Female founders are crashing the billionaire club
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There’s a certain confidence that comes with being a billionaire.
Spanx founder Sara Blakely has it. On this November morning she’s at her Atlanta office, lounging on a red, white, and black paint-splatter-patterned couch and dressed, appropriately enough, in Spanx’s new loungewear. “Mick Jagger just asked me to send him these,” she says by way of introduction, gesturing at the cozy-looking set.
In just two days, after 21 years of owning and running Spanx, Blakely would close on a deal that sold a majority stake in her company to Blackstone, a transaction that values the shapewear maker at $1.2 billion. It launched Blakely, already wealthy from her years of operating the booming business, into a new realm: “The difference now is, I’ve monetized the value,” she says.
Blakely, 50, built that billion-plus value largely on her own—no VC backers, no cofounders sharing the load. And she went about it her own way, making business decisions via “intuition,” operating far from the apparel industry hotspots of New York and L.A., and conceiving of herself as more inventor than CEO. She even wrote the original patent for Spanx’s shapewear herself, rather than shell out for an expensive lawyer: It hangs in a red frame in the company’s lobby. Her path has had many benefits, but it’s also been one that “can be lonely,” she says. “I’ve been on my own island.”
Beyond her penchant for bootstrapping, part of what has separated Blakely from the larger startup world has been her status as a female founder—the rare woman to start and run a company of Spanx’s size. But on that front at least, her island just got a bit more crowded.
The past year has been a turning point for female founders, with not just Blakely, but also Whitney Wolfe Herd of dating app company Bumble, and Anne Wojcicki of genetics startup 23andMe crossing a rare threshold: female founders and CEOs who have sold or taken their company public—and achieved billionaire status in the process.
The billionaires’ exits may have been the most spectacular, but they were part of a larger surge of blockbuster IPOs, SPACs, and sales led by female founder-CEOs, including Jennifer Hyman of fashion company Rent the Runway; Caryn Seidman Becker of biometrics screening company Clear; and Heather Hasson and Trina Spear, of medical scrubs maker FIGS. So far in 2021, five U.S. venture-backed companies with all-female founding teams went public or were sold in deals valued at $1 billion or more, according to Crunchbase. Five in a year may not sound like an earthshaking stat, but consider the context: Since 2011, only 12 female-founded companies managed to hit that number.
Reaching the billion-dollar mark is a huge deal for these founders, obviously. But it also has significant implications for the larger startup ecosystem—and for those who benefit from the massive wealth generated by a successful exit. The women enriched by these “liquidity events” can also include investors, board members, and employees—groups of people who are, in many of these cases, predominantly, and for the startup world, unusually, female.
“It’s really important when you have these large exits, because it creates an ecosystem not only of talent, but also of wealth,” says Deena Shakir, a partner at VC firm Lux Capital, which has coinvested with Wojcicki in several startups. “And that proliferates for future companies down the road.”
Certainly, these milestones come during a year that has seen a frenzy of dealmaking and IPOs across the board—and where the gains have disproportionately benefited men. Compared with this year’s five female-founded big exits, 172 U.S. venture-backed companies with all-male founders had 2021 exits valuing their companies at $1 billion or more, according to Crunchbase. And despite the odd venture-dodging bootstrapper like Blakely, most startups that aim for billion-dollar scale do depend on VC dollars, of which only about 2% ended up in female-founder hands this year. That stat, already dismal, gets worse when you zero in on Black and Latina women, who together get less than 0.5% of venture capital, reports ProjectDiane.
So a few more big IPOs won’t fix a breathtakingly inequitable system. But for those who have been working to expand entrepreneurial opportunities for women, the minting of multiple female-founder billionaires this year is a cause for hope—in large part because these women are more likely than successful male founders to reinvest some of their wealth in other women.
“We’re still in the beginning of these fundamental shifts,” says Pam Kostka, the outgoing CEO of All Raise, the Silicon Valley nonprofit focused on female founders and venture capitalists. “But we see the seeds being planted—and I’m optimistic.”
Anne Wojcicki, a laid-back presence who sometimes shows up to speaking engagements in her running shorts, is used to being “surrounded by money,” she says. Her family grew up comfortably middle class, but back in 1998, her sister, now YouTube CEO Susan Wojcicki, rented her garage to the founders of what would become Google. Anne eventually married and later divorced Sergey Brin, one of those founders, who is now the seventh-wealthiest man in the world, according to Bloomberg’s Billionaires Index. (The terms of their divorce settlement have not been disclosed; Wojcicki and Brin, who invested in 23andMe, in late 2017 split up the family office that jointly directed investments and philanthropic grants.)
But despite all that, the 48-year-old has noticed a change in how she’s been treated, especially since 23andMe went public in June with a valuation of $3.5 billion. (The deal was done via merger with a special purpose acquisition company created by Virgin Group’s Richard Branson.) In other words—since she made a share of her tremendous wealth on her own.
