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An Entrepreneur’s Guide For Knowing When To Take A Vacation

Lifestyle

Most of us suffer from something called overconfidence bias, meaning that there's a significant gap between our belief in what we can accomplish, and the reality. I would imagine that the gap gets even wider for most entrepreneurs. I don't have any research to back this up, other than proof that if you can quit your job and step into an unknown world, create something new, and expect people to actually buy it, well, you must be pretty damned confident.


Most of us suffer from something called overconfidence bias, meaning that there's a significant gap between our belief in what we can accomplish, and the reality. I would imagine that the gap gets even wider for most entrepreneurs. I don't have any research to back this up, other than proof that if you can quit your job and step into an unknown world, create something new, and expect people to actually buy it, well, you must be pretty damned confident.

Where overconfidence bias tricks us up is when the rubber meets the road. It's the end of the day, your list of to do's is still long, and you make the decision to forego personal time and just keep grinding.

This seems like a great idea at the time, but it's only short-term thinking. I propose that entrepreneurs take a long-term thinking approach to their productivity, much like we should be doing with our business strategy, finances, and everything else. In fact, when it comes to your personal health, it feels like that should be priority number one, simply by reasoning that if you fall ill or drop dead, the rest of the planning really doesn't matter. With this in mind, here are 5 ways to know that it's time for you to take a break. Whether it's a formal vacation, or simply a meditative walk, the goal is to clear your mind so that you can perform to your best, over the long-term.

1: You're exhausted, but forcing yourself to keep going.

Jeff Bezos recently said that sleeping 8 hours per night is key to him, and his shareholders, in making good decisions. A host of other entrepreneurs, including Arianna Huffington, are declaring lack of sleep, and burnout, a multi-billion dollar crisis. Regardless of how much you want to keep going, when you're feeling lethargic you have to stop. You decision-making skills, logic and reasoning are not in the right place for you to work. And the risk of burning out is simply too high. Make good micro-decisions, for long-term greater productivity. Follow the example of the greatest entrepreneurs today and be sure to get 8 hours per night, catch up on any hours you lose, and take mental, and physical, breaks throughout the year. Your overconfidence biased brain may not believe it's necessary, but all research points the to the opposite.

2: You're stressed.

I do a lot of work in corporate culture design with emphasis on workforce wellness. Researchers have found that the costs of high-stress environments will kill a business. It's only recently that many businesses are willing to break free of the high-stress leadership styles and adapt to more long-term thinking. This applies to entrepreneurs as well. Imposing high levels of stress on yourself and your work will speed up short-term productivity, but at a great cost. Organizations with high-stress show 40% more absenteeism, make 70% more accidents, and have 50% higher healthcare costs[1]. Why are the numbers so high? Depleting your cortisol levels is bad for your mental state and bad for business. It leads to health issues, less precision, and burnout.

Take a daily assessment of your stress levels. If you're feeling out of balance, the answer isn't to work harder, it's to stop work altogether. Think about how many times you've made yourself sick from stress. All of us high-performers do it naturally, so the need is urgent to stop ourselves. A week out of work because you're not well is a greater cost than taking an hour of mental vacation to do something you enjoy.

If some people didn't tell you, you'd never know they'd been on vacation." -Kin Hubbard, American Cartoonist

3: You feel weak.

Your mind is still whirring away at your entrepreneurial venture, but your limbs just don't seem to keep up. In the fitness world we call this “dead arms" or “dead legs". It's the byproduct of over-fatigue. This can happen to you from typing on a laptop too much, just as easily as it can from lifting weights. Dead arms or dead legs means that your body is fatigued. To get your limbs back to operating at their best, its time to increase blood flow. Get a massage, or even better, get a workout in. I know it seems counter-intuitive, but when you're fatigued, a workout will increase your blood flow, which reduces the fatigued feeling you're getting. Force yourself outdoors for a run, on the treadmill, or take a fitness class. If you aren't the fitness type, I am a huge proponent of cryotherapy for body recovery. Find a cryo spa near you and give it a try. Most offer a discounted first time rate. It only takes stripping off your clothes and three minutes to get your body feeling brand new again.

