Why Are 99% Of Big Internet/Tech Companies Made By Men? Are Men Better Entrepreneurs Than Women?
Why are 99 percent of big internet or tech companies made by men? Are men better entrepreneurs than women?
This question originally appeared on Quora, the knowledge sharing network where compelling questions are answered by people with unique insights.
Answers by Jae Alexis Lee, Enoch Smith, Maciej Pas, Joseph Reed, Suchitra Krishna S., and Sarah Abualia.
Jae Alexis Lee, I poke holes in things and stop ships from running aground
Ladies and gents, people who identify as neither, I feel the need to unpack some serious bullshit that men like to tell themselves about their supposed self superiority.
Access to capital
Let’s talk about VCs for a moment because you can’t deny the impact that they have on which startups make it and which ones don’t. For people who have been looking at the data it’s clear that there’s an issue with access to funding.
Women entrepreneurs run 30 percent of all small businesses, and together employ 7.9 million people and generate $1.4 trillion in sales (as of 2015). Needless to say, these are pretty staggering numbers.
All that success is wonderful. However, there exists an underlying issue that is keeping women from being even more impactful — difficulty finding funding.
Women-owned businesses receive just 7 percent of venture capital investment money, which is highly disproportionate to their role in the economy. Additionally, loan approval rates for female entrepreneurs is 15 to 20 percent less than it is for men. Clearly, something is not right.
Stop for a second and look at the numbers. For anyone who says to themselves “well, women don’t make good entrepreneurs to begin with”… I call BS. While it’s unarguable that there are forces preventing women from being entrepreneurs in the first place, women account for a significant percentage of business owners and entrepreneurs but they don’t receive a proportional level of funding.
We know, empirically, that a majority of VCs are men and that shouldn’t be news to anyone at this point. What people may not realize, however, is that the gender imbalance in VC firms correlates highly with the rate at which a given VC firm will fund female-founded companies.
There is clear evidence, however, that the small number of venture firms with female founders and/or an unusually high percentage of female partners, invest at elevated levels in female entrepreneurs.
Most of the money from venture capital goes to companies with male founders:
I will be the first one to tell you that I know, first hand, the difference between being a man in the room with a pitch and being a woman in the room with a pitch because I’ve been both.
I’ve gotten through an entire pitch deck as a man in the room with a prototype on the table without once having to talk about my experience or to justify why I personally had the technical expertise to pull off a project. As a woman in the room I’ve heard such wonderful things as “why would you think I’d give funding to someone who’s never done this before?” and then had to explain why the past 20 years of my career made me the right person to do exactly what I was pitching. The result is that I spend more time defending myself than I spend defending my product. As a man in the room, a majority of the discussion is about the project, the plans for implementation, the use cases… We’re talking about whether or not the business and product is viable. As a woman in the room, we’re talking about whether or not I’m viable.
Perception vs Reality
There is a perception that female founders or teams with female founders are less likely to succeed. That women aren’t capable founders and that investing in a female-led startup is a higher risk investment. That, however, doesn’t jive with reality.
We’ve been fortunate to back many companies with female founders (and women-founded companies represent a greater percentage of our investments than the national VC average). That’s why we were so excited to learn that our investments in companies with at least one female founder were meaningfully outperforming our investments in all-male teams. Indeed, companies with a female founder performed 63 percent better than our investments with all-male founding teams. And, if you look at First Round’s top 10 investments of all time based on value created for investors, three of those teams have at least one female founder — far outpacing the percentage of female tech founders in general.
You see this again and again in the data. For start-ups with five or more female executives, 61 percent were successful and only 39 percent failed.
There’s absolutely no reason to believe that women are less capable of being entrepreneurs or founders of tech companies. While you hear a great deal of rallying around a supposed “meritocracy” in tech, the truth is that actual merit, hard data demonstrating performance, is of less value than perceived merit. That leads us to our final problem.
Mansplaining away the problem
When it comes to men providing reasons why women aren’t launching more tech companies, I’ve heard it all. I’ve listened to people extol the miracles of testosterone as though the hormone were a business success wonder drug, or that men are just smarter than women. I’ve seen men talk about women being “ill-suited” to the kind of thinking necessary to innovate in technology and more of the same nonsense women have been confronting in STEM in general and in tech in specific for years.
I’ve seen no shortage of excuses in attempts to justify the status quo because people aren’t comfortable with the idea that a problem exists. People get even more uncomfortable with the idea that they contribute to the problem.
