Aspen Ideas: Female-run companies see ‘remarkable trend’

Erica Robbie
The Aspen Times
Shark Tank venture capitalist Kevin O'Leary, Eileen Fisher, Microsoft executive Peggy Johnson and "Honeyfund" co-founder Sara Margulis at an Aspen Ideas Festival discussion Monday on investing in women-run businesses.
Erica Robbie/The Aspen Times

When Eileen Fisher was young, her father told her that he could not help pay for college because he needed to save money to invest in her younger brother’s education.

“It seemed OK at the time,” the soft-spoken retail powerhouse and namesake of her half-a-billion dollar clothing company said Monday before a packed ballroom at the Hotel Jerome.

Fisher, who would go on to support herself through college waiting tables, led a talk titled, “Want to Make Money? Invest in Women” as part of the Aspen Ideas Festival alongside Shark Tank venture capitalist Kevin O’Leary, Microsoft executive Peggy Johnson and “Honeyfund” co-founder Sara Margulis.

In the U.S. marketplace, women own 11.6 million businesses and growth in this sector since 1997 has increased by 114 percent, which is 2.5 times the national average, the program states. Despite that female-founded businesses regularly outperform firms started by men, male-led firms are more likely to receive start-up funding.

The brainchild behind the discussion, O’Leary said his investment company noticed a “remarkable” trend the past seven years working with start-ups.

In every metric of a return on an investment — be it the internal rate of return or the return of capital — O’Leary said, “The majority of our returns came from companies run by women.”

“And this is agnostic to geography or sector of the economy.”

Upon examining these start-ups’ quarterly sales forecasts, O’Leary found that male-run companies achieve their financial goals about 65 percent of the time, while female-managed firms reach their targets about 95 percent of the time.

Women, more so than men, will often adjust these projections with time, in order to set more realistic expectations, O’Leary said. The way in which a more accurately predicted sales forecast translates to higher returns is tied to company morale.

“In a private company that is constantly hitting its goals, the culture slowly shifts,” O’Leary said.

He equated this to playing basketball on a team during a winning season: “Nobody wants to get traded.”

With little to no turnover at these “winning” companies, less disruption equals more consistent cash flows, O’Leary said, and the returns are “significantly higher.”

His disclaimer shortly after: “I’m not into gender warfare. I would give money to a goat.”

In terms of male and female business practices, the panel also explored discrepancies in communication style and decision-making between genders.

Noting Fisher’s “mild-mannered” temperament, O’Leary questioned how she operates her business and makes decisions on a daily basis.

“What are you really like?” he quipped. “Half a billion in business is a real business and there’s a lot of risk every day. How do you do it?”

Along with paying close attention to “the idea and the creative at the center of a business and how that works,” Fisher said she relies on her six-person leadership team to collaborate with on major company decisions.

She said her company’s “deep democracy” decision-making process seeks input from each team member. If a team member is not supportive of an idea, Fisher wants to know what that person needs in order to be on board.

O’Leary was visibly puzzled by this notion, as Margulis pointed out.

Growing up conditioned to listen rather than to speak, Fisher said she learned to turn her weakness into her strength.

“Listening is the way I run my business,” Fisher said. “I think women bring more of that.”

A self-proclaimed introvert who has held several leadership roles in the male-dominated tech world, Johnson recalled a time when she was penalized at work and on her performance reviews for not speaking up or being more assertive.

Johnson said she often considered leaving the industry until one manager shifted the dialogue from highlighting the aggressive traits she lacks to recognizing the positive attributes she brings to the company, such as listening and collaborating well with others.

“Merit is measured differently,” Johnson said.

The question, then, of whether a more subdued style of communication holds women back in corporate America floated between the panelists.

“I think corporate America needs to learn that good listeners are a positive thing to have,” Margulis said, noting the benefit to diversity in leadership and skills.

“Sometimes it’s not the talking, it’s the listening,” Margulis said. “Sometimes it’s not the decision-making, it’s the collaboration.”