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For women-led startup valuations, 2019 has been a great year. The number of women-founded unicorns increased this year after Emily Weiss’s Glossier, Jennifer Hyman’s Rent the Runway, and Steph Korey’s Away achieved unicorn status, a marker of startup success.
As of May 2018, of 130 venture capital-backed unicorns in the United States, 14 had a female co-founder according to PitchBook. Unicorns are U.S.-based software companies started since 2003 and valued at over $1 billion by public or private market investors.
This week All Raise, a non-profit startup dedicated to addressing and improving the lack of diversity and inclusion in the tech industry, hosted an inaugural “How She Built This” fireside chat featuring Katrina Lake, founder and CEO of unicorn Stitch Fix, a fashion-based subscription service. Lake is the youngest woman ever to take a company public, and the only woman in 2017 to lead an initial public offering in technology. Below I highlight three key takeaways from the conversation:
1. Capital Efficiency
Raising venture capital is difficult, but especially so for women founders. Women received a mere 12% of US venture dollars in 2018. To put that into perspective, all 2018 female founders put together received $10 billion less in funding than one e-cigarette company, Juul, took in by itself according to Fortune.
The gender gap doesn’t just exist in venture dollars raised, but also in founder equity. A recent study about the effect of gender on equity by Carta and investment collective #Angels found that women make up 13% of founders, but hold only 6% of founder equity. The study also found that female founders own just 39 cents for every dollar of equity male founders own.
Lake shared with the All Raise audience of women founders and funders that she thought raising both private and public rounds were difficult. “Some entrepreneurs are successful just because they’re good at raising money…If you have the opportunity to raise a lot of money, do it. Especially if you’re in a super competitive environment,” she said.
She believes her strengths include building company culture, hiring top talent, and finding product-market fit. “I’m not good at raising money. I was capital efficient because I had to be. I constantly had to think, ‘How could I make more with less?’” she said. Founders should focus on what they’re trying to prove, and how to prove it cheaply. “We proved a lot of things at Stitch Fix with Survey Monkey and Paypal,” she shared.
2. Scaling People
Lake hired people who were excited about what Stitch Fix was building, and had seen the problems they were facing before. She believes it’s vital your employees have growth potential. If your startup is growing 120% year over year, your employees need to be growing 120% year over year as well.
Some people she hired were not useful for packing boxes or using excel even if that was the most pressing priority of the day, but she was betting they would be useful in the future as the business grew.
“I had only managed one intern before starting Stitch Fix. My direct report team taught me how to scale my management ability,” Lake said. Another strategy she shared included keeping a Google document of people in different cities around the world she wanted to meet who could add value to Stitch Fix or herself personally.
To build a great company culture, Lake believes founders need a framework and to live and breath their company values every day. “Strip the word ‘culture fit’ out of everyone’s vocabulary. Culture fit is hiring everyone that looks like me, and is the antidote to diversity. Instead, look for people who are ‘culture adds,’” she shared.
3. Authentic Leadership
Lake wants to change the societal perception of what an entrepreneur looks like. She shared that she had no entrepreneurial influence in her life growing up. At the start of Stitch Fix, Lake wanted to be known as a tech CEO, not a female CEO. “My perspective has changed on this because people need to know leaders don’t all look like white males,” she said.
The week leading up to Stitch Fix’s IPO was horrible according to Lake. She had brought her five-year-old son on her roadshow and wasn’t sleeping. She decided to bring her son on stage during the IPO sharing, “I wanted to show what an authentic leader looked like.” She believes the main currency of leaders today is authenticity and vulnerability. This leads to trust and strong relationships with employees. Women entrepreneurs need to be leaders in their own authentic way.
Lake tries to normalize being a working mother. She did Stitch Fix’s IPO between having two kids and took a full 16-week maternity leave for both kids. Every day at work she tries to normalize micro-moments like pumping or needing to pick your kids up from school. “I’ll say in a meeting in front of everyone, ‘I need to leave early because I have to pump.’ or ‘I’m going to go pick my kids up from school now.’ I want this behavior to become normalized so that other women know it’s okay to do the same,” Lake said.
Lake shared that someone once contacted her after a talk and said, “Stop saying like. Saying like all of the time makes you sound young and inexperienced.” Lake responded, “I am young and inexperienced.” Lake said she realized she must keep saying ‘like’ when speaking publicly. “I need to own this. Saying like doesn’t make me any less great of a leader,” she said.
Like many other women entrepreneurs, Lake shared that she was often underestimated as a founder and leader. “You learn grit and gain motivation when people constantly don’t believe in you. That’s a secret weapon,” she said to the awe-struck audience of women.
June 1, 2019 at 03:58PM
Forbes – Entrepreneurs