Wojcicki recalls how she and Brin used to attend the World Economic Forum in Davos, where the attendees’ color-coded name tags create a notorious caste system of the well-heeled: “I remember specifically how people would just look at your badge and be like, ‘Oh, you’re a partner.’ And then they ignore you,” Wojcicki says. “There are people who wouldn’t talk to me for years and years.”
That’s a dynamic familiar to many female billionaires, who are generally more likely to come into money through inheritance, marriage, or divorce. Women own 37% of North American wealth, according to Boston Consulting Group, but few of them acquired it directly from their own businesses. Only 5% of the top 1% of U.S. households by income are one-percenters because of the woman’s earnings, reports the American Sociological Review.
Coming into a fortune through inheritance or divorce sometimes leaves women less confident about what to do with it, according to Women’s Philanthropy Institute director Jeannie Infante Sager. There are exceptions, of course. MacKenzie Scott, ex-wife of Jeff Bezos, and Melinda French Gates, formerly married to Bill Gates, have collectively given billions to organizations focused on gender and racial equality, far outshining their former husbands in this area. But as a whole, says Sager, women who have profited from their own entrepreneurship are more comfortable investing in others. “They’ve been successful in earning wealth, so they’re confident they can create more wealth,” she says.
Those who operate in the world of the wealthy also point to another difference in how men and women approach their fortunes. “Women make sure it’s not forgotten they have a responsibility to help those coming behind them,” says Wendy Holmes, a managing director and private wealth adviser at UBS, who works with clients with assets greater than $100 million.
Women’s propensity for doing just that is visible in the paper trail left by the big IPOs of 2021. According to a Crunchbase analysis for Fortune, 110 men who achieved billion-dollar exits this year—a group that includes the founders of Coinbase, Robinhood, Affirm, and Warby Parker—have made 732 public investments in other startups. Of those, 6% of deals went to all-female founding teams, and 14% to companies with mixed gender teams. Meanwhile, Crunchbase counted 10 female founders who achieved billion-dollar exits and made a total of 59 public investments, 22% of which went to all-female teams and an additional 25% to startups with founding teams that included at least one woman.
No single man tracked by Crunchbase has invested in as many women as Wojcicki, who has backed 14 companies with at least one female founder (out of 29 overall investments). She’s comfortable investing in and potentially losing money on entrepreneurs that the white, male Silicon Valley establishment might consider to be “higher risk.”
“A lot of people will say, ‘I don’t mix philanthropy with investing.’ But my line is more blurry,” Wojcicki says. “I’m investing to do good, and to drive change. If that has less of an ROI, I’m happy to take that ding—but I also believe that long term, it’s the right financial choice.”
Wojcicki and her fellow female founder-CEOs also measure their success in how many future startup executives they’ve employed. At least 11 23andMe employees, including six women, have gone on to found or lead their own companies, and most of the other founders interviewed for this story could also brag about the number of CEOs and founders they count among their companies’ alumni network.
“Having cash—and being able to fund projects—opens up doors,” says Wojcicki. “And seeing all these women actually having liquidity is amazing.”
Whitney Wolfe Herd doesn’t feel like a billionaire. It’s been nine months since Bumble Inc., the dating app business she founded, went public via the Nasdaq stock exchange in an IPO that valued her 11.6% stake at $1.5 billion at the close of trading.
The 32-year-old is with family in Colorado but takes a break for a video call, dressed in a casual long-sleeve shirt and a messy bun, Bumble’s bright-yellow slogan “make the first move” as her Zoom background. “It all feels very on paper,” she reflects. “I haven’t sold one share on the public markets.”
Bumble wasn’t Wolfe Herd’s first startup (she was a Tinder cofounder), and even in the early days, she considered herself well-educated about deal structure. But there was a lot of fine print to navigate over the life of the company, which was originally backed by European dating app Badoo and its parent, MagicLab; and in which private equity firm Blackstone bought a majority stake in 2020. That transaction valued the company at $3 billion, serving as a precursor to the IPO and putting Wolfe Herd in charge of the entire operation—but even today, she sometimes thinks about what could have gone wrong.
“A lot of women feel they need to take whatever money they can find, because it’s so hard to find money as a woman founder,” she says. “But sometimes the fine print doesn’t make sense, or it slips through the cracks, or it becomes damaging to them long-term. Terms and clauses can hold a founder hostage down the road.”
Now, as she assesses what she might do with her freshly minted billionaire status, she’s less fixated on how much venture capital funding women are getting, and more on what happens to them once they get it. Wolfe Herd has “99% paused” her personal angel investing (aside from a brand new stake in Spanx—more on that later) as she navigates her new restrictions and responsibilities as a public company CEO. But as she identifies businesses where she wants to invest in the coming years—women’s health and financial empowerment are two top interests—Wolfe Herd wants to offer not just funding but information, the insider knowledge she wishes she’d had more access to along the way.
