Motley Fool Hidden Gems Investing - Leadership Strategies & Using Sports to Teach Business

Episode Date: November 13, 2022

More senior-level women are leaving the workforce than ever before, and just 2% of venture capital funding goes to female-led start-ups. That said, there are plenty of reasons to be optimistic about the future of female leadership and entrepreneurship. Julia Boorstin is CNBC’s Senior Media & Tech Correspondent and the author of “When Women Lead: What They Achieve, Why They Succeed, and How We Can Learn from Them.” Deidre Woollard caught up with Boorstin to discuss:  - Closing the funding gap for female-led companies - Shifting power dynamics in healthcare - What sports can teach kids about business - Why female leadership strategies are valuable for any business Companies mentioned: RENT, REAL, SFIX Host: Deidre Woollard Guest: Julia Boorstin Producer: Ricky Mulvey Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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Because we have your number. We see more women now who are at the senior levels leaving the workforce than ever before. So women at the VP level and above, they are leaving their companies. That is an incredibly negative thing, not just for them, but for corporate America. Not only are those companies missing out to have the expertise of those senior women, but think about all the younger women who are losing role models and losing mentors. i'm chris hill and that's julia borsten senior media and tech correspondent for cnbc she's also written the new book when women lead what they achieve why they succeed and how we can

learn from them deidre woolard caught up with borsten to talk about the problems that female led businesses are solving and how sports can teach kids to fail better I love this book I found myself cheering while I read it one of the most important things I took from your book was this idea that women are more likely to start a business with a societal impact and that women tend to prioritize impact over financial gain. How do we get more of that superpower out in the world? Well, I actually think what's really important is not prioritizing impact over financial gain, but figuring out business models that align impact and financial gain. So in success, these companies are not only making money, but the more money they make,

the more of a positive impact they're having either on society or on the environment. And I profile a lot of these companies and these founders in the book, and I think that's what's so important is figuring out a way to align those. So I, for instance, write about a company called Full Harvest. They take food that is not considered pretty enough to show up in a grocery store. So these are the exterior romaine leaves that may just rot, that before were just rotting on the ground in the fields when all the rest of the romaine hearts were being harvested. And so this entrepreneur, Christine Mosley, said, hey, we can take those romaine leaves and sell them to companies that make green juice. The farmer benefits, we can help the companies that are

making the pricey green juices lower the prices of green juice. And by the way, you're saving billions of dollars of food that otherwise would be rotting and bad for the environment. So financial gain and positive environmental impact, I think increasingly we need to see companies that are doing both at the same time. It's not like a side thing. We're going to make money and donate some of it to a good cause. We're going to create businesses that have both a financial and a social or environmental win. Well, and I think what's interesting about that example is that women sometimes ask questions about things that maybe other people don't. I'm thinking about the healthcare example. In the book, you had a bunch of female-led

healthcare startups. I was really struck by the story of Toyin Ajayi and how her experience as a doctor, led her to think about healthcare in this different way and really reimagine it. So why do you think healthcare is an area that we see this happen with too? Well, look, healthcare is an area that a lot of people have had their own frustrations with. There are a lot of challenges to the healthcare business in the United States. And I have to say it is a business. And one of the challenges is that a lot of companies get paid on the volume of care, not on the actual health outcomes of individuals. So that Toyin Ajayi story is an amazing one. Her company is called CityBlock Health. But what I found so interesting is she

really deployed a lot of the traits that female leaders are more likely to have, strategies that female leaders are more likely to use. And she did that to take an entirely different view of how to fix the healthcare business. So for instance, she was a young resident at Boston Medical, which is an incredibly wealthy state when it comes to healthcare. But what she noticed is that when it came to low-income patients, they were going in and out of the emergency room. She would see the same people come in month after month, and they were getting treatment for the immediate issue, but oftentimes they were getting discharged into the street. Some of them were homeless and were literally getting sent back out onto the street.

