Susan Lyne, who until recently was the CEO of AOL’s brand group, came to Israel this spring, where she sat down for an interview with Geektime. In her role at AOL, Lyne oversaw websites like TechCrunch (but not The Huffington Post, which has remained under the exclusive control of Arianna Huffington). She recently stepped down from her position to run a venture fund within AOL that is geared towards startups led by women.
The new fund is called BBG (Built By Girls) and its only investor at this stage is AOL. Its goal is to break the glass ceiling of startup leadership for women.
The Breakfast Club
“I was starting to meet a lot of young women who were building interesting startups, so I started organizing breakfast meetings in New York,” Lyne told Geektime. “In the beginning, only six to eight women came to these meetings, but we ultimately we grew to a group of 35 women and I realized the time had come to develop this into something more interesting.”
“I looked over the numbers for the U.S. venture capital industry and when I learned that women are getting just 7 percent of investments and that just 4 percent of investors are female, I realized that something has to be done.” Lyne believes there is a structural market failure in the U.S. venture capital and investment industry.
“I think that if 93 percent of the funding today goes to just half the population, that’s a market failure as well as an opportunity that we should exploit.”
Geektime: Why do you think venture capital funding in the U.S. is a man’s game?
“I think it’s human nature. The way you get to pitch a VC fund is usually because you know someone, whether an entrepreneur, an investor or another fund. So the male circle perpetuates itself. Women don’t have the same connections so it’s harder to get their foot in the door.”
“I was a reporter for a while, then became an editor. My real break came when I became an assistant to the editor-in-chief of a magazine. I saw that the world is changing and I need to evolve with the times. I eventually created the magazine Premiere, which dealt with the video industry. Then another opportunity came along and I was hired by Walt Disney.
“I like to multitask, like most women.”
Do you think the next big media venture will be technology based or will it come from the world of content?
“I think the next big venture will be an integration of tech and content. Tech does not just create new business models and new methods of distribution, it creates the opportunity to tell stories in a new way and also helps find new customers.”
Lyne notes ABC as an example.“They made engrossing shows where if you missed an episode you’d be lost. HBO managed to overcome this problem by rebroadcasting its episodes repeatedly.”
Lyne then cites a study showing that even regular watchers of a TV program see it on average 1.4 times a month.
“That’s because other things happen, life happens. That’s why video-on-demand came along. Nevertheless, there are enough people who still like to watch programs at the same time that other people do, so that they can talk about it the next day, without spoilers. At the end of the day, people like both ‘live’ and on-demand. Both formats have their place and neither will kill the other.”
What do you think of the startup scene in the U.S. Why aren’t there more women involved?
“I’m glad that people are starting to talk about the problem of company culture in the startup world and how it’s not super-friendly to women. There are statistics that 50 percent of women who went to work for tech companies left because they felt it was a hostile environment or they couldn’t advance.
“These issues need to be placed center stage and receive greater exposure so they can be addressed. Unlike banks or companies that have a code of conduct, media and startups don’t have an organized set of rules. This industry is still new, it’s just groups of people that decided to work on a new product together.
“The dearth of women in the industry and in management positions is problematic. But the first step is that we’re talking about it.”
What do you intend to do to change women’s status in the industry? How much money will you invest and where?
“We’re talking about seed investments. We will invest $150,000 to $250,000 in media startups as well as consumer Internet. We decided to focus on those verticals because it’s where most women’s startups are, as opposed to SaaS and enterprise. We’re a small fund so it was important to us to be focused. It’s the industry I come from and we understood that the potential customers of consumer Internet are mostly women.”
Small fund, big problems
At present, Lyne’s fund is small, with just $10 million that will be invested in 12 companies each year. So far the fund has invested in ten companies, all of them American. But Lyne hopes that the connection with Nautilus, AOL’s scouting arm in Israel that is managed by Merav Rotem Naaman, will also help female Israeli entrepreneurs get funded.
Asked whether the fund will make it hard for female entrepreneurs to raise their A round, Lyne said the fund would support additional investments in some of the companies if they think it’s a good investment. This can create a different problem, one of signaling, whereby a company that doesn’t get follow-on funding won’t be able to raise it from new investors because they’ll understand it doesn’t have continued support from the fund.
In response to my question about investments in startups from Europe or other places in the world besides Israel, Lyne says that about ten such companies approached the fund “and none of them received investment at this point because we set a high bar due to the difficulty of investing in companies that are geographically distant, where there are language barriers and the target audience is not necessarily the United States. In the end, it was hard for us to help them.”
Can you offer our readers three tips for female entrepreneurs, from your point of view?
“The first tip is to take a step back and look at the bigger picture. In other words, look at how your dream of a startup will turn it into a company that is worth at least $100 million, and don’t be afraid to talk about it, don’t be afraid to dream big and sell your dream.”
Lyne says, “The problem is that men know how to say with great confidence why their company will be worth a billion dollars, as opposed to women, who don’t bother to explain this or are modest and cautious in estimating how much it will be worth.
“The second tip is always try to raise more than you think you need because raising the next round will be harder than you think, the expenses will always be greater than you anticipated. It would be a pity to spend all your effort constantly raising money rather than building a company.
“The third tip is to focus on your customers, even when you are raising funds or busy with every day management or recruiting workers because the most important thing at the end of the day is the customer and how you will give them the best product.”
Simona Weinglass translated the original post.