Monthly Archives: November 2013

Welcome To The Unicorn Club: Learning From Billion-Dollar Startups

Posted Nov 2, 2013 by Aileen Lee

Many entrepreneurs, and the venture investors who back them, seek to build billion-dollar companies.

Why do investors seem to care about “billion dollar exits”? Historically, top venture funds have driven returns from their ownership in just a few companies in a given fund of many companies. Plus, traditional venture funds have grown in size, requiring larger “exits” to deliver acceptable returns. For example – to return just the initial capital of a $400 million venture fund, that might mean needing to own 20 percent of two different $1 billion companies, or 20 percent of a $2 billion company when the company is acquired or goes public.

So, we wondered, as we’re a year into our new fund (which doesn’t need to back billion-dollar companies to succeed, but hey, we like to learn): how likely is it for a startup to achieve a billion-dollar valuation? Is there anything we can learn from the mega hits of the past decade, like FacebookLinkedIn and Workday?

To answer these questions, the Cowboy Ventures team built a dataset of U.S.-based tech companies started since January 2003 and most recently valued at $1 billion by private or public markets. We call it our “Learning Project,” and it’s ongoing.

With big caveats that 1) our data is based on publicly available sources, such as CrunchBase, LinkedIn, and Wikipedia, and 2) it is based on a snapshot in time, which has definite limitations, here is a summary of what we’ve learned, with more explanation following this list*:

Learnings to date about the “Unicorn Club”:

  1. We found 39 companies belong to what we call the “Unicorn Club” (by our definition, U.S.-based software companies started since 2003 and valued at over $1 billion by public or private market investors). That’s about .07 percent of venture-backed consumer and enterprise software startups.
  1. On average, four unicorns were born per year in the past decade, with Facebook being the breakout “super-unicorn” (worth >$100 billion). In each recent decade, 1-3 super unicorns have been born.
  1. Consumer-oriented unicorns have been more plentiful and created more value in aggregate, even excluding Facebook.
  1. But enterprise-oriented unicorns have become worth more on average, and raised much less private capital, delivering a higher return on private investment.
  1. Companies fall somewhat evenly into four major business models: consumer e-commerce, consumer audience, software-as-a-service, and enterprise software.
  1. It has taken seven-plus years on average before a “liquidity event” for companies, not including the third of our list that is still private. It’s a long journey beyond vesting periods.
  1. Inexperienced, twentysomething founders were an outlier. Companies with well-educated, thirtysomething co-founders who have history together have built the most successes
  1. The “big pivot” after starting with a different initial product is an outlier.
  1. San Francisco (not the Valley) now reigns as the home of unicorns.
  1. There is very little diversity among founders in the Unicorn Club.

Some deeper explanation and additional findings:

1) Welcome to the exclusive, 39-member Unicorn Club: the Top .07%

  • Figuring out the denominator to unicorn probability is hard. The NVCA says over 16,000 internet-related companies were funded since 2003; Mattermark says 12,291 in the past 2 years; and theCVR says 10-15,000 software companies are seeded each year. So let’s say 60,000 software and internet companies were funded in the past decade. That would mean .07 percent have become unicorns. Or, 1 in every 1,538.
  • Takeaway: it’s really hard, and highly unlikely, to build or invest in a billion dollar company. The tech news may make it seem like there’s a winner being born every minute — but the reality is,the odds are somewhere between catching a foul ball at an MLB game and being struck by lightning in one’s lifetime. Or, more than 100x harder than getting into Stanford.
  • That said, these 39 companies have shown it’s possible  – and they do offer a lot that can be learned from.


2) Facebook is the super-unicorn of the decade (by our definition, worth >$100B). Every major technology wave has given birth to one or more super-unicorns

  • Facebook is what we call a super-unicorn: it accounts for almost half of the $260 billion aggregate value of the companies on our list. (As such, we excluded them from analysis related to valuations or capital raised)
  • Prior decades have also given birth to tech super-unicorns. The 1990s gave birth to Google, currently worth nearly 3x Facebook; and Amazon, worth ~ $160 billion. The 1980’s: Cisco. The 1970s: Apple (currently the most valuable company in the world), Oracle, and Microsoft; and Intel was founded in the 1960s.
  • What do super-unicorns have in common? The 1960s marked the era of the semiconductor; the 1970s, the birth of the personal computer; the 1980s, a new networked world; the 1990s, the dawn of the modern Internet; and in the 2000s, new social networks were built.
  • Each major wave of technology innovation has given rise to one or more super-unicorns — companies that could change your life to work at or invest in, if you’re not lucky/genius enough to be a co-founder. This leads to more questions. What is the fundamental technology change of the next decade (mobile?); and will a new super-unicorn or two be born as a result?

Only four unicorns are born per year on average. But not all years have been as fertile:

  • The 38 companies on our list outside of Facebook are worth about $3.6 billion on average. This might feel like a letdown after reading about super-unicorns, but remember, startups generally start as ideas that most people think are crazy, dumb, or not that important (remember when people ridiculed Twitter as the place to share that you were eating a ham sandwich?). Only after many years and extraordinary good fortune, a few grow into unicorns, which is extremely rare and pretty awesome.
  • Unicorn founding was not front-end-loaded in the past decade. The best year was 2007 (8 of 36); the fewest were born in 2003, 2005 and 2008 (as far as we know today; there are none yet founded in 2011 to today). From this snapshot in time, it’s not clear whether the number of unicorns per year is changing over time.
  • It would be interesting to plot the trajectory of unicorns over time  — which become more valuable and which fall off the list — and to understand the list of potential unicorns-in-waiting, currently valued at <$1 billion. Hopefully for a future post.


