Just take a look at Mashable’s partnership with Microsoft BizSpark – you’ll find a running list of a great many start-ups and their products or services, many of them have some kind of venture capital or angel investment backing their pursuits. Lots of them are also-rans, many have no idea how or when or if they’ll make money, and most will fail. Despite this high rate of start-up failure, investors don’t appear to be slowing down in the cash injections they’re pushing into the scene.
But when it comes to who founds and funds these ventures, as has been oft-noted, the flow of cash does not run in the direction of women. When women do found start-ups that get noticed, they tend to be part of what I’ve come to think of as the 4Fs: fashion, food, family or feminism.
Recently, Bloomberg featured some of these very successful founders in a profile called, “Stilettos Invade Startups as Niche-Shopping Sites Attract Women“. And while any woman would find the stories of these successful women founders to be inspiring as we start to eke our way through the ‘narrow sunroofs’ that Sheryl Sandberg and others in Silicon Valley think have supplanted glass ceilings, there is also a cause for concern.
I wonder if other women entrepreneurs sigh a little when they read sentences that identify these women as part of “a growing group of women at e-commerce companies tailored to specific areas, such as food or fashion, where the female perspective is seen as vital.”
Maybe it’s because I both work in advertising as a strategic planner, the ‘voice of the consumer’ in the agency, and as an entrepreneur myself. Maybe it’s because I love technology as much as I love my shoe collection, now numbering 60 pairs. But it seems to me that limiting the market sectors to which we apply women’s perspectives to food or fashion is not simply sexist, it’s stupid. When you leave women – who control upwards of 80% of consumer purchases – out of the conversation in nearly any market sector, you are leaving an enormous amount of money on the table.
American women control or influence 85% of purchase decisions, and globally spend nearly $20 trillion annually. That’s a lot of money to spend on lipstick, nylons and sewing notions.
It’s a less surprising number when you consider two simple facts: women make up half the population, and they are citizens with equal political and property rights (e.g., they can enroll in universities, hold jobs, own real property, engage in contracts, open bank accounts, loans and lines of credit, and even vote). They therefore have income and spending power – and there’s lots of them. Lots of us.
What do we spend all this money on? According to research compiled by She-economy.com, we were influencers or purchasers of 91% of new homes, 66% of personal computers, 92% of vacations, 80% of healthcare, 65% of new cars, 89% of bank accounts, 93% of OTC pharmaceuticals. So why aren’t we thinking of women’s perspective as vital to businesses in the areas of construction, financial products, computers and electronics, travel, healthcare, automotive and pharmaceutical?
As a planner, I moderate or attend a lot of focus groups; indeed, in six years in brand consultancies that underpinned our work with primary qualitative research, I literally moderated hundreds of groups and interviews across a variety of market sectors. There are certain areas where we brief our recruiters to supply a high quota of women: consumer packaged goods, TV shows, fashion, and pharmaceuticals. Products aimed at children mean we talk to moms; food and CPG manufacturers and retailers, like Kraft or Wal-mart, are almost exclusively interested in moms, who wield the check book and steer the shopping cart. It’s understood that women are the ones buying the bologna and the body wash; we take for granted that moms handle family health decisions, take the kids to the doctor’s office, and make the trips to the pharmacy. We know they watch a lot of TV, and do most of the clothes shopping. We know that women are also the primary influencers of their husbands, friends, children and parents. And most importantly to our business, we know that the clients in these sectors want to hear from them, because they want to market to them.
But there were plenty of categories in which we are at best sneaking in women, usually with the instruction under the gender field, “recruit a good mix.” Logistics and shipping, enterprise software, automotive, consumer electronics, even some liquor brands, are categories in which the marketing and advertising world simply presume men are the primary consumers.
Often, as strategists spending most of our work lives talking to people out in the world, we know that women are significant purchasers or influencers in these categories as well. However, our clients base many of these targeting decisions on consumer segmentations; often, a 55/45 male skew is enough to suggest that they need only address or hear from men. Worse, targets that are defined by job titles like ‘small business owner’ or ‘IT decision-maker’ or ‘business decision maker’ (usually meaning the C-suite), or even ‘shipping manager’ are assumed to be male; we typically don’t even screen on the basis of gender, and rarely meet a woman as a result. The presumption becomes the rule.
