Wednesday Wisdom from Susan Lyne, President of BBG Ventures
We’re halfway through the week, and it’s time for a boost of inspiration to keep us going. Our #WednesdayWisdom blog series taps into the minds of industry leaders and disruptive visionaries who are working to build the future of entrepreneurship.
We sat down with Susan Lyne to discuss the evolution of the tech industry, a woman’s buying power, and the challenges women face when pitching male investors. Susan is the President at BBG Ventures, an early stage fund focused on consumer internet and mobile startups with at least one female founder.
What originally sparked your interest in female consumers?
When I started working in media back in the mid 70’s, no one talked about data – everything we did was by instinct: what do we think people want to read about? Will this cover line be a magnet for readers? But it didn’t take me long to realize that women bought many more magazines than men did, and that you could grow your circulation by talking to them.
When I went to ABC the conventional wisdom was that women would watch shows made for men, but men wouldn’t watch shows for women – so everyone was chasing the next Law and Order, the next CSI. I walked into a meeting one day and heard the woman running our comedy department bemoaning the fact that Sex and the City was going off the air. She said, “all my shows are gone,” meaning shows like Ally McBeal, Melrose Place, SITC, that women gathered to watch together and talked about the next day. It was a wakeup call for me – and we decided to buck the conventional wisdom and go after the next “girl” show. Out of that development season came Desperate Housewives, Grey’s Anatomy and The Bachelor.
I went from ABC to Martha Stewart Living Omnimedia to Gilt.com, companies that delivered something unique to women and in the process built strong brands and loyal followings. Women make the final decision on 85% of all consumer purchases – and they’re increasingly the early adopter and power user of new tech platforms and services. Women should spark everyone’s interest!
Where did the inspiration for BBG Ventures begin?
It goes back to my time at Gilt. I joined the company in 2008, the year after the iPhone launched. We didn’t realize it at the time, but that was a transformational moment for entrepreneurs because it put a computer in everyone’s pocket. NYC was starting to emerge as a tech center, and the city attracted a different kind of female founder – women who were reimagining every aspect of home and work life to be more efficient, more productive, or just more fun. That first wave included companies like LearnVest, BirchBox, Paperless Post and, of course, Rent the Runway. Raising money was a challenge because 95% of venture investors are men. So before they could get to the meat of their pitch, they had to explain how women think about their closets, or why we’re always on the hunt for the next great beauty product. I thought: let’s back the best of these female founders, who inherently understand the end user – what she needs, what she wants, what will delight her.
At BBG Ventures you believe the greatest untapped opportunity for venture capital lies in backing women. Why women?
A few reasons: first, women are the dominant consumers – and not just in the obvious areas like apparel and food, but insurance, computers, cars, home purchases, medical care. We’re also the power users of most new consumer tech platforms and services. So it makes good sense to back entrepreneurs who know that end user, especially since the majority of venture investors aren’t hunting there. Pattern recognition leads VCs to get more excited by someone who looks like Mark Zuckerberg. That’s an advantage for those of us who are focused on women.
From your experience, what does having at least one female founder do for a company?
At consumer-facing companies, it ensures that there is someone in a decision-making position who really gets how and why women will use the product. We invested in a company called Hop, Skip, Drive – a ride service for kids founded by 3 working moms in LA. When we made the investment, there was a better-funded competitor in SF. That founder skimped on background checks and spent his money instead on marketing. HSD knew the #1 issue for customers (moms) would be safety; so from day one they fingerprinted every driver. Two years later, the SF company has folded, and HSD is thriving.
It’s still early days but there’s also evidence that teams with a female founder have better outcomes. First Round, one of the oldest early-stage VCs in NYC, did a look-back at their first 10 years of investing and discovered that companies with a female founder performed 63% better than all-male teams. It shouldn’t be surprising: research has consistently shown that diverse teams drive better results because they’re more likely to challenge assumptions. That forces you to focus more on facts and to process information more carefully – and gets you to better solutions.
When you hear a pitch, which is most likely to convince you to invest: the person, the product, or the revenue potential?
The ultimate gating factor is always going to be the person: do we believe that this founder can take the product all the way? No business, no matter how successful it may look from outside, has gotten there without serious bumps in the road. The founder is going to face days when nothing is working. She needs tenacity and grace; conviction and a willingness to try something new. It’s a tall order.
Why do you think it’s taken so long for people to focus their investment strategies on female-led business ventures?
I think it goes back to the way the tech industry has evolved. I read an interview with Marc Andreeson a few years ago where he talked about the origins of the Silicon Valley startup scene, when the customer for your product was a big tech company. Founders came out of engineering programs or CS programs. It wasn’t until the focus shifted from enterprise to consumer that women began starting companies in large numbers. Add to that the fact that less than 5% of venture partners are female and you start to see why it’s been an uphill battle.
What do you see for the future of women in business?
I see blue sky ahead. We just need a few big wins. Once we have a few examples of women-led companies successfully going public, or being acquired for billions of dollars, it will put to rest the rest the silly arguments about whether women can compete in this marketplace. And you’ll see a lot more venture capital chasing female founders. We’re close to that moment.
You have said that your biggest wins come from listening to, building for, and betting on women. Can you share some of the most impactful wins with us, and what those experiences were like?
(Answered this in #1)
What’s your advice to women who are asking themselves whether their product is worthy of pursuing venture funding?Ask yourself whether your product solves a real problem faced by millions of people (the market size); whether people or companies will pay to use it (your business model); and whether you are the first-mover or have proprietary technology (competitive advantage). If the answer to those things is yes, start working on a deck!
For an extra dose of #WednesdayWisdom, read our interview with Ann Shoket, author of The Big Life: Embrace the Mess, Work Your Side Hustle, Find a Monumental Relationship, and Become the Badass Babe You Were Meant to Be, available in stores everywhere March 14, 2017, and former editor-in-chief of Seventeen Magazine. This post first ran on The Shift in the “Shifting Perspectives” series, where smart women share helpful life advice and real talk.