Business 09 January 2017
Various cultures have come to recognize the one-horned mythical animal as symbolic of high social rank. But in today’s world of startups, the chances of achieving unicorn status--about 1 in 5 million--is no easy feat. In fact, the typical venture capitalist meets with 1,000 new companies a year and funds only two of them. “For every 10,000 startups that get funding, only one becomes a unicorn, the venture capital slang for a startup valued at $1 billion or more,” says Peter S. Cohan, of Peter S. Cohan & Associates.
As rare as unicorns are there’s something even rarer when it comes to business: a billion-dollar, woman-led venture. Of the 84 so-called “unicorn US companies,” only two have women CEOs, according to analysis published by TechCrunch. Additionally, only 2.4 percent of all startups have female CEOs and only 4.6% of Fortune 500 companies are led by women. For reference, the TechCrunch article looked at companies founded between 2005 and 2015 valued at a minimum of $1 billion.
"For every 10,000 startups that get funding, only one becomes a unicorn, the venture capital slang for a startup valued at $1 billion or more"
A systemic bias for male entrepreneurs that starts the instant someone gets an idea for a business is partly to blame. Not surprisingly, funding decision makers are typically male-95% of investors. According to a recent study by researchers at MIT, investors overwhelmingly prefer pitches by male entrepreneurs - even when the content of the pitches is the same.
The need to close the gender gap is not rooted in a sense of fairness; it’s about achieving greatness. But, it’s becoming more clear that without greater female involvement, everyone loses.
There’s an obvious lack of women on the boards of unicorn companies. According to analysis by Fortune, 60 percent of the unicorns had all-male boards and none of the 55 companies included had more than one woman on their boards. Fortune also noted that among the startups with all-male boards were Uber, Airbnb, Snapchat and Tinder. Fortune reached out to all U.S.-based unicorns that have all-male boards. Only eight--JustFab, Lookout, Razer, Slack, Pluralsight, Pinterest, Snapchat and Legendary Entertainment--would speak on the record about the gender disparities in their businesses. Most stressed their commitment to diversity, but noted that early-stage startup boards tend to be composed of founders and investors-who are men.
To begin bridging the startup gender gap, more women must get onto company boards. If necessity is the mother of invention, then Sukhinder Singh Cassidy, a technology executive and entrepreneur, has a relevant solution: the #ChoosePossibility Project. Cassidy launched theBoardlist, the first initiative of the #ChoosePossibility Project, in July 2015. It’s designed as an online marketplace to connect CEOs looking for candidates with women who are peer-endorsed for private and public tech company boards.
When the site launched it included the names of over 600 women who had been endorsed by 50 investors and CEOs in the tech industry, from companies like Accel Partners, Twitter, Lyft, Greylock Partners and Box. And in October, 2015 theBoardlist announced its first placement of a woman (Karla Martin, director of global business strategy and strategic planning at Google) to the board of a private tech company.
Martin landed on theBoardlist via the recommendation of Core Ventures Group General Partner Joanna Earl, one of theBoardlist’s founding members. theBoardlist works by sourcing recommendations from its members, who are both male and female, to provide a platform for tech companies to discover and connect with board-ready women.
“Nearly 70 to 75 percent of tech companies - in Silicon Valley - have all-male boards,” says Justin Jarman, Co-Founder and President of theBoardlist. “One reason for that could be due, in part, to a discovery problem.” Jarman said that his network has traditionally given him access to a pool of male executives with board experience. According to the company’s mission statment “100% of tech company boards use gender diversity as an opportunity to realize greater company performance.”
Did You Know?
-90% of all unicorn founders attend just 3% of U.S. colleges and universities
-The most valuable U.S. unicorns are mostly founded by alumni from private institutions including Stanford, Harvard, MIT, and Yale.
-Stanford University boasts 38 current unicorn founder alumni, whereas Stanford Graduate School of Business boasts 10.
-Harvard University boasts 21 current unicorn founder alumni, whereas Harvard Business School boasts 9.
-University of California, Berkeley led all public institutions with 12 unicorn founder alumni.
-In 2015, 7 percent of female founders received venture capital.
-28% (or $.72 to the dollar) is the average gender pay gap for computer programmers- the biggest gender pay gap job in the tech industry.
