People 05 November 2018
Imagine coming home from an epic birthday trip to find that your dog sitter had not followed your instructions. Then picture the dog sitter going to extreme lengths of faking her own death to avoid paying back your $150. For most, it seems like a one in a million chance that it would happen. Though, for Jenny Thompson the CEO and Founder of SafetyPIN Technologies, it was a reality she had to face a year ago.
Before the chaos, it was a time for celebration, as Thompson was celebrating her 50th birthday in Tahiti. Now 51, a year later, she was reminded that this vacation was after she left her job of 20 years in the dietary supplement industry, not sure what she’d do next. In her professional career, Thompson built a team of about 45 professionals, grown a business from $2 million to $70 million while she launched hundreds of health supplements and information projects. “It was incredibly exciting and incredibly scary at the same time,” she admitted. “It would have been very easy to stay there and just sail through and continue making money.” Instead, she took a leap of faith.
This is Jenny Thompson, CEO and Founder of SafetyPIN Technologies. (Photo courtesy of Jenny Thompson)By chance, what happened upon her return to the U.S. is what drove her to enter the tech industry. “I came home [to] find [that] my dog sitter had not stayed with my dogs,” she began. “She had left them alone in my house and then she had taken them somewhere else without my permission.” Thompson hired the dog sitter off of Craigslist. “When I told her that she couldn’t work with me anymore, I had pre-paid her for the next week and [told her] she [had] to pay me back,” she continued. “Instead of paying me back $150...or just blocking me from her phone she faked her own death through a series of elaborate lies and schemes.” At that point, Thompson decided to take action and develop a behavioral profile, because it would have flagged that dog sitter. Though her dogs were not hurt, she wanted to ensure this wouldn’t happen to anyone else.
What seemed like a nightmare drove her to build SafetyPIN Technologies. SafetyPIN is a virtual trust badge that’s ideal for sharing in gig economies. “Many of us are using WAG to hire dog walkers or Care and Sittercity to find babysitters and we really don’t know enough about the people that we’re inviting into our home and around our children, around our pets, around our parents,” she explained. “So we developed this virtual trust badge.” Hiring paid services like babysitters, dog walkers, dog sitters, caretakers or electricians, for example, require time and patience.The SafetyPIN is additional security for the hiring decisions you make. They run a proprietary behavioral review, comprehensive background check, ID verification, and financial history screening to ensure they are not someone likely to scam or defraud you. “All data is protected and encrypted,” she assured. “We don’t store your background check; we only use our scoring algorithm once it’s been run [and] we rerun people regularly.”
SafetyPIN is slowly but surely growing as a business. Thompson has always been confident in her ability to run and grow a business but shared that there are some differences from the way she used to run things. “It’s very different going from being part of a private company that’s completely self-funded to seeking funding and having to do the fundraising and starting over as a female tech CEO at 51,” she explained. “It is a lot different. I’ve always had this philosophy when people don’t have to hunt for their food; they waste a lot more of it.”There’s a realistic approach that Thompson takes when she’s considering how her company will profit in the months ahead. With SafetyPIN she’s mindful of managing spending, paying attention to the ROI whereas most companies may not consistently be doing the same. “I’ve always approached my company like that [and] it made it very easy for this transition,” she clarified. “The easiest part is that I’m not somebody that overspends and I’m not somebody who invests in things that don’t help build the company and build the team.” Thompson is a unique Founder in tech. “I always joke [around saying] I’m a 51-year-old female founder in tech, so I’m a unicorn no matter what our evaluation ever is,” she laughed. Age is only a number, but it does play a part in how she manages SafetyPIN and the company’s success with integral parts like funding. Thompson thinks starting at the age 50 has pros and cons. “There’s an energy that comes when you’re young… You can stay up until three in the morning and when you start young you’re not taking as many steps back,” she said. “I haven’t lived without an income since I was in college and the idea of investing my own money and not having a salary right now because I don’t want to take out any money out of the company...having to take the step back has been valuable for me and a little bit of a wake up call.”
Pictured above are Jenny's dogs, Lulu and Django. (Photo courtesy of Jenny Thompson)
One of many scarifies Thompson and members of her team made was giving up a salary or benefits for the growth and success of SafetyPIN. Though, what makes her different from a younger founder is her level of experience. In her pervious job, she led and worked with hundreds of people, but she also ended professional relationships.“I think that’s probably one of the harder things for younger founders, is not having experience firing or building a team, really knowing when it’s time to bring someone onboard [and] when it’s time to let somebody go,” she emphasized. “That’s been an incredibly valuable experience.”
“I’ve always had this philosophy when people don’t have to hunt for their food; they waste a lot more of it.”
Trying to find the right team to build a business with is harder than it looks and Thompson says she’s still learning as she moves along. “Just in the past year I’ve had two people in the COO role that both had to leave...and one was my co-founder, she related. “I’d say that we test drove each other but, we didn’t crash-test each other.” As a Founder and CEO, she has set rules and expectations for her COO, that makes the right leader. “In neither case did these people deceive me, but I think especially when you’re in a startup mode there’s a part of you that’s just grateful that somebody will come work for you especially if it’s at a discount or your not giving benefits or they’re working for no salary,” she explained. She encourages older and younger women that are looking to create their own business to set that mindset aside and realize what you’re building “is something amazing” and the team you build “get to be a part of it.”
Another failure that determined the success of SafetyPIN is not having an aggressive “go to market” strategy ready when the company was launched. Thompson had another wake-up call when she realized consumers weren’t waiting for their product. “My advice to anybody in this situation would be, be realistic when you launch,” she said. “Don’t let yourself get discouraged, but let yourself take the feedback and make the right decisions. Raise as much money as you can, raise early so you have the cash when you need it.”SafetyPIN is designed to help individuals and families from hiring contractors or paid services to dating apps. “SafetyPIN Technologies work with the former head of White House security…head of forensic psychology, [and a] federal investigator who does background checks for Homeland Security and the Department of Justice,” she shared. “[The federal investigator] has said [SafetyPIN] has the most comprehensive background check, other than a security clearance level check.” Thompson wants everyone to know behind every SafetyPIN are their stamps of approval.
Like a unicorn, Thompson is rare. She not only proved she could be a founder at 50 but also be able to work in a different field like tech and developed a successful virtual trust badge. In a generation where we use the Internet for everything – keep SafetyPIN in mind to make safe decisions on and offline.
7 Min Read
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.