Stilettos Invade Startups as Niche-Shopping Sites Attract Women
Alexis Maybank, co-founder of the shopping website Gilt Groupe Inc., says her 5-inch stilettos are meant to send a message: being feminine and starting a technology company aren’t mutually exclusive.
She and Gilt co-founder Alexandra Wilson are 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. SharesPost Inc., a site that tracks privately held companies, values Gilt at $2.4 billion, making it a leader among startups founded by women.
The rise of daily-deal services and other sites aimed at shopping niches are creating opportunities for female entrepreneurs, who are better represented in the retail and fashion industries than in Silicon Valley startups. Companies also are recognizing that women account for the majority of Web surfers and Internet shoppers, giving female executives an edge in gauging consumers and filtering what products to offer.
“Women are driving most of the consumer activity on the Web today,” said Aileen Lee, a venture capitalist at Kleiner Perkins Caufield & Byers, who devotes about half of her investment portfolio to startups founded by females. “They’re the majority of users on Facebook, on Twitter, on Zynga. That gives websites that figure out how to harness social media early on an advantage because they can grow more quickly.”
Women made up 56 percent of the 153.6 million U.S. users who visited social-networking sites or blogs in May, according to Nielsen Co. They accounted for 57 percent of visitors to online retail sites such as Amazon.com, ShopAtHome.com and Walmart.com, according to Nielsen.
Rent the Runway
Niche e-commerce sites founded by women include One Kings Lane, which focuses on designer décor; Plum District, a daily- deal service for moms; and Rent the Runway Inc., a website that rents high-fashion gowns and other couture for 90 percent off.
The sites represent an enclave of women in an industry dominated by men. While women account for half the workforce, they hold 25 percent of technology jobs, White House senior adviser Valerie Jarrett said in April at an event devoted to the issue. Only 8 percent of new technology businesses are started by women, and 5 percent of capital investment goes to female- owned companies, she said.
There are only a few high-profile women in Silicon Valley, such as Facebook Inc. Chief Operating Officer Sheryl Sandberg or Yahoo! Inc. Chief Executive Officer Carol Bartz. And several of the largest technology companies, including Adobe Systems Inc., have no women on their boards.
Social media and e-commerce companies that fail to cater to females risk losing out on a demographic that controlled $12 trillion of the $18.4 trillion in consumer spending, according to a 2009 estimate from Boston Consulting Group.
At Gilt Groupe, a members-only shopping site based in New York, women account for almost three-quarters of customers. Sales more than doubled in 2010, reaching about $400 million, according to Jennifer Miller, a Gilt spokeswoman. Gilt posted revenue of $170 million in 2009 and $25 million in 2008.
The influx of women into the technology industry in the next five years will outpace the rate over the past decade, said Amy Millman, president of Springboard Enterprises Inc., which has helped more than 400 companies led by females raise more than $5 billion in capital, according to its website. Those women will be younger, fresh from incubator programs aimed at students in science and business, she said.
While there are more women joining companies, some don’t take on the role of CEO, or they cede the top job after the business gets bigger. There are typically more male candidates who have run big companies or handled initial public offerings, and companies may seek to add this kind of experience as they grow.
That was the case with Gilt, which is run by Kevin Ryan, the former CEO of DoubleClick Inc., now part of Google Inc. (GOOG) Maybank and Wilson had served as co-CEOs in the first year, though they made a decision in the beginning to step aside after the company reached $100 million in revenue. Ryan had taken DoubleClick public -- something that’s “clearly a future possibility” for Gilt, Maybank said.
Zipcar Inc., the car-sharing business founded by Antje Danielson and Robin Chase, followed a similar path. Now a publicly held company, it’s led by Scott Griffith, a veteran of companies such as Boeing Co.
Of the women Springboard works with, about two-thirds have yet to serve as founders or CEOs, Millman said. Still, a shift into more influential positions is inevitable, she said.
“You’re beginning to see a kind of maturity,” she said. “This is really recent.”
In the past year, Founder Labs, an organization that helps entrepreneurs advance from the idea phase to the launch phase, has seen a fivefold increase in inquiries from women asking how to start a business, according to founder Shaherose Charania. The organization began telling stories of female entrepreneurs on its website, Women 2.0, about two months ago. Internet traffic has increased 100 percent as like-minded women seek role models, she said.
“I can’t relate to Mark Zuckerberg, and I can’t relate to Steve Jobs,” she said, referring to the co-founders and CEOs of Facebook Inc. and Apple Inc, respectively. “Having a community where people look like you -- seeing other role models implicitly tells someone they can do it.”
Women also are taking advantage of technological advances that have made scaling a startup more cost-efficient and quickly profitable, Kleiner Perkins’s Lee said. That means it’s easier for entrepreneurs without deep-pocketed backers to succeed.
“We’re seeing a good number of companies that will generate $5 million to $10 million in revenue within their first anniversary of launching the site,” Charania said.
This new crop of entrepreneurs shouldn’t play down their femininity to succeed, said Gilt’s Maybank, 36. She takes inspiration from Meg Whitman, former CEO of EBay Inc., who adopted more of a “motherly” leadership style, Maybank said.
“Often when you think of women in positions of power, they’ve got to be bulldogs,” Maybank said. “I don’t try to appear less feminine. I allow that to be something that helps me and marks who I am, not something that’s a liability.”
Many of the new sites are better at recreating the sense of discovery that women feel while wandering through a boutique, said Jules Pieri, founder of Daily Grommet, which features hand- picked manufacturers with compelling back stories. Search- focused e-commerce sites don’t deliver that, she said.
“Retail cannot be algorithmically driven,” Pieri said. “Great retail is all about that sense of adventure and discovery. The next wave on this space is really rich social interaction, using video, using media, to achieve that.”
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