In addition to funding, she plans to provide founders with resources like legal services from an independent attorney and in-depth education about how deals are structured. “I want to package some of these things that so many women have discovered the hard way,” she says, referencing the spate of female founders who lost control of their companies in 2020 (a group that includes the Wing’s Audrey Gelman and Outdoor Voices’ Tyler Haney, among others). Wolfe Herd calls this investing with “no strings attached.” She says, “You’re not trapping young business owners into terms that are impossible for their future growth and success.”
It’s a formalization of a kind of startup education that has historically happened informally, and as such, failed to reach women. “There’s this camaraderie that exists with men that’s like, ‘Let me connect you to my lawyer,’ ” she says. “For some reason, the women’s ecosystem doesn’t offer that same access.”
Part of that disconnect comes back to how overwhelmingly male the larger system is: About 85% of check-writing general partners at venture capital firms are male, according to PitchBook. Male VCs have certainly played a role in backing female entrepreneurs; Wojcicki, for example, is quick to praise her early male investors, including 23andMe board member and Xfund managing general partner Patrick Chung, as “super supportive” and committed to “driving change.” But the structure of the venture world means men are still dominating not just the funding calls, but also, as board members of their portfolio companies, often dictating decisions around strategy, expansion, and even company leadership.
“A lot of investing is just around pattern recognition—and some of it is conscious, and some of it is just muscle memory,” says Maya Noeth of Accel, a former Bumble board observer who led the venture capital firm’s $97 million investment in Bumble during Blackstone’s buyout (Accel now owns 5.5% of the company). “The more times you can have exits like this, where women are generating many multiples of return on investors’ capital, the more normalized it becomes—and it just reduces friction to invest in future women.”
One possible model for what Wolfe Herd has in mind—though concentrating on investors rather than founders—is a two-year-old VC fund called Operator Collective. The purpose of the fund is to give underrepresented startup execs experience as investors, thereby expanding the pool of who is cutting checks: 90% of its operator limited partners are female, and 40% are people of color. Crucially, it also allows many LPs to start by investing just $10,000, lowering the stakes and the bar to entry. “This is about education and accessibility,” says Mallun Yen, Operator Collective’s founder. “I really wanted to expand wealth creation beyond white male rich people.”
There’s evidence that approach works: In the case of Operator Collective, LPs who’ve had a taste of success go on to invest more broadly. “They make other angel investments, become advisers, join boards,” says Yen. “What you’re seeing is that when these women are given access, and they’re given a way of investing, then they absolutely are.”
Just setting foot in Spanx’s Atlanta HQ, it’s clear that this is a company that plays by its own rules. Color, tchotchkes, and art adorn most surfaces—the numerous sculptures and paintings of bras and butts are particularly hard to miss. Housed in a six-foot-high glass case, there’s even a mannequin modeling the original leather pants Olivia Newton-John wore after her transformation in Grease, which inspired Blakely to launch the first Spanx leggings.
So how does such an iconoclast—both the founder and the company she runs—fit into the buttoned-up world of Blackstone, which now owns a majority stake? “You mean, they don’t have pink walls?” Blakely says, laughing. “I’m going to bring my butt statue right to the lobby of Blackstone.”
In reality, Blackstone is proving itself more than willing to think outside the usual private equity box; an all-female team led the Spanx deal, and between working with Blakely, Wolfe Herd, and Hello Sunshine founder Reese Witherspoon, it’s earning a reputation as a big backer of women-founded companies.
Of the decision to sell, Blakely says, “I said to the universe, ‘I need a sign. I need for it to be specific. It cannot be a rainbow. You need to make it abundantly clear.’ ” She got it—though she declines to say what it was. As for Blackstone, what appealed to her wasn’t “as much about the dollars and the deal structure,” she says. “It felt more about, we see what you’re doing, we feel what you’re doing, and we want to empower you to do it on a bigger scale.”
It wasn’t as much about the dollars and the deal structure … It felt like, ‘we see what you’re doing, we feel what you’re doing.’Sara Blakely, founder, Spanx
While “owning something 100% has so many benefits,” she says, she’s looking forward to this new, more collective stage of the company’s development. (Blakely says she’ll stay highly involved in the business; she retained a minority stake in Spanx in the sale and became executive chairwoman.) After all, she’s spent years as the only woman in the conference room and on the manufacturing floor. Now her investors include Wolfe Herd, Witherspoon, and Oprah Winfrey, all of whom bought in at the close of the Blackstone transaction. “I’m interested in seeing how it feels not to have the weight of all of it on me,” she says.
