Finding it difficult to garner respect as a female Internet entrepreneur in Chicago’s venture capitalist community, Samantha Borland did what she deemed necessary to increase her chances of raising money for her new dot-com. In December of 1998, she hired a man as chief executive.
“Men have an easier time with the VCs (venture capitalists), and he was a more seasoned CEO,” Borland says. “It’s been hard to find women for upper management positions. Women just aren’t in my six degrees of separation.”
Borland, 28, has since moved into the chief executive position of her company, MyEventPlans.com, after gaining confidence in herself and raising $6 million in two rounds of funding with the help of her male counterpart.
Across the nation, a newly visible group of women has moved into the spotlight as CEOs or founders of high-profile Internet companies, including Meg Whitman of eBay, Patricia Fili-Krushel of Healtheon, Kim Polese of Marimba, Carly Fiorina of Hewlett-Packard and Ellen Hancock of Exodus Communications. But, the fact remains that although women are moving up, they are still seen as underdogs when competing for equity.
“VCs aren’t funding females,” said Darcy Evon, president, founder and CEO of Chicago-based I-Street Reporter, a news and networking site for the digital economy. “When I went for funding with a certain group of VCs, I heard later that they made fun of me, saying I was going to launch some stupid girl site.”
In December, Evon’s I-Street Reporter received $500,000 in an initial round of funding from Divine Interventures Inc., a Lisle-based holding company whose investments include more than 50 companies, 15 percent of which are headed by women. Despite the obstacles, Evon believes there are more opportunities for women in the Internet than “anywhere else in the 21st Century.”
That may be true, but women have not shattered the glass ceiling yet, although the word around town seems to be that the old boy’s network is waning. Last year, women held 40 percent of the management positions in Internet startups financed by venture capitalists–a 90 percent increase over 1998, according to VentureOne, a San Francisco research firm. However, over the same time period, the number of women CEOs of Internet companies remained the same, 5 percent.
“Women still have a long way to go in Internet-related businesses,” said Lisa Flashner, managing director for William Blair New World Ventures, an Evanston-based venture capital firm that has a strategic alliance with Chicago’s William Blair Capital Partners. However, Flashner says she has seen an increase in the number of women involved in technology-based companies.
“There’s a focus on merit. People are young and aggressive and they’ve grown up with women as professional peers,” she said. With the speed at which Internet firms are multiplying, “you don’t have to put in 15 years anymore to move up.”
Unlike most traditional companies, where it takes a long time, generally, to climb the executive ladder, the boom in Internet companies has opened up an unprecedented number of high-level management positions that need to be filled.
Traditionally, senior managers have been men, many who hold MBAs. A quick survey of Chicago’s top business schools reveals that women represent a mere 20 percent and 32 percent of the MBA candidates at the University of Chicago’s Graduate School of Business and at Northwestern University’s Kellogg Graduate School of Management, respectively. These percentages have not budged much in the last 10 years.
“The industrial design couldn’t have been worse for women (MBAs) struggling with career and family,” said Austan Goolsbee, associate professor of economics at the University of Chicago. Typically, an MBA graduate’s first eight years as an investment banker or consultant would include up to 100 hours of work and three days spent traveling every week–a difficult feat for any new parent, especially a new mother, Goolsbee says. Only after some 25 years of work might an MBA grad move into a senior management position, Goolsbee explained. “But with the structure of the Internet, all you need is a good idea and high human capital (high education, high ability, etc.) and you’re in the game right away.”
Hard work and long hours are still part of the game, but just two years in an Internet company could yield a high-level executive position.
Anthony J. Paoni, clinical professor of e-commerce and technology at Northwestern, who comes in contact with about 4,000 executives a year, believes that a greater percentage of women understand the new digital economy. Internet-related jobs offer a greater degree of flexibility that allows women to work from home, Paoni notes.
Jane Thompson, president and chief operating officer of InLight Inc., an Evanston-based developer of interactive multimedia and Internet-based patient education and health information systems, agrees that the Internet’s culture, coupled with recent technological advances, eliminates geographical immobility.
For more than a decade, Thompson worked as a senior executive at Sears, Roebuck and Co., before leapfrogging into her position at InLight last August. Thompson points out that one of InLight’s senior employees works from home on Fridays in order to fit in play time with her young children–a rare luxury in the traditional old economy companies.
“The Internet is a new frontier,” Thompson said. “It’s an area that has a lot of innovation in non-traditional and non-linear thinking, and there seem to be a lot more women running the show. The Internet favors women’s characteristics, like the way they think, manage and lead. It sure beats bureaucracy!”
“Women tend to be better at relationships,” said Ellen Rudnick, clinical associate professor of entrepreneurship at the University of Chicago. “The Internet is a virtual business and a lot of the relationships are outsourced. Women are better at utilizing different types of skills like managing multiple tasks and resources.”
In the Chicago area, women head about 15 percent of the approximately 280 Internet-related companies, according to Evon of I-Street Reporter. And nearly all of the companies have women in their senior management team.
“The more women you have in management positions, the more women you’ll see eventually leaving to start up their own business,” says Debra Filtzer, program manager for the National Women’s Business Council, a bipartisan federal government advisory panel based in Washington D.C. “The Internet is a great leveler.”
Despite that optimism and the rocket speed at which Internet companies are taking off, women have a lot of catching up to do.
Chicago venture capitalist Ellen Carnahan, a 13-year veteran, says “women aren’t even on the radar screen.” Managing director for Chicago-based William Blair Capital Partners and a specialist in information technology investments, Carnahan says that of the 10 to 15 technology or Internet-related companies funded by William Blair, not one is headed by a woman.
“There are more women in executive positions but not women heading companies,” Carnahan says. “Clearly, a lot more women have entered Internet-related businesses in the last four or five years. Hopefully they’ll stick.”
