Gotham Gal

Question of the week #12

I've noticed women that receive angel and VC funding often have MBAs from Ivy League schools (Or male co-founders). Have you noticed this trend? If so, why do women need the Ivy stamp of approval when the same doesn't seem true for men?

This is a really interesting question.  There is no doubt there appears to be a theme in many of the Women Entrepreneur of the Week posts that I have written over the past few years. Many of these women have their MBA's from a roster of impressive schools. 

I believe there are a few parts to this answer.  Let's begin with "have you noticed a trend".  Many of the MBA programs are teaching entrepreneurship as part of the curriculum so it is not surprising that many graduates find themselves moving in an entrepreneurial direction post-graduation.  Many of those graduates start working on their business plans while in school.  They have incredible access to research and people to really flush out their ideas before graduation.  So perhaps it is a trend but I see it as a good thing for women and the economy.  Many of these business models might just become good solid life style businesses while others become something bigger.

Are move women receiving funding because they want to an Ivy League school?  I don't think so I just think there are more out there in the marketplace so the odds are more will get funded.  Growing your business from scratch is like getting a MBA.  You learn to grow a business through trial and error versus a classroom environment. 

Are more women getting funded with a male co-founder?  I am not so sure about that either.  I am a big believer that gender balance at the co-founder level statistically have a better chance for success.  When people are coming from different thought processes as most men and women are is a very good thing for a partnership. 

Personally I do not believe that going to an Ivy league school or getting a MBA from any school is a stamp of approval for anyone starting a business.  There is no doubt that many super smart people get MBAs but that is no the end all be all.  People go to business school for a variety of reasons.  They are trying to pivot their career, they are not getting the type of jobs they want when they graduate from college, they are looking to educate themselves in a different environment before embarking on their business, etc. 

It might look like a trend but I just think there are a lot of people with MBAs because the job market was so weak that many college graduates continued on to get their MBA after being in jobs that didn't rock their boat and felt that going to graduate school would help them enter the work world at a different level.  The curriculum is geared towards entrepreneurship so many ended up trying to start their own thing.  More MBAs starting companies in turn has more MBAs getting funded. 

Investing in what you know

I have been starting to hear from many women who are really beginning to think about investing in start-ups, particularly women entrepreneurs.  More and more women have created capital that allows them to think about taking a portion of their wealth and putting it to use as an angel investor. 

I had heard from many women who have said they aren't sure about being an angel investor because they don't know anything about it.  Once we begin to speak about a particular business that they are familiar with it is apparent to them they actually know a lot.  They might not know the particulars about a legal document and the difference between preferred and common stock but that can be learned.  What can't be learned is the years of experience they have had about a parrticular vertical where they have been involved with things that work and things that don't.  That is valuable knowledge to pass on. 

I had lunch this week with two of my favorite people.  One of them is someone I admire and truly look up to.  She told us a story that has really stuck with me.  About 20 years ago she had inherited some money when her mother died.  She wanted to take that money and invest it properly.  She went and spoke to a variety of men that she knew and asked them how she should invest the cash.  Each of them said basically the same thing.  Don't worry about it, I can put it in a fund for you or I can diversify it into a few things but that is not what she wanted.  She really wanted to invest her money in something that she could understand and watch grow.  She wanted to be involved. 

One day she walked into a bank in her neighborhood and sat down with a young man who gave her the best advice.  I knew exactly what the advice was before she said it.  He asked her what does she know best.  What she knows is art.  She was an incredibly successful art dealer and has an eye for talent.  His advice was invest in what you know.  So she did.  She took 75% of the cash and put it into art.  She took the other 25% and put it into something safe like bonds. 

Fast forward 20 years, she invested heavily in one particular artist that she believed in.  She now has the worlds most important collection of this artists work and it is worth a small fortune.  The return she could make on that art if she chose to sell it today is more significant than anything she could have done with her cash.  What is more important it she enjoyed the process and was part of it.  I am pretty sure she would not have had the same determination and joy putting her money into the stock market. 

So my advice to people who are thinking of taking a piece of their capital and putting it to work in start-ups, put that money to work in start-ups that you understand.  Your knowledge is valuable and you will absolutely enjoy the process.  It is mentoring at a completely different level.  It is rewarding for both sides of the table, you and the entrepreneur. 

AWE, Alliance of Women Entrepreneurs

I was invited down to Philadelphia to speak at the Alliance of Women Entrepreneurs annual gala.  I took the train down to begin the day at lunch.  I met with Jane Hollingsworth, the President of AWE and Barbara Schilberg, CEO of BioAdvance who was being honored that night and a handful of other impressive women.  We sat around and discussed our businesses and AWE. 

In the afternoon I got to sit down with the group of women entrepreneurs who are the 2012 fellows that AWE has chosen including the fellows from last year.  Each are doing something completely different so the only constant is that they are all women entrepreneurs.  Life Science is very strong in Philadelphia so there was a bent towards that.  Yet there is always a constant in regards to how women tend to operate. 

