Women business founders rising, but slowly

ByABC News
April 22, 2008, 11:43 PM

— -- Where are the Starbucks, Nikes, Amazons, Home Depots and Genentechs founded by women?

This is a question that puzzles those who track fast-growing companies. Few fledgling businesses founded by men or women ever grow into giant corporations, but with women launching twice as many businesses as men, some meaningful percentage of the new giants might be expected to have a woman as keystone.

That women are conspicuously missing is somewhat counter-intuitive to the glass ceiling argument. Only 43 women have climbed the traditional ladder to become CEOs of Fortune 1000 companies in the last 35 years, and fresh research from executive women's organization Catalyst suggests that the pipeline is not exactly filling up with future candidates. Such a track record might have caused the best, brightest and most ambitious executive women some years ago to tire of limited opportunities and set out to control their destinies and report to no man.

But if 43 seems like a low number, consider how many companies were founded by women, then grew into the Fortune 1000. The total is three. And all were co-founded by men:

Golden West Financial by Marion Sandler and her husband, Herb.

Software Spectrum by Judy Odom, her then-husband Richard Sims and business partner Frank Tindle.

PC Connection by Patricia Gallup and business partner David Hall.

Golden West and Software Spectrum have subsequently been acquired, leaving PC Connection, founded in 1982, as the only existing Fortune 1000 company (No. 971) with a woman as a founder. Gallup remains CEO.

The obvious explanation is that companies take decades to grow into giants, and women need more time. But an examination of the up-and-coming billon-dollar companies indicates that women founders remain so rare that there may not be enough in the pipeline to replace founders of the past, such as Jenny Craig, Debbi Fields (Mrs. Fields Famous Brands), Estée Lauder, Ruth Fertel (Ruth's Chris Steak House) and Mary Kay Ash.

David Thomson, a former McKinsey & Co. consultant and author of Blueprint to a Billion: 7 Essentials to Achieve Exponential Growth, identifies the next generation of big companies, and it puzzles him that women founders are all but non-existent when conditions for women have never been better. Fast-growing companies today are more likely to resemble Apple than General Motors, with success more dependent on ideas than on capital. There's no reason why Facebook billionaire Zuckerberg, 23, isn't Mary instead of Mark.

At USA TODAY's request, Thomson re-examined his data and re-interviewed women entrepreneurs to make sure that the early signs of a change weren't around the corner. He learned two things: There are no signs of change and, "This is a very emotionally charged topic," he says.

The odds of an early-stage start-up with a big idea eventually hitting $1 billion in annual revenue are 1-in-20,000, Thomson says, which is why in the 22 years from 1985-2007, only 387 new publicly traded companies achieved $1 billion. Based on today's ratio of women who have founded up-and-coming $1 billion companies, Thomson estimates that the odds of a woman starting a company that reaches $1 billion, whether she stays with the company or leaves, are closer to 1 in 500,000.