When you talk to transgender people in STEM, you see a different view of the puzzle. You see trans men talking about how much easier it becomes to be recognized for their capability and you hear trans women talk about how much harder it becomes to do the same. For those of us who have transitioned after building a professional career, it is impossible to be oblivious to the existence of the problem
It shouldn’t be news to anyone that there’s an issue with sexism in tech. We know that women in tech exit the profession at a higher rate than women in other science or engineering fields, and there’s ample anecdotal evidence describing the problems women face in the industry. We know that we’re dealing with this at every stage of a career from women being discouraged from pursuing computer science to the struggles they face in male-dominated classrooms and all through the career path. None of this should be news in 2017.
So, for anyone asking why a majority of tech companies that you’re hearing about are founded by men, ask yourself this: What amazing things aren’t happening because the women who invented them couldn’t get funding for their company or because they were never able to make it to the startup stage?
The list of problems is long, the list of reasons is even longer, but until everyone can get on board with the existence of the problem and stop mansplaining away the issues, this isn’t going to change.
Enoch Smith, Degree in Gender Studies
Whether men are “better” at entrepreneurship is kind of a loaded question, since it depends on what you mean by “better.”
That said, there are likely to be both social and biological causes for the disparity in tech startups by men and women.
Biologically speaking, there’s evidence that testosterone increases risk-taking and status-seeking behavior in humans (among other things). All things being equal, a male will be more likely to take a big risk to get a high-status position than a female will.
Human males also have a flatter bell curve than females. There are more males with extremely high IQ, for example, but also more with extremely low IQ. That means that the upper (and lower) portions of a meritocratic system are likely to be skewed male.
Males also appear to be more object-oriented than females, which might help explain why there are relatively more men in engineering and other STEM fields, whereas women dominate the humanities and social sciences.
Socially, there are also differences. Most societies place high expectations on men to be high earners so that they can financially support a family. Conversely, women often face a variety of obstacles to reaching high-status positions, since society also tends to place high expectations on women to perform various domestic and childcare duties which can conflict with high-powered careers.
Another issue is the snowballing that tends to occur in social groups. If you’re a man, for example, and you’ve got some friends who are going into finance, you’ll be more likely to sign up as well, since you’ve got a peer group that can offer advice or support, and you’ll probably want to go someplace where you already know you’ll have friends. For women, it’s often the opposite issue — if your friends have already decided on a people-oriented career, you’ll be more likely to follow along instead of getting a job in a totally different discipline.
After a while, people tend to recognize that there are more men or women in particular jobs, and those jobs get gender-stereotyped. That only exaggerates any existing gender differences, since most people don’t want to be perceived as gender-atypical. So, for these (and other) reasons, absent some external force, specific jobs tend to get more and more dominated by a single gender.
So, to finally try and answer the question, it really depends on what “better” means. If the way the system works means that you need someone willing to take big risks, then men will probably be more interested than women. These days, that’s the current paradigm in tech companies, so you get more men. A few decades ago, though, many computing jobs were considered low-risk, low-reward, secretarial jobs, and the field was pretty female-dominated at that point.
Jae Alexis Lee already gave a good answer to the first question. Since the access to capital is obviously biased, then in all likelihood so is the outcome.
As for the second question — Are men better entrepreneurs than women? — you’d have to look at different numbers … You’d need to compare the number of successful entrepreneurs vs. the number of unsuccessful ones. If the men-women ratio of people starting tech companies is 9:1, but the ratio of men-women starting successful tech companies is 9:2, then women are obviously better. It’s just that not many of them are interested in starting or running tech startups.
Joseph Reed, SA
The statistics don’t lie. The simple answer is yes, men are mostly better in the entrepreneurship/tech fields than women. This is largely down to innate causes. Men are innately born with features and mind-makeup that give them a better edge over women in these fields.
You will also see there are more men who are either very clever or not so clever, whilst women are mostly at the middle of that spectrum. It’s the very clever people who go on to make the big internet/tech companies, as they are able to understand the complex technology (advanced programming, server administration etc.) very early on, that goes behind building a big internet company and then making it become successful.
Suchitra Krishna S., I have studied this movement a lot
Internet and tech startups tend to be largely men but entrepreneurs are not just men.
Women own around 30 percent of small businesses.
Regarding tech startups, there are less women in tech education itself so you can’t expect beyond eh?
Also you will be surprised to know that tech companies which are IT-based have quite a few women in the work desks (30 percent). So they do help in functioning.
Sarah Abualia, studies English Literature & History at Talitha Kumi School
It’s not that they are better than women. Males have higher rate of intelligence than females. They don’t even have to try to work so hard to get the result. And this is exactly what a technology company needs in order to create new ideas or solutions for any technical problem. They don’t need someone who works hard for it. They need a person who can be clever enough to do it.
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