3) Consumer-oriented companies have created the majority of value in the past decade

Venture investing into early-stage consumer tech companies has cooled significantly in the past year. But it’s worth realizing that:

  • Three consumer companies — Facebook, Google and Amazon — have been the super-unicorns of the past two decades.
  • There are more consumer-oriented than enterprise unicorns, and they have generated more than 60 percent of the aggregate value on our list outside of Facebook.
  • Our list likely seriously underestimates the value of consumer tech. Of the 14 still-private companies on our list, 85 percent are consumer-oriented (e.g.TwitterPinterestZulily). They should see a significant step up in value if/when a liquidity event occurs, increasing the aggregate value of the consumer unicorns.

4) Enterprise-oriented unicorns have delivered more value per private dollar invested

  • One reason why enterprise ventures seem so attractive right now: the average enterprise-oriented unicorn on our list raised on average $138 million in the private markets – and they are currently worth 26x their private capitalraised to date.
  • The companies that seriously improved this metric are NiciraSplunk andTableau, who all raised <$50 million in private markets and are worth $3.8 billion today on average.
  • Plus Workday, ServiceNow and FireEye who are currently worth >60x the private capital raised. Wow.
  • Contrary to conventional VC wisdom about enterprise companies requiring more early-stage capital, we didn’t see a difference in Series A dollars raised by enterprise versus consumer unicorns.

Consumer companies have delivered less value per private dollar invested

  • The consumer unicorns have raised $348 million on average, ~2.5x more private capital than enterprise unicorns; and they are worth about 11x the private capital raised.
  • Companies who raised lots of private money relative to their most recent valuation are FabGilt GroupeGrouponHomeAway and Zynga.
  • It may just take more capital to build a super successful consumer tech company in a “get big fast” world; and/or, founders and investors are guilty of over-capitalizing consumer Internet companies at too-high valuations in the past decade, driving lower returns for consumer tech investors.

5) Four primary business models drive the value and network effects help

  • We categorized companies into four business models, which share fairly equally in driving value in aggregate: 1) E-commerce: the consumer pays for goods or services (11 companies); 2) Audience: free for consumers, monetization through ads or leads (11 companies); 3) SaaS:Users pay (often via a “freemium” model) for cloud-based software (7 companies); and 4) Enterprise: Companies pay for larger scale software (10 companies).
  • None of the e-commerce companies on our list hold physical inventory as a key part of their business models. Despite that, e-commerce companies raised the most private dollars on average — delivering the lowest valuations vs capital raised, and likely driving the recent cool down in e-commerce investing.
  • Only four of the 38 companies are mobile-first. Not surprising, the iPhone was only launched in 2007 and the first Android device in 2008.
  • Another characteristic almost half of the companies on our list share: network effects. Network effects in the social age can help companies scale users dramatically, seriously reducing capital requirements (YouTube and Instagram) and/or increasing valuations quickly (Facebook).

6) It’s a marathon, not a sprint: it takes 7+ years to get to a “liquidity event”

  • It took seven years on average for 24 companies on our list to go public or be acquired, excluding extreme outliers YouTube and Instagram, both of which were acquired for over $1 billion in about two years since founding.
  • 14 of the companies on our list are still private, which will increase the average time to liquidity to eight-plus years.
  • Not surprisingly, enterprise companies tend to take about a year longer to see a liquidity event than consumer companies
  • Of the nine companies that have been acquired, the average valuation was $1.3 billion; likely a valuation sweet spot for acquirers to take them off the market before they become less affordable

7) The twentysomething inexperienced founder is an outlier, not the norm

  • The companies on our list were generally not founded by inexperienced, first-time entrepreneurs. The average age on our list of founders at founding is 34. Yes, the founders of Facebook were on average 20 when it was founded; but the founders of LinkedIn, the second-most valuable company on our list, were 36 on average; and the founders of Workday, the third-most valuable, were 52 years old on average.
  • Audience-driven companies like Facebook, Twitter and Tumblr have the youngest founders, with an average age at founding of 30 (seemingly eminent unicorn Snapchat will lower this average). SaaS and e-commerce founders averaged aged 35 and 36; enterprise software founders were 38 on average at founding.

Co-founders with years of history together have driven the most successes

  • A supermajority (35) of the unicorns on our list have chosen to blaze trails with more than one founder — with three co-founders on average. The role of co-founders varies from Co-CEOs (Workday) to technical co-founders who live in a different country ( Looking at co-founder equity stakes at liquidity might be another interesting way to look at founder status, which we have not done.
  • Ninety percent of co-founding teams comprise people who have years of history together, either from school or work; 60 percent have co-founders who worked together; and 46 percent who went to school together.
  • Teams that worked together have driven more value per company than those who went to school together.
  • Only four teams of co-founders didn’t have common work or school experience, but all had a common thread. Two were known and introduced by the investors at founding/funding; one team was friends in the local tech scene; and one team met while working on similar ideas.
  • That said, the four unicorns with sole founders (ServiceNow, FireEye, RetailMeNot, Tumblr — half enterprise, half consumer) have all had liquidity events and are worth more on average than companies with co-founders.


