What does it take, as a woman, to become a billionaire?

There are 1,011 billionaires in the world right now. Since they released the numbers in March, Forbes has been running various pieces on subsets of the billionaire population. Lately, that subset has been women (like here, here, here, and here). While a great way to re-package dry numbers into interesting stories, the coverage has raised more questions than it has answered.

The numbers

Why So Few Women?

The obvious question is: why aren’t there more female billionaires? Forbes brings a lot of possible explanations to the table. They explore economic factors, like how women are still in the earlier stages of their entrepreneurial journeys because the benefits from more opportunities take a while to trickle down. Or that women aren’t using venture capital the same way men do. They also explore the question in terms of the nature vs nurture debate: do women make less because obstacles prevent them from making more or because they choose not to? One one hand, the Forbes authors point to a lack of opportunities, citing statistics like the median income for jobs. On the other, they look at research that shows women are drawn to organizations that provide values beyond wealth, suggesting men and women define success differently: “Men tend to start businesses to grow them to be large and to be the boss while women start them to do something meaningful and to make a difference.”

Interestingly, a study of high-net worth individuals in Britain found that women are better at preserving wealth than men. Wealthy women now outnumber wealthy men in Britain 51%-49% (percent who had £500,000+ to invest), partially becuase they invest more conservatively and lost less in the financial crisis. What’s your take on the nature vs nurture arguments? And  do they matter? Would you rather be on the billionaire list or have a company that makes a difference? Is that a forced choice – how much harder is it to be a billionaire and make a difference? Is risk-aversion another component to be factored into the nature vs nurture debate?

Why isn’t anyone celebrating their successes?

So far, most news outlets (like the WSJ, Telegraph, and more) have been focusing on the list’s gender gap. Forbes writes, “the dearth of them is itself a story, and begs the question of why so few?” Interestingly, very little attention has been given to women who did make it. Some you may have heard of, like J.K. Rowling (Harry Potter), Meg Whitman (eBay, politics), and Oprah Winfrey (media). Other names aren’t as well known, like Wu Yajun, a former engineer and real estate developer, Rosalia Mera, who went from making clothing in her home to founding Zara and 4,000-store clothing giant Inditex, and Doris Fisher, who started Gap, Inc. Read about all of them.

The “self-made” vs “inherited” distinction implies that the other 75 women (and 257 men) aren’t entrepreneurial. Is this really the case?

First off, the inherited number is pretty impressive in and of itself, considering that up until the 1970s and 80s the US Supreme Court was still overturning laws that made it difficult for women to inherit and own property, women currently only own 1 to 2% of titled land worldwide, and that patrilineal inheritance is a part of many cultures.

Then there’s their entrepreneurial-ness. Paris Hilton may have given heiresses a bad name, but even she’s an entrepreneur (she has her own record label and perfume line, among other ventures). While Alice Walton, daughter of Wal-Mart founder Sam Walton, inherited the bulk of her money when her brother died in a plane crash in 2005, she founded an investment bank, Llama Company, in 1988 and was the driving force behind the construction of the Northwest Arkansas Regional Airport. Alicia Koplowitz sold her shares in the family business, FCC, to her sister Esther; Esther has since transformed the company while Alicia focused on real estate, finance, and venture capital. Susanne Klatten, granddaughter of Herbert Quandt of BMW fame, gained most of her business experience while working under assumed names and then grew Altana Pharmaceuticals into the 4.6 billion euro company she sold in 2006. There are also women like Dylan Lauren, whose father Ralph Lauren is on the billionaire list due to his iconic clothing brand. She subsequently made the list of “heiresses to watch” because she started high-end Dylan’s Candy Bar, which is now one of the biggest candy stores in the world. Can you think of any others?

What’s the deal with China?

When it comes to progress in women’s rights, we’re pretty quick to write off China, infamous for its One Child policy that led to a gender imbalance. However, half of the self-made female billionaires came from China. Factors like the development of hospitable social and economic environments, which have encouraged women to get an education and start companies, seem to be playing a role. Constantly changing market regulations give Chinese entrepreneurs of both genders more opportunities to exploit and less red tape to deal with. Women are 36% of the Chinese work force, make up half of university enrollment, and contribute to half of household income. Fei Qin, lecturer in Entrepreneurship at the London School of Economics notes, “I grew up in Beijing and I’ve lived in Europe and in the UK but I would say China has the highest standard of gender equality anywhere. In my generation every girl in school knew the saying ‘women hold up half the sky’ and knew that a career would be a very important aspect of her life.” But what about just sheer numbers? China has an enormous population (which Forbes forgets to mention): in China, there are 474,871,442 women between the ages of 15 and 64, compared to the US’ 104,015,706, so it’s more likely 7 of them would become self-made billionaires. Then again, that’s 7 out of China’s 64 billionaires vs the US’ 3 out 403 total billionaires.