4: You Feel Depressed

Depression is incredibly common among entrepreneurs for a laundry list of reasons. If you're feeling down, a great way to overcome your blues is to get out and attend a networking event or social gathering. When you're depressed this is exactly the opposite thing of what you want to do, and absolutely what you need to do. Connection is the opposite of depression. Neural networks are shown to improve in mid to moderately depressed people who attend social events. Get out and re-wire yourself, ASAP.

An often-overlooked aspect of entrepreneurial management is emotional self-management. We have to focus on our mental and emotional game as a priority if we're meant to perform at our very best. As an entrepreneur, you don't have a boss to tell you to keep going, or to take a break. Take on the role of your own boss. Keep your body and mind feeling great. Your business is counting on it.

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Business

Dear VCs: Making Pledges Won't Close The Funding Gap

Amid the mainstream conversation about inclusion and justice in the workplace, otherwise known as #MeToo, a Silicon Valley venture capital fund considered how they can be more inclusive of the women, minority, and LGBTQ entrepreneurial communities.

Their solution? Ask the CEOs they currently fund to promise to hire senior-level employees from diverse backgrounds.


Lightspeed Venture Partners, a venture capital fund that has investments with blockbuster startups such as The Honest Company, Affirm, and HQ Trivia, has asked its portfolio company CEOs to sign a “side letter" affirming their commitment to consider women and other underrepresented groups for senior jobs and new spots on their board of directors.

Can making pledges— or even hiring a C-Suite level employee to manage diversity efforts— really make an impact on the funding gap for multicultural women-led companies?

Many experts say it's going to take systemic change, not letters of intent.

It is well reported that the amount of investment going to multicultural women-led companies is incongruous to the entrepreneurial landscape and the performance of their businesses. Between 2007 and 2016, there was an increase of 2.8 million companies owned by women of color. Nearly eight out of every 10 new women-owned firms launched since 2007 has been started by a woman of color yet, these businesses receive an abysmal 0.2 percent of all funding. Amanda Johnson and KJ Miller, founders of Mented cosmetics, were just the 15th and 16th Black women in history to raise $1M in the fall of 2017.

The multicultural women who do defeat the odds to get funded receive significantly less than male founders. The average startup founded by a Black woman raises only $36,000 in venture funding, while the average failed startup founded by a White man raises $1.3M before going out of business.

The implicit and explicit bias not only impacts individual multicultural female founders, it could be stifling innovation. For example, companies with above-average diversity on their management teams reported innovation revenue as 45 percent of total revenue compared to just 26 percent of total revenue at companies with below-average management diversity. That means nearly half the revenue of companies with more diverse leadership comes from products and services launched in the past three years.

In our economy today, venture capital is responsible for funding the work of our most innovative companies. Venture capital-backed U.S. companies include some of the most innovative companies in the world. In 2013, VC-backed companies account for a 42 percent of the R&D spending by U.S. public companies.

With a wealth of multicultural women entrepreneurs and evidence to support the performance of diverse companies, why does this funding gap persist?

According to Kristin Hull, founder of Oakland-based Nia Impact Capital and Nia Community, many traditional investors consider women or minority-led businesses as a category in their portfolio, like gaming tech or consumer packaged good. Hull, who focuses on building portfolios where financial returns and social impact work hand-in-hand, argues gender and ethnicity are not a business category and investors who dedicate a specific percent of their portfolio to diverse companies are the ones missing out.

“We are doing this backwards," says Hull. “Adding diverse, women-run companies actually de-risks an investment portfolio."

Hull points to research that has found women are more likely to seek outside help when a company is headed for trouble and operate businesses with less debt on average. What's more, a study conducted by First Round Capital concluded that founding teams including a woman outperform their all-male peers by 63 percent.

Ximena Hardstock, a 43-year-old immigrant from Chile experienced this bias first hand before she raised $5.1M for her tech startup. “How do you get an investor to notice you and take you seriously?" says Hardstock. “White men from Harvard have a track record and investors are all looking for entrepreneurs that fit the Zuckerberg mold. But a woman from Chile with an accent who started a technology company? There is no track record for that and this is a problem so many women of color face."

Hardstock came to the U.S. from the suburbs of Santiago when she was just 20-years-old. Alone with no family or connections in the U.S., Hardstock worked as a cleaning lady, a bartender, and a nanny before she began teaching and working in education. “I had a lot of ideas and Chile is still a very conservative country," she says. “Most women become housewives but I wanted to do something different. So, I moved to the U.S."