One woman spoke of her company, a non-profit.  She had spent four months getting a meeting with a guy who ran an incubator as a volunteer and got him to merge with her.  Changed the name of the company, started getting investors but after all that leadership found herself not being the person who was the face of the organization but the guy who merged into her company.  Through AWE she is going to get support and advice on how to lead going forward and that is a very good thing.

That evening there was a dinner and speeches.  I am pretty comfortable on the stage but need to get much better at just talking off a few bullet points.  I am not there yet.  What I wanted to talk about is not really what I ended up talking about. The past few weeks have been super tough being displaced and so I am a little out of sorts.  Lesson learned for me and I will get better at the speech giving going forward. It is mostly about confidence that I won't go off on a tangent and babble. 

Bottom line AWE is awesome.  Such an impressive group of women who have built companies, are building companies and more important a community that is supporting each other.  The next step is getting some of these women to start investing in each other.  I felt incredibly to be honored that I was asked to speak to this group. 

 

#Giving Tuesday

Who ever came up with the phrase Black Friday or Cyber Monday?  There is also #Giving Tuesday.  I really like this concept that hopefully will become part of the yearly landscape. 

#Giving Tuesday is about establishing a day where we all give back.  This site is established to raise awareness and charitable donations that make a difference.  The concept of #Giving Tuesday is also to educate individuals and communities across the country to give back.

Americans are some of the most charitable people in the world.  As a whole we believe that the right thing to do is to give back to others that are not as fortunate as we see ourselves.  #Giving Tuesday site provides one powerful platform for people to connect, donate and make an impact. 

Check it out and continue to remember #Giving Tuesday this year, next year and years to come. 

Wandy Yeap Hoh, MeeGenius!, Woman Entrepreneur

I met with an investor for breakfast a while back and she told me about Wandy.  Her daughter loves MeeGenius books and she happens to sit on the MeeGenius board.  I was intrigued that Wandy launched MeeGenius because she saw that her kids wanted to play with any device within their grasp.  Why not figure out how to disrupt the childrens book market with the concept of ebooks?  Filling a void in a womans life is many times the foundation of launching a business and that of course was just the beginning. 

Wandy grew up in Hong Kong and left when she was 9 years old.  Her father had a long history of working with the British Government as he was an entrepreneur.  When Hong Kong was returned to China, he felt it was time to leave.  He was working on more than a handful of businesses at that time.  The family moved to Cherry Hill, NJ just outside of Philadelphia.  Five years after landing in NJ, her father passed away. 

Her mother was also an entrepreneur who began opening a clothing store at age 20. Her Mom knew she had to build new a business in order to support the family and was prepared to do it.  At 14 she brought Wandy into NYC to attend a business meeting to make sure she got her points across in English.  She had gone to a large printing company to convince them to create a line of wedding invitations in Chinese.  Even when Wandy went to college out west her mother was amazed at what the yellow pages had done for the Chinese community out west and brought the concept to the east coast building a Chinese yellow pages for the tri-state area.  A real entrepreneur.

Wandy graduated from high school and went to UCLA for college.  She continued to read and write Chinese, Mandarin and Chaung-Chinese all through college.  She graduated in three years at 20 years old taking a job at Arthur Andersen as an economic financial consultant.  When she had just turned 21 she was put on her first project; the Orange county bankruptcy.  It was the first municipality to go bankrupt in CA.  As Wandy said, what was amazing is that the financial controller actually thought he did nothing wrong and that he had this magical equation that would result in amazing returns.  The first thing Wandy's group did (that was led by James Mercer) was sue every investment bank involved in the downfall of Orange country.  She started doing financial analyses to prove the case of what the banks did wrong which came down to toxic short term debt on long term securities.  She stayed for three years on this project and left when she got into Columbia Business school.

Wandy graduated from Columbia Business school in 1998.  She went to work for DLJ as an investment banking generalist.  A week after she started she found out that DLJ was sold to Credit Suisse.  She had interned there the summer before so she felt lucky that she was in the private equity side that survived.  A new business was being launched inside the merchant banking division which was a private equity fund focused on liquidity to LP interests.  She was employee number 2 in in launching this division and stayed through three fundraisings.  They went from zero to five billion under management in 5 years.  She decided to leave in 2005.

Wandy left for a few reasons.  The marketplace was getting crowded, she started to take an interest in a different investing direction and she had a young child at home.  She wanted to figure out something that she was passionate about where she would not have to travel as much.  Bottom line, she wanted to start her own business.

In 2008 ebooks started to go through the roof.  People began to think about what was going to happen to print.  Would the same thing happen to publishing world that happened to music?  Wandy began to spend time on line looking for interesting and educational books for her now two children.  She found nothing but mindless games.  She wanted to expose her kids to content through devices where she felt like they were learning and having fun at the same time.  We all know that kids can not read until they reach a certain age and reading to your kids is key but you can't do that 24/7.  How do you entertain your kids through learning in those down times.  That is the premise of MeeGenius. 

She founded MeeGenius in 2009.  The first year was mostly about research and development.  Originally they build the platform on flash and when she found out that the iPad was coming they had to make some serious decisions.  Wandy scrapped everything she had built and rebuilt it on HTML5 so they could be an app in the store when iPad launched.  It was a bold move but paid off.  They were featured several times in the Apple app store giving Mee Genius a first advantage. 

