Big Opportunity for Financial Services and Products for Women

The world of finance is cold and uninspiring to women. Beyond the heart-warming photos of aging couples swanning into retirement along the beach, financial services and products have not been designed well to suit women. This article speaks to some new approaches to court women in ways that suit them, i.e., creating learning and networking environments that are not "the pink and shrink" style of past efforts.

I've also been looking for financial products that speak more specifically to women's values around holding up "half the sky". In the area of mutual funds, I've found just one mutual fund that is focused on women's leadership (many CSR funds include diversity and positive corporate policies that affect women) called the PAX women's fund. From the poor financial returns, it appears that the managers were more pioneer than performance-driven. I think there's also a huge opportunity here. After all, if there are affinity funds for Lutherans to invest together, there's likely a market for women to do the same, at market returns.

Launching a Fund for Bay Area Women Angels

I am launching a small seed stage fund with Julie Chin for SF Bay Area women angels. We will invest in Bay Area technology companies and will not have a gender lens on the equity of the founding team. This is a small group of well-connected visionary women with backgrounds in engineering, design, corporate development, business development, marketing, and PR, from the leading technology companies (Google, Facebook, LinkedIn, Twitter, Zynga) and accomplished start-up entrepreneurs and venture capital investors. We are giving preference to women who are excited to add value to companies through strategic advice and introductions. We believe these key members of the start-up ecosystem will deliver superior returns through their grasp of the future direction of technology. We also believe that women's different approaches to investing, ie, systems thinking, impact orientation and investors as consumer (ie, don't need to go home and ask the spouse to "get" it) will result in top returns. Let me know of any women angels that we should be engaging.

Why I Invested in the Icebreak

I recently invested in the Icebreak.com, an Internet service that allows couples to improve their relationship through a series of weekly ratings and thought-provoking questions.

1. I think the overall concept and market opportunity are huge. And, so far there are no clear leaders in the market. Women are the target market and women have an infinite amount of interest, perhaps even an existential level of interest, in their primary relationship. So, the service will have a strong level of engagement. Men are the tag-along audience and as Dave McClure said, "the Icebreak will help husbands get out of the doghouse and get laid". The relationship self-help market is enormous and the Icebreak can take relationships into the world of "the Quantified Self". I also think the next phase of the web will move up Maslow's hierarchy from stuff to self-actualization and this service fits nicely into that trend.

2. The co-founders Christina Brodbeck and Dwipal Desai are a great duo and they are creating a great team. They were both on the founding team of Youtube and bring lots of UI and engineering experience.

3. They have a clear and credible revenue model. Additionally, as they gain traction and engagement, they are a great acquisition target.

Lastly, for me, as a woman investor, I love to see women co-founders target women as consumers, and even better, targeting women at their very core.

Why Homophily Matters in Investing

According to Wikipedia, homophily (i.e., "love of the same") is the tendency of individuals to associate and bond with similar others. The presence of homophily has been discovered in a vast array of network studies. Within their extensive review paper, sociologists McPherson, Smith-Lovin and Cook (2001) cite over one hundred studies that have observed homophily in some form or another. These include age, gender, class, organizational role, and so forth.

Homophily matters for investing in start-ups, too. Women entrepreneurs get 15% of angel investments and also represent 15% of angels. Likewise, women entrepeneurs receive 6-10% of venture investments and represent 7% of venture capital investors.

When I see business plans for products or services that I can't see using, it's harder for me to really believe in its potential for traction.

I went to the Game Developer's Conference a couple weeks ago and met several game developers, who all proudly showed me their latest game on their iphones. The men showed me casual games themed with toy canonns and monsters and the women showed me carbon-eating sprites and earnest children's games. While I loved the energy of each of the game developers that showed me their games, I was more interested in the potential for the games that my niece likes to play. And, in the end, it's women who are the buyers in casual gaming.

Focus on Women Consumers = the New Social Venture Capital

The central reasons to focus on women as your primary consumer are only growing. First, they are the dominant consumer in the US in almost all categories (averaging over 80% across categories). In addition, they are more profitable consumers because women have greater loyalty and a greater tendency to be the source of referrals. This viral benefit is now being amplified by women's larger presence in social networking, as discussed in this article by Aileen Lee.

Another interesting advantage is women's social values. According to Marti Barletta's fabulous book "Marketing to Women" (which I've discussed in earlier posts), women buy into cause marketing at higher rates than men, 77% to 64%. Women care more about a corporate halo, ie, companies that care about the environment, community charities, etc and spend accordingly. And, 85% of women list "Make the world a better place" as their primary aspiration. When companies really listen to the extent of women's altruism, they will, by definition, provide products and services that "make the world a better place."

Why Women Rule the Internet

Here's an article in Techcrunch by Aileen Lee at Kleiner Perkins that fabulously summarizes the data on women's dominance in online consumption and social behaviors. Interestingly, the initial comments on this article bemoan Lee's observations as some sort of tiresome and perhaps icky feminism.

This misses the point. Lee is making the business case that women's behavior is the key to customer acquisition and revenue. She suggests that companies spend more time making sure their female customers are happy with product/service offerings. This all seems obvious, but given the comment thread of resistance, it may be still be a winning and differentiating strategy.

Design and the “Extreme User”

I’m curious about how the world would be different if women held half of the positions in leadership, design, product management, politics, etc. Let’s imagine that this had been the case for the past 50 years or take any number of years over 25, ie, a generation. It’s a thought experiment and I think it’s one that would lead to incredible revelations on how the world is designed, at times, by default, mostly because women weren’t there. If one were to unpeel these layers, I think one would find a bonanza of unexpected and potentially huge business opportunities.

On some level, the conversation I want to have is not even about gender. It’s about conceiving and designing systems, products and services for the more extreme user and thereby pleasing everyone. A great example is the OXO brand of kitchenware which was designed for consumers with arthritic hands. It turns out that everybody likes easy to use can-openers and the brand expanded far beyond its original intended niche user. This was such an epiphany that I wondered what if everything were made for the extreme user, whoever that might be in each case?

Decision-making theory suggests that women are often the extreme user, because they have more criteria for a product or service than men. In a classic example used by Marti Barletta in her book “Marketing to Women”, men considered 2 or 3 factors when selecting a cell phone. Women may share the same 2-3 top criteria, but during their “helical” decision-making process, they might add 4 more criteria and additionally want to have the object in the color blue.

Any other examples come to mind?