July 2010

Q. Why is there a dearth of women on high–growth, technology startup teams?

A. I have been working with women entrepreneurs in Canada since 2001, when I sold my shares in a dot-com company I started with work colleagues. We were a team comprised of men and women, each with an equal share of the company. I had an epiphany that year, and realized that women could make a lot of money from being part of such a startup team. The technology field was stimulating and exciting. I would say about 90% of the programmers in our 50-person company were male, and mostly from Waterloo. About half the project managers and creative talent were female.

Truth be told, it was a male partner that primarily drove the growth and arranged the meetings with potential investors and to his credit, played a lot of hockey and golf that sealed our first deals. I brought in a lot of business and did a substantial amount to support client acquisition, create good products, develop our growth strategy, and build overall client satisfaction, but when I look at our amazing growth trajectory from a ten-year vantage point, I am not certain I would have had the same success on my own. It was a team effort.

Our business was valued at $10 million and we sold it just before the market crashed. Most of the money went back into the company. The publicly traded company that bought us went into bankruptcy shortly afterwards, and my dot-com adventure came to a close.

All of the founders took some time to process the experience. We had stiff non-competition agreements and each of us had to decide where to go next. I had had two children within a short period of time, and by the time I sold my last share, I was nursing a newborn and chasing around a toddler with the help of an excellent caregiver and involved husband. Even with this help, I realized that the challenges of continuing the entrepreneurship lifestyle with the same intensity as before were going to be substantial.

I became fascinated with the question of how women can raise children and put in the long hours required by technology startups. How were negotiating teams supposed to count vesting periods in deals with pregnant women? Clearly, none of the lawyers negotiating my deal had encountered that situation before. How were women supposed to connect with the venture capital community, when so many of the deals are done over a friendly game of golf or belt of scotch? And lastly, the startup culture in the technology sector is, not surprisingly, driven by technologists, very few of whom are women.

I have devoted a lot of time to supporting, studying, and engaging with women entrepreneurs from a wide variety of sectors, most of which are service oriented. I have led associations, participated in government consultations, and represented Canada internationally at symposia of women entrepreneurs. Over the last couple of years, I have been working with the Rotman School of Management to create Next Steps, a program for high-growth women entrepreneurs. With the emergence of social media as a “hot” startup area - and one that arguably plays to women’s strengths - I have started to look at women-led startups in the technology space again.

Through my work with women-led startups, I have come to the following conclusion: as an industry, we should be focusing on increasing the number of women on startup teams. We should be ensuring that women team members have an equity stake in the business and have meaningful leadership roles on the management teams. If a woman is President and CEO, that is wonderful, but I feel that it is even more important just to have women present and engaged. I believe that the diversity in viewpoint and life experience that women leaders bring to the table impact the performance of companies in a complex, global, and increasingly interconnected world. This is the world in which Canadian startups have to compete and thrive in order to boost our country’s productivity levels. Women have to have a seat at the table, and by being there, have the potential to impact the success of Canadian startups.

A recent Catalyst study showed that companies with three or more women on their board of directors outperform those with fewer women by 53% on return on equity, 42% on return on sales, and 66% of return on invested capital (Joy et al., 2007). Moreover, the study found that the link between women board directors and corporate performance holds across industries. I am convinced that part of the reason for our startup’s success, was that, at all times, there was that strong female representation in the founding leadership team (with a female COO and VP Creative) that impacted all parts of the company, ranging from product and service development, client service, human resources, operations, and business development. Our “secret sauce” was the diversity in our leadership team.

If diverse startup teams can be so successful, why are they so rare? Among other factors, the following reasons contribute to the rarity of women on startup teams:

  1. There are few women who have a background in technology. Women looking to work with a technology startup are more likely to have a background in sales, project management, marketing, legal issues, or human resources. Even in my case, when I did my new media training at the Vancouver Film School in 1995, there were four women in my class of about 25. To make matters worse, the numbers of women enrolling in computer science at universities is actually dwindling, as will be discussed later.

  2. There are very few venture capitalists and investors who are women. Women who are investors are at least likely to connect with women on startup teams. In the United States, investment firms with at least one woman partner are 70% more likely to invest in a women entrepreneur than firms that have only make partners, according to a whitepaper published by the venture capitalist firm Illuminate Ventures.