Most founding CEOs scale their companies for the long run. But not all founders stay for the whole journey

  • An impressive 76 percent of founding CEOs led their companies to a liquidity event, and 69 percent are still CEO of their company, many as public company CEOs. This says a lot about these founders in terms of their long-term vision, commitment and their capability to scale from almost nothing in terms of money, product, and people, to their current unicorn company status.
  • That said, 31 percent of companies did make a CEO change along the way; and those companies are worth more on average. One reason: about 40 percent of the enterprise companies made a CEO change (versus 25 percent of consumer companies). And all CEO changes prior to a liquidity event were at enterprise companies that added seasoned, “brand-name” leaders to their helms prior to being bought or going public.
  • Only half of the companies on our list show all original founders still working in the company. On average, 2 of 3 co-founders remain.

Not their first rodeo: founders have lots of startup and tech experience

  • Nearly 80 percent of unicorns had at least one co-founder who had previously founded a company of some sort. Some founders showed their entrepreneurial DNA as early as junior high. The list of prior startups co-founded spans failure and success; and from tutoring and bagel delivery companies, to PayPal and Twitter.
  • Only two companies were founded by leaders without prior experience working in tech/software; and only three of 38 did not have a technical co-founder on board (HomeAway and RetailMeNot, founded as industry rollups; and Box, founded in college).
  • The majority of founding CEOs, and 90 percent of enterprise CEOs have technical degrees from college.

An educational barbel: many “top 10 school grads” and dropouts

  • The vast majority of all co-founders went to selective universities (e.g. Cornell, Northwestern, University of Illinois).  And more than two-thirds of our list has at least one co-founder who graduated from a “top 10 school.”
  • Stanford leads the roster with an impressive one-third of the companies having at least one Stanford grad as a co-founder. Former Harvard students are co-founders in eight of 38 unicorns; Berkeley in five; and MIT grads in four of the 38 companies.
  • Conversely, eight companies had a college dropout as a co-founder. And three out of five of the most valuable companies (Facebook, Twitter and ServiceNow) on our list were or are led by college dropouts, although dropouts with tech-company experience, with the exception of Facebook.

8) The “big pivot” is also an outlier, especially for enterprise companies

  • Few companies are the result of a successful pivot. Nearly 90 percent of companies are working on their original product vision.
  • The four “pivots” after a different initial product were all in consumer companies (Groupon, Instagram, Pinterest and Fab).

9) The Bay Area, especially San Francisco, is home to the vast majority of unicorns

  • Probably not a surprise, but 27 of 39 on our list are based in the Bay Area. What might be a surprise is how much the center of gravity has moved to San Francisco from the Valley: 15 unicorns are headquartered in San Francisco; 11 are on the Peninsula; and one is in the East Bay.
  • New York City has emerged as the No. 2 city for unicorns, home to three. Seattle (2) and Austin (2) are the next most-concentrated cities for unicorns.

10) There is A LOT of opportunity to bring diversity into the founders club

  • Only two companies have female co-founders: Gilt Groupe and Fab, both consumer e-commerce. And no unicorns have female founding CEOs.
  • While there is some ethnic diversity on founding teams, the diversity of founders in the unicorn club is far from the diversity of college grads with relevant technical degrees. Feels like some important records to break.

So, what does this all mean?

For those aspiring to found, work at, or invest in future unicorns, it still means anything is possible. All these companies are technically outliers: they are the top .07 percent. As such, we don’t think this provides a unicorn-hunting investor checklist, i.e. 34-year-old male ex-PayPal-ers with Stanford degrees, one who founded a software startup in junior high, where should we sign?

That said, it surprised us how much the unicorn club has in common. In some cases, 90 percent in common, such as enterprise founder/CEOs with technical degrees; companies with 2+ co-founders who worked or went to school together; companies whose founders had prior tech startup experience; and whose founders were in their 30s or older.

It is also good to be reminded that most successful startups take a lot of time and commitment to break out. While vesting periods are usually four years, the most valuable startups will take at least eight years before a “liquidity event,” and most founders and CEOs will stay in their companies beyond such an event. Unicorns also tend to raise a lot of capital over time — way beyond the Series A. So these founding teams had the ability to share a compelling company vision over many years and rounds of fundraising, plus scale themselves and recruit teams, despite economic ups and downs.

We tip our hats to these 39 companies that have delighted millions of customers with fantastic products and generated so much value in just 10 years despite a crowded startup environment. They are the lucky/genius few of the Unicorn Club – and we look forward to learning about (and meeting) those who will break into this elite group next.

Social Proof Is The New Marketing

Posted Nov 27, 2011 by Aileen Lee

As I’ve written about before, we’re in an amazing period of the consumer Internet.  Despite a shaky economy, many web companies are in hypergrowth.  This is reminiscent of the five-year period over a decade ago when companies like Amazon, Netscape, eBay, Yahoo, Google and PayPal were built.

