Tereza's Op Ed
The following is a guest post by our friend and AVC community member Tereza Nemessanyi, founder and CEO of Honestly Now Inc., a web and mobile social media platform which will release its beta product to the market in September. It was initially published by Reuters. The opinions expressed are her own.
After decades investing in “white male nerds who’ve dropped out of Harvard or Stanford,” venture capitalist John Doerr broke a pattern in July: he invested in a woman.
Not that Kathy Savitt was a risky bet.
The former CEO of American Eagle Outfitters and a senior executive at Amazon, Savitt built Lockerz.com, a social networking and commerce site for ages 13 to 30. She grew it from 50 college and high school students to 15.5 million users in less than twelve months, leveraging natural networks of friends and social influence. In the web technology world, she’s a rock star.
Doerr, and his firm, Kleiner, Perkins, Caufield and Byers, are well-known for prescient, industry-leading investments including Google, Intuit, and Amazon. They estimate they’ve created 150,000 jobs.
But in an industry obsessed with placing bets based on what’s known as “pattern recognition,” women-led companies are funded less than 9% of the time. According to Shaherose Charania, founder of Women 2.0, this recently dropped as low as 3%. For women age 40+, the rates are even lower.
Savitt, a 47-year-old mother of two, breaks that mold.
Mark Heesen, president of the National Venture Capital Association, describes this more recent phenomenon: “There are more women in the world. They represent a greater share of markets and purchasing power. Being more proactive about increasing their presence in the industry just makes sense.”
Recent studies by the Kauffman Foundation and venture capitalist Cindy Padnos of Illuminate Ventures show high-tech businesses with women in leadership outperform the rest. They are more capital efficient, launching with 30%-50% less capital, generate 12% higher revenues, and have lower failure rates.
If women are so good at starting businesses, then why does it take them longer to start one? Well, according to a Tampa University study, women are bitten by the entrepreneurial bug later than men. Our startup sweet spot is between the ages of 35 and 45 — after we’ve finished school, gained professional experience, had children, and transitioned out of the early “interruption parenting” years. We are eager to apply what we know, to create new businesses on our own terms.
Nonetheless, the two-white-guys-in-a-garage stereotype remains the romantic ideal.
Consider Y Combinator, the tech industry’s most prestigious startup incubator.
Founded in 2005 and located in Mountain View, CA, Y Combinator’s mission is to introduce many ideas to the market quickly and cheaply, so mistakes are small and earnings arrive early. The model works.
It’s funded by big, smart tech money, which is backed by internet pioneers Paul Graham, Trevor Blackwell and Robert Morris. Its participants, who hail from around the country, get to rub elbows with the biggest names in technology. A Y Combinator badge is like flypaper for investors.
But it turns out that fewer than 3% of Y Combinator participants are women. According to Y Combinator partner and author of “Founders at Work” Jessica Livingstone, this ratio represents their applicant pool.
Now, I’m a swing-for-the-fences kind of gal so last year I looked into applying to Y Combinator. They require a three-month relocation to the Valley. Trouble is, I’m a 40-year old suburban wife and mother of two young kids from the New York. So no can do.
I blogged and commented in recent weeks about it, and learned I’m not alone.
Leading venture capital investor and blogger Fred Wilson also blogged about the topic to his 10,000 daily readers. And out came a tidal wave — four times his average comment activity. Hundreds of women emerged from the shadows.
Do we need an “XX Combinator” for women entrepreneurs age 40+? Perhaps.
But many male voices of “a certain age” came out too. So did women in their 20s and 30s, without kids. So did African Americans.
They offered compelling alternatives such as the “Kids-In-Bed Combinator” — prime work hours from 9pm to 2am!
Or we could call it “NY Combinator.” The New York startup scene is breaking out. Great wins are happening for our home-grown, such as Gilt Groupe, Foursquare, Etsy and Tumblr. While these groups weren’t conceived by women, despite some of them directly serving that population, New York’s creative class does provide a mother lode of female talent. According to Richard Florida’s 2007 “singles” map, he counted 185,000 more highly-educated, creative single women than men.
These creative juices could be flowing to tech startups if they could get products to market and raise capital. We should grab this moment to support the diverse technology innovation that is popping up all over New York and start serving up the best of what New York — and everywhere else — has to offer, including young-white-guys-in-garages too.
It’s taken me, a Wharton grad with 18 years experience and several startups and an IPO under my belt, twelve months to get from idea to product introduction. In an era where speed-to-market is the name of the game, that is way too long.
Our country is in desperate need of jobs. Innovation creates jobs. And great ideas can come from the most unexpected of places. Including a mom from the ’burbs who yearns to build the next Google.