Published in the San Diego Union-Tribune, July 22, 2019
“You’re dead to me.”
— Kevin O’Leary, “Shark Tank”
O’Leary has created a crusty but charming persona, and you would think that his support of women entrepreneurs would simply mirror the basic statistics, namely that 36 percent of businesses are started by women. We also know that less than 10 percent of women CEOs get traditional venture capital investment. The battle for funding meritocracy remains tilted against women.
But my favorite shark breaks the traditional model and invests almost exclusively in companies run by women. Of the 39 startups that he has invested in, about 30 have women CEOs. He thinks his returns from those companies are better than the others.
“The single most important factor in the out-performance of female entrepreneurs is their tendency to set reasonable goals for growth,” O’Leary says.
They are not afflicted with the testosterone goals set by men, and as a result, they run out of money less often. He says that his woman-led companies have much less turnover in employees. “They go three of four years with no turnover,” he says.
Now in fairness, O’Leary is happy with moderate growth of 10 percent to 20 percent year over year, while my compatriots in the Valley want to pour gasoline on their startups’ fire and show 100 percent growth per week. But O’Leary notes that sometimes when you go big, you also often run out of gasoline or the whole thing blows up in your face. But that is the venture model, and he’s sticking to it.
Further, he says, “Women manage risk better.”
So where did women develop that skill set? Let’s look at the dynamic of the family unit and the roles of mother and father. Women, more than men, face the puzzle of trying to create work-life balance. They manage their company trials and stresses by day, and then come home to manage their charming, screaming children. In fact, O’Leary specifically thinks women handle negative comments from customers better than men. (You think maybe there is a correlation between managing customers and children?)
There has been a slew of articles on gender diversity and its positive impact on boards of directors. Couple that with research that suggests women are psychologically more risk-averse than men, and you have the possibility of a stable, rational captain, whose voice will guide your boat to shore without a mutiny along the way. O’Leary is not a hard science guy, and he favors consumer-product companies where he believes the women CEOs will deliver the best results.
But STEM (science, technology, engineering and math) women still face challenges. A recent article by Ami Patel Shah, hedge fund partner and former examiner at the U.S. Patent and Trademark Office, writes that there are fewer women filing inventions than ever before. The dichotomy is that STEM women are blasting into the C-suite with greater frequency, but they are “Hidden Figures” when it comes to filing patents. Shah says there is a bias at the patent office against the “softer sciences” like computer software v. chip design. However, in the area of biotech, women CEOs are a clear force to be reckoned with.
Since December, three local female biotech CEOs have taken their companies public, reports San Diego Union-Tribune reporter Bradley Fikes.
Finally, let’s see if there is a correlation between successful women entrepreneurs, family dynamics and the practice of “rituals.” (I am not advocating for human sacrifice here.)
Studies by Michael Norton and Ximena Garcia-Rada, both at Harvard, support the positive effect of rituals in marriages — going out to your favorite meal at your favorite restaurant on a given evening. Garcia-Rada says, “Relationship rituals are powerful commitment devices.” It makes your marriage better. And she says that having rituals in your business has the same positive effects. Rituals create common, shared expectations and increase the sense of community. Rituals are part of a corporate culture — like ringing a bell after a sale or birthday songs, going bowling, or happy hour.
Rituals have two key traits. “They involve a repeated pattern of activity that continues over time, and they have symbolic meaning,” Garcia-Rada says. The ritual does not have to be expensive — you can forgo the trip to Tiffany’s — but it has to be consistent and anticipated.
The female CEO seems to intuitively understand the connection between business rituals and the bedtime story.
Rule # 619