The new faces of tech
HOW WOMEN, AND THEIR START-UPS, ARE CHANGING SILICON VALLEY
SAN FRANCISCO — Reshaping a time-worn narrative isn’t easy. Social revolutions rarely are, especially when you’re a woman trying to break into the boys’ club that is Silicon Valley.
But an emerging class of early-stage tech start-up executives is helping dispel the notion that there isn’t a leading role for them in the male-dominated valley. Company founders and leaders are coming out of Google, Salesforce.com and elsewhere for the excitement of shaping a young business.
The emergence of young female tech founders and executives reflects sweeping change in the worlds of start-up companies and angel funding, where wealthy investors give money in return for a stake in a company. It un- derscores the enormous purchasing prowess of women online that is transforming the Web economy. As more consumers reach for their smartphones and tablets to shop and communicate, there is a pressing need for commerce sites that cater to women, who control 70% of online purchases worldwide, says Lisa Stone, CEO of BlogHer, a digital media company.
Many of these inroads are being made by female-led start-ups that are fueling innovation and the digital economy. Women will influence the purchase of $15 trillion in goods by 2014, according to Boston Consulting Group.
“Female users are the unsung heroines behind the most engaging, fastest-growing and
most valuable consumer Internet and e-commerce companies,” says venture capitalist Aileen Lee. She has invested in Brit, a lifestyle branding company, and Plum District, an e-commerce site for moms, among many ventures led by women.
Make no mistake: The executive suite for business in general and the technology industry specifically remains a male stronghold. Just 3% of all tech start-ups are led by women, according to a Kauffman Foundation report. Only a handful of CEOs at Fortune 500 companies are women. Indeed, the glass ceiling remains a reality for many women, and charges of sexual harassment and sexual discrimination persist. In fact, a recent lawsuit by Ellen Pao, a junior partner at one of the valley’s most prestigious venture funds, Kleiner Perkins Caufield & Byers, is all the buzz here these days because it exposes the fragile position women hold in the tech world. Even so, there is reason for optimism. “The technology landscape has flattened,” says Shaherose Charania, CEO of Women 2.0, a media company and resource that helps thousands of aspiring and current female entrepreneurs launch new ventures. Its innovation conference in Mountain View, Calif., in February drew 1,000 people, three times the audience in 2011.
Precise numbers are elusive, but anecdotally they seem to bear out Charania’s thesis: The number of women starting tech companies nationally has doubled in the past three years, according to an informal poll by Women 2.0.
Meanwhile, all but two of the 19 U.S. high-tech IPOs in 2009 had at least one female officer. Compare that with 1988, when only 4% of the 134 firms that went public in the U.S. had women in top management spots.
“I’ve been involved in the New York City startup scene for several years, and I’ve seen many more female entrepreneurs getting their projects off the ground recently,” says Foursquare CEO Dennis Crowley, who has participated in fundraisers and events for start-ups led by women.
Start it up
Of late, it’s been a thrill ride for female entrepreneurs in tech. Advances in technology, lower infrastructure costs and ample angel investing have made it easier to launch an early-stage company, says Leah Busque, CEO of TaskRabbit, an eBay of sorts for odd jobs.
It’s cheaper to start a company today because Web servers and other equipment cost hundreds of thousands of dollars, not the millions once required for high-end computer servers. Newer technologies, such as cloud computing, reduce infrastructure costs. And coding isn’t as onerous as it once was. Those changes have allowed entrepreneurs to build products faster and land funding sooner.
Five years ago, starting and funding a femaleled tech company would have been a formidable task, says Vivek Wadhwa, a fellow at the Rock Center for Corporate Governance at Stanford University. But, today, women are helping each other through groups such as Women Who Code, Astia and Girls in Tech, and some venture capitalists are warming up to backing companies led by women.
“We (women) try to band together and look out for each other,” says Brit Morin, 26, founder of Brit. In April, she landed $1.25 million in seed funding for Weduary, a Web app for building wedding sites. Among the investors: Google Vice President Marissa Mayer, VC Lee and former BabyCenter CEO Tina Sharkey.
“It’s great to be a woman in tech. It’s definitely a buzzy time,” says Katia Beauchamp, 29, CEO of Birchbox, a subscription service for grooming and beauty products. “We’re blazing a path, but we’re also benefiting from other pioneers.”
Foremost among those receiving credit is Sheryl Sandberg, Facebook’s chief operating officer, who has successfully juggled running a multibillion-dollar company and raising a family while mentoring female execs.
Sarah Leary, who in late 2010 co-founded Nextdoor, a private social network for neighborhoods, also credits the dramatic jump in angel investors who have taken their riches from Google, PayPal, eBay and Yahoo, and invested them in start-ups.
Dave McClure, whose firm has funded more than 50 companies led by women, has noticed the influx of female CEOs and a parallel surge in e-commerce and consumer sites. “Buyers trend female more than male,” he says.
A long road
But social movements take time. The pipeline from academia is relatively dry. A fraction of the estimated 120,000 computer-science graduates in the U.S. each year are women — 11.7% of bachelor degrees in 2010-11, vs. 13.8% in 2009-10, according to Computing Research Association. India and China are graduating nearly 1 million men and women annually in computer science.
Only 1% of venture-capital money was invested in companies run by female CEOs in 2010, the most recent year available, according to Dow Jones VentureOne. It says a drop in VC investment hit female-led companies particularly hard.
That is borne out in several statistics that underscore the gap between the sexes in executive board rooms. IBM CEO Ginni Rometty, Xerox CEO Ursula Burns and DuPont CEO Ellen Kullman are exceptions among the predominantly male Fortune 500 CEOs. A scant 3% of public companies — not to mention, Fortune 500 firms — are headed by women, says research company GMI.
“There always has been, and continues to be, a shortage of female-led companies,” says Dana Stalder, general partner at VC firm Matrix Partners, which has investments in female-led startups such as home-care company Care.com and online retailer Gilt Groupe. About 10% of private companies in Matrix’s portfolio were founded by female entrepreneurs.
Female leaders are convinced that such startups will lead to spin-offs or investments in other companies led by women.
That has paid off handsomely for Rashmi Sinha, co-founder of SlideShare, an online community for sharing PowerPoint and Word documents and other presentations, which was sold to LinkedIn for $119 million in April.
“As the ecosystem becomes more supportive, you will see more companies created,” says Kimber Lockhart, 26, a trained engineer who sold her then-2-year-old start-up, Increo Solutions, to Box for an undisclosed amount in 2009. Several companies bid for the documentation-management firm.
Adds Leary, “It is exciting to see so many (female-led) companies. But it is a long journey, and there are many stages to that journey to be successful.”