Latest / Success Story with Scott Clary / Lessons - Why Women Get 2% of VC Funding | Julia Boorstin - CNBC Senior Correspondent

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Lessons - Why Women Get 2% of VC Funding | Julia Boorstin - CNBC Senior Correspondent · Success Story with Scott Clary

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  In this lessons episode, explore why gender equity in the workplace remains elusive despite
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  higher educational attainment among women. Discover how the broken wrong limits early career
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  advancement understand how pattern matching and unconscious bias shape venture capital decisions
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  and uncover how diversified leadership and investment approaches drive stronger outcomes.
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  So where are we at in terms of equity? So what is the reality for somebody going into the
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  workforce now and then trying to move up? What are the problems and the struggles that perhaps
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  we think are gone but are still there? What what do we have to deal with? So what's interesting is
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  that you know women actually graduate from college in higher numbers than men do.
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  Women go to more grad school than men do. I think the numbers are pretty close to equal when it
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  comes to business. Well these numbers change all the time but there's no there it's not like men
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  are getting more education than women do but there've been a lot of studies trying to figure out why
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  women may start in jobs at the same numbers as men but don't end up at the top of companies
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  in the same numbers as men and one of the key theories and this was something that was sort of
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  articulated by Alina and McKinsey study is this idea of a broken wrong. Women get promoted at
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  the lower levels but then there's a sort of a leap to more of a management level where often
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  women just don't get those promotions and interestingly it doesn't necessarily seem to have
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  anything to do with performance. It can have to do with how much women are pushing for promotions
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  or maybe they are are sort of inadvertently penalized for taking time off from work for you know
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  from maternity leave etc so there are so many different reasons but one thing that I really focus
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  on in this book is I look at the tech industry in particular because the tech industry has more of a
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  gap in venture capital funding than in any other industry you'll see in terms of representation.
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  So we all know that tech companies are incredibly powerful they impact the way we live our lives the
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  way we travel with companies like Uber the way we you know order every product to our house with
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  Amazon like there's no company tech their tech companies have massive influence over everything
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  and tech companies are funded by venture capital whether it's Facebook or Airbnb all these
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  company Google all these companies exist because venture capital fuel them and allow them to grow
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  massively while they were still losing money so I wanted to look at this sector because this is
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  the sector with the craziest gender gap women on average female founders have gotten 3% or less
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  of all venture capital funding in the past 10 years so if you look at billions of dollars in
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  in venture capital like 30 billion dollars last year 3% of it actually 2021 it was 2% 3% or so of
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  that money goes to companies of female founders that's absolutely insane so that's the reason why
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  that doesn't really make sense so I really want to focus on that world just because the gap was
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  so crazy that I wanted to understand a why that was happening and b how the women who had
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  defined the odds and had managed to get that tiny piece of enter capital funding how they had
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  done it I wanted to know their secrets because I thought these women are by definition exceptional
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  and I really want to learn from them so so we'll unpack why some women did receive VC funding
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  but that's a really interesting stat so I would have actually assumed that in yeah of course you
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  think of tech is like oh there's all you know the tech bros and whatnot and there's like
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  sort of like a negative connotation with the tech bro sf startup but the numbers that tech is
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  worse than some other legacy industries is absolutely insane so if 3% of it's 3% of female founders
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  are getting VC money it's very obvious why there's not a lot actually it's actually slightly more
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  complicated 3% of VC dollars go to companies with female founders but it's 6% of deals and what's
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  interesting is because you know each deals like the check that's written yeah what that means is that
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  women's checks are smaller than the checks that men are getting if they're getting 6% of deals
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  and only 3% of dollars it means the checks are on average smaller so why is that that's a huge
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  problem to solve for right thing it's another problem too so there's so much in here and I just
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  want to be clear I'm not pointing fingers at anyone I think what's really interesting about this
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  is I don't think there's one group one person no no one group or organizations to blame for any of
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  this this is layers upon layers of structural historical societal patterns that have established
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  this system and it's very hard to break them what I was most interested in and press to learn in
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  my research is just this concept of pattern matching is hugely powerful pattern matching is this
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  idea that if you're a VC and you want to make an investment in a founder your instinct and the
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  data would indicate that you should invest in someone who matches a pattern you should invest in
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  someone whose company is similar to another company founded maybe you have a habit or a
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  pattern of investing in people who were engineers at an Ivy League school and then founded an
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  enterprise software company which they sold and now you want to invest in these as second time
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  founders if you're looking at that subset of of founder you're going to be looking mostly at men
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  so it becomes this feedback loop where people just invest in more and more of the same types of
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  people part of it is that if you're a venture investor you're making some big bets and you want
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  to control every factor you can control so if someone reminds you of Mark Zuckerberg back at
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  influence you there's some crazy quotes in my book I've heard this from BC saying I'll invest in
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  anyone who reminds me of Mark Zuckerberg but I think that it's just this instinct to go with the
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  familiar and also when you're an investor you're going to be spending a lot of time with these
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  companies you're writing big checks to and so you want to make sure this is someone you like and
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  don't mind spending hours upon hours with so there's also this instinct to invest in people who
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  feel like your friends maybe they went to your same fraternity you know for same college we're
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  in your same fraternity so I think a lot of that is this sort of it's a pattern matching which is a
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  symptom of unconscious bias and the more we could just recognize it the more there's a huge
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  opportunity to break the pattern and there's financial opportunity in breaking the pattern there's
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  a VC I interviewed for the book named Josh Coppelman from First Round Capital it's a fund in
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  Philadelphia he had a very successful fund and after 10 years he said let's do a study and let's
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  find out like what has been working with our companies they invested in early stage companies
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  early stage is when there's the most opportunity for bias because you're not investing in a company
