish.

Women may or may not be more or less successful as entrepreneurs or investors. They may or may not be too sensitive or not sensitive enough to slights and insults. What should be abundantly obvious is that no one in any industry, but particularly this one can afford to behave in any way other than gratefully for their current and/or future patronage. JL

Peter Cohan comments in Forbes:

Vivek Wadhwa, with titles at Stanford and Duke, will co-publish a study this spring that concludes women tech entrepreneurs outdo men.  Gotham Gal, Joanne Wilson, investor in 31 start-ups, most of which are women-run, reveals her thoughts on why she likes to invest in women entrepreneurs and how she helps them.

Women in Technology: Evolving, Ready to Save the World co-authored with Lesa Mitchell, a vice president at the Kauffman Foundation — drawing on online surveys of 500 women –concludes that women-led high tech start-ups are “more capital-efficient, achieve 35% higher return on investment, and – when venture-backed — generate 12% higher revenue than male-owned tech companies,” according to Business Week.
This bold conclusion sounds very compelling. I look forward to reading it because I wonder how the study reached its financial conclusions. For example:

• How does the survey measure the amount invested in the women-run firms?
• How does it count the investment returns and the revenues?
• Who belongs to the control group of men-led high tech start-ups to which the study compares the outcomes of the 500 women-led start-ups?
• How does the study capture the investment, revenues, and investment returns for those men-led companies?

Wilson, who is also the wife of Union Square Ventures managing partner, Fred Wilson, is an angel investor. 70% of her 31 companies are led by women entrepreneurs and “I haven’t lost one in six years.” Many of her stakes are in technology companies connected to the food industry — Wilson has “always enjoyed cooking and baking.”
Even though there are big differences between running a food company and a high-tech one — not the least of which is the need to have deep technology insights – her thoughts on women entrepreneurs are highly relevant to this discussion.  
Wilson loves to have lunch and dinner with entrepreneurs and thanks to her 10 years of blogging she gets leads for new investments “from her inbox” and meets talented women at the annual women’s entrepreneur conference she co-chairs that’s run by NYU’s ITP department.
In Wilson’s view, women start businesses “to fill a void in their lives — men don’t.” She gave the example of ZipCar founder, Robin Chase. According to Wilson. “I can imagine she was thinking ‘it would be so great if I could walk out the door and jump into a car.’ She was trying to make her life easier.”
By contrast, she cites Twitter and Tumblr as examples of men-led start-ups that don’t meet deeply-felt needs. Men think about the businesses that they want to build differently.
Wilson believes that women are more are detail-oriented than men which can lead them to be very careful about taking risks. As Wilson explained, “Women cross all the Ts and dot all the Is. They are not so on-the-fly. That can be a good thing and a bad thing.”
Wilson comes from a long line of women with strong instincts about ideas that will become big in the future. As she said, “I am a generalist and like my grandmother and my mother, I have a good gut. I invest in different industries and bet on the entrepreneur — I don’t need to look at the numbers because they never come true. I believe in these women – every one will be a success at some level.”
Wadhwa suspects that one of the reasons that women outperform men is that they have very helpful female mentors. 80% of the female tech entrepreneurs told him that they have men and women mentors and 45% said that their women mentors were “very helpful.”
If any of Wadhwa’s survey respondents have met Wilson, they are getting very powerful mentoring. That’s because she helps her companies to hire new executives, to find a business model, and to make short-term progress towards their long-term goals.
She meets “incredible women who are looking for the next things.” And she interviews these women and helps connect them to the start-ups in which she’s invested. “I found a chief operating officer for one of the start-ups and I am invested in and am constantly on the look out for great talent for every company I work with,” according to Wilson.
Wilson also get involved with helping her start-ups to figure out their business models. “These days, investors don’t just care about traction and engagement, they care about revenues. I push companies to prove they have a business model. Even if they are not covering their monthly burn I ask them to explain ‘How are we gonna make money?’ And I encourage them to spend money so they can find out whether their business model works.”
In addition to making introductions to potential customers, Wilson requires her companies to meet with her and other advisors every six weeks to think about long-term goals and how short-term tactics are leading to them.
According to Wilson, she wants her entrepreneurs to “think out of the weeds to make sure that they are working on the right things.” These advisory board meetings also help the entrepreneurs prepare to run a more formal board of directors meeting as they grow and take on venture capital investment.
While there is no question that women are in the start-up arena, I look forward to the day that Wilson’s start-ups generate positive investment returns for her and her co-investors. And I am curious whether Wadhwa’s study — when published — will answer my questions on its financial conclusions in a compelling way.