So she thought, of course, these people are going to be coming back in because they're not actually getting the help they need to really get healthier. She also saw some distrust of the system. And one patient she found hadn't been to a doctor in 30 years, and she had to sort of pull out of her what she was really in for, not the cough she had technically come in for, but the fact that she was worried she might have breast cancer, which it did turn out she had. And she had waited way too long to get treatment. So of course, Dr. Ajayi helped her get treatment. But Dr. Toyin Ajayi saw all of these challenges, saw that the system itself wasn't

actually working for patients. So she built CityBlock Health to take a really comprehensive view to help those patients, especially at the lower income levels. And for instance, They shift the power dynamic to try to build that trust. Oftentimes, they have doctors visit patients in their homes to address the whole health of the patient, to make sure people are actually getting healthier. They often have social services. They have people who are effectively social workers help their patients secure housing, get additional benefits. And ultimately, this is a company, CityBlock Health, gets paid on the long-term health outcomes. They don't get paid more if people get a lot of tests run on them when they go into the emergency

room. Those high emergency room bills are not a win for them. And so they're trying to structurally fix the problem, not just put a Band-Aid on it. I think there's something interesting there about the value of the female perspective. It's something you talk a lot about that in the book. How would you define that? And what do you think is the specific value that brings to business? Well, look, I think that I have to say every leader leads in a very different way. I've interviewed literally thousands of leaders and CEOs in my 20-plus years as a business journalist, first at Fortune Magazine, now at CNBC. But to me, what's so notable is there are these strategies that women are far more likely to deploy. And for decades, they have not been

associated, and probably forever, they have not been associated with strong leadership. But all the research shows, and I read through about 300 academic studies, all the research shows that these more female leadership strategies are, in fact, incredibly valuable for everyone. So, for instance, empathy. What Toyin Ajayi did is she was empathizing with those patients who didn't trust the system. She saw an opportunity because she could really empathize with the people who would ultimately be her customers. Empathy is hugely valuable, not just to relate to your customers and what they want, but also your employees. It's harder now than ever to motivate and connect with employees. Empathy is essential. Other characteristics that women

are more likely to have vulnerability. Women feel a lot more comfortable leading with vulnerability. And there's so much evidence that vulnerability invites problem solving, invites collaboration into problem solving. Humility is a key part of that as well. And as one of the CEOs I interviewed said, nobody wants to work for a know-it-all, right? So that's a really essential thing. And then you mentioned the fact that female founders are more likely to launch purpose-driven companies, there's a lot of evidence that that leads to greater outcomes, greater success. It's easier to motivate and hire employees. If people know that they're doing more than just making money for their boss, they're also going to have a positive impact on the world. And then I think

this big picture approach that Toyin Ajayi demonstrated, you know, this idea of contextual thinking, there's a lot of data that women are more likely to have divergent approaches to problem solving. So to pull out threads and try to ask questions around a problem, to bigger, build a sort of stronger picture of the whole forest around a tree, whereas men are more likely to converge on the problem, say, let's rush to a solution. Let's focus only on the solution right now. Though there are advantages to that, it's also really valuable to take that divergent approach, explore everything around the problem. And what I've seen in my research is the more you understand the context of a problem, not only will you be able to create a more systematic approach to

fixing that tree, if we want to talk about forest and trees, but also when the situation changes, you might be better equipped to adapt because you've already gone down those roads, pulled all those threads and explored all of those tangential things. So you have a better understanding of the full situation. So the situation changes, you'll be like, oh, we've already talked about this. Now we can pivot and address that challenge. So obviously we want more female leaders, getting funding is a core problem. In your research, did you find that women are more likely to get funding for things that speak to women's issues? And if so, how do we get women into all sorts of leadership positions and all sorts of companies? Yeah, I mean, the funding