Like Wojcicki and Wolfe Herd, Blakely says she wants to turn her focus to supporting other female founders, but as with all things, she’s going about it her own way. Most recently, she offered a series of $5,000 grants to female entrepreneurs during the pandemic—a relatively modest amount she chose because it’s the size of the savings she used to launch Spanx, money she famously made by selling fax machines door-to-door.
She also sees her role as more than financial. She believes her story and success can encourage the next generation of female entrepreneurs—showing them that you don’t have to take venture capital, that you can prioritize your ownership, and that you don’t have to compromise your personality or values to make it in business. A lofty idea, sure, but one that’s already borne some fruit. Wolfe Herd, for one, credits Blakely and her path as a model: “Sara protected her economic interest the whole time,” she says.
Like Blakely, Wojcicki, and Wolfe Herd, all of the U.S. female founder-CEOs who took their companies public in 2021’s big exits were white. Internationally, the situation is somewhat more diverse. In November, Falguni Nayar, founder and CEO of beauty retailer Nykaa, led her startup through an IPO that made her India’s wealthiest self-made woman, with a net worth of more than $7 billion, according to Bloomberg’s Billionaires Index. And some U.S. companies with female founders of color did go public in billion-dollar deals this year, including Neha Narkhede’s Confluent, Jessica Alba’s the Honest Company, and Tracy Sun’s Poshmark. But none of these women were in the CEO seat.
“It still takes a cadre of white men, either in leadership positions or on boards, to allow the subsequent rounds of funding” that are typically required to get a company to billion-dollar scale, says Melissa Bradley, a serial entrepreneur and former Obama administration official who now runs the 1863 Ventures fund for underrepresented entrepreneurs (and who is a Black woman). “For women of color, we have to get the white man’s validation—and that is just fewer and far between.”
The 2021 crop of female-founded exits “is something to celebrate,” Bradley adds. Companies like Bumble and 23andMe “are the ones who got through,” she says. “This year more got through. But it does not mean the door is now going to open wide, and here comes everybody right behind them.”
Some of the women who squeezed through that door share Bradley’s skepticism. Rent the Runway cofounder and CEO Jennifer Hyman, for example, raised $357 million in her retail company’s October IPO, and says she’s been “inspired” by the even bigger deals led by Wolfe Herd and Blakely (whom she calls, respectively, a friend and a mentor). “These are incredible, incredible women—and maybe [they will] inspire even more women to fight harder,” says Hyman. But she’s skeptical. “I’m sorry to be pessimistic” about the long-term effects on the female-founder ecosystem, she says: “Until the dollars go [women’s] way, there’s not much that will change.”
After all, no matter how much of their new wealth they invest in fellow women, Blakely, Wojcicki, and Wolfe Herd are only three people. And, as Hyman wryly points out, they’re vastly outnumbered in the ranks of the founder-billionaires who don’t have a track record of investing in half of the population.
“There’s a lot of men who have made billions of dollars,” Hyman says, “who I wish were investing in women.”
Blackstone’s founder whisperers
The private equity player has emerged as a leading force helping propel female CEOs toward big money exits.
The unlikely connective tissue between the Bumble and Spanx exits is Blackstone, the private equity firm with $731 billion in assets under management.
Starting with its 2020 stake in Bumble, the firm has committed to backing “strong female founders with a point of view,” says Kelley Morrell, global head of asset management for tactical opportunities, who led the firm’s post-investment work with Bumble and was part of the team that closed the Spanx deal in November.
Although apparel and online dating are two wildly different industries, Blackstone is following a similar playbook with both businesses: identify a company with powerful leadership and unrealized potential, shore up the business, recruit the right management team and board, and prep for an exit. (For Spanx, that effort is being led by global head of consumer for the growth division Ann Chung—at the helm of an all-female deal team.) The strategy extends to media too; a different team at the firm bought a majority stake in Hello Sunshine, actor Reese Witherspoon’s media company, valuing the venture around $900 million.
Blackstone sees opportunity here: When it invested in Bumble, the transaction valued the dating app business at $3 billion; at the close of its first day of trading, Bumble’s value was $13 billion. Wolfe Herd went on to become an advocate for the firm, helping persuade Witherspoon and Sara Blakely to come on board. “So many people were like, ‘Oh, don’t go with a private equity firm,” Wolfe Herd recalls. “But they have been this remarkable engine behind us with resources, with expertise, with leaders with passion.” She and Witherspoon also became some of the first outside investors in Spanx at the close of the Blackstone transaction.
“Blackstone recognized that this is really unique and different,” Morrell says of the Bumble deal. “We’ll be able to utilize this experience in backing other types of founders going forward.”
A version of this article appears in the December 2021/January 2022 issue of Fortune with the headline, “Crashing the billionaire boys’ club.”
Editor’s note: An earlier version of this story misstated the value of Bumble’s market cap at the close of its first day of trading. It was $13 billion.