Today’s guest is Melinda Wittstock, the CEO of Verifeed. In this episode, we’re going to going to talk about her upcoming book about women as entrepreneurs.
Melinda believes and I agree that the road for women entrepreneurs is different than it is for men. With over half of new businesses started by women, this is an important topic. One that I’m sure you’ll enjoy.
Here are some of the things you’ll learn in today’s episode:
- What is different about women and men as entrepreneurs.
- What the intersection is between business and personal growth.
- Understanding that women often want to be liked more than men and the challenges and opportunities this provides.
- Why Venture Capital funding is often more difficult for women than men.
- How pattern recognition is a main factor in getting VC funding.
Narrator: Welcome to The Sustainable Business Radio Show podcast where you’ll learn not only how to create a sustainable business but you’ll also learn the secrets of creating extraordinary value within your business and your life. In The Sustainable Business, we focus on what it’s going to take for you to take your successful business and make it economically and personally successful.
Your host, Josh Patrick, is going to help us through finding great thought leaders as well as providing insights he’s learned through his 40 years of owning, running, planning and thinking about what it takes to make a successful business sustainable.
Josh: Hey, how are you today? This is Josh Patrick. You’re at The Sustainable Business. Our guest today is Melinda Wittstock.
Melinda: Hey, Josh.
Josh: How are you today?
Melinda: I’m really good, thank you. It’s kind of a rainy day in Bethesda. It’s one of those days where you just want to kind of stay in bed a little bit but I was excited to wake up to do this with you so.
Josh: Well, I’m glad you did. You’ve got an interesting background. You’re the founder and CEO of Verifeed. You invented algorithms to measure growth. You call this Return on Authenticity™. You’re writing a book about woman entrepreneurs. You were an anchor. You’ve been on BBC, ABC, CNBC. You’ve got tons of things.
You’ve got me beat starting your entrepreneurial journey at five. I waited all the way till I was seven before I started mine, so you’ve got me beat there. What I’m really fascinated about and I would like to speak with you about is the book you’re writing on women entrepreneurs. Why write the book in the first place?
Melinda: Oh, man. It’s pretty simple, really. I’m writing the book I wish I had when I was starting out because there was no real manual for how to go be a female entrepreneur. Even the fact that you have to call it a female entrepreneur, just an entrepreneur. All my role models were men.
It’s very interesting. Women, depending on the generation, really had to pioneer. There was no roadmap. There was no blueprint. And I think, in a lot of cases, women just have to pioneer. Only recently are we beginning to figure out ways to support each other and share knowledge in a way that we don’t all have to make the same mistakes.
Josh: Well, I like people to learn from my mistakes because I’m like an expert at that.
Melinda: Yeah. Oh, God. And I’ve got loads of those to share to people in my book so there’ll be a lot of reading material. Yeah.
Josh: Yeah. What’s the number one lesson? You know, I’ve just finished my book and my book coach keeps saying to me, “What’s the big lesson you want to teach?” And I’ll ask you the same question she’s been asking me for the last nine months. What’s the big lesson from your book?
Melinda: Yeah. What I’ve learned in my life, it wasn’t immediately apparent, but it is to me now, that there’s a real intersection between personal growth and business growth. That, when I interview – and I’ve interviewed hundreds of female entrepreneurs, and the one thing that every successful woman has in common is this internal mindset of positivity, not letting limiting beliefs, or fear, or all of those things we all have, whether we’re men or women, but not letting those things get in the way.
Josh: What’s different with men and women about that? Men have the same issues. In fact, I know they do but what’s the difference?
Melinda: Yeah, it’s interesting. I think we’re wired differently or socialize differently. One of the things that’s emerging from the book is that women really want to be liked. And so, say for example, when you have a decision for your business and you have to fire somebody, women are more like– again this is a generalization, they’re more likely to agonize about that relationship, for instance, of how to make that person feel good or just be much more worried about, “Oh, is somebody going to think I’m like the B-word if I take this decision that’s necessary for my business?”
That’s changing. But we do have this real need to be liked but much more about relationship. Now, you flip that coin around and that’s actually really great for a business because businesses work better that have really cohesive teams. And so, women bring a lot to the table. On that score, that’s really positive as well but like anything, any kind of characteristic that you have, there’s always a positive or negative. I suppose, the job of any entrepreneur is to be a bit of an alchemist. How do you take coal and turn it into a diamond?