gap is massive. Last year, 2% of all venture capital dollars went to female-founded companies. about 15.5% went to companies with co-ed founding teams. And that number has actually been growing, the co-ed teams. But the percentage of funding that went to all male founding teams last year, 2021, 82%. That is a massive gap if you think that those are founders that don't have women involved in the earliest stages. So the funding gap is huge. One way women have seen a closure of that gap is when they found companies with a purpose. So there's research showing that when investors are looking at companies without a purpose or companies that also have a purpose baked in, that having a purpose baked in eliminates the bias against

female investors. And I have a really interesting study about that in my book. That ties into this expectation that women are supposed to be warm and nurturing, which is a stereotype of women that has also been a challenge for a lot of female leaders and part of the double standards that women have to reckon with. We are seeing a surge of entrepreneurship and funding of female founders in the health tech space. You know, health tech is an area that has overlooked services for women for a very long time. And now we're seeing a surge of these companies, whether it's around fertility or menopause or even just general women's health. And so that's an area where we're seeing women draw more funding. And then also in retail, you know, there have been three

big notable IPOs, female-founded companies, that have really changed the way people consume products. The RealReal, Rent the Runway, and Stitch Fix, you know, sort of from the circular clothing economy to the rental economy to this idea that everyone has access to a personal stylist. So I do think that once there's a critical mass in certain categories and things start to change more quickly. So in any field, once you have 20 or 30% of the executives in that field be women or 20 or 30%, that idea of critical mass is once you hit a 20 or 30% of a minority group, then the change becomes much more rapid. So I think that's something to watch. And another reason why it's important to get more and more women into each of these industries. But I also

do feature some women in my book, When Women Lead, that are in the enterprise software space. And it's important to understand there are women in companies across various fields. So thinking about the post-pandemic, we just talked a little bit about what some of those companies are going through. How did your understanding of female leadership evolve as you watched so many women leaders navigate the challenges that we all faced during the pandemic? Well, on one hand, I was incredibly inspired. I was watching these women navigate the biggest challenges that any companies have seen in

the United States probably since World War II. And I was really impressed by their ability to balance long-term planning and short-term adaptation. And I really saw sort of this idea that women are more likely to have a high adaptability quotient. I saw that in action. I was inspired. I was incredibly hopeful, especially because so many of these companies are really trying to change the world. And so that to me was very inspiring. And on the other hand, I did see women facing more double standards, more challenges, and more public scrutiny simply because there are fewer of them. I really wanted to understand why women leaders are so much more likely to be under the microscope.

And I think it comes down to this idea of token theory. Whenever someone is in a small minority, they are more likely to draw increased scrutiny, criticism, and attention. And I think that's definitely been true of the female leaders and CEOs. So I hope we get to a place where there so many female leaders that they are no longer so notable for being in the minority and no longer draw that kind of heightened scrutiny. Well, and also during the pandemic, we saw the challenges of having kids at home, things like that, really impacting women in general, not just women leaders, but women all throughout the workforce. And what do you think needs to change the way that we think about children and the responsibilities in the home to enable more female leadership?

You know, there are some amazing books that are written about this very issue. One is called Fair Play by my friend and inspiration Eve Rodsky. She talks about how men and women or partners need to equitably divide up labor at home, including the invisible labor, the stuff that we don't talk about or that people just assume that the moms are going to do. And so I think that's a key part of it. There's also been a lot of attention coming out of the pandemic about how many women left the workforce, how the pandemic really set women back, not just by years, but by decades. And we need to have better systems in place around childcare to support women so they can continue to work. And so corporate America

doesn't lose a whole generation of phenomenal female executives and leaders. So I think there's been a big push to really try to address that from a sort of regulatory standpoint. And Reshma Sujani has introduced this thing called the Marshall Plan for Moms, which I think is a really important thing to look at, and this idea of how our government needs to be working to help support women, which is what it needs to do to help support businesses. Well, I find that fascinating because I think that it's true that child care is seen as a women issue when it is absolutely a future of the economy, a future of the world issue. And yet it seems to be bucketed under sort of female problems in some way. Yeah. I mean, it's interesting because,

