By Kevin Matthews
If they’ll listen, Sarah Thébaud ’02, a sociologist at UC Santa Barbara, has a multibillion-dollar idea for private equity investors. Sit down for a minute. You won’t believe how simple this is.
First off, have you been to the symphony in the last decade or two? How did it sound? Nice?
In the 1970s and 1980s, symphony orchestras began holding blind auditions for new performers. They set up screens on stage so that a jury wouldn’t see the musicians, to know who was male or female. Before the shift, 19 of every 20 musicians in the top five U.S. orchestras were male.
As blind auditions have become widespread, that proportion has plunged to around two-thirds male.
It’s a safe bet that musical proficiency on symphonies has not suffered. Instead, it’s probably risen. Before, too many highly accomplished women were being turned away.
The reason for that might have been discrimination or, more likely, unconscious bias. The judges were always looking for that something extra. Yes, the oboist you’re hearing is obviously well-trained; but is she exceptional, brilliant?
Now, think about entrepreneurs. What does the job take?
To build a business from just an idea, you’ve got to be independent, aggressive, a risk-taker. You’ve got to have drive and always put the business first. A touch of ruthlessness wouldn’t hurt.
Not long after earning her Ph.D. at Cornell University in 2010, Thébaud thought about this view from her vantage point as a sociologist. She observed that the traits that people associate with entrepreneurs have also been shown by researchers to be associated with men.
“People often think that men should behave in those ways, not just that men are like that,” she said.
Thébaud surmised that the perceptions linking ideal men with ideal entrepreneurs could give men a head start on venture capital funding. Her suspicions were confirmed when she conducted three studies in the U.S. and United Kingdom. She asked hundreds of university students to rate identical investment pitches presented under made-up men’s and women’s names.
Respondents saw men’s business ideas as more viable and worthy of funding, because they systematically judged the women less competent or skilled than the men. The penalty was larger in the U.K.
Tellingly, Thébaud found that female presenters could close much of the gap with men in cases where members of both sexes had highly innovative pitches to make. On the other hand, men were regarded as competent whether their proposals seemed innovative or not.
All of this has something to do with women receiving just 19 percent of angel funding and an even smaller share of venture capital. Startups with women as CEOs get about 3 percent of venture capital dollars.
So here’s the pitch for venture capital firms. The same basic pitch could be directed to banks that make small business loans, and for that matter to employers evaluating job candidates. It has two parts.
First, wherever possible, decide blind. Black out the names on initial applications for funding, and assign numbers instead. Have assistants scan documents for clues about the genders of applicants in order to hide them.
Do this regardless of your own background. Women participating in Thébaud’s studies, it turned out, shared the gender biases of men.
The new, blind applications will allow more women in the door and might advance candidates of different races and religions. By keeping more of the best people in the running, this step alone will make you money.
Second, divide up decision-making and hold everyone accountable. Develop consistent criteria for who looks like a leader. Ask people who’ve listened to an investment pitch to justify their decisions to others who weren’t present, always based on the agreed-upon criteria.
“What do we take as evidence of competence and the kind of go-getter personality we want to see, and what do we throw out? What’s just posturing?” asks Thébaud.
You trust your gut. Sure, it got you this far. But bias is everywhere. There’s every reason to think it costs you.
Newsweek, Time and The Atlantic covered Thébaud’s research this year, and she discussed it in April as part of the School of Management’s Entrepreneur Speaker Series. Watch her talk at tinyurl.com/CLU-Thebaud.