Male-heavy boards dominate in the start-up mecca of
Silicon Valley, which prides itself on progressive thinking and putting talent
first. A Reuters survey of the 10 top venture-backed start-ups, as measured by
venture funds raised, shows that six do not have any women on the board,
including Pinterest. And none has more than one.
Reuters' research relied
on publicly available data and discussions with start-up executives and board
members.
The gender imbalance has been the norm for years despite some
recent signs of change. Google, Facebook and Twitter all went public without a
woman on the board. They are more diverse now.
Big, established
companies, by contrast, frequently have two or more female directors, based on
the 10 largest US tech companies by market value. All of the top 20 have at
least one.
The dismal record of start-ups when it comes to gender
diversity was highlighted last month when Twitter came under fire for its
all-male board on the eve of its public offering. On Thursday, the company
announced that it had added former Pearson chief Marjorie Scardino to its
board.
Entrepreneurs and executives contacted by Reuters did not question
the conclusion that there are few women directors at start-ups, but they
frequently described it as unintended, and some such as Pinterest say their
executive ranks are more balanced.
Start-ups tend to blame the lack of
women on their boards on factors such as their youth, their small boards, their
single-minded focus on growth to the exclusion of other priorities, and a
scarcity of women steeped in technology. They also blame venture capitalists,
who are usually male, usually hold the bulk of board seats - and don't want to
see their voting power diluted by adding noninvestor board
members.
Critics counter that entrepreneurs who pride themselves on
creativity and innovation simply aren't trying hard enough when it comes to
gender diversity.
At Pinterest, the focus is on work, said Chief
Executive Ben Silberman, whose board consists of himself and two male venture
capitalists. "It's pretty heads down," he said. If the company expands the board
and a qualified woman emerges as a candidate, "we'd be open to it," he
added.
"Diversity across all dimensions, including gender, is important
to our success," a Pinterest spokesman said. The company's leadership is roughly
40 percent female, including its heads of engineering, finance, sales and
recruiting, he added.
Public companies think about board diversity all
the time - whether it's because they are constantly being scrutinized, or
because they face public investor pressure.
"The companies that want to
do it will do it. Those who don't will not," said Maria Klawe, president of
Harvey Mudd College, a computer scientist and a board member at software giant
Microsoft and chipmaker Broadcom. "This stuff doesn't happen by chance."
The
issue is not simply one of social equity. A study by the Credit Suisse Research
Institute, a bank-funded group, looked at 2,360 public companies and found that
over six years, the share price of large-capitalization companies with at least
one woman on the board outperformed companies with no women on their board by 26
percent.
For small and mid-capitalization stocks, the outperformance
totalled 17 percent.
The study identified a handful of factors that could
explain the better performance, including a healthier mix of leadership skills,
better corporate governance, greater understanding of consumer decision-making,
and access to a wider pool of talent.
Even though it's now conventional
wisdom in Silicon Valley that a lack of women in leadership and technical roles
is a big problem, progress has been very slow, especially at the
top.
"Meritocracy is the word you hear all the time here. Everyone can
get ahead," said Heidi Roizen, a venture capitalist at Draper Fisher Jurvetson
and a former software-company founder and Apple executive. "I don't think it's
as clean and pure as people think."
Women board members set an important
tone, said Roizen and others, signalling to employees that talented women can
succeed in the organization.
The Boys Club
That matters especially
at a time when skilled technology workers are in high demand, but women are not
pursuing tech careers in anywhere near the numbers as men. While women receive
43 percent of US bachelor's degrees in math and 40 percent in physical sciences,
they receive only around 30 percent of doctorates in those areas, according to
the National Science Foundation. They receive around one-fifth of bachelor's and
doctorates in computer sciences.
Only 27 percent of entrepreneurs are
women, says Ross Levine, a professor at the University of California, Berkeley,
who is researching the gender gap in entrepreneurship. Only 20 percent of
start-ups across industries have one or more female senior-level executives,
according to a study of start-ups by Dow Jones VentureSource.
And about
89 percent of all venture capitalists are male, according to the National
Venture Capital Association, directly affecting the lack of women on start-up
boards.
"If my investors don't have more women working for them there's
not much I can do to get more women on the board," said Dave Goldberg, the chief
executive of SurveyMonkey, also one of the 10 start-ups surveyed by Reuters.