Hardstock went on to earn a Ph.D. in policy studies, served as vice president of Advocacy for National StudentsFirst and worked as a member of Washington DC mayor Adrian Fenty's cabinet. Her experience working in both education and government exposed her to a need to simplify the process of connecting lawmakers with their constituents. As a result, Hardstock founded Phone2Action, a digital advocacy company that enables organizations and individual citizens to connect with policymakers via email, Twitter, Alexa and Facebook using their mobile phones.

Because venture capital and private equity are not necessarily meritocracies, Hardstock initially struggled to get in an audience with the right investors despite her company's growth potential, her experience, and her education. In fact, it wasn't until she won a competition at SXSW in 2015 that she could get an audience with a serious venture capitalist.

While it may seem like symptoms of a bygone era, both Hardstock and Hull say the path to investor relationships is forged in places where many women of diverse backgrounds are not – ivy league organizations, golf courses and late night post-board meeting cocktails attended mostly by White men of means.

The history of venture capital has never been very balanced, according to Aubrey Blanche, global head of diversity at Atlassian software development company and co-founder of Sycamore, an organization aiming to fix the VC funding gap for underrepresented founders. “White and Asian men have built the venture system and for generations have been seeking out people like themselves to invest in."

Personal and professional networks are critical for founders to connect with investors, but many multicultural women don't have access to the networks their White peers have. According to a study conducted by PRRI, the average White person has one friend who is Black, Latino, Asian, mixed race, and other races. This common situation makes getting that all important warm introduction to established VCs very challenging for multicultural women founders.

“Is the ecosystem of your network equivalent to your net worth? Absolutely," says Hardstock. “For us, we have to build our own ecosystem and recreate what happens on the golf courses and at the Harvard reunions."

To Hardstock's point, most multicultural women with entrepreneurial aspirations lack that Ivy League network. According to reporting published in The New York Times, Black students make up just nine percent of the freshmen at Ivy League schools but 15 percent of college-age Americans. This gap has been largely unchanged since 1980.

While notable female investors such as Arlan Hamilton, Joanne Wilson, and Kathryn Finney are actively working to close the funding gap for women of color, only seven percent of current senior investing partners at the top 100 venture firms are women. Less than three percent of VC funds have Black and Latinx investment partners. Without an influential network, Hardstock and entrepreneurs like her are left screaming for a seat at the table.

When Black, Latina, and Asian women founders do get in the room with the right investors, they have to work harder to get the investors to relate to their products and services. “Entrepreneurs solve problems they understand," says Blanche. “When multicultural women entrepreneurs present their businesses to a homogenous group of male investors who may not be equipped to understand the idea, they may pass on an amazing business."

Take, for example, the founders of Haute Hijab or LOLA. Founders of both successful startups would have to explain the market for their services to a table occupied mostly by men who may never have considered that Muslim women want more convenient access to fashion and have never considered women might prefer to purchase organic tampons.

This lack of familiarity typically means reduced funding for women and a host of other consequences.

As one recent study pointed out, even the way investors frame questions to women can impact funding. According to the Harvard Business Review, female founders are often asked “prevention-oriented" questions focused on safety, responsibility, security, and vigilance. Male founders, on the other hand, are often asked questions focused on hopes, achievement, advancement, and ideals.

When all of these factors are considered, a side letter may not be enough to begin to close the funding gap.

Both Blanche and Hull say real change can be made by democratizing information and education on impact investing. Both women say educating investors and MBA candidates about impact investing is the best way to overcome current bias.

Blanche's organization, Sycamore, produces a newsletter for new angel investors who want to help close the funding gap while making money in the process. Hull's firm has an internship program for multicultural girls from Oakland to expose them to the worlds of investing, entrepreneurship, business leadership, and financial literacy.

“I'm excited about the changes I see," says Blanche. “I see more firm employing the Rooney Law on an institutional level, an increase in smaller firms looking at underserved communities, and the democratization of institutional funding."

Hull adds that as long as multi-cultural women-led firms continue to show returns and outperform or perform on par with companies founded by White men, the investor community will rethink their portfolio strategies.


This piece was originally published in 2018.