(Preface: This article is a critique of a status quo that I fit into. Thus, in many ways, it is a critique of myself and my own thinking patterns. I am writing this somewhat from the perspective that is biased, that has blind spots, that is prejudiced. In this article I am not attempting to avoid these prejudices as this would only be denial, and denial doesn’t solve the problem. So, all you politically correct people out there, take your guard down. I am going into the psyche that has created the problem…)
(Also, this article is a freeform follow-up to last month’s article Getting Real with the Gender Lens).
As I’ve come to see it, ever since I learned how quotas fit in historically, I think it’s like this: you can push ceilings all you want, and show why things should change, … and then you just have to break those ceilings with something like a quota. People in power don’t just give it up after thinking about it when you explain it to them. Or so says Dr. King, as I read him. This subject has got to be sort of like that, I think.
And I don’t think guys are resisting out of an unwillingness; it’s more of a blind, comfortable, leather-recliner-chair-and-a-beer kind of bias; we just get focused on the game we are playing the way we play it. This is a hard thing for most guys to get their heads around, at first. It’s hard to see that it’s a real problem and that just consciously thinking better-feeling thoughts, or having better attitudes sort of makes things change. In fact, the selection process is skewed in ways we are blind to and we well-meaning white boys just don’t seem to see it. So, if I were in their shoes I’d be thinking “I’m going to do it right,” as most of the guys choosing entrepreneurs did in those accelerators. They probably all thought they were unbiased modern men, just being logical and going with the facts.
The results say that we – I – have a bias that is leading to lower portfolio company performance in our selection criteria; a bias we can’t see. As a matter of fiduciary responsibility, we then just need to set in place a quota to make sure we are selecting the highest performing group whose value we – guys and the people on these selection committees, some of whom are women – can’t clearly see. We need to do this through an artificially instituted changing of the selection criteria; in order to do what the data says to do but that we don’t seem to be able to do on our own. This is a crutch to help guys achieve better portfolio performance, a guide for a blind man. Guys are built for comfort. Changing big rules like this can be worse than going shopping with your wife or girlfriend.
After that point, we are looking to lateral relational value, with vendors, customers, employees, and the community, which I write about on our site; for the areas where we think we will find that extra financial value.
I think that a series of global Google hangouts, phased up to SOCAP13, along with maybe some physical meetings at our HUBs would accelerate this idea. The HUBs around the world could get involved, maybe. This is a seriously challenging idea to some of us guys. The former head of the Santa Fe Institute contacted me to explain how unjust this was, how unfair, possibly illegal. I told him male privilege was not enshrined into law, just country club rules. That, I am told, is my message in this mix; a guy can say that line while a woman can not.
So I say that line, then talk about what the numbers say, then explain my action as I scope out the next fund I’m going to be involved in, and offer this quota as a possible piece of impact investing infrastructures to others doing early stage funds. Only use this tool if you want to beat the other boys, is the way we might play it for them. Listen guys, using the quota is like taking a performance enhancing substance, like steroids. … Except it’s not destructive like steroids.
Compare the financial performance of funds that used it against those that didn’t. Gender lens quotas: a tool for winners. Be the best fund manager you can be. Use a gender lens quota. Sell justice like Gatorade. It could spawn to have its own line of deodorants and personal care items. Yes, I am wearing True Justice, the quota cologne. How do you like it?
When you design the system correctly, justice is just a positive externality.
I’m finding other parts of our selection process to be flawed, too; in what we look at from the standpoint of company performance, seeing the enterprise as an island rather than situated in a community. Looking at relational value, as the SOCAP Open entry suggests, is an attempt to design something new into the criteria; new places to check under the hood, new methods to refine the site on your hunting rifle, a new way to sharpen your warrior blade. We will be looking for the bonus in places most funders don’t look, in feedback loops that create financial value through trusted, mutually-value-creating relationships. And I think that approach will outperform what the existing research shows. I think we will be above baseline, that this approach will outperform its peers.
The data says this is the path to higher performing fund portfolios. There are, of course, other reasons to do this. But it’s interesting you can argue from that perspective. I am not suggesting that higher financial performance is my reason for doing this. But when I saw the data I saw this as a lever to change some things, which I am interested in. I’m not sure if its moral strength as a quota is weakened or strengthened by the fact that it is eminently practical and should lead to investors making more money; enriching the already rich, unless we change the dynamics around that in this fund.