We can scale the heights of Everest, but we still can’t crack the glass ceiling of corporate America.
That was the theme of a widely forwarded article in USA Today last week that was sent to me by my friend Rieva Lesonsky, formerly editor-in- chief of Entrepreneur magazine and now CEO of her own startup company, SMB Connects.
The story asks a question that’s always perplexed me: Where are the Starbucks, Nikes, Amazons, Home Depots and Genentechs founded by women?
Now don’t get me wrong. Few male-owned businesses ever get to the top, either. Most startup businesses fail within their first five years, and more than 90 percent of small businesses that go the distance never get past $1 million a year in sales.
Still, with twice as many women launching businesses as men, you’d think that a growing percentage of businesses started by women entrepreneurs would be breaking into the major leagues by now.
Unfortunately, the statistics tell a different story. According to the article, only 43 women have climbed the ladder to become CEOs of Fortune 1000 companies over the past 35 years. The number of women-founded businesses that have grown into Fortune 1000 companies is even smaller–three, to be exact. And those companies (Golden West Financial, Software Spectrum and PC Connection) were co-founded by men.
So what’s the explanation? Well, it’s tempting to speculate that little saplings don’t grow into billion-dollar oaks overnight, but that doesn’t explain why today’s crop of fast-growing, technology-enabled startups–think Google, Yahoo and Facebook–could not have just as easily been founded by women.
That’s why USA Today asked David Thomson, a former McKinsey & Co. consultant and author of Blueprint to a Billion: 7 Essentials to Achieve Exponential Growth, to re-examine his data and go back and speak to the women entrepreneurs he interviewed for his book.
His discoveries were not encouraging. The odds of an early-stage startup with a big idea eventually hitting $1 billion in annual revenue are 1-in-20,000, he found, which is why in the 22 years from 1985 to 2007, only 387 new publicly traded companies achieved $1 billion in sales. Thomson estimates that the odds of a woman starting a company that reaches $1 billion, whether she stays with the company or leaves, are roughly 1 in 500,000.
So the odds are stacked against us–although that’s not exactly headline news. Back when I was CEO of NetCreations, I was often interviewed for stories about why women-owned businesses tend to start at the kitchen table and stay there. Explanations seemed to fall into two camps–outright discrimination (by banks and investors) and women’s avoidance of risk. Then there’s women’s tendency to start “lifestyle businesses” that make it possible for them to pick up their sick kids from school while their husband commutes to an office.
Based on my experience as an entrepreneur and consultant, I think the two biggest reasons why there are so few large companies founded by women are lack of confidence and lack of financial literacy, which often go hand in hand. Think about it: Many male entrepreneurs–even those with no experience starting a business–are willing to step up to the plate and swing for the fences even if they risk going down in flames. Women, for the most part, tend to be more cautious. I see this with our clients all the time–the guys think they can ring up $40 million in sales in year one while the women doubt they can break $10 million in sales by year five.
But big dreams don’t guarantee big results. Growing a startup company to a billion-dollar business takes capital–and if you can’t communicate your vision to banks and investors, you’re never going to be able to raise the kind of money you need to make it to the Fortune 1000. That’s why I believe that financial literacy is mission critical for anyone who wants to grow his or her business, no matter what gender.
Will women business owners ever scale the heights of the Fortune 1000? I believe one day we will–but not until we learn to speak the language of money.
This entry was posted on Monday, April 28th, 2008 at 12:41 pm and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.One Response to “Billion-Dollar Businesses: Still a Long Shot for Women”
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April 28th, 2008 at 9:49 pm
Very good article. You Make very good points here. I do disagree with one thing though - the lack of confidence. I believe women need more resources, more doors open to them. The corporate world expects a man to enter “the conference room” before the meeting begins, I believe this generation is changing all that.
Lisa