Innovation Old vs. New

This week my husband and I had one of our conversations about innovation. I see innovation blooming all over in early-stage companies that aim to improve our experience and offer a new generation of products incorporating technology. My husband was a Global Research Director at a major Wall Street firm, so he has an excellent viewpoint on public companies, the markets and the full range of investment products. I worked on Wall Street, too, but as an investment banker helping companies raise capital in the public and private markets.  Now, I live in the completely different world of the startup ecosystem, where people are creating new technology, products and businesses.

Our conversation started off as it does many times. I was talking about an example of an early-stage company doing something that is done by a big corporation – only the small company is using technology and can do what that they do better, cheaper and faster. We then delved into a discussion about the merits and value of old line business and new transformative companies.

A few weeks ago, I saw a post from Blackrock’s Chief Investment Officer about the new mega trend of public companies buying back their shares. CB Insights picked up on the article and made some powerful points about when companies cannot find auspicious opportunities to deploy their capital, they buy back their shares in the public markets.  When it comes to innovation, start-up companies can move faster and experiment and iterate until they find the solution or the right model. Having worked in both established corporations and with early stage companies, I would put my money on start-ups for fast and big innovation.

This cartoon captures for me what I believe is happening.

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There are new entrants into every industry that are decentralizing the services and delivery of goods. Not every company will make it, but each company offers a movement forward on the innovation path. No company jumps in and creates a new direction. Innovation happens in small increments, often with different companies contributing to the evolution.

This is a time of explosive innovation and change that can only come about with adequate capital to the most promising founders and ideas. This is a call to action for women to found companies to invent and offer products that we really want. This is a call to action for men who are founding companies to include women in your founding team–especially if your products are for women.  And it is a call to investors to consider what it means for gender and other types of diversity.

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Engagement in the Workplace

By Maggie Cely

At Plum Alley, we have long believed in the benefits of women founding and investing in companies. Now, there is evidence to say that women remaining in those companies as part of the leadership is beneficial for the bottom line.

“A highly engaged workforce means the difference between a company that thrives and one that struggles. When employees are engaged, they are passionate, creative, and entrepreneurial, and their enthusiasm fuels growth.”

Gallup’s article Q12 Employee Engagement concluded with this resounding statement on the correlation between engagement and financial growth. It makes sense – employees that receive acknowledgment for their triumphs, have open communication with their superiors, and are encouraged to grow are productive members of their team and, therefore, company.

One would presume that American companies would be partial to this variety of leadership to drive profits, encourage growth, and improve efficiency.

Statistically, the managers with the highest level of engagement are women; however, women only make up one-third of all workplace leadership roles in the U.S. Apparently, efficiency is no match for gender bias.

Entrepreneur magazine summarized findings from a series of Gallup studies regarding the state of managers and employees in the workplace, finding that women excelled at 11 of 12 categories of employee engagement over men. They broke down the information into 5 digestible ways women employ these engagement tactics to improve employee performance, number one being that women are generally more engaged themselves. Inspiring personnel development, offering regular feedback and praise, and an overall strong moral compass were additional reasons named.

Gallup also looked into who worked best under whom – does a male work most effectively under a man or woman?

It turns out that men and women varied most at engaging their own gender, yet the co-ed teams were relatively consistent. Men engaged their male employees at a rate of 25%, and females at a rate of 35% with female employees. These figures are a bit puzzling, given that the most engaged team dynamic, a female boss with female employees, is the least prevalent.

PreferenceOfBossGender-R2_Engagement

Another strong note was the study of preference and how attitudes have changed over the past 60 years. In the 50’s, an overwhelming majority (two-thirds) of Americans preferred a male boss, 5% a female boss, and 25% claimed ambivalence. In 2014, one-third of Americans preferred a male boss, 20% preferred a female boss, and the majority (46%) had no preference.

PreferenceOfBossGender-R2_Leadership (1)

In regard to preference, working underneath a specific kind of human no more shows a gender bias than choosing to work at a startup shows a size prejudice. It’s merely preference, what works for you as an employee.