One challenge, which isn’t new, is the battle for consumer attention.  If you’re looking to grow your user base, is there a best way to cost-effectively attract valuable users?  I’m increasingly convinced the best way is by harnessing a concept called social proof, a relatively untapped gold mine in the age of the social web.

What is social proof?  Put simply, it’s the positive influence created when someone finds out that others are doing something.  It’s also known as informational social influence.

Wikipedia describes social proof as “a psychological phenomenon where people assume the actions of others reflect the correct behavior for a given situation… driven by the assumption that the surrounding people possess more information about the situation.” In other words, people are wired to learn from the actions of others, and this can be a huge driver of consumer behavior.

Consider the social proof of a line of people standing behind a velvet rope, waiting to get into a club.  The line makes most people walking by want to find out what’s worth the wait.  The digital equivalent of the velvet rope helped build viral growth for initially invite-only launches like Gmail, Gilt Groupe, Spotify, and

Professor Robert Cialdini, a thought leader in social psychology, has many examples. In one study, his team tested messages to influence reusing towels in hotel rooms.  The social proof message – Almost 75% of other guests help by using their towels more than once” had 25% better results than all other messages.  And adding the words “of other gueststhat stayed in this room” had even more impact (also an example of how A/B testing of small details matters). 

In another study, a restaurant increased sales of specific dishes by 13-20%just by highlighting them as “our most popular items”.  SP also works on your subconscious – it’s the reason why comedy shows often use a laugh track or audience; people actually laugh more when they can hear other people laughing.

Five Types of Social Proof

If you’re a digital startup, building and highlighting your social proof is the best way for new users to learn about you.  And engineering your product to generate social proof, and to be shared through social networks like Facebook, Twitter, Google+, Tumblr, YouTube, Pinterest and others, can multiply the discovery of your product and its influence.  Think of it as building the foundation for massively scalable word-of-mouth.  Here’s a “teardown” on various forms of social proof, and how some savvy digital companies are starting to measure its impact.

1) Expert social proof – Approval from a credible expert, like a magazine or blogger, can have incredible digital influence.  Examples:

  • Visitors referred by a fashion magazine or blogger to designer fashion rentals online atRent the Runway drive a 200% higher conversion rate than visitors driven by paid search.
  • Klout identifies people who are topical experts on the social web. Klout invited 217 influencers with high Klout scores in design, luxury, tech and autos to test-drive the new Audi A8.  These influencers sparked 3,500 tweets, reaching over 3.1 million people in less than 30 days – a multiplier effect of over 14,000x.
  • Mom-commerce daily offer site Plum District also reached mom influencers thru Klout, and found customers referred by influential digital moms shop at 2x the rate of customers from all other marketing channels.

2) Celebrity social proof – Up to 25% of U.S. TV commercials have used celebrities to great effect, but only a handful of web startups have to date.  Some results:

  • In 1997, was one of the first web startups to use a celebrity endorser –William Shatner – not a travel expert, but seemingly obsessed with saving consumers money.  It has been a huge win; Priceline now has a $23 billion market cap, and the fee Shatner took in shares is estimated to be worth $600 million.
  • Trendyol, the fastest-growing fashion ecommerce company in Turkey, regularly launches merchandise campaigns with the endorsement of celebrities. This practice increases site traffic by 2.5x and product sell-through by 30%.
  • ShoeDazzle launched with celebrity Kim Kardashian as chief stylist. Her involvement helped leapfrog the company to an estimated $25m in 2010 and $70 million in 2011 sales, plus a recent $40m financing.  Celebrity endorsement by Jessica Simpson and aesthetician Nerida Joy recently helped Beautymint attract 500,000 visitors in the first 24 hours of its launch.
  • The most authentic (and cost-effective) celebrity social proof is unpaid. Forhome décor site One Kings Lane, a 2010 unpaid mention in Gwyneth Paltrow’s influential blog GOOPprovided a 90% lift in daily sign-ups vs. the previous 4 days’ average.  Celebrity use by Sir Mix-A-Lot and producerDiplo generated viral buzz, helping the company skyrocket to 140,000 active users in just 4 weeks.

3) User social proof  – Direct TV marketers are masters at sharing user success stories. (fascination with this was actually the inspiration for this blog post).  Companies mastering this digitally include:

  • More than 61 million people visit Yelp (working on an upcoming IPO) each month to read user reviews.  And reviews drive revenue; a recent HBS study showed that a 1-star increase in Yelp rating leads to 5-9%growth in sales.
  • User-generated videos (UGVs) are a growing and important social proof phenomenon.  Early visitors to Shoedazzle watched more than 9 UGVs on average, helping catapult sales; and user testimonials on YouTube drove a 3x conversion rate vs. organic visitors for Beachbody, the makers of P90x fitness.
  • Negative user social proof is also important to track. The first negative user review oneBay has been shown to reverse a seller’s weekly growth rate from 5% to -8%. It also hurts pricing; a 1% increase in negative feedback has been shown to lead to a 7.5% decrease in sale price realized.