Josh: That’s a good question. Again, what’s different from women to men about that?
Melinda: In terms of how to do it, we all start in different place. And so, because I’m a tech entrepreneur, I have a slightly different lens on this. It depends on what type of job you’re going to do.
For a woman to go and invent technology and to go get the VC funding and like adequate capitalization that she needs to really make a go of it, that’s really hard. At this stage, for companies that actually even qualify for VC funding, women only get 3% of that money in the United States and 17 years ago it was 2%, so the needle’s not moving very much. I thought, “Well, what is it? What is it that’s stopping us from getting access to the capital we need?”
There are a couple of things, in terms of limiting beliefs, where we don’t ask for enough. Underneath that is this– I think it’s kind of a psychological thing of, do we value ourselves enough? Or, are we just so used to being able to make a lot out of little? We take that as personal pride like, “Look at how much I can do with so little”.
That can be absolutely disastrous in the case of a tech business because you always need more than you think you need. If you think you need a million dollars to launch something, you need at least two. You think you need five, you need ten.
Josh: By the way, that’s true in every business.
Melinda: Yeah. It really is because everything takes longer. There’s a lot of things beyond your control, as you know, and so much that can go wrong that even if you do everything perfectly. There are a lot timing issues, especially if you’re inventing something where you have to make the market for that product.
What happens often, when women go to VCs for funding, there are a whole bunch of things that have to change here. VC funding is very much based on relationships. Are you in the network? Most women are not in the network and they don’t have that kind of connection so that’s pretty tricky. Are you known in Silicon Valley? Most women are not.
Second, women tend to create business models that are a little bit different than what men do. Men are very linear. They’re very kind of– again, a generalization, very A to B. Like, “I’m going to create this one thing. It’s going to solve this one problem. It’s going to be really simple. And then I’m going to sell the company and I’m going to try and get like a 5X or 10X multiple”, period, done. Right? Yehey. Okay.
Women are more likely to think, “Oh, I’m going to apply all these different technologies in a unique away to like sort of disrupt an entire industry that I was working in. Say, I was working in corporate America and I got tired of disrupting from within. I have all this domain expertise. I can see how the whole industry could be better. I’m going to apply the technology like A, and C over here, and D, and all of that. And it seems, to a man, unfocused. But it’s not unfocused, it’s just a different focus. Women tend to connect dots, just our brains are wired differently.
Josh: Let me ask you a question. One of the things I call myself is a niche-a-holic. In fact, my video going out on Friday is about becoming a niche-a-holic and why it’s so important. I have this problem in the way I work which is I love bright, shiny objects. I’m all over the place. So, as a result, people have a really hard time figuring out what it is I actually do. That might be the same issue that women are facing in trying to get VC funding in that if you’re saying, “I’m going to work on a global basis” most VC funders are going to say, “Well, we know that doesn’t work because there’s only been one Microsoft in the last 50 years.”
Melinda: Well, they do invest based on pattern recognition. I have a kind of a funny story for the company that I was doing before Verifeed. This company called NewsiT. It was way ahead of its time, 2010. It was leveraging the power of the iPhone to do collaborative news around shared interest social network. It had a whole series of complicated algorithms. And behind it, it was trying to get the mobile UI right. It had this massive issue of getting a lot of user-generated content.
We were at the point where we had hundreds of thousands of users. We’ve been written up in Tech Crunch. We were doing really well. Marissa Meyer, from Yahoo, had called us the future of news. It was all going really well. We didn’t have enough money. We didn’t have nearly enough money for what we were trying to do.
This is back in time when an investor would say, “What makes you think people are going to contribute content?” And I’d say, “Well, I mean, they are. I mean, look at Facebook and what not.” And they’d say, “No, no, no.” Then they’d say, “Well, what makes you think mobile’s going to be big?” And I’m like, “Trust me. It’s going to be big.” And then they’d’ say things like, “What makes you think that if you do have all these user-generated content, how are you going to curate it? Where are you going to store it? That’s going to be really expensive.” And I’d say, “There’s this new thing called the cloud”.
I mean, the problem here is that I was innovating on so many different fronts that what I didn’t understand is, “Okay, so the investor is perceiving multiple pieces of risk.” Now, I had a plan that was very focused, very A to B. We solve this, and then we do this, and then we do that, so that the risks were not interdependent because I could see that too. It’s just that I have a– women are more likely to have a sub-systems thinking brain where you can see all these different pieces. I used to get told all the time, “God, just be more focused. Be more focused.” And I’m like, “I am focused. What are you talking about? It’s just that my focus is different.”