The major issue is that having a female boss is substantially less likely than having a male boss, so employees are forced to work within the confines of structural inequality that stems from promotional bias. In other words, you can have a preference, but you can’t really have a preference.

Notwithstanding these findings, progress is on the horizon. COO of Facebook Sheryl Sandberg just unveiled a training program to recognize and challenge unconscious bias in the workplace, beginning with her own team. Dozens of organizations that promote women in tech and other male-dominated industries are growing in popularity and prevalence (see Tech Ecosystem Infographic).

How do we continue the trajectory towards change? Literature on the subject alone is not enough to change perceptions. Rather, infusing women’s entrepreneurial ventures with capital, encouraging women to invest and to be involved in investment decisions, diversifying teams, and promoting staff with the credentials to perform and the ability to engage are imperative initiatives to change the landscape and stimulate growth, financial and otherwise.

SoulCycle

The Decade of the Female Entrepreneur

Julie Rice and Elizabeth Cutler, courtesy Inc.com

By Deborah Jackson

Thank you SoulCycle.

If you haven’t tried the popular sweat-inducing aerobic exercise for 45 minutes that has caught on like wildfire in urban areas, you must be out of the country. I first discovered SoulCycle in 2011 when I was looking for an alternative to a boot camp I did with my friend, who also gave birth to two daughters at the same time over 20 years ago. We felt it was time to do something about the weight gain that naturally occurs in our age bracket. After a year of boot camp, I needed an alternative way to get exercise. I tried SoulCycle as part of a special Gilt offer that included a pair of my very own bike shoes. SoulCycle was desperate to get new customers; my 3-class package with shoes was $30.

The studio on West 18th was new, empty and candlelit. I loved the class–I was physically challenged but also emotionally and spiritually recharged. I became a devotee and at every holiday my go-to gift was more classes at SoulCycle.

SoulCycle in 2015 is similar and different. I was there today and as I was racing to catch up, I looked around and noticed what I notice at every visit: the room was dominated by women. There are always a few men who come with their partner or their girlfriend. But, the place is by women for women.

This company just filed their S1 to go public. I pondered that as I was trying to distract myself from the increasing resistance on the petal.

This is huge. This company was founded by two women who were looking to create a cycling space and approach that worked for them. The gym space and exercise options are so prolific that it is hard to image another one. Yet somehow Soul Cycle is thriving, has a cult-like following and grows through word of mouth. A founder’s dream.

The existing options at gyms and stand alones were not doing it for Elizabeth Cutler and Julie Rice, SoulCycle’s founders. These women built the first space with the features they wanted–an accepting environment that also pushes you to work hard. The ambience at SC is about plugging into something more than just physical prowess. Instructors ask you to close your eyes and visualize your dream, or think about how your soul is showing up for your body.

Brilliant, Elizabeth Cutler and Julie Rice. You knew what you wanted, and you knew that other women wanted it too.

This is what the next decade will be. This is the decade of the women entrepreneur. Women are starting to build the companies and products that they want. The competition is irrelevant–women are building things that will go viral.

Women have founded rockstar companies in the consumer product space–think Spanx; Ringly; Goldieblox. For software, we have Learnvest; for health care there is Maven. The biggest thing that has enabled women entrepreneurs is technology and the internet. You can find customers and get publicity without massive amounts of money.

The world is changing and women are taking the lead. They are building the products that they want. This is game changing because women know the customer as they are the consumer. Women are not a niche market. They control spending for food products for the the family, clothing and medical care. I predict the rise of the woman entrepreneur in this decade because she is building the products that women want.

Just like SoulCycle, women build products that connect you with more–either your soul or your values.  These products also treat you like you matter. Because you do.

Aspirations

Retaining Women: A Problem Startups Don’t Have

By Lucy Drummond 

Two early twenty-somethings catch my eye as they step out of the elevator in suits. This is an unusual sight at WeWork, where most employees dress in business casual. Comfortable wear is especially important during New York City’s humid, sweltering summer months.

