An All-Female Board Needs to Be as Unremarkable as an All-Male One
HBO's hit sitcom Silicon Valley is full of tech-culture parody and hilariously disastrous business decisions. The fictional, comical startup Pied Piper has a frat house aesthetic that demonstrates a very real, yet very serious problem: like 83 percent of venture-backed companies, it lacks even a single female founder.
It has been proven through compelling and meticulous research that companies are more profitable and make better business decisions when women are placed in leadership roles. So, why are finance and tech startups so far behind on such an obvious win-win? How does an industry like fintech, with its drive toward efficiency and profitability, continue to ignore the obvious benefits of gender-balanced leadership?
Combatting the "mirror-tocracy"
At least some inequality women face in the financial and tech space is the result of a "mirror-tocracy" -- referring to the tendencies of companies predominately led by white males to continue to invest in others that look like them. In-group biases, an unavoidable part of the human condition, make us more at ease with the people who most resemble us and risk-aversion pushes us toward the types of businesses we know best. It is this narrow focus of information and bias which causes an unequal distribution of financing. Machine learning and other data-driven selection methods democratize access to capital and opportunity, as demonstrated by increased rates of approval once human bias is removed.
Bias-blind tools and technologies offer unprecedented potential to democratize access to products and services. I feel a responsibility as a woman founder of a fintech company to promote policies in our workplaces as well as new products that will make an effective change for those who come after me. We should be proactively designing our systems and services to be as free of bias as possible, reducing the influence of in-group preferences to guide risk assessment and investment choices.
As we work toward removing irrelevant biases, we must also remember that decades of data, particularly those generated by institutional lending and government documents, include embedded disadvantages about women and minorities. Generations of limited credit and off-the-books earnings may make even excellent businesses appear more fragile or vulnerable than they are. The same techniques that allow services to target those who might benefit most from our services may further entrench historical mistreatment. Mortgage companies, for example, have been criticized for using Facebook's wealth of data -- including protected characteristics like race -- to pitch certain loans. Safeguards must be implemented to prevent continuing or retrenching biases in data-intensive decision environments.
Institutional solutions for pipeline problems
As we look toward progress, we must build equity and meritocracy into our own organizations as well. Discriminatory treatment of women in tech workplaces, both outright abuses and the more unconscious and benign inattention, creates disproportionate attrition, especially as women near the top levels of leadership. Diversity of viewpoints and backgrounds in leaders improve decision-making and outcomes in returns and asset management, and we can't afford to narrow the funnel of innovators before they can make the most difference.
Just 15.8 percent of venture-backed companies have a female founder and that number hasn't budged since 2012. Companies with women in top spots received just 2 percent of total VC dollars last year. Representation rates in finance are even more daunting. The rate of women leaders at the country's top banks is under 25 percent, and just 15 of the world's 800 banks have women as CEOs. Globally, women hold just one in five controlling board seats, creating a serious pipeline problem for the next generation of leaders.
Institutional policies that improve bias-driven disparities include transparency and meetings open to all, which provides the opportunity for all employees to engage in decision-making and policy setting. Diligent documentation provides groundwork for a meritocracy driven by data: Document and celebrate your staff's key competencies and reward them accordingly. I'm not suggesting gender is the sole prerequisite to attain a leadership role in a company. Trust me, women want to earn their positions. The proverbial banking boardroom must do better and provide bias-free opportunities so everyone can prove their value objectively, particularly those typically overlooked.
Signals of success
An increasing number of early stage funds have prioritized lending to companies with female founders, including MergeLane, Fierce Capital, Felicis and the Female Founders Fund. Support and networking fora like SheWorx, Project Mentor and Watermark are providing mentorship and communities for women in leadership. A new track called Rise Up at Money 20/20, the largest fintech conference in the world, seeks to address gender imbalances in financial services and fintech. My own experience in male-dominated industries gives me confidence in the potential of women to excel and an incentive to normalize women in leadership.
What will success look like? Supreme Court Justice Ruth Bader Ginsburg, asked when there would be "enough" women on the Supreme Court, famously quipped, "When there are nine." Her example is a valuable one for women seeking to belong in fields where they've been underrepresented. Success in representation doesn't require that half of every bank board and C-suite be women, only that an all-female board is as unremarkable as an all-male one.
Myopic, clumsy all-male management may make for a comic romp in HBO's fictional Silicon Valley. The real-world consequences are much less entertaining. Advancing fintech's differentiators of innovation both requires and inevitably leads to the increasing visibility of women in leadership.