Looking to increase revenue? Hire more women.
We are just days away from what may truly be one of the most historic moments in our country’s history. As we consider the very real possibility of a female president, we’ve been thinking a lot about gender diversity within our own network, our portfolio companies and the NYC Tech community at large. It’s clear that women have made huge advances in the workplace, but they’ve still got a long way to go. A deep look at our own portfolio turns up some humbling figures; with over 60 portfolio companies in the Primary family, there are just four (Ollie, Alloy, PS Dept. and Fashion Project) with female founders. And while there are plenty of women rounding out our companies’ ranks, the number of women in C-level and SVP roles is regrettably low.
Of course, this isn’t an issue specific to Primary. It’s a national issue, and one that’s palpable throughout the tech community, where female representation falls among the lowest of any industry. New data from McKinsey and LeanIn.Org shows declining rates of gender representation as you move up the corporate ladder, and as it stands, over 75% of privately funded tech company boards have no women.
Inclusion is an issue that we take very personally, and it’s one of the reasons we’ve been building out our Primary Expert Network - to create a peer network of amazing women (and men) for mentoring, networking and recruiting purposes. Last week, we gathered 20 of these admirable female tech leaders for an informal dinner. Leading the discussion was the legendary Susan Lyne, multimedia savant, ecommerce visionary, accomplished entrepreneur and outspoken advocate for women in tech. Susan embarked on her storied career in 1975, and having moved her way up through the ranks at some of the world’s most admirable media and tech companies, we couldn’t think of a more suitable individual to address our captive group. Looking back on her trajectory, Susan says with complete confidence that gender inclusion will one day be a total non-issue. To steer companies to that target, Susan offers up some concrete, economics-based arguments for inclusion that go beyond the “diversity for diversity’s sake” rationale.
Throughout her career, Susan learned some valuable lessons about brand and consumer loyalty that form the basis for her arguments on inclusion. She began her career in media - largely because that was the only sector where a young woman could find other female role models at the time - first at News Corp, then later serving as president of ABC Entertainment and CEO of Martha Stewart Living Omnimedia (notably during the challenging years that saw Martha convicted and crocheting in prison garb, all the while growing her base of loyal customers). Over the course of her tenure in media, Susan became acutely aware of the growing importance of women as the dominant consumer population, and her content was successful in part because she realized the inherent business need to deliver material that would become essential “appointment TV” for women. Wildly popular programming like Desperate Housewives and Grey’s Anatomy were a direct result of this strategy.
Susan kept a close eye on women’s increasing consumer influence as she moved over to the tech world in 2008 to serve as CEO of Gilt Groupe. Women are now the final decision-makers on 85% of U.S. household expenditures. As a result of this growing dominance, Susan explains, it has become a nonnegotiable business imperative for companies to increase female representation at the top in order to understand and appeal to their largely female customer base. Indeed, as the tech world has moved from largely enterprise B2B companies to encompass more D2C ventures, the best way for companies to develop market-leading products and maintain a competitive advantage is to ensure that the voice of the customer is well-represented. The case for inclusion, therefore, has shifted from a “diversity for diversity’s sake” argument, to one that is based on smart business tactics and revenue generation.
Susan has since made her home in the NYC Tech world with the founding of BBG Ventures, an early-stage VC fund focused on consumer internet and mobile startups with at least one female founder. Through BBG, Susan is playing the roles of both women’s advocate and savvy businesswoman: She’s leveling the gender playing field in tech by seeking out female founders, but she's also investing in startups that statistically drive outsized returns. According to McKinsey’s 2015 “Why Diversity Matters” study, companies boasting the highest levels of gender inclusion are 15% more likely to have financial returns above their respective national industry medians. Those with the highest levels of ethnic and racial inclusion are 35% more likely to see those same financial results.
It can be challenging, even for the most inclusive of companies, to prioritize diversity for diversity’s sake when there are high-stakes benchmarks, revenue targets and acquisition opportunities on the table. And that’s exactly where the “diversity for revenue” argument can drive tangible change. Together, our roomful of female tech leaders came up with a number of practical ways to go about doing so:
- Create “lean-in circles”: Within your own company, find a nexus of peers who are similarly committed to increasing the number of female recruits. Use this group to develop some tangible ways to hire more women that would be effective within your organization, and approach firm leadership together. These groups also provide excellent opportunities for informal mentoring and collaboration.
- Enlist the help of hiring tools: There are some new tools on the market that can help boost a diverse candidate pool. Pymetrics uses neuroscience games and big data to match candidates with appropriate roles. The gender and ethnic bias-free platform uses proprietary data science algorithms to mitigate unconscious bias in career choice and hiring, and claims to be 5-10x more predictive of fit than resume reviews or questionnaires. Additionally, when writing up job descriptions, check out Textio, which automatically edits your text to be more inclusive and effective at attracting diverse and highly qualified candidates.
- Utilize the network effect: If you’re looking to bring more women onto your board (as B2C companies absolutely must), TheBoardlist is an indispensable resource. The group was created to drive improved business performance through increased gender diversity on tech boards, and now has over 1,300 highly qualified women in its curated database.
As Hillary prepares for her literal and figurative glass-ceilinged election night party, we are encouraged by the latest pushes for inclusion and the slowly-but-surely increasing numbers of women in the C-suite. But there’s a lot of work to be done before we can get to the “gender as a non-issue” milestone. Exactly half of last week’s attendees attested to being the only - if not one of two - women on the senior team at their company, and a number noted that not a single woman sits on their company’s board. This is a serious issue with real financial consequences, and it’s shifted the argument for gender inclusion well beyond a general push for diversity. We remain committed to continued dialogue on the topic of inclusion through the Primary Expert Network and other community events, with the ultimate goal of changing the conversation and balance of power in the tech community.