4) Wisdom of the crowds social proof – Ray Kroc started using social proof in 1955 by hanging an “Over 1 Million Served” sign at the first McDonald’s.  Highlighting popularity or large numbers of users implies “a million people can’t be wrong.”  Some digital examples:

  • Fashion e-tailer Modclothenables its community to “Be the Buyer” by voting on which styles they think Modcloth should sell in the future.  Shoppers take strong cues from the community; styles with the “Be the Buyer” badge sell at 2x the velocity of un-badged styles.
  • Callaway Digital Arts finds that when any of their kids’ iPad apps is listed as a top 10 most popular app in the iTunes App Store “Top Charts,” daily downloads vault 10x over the prior week – but being the No. 1 most popular app drives 30-50% more daily downloads than being No. 2.
  • Greentech company Opower uses social proof to help reduce electricity consumption. It works: Opower sees an 80% response rate to e-mails citing how a household’s use compares with the neighborhood, which has driven more than 500 million kilowatt hours of savings so far.

5) Wisdom of your friends social proof – Learning from friends thru the social web is likely the killer app of social proof in terms of 1:1 impact, and the potential to grow virally.  Some examples:

  • Friends inviting friends to play through Facebook and other social networks helped Zyngagrow from 3 million to 41 million average daily users in just one year, from 2008 to 2009.
  • Moms, arguably the most valuable demographic on the social web, rely heavily on friends and family recommendations.  A recent Babycenter study showed moms rely on the wisdom of their friends 67% more than average shoppers; and they rely on social media 243% more than the general population.
  • Friends referred by friends make better customers.  They spend more (a 2x higher estimated lifetime value than customers from all other channels at One Kings Lane); convert better (75% higher conversion than renters from other marketing channels atRent the Runway); and shop faster (they make their first purchase after joining twice as quickly than referrals from other channels at Trendyol)
  • They also make better contributors.  People who see content from their friends onTripAdvisor contribute personal content to the site at 2x the rate of others, and are 20% more engaged than other users.

Building Your Social Proof

Will one form of social proof work best for your company? Maybe, but companies likeLegalZoom have found that a “mixed salad” of various types of social proof is most effective.  The beauty of the web is you can test, learn and iterate quickly to find what works best.

To note, I don’t think a social proof strategy will be effective if you don’t start with a great product that delights customers, and that people like well enough to recommend.  How do you know if you have a great product?  Track organic traffic growth, reviews, ratings and repeat rates.  And measure your viral coefficient – if your site includes the ability to share, what percentage of your daily visitors and users share with others? How is the good word about your product being shared outside your site on the social web?  Do you know your Net Promoter Score, and your Klout score?

In the age of the social web, social proof is the new marketing.  If you have a great product waiting to be discovered, figure out how to build social proof around it by putting it in front of the right early influencers.  And, engineer your product to share the love.  Social proof is the best way for new users to learn why your product is great, and to remind existing users why they made a smart choice.

P.S.  FOMO, or the psychological phenomenon known as “Fear Of Missing Out,” is also a form of social proof.  As people are wired to learn from others, they are also wired to want things in short supply.  FOMO is a great forcing function on decision-making, as evidenced by the incredible growth of ecommerce flash sales. A friend at another venture firm has posted on his office wall “Is it FOMO, or is it real?” because it also happens in venture financings.  Maybe a topic for a future post.

Why Women Rule The Internet

Posted Mar 20, 2011 by Aileen Lee

It feels like we’re in a Golden Age of the web, led by consumer internet services and e-commerce.  Just consider these stats: Facebook—over 600 million users.  Twitter—25 billion tweets last year. Tumblr—1 billion page views a week.  Zynga—100 million users on Cityville in just 6 weeks.  We’re witnessing a generation of consumer web companies growing at an unprecedented rate in terms of both user adoption and revenue.

But here’s a little secret that’s gone unnoticed by most.  It’s women.  Female users are the unsung heroines behind the most engaging, fastest growing, and most valuable consumer internet and e-commerce companies.  Especially when it comes to social and shopping, women rule the Internet.

Consider some more data. Comscore, Nielsen, MediaMetrix and Quantcast studies all show women are the driving force of the most important net trend of the decade, the social web.Comscore says women are the majority of users of social networking sites and spend 30% more time on these sites than men; mobile social network usage is 55% female according toNielsen.

In e-commerce, female purchasing power is also pretty clear.  Sites like Zappos (>$1 billion in revenue last year), Groupon ($760m last year), Gilt Groupe ($500m projected revenue this year), Etsy (over $300m in GMV last year), and Diapers ($300m estimated revenue last year) are all driven by a majority of female customers.  According to Gilt Groupe, women are 70% of the customer base and they drive 74% of revenue.  And 77% of Groupon’s customers are female according to their site.

Women even shop more on Chegg, which offers textbook rentals on college campuses across the country. Males and females attend college at an almost even rate. Renting would seem an equal opportunity money saver, plus it’s better for the planet.  But according to Chegg, females are 65% of renters.  Why? Renting requires a little more advanced planning.  Chegg’s research shows women are more inclined to plan ahead than men. And, they seem to care more about saving money, and are more likely to be influenced by a friend’s recommendation.

It’s no accident launched a program called “Amazon Mom” last year, or that they bought both Zappos and Quidsi (parent company of, and for almost $1.8 billion in total.  According to the US Census Bureau, women oversee over 80% of consumer spending, or about $5 trillion dollars annually. Women control the purse strings when it comes to disposable income. That’s long been the case.