And so, this culminated. I remember I got this big meeting with a VC. A very well-known VC and did my pitch and showed all the traction. You know, I thought, “This is really great.” There was a long pause and he said, “This is great, Melinda. Somebody’s going to do this.” And I, “What do you mean, somebody’s going to do this? Like, I am doing it.”
Josh: Why not me?
Melinda: “What are you talking about?” And my journalism kind of took over. I wanted to know the why. I kept asking questions. Finally, he was like at the end of his time. He got up. You know, he’s not going to pressure me out. And he said, “We invest based on pattern recognition.” And I thought, “Oh, well that’s interesting because our technology was pattern recognition. I invented a bunch of pattern recognition algorithms”, so that that was an interesting irony.
As he was escorting me out and I was walking down the street in New York, I was thinking, “What went wrong there? What is it? How do I not fit the pattern?” I went through this mental checklist and I was like, “Okay, so did not go to Stanford, MIT, or Harvard. I did not drop out of any of those schools. I do not have a garage so like I did not invent anything in my garage. I’m not 20-something.” Let’s see. I went through all these things. I don’t eat ramen noodles because they have too many carbohydrates, that’s not good for my butt or whatever. I’m going through all of this stuff. And then, “Oh yeah, right. I’m a woman.”
I had this epiphany at that point but it wasn’t just like a straight out sexism or something that just, “Oh you’re a woman so you don’t qualify.” It’s that we tend to come to the table with business ideas, a little bit later in life, with domain expertise. We’ve hired, we’ve fired, we’ve run teams. I had run teams of 50. I had done a whole bunch of things. I’ve had a company before NewsiT that had run for 10 years and had 300 clients and millions of dollars in revenue and all these awards. I wasn’t the typical sort of person that a VC puts their whole superstructure around.
What I didn’t understand is, they prefer really young people who have a lot of promise and they’re the inventor but they can really kind of be controlled because they need all the expertise that the VC brings like how to hire and fire and like how to do your accounting. I knew all that stuff already and had deep domain experience.
I think the VCs kind of look at a lot of women, we’re like– they don’t know how to even talk to us. I think all of this is ripe for disruption. There’s a lot of women with great businesses that don’t get funding.
I don’t know if you saw this. A couple of months ago, Harvard Business Review released a series of tapes. They taped a lot of VC meetings with both female and male founders. They published these tapes. It was fascinating because there was a pattern. Harvard business Review saw the pattern. Yes, it was like the pattern recognition in these pitch meetings. Invariably, the men were asked about their promise and the women were asked about the proof. What they’ve done, almost every time.
Josh: Ha, interesting.
Melinda: “What have you proven? Why you? Why you? Why you?” Whereas, the men were like, “What do you think it promises?” Right?
Melinda: The men were asked about how they were going to maximize profits and earnings and valuation. The women were asked about how they were going to mitigate loss.
Josh: You just brought up my biggest pet peeve with VC funding. VC funding which is, in my opinion, the highest risk way of ever launching a business–
Melinda: Oh my God, it is.
Josh: –is because VCs focus on growth. What you just said is women focus on profit.
Melinda: Well, I didn’t say that actually. What I said was the VCs were asking questions that were assuming that about women. It was an assumption. It was an incorrect assumption.
Josh: Okay. Well, you see, I would submit that the VC model is a horrible model.
Melinda: Oh, well, that’s true. I agree with you there. I think there’s a lot wrong with it.
Josh: My other question for you about women being VC funded. How many women are going up to bat versus how many men are going to bat?
Melinda: Well, yeah, that’s also true. So there’s not nearly the numbers or density of women. I think one of the things in the tech industry, and that my book explores this too, is that you need a density of exits among women and women who are committed to investing as angels and super angels in other female businesses. And that we’re a little bit more connected because it’s hard.
People say, “Oh, we need more women on VC firms” but what’s the pathway to get to be a partner and on the investment decision making committee at a VC? Usually, either you’ve had an exit or you’ve been the entrepreneur in residence or there’s something that has allowed you to be in that position where you’re evaluating other female businesses. So yeah, obviously, the numbers aren’t necessarily there although I think that really is changing.
