Career 24 January 2020
For the last 30+ years, I have focused on bringing together political parties, corporate competitors and disparate nations to foster quality leadership, diplomacy and results that better society, creating sustainable partnerships and profitable business models. Has it been easy? By no means. Rewarding? Immensely.
Here's what I learned along the way, how I did it, and how you can, too.
When I left Washington to enter the corporate world, I was asked to investigate and determine ways that companies were struggling to be successful in areas where major investments were being made. This meant meeting with and challenging key executives, staff and stakeholders, benchmarking against best in class competitors and making recommendations that change processes, cultural norms and internal ownership. The end goal was always to move the organization or activity to a higher level of performance. In other words, my job was to figure out what were the "boulders in the road" and move them. The boulders in many cases were people or projects they designed and held dear. Not surprisingly, my inquiries caused adverse reactions. Over time, as boulders turned into rocks, and rocks turned into pebbles, consensus came to bear, and goals were met that enabled the organizations, department owners within them, and society to thrive. My work – which had been unwelcomed by some – was accepted, and even appreciated, by those who had once been critical.
As a 26-year-old who was doing this for the first time and facing strong head winds expressed in highly personal ways, I sought advice from my father, an executive operating in a highly politicized arena. His letter is worn, but I keep it on my desk.
"I wish I could be there with you when you have to face these challenges...just remember to look beyond what is currently in your life and try to visualize what is unseen. Count your blessings and it will also help you challenge the crisis you are experiencing...Some of the greatest stumbling blocks I have ever faced have also resulted in being my greatest stepping-stones." His wise words encouraged me to turn managing complexity into an artform. As a U.S. Ambassador and the ﬁrst female Commissioner General to the World Expo, I was able to create an atmosphere of confidence amongst project investors which resulted in the first financial surplus in the history of US participation in a World's Fair. As CEO of FARE, I guided a major restructure to support food allergy research and received commitments of $75M within 12 months.
Here is what I learned along the way, including guidelines I follow each time I find myself facing a new or complex situation:
- Recognize that when there are different levels of real-time execution and a sense of urgency, the risk complexity is multiplied. Know what you want the organization or alliance to look like, speak with facts and build a roadmap to get there.
- Break down each problem, recognize the constants and the variables. Identify what is the same in each situation and what is unique.
- Itemize the constants. What characteristics are seen across the entire organization which are impediments to change? Fix those first.
- Identify the unique issues that are compounding the problem, e.g. finances, people, legal, channel relationships, history, culture and politics.
- Don't pretend to know what you don't know. It hurts your credibility. Keep asking: Why? How does x relate to y? Who makes that decision? Remember, as a change agent, you are not expected to be the subject matter expert, so feel confident and admit you don't know how "the thing" works. Your goal is to understand the pathway for how we ended up where we are today—a place none of us want to be.
- Move boulders out of the way for your team, so that really smart people who are committed to the new way of doing things can run as fast as they can without being tripped. Your job is to manage the complexity by keeping your eye on standards, governance, revenue, external perceptions, fiduciary responsibilities and long-term consequences. Adjust accordingly to avoid greater problems while continuing to move towards the long-term goal.
- Align incentives to change by identifying motivations to better maximize resources. View the situation from the perspective of the other person and determine what is most important to them. Unless the organization or situation is completely broken, you can find ways that everyone can feel a sense of ownership in the new way of operating. Although there is a sense of urgency, you can move more quickly by bringing your critics along if you frame your recommendations in a manner that positions change in their vernacular and aligns with their worldview.
The Merriam-Webster dictionary defines complexity as "the quality or state of not being simple; a part of something that is complicated or hard to understand." However, always remember problems can be solved and issues can be resolved as long as you stay committed to the facilitation of success. Inspire the loyalty of those around you. Celebrate the early wins. Systematically, keep key stakeholders apprised of successes and challenges on a regular basis.
Most importantly, focus on helping others succeed. Let your employees know – and demonstrate – that they are a part of a team that matters. To achieve real, meaningful social impact, leaders and their teams must be sure their actions are also real and meaningful.
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.