But what’s different now is that there is an exciting new crop of e-commerce companies building real revenue and real community, really fast, by purposefully harnessing the power of female consumers.  One Kings LanePlum DistrictStella & DotRent the Runway,ModclothBirchBoxShoedazzleZazzleCallaway Digital Arts, and Shopkick are just a few examples of companies leveraging “girl power.”  The majority of these companies were also founded by women, which is also an exciting trend.

And take a look at four of the new “horsemen” of the consumer web—FacebookZynga,Groupon and Twitter.  This may surprise you, the majority of all four properties’ users are female.  Make that “horsewomen”.

Sheryl Sandberg, COO of Facebook, has talked about how women are not only the majority of its users, but drive 62% of activity in terms of messages, updates and comments, and 71% of the daily fan activity.  Women have 8% more Facebook friends on average than men, and spend more time on the site.  According to an early Facebook team member, women played a key role in the early days by adopting three core activities—posting to walls, adding photos and joining groups—at a much higher rate than males.  If females had not adopted in the early days, I wonder if Facebook would be what it is today. (Why do you think all the guys showed up?)

How about gaming, seemingly a bastion of men in their man caves?  The titan of social gaming, Zynga, says 60% of players are female.  And a survey by PopCap shows females are the majority of social and casual game players. In fact, they note the average social gamer is likely a 43-year-old woman.

And more women use Twitter, which has a reputation for being a techie insider’s (i.e., male) product.  Women follow more people, tweet more, and have more followers on average than men, according to bloggers Dan Zarella and Darmesh Shaw’s analyses.

Brian Solis’s analysis shows females are the majority of visitors on the following sites, which he calls “matriarchys”:  Twitter, Facebook,, Docstoc, Flickr, Myspace, Ning,, uStream,, Bebo and Yelp.  The one “patriarchy” site he notes, where males > females:  Digg.

Yes, women also rock sites like Opentable and Yelp. According to Yelp, while half of their traffic is male, the majority of contributors and ecommerce purchasers are female.  And according to OpenTable, the majority of bookings are overwhelmingly made by females.  Why?  Likely because women drive most decisions about where to go and where to eat.

Perhaps none of this is surprising.  Women are thought to be more social, more interested in relationships and connections, better at multi-tasking.  There is also anthropological research to back this up.  Dave Morin of Path introduced me to Dunbar’s Number, proposed by the anthropologist Robin Dunbar.  The number is the theoretical limit of how many people with whom one can maintain stable relationships (thought to be 150).  But Dunbar’s most recent research shows there are different numbers for women than men—that women are able to maintain quantitatively more relationships within every ring of closeness than men.  Knowing that is an important factor if you want to build and stoke social network effects.  More female users will likely help your company grow faster.

So, if you’re at a consumer web company, how can this insight help you.  Would you like to lower your cost of customer acquisition?  Or grow revenue faster?  Take a look at your product, your marketing, your customer base.  Maybe you would benefit from having a larger base of female customers.  If so, what would you change to make your product/service more attractive to female customers?  Do you do enough product and user interface testing with female users?  Have you figured out how to truly unleash the shopping and social power of women?

You could also take a look at your team.  Do you have women in key positions? If you’re planning on targeting female customers, I can’t imagine why you wouldn’t want to have great women on your team.

If you are already targeting female customers, have great women working in your company, and are seeing strong commerce and social network effects, congratulations.  You are likely trying to figure out how to handle hypergrowth right now.  Plus your office probably smells pretty good.

Women are the routers and amplifiers of the social web.  And they are the rocket fuel of ecommerce.  The ongoing debate about women in tech has been missing a key insight. If you figure out how to harness the power of female customers, you can rock the world.


Posted Oct 2, 2013 by Andy Johns

Over the last couple of years I’ve met a lot of people who work in the startup world. A considerable number of the connections I’ve made stem from introductions from friends/colleagues or somewhat circuitously by way of stuff I’ve written on other sites. For example, in September of 2012 I wrote an answer on Quora where I shared my perspective on what it took to work effectively alongside people more intelligent than I am. Since that time my answer has received over 1,200 votes. When I wrote that answer I was shooting from the hip. I actually wrote it while at work. I expected it might get a few votes, but not that many.

After writing that answer I met with a few people who contacted me directly via Quora to ask me a bit more about how I navigated my career. I was able to be more nuanced in my discussion with them in person than I was via my Quora answer and I thought I’d share some of that nuance.

An Economy as a Metaphor for Career Strategy

What I wrote about in my Quora answer was that failure and unhappiness was a certain outcome of trying to be something you’re not. Everyone has their inherent strengths and weaknesses. I’m of the camp that believes that people should focus most on playing to their strengths and to align their strengths with a role that requires them to use their strengths regularly. That’s the gist of my answer to that question on Quora. I think that’s just one part of career success though.

In addition to finding work that leverages your strengths, you should think strategically about the career moves you make. What you should do is think strategically about the skills you develop and how those skills can preempt an increase in demand for those skills within the job economy. Then, as the demand for those skills flood the market, you’re in the pole position to leverage your supply of that skill to use the career economy in your favor. Let me be more specific with my own experience.

