On startup boards, laziness and bias trounces gender diversity
Today, no woman is giving a spirited “I have a dream…” speech to founders and entrepreneurs, seeking a balanced startup board. Such issues are best left for public company boards, non-profits or the likes of girl-scout cookie boards. Because startup boards are formed in a hurry, we need to close that Series A round in a hurry, ship products in a hurry and sell the company in a hurry! Who has time for this diversity kumbaya? Dancing in moonlight? Nah…not me. I am busy making a dent in the world. Let someone else down the road worry about a gender-balanced board.
That’s what most founders will say. And its time we faced the truth – in the name of speed ( or fill in the blank lame excuse) , we are being utterly lazy and irresponsible to our own startups. Not to mention our customers, our stakeholders and society at large – indeed, as Dan Shapiro of Google says, to handicap yourself by 50% of the population is insanity.
Most VCs and most founders are men – therein lies the problem: We propagate this ‘ole boys’ network behavior subconsciously – its not by malicious design. We dont want to keep our better halves out of the mix. It’s just that we don’t try. Most startup boards are formed in a reactive fashion – raise money, and once you get a term sheet, a board of directors is formed. Brad Feld and I are writing a book, Startup Boards where we raise the fundamental question – can you proactively build an all-star, high performing board ? Its not easy. Some CEOs have done it. And you have to start with people first, then money. Wendy Lea, CEO of GetSatisfaction points out that “Most founders are men and most investors are men.” We agree, but once we know our biases, to not do anything about it is to be a part of the problem.
Consider this 20% bias – in surveys (“The Tilted Playing Field: Hidden Bias in Information Technology Workplaces,” 2011. Level Playing Field Institute) as many as 80% startup women (orange bar) think diversity offers better problem solving, improves innovation. Yet only 60% of the startup men (red bar) felt the same. On the flip side, 80% of men felt that they are addressing diversity at workplace but only 60% of women agreed. That 20% gap on both those counts reeks of male subconscious bias.
We don’t need any more “business cases”: Its insulting to say “we need a business case” when we are shutting out as much as half of our population. But for the left brainiacs, here are some data points from a recent National Center for Women & Information Technology NCWIT presentation :
- Successful startups have 2X more women in senior positions (Source: Dow Jones Venture Source 2011)
- Startup use 40% less capital when women lead, and have a higher probability of survival. Cindy Padnos of Illuminate Ventures has been the champion for women board executives. Look up her white paper on this subject. She says, “With less than 10% VCs being women, its a harder challenge. We have not even begun to think about diversity on startup boards.”
- Higher women representation can bring as much as 34% higher ROI (Catalyst group research on gender diversity).
- Credit Suisse Research Institute studied gender diversity in 2360 public companies and found several advantages – a 3X higher market cap where companies had more than 3 women board members, lower debt, higher ROE…its indicative of how superior performance is driven by balanced boards.
- McKinsey has a whole set of publications on the gender diversity issue – all designed and developed with sufficient rigor and will put any Harvard MBA fratboy to shame.
Calling all brothers – we own this problem, we can solve it: With so many data points yet no meaningful outcomes, we must pause and ask – whats up, dude? Lets call all brogrammers, grab a beer, or watch a football game and yell whasssuppp one more time.
Then, lets take a pledge. Look into the mirror, raise your hand and say, It begins with me. I will create an open and a diversified culture in my startup. That will help my mother, daughter, sister, spouse, friend tomorrow. It will restore the much needed balance in the entrepreneurial ecosystem. There are a number of things women can do as well, but for now, lets try to fix our own backyard. Its our thinking that needs to change, to open up and to try harder. The NCWIT has created brochures to encourage women to join startups -make good use of it. And know that breaking in any network takes time. In “The Business of Venture Capital”, I interviewed Lip-Bu Tan, an Asian who became a VC and started Walden International. He recalled “It took me at least 10 / 15 years to break into the VC networks of the Silicon Valley”. Brad Feld and Amy write in their recent book Startup Life that it will be two decades before we see a change in the diversity ratios. That’s just way too long to let 50% of the population sit along the sidelines.
Solve, evolve: (No Binders required): Wendy Lea, CEO of GetSatisfaction says, “Its a sign of an evolved CEO who can balance the feminine and masculine energy – their startup will be a better place.’ Look, even Mitt Romney asked for help and got his “binders full of women”. Just make a proactive effort to attract the best and brightest talent on your board and ensure you have diversity of thought & experience. Its easy to stay in default “fratboy” mode. It takes more effort to be inclusive. In short, we are not as evolved as we think we are. Not as long as startup boards are male-dominated, biased, closed, myopic, self perpetuating networks.