Are We Really Out of the Loop?
October 29, 2010
By Mary Schmidt, Marketing Troubleshooter
Maybe that's not such a bad thing. Lots of innovation happens outside the loop, box, beltway, and valley.
NYT: Out of the Loop in Silicon Valley
Women own 40 percent of the private businesses in the United States, according to the Center for Women’s Business Research. But they create only 8 percent of the venture-backed tech start-ups, according to Astia, a nonprofit group that advises female entrepreneurs.
I work with a lot of tech start-ups and that means interaction with venture capitalists. However, these days many of the guys (and they're overwhelmingly white males) are so risk adverse that "venture capitalist" could be considered an oxymoron. One even actually said, "We look for reasons to NOT invest." (Well, okay...but your website touts your adventurous spirit - even uses the Shackleton expedition as a shining example of courageous venturing forth! [The fact the expedition was a tragic mess - we'll cover in another post someday, but I digress] Oops, oh that was just what the marketing person wrote...silly girl, me.)
It's incredibly difficult to get funding - even for male entrepreneurs. Women in high tech? Few and far between, for any number of reasons.
“It’s not like people are making an effort to exclude people, but I see very little diversity in the candidate pool,” says Aileen Lee, a partner at Kleiner Perkins Caufield & Byers, the big venture capital firm. She says this could reflect the different educational paths men and women follow in high school and college: men, for a variety of reasons, are more likely to pursue computer science and engineering degrees and subsequently rise through start-up or management ranks.
'K. Point taken (and made all over the place, ad nauseum. "Math class is tough.") But you don't need an engineering degree to start a company or work in high-tech. (Really. Shhh...don't tell the colleges. And many VCs don't have engineering backgrounds.)
One big reason (in my not-so-humble opinion) there aren't more women seeking VC $ is lack of patience with testosterone-fueled posturing and big dog bloviating. We need to get moving! Get things done! Yes or No, Big Boy. Let's GO! (Oh. Joy. YOU want another Powerpoint presentation...sigh)
All entrepreneurs have to develop incredible patience as they make the rounds seeking capital. Answering the same (often dumb) questions over and over. Catering to the outsize egos. Submitting and re-submitting financial projections. Certainly, there are some smart, savvy VCs around, but like anything else - you've got to do some work to find the quality (and the right fit for you.)
So,where am I going with all this? Here's where.
The successful biz model is fundamentally changing. Thanks to technology and a flattened global economy (which - really - can be a very good thing for everyone), the old models are creaky and largely irrelevant. Until the VC community catches up, it'll be tough for anyone to get funding (regardless of what the economy is doing.) The old guys don't grok the new world. (Here is where I note many "old guys" DO grok the new...but they tend to be the exception that proves the rule.)
You can write a killer biz plan while breast-feeding (as one woman in the article did). You can start a "techy, big brain" biz with a PC and a princess (no joke) phone (as one of my friends did). Outsource your distribution. Build a stunning, powerful revenue-generating website using free software. Contract with seasoned pros as you need them (Headcount projections? Please. Who needs the overhead?) Build a company in three years, sell and move onto the next idea (Five-year plan with color-code organizational charts? Oh, My achin' Powerpoint.)
Our society is also changing. More people (of both sexes) are realizing they don't have to be BIG to be successful. Who wants to be the next IBM or Google if you can build a lucrative "lifestyle" biz that keeps you in comfort...and you don't burn out? What do you really enjoy doing? (I type...in my comfy home office...wearing my bathrobe...with a second cup of French press coffee by my side.)
Regardless of the industry - high-tech, low-tech, no-tech - getting capital is always a challenge. Personally, I've done a 180 in my recommendation to clients. DO bootstrap if you can. (Google started - btw - with credit cards.) BUT, do some hard thinking before taking the leap.
- Set aside some funds so you can pay the mortgage.
- Set a time limit for trying (if you get down to the nitty-gritty desperate last crumbs of your money, you're NOT making good decisions).
- PLAN. Certainly you don't want to sink into analysis paralysis, but do your research (why will YOU succeed where five other restauranted failed in that location?)...have goals and know your 30/60/90 day tasks.
Here's where I wade into it...just as you don't want to be patronized and insulted because you're a woman...DON'T expect special treatment either, because you're a woman. Be prepared. Have the facts. Don't substitute "passion" for solid biz planning. Don't assume that a fellow femme at a bank or VC firm will cut you slack since "we're all in this together." (We aren't.)
If your business really needs VC funding - do your own due diligence so you don't spin cycles chasing ones who'll never be interested. Develop patience. And - yes - be prepared, you're going to run into some sexist, clueless clods...just as we do everywhere else.
Now, go read that NYT article - lots of good food for thought, inspiration and perspective.
I've got to go finish a biz plan for my male client so he can present to a male VC. :)
The Great Business Die-Off (from my Idea Pool blog)
What Kind of Business Do You Want To Build? (from my Idea Pool blog)
Small is the New Big (From Seth Godin...from 2005)
Seriously? When more of the cave men literally die off.
Posted by: Mary Schmidt | November 01, 2010 at 11:05 AM
Women and men are out of the loop these days. All of these VCs are running scared because they don't know a good idea from a bad idea. But to discount women simply because they're women is ridiculous.
I grew up in the 60's and 70's in the time of Women's Lib, and I am appalled that attitudes like some of those jerks mentioned near the beginning of the NYT article still exist.
I'm in business, and I just want the best and the brightest. I don't care about their gender, skin color or anything else.
When will these caveman attitudes finally cease?
Posted by: Rick Henkin | October 31, 2010 at 04:14 PM