The two young gentlemen sit down with wide eyes. I can tell they are in disbelief at what is going on behind me–sangria is flowing, beer is on tap, and a company is giving away free t-shirts. Relaxed lounge music plays in the background. It is 5:45pm on a Wednesday.

Park South

WeWork Park South, courtesy WeWork

I smile and turn to read the Bain & Company report I have been assigned, entitled “Everyday Moments of Truth: Frontline managers are key to women’s career aspirations.” My smile fades. The subject is women’s career aspiration in corporate America–or how it gets sucked out of them due to uninspiring management at mid-levels.

The irony is great as I simultaneously read this report and listen in on the young suits in their conversation. They have been joined by a third, a man who works at WeWork, but he wears a collared shirt and jeans. He has to persuade the younger two that the drinks and snacks are not some sort of trick, and now with beers in hand, the younger two relax.

The man who works at a startup within WeWork is a former private equity banker, and is a few years older than the other two. He tells them about the freedom and flexibility of his current career situation: the hours, dress code, amenities, events, autonomy. The two suits listen intently, occasionally chiming in with statements such as: “Yeah! I hate leaving work at 9pm, leaving at 6 sounds awesome!” I suspect their current absence from work is quite an anomaly.

The palpable excitement of the two young corporate men provides an interesting backdrop to the material I read.

Women graduate college with confidence and “wind in their sails” because academia has made significant strides in gender parity. At college, female students are encouraged to raise their hands, participate, form groups, and develop as public speakers. For their first two years of corporate experience, females carry this character strength with them–43% aspire to rise to senior level management and C-suite positions. This is more than their male counterparts: only 34% of males in entry level positions aspire to rise in the same way.

Unfortunately, this is the only time in corporate careers that women’s aspirations to rise surpasses men’s. Mid-career, the desire to climb the corporate ladder for women shrinks in an inverse relationship with the more experience they get. Some of this aspiration is regained at the highest levels of management, but it neither recovers fully nor again outpaces men’s.

Aspiration

By the time women are considered “experienced” employees–over two years of working on the job–their aspirations to reach the top level of management have split in half. Only 16% of female employees at this stage want to rise in their corporations, compared to 34% of males. At more senior levels, this number improves, but it never fully recovers. 34% of mid to upper level female employees desire to rise. However, more than half of men at the same level (56%) want to continue to rise. This last set of numbers may even be skewed as some of the women who lost aspiration have probably left.

Bain’s reason for this drop? Being human.

Employees today–especially millennials–want to feel engaged and inspired in their work, and are more productive when these elements are present. The more an employee feels understood and supported, the more committed she or he becomes. Especially for women, so says Bain, relationships and communication are central.

It makes sense: corporations measure success using qualitative terms. Women have been barred from many powerful positions because of exactly that; they have been considered to be “too emotional” for rational, calculated, professional decisions. However, that sort of biased thinking is long out of fashion, and has been debunked by research that proves having more women in executive decision-making positions increases the bottom line. The neglect of the qualitative actually hurts profit.

Female employees are as competent and committed as males, but on the whole they need more human and authentic relationships at work.

What will help women keep their aspirations is for mid-level managers to develop more open, interpersonal relationships with junior female employees. Two thirds of senior male employees are hesitant to have a private meeting with a more junior woman, which I imagine comes out of a respectable intention. However, the effects are detrimental because it stymies honest conversation and the possibility of a mentor relationship.

To fix this problem, Bain suggests managers share their personal stories about balancing work and family life in the conference room. Yes, you read that right, the conference room. One of the top management consulting firms says that opening up about family and personal life in typically professional-only settings will increase commitment and help retain female employees.

The surprising–albeit very welcome–suggestions do not stop there. Bain says: “Visibly reward and outwardly champion employees who break the mold, offering public recognition for those who are successful using non-traditional schedules or career paths.”