There a lot of women in business and a lot of very successful women in business. Women tend to do businesses though that aren’t necessarily VC-qualifying business anyway. A VC is going to look at it and say, “Is it scalable? Is it going to grow? Can it be a $500-million or a billion-dollar business? Yes or no?” Obviously, with SaaS companies, that’s a lot more likely. But if you create some sort of consulting company or some sort of company that he has no ability to scale then obviously you don’t even qualify for VC funding to begin with.
Josh: Right, nor should you want to.
Melinda: Well, exactly because, I mean, the only reason– I think the best case to take VC funding is to scale a proven idea. But if you need it for seed, VCs don’t really give seed capital really anymore, anyway.
Josh: Right, that’s the angel world.
Melinda: Yeah, it really is. But even the angel world is getting later stage. They really want to see a lot of proof of revenue. Revenue is tricky. It’s a lagging indicator if you’re creating a company or a startup that involves innovative technology because you need the money to even develop the technology so.
Josh: Yeah. Well, it’s sort of a chicken and the egg situation.
Melinda: Yeah, it is.
Josh: Here’s what I’ve noticed about working with women entrepreneurs or women private business owners versus men. I find that women are much more coachable.
Melinda: Right. They are. That’s a good thing until it’s not because sometimes we get over coached because we’re so absorbed. A couple of women I’ve interviewed in the book were sort of over coached to the point where they sort of believed everybody and it kind of cancelled themselves out. These are really smart women. It’s not like they’re not great.
But just like, say, for a woman who had come out of Tech Stars. A couple of the people in Tech Stars were like “You have to do this kind of swing for the fences model, don’t worry about revenue, just get users. Go B2C. Get traction.” And then the others were like, “No. You need to do B2B and get revenue before you can do that.” She was just, in the end, utterly like “what do I do?” It left her in a situation of kind of trying to please everybody and ultimately pleasing no one.
I think sometimes we go through life women – again, a generalization, always thinks of generalizations but kind of with this drinks trade balance. We make sure everybody’s got a drink. Everyone’s drink’s full. Everyone’s happy. And so, to what extent do we do some of those things, carry some of that socialization with us in the business.
Josh: You know, part of the issue also, I see, is that women are seen as being not nice and that’s I would just use a different word.
Melinda: What if you’re strong? Then you’re like–
Josh: Yes, yes.
Melinda: You’re the– can I say this on the air, the bitch word? Oh my God.
Josh: If you happen to act like a male counterpart, you’re running your business. You’re seen as being the pain in the neck.
Melinda: Oh yeah, I know.
Josh: Versus men are expected to behave that way.
Melinda: Oh, God. This is so, so true. I think women are in such fear of being labeled that because it’s so pejorative.
One of the things that my book seeks to do is to really reclaim or redefine concepts of strength and power because these are– we’re talking archetypes now, but like they’re really archetypal kind of masculine kind of characteristics. And to run a business, you do have to be strong. You have to make tough decisions. You can’t be worried about being liked all the time because sometimes you’re just going to make a decision– someone, an employee or a client– I mean, there’s so many things where you have to make tough decisions. There’s no question about it. And so, how you do that without being seen as some sort of mean girl or something, right?
Melinda: And people will put that on you. What I’ve discovered, as people will put that on you, even if you’re not being that way because there’s so much– getting kind of psychological here, but there’s so much projection. People like to blame somebody else for their own problems often. If a woman comes in and she’s really strong and says, “Well, this is what we have to do with the business.” She’s perfectly nice and polite and is working with tremendous integrity, she can still be called a bitch so. And then there are some people who can behave in a really awkward, not nice, out of integrity sort of way–
Melinda: –but what’s unfortunate is when people get tarred with something even that just for exhibiting like what it takes to run a business, and grow a business, and scale a business.
Josh: Oh, you know, it’s interesting. This is especially true out in Silicon Valley. It’ll be my guess is that men get away with being brilliant jerks, women don’t.
Melinda: Oh yeah, exactly. It’s like, “Oh, it’s okay. He’s just like that. He’s an entrepreneur.”
Josh: Yeah. He’s like, he’s a man. He’s brilliant at what he does. You have to put up with his crap.
Melinda: Okay. His name is Travis from Uber. I mean–
Josh: Right. Well, we have a whole– the truth is Steve Jobs was a brilliant jerk.
Melinda: Yeah. Well, yeah. But like– okay, so here’s the thing about him, a real perfectionist.