Goldberg is married to Facebook COO Sheryl Sandberg, one of the most successful
female executives in Silicon Valley.
One of Goldberg's two independent
board members, former VeriSign chief financial officer Dana Evan, is
female.
Roizen and other female venture investors say their industry is
beginning to change. More women are starting companies, they say, and as some of
those companies achieve success that will bolster the number of female VCs,
since many VCs cut their teeth as company founders.
"It's been in the
last two, three, four years," says Theresia Gouw, a VC at Accel Partners,
pointing to examples such as her portfolio company Birchbox, a beauty-products
subscription business launched by two women in 2010.
Indeed, a handful of
women have achieved celebrity status in the start-up world, including Sandberg,
Google's head of ads and commerce Susan Wojcicki and Yahoo CEO Marissa
Mayer.
High-profile female venture capitalists include Mary Meeker of
Kleiner Perkins Caufield & Byers, who is on the board of payments-service
Square and funding service Lending Club, and Aileen Lee of Cowboy Ventures, who
has backed companies such as Dollar Shave Club and Philz Coffee.
If a
company doesn't land a female VC on its board in its early years, when most
start-up boards consists of the founder and a few key investors, it acquires a
built-in chance later: when it weighs going public. Both New York Stock Exchange
and Nasdaq board rules, such as building audit committees, generally require
bolstering board seats.
Still, many start-ups duck and weave rather than
bringing a woman onto the board. Facebook dallied until after its 2011 IPO
before appointing Sandberg to the board. Google added two women to its board a
year after its 2004 IPO. Now three of Google's 10 directors are
women.
Some female directors of start-ups say they are sometimes
reluctant to overtly suggest the topic of adding more women for an open board
seat. That is because they know it might raise the hackles of existing board
members who want to make sure the best person gets the seat, not somebody who
was less qualified but female.
"People don't want to just stuff women on
these boards," said Ann Winblad, a venture capitalist at Hummer Winblad, who
says she tends to suggest women candidates without highlighting their gender as
an asset.
Many people, both male and female, assume the woman is the
weaker candidate, said Meiko Takayama, founder and chief executive of advocacy
organisation Advancing Women Executives.
"It's based on unconscious
bias," Takayama said. "It's not malicious."
Roizen herself was the
subject of a Columbia Business School study that asked students to evaluate her
accomplishments - but with half the students seeing her name as "Howard," not
"Heidi." The students seeing her true name thought she seemed selfish, not the
type of person they wanted to hire or work for. The students who saw the name
"Howard" thought he seemed likeable.
'Cop Out'
Many young
companies acknowledge the issue, often saying they go out of their way to try to
hire from a relatively small pool of technical women. But critics roll their
eyes when that qualification comes up.
"I personally think that's a bit
of a cop out," said Carol Bartz, the former chief executive of Yahoo and a Cisco
board member. "There are all kinds of expertise that you need on a board. And if
the entire board is technical then it is not diverse enough."
"They're
more comfortable with their VC boys' network and really don't want to rock the
boat," she added.
Bartz said that sometimes the companies can make the
specifications - or 'spec' as it is known in the recruiting industry - for the
recruitment of board members so narrow that it automatically eliminates women
from the candidate pool.
That spec always sounds the same, said Martha
Josephson, Silicon Valley-based partner with recruiting firm Egon Zehnder:
someone from the C-suite who has experience running big parts of a company's
operations.
Even if existing board members are actively looking for a
woman to bolster their ranks, unacknowledged biases can come into play, said
investor and former analyst Esther Dyson, whose board seats include genealogy
company 23andMe, local-organizing network Meetup, and advertising company WPP
Group.
"A just-okay guy seems suitable," she said. "But a just-okay woman
doesn't quite match the awesome-woman image they have in their
heads."
Dyson forms part of a small group of sought-after female board
members for start-ups that also includes Evan, the SurveyMonkey board member,
and former Macromedia CFO Betsey Nelson, whose board seats include
LivingSocial.
"Can you show us a pool that has more than the same names
that circulate?" Nelson said she often finds herself asking when the subject
arises of ensuring that women win consideration for an open seat. Evan says she
is approached at least 3-4 times a quarter to join a board.