you know, Lean In and McKinsey just came out with their Women in the Workplace report, which is now an annual report. And this report focused on the fact that we see more women now who are at the senior levels leaving the workforce than ever before. So women at the VP level and above, they are leaving their companies. That is an incredibly negative thing, not just for them, but for corporate America. Not only are those companies missing out to have the expertise of those senior women, but think about all the younger women who are losing role models and losing mentors. So I think it's really important to look at that data and understand that we need those women to stay in the workforce. And if you look at this study, which I highly recommend,

it talks about why women are leaving. Many of them are frustrated. Many of them feel like they're not getting credit for what they're doing. They're getting undermined at work and they've simply had enough. So we've talked about the great resignation, which was a phase a couple months ago, or maybe even a year ago. And now I think senior women are trying to figure out where they fit in in the corporate landscape. I hope that some of those women found their own companies or go work at companies that believe in them and value them as much as they should. But I think that we really need those women to be working and to be, you know, inspiring and educating and, and forcing change because that's sort of what we need right now. So I just think that like, this is not just

a women's issue, like corporate America, male run corporate America will benefit if more women stay in their companies and don't leave. So we've talked a little bit about senior leadership. Let's talk about the, the, the future, the next generation. You made this interesting connection in the book between sports and leadership for women. So what did you discover and how does that make you think about the role of sports in young girls' lives? Well, I actually think the thing about sports is valuable for men as well. So there's a lot of research showing that not only are female athletes in high school and college more likely to be successful in business, but athletes in general, if you do sports seriously in high

school or college, you're more likely to be successful in business. So this is true for both men and women. But interestingly, it also helps close those gender gaps between men and women. I was really interested in this research. I thought maybe it's because young women who are doing sports are trained to be really competitive with each other and to go out and compete against other teams. I thought maybe it was something about teamwork. I did not do sports very seriously myself. I was really, really curious about this research. Also, I have two kids and I take them to basketball practice all the time. I wanted to understand what they were really getting out of this. I dug deep into the research. What was so interesting is that the value of sports does not

come from competing against other teams. The value is frequent failures, because you're not going to win every game. You'll probably lose about half of the games on average. Frequent failures and getting used to the idea that you're going to constantly be evaluating your performance, figuring out what you could do better, and pushing yourself to do better next time. So psychologists or social scientists call this after-event reviews. In sports, you call it reviewing the tape. You don't have a game and then don't talk about what happened and then move on to the next one or say, well, that was a bummer and move on to the next one. You say, wow, we bombed that game. Why? What could we do differently? What could we not control because the team had

certain advantages or the sun was in our eyes or whatever it is? So I think that this idea that athletes are trained to get used to failing and understand that each failure is an opportunity to learn and improve. So to break that down, these after event reviews include figuring out what you did well that you can be proud of, but also continue to grow into, figuring out what you did badly and how you need to do better next time, and also isolating the factors that were really outside of your control so you can understand how you interacted with these factors that were outside of your control and maybe even how you can prepare for those types of things better next time. So I think that's a practice that everyone can adopt. So I did not play basketball in high

school, but I can adopt that practice in my everyday life. Every TV segment, if I feel like, oh, I could have done that better. Instead of just being annoyed, I can go back and watch it and think, let me do my after event review and be better next time. I love that. Yeah. Not, not always so easy to do, but I love what you said there about frequent failures, because I think that's really important, especially when we talk about entrepreneurs and entrepreneurship, most, most businesses, uh, you know, the success rate is, is not so high, but, and so getting funding, which we talked about earlier, is even more important. One of the things that you talk about that I think is really interesting and gets me excited is there are more female