-The average for the adjusted gender pay gap in the tech industry is 6 percent in the U.S., meaning women, on average, earn $.94 for every dollar that men earn.
-The proportion of women partners at venture capital firms has slowly declined from 10% in 1999 to 6% in 2016.
3 Min Read
"How did you ever get into a business like that?" people ask me. They're confounded to hear that my product is industrial baler wire—a very unfeminine pursuit, especially in 1975 when I founded my company in the midst of a machismo man's world. It's a long story, but I'll try to shorten it.
I'd never been interested to enter the "man's" world of business, but when I discovered a lucrative opportunity to become my own boss, I couldn't pass it up—even if it involved a non-glamorous product. I'd been fired from my previous job working to become a ladies' clothing buyer and was told at my dismissal, "You just aren't management or corporate material." My primary goal then was to find a career in which nobody had the power to fire me and that provided a comfortable living for my two little girls and myself.
Over the years, I've learned quite a few tough lessons about how to successfully run a business. Below are five essential elements to keep in mind, as well as my story on how I learned them.
Find A Need And Fill It
I gradually became successful at selling various products, which unfortunately weren't profitable enough to get me off the ground, so I asked people what they needed that they couldn't seem to get. One man said, "Honey, I need baler wire. Even the farmers can't get it." I saw happy dollar signs as he talked on and dedicated myself to figuring out the baler wire industry.
I'd never been interested to enter the "man's" world of business, but when I discovered a lucrative opportunity to become my own boss, I couldn't pass it up.
Now forty-five years later, I'm proud to be the founder of Vulcan Wire, Inc., an industrial baler wire company with $10 million of annual sales.
Have Working Capital And Credit
There were many pitfalls along the way to my eventual success. My daughters and I were subsisting from my unemployment checks, erratic alimony and child-support payments, and food stamps. I had no money stashed up to start up a business.
I paid for the first wire with a check for which I had no funds, an illegal act, but I thought it wouldn't matter as long as I made a deposit to cover the deficit before the bank received the check. My expectation was that I'd receive payment immediately upon delivery, for which I used a rented truck.
Little did I know that this Fortune 500 company's modus operandi was to pay all bills thirty or more days after receipts. My customer initially refused to pay on the spot. I told him I would consequently have to return the wire, so he reluctantly decided to call corporate headquarters for this unusual request.
My stomach was in knots the whole time he was gone, because he said it was iffy that corporate would come through. Fifty minutes later, however, he emerged with a check in hand, resentful of the time away from his busy schedule. Stressed, he told me to never again expect another C.O.D. and that any future sale must be on credit. Luckily, I made it to the bank with a few minutes to spare.
Know Your Product Thoroughly
I received a disheartening phone call shortly thereafter: my wire was breaking. This horrible news fueled the fire of my fears. Would I have to reimburse my customer? Would my vendor refuse to reimburse me?
My customer told me to come over and take samples of his good wire to see if I might duplicate it. I did that and educated myself on the necessary qualities.
My primary goal then was to find a career in which nobody had the power to fire me and that provided a comfortable living for my two little girls and myself.
Voila! I found another wire supplier that had the right specifications. By then, I was savvy enough to act as though they would naturally give me thirty-day terms. They did!
More good news: My customer merely threw away all the bad wire I'd sold him, and the new wire worked perfectly; he then gave me leads and a good endorsement. I rapidly gained more wire customers.
Anticipate The Dangers Of Exponential Growth
I had made a depressing discovery. My working capital was inadequate. After I purchased the wire, I had to wait ten to thirty days for a fabricator to get it reconfigured, which became a looming problem. It meant that to maintain a good credit standing, I had to pay for the wire ten to thirty days before my customers paid me.
I was successful on paper but was incredibly cash deprived. In other words, my exponentially growing business was about to implode due to too many sales. Eventually, my increasing sales grew at a slower rate, solving my cash flow problem.
Delegate From The Bottom Up
I learned how to delegate and eventually delegated myself out of the top jobs of CEO, President, CFO, and Vice President of Finance. Now, at seventy-eight years old, I've sold all but a third of Vulcan's stock and am semi-retired with my only job currently serving as Vice President of Stock and Consultant.
In the interim, I survived many obstacles and learned many other lessons, but hopefully these five will get you started and help prevent some of you from having the same struggles that I did. And in the end, I figured it all out, just like you will.