IPO

Women: Not Present on IPO Company Boards

For years we have heard that men largely populate the boards of IPO companies. We decided to test that precept. 2020 Women on Boards looked at the gender composition of the boards of directors for the 25 largest IPOs[1] in 2014, 2015, and 2016 and the results are worse than expected. It is widely accepted that IPO company boards are populated by venture capital appointees who are mostly white men, but we hoped that at the point of going public, companies would recognize that board diversity is essential to success. Not so. Of the 75 largest IPOs from 2014 to 2016, nearly half, or 37 companies, went public with no women on their boards. Another 25%, or 19 companies, had only one woman. In other words, between 2014-2016, three fourths of companies with the largest IPOs went public with one or no women on their boards.

 

The optimists among us might assume that these companies would correct this judgement error in the first year or two of operating in the public eye—and in fact, several of them did. The number of Zero ‘Z’ Companies with no women on their boards dropped from 37 to 22, or 30%, and the number of Token ‘T’ Companies with one (token) woman rose from 19 to 27, or 37%, as ‘Z’ companies added a woman. Additionally, two all-male IPO companies that failed to diversify were no longer trading by May 2017. Nevertheless, even after a year or two of being public, two thirds of the companies still had one or no female directors.

 

Every year 2020 Women on Boards publishes the Gender Diversity Index (GDI). In 2016, the percentage of women on the boards of GDI companies rose to 19.7% and the percentage of women on the 2016 Fortune 1000 list was 18.8%. When we compare this progress to the recent IPOs where the percentage of women on these boards is 9.4%, we see how far we need to go.

 

Fitbit Not Fit for Women

Fitbit, the colorful bracelet seen on the wrists of the fit and wanna-be fit, is not fit for women. The company that is dedicated to health and fitness of the masses is going public with no women on its five-member board – another technology company taking the lead from its male investors. We say it’s time that the VC community pay attention to stakeholders who want to see the boards of companies where they work, shop and invest reflect the population, more than half of which is women.
 
Of the ten biggest tech IPOs of 2015 (Wall Street Journal, 6/17) three are Zero 'Z' Companies with no women directors (Black Knight Financial Services, Shopify and Apigee) and five are Token 'T' Companies with one woman director (Innovation Holdings, GoDaddy, Evolent Health, Baozun and MaxPoint Interactive). Two of the companies are Winning 'W' Companies, with 20% or more board seats held by women (Etsy and Box).
 
We all know that women make up a huge number of Fitbit customers - maybe the majority. The same can be said of most of the companies on the 2015 technology IPO list. To imply that there are no women qualified to serve on the Fitbit board is ludicrous. At best it's a gross oversight. At worst, it's discrimination, plain and simple. Discriminating against your customer base is just bad business.
 
We implore Fitbit to put women on its board.

Launching an IPO? Follow Zendesk's lead.

Zendesk, a leader in providing cloud software for better customer service, announced that it would be appointing three new members to its board of directors, all of whom are women. Caryn Marooney, Vice President of technology communications at Facebook; Elizabeth "Betsey" Nelson, former chief financial officer of Macromedia; and Michelle Wilson, former Amazon.com General Counsel. Zendesk's board now stands at 4-3, men to women. With companies like Twitter and Facebook taking so much heat for not having any women on their board, Zendesk's seemingly unprovoked decision sets a new precedent, giving hope for the future of corporate board diversity.
 
In a separate declaration, Zendesk stated that they have reached 40,000 customers, now serving over 300 million people worldwide--giving all the more reason to expect that the company is headed toward an IPO.
 
Whether influenced by the desire to go public, or genuinely falling in line with corporate board diversity, Zendesk has put its full faith behind its new board members: "Caryn, Betsey and Michelle know what it takes to turn growing companies into some of the most respected brands in the world," said Mikkel Svane, Zendesk founder and CEO. "Their talents will help us share our vision for bringing companies and customers closer together with even more people around the world."
 
Other companies getting ready to launch IPOs can learn from Zendesk's example. In an earlier blog post, we called for a checklist for companies about to go public. If you missed it, you'll find it here.

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