venture capitalists, more women raising money to support women. How can all women kind of benefit from understanding the ways that money is raised and sort of changing that power dynamic a little bit? So I truly believe that knowledge is power. I have become, in this researching process, increasingly obsessed with data. I think if you understand what you're up against, you're going to be more successful in battling it. You can't climb a mountain if you don't know how high it is. You can't blast through the boulder that is bias if you're not totally aware of what exactly that boulder is. So I really lay out in the book a ton of research about double standards and about challenges and about the percentages of funding that go to women or

why women get asked different questions in pitch meetings, because I think all that information is not meant to bum people out and to frustrate them, but to empower them. And so if they come up against bias or if they're frustrated by how a situation is going, they could say, wait a second, which part of this negative feedback that I got is actually valuable to me and is useful and I could use this to get better next time, and which part of this is simply bias and stereotype being deployed against me. And being able to separate out the valuable stuff from the bias is hugely empowering and useful. And I think that people need to know all the numbers so they can figure out how to exist in this world. Yeah. Interesting. So one of the things that that seems to say to me

though, is that women still seem to need to do more of the work. Why is it important for men to also do this work as well? Well, look, here's the thing. All of the data shows that diversity is valuable for business. Companies will be more successful if there are women and people of color on every team. Men will benefit from understanding this research and men will benefit from leading in some of the ways that have enabled women to defy the odds. All of the traits that enabled women to be successful and grab a tiny piece of that 2% of venture capital funding, those are traits that will help men defy the odds that they're up against in whatever situation they're facing. So I think we need to understand that these female leadership traits are universally

valuable and that everyone of any gender needs to break free from these stereotypes of what a leader looks like and acts like and how they behave. So I think that's sort of a step one in this process. But I also think that there's some really interesting research about how diversity bringing in outsiders to a situation helps the people who are there in the first place level up their game. And there's a great study in the book about the Greek system and how fraternity and sorority members sort of assume that everyone has a shared language. I don't know if you remember this study. This is one of my favorite ones. And they found that when you brought in an outsider, someone who was not part of that fraternity or sorority, the people in the original group were

like, wait a second, I can't assume that this person is going to agree with me. I have to make sure I'm really sure of my assumptions. I'm really sure about my own way of addressing this problem. And so I think that we all get better when there are people who are different from us who we're interacting with or who are joining our group. And we have to think about if we all want to be our best selves at work, we should surround ourselves with people who have different assumptions, you know, perceptions and backgrounds than we do. Yeah, absolutely. It's one of the reasons I think this book is so important. Last question for you, what makes you most optimistic about the future of female leadership and entrepreneurship?

There are so many reasons I'm optimistic. One of which is that these women have defied amazing odds against them, massive odds against them, and they're still taking on some of the most important challenges of our time. And I'm particularly optimistic about the way they're taking a long-term plan. These next couple of years may be tough, but they want to enact a systemic change of whatever industry they're tackling, whether it's retail or healthcare or the agriculture industry. So I'm optimistic because of these women's amazing stories and because of their long-term approach. I'm also optimistic that everyone is going to start to adopt the strategies that female leaders have traditionally taken, because I believe this is

a moment for change in the business world. We're coming out of the pandemic. We are facing, you know, record inflation, concerns about a recession. There's still a war going on in Ukraine. We are in a new phase of constant uncertainty. And I believe that this is a time for everyone at every company to think about how they're going to be moving through the world. Leaders need to think about how they're connecting with their employees, their customers in an entirely different way than they did 20 years ago. And I think this is a time where everyone is going to benefit from those traditionally female leadership traits. And if you want to succeed right now, things like empathy are table stakes. This is the time to really dive in and understand how these women have defied the

odds and take those skills, take those strategies and have everyone adopt them right now because we are facing so many challenges. We need a new tool set to navigate them. Empathy is table stakes. That's very powerful. I love that. The book is When Women Lead. Julia, thank you so much for your time today. Thank you for having me.

As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill. Thanks for listening. We'll see you tomorrow.