Melinda: Because he knew that– there’s this thing that stayed in my mind about him of standing over a bunch of engineers and designers and saying, “Would you really be willing to look at that blue bar like you have it there, like every day for your whole life? Oh, you wouldn’t? Okay. Well, can you change it?”
Josh: Right. Well that’s a good question. But he didn’t say it politely.
Melinda: No, he didn’t. No.
Josh: No. He said it in a– and if a woman eve said the stuff Jobs did, she would’ve been drummed out of the company in seconds.
Melinda: Absolutely. That’s right. Sometimes, women have to do– and you know it too, you have to go a roundabout way to get the same results. You just have to– it’s like, I guess, people call it soft power or whatever, but you’ve got to make someone think it’s their idea or just all these things. It takes so much more time and energy. It’s always kind of irritated me because I’m just a lot more direct and I would much rather just kind of get to the point. It saves time. It saves money.
And so, a lot of really entrepreneurial people who are really intelligent, they’re a little bit impatient. Entrepreneurs, I think, by definition are kind of impatient. Like, you want to grow your business fast. You want it fast, fast, fast. And so, it can be frustrating feeling like you have to waste time to go around but women do have to find a feminine way to show up in power because this is one of the things about authenticity.
I think, both of us are old enough to remember back in the 80’s how women coming into business, whether in the corporate world or very few as entrepreneurs, but starting your own businesses, had to do the uniform – the power shoulders and the shirt with the kind of tie and that kind of uniform? And it was to look like a dude.
Melinda: It was ridiculous but kind of had to be done. There was also the uniform as, “Oh, okay. I can never show weakness. I can never cry. I can never– right?
Melinda: And so, women expressed their frustration differently. They’re more likely to get rid of it, just clear it, seemed like being upset or whatever. You couldn’t do that. As a result, I think a lot of women had to, in essence, be a little bit inauthentic or taps much more overly into their masculine energy. I think when guys look at that, for a while, it was necessary to just be seen as one of the guys. I know I did it. But after a while, it’s like, “Well, wait a minute. I’m not living my own life. I’m not being myself. I want to be able to be things and also be a woman.”
Josh: Melinda, we’re at the end of our podcast. I’m going to bet people are going to want to find you somehow and read your book when it comes out. By the way, when is your book coming out?
Melinda: Next spring.
Josh: Next spring?
Melinda: Yeah, yeah, yeah. So, right now–
Josh: Okay, so we’re a bit early.
Melinda: Yeah. So my big process is I’m doing all the interviews. Right now, I’m interviewing so many women and it’s awesome. It’s an awesome process but, ahead of the book, I’m creating a community of women. There’s going to be a lot of stuff going on ahead of the book. There’s lots of ways for women to participate and get in touch and a whole bunch of good stuff.
Josh: How would they go about doing that?
Melinda: Find me on social media, that’s the easy end. On Facebook, for instance, I’m just Melinda Wittstock. I’m going to be creating a private group so if people want to friend me and DM me there. On Twitter, you can find me. My handle on Twitter, if you just look up Melinda Wittstock, you’ll find me but it’s @veriate, V for Victor, E-R-I-A-T-E. And so, you can always just connect with me on Twitter as well. And then through my company, all the contact information, if you go to verifeed.com, you can find me there.
This has been a fascinating conversation. We’re going to continue this on our Facebook Live broadcast we’re doing right now, after we’re done with this so we’re going to tie up to the podcast.
I also have an offer for you. I have a one-hour free audio CD course. I’m learning, unfortunately, that new cars are not coming with CD players. If you happen to be in that situation, just e-mail me and I’ll send you the file. But to get this, it’s really easy. Just take out your smartphone and text the word SUSTAINABLE to 44222. That’s the word SUSTAINABLE to 44222. You’ll get a link and you give us name and your address. We’ll mail out the CD. Hopefully, you’ll want to talk to me about it because I think it’s pretty interesting stuff.
Thanks a lot of spending some time with us today. This is Josh Patrick. You’re at The Sustainable Business. I hope to see you back here really soon.
Narrator: You’ve been listening to The Sustainable Business podcast where we ask the question, “What would it take for your business to still be around 100 years from now?” If you like what you’ve heard and want more information, please contact Josh Patrick at 802‑846‑1264 ext 2, or visit us on our website at www.askjoshpatrick.com, or you can send Josh an e-mail at firstname.lastname@example.org.
Thanks for listening. We hope to see you at The Sustainable Business in the near future.