  3. There is no incentive for change. Having young women in key leadership roles is challenging. My partners were not thrilled that I took two maternity leaves, albeit short ones, within two years. People in general are very comfortable with the status quo, and the technology community has a comfortable homogeneity when it comes to the model for success. But as one recent columnist, Natasha Mooney, said, “Hiring your first woman employee when you’re a 30-person company is far more difficult than when you’re a 5-person company.”

So, what is stopping women from taking major leadership roles in the technology startups of today? Through my work in the field of women entrepreneurs, I have identified five recommendations to increase the number of women in startup teams:

  1. Encourage startup teams to consciously analyze the diversity in their leadership teams. What diversity of thought could be missing as part of the growth strategy? Ask founders what might be missing in the mix, from product development to sales strategy to growth strategy? For example, with consumer-oriented products, how is the team addressing the needs of a female user base? Groupon’s subscription base is over 75% female. This is not the type of number to dismiss lightly. At times, the female viewpoint needs to be represented at senior levels in the organization, even if that female viewpoint is that of the end consumer.

  2. Tap into a base of experienced, older women leaders. Women business leaders in their 40s, 50s, and 60s are excellent sources of experienced management talent for startups. Tapping into this group and engaging them in technology startups as investors or members of a management team or advisory board can be an excellent way to tap into the experience and expertise of these women. This is the view of private equity expert Jacoline Loewen, Director at Loewen and Partners in Toronto and panelist on the Business News Network television show The Pitch. She says, “Startups are like an intense marriage and choosing a woman 50+ to be a founding member, particularly if you are all males under 30, could be a savvy choice… these guys have to get over the stereotype of mum with the cookie tray nagging about a messy room. At age 53, Arianna Huffington did a startup bloggers’ forum website called The Huffington Post which went on to get sold 6 years later to AOL for US$315 million.”

  3. Acknowledge that women may have different needs than their male counterparts. In their early 20s, women can compete more or less head to head with men. Unfortunately, many women soon find that their careers are impacted by the decision to have a family. What they need during this period is as much flexibility as possible. They also need to earn enough money to have good quality childcare so that they can present to that potential investor in New York on the spur of the moment. This need for cash flow during this critical period is important to understand.

  4. Support and nurture organizations that in turn support women entrepreneurs. There are several organizations and initiatives in Canada, and increasingly internationally, that support women who want to engage and be successful in high-growth startups. The support for these organizations needs to come from multiple sectors: government, professional services, technology, financial services, and academia. In order to increase the likelihood of success, women need the contacts, networks, mentorship, and access to information that these initiatives can provide. Compelling examples of these types of initiative in Canada include:

    Further examples from the United States include:

  5. Expose technology and computer science to girls in a more compelling way. Girls and young women love using technology, as any parent with any exposure to girls and their Webkinz can attest to, but how can this early enthusiasm and interest be translated into an interest in product and software design? How can we teach girls to engage in programming in a more appealing way? There are those that are trying, but the representation of women in computer science departments continues to decline. From 2002 through 2009, the proportion of female graduates from computer science bachelor degree programs declined from 19.4% to 11.3% in Canada and the United States (Zweben, 2009).

    Initiatives such as Alice, educational software that teaches students computer programming in a 3D environment at Carnegie Mellon, show a model of how to engage girls in middle school. Alice allows students to learn fundamental concepts of programming and programming logic without a background in mathematics and programming. The software introduces a storytelling model, which allows girls to create software that is personally relevant to them. (For further details on the promise of the Alice approach for influencing later success in computer science education, see the paper by the National Center for Women & Information Technology) Going through the process of learning how to program is very important in the technology industry, not only as a potential pathway to becoming a programmer, but also as important background to enable more effective interactions with technical teams. This early engagement in technology is a critical step in getting women to the point where, in their 20s, they might find themselves in an environment conducive to creating the next “killer app”.

From my vantage point, following these recommendations would help infuse our existing startup teams with female talent and nurture the younger generation of women that is interested in using technology to create products and services that are consumer friendly. Encouraging more women to be a part of high-growth technology startup teams, as entrepreneurs or otherwise, will result in well-balanced technology companies that can compete effectively in today’s diverse world.

Share this article:

Cite this article:

Rate This Content: 
No votes have been cast yet. Have your say!