Fast forward there are over 1000 books in their catalog and 500 you can buy.  Their books sell from $1.99 to $5.99 but you have to sell a lot of books to really build a business.  They continue to think about several models.  Branded content is not interested in subscription models but she feels for this market that has to happen. 

There are two prongs to this market.  One is that once publishers see that you have a committed marketplace they become interested but all of their content is proprietary.  In essence the content is owned by the author so the process it tedious.  The other is that MeeGenius is acting as a publisher for authors.  The process is short compared to the old school publishing houses which can take up to 18-24 months just to get a book out the door and there are literally 4000 submissions for every single book that gets published.

Wandy says that MeeGenius is building a new publishing house.  There is a social piece, a discovery piece and a branded piece.  She is able to track what people are reading and push new content to them.  They are beginning to move into chapter books for their readers as the kids grow with them.  They want to amass a community to share their books with from teacher recommendations to their students to book clubs.  On line they can be more user specific and social which is why they are the number one downloaded app for children's books. 

Wandy has been growing MeeGenius as social media started to take off with the iPad and you can download their books on your phone and Android.  Being able to publish new authors content right on their site is an important piece for becoming a go-to place for parents and children to read and educate through books and games.  Smart woman building a smart marketplace. 

 

What's left after Hurricane Sandy

We are still not back in our place and probably won't be until December or possibly January.  Once we move back in everything will basically go back to normal.  For the people who have lost their homes in areas of New Jersey, Staten Island and Brooklyn life will never just go back to normal.  Their homes are simply gone.

When you see the photos of these homes you can see that there is nothing left to build on, no repairs to be done.  These homes will have to be bulldozed.  Then what?  Many of the people who owned these homes did not have flood insurance.  Where do they rebuild?  Do they rebuild homes in an area that could easily be destroyed by a hurricane again next year? 

I do not know what the worth of these homes prior to the hurricane but here is what I would propose.  Perhaps the Federal Government could come up with a proposal for each of those individual plots of lands and buy each owner out.  It would have to be enough money for each family to relocate easily.  Then take those large tracts of land that have now become part of the shoreline and create national parks.  Parks that can take the wrath of another Sandy.  Parks that can embrace Mother Nature without leaving costly clean-ups and devastation. 

I feel absolutely terrible for every individual who has been literally taken by surprise but pouring money into their properties does not make sense for anyone.  It is a time to think with our heads not with our hearts. 

Business Insider interview with Lindsay Campbell

Lindsay Campbell interviewed me at Business Insider.  We basically sat down and talked.  Here is the interview broken down in to three segments. 

 

Question of the week #11

A few people asked this question so that is why I am making it the question of the week. 

What role does gut instinct play in your investing decisions?

My gut plays a huge role in my investing decisions.  Certainly I want to understand the landscape, the competitors, the concept and the long term strategy.  Yet when a company is just starting to grow it is an evolution.  What you believe you will do or what will happen is not necessarily what will happen or what you will do.  The market is the ultimate answer on which direction a company will grow. 

I want to see numbers and plans but at the end of the day it is really my instincts around investing in someone and their company.  Is this something that I understand why it is gaining traction and why it is filling a void in a marketplace and is this the right person to build it.  That part is gut and to me that is the most important part. 

 

Happy Thanksgiving

There is just something about Thanksgiving.  I love the ridiculousness of the preparation for the meal.  The traditions of certain dishes.  The four day weekend in November.  The whole thing.

Every year we always say what we are thankful for as do many people sitting around their tables.  I am thankful for a litany of things but of course the number one thing is my family.  Watching our children find themselves as young adults makes me peer into myself more frequently.  That is a very good thing.

Wishing everyone who celebrates Thanksgiving a good holiday.  Enjoy the day, eat insane quantities of food ( not sure why we do that every year ) and spend a lot of time off line. 

 

Has the web become the next Main Street?

I continue to see countless ecommerce/fashion businesses show up in my box.  Some I have met with and others I have not.   What is interesting is many of these businesses are gaining some traction, not a huge amount but enough that they have built an audience around their individual models.  They are also making money. 

Certainly there has been some businesses in this vertical that have been explosive.  Most of those businesses have been funded for one reason or another and have had the ability to grow quickly and become big.  Just to name a few; Fab, Net-A-Porter, Shop-Bop. 

Is there room for others in each space? Sure but more than likely many of the businesses that are trying to take a small piece of each large sites marketshare will never get to be the size and scale of the leaders.  That doesn't mean that they are not successful.

Decades ago, on every small town or city street were Mom and Pop stores that carried products for the community.  One could be a womens clothing store, one could be the home furnishing stores, one could be just kids clothes or menswear.  Those businesses built loyal followers and provided a life style for the people that owned them.

Is the web becoming the next global Main street?  How many people have you talked to that tell you what their favorite website is that you have never even heard of.  Sometimes it is a brick and mortar store with a great site and sometimes it is just a blog that sells products.  It does not necessarily make sense for everyone to go out and raise money perhaps there are plenty of businesses who should create their own Mom and Pop store on the web and own it themselves.