MICHEL MARTIN, HOST:
Earlier this week, one of the most celebrated athletes in the world made the kind of announcement that is certain to come, but rarely welcomed when it does. Tennis legend Serena Williams revealed that her upcoming tournament is likely to be her last in the sport that made her a household name. But even after decades on the court, 23 Grand Slam victories and a career in which she and her sister Venus changed the face of their sport, it’s actually her future plans that caught our attention. In a feature in Vogue magazine, Serena Williams wrote that she plans to focus on investing in companies led by women and people of color through her venture capital firm, Serena Ventures.
We wanted to hear more about the kind of influence Serena Williams is already having in that realm and what she may yet be able to accomplish, so we called Sallie Krawcheck, the CEO and co-founder of Ellevest. That’s an investment and financial literacy platform aimed at helping women reach their financial goals. And she’s with us now. Sallie Krawcheck, welcome back. Thanks so much for joining us.
SALLIE KRAWCHECK: Michel, thank you for having me.
MARTIN: So I want to mention two of the reasons we called you. First, you were considered one of the most successful and highest-profile women on Wall Street before you left to do this venture. You were very successful in private banking. And the second reason we called you is that Venus Williams, Serena’s older sister, is one of the investors in Ellevest. So you have experience in this particular realm. So the first question I have for you is, why is Serena’s decision to ramp up her investing significant?
KRAWCHCK: It’s significant because women supporting women, women investing in women is a path forward to get more women’s businesses funded. So today, venture capital goes primarily to men. Women CEOs raise a single-digit percent of venture capital dollars. And I can tell you in fintech, which is what all Ellevest is, it’s about 1%, even though the returns on these investments in women CEOs tend to be higher. And having women like Serena and Venus invest in companies run by women is a way for us to break open the boys club. And we just haven’t made as much progress with traditional venture capital firms as we would have hoped by now.
MARTIN: Well, let me dig into some of those – that data that you just shared. There’s some research from Harvard University that says that women make up just about 11% of general partners at venture capital firms. And yet, venture capital firms that – who hire more women tend to be more successful. Harvard’s research shows that these firms make more successful investments, have higher returns and more profitable exits. That seems to be a disconnect there in a business that sort of prides itself on being based on the numbers. So, first of all, why does it remain so male dominated and why, despite this data, you know…
KRAWCHCK: Boy, what do you think? But, Michel, we see it again and again. If you look at my old industry, Wall Street, they’re about the numbers, they’re about the returns. And yet, they remain more male than female in the investing business. Ninety-eight percent of mutual funds are managed by men, even though there is research that women are certainly as good, some research shows better investors than men. And so why wouldn’t it then bleed into venture capital, where women are coming in but haven’t made it to fully to the senior ranks yet, that men continue – well, I know what the research says that I’ll get better returns if I invest in diversity, but gee, this guy who reminds me so much of myself when I was younger just really has it.
And venture capital has been a pattern recognition business. Invest in people like this. Doing things like this have worked in the past, so I will continue to do it and work in the future. And those theoretical returns that I’m not getting because I’m not doing something different are only theoretical. There’s no scorecard of those that shows you you made X, you could have made double X if you had invested in a more diverse group.
MARTIN: It’s been reported that Serena Ventures has participated in early stage funding for 16 companies that are now valued at more than a billion dollars. I don’t know how much of her investment made up their early stage funding, but the fact that she’s associated with it, can you just give us some context for how significant that is?
KRAWCHCK: Yeah. So what’s interesting is, you know, it’s the money and it’s also the support – said before, networking is the No. 1 unwritten rule of success in business. And so as individuals come in and invest not just their money, but also their network and their connections, this is sort of this positive feedback loop. Again, men have been doing this forever. I always love to say men play business as a team sport. They promote each other. They fund each other’s businesses. They talk each other up, et cetera. Women, probably because there have been so few at the senior level for so long, there have been so few startup CEOs who are women, have really had to play the game as an individual sport. And by bringing this knowledge base and these connections to bear, you increase the chances of success by some good measure for a startup CEO.
MARTIN: I’m also thinking about precedents of high-profile celebrities in another field trying to use – to leverage their kind of profile to to make a difference in another realm. I’m thinking, for example, Magic Johnson’s partnerships with Starbucks to bring those cafes to urban neighborhoods, right? The reason I mention that is that there just seems to be these structural poles that push against women’s participation, particularly younger women. I mean, Serena talked about this herself in her own sport. Like, she talked about wanting to grow her family and the physical facts of that bumping up against the realities of her sport. And I just wonder, can an investor like her change that dynamic for other women who aren’t necessarily athletes, but who are pushing up against these biological realities? Can an investor like Serena or Venus, for that matter, actually intervene in those – I don’t know – 2,000 years of social history, biology, all of that?
KRAWCHCK: No one individual will make the difference. But, you know, this beginning to be a trend can make a huge difference in several different ways. You know, first of all, you know, we talk about retiring. She’s not retiring. She’s moving on to a different phase of her career. So I think she’s demonstrating a really interesting way of pulling together different careers over the course of one lifetime. And then the final thing I’ll say is money makes a difference. You know, when you’re trying to, you know, can she make a difference? Can she – well, that helps tremendously in terms of women’s success.
MARTIN: That was Sallie Krawcheck. She’s the CEO and co-founder of Ellevest. Sallie Krawcheck, thanks so much for sharing these insights with us.
KRAWCHCK: Thank you for having me. Transcript provided by NPR, Copyright NPR.