Another Way the Startup World Hinders Women Entrepreneurs

Image: Shutterstock

BBefore launching new products, entrepreneurs often have doubts: will their ideas succeed in the market or will they fail? To reduce uncertainty, creators can publish their inventions on platforms like Product Hunt, where early adopters explore and test new apps and other products, while offering feedback to help entrepreneurs refine their ideas.

However, there is a caveat to this review: 90 percent of Product Hunt users are male, according to a recent working paper by three researchers at Harvard Business School titled “Barred Sampling of Early Adopters and the Direction of Innovation in Startups.”

“You’re missing out on information from a huge part of the population,” says Rembrand Koning, assistant professor of strategy who wrote the paper with Sarofim-Rock professor of business administration Ramana Nanda and postdoctoral fellow Ruicin “Sam.” Cao.

This reality is especially problematic for women entrepreneurs, who are more likely to invent products that meet the needs of women consumers. “You can imagine these products being discounted because the men on this platform often lack the life experience to appreciate the potential appeal of a product,” Koning says.

This gender gap is hardly limited to Product Hunt. Men also make up 75% of Kickstarter visitors, 67% of Indiegogo visitors, and 79% of Y Combinator’s Hacker News. And, of course, they dominate the conference rooms of venture capitalists and technology companies making decisions about investing in new products. “When you’re trying to grow a startup, the people you get advice and feedback from are overwhelmingly male,” Koning says.

This phenomenon, known as “sampling bias,” is more likely the result of active discrimination against women, Koning says, but rather a lack of representation in the sample of people giving feedback. However, this can have serious implications for the success of a product.

Products targeted at women show less growth
To test this effect, the researchers studied about 6,000 products released on Product Hunt over a two-year period from 2016 to 2018. Using machine learning, they analyzed product descriptions to categorize products based on how much female consumers like them.

For example, an app that allows pregnant women to request a seat on public transportation was rated over 99 percent female-friendly, while an app that uses artificial intelligence to help managers with diversity was rated 75 percent. “You can imagine that given the barriers women face in the labor market, they would like managers to use it more,” Koning says.

When they studied product performance over time, they found that on a platform where nine out of 10 users are male, typical female-targeted products saw 40% less growth than male-targeted and gender-neutral businesses one year after launch. In addition, female producers had fewer users and lower venture capital funding rates.

Of course, one explanation for this discrepancy could be that products targeted at women generally don’t sell as well. Koning and his colleagues, however, used a clever method to test this assumption. Product Hunt sends out a daily newsletter featuring previously released products. The researchers calculated that on days when the newsletter featured products targeted at women, more women would click on the link to go to the site. “They can tell their friends about it and share it on Twitter or Instagram, so you get a lot of female engagement these days,” Koning says.

Sure enough, when they looked at the success rates of products in those days, they found that growth and venture capital funding for female-targeted startups was just as strong as their male-targeted competition. Koning suggests that in those days, founders received positive feedback that not only helped them improve their product, but also made them more able to overcome frustration and market it. “Perhaps they will continue to put efforts into this,” Koning says. In essence, they get a better sample to evaluate the potential of their product.

Entrepreneurs need feedback from their target audience
The study, according to Koning, demonstrates how important it is for entrepreneurs to get feedback from early adopters who are demographically similar to their target users in order to accurately gauge the market. “If Product Hunt goes wrong, then maybe find other channels, create focus groups, explicitly make sure you interact with these people,” Koning suggests.

While the study only looked at women, the results could apply to any group represented in the tech test audience, he adds, including people of color and rural consumers. Some VC firms have taken the initiative to specifically look for products that appeal to these underrepresented groups, such as X Factor Ventures, which focuses on women, and Harlem Capital Partners, which focuses on people of color, looking for benefits with products that other players might miss. .

Ultimately, however, the world of product testing is a reflection of the wider tech world, which is dominated by white, urban, professional men. To truly realize the potential of products that appeal to women and other groups, Koning says, companies must continue the hard work of diversifying their workforce.

“At the end of the day, the reason most of these platforms are male-dominated is because all the VCs, engineers, and other founders are mostly male,” Koning says. “If you want a more diverse platform, you need a larger ecosystem to be more diverse.”

about the author
Michael Blanding is a writer based in Boston.

[This article was provided with permission from Harvard Business School Working Knowledge.]