Strategies: Sex, money and entrepreneurs

If Steve Jobs had been Stephanie Jobs, would anyone have ever heard of her?

That's the type of question the sex discrimination case involving one of the most prestigious venture capital firms in the world has sparked here in Silicon Valley, where I live. The case has brought renewed attention to the glaring lack of women in technology and the implication for women not only as venture capitalists, but as entrepreneurs.

In the case, Ellen Pao, a former junior partner of the venture firm Kleiner Perkins Caufield & Byers, sued the firm, alleging she was kept from the same opportunities as her male colleagues. She claims she was held to different standards and subjected to sexual harassment.

The issues underlying this trial go far beyond the details or outcome of this particular case or firm.

I have known many venture capitalists — both male and female. Eugene Kleiner was my dear friend and mentor. John Doerr, the current senior partner of Kleiner Perkins, wrote the foreword to the current edition of my book, Successful Business Plan: Secrets & Strategies. These are good people — people who've helped create hundreds of thousands of jobs.

But the women venture capitalists I have known have told me of a pervasive industry culture unwelcoming to women — both as VCs and entrepreneurs. Only a tiny percent of VC partners are women — 6% — and that percentage is down from 10% in 1999, according to a Babson University study.

With fewer women VCs on the funding side, there's less access for women entrepreneurs to the funds and support necessary to grow world-class companies. There are fewer women investors to seek entrepreneurs in their own networks.

A 2014 study conducted by scholars from Wharton, Harvard and MIT showed that women entrepreneurs had a significantly harder time getting funded by investors — even when the company and pitch were identical.

For years, VCs didn't see a need to bother with diversity. There's so much money —literally billions and billions — in the male-dominated industry, partners and investors have felt little reason to change. If you're getting stinking rich with only young white or Asian males, either as partners or as entrepreneurs you fund, why look for others of different genders, races or ages?

But that image of rolling in dough may not be the whole story. A 2012 study by the Ewing Marion Kauffman Foundation reported that venture capital funds did not perform as well as public stock markets. In other words, venture capital firms could be doing a much better job making money.

The lack of diversity is almost certainly a contributing factor for many of VC firms' bad bets. Increasingly, many investments are not so much about technology but about products that engage or serve consumers, many of whom are female. The lack of women around the table when making these decisions can hurt. Years ago, a VC friend of mine chose to invest in the supermarket delivery service Webvan. I was skeptical of the decision. "It's a $20 billion market," he told me. "Yes, but have you ever seen how people really shop?" I responded. In fact, neither he nor any of the members of his VC firm actually did regular grocery shopping.

It's also time for VC firms to also change the perception of what makes a spectacular VC or entrepreneur. The emphasis has been overwhelmingly on engineering skills. Many skills are equally valuable in building companies, including being able to identify great business ideas, build terrific teams, identify talent, and build strong networks.

Then there's the question of how we react to personality traits of men versus women, bringing us back to the question of whether Stephanie Jobs would have had the same opportunities if she were as abrasive as Steve Jobs was reported to be.

Four of us were having this discussion the other night — two men, two women. "Sure, she'd be treated the same if she was as talented and innovative as Steve," said the men.

"No way," said the women. "She would have been seen as obnoxious."

The only way we're going to have more great entrepreneurs is when we value the obnoxious — and the easygoing — women as much as the men.

Among Rhonda Abrams' recent books is the 6th edition ofSuccessful Business Plan: Secrets & Strategies. Register for her free newsletter at PlanningShop.com. Twitter:@RhondaAbrams.