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  based on a five-year track record you're investing in a company based on the idea and the founder
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  so he went back and looked at the results of his investments over the years and he found that the
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  female founded investments which weren't there weren't very many of them they tended to perform better
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  he thought this is crazy if the female founders their companies are doing better why are we investing
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  in more of them so you sort of took a step back and realized that there were systems they could put
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  in place to make sure they weren't just you know investing in the in the obvious thing based on
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  the patterns so they before used to only have investors who had had a successful company that
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  they had invested in that limited the pool and they said why do we only have to hire people we've
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  invested in their company let's you know let's broaden the pool so they started hiring different
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  kinds of investors more women and women are twice as likely to invest in a female founded startup
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  than men are so they all of a sudden got this different pool of companies who are coming to them
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  with their ideas because they diversified who their who their venture partners were basically and
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  then interestingly they put these systems in place in their meetings to make sure that they're
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  getting rid of bias they'd hear a pitch and then instead of just opening you know having that
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  founder leave and they'd open the floor for conversation this is something that happens in meetings
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  no matter what type of company you're in they would have a hear a pitch like you could hear a
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  presentation but they'd have everyone write down what they thought about the company then they'd
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  have a conversation that way you didn't have one very loud charismatic person railroad everyone
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  else into listening to their opinion and then everyone would be like okay fine this guy's loud
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  we should do what he wants to do this way you could get people who are maybe more introverted maybe
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  maybe more women who are less likely to want to go out on a limb in a male dominated room and
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  you could just let everyone share their opinion without you know without it having to be a public
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  performance and he found that the outcomes of implementing this system were really really powerful
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  so I think there's so much upside to recognizing and stripping out the pattern matching and
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  unconscious bias so it's going to take these VC firms an incredible amount of self awareness to
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  do with this one VC did which is absolutely incredible curious about your thoughts and I know it's
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  not going to be an absolute answer that we can solve for right now but do you think it would be
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  easier if we teach over some of the things the awareness that we're going to talk about in a
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  second about female founders that have done exceptional things and sort of broadcast that message
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  out to the world or alternatively second potential strategy if we try to get more women founded
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  female founded VC funds that would hopefully start off on the right foot what do you think is more
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  realistic I think you need all of the above ultimately the venture capital industry is very
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  large and very entrenched they get money from all sorts of different sources the only way you're
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  really going to see massive change in terms of who's getting funding is if you have some of the
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  biggest funds of billions and billions of dollars if you get them to identify the value the
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  financial value this is not about helping the world this is about they will make more money if they
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  invest in a more diverse set of companies I think once you have that piece that's when you're
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  going to see more systemic change otherwise it just you know plenty of women are starting funds
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  and that's great but that alone is not going to drive meaningful change to the numbers if you're
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  talking about coming from a place where women founders have never drawn more than three percent of
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  VC dollars in any given year that's still it's a sad but incredible stat so let's let's break down
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  that three percent I mean that's what you did right you broke down you went into the three percent
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  and you found out why why these people got the money what was the what was the differentiator
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  between all the other women founders that weren't successful and then it's also talk about the
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  results because the results are also incredible I know that some of the people that you interviewed
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  they're like on my list of people that like I definitely want to interview like they're like
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  fucking badass like they're awesome yeah so um let's let's first but we can take it whichever way
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  do you want to talk about the results first or do you want to talk about why these people were
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  successful in raising capital in the first place well what do you mean by the results you mean
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  like the incredible companies they built and why there's a financial incentive to diversify your
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  portfolio based on some of the people that you spoke to yeah I mean look there's a lot of powerful
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  data I mean I should back up and say I started this book because I was so impressed by the female
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  founders I was meeting and I thought their approach seemed different from this kind of stereotype
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  of what leaders are supposed to look like and be like and lead like and I kept on coming back to
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  this idea that leadership doesn't have to just be one thing this you know this archetype of male
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  aggressive top-down hierarchical management like that is really not the way things work certainly not
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  anymore and we're seeing women lead in so many different ways and I think it's really empowering
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  to realize like all of these different things work maybe I have a piece of that in myself maybe
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  there's something there that I can I can try to grow in myself and it's okay that I don't look
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  like that like that bro you know the tech bro as you put it or the or the guy in the suit
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  that's our that's our stereotype so I first start off wanting to tell these amazing stories because as
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  you said you guys have to read my book it's so much fun these stories are so surprising and inspiring
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  but behind the stories I thought each of these stories is driven by different characteristics
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  what what this woman is doing trying to form the healthcare system what this woman is doing
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  trying to navigate the pandemic the peak of the crisis with a company that by all of her measures
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  should have gone out of business and instead has gone on to magnet you know magnificent heights
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  what they're doing is a leadership trait or strategy that we can break out and I can find research on
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  so I started with the stories and then I just started reading so many academic studies about
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  management and leadership and I I was really impressed by these studies it's amazing what
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  business school professors have been up to but also to learn that some of these traits um you know
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  that that maybe we don't associate with leadership or business success are actually hugely valuable
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  and we should just throw out the stereotypes of what a leader looks like because it has nothing to do
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  with what in reality actually works thanks for tuning in if you found this valuable don't forget
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  this conversation check out the links in the description to watch the full episode see you in the
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