Another suggestion is–of course–having more women serve as role models in higher level management. But this is a chicken and egg problem, and will be ameliorated as the the pipeline for mid-level professional women improves.

I can’t help but feel that startups already do a lot of what Bain calls for. Granted, it comes with the territory; being small and new offers an inherent opportunity to do what big, established companies cannot. But I still wonder why so many women would choose to stay in uninspiring career paths, hoping that their superiors will change.

As I finish reading the report, I glance up. The three gentlemen are still talking, swapping stories and laughing in camaraderie. As I gather my things to go, I wonder how long it will be until I see the two younger men in t-shirts happily strolling the halls of WeWork.

Ecosystem Header

The Ecosystem for Female Entrepreneurs

There are many graphics that show the power of the male networks that supports male founders. There have been articles about the powerful and exclusive boys club. Men connect by doing business, sharing deal leads, playing sports, providing funding, and passing the hat around the table to support their buddies. It is human nature to hang with people you know and like and are similar to you. You feel comfortable and you don’t have your sense of self or ideas challenged by anyone. All of this is understandable even when it has adverse consequences.

Women of all ages are looking for ways to advance and champion each other. There are some established groups that were trailblazers as well as many new organizations springing up with purpose and commitment to open access and funding opportunity. We need all of this and more.

We have identified the organizations that have a primary and demonstrated commitment in one or more of these areas: women entrepreneurs; women building tech; women angel investors and women professional venture investors.

All of the companies and organizations in our graphic spend their time and money in the pursuit of equal access and opportunity for women and outstanding companies. This is a new age of action oriented initiatives where you use your influence and money to change things around. We did our best to include the companies we know but there are probably more to include. If you know of any additions please contact us at info@plumalley.co. Keep in mind that they have to service one or more of the 3 categories above and this has to be their primary focus. Thank you.

Deborah Jackson

Ecosystem Raising Capital

Ecosystem Support Women

Sources of Economic Hope

Rising To The Challenge

The Motivations of Female Entrepreneurs

The third infographic of our series based on data from the Kauffman Foundation’s report Sources of Economic Hope: Women’s Entrepreneurship explains why entrepreneurs don’t quit.

The hurdles are many when launching a business or venture. What keeps entrepreneurs going is the creative potential in pursuing their wildest dreams. The most common reason for starting a business is the founder’s desire to capitalize on an idea.

Entrepreneurs identify factors that have contributed to their success to varying degrees. However, the most important factors consistently involve learning from the past.

Lessons learned from previous success is tied with prior industry work experience as the most common success factor in startups.

What is notable is that learning from past mistakes is a very close third. 88.2% of respondents state that learning from wins is important, while 87.3% agree that learning from failures is also so.

Those who are truly motivated will turn “failure” into an advantage–seeing it as more of a growth map than a defeat. Founding a company requires immense determination. Those who are successful turn setbacks into opportunities to refine their goal.

The last part of our infographic explores how failure is experienced by women and men. Short summary: women value hard work whereas men trumpet self-confidence.

Sources of Economic Hope

#ChoosePossibility

Last week Re/Code ran a story powerfully titled Tech Women Choose Possibility by Sukhinder Singh Cassidy, the Founder and Chair of Joyus. The article mentioned her personal experience as a successful women tech entrepreneur and also presented the results of a survey she had conducted with 230 women tech entrepreneurs and female venture capitalists. I was one of the women founders in the survey and you can see the list of women in the survey on Medium.

The survey revealed some important conclusions:

1. Women don’t need engineering degrees to have successful tech companies
2. Most successful women entrepreneurs have faced gender bias
3. The women entrepreneurs in the survey were successful at raising outside capital

Below is an infographic we created to highlight more of the survey results. Everyday we make choices about living in a way that furthers what matters to us. Join us to #Choose Possibility by supporting women entrepreneurs and those who invest in them.

By Deborah Jackson

ChoosePossibility