Placing a Bet

When I decided to leave Facebook I had only been there for 2 years. I was recently promoted and received a 50% salary increase, a cash bonus, and 15% more stock. I was pretty damn happy, predominantly because I felt valued by the company. I went home that day and did one of these in the front yard of my house:

Three months later though I left the company. I left despite the money and the sureness of Facebook’s success. I left because I saw an opportunity that I hoped had greater potential for long-term career outcome. Let me explain why.

I worked on the Growth team at Facebook. We were responsible for figuring out how to get more active users on Facebook. It was a first of it’s kind. No consumer internet company had ever had a Growth team. Our team crushed it and produced tremendous value for the company. While working on that team I had an epiphany. More consumer internet startups needed a Growth team because not enough companies had a pragmatic approach to growing more efficiently and reliably. I could either stay at Facebook and earn more promotions over time and make some solid cash off of the equity. Or I could leave to attempt to build more growth teams at more companies. What I eventually decided was that I wanted to be the person responsible for bringing Growth teams to more companies.

This is where the career economy metaphor comes in. Want I wanted to do was become one of the most knowledgeable people on the planet when it comes to understanding how to grow a consumer startup. I also figured that the demand for people who understood how to grow startups would increase proportional to the rate of success of consumer internet companies. Basically, the consumer startup industry had incredible momentum. In parallel, more startups needed Growth teams since more and more growth was engineering/product/data driven and not traditional marketing driven. I wanted to have a significant amount of the supply of growth knowledge at a time where there was very little real supply of that information but a tremendous amount of demand as well.

That was the bet I placed when I left Facebook in 2010 and went to Twitter to build a growth team. I’ve continued that trend by having been involved full-time or as an advisor to companies on growth including Quora, Khan Academy, Flipboard and a few others. Today, it appears that was the right decision. The whole “growth hacking” craze has elevated the position of growth teams and “growth hackers” in the startup world, more companies are explicitly looking to hire growth designers, engineers and product managers, and more companies have had successful implementations of growth teams. Even more established companies are hiring for growth such as the acquisition of IronPearl by PayPal where Stan Chudnovsky was named PayPal’s new VP of Growth.

Those who got started early as leaders in Growth are benefiting from the economy around it where every startup is looking to hire a growth leader but very few people have a deep, legitimate understanding of consumer startup growth. Those in control of the supply of valuable growth information are in an advantageous position and can basically choose where they want to work.

Sure, I would likely have plenty of career options had I stayed at Facebook for 4+ years. But I can say without hesitation that I understand growth of consumer internet startups much, much more deeply having now worked on growth at multiple companies. With deeper knowledge in the field of growth, I’ve encountered career opportunities I would have never predicted, such asjoining Greylock as a Growth Strategist in Residence.

The Next Career Economy

Today, I continue to think about what future economies around skills and experience will exist and how I can preempt that economy to establish early ownership of the skills supply. The advice I’ve been giving to people struggling to establish themselves in the startup world is to first start by making sure they understand what they are good at and enjoy doing. Secondly, they should think deeply about how their strengths/interests can be applied in a way where the skills economy is in their favor. If you can preemptively determine where you think the skills economy is going to move, get ahead of the pack by establishing your skills earlier than most.

Based on my experience here are a few of the skills economies that I’ve come across where significant opportunity exists for the owner of those skills:

  • Designers that can code since most top-tier startups want designers that can code more than designers that can’t (e.g. Richard Henry)
  • Designers with data skills since you can self-administer a/b tests as well as design products (e.g. Rob Matei)
  • Statisticians who are technical enough to pull large data sets and massage the data into actionable insights (e.g. Adam Kinney)
  • Mobile business development pros who know the global mobile landscape and have contacts across the industry (e.g. Ali Rosenthal)
  • Marketplace Community Managers who do relationship management on both sides of a two-sided marketplace (e.g. Sheila Karaszewski)

For those looking to craft a career strategy, I hope you find this information useful. Here’s a recap of the key points:

Focus on your Strengths

Start by finding a job that requires you to utilize your strengths more often than not. By focusing your work around what you’re good at, you’ll find greater long-term enjoyment with your work as well as a higher likelihood of being successful at it. 

Identify Skill Economies

As you gain more skills and experience, continually evaluate skills economies around you. Find scenarios where others have accelerated their career trajectory by doubling down on building skills deemed highly valuable by the career economy. 

Place Bets

Don’t be afraid to place a career bet by going after a particular skill economy, especially when the skill you are looking to improve is aligned with what you are naturally good at and enjoy.

Why Your Next Board Member Should Be A Woman

Posted Feb 19, 2012 by Aileen Lee

Good questions have been asked lately of tech companies without gender diversity on their boards of directors. While women comprise51% of the population, they make up only 15.7% of Fortune 500 boards of directors, less than 10% of California tech company boards, and 9.1% of Silicon Valley boards.

Why should we care? For one,women are the power users of many products and it’s just smart business to have an understanding of key customers around the table. Could you imagine a game company without any gamers on the leadership team or board?

If you’re not aware, studies also show companies with gender diversity at the top drive better financial performance on multiple measures – for example, 36% better stock price growth and 46% better return on equity. And, studies show the more women, the better the results. This is likely because teams with more females demonstrate higher collective intelligence and better problem solving ability. So it’s probably not a coincidence the world’s most admired companies have more women on their boards than the average company.