Our clients don’t have a problem with that. It reinforces the picture in their heads, and our lack of an attempt to talk to women keeps that picture in focus, because qualitative research in focus group facilities, behind one-way mirrors, is often the only occasion our clients ever have for seeing consumers “up close.”
But there is another side to these stereotypes. Gilt Groupe, One Kings Lane and Rent the Runway are regarded as successful businesses (in the e-commerce spaces of daily deals and fashion/design, of course)… now. When Susan Lyne left Martha Stewart Omnimedia for Gilt Groupe in 2008, Patricia Sellers wrote: “Since Susan Lyne made a big name for herself at the top of ABC Entertainment and then Martha Stewart Living Omnimedia, her move to the CEO position at tiny Gilt Groupe seems to be a head scratcher. Have you heard of this year-old startup? I hadn’t.” While the article goes on to speak positively about Gilt’s prospects and business model, it wasn’t exactly a ringing endorsement of a move to Gilt as a career move. One Kings Lane, among others, benefited from Gilt’s early and continued success in defining a business category.
In late June, Business Insider ran a story about a new start-up, under the headline: “Here’s Proof That Any Ridiculous Idea Can Get Funding Right Now“. The article is much more positive than the headline about Naturally Curly Network, a social network for people with curly, kinky and wavy hair to connect with content, products, stylists, and each other. However, Business Insider seems baffled: “What’s more astounding is that NaturallyCurly says it was profitable and cash-flow positive last year.”
By the way, this is not the first round of funding for the site (really four sites), who obtained $1.2 million in the second round, after a $2 million initial investment. It’s an established business – and a profitable one.
According to the company, a global consumer packaged goods brand is sponsoring the launch of their mobile app. With a million unique visits to the sites each month, clear tie-ins for product sales, brand sponsorships, and local business promotion, Naturally Curly Network (while not helpful to my stick-straight head), presents a clear value proposition to its investors.
In the US, hair salons alone generate $19 billion in consumer spending; personal care products are a $40 billion industry, of which hair care products make up approximately a quarter of that market. This start-up, admittedly, is aimed at people with curly, kinky and wavy hair, but that’s not a small population – Naturally Curly claims it’s more than half of Americans. Products for curly hair clearly sell – as evidenced by the empty spaces left by the few options that are chronically understocked at my local drugstore.
And it’s not simply women who struggle with styling and caring for curly hair, but men and women of a variety of ethnicities and hair types. Retail sales of ethnic health and personal care products in the US are about $1.5 billion – but have you ever seen the ‘ethnic’ section of the hair care aisle at your local drugstore? It’s usually at the end of the aisle, near the floor. So in this case, we’re not just leaving money on the table by mocking investment in a service that could connect people to products and services in a multi-billion dollar consumer sector, we’re literally leaving it on the floor.
There are a few brands and businesses who aren’t going to leave that money on the table, and investors and entrepreneurs should take note. If large companies see the potential in products and services for women and other under-served communities, then there is serious opportunity for start-ups who can, theoretically, move more quickly and be more responsive than their much larger, older cousins.
I spoke at a TIAA-CREF Forum event in April (The CMO, CTO and COO of TIAA-CREF, a retirement and financial services company, are women). The keynote speaker at the event was Joseph Coughlin, head of the MIT AgeLab. He spoke engagingly and at length about the rise of the 50+ woman in America: she starts more businesses, controls more consumer spending, engages online more than her husband. Women don’t retire – at least not the way men do. In the recent recession, women lost jobs at a slower rate than men (though they now appear to be regaining jobs at a slower rate, too). And TIAA-CREF, rightly, sees this as a huge business opportunity.
So congratulations to the start-ups, founded by women, who are finding responsive customers and investors and building successful businesses serving women and other under-served communities. We need more investors – and the business press – to take their market segments and their customers seriously. But wouldn’t it also be amazing if real estate, finance, automotive, technology, business-to-business were areas that investors feel are ‘where the female perspective is … vital’?
And what would it take to get there?