There is a group of public companies that gets these insights – they are quietly adding some of the smartest women in Silicon Valley to their boards of directors. And most are not making much noise about it, perhaps they want to benefit from their savvy while their competitors are asleep at the wheel.

I was impressed by a move by AutoNation, the country’s largest auto retailer ($4.6B market cap). They did an extensive search and last year added Alison Rosenthal to their board – an off-the-F500-radar-screen, Brown and Stanford educated, early Facebook team member who led FB’s core BD activities for 5 years in social, growth, international and mobile.

Why add a 30-something female to a male board with an average age of 58? Mike Maroone, AutoNation’s President and COO explained, “We looked at our board [and realized] it’s male dominated, while women make over 50% of the purchasing decisions in our business. And, the travel, music and news industries have been transformed by digital. We’re trying to transform the auto business and connect with the thinking of the digital generation, and we need this level of insight at the board level.”

AutoNation is not alone in identifying next gen talent that adds diversity of gender, thought, age and experience to the boardroom, long the domain of (male) titans of big business, law and finance.

LinkedIn ($9.1B) was ahead of the curve when they added longtime Netflix CMO Leslie Kilgoreto the board in 2010. And in the past year, TripAdvisor ($4.1B market cap) added former Google International exec Sukhinder Singh Cassidy to the board of directors; HomeAway ($2.1B) added Google Ads head Susan Wojcicki; LuluLemon ($9.3B) added FB local-and-mobile exec Emily White; Starbucks ($36.5B) added 29-year-old Clara Shih, CEO of Hearsay Social and author of The Facebook Era; and Scripps Networks Interactive ($6.9B) justannounced the addition of Gina Bianchini, CEO/founder of Mighty Software.

Of this, LinkedIn CEO Jeff Weiner says, “Some boards may look for candidates already on other boards, or CEOs of other companies. In the case of Leslie’s seat, we were looking to add someone with specific expertise, CEO or non-CEO, to complement our board – and the results from broadening our consideration set have been outstanding.”

Christine Day, CEO of LuluLemon, offered similar sentiments. “We wanted a board member who understands how our target guest thinks, is a leader in the world of digital innovation and social, and understands steep growth. Emily is part of a new generation that is going to change the game.”

Ebay ($45.1B market cap) also recently added Facebook product marketing exec Katie Miticto their board. Of this, CEO John Donohoe told me, “We were looking to add people who understand the web of the future and our consumer (50% of whom are women), and who are product and tech savvy. Katie is a 12 out of 10 on these. And, we have a strong commitment to attracting, developing and retaining female leaders. There’s also a cultural impact outside of the boardroom – it’s inspiring to our team members and community to see someone like Katie on our board.”

By adding new blood to the boardroom, these companies are getting a four-fer, or more: 1) gender diversity, and in most cases, age diversity around the table; 2) better understanding of core customers; 3) Social-Mobile-Local expertise and insight into digital platforms like Facebook, Google, Apple, Amazon, Twitter, Path, Square, Flipboard and Pinterest that are fundamentally changing business; and 4) hyper growth and rapid innovation DNA.

These factors are driving a trend to change board composition. And from what I’ve heard from CEOs, the smartest companies will continue to diversify their boards rather than “checking a box.” Initiatives like 20by2020 will also help.

There’s an opportunity to make your board, and your company, smarter by adding diversity, especially of gender. And if you’re at a smaller company, there’s a greater likelihood that your board lacks diversity – and that’s an opportunity to seize, especially if your company counts on females as key users. Savvy companies are quietly changing up their boards of directors and teams, and this is giving them better collective intelligence, more community admiration, and better financial results.

PS if your company would benefit from new DNA in the boardroom, there is great talent to consider. Here are just some examples of female leaders who are savvy about digital innovation, customer experience and hypergrowth. I’ve listed talent with experience from larger companies, as startups are generally less able to share their talent:

Allison Johnson, former VP Global Marketing Comm, Apple
Anne Raimondi, VP Marketing, SurveyMonkey
Amy Chang, Head of Global Product, Ads Measurement, Google
Barbara Messing, CMO, Tripadvisor
Caterina Fake, Founder, Pinwheel; cofounder, Flickr and Hunch
Carolyn Everson, VP, Global Marketing Solutions, Facebook
Heather Harde, former CEO, TechCrunch
Jennifer Bailey, VP WW online stores, Apple
Jessica Herrin, CEO/founder, Stella & Dot
Jessica Steel, EVP of Business & Corporate Development, Pandora
Joanne Bradford, Chief Revenue and Marketing Officer, Demand Media
Julie Bornstein, SVP, Sephora Digital
Katie Jacobs Stanton, Head of International Strategy, Twitter
Kerry Wharton Cooper, CMO, Modcloth; ex VP eCommerce,
Lori Goler, VP of People and Recruiting, Facebook; ex marketing, eBay
Marissa Mayer, VP of Local, Maps and Location Services, Google
Raji Arasu, VP of Technology, eBay
Selina Tobaccowala, VP of Product and Engineering, SurveyMonkey
Stephanie Tilenius, Global Commerce Strategy, Google
Tina Sharkey, Chairman and Global President, BabyCenter