Photo courtesy of The Taipei Times.

Power corrupts, but absolute power corrupts absolutely

Bill Clinton. John Edwards. Mark Sanford. Mark Foley. News of politicians having extramarital affairs has become almost commonplace. In fact, 2008 was the first election in which confessed adulterers ran for President. Still others seem to have sticky fingers, including Rod Blagojevich, Tom Delay and William Jefferson (of dubious $90,000 in the freezer fame). Corruption and hypocrisy seem to be a universal phenomenon — touching politicians across the political spectrum.

They decry the loss of family values in public but cheat on their spouses in private. They condemn government waste but enrich themselves with taxpayers’ money. So what’s the connection between hypocrisy and power? Is it anecdotal? Do these examples just stick out more because they involve high-profile people, or are politicians more at risk of being corrupted?

Two researchers, Joris Lammers, from Tilburg University, and Adam Galinsky, from Northwestern University, conducted a series of experiments to answer these questions.

According to the study they just published in Psychological Science, Lord Acton was right — power actually corrupts. They claim that power is corrupting because it leads to moral hypocrisy. Everyone knows the difference from right and wrong, even those in a position of power. However, power makes it easier to rationalize away doing wrong, thus the hypocrisy between “me” and “everyone else.” For example, in one experiment testing hypocrisy, two groups of people (“high power” individuals and “low power” individuals) were asked to rate certain actions on a scale of 1 to 9, with 1 being “highly immoral” and 9 being “highly moral.” The powerful said that a person speeding because they were late to work warranted, on average, a 6.3 on the morality scale. However, when placing themselves in the exact same situation, they gave themselves a 7.6. In other words, their speeding was more acceptable than other people’s speeding. In contrast, the less powerful people scored themselves the same as everyone else.

The authors also found that people who believed that they were entitled to their position of power were more corruptible. People who were in high-power seats but did not believe that they deserved their high-ranking position were very harsh on themselves, morally speaking.  (For more on the study, read the Economist’s article here).  Other studies have found that an isolated person of power is much more likely to abuse their position — it’s easier to take advantage of people when you don’t see them. Your mind skips over the sympathetic bit and goes straight to Machiavelli. The implications of this finding are troublesome in a world where technology makes isolation even easier (telecommuting; the ability, via blogs or feeds, to read only the news you agree with; speaking to your constituents via twitter instead of town hall meetings, etc).

So, assuming that Lammers and Galinsky are correct, what does it mean? Democracy and liberty are natural extensions of Lord Acton’s dictum in the broadest political sense, but clearly, temptation still looms in a democracy. What’s next?

Also, what does this mean in a business environment, where positions of power are everywhere? Business lunches, travel expenses, and the like all have the potential to be abused — and not just by the CEO. Is the janitor stealing the office’s toilet paper because s/he’s in a position to do so? Is your assistant stockpiling office supplies because she feels entitled to them? (Don’t laugh, businesses lose billions of dollars a year in employee theft.)  To complicate matters, studies show that unleashing the ethics police is counterproductive because such oversight would make people uncomfortable and incite backlash.

So what’s a manager to do? It’s obviously easier to prevent corruption than try to solve it after the fact, but how do you recognize the culprits? At what point do you start caring? And when does small become big?

Also, is “big” corruption ever excusable? Grover Cleveland won the 1884 election in spite of the press outing the child he fathered out of wedlock, and again, two admitted adulterers threw their hats in the last Presidential race (with one getting 56 million votes). And then there’s the fact that some of America’s most esteemed leaders were less than honorable. FDR, who had an affair with his wife’s social secretary, and Andrew Jackson, whose wife may not have been divorced when he married her, are frequently ranked in the top 10 most successful presidents by historians. JFK, who was rumored to have had an affair with Marilyn Monroe among others, came in third behind Martin Luther King, Jr and Mother Theresa in a Gallup list of the most admired Americans.  Add to the list the political leaders embroiled in corruption scandals over the years.  Did their thirst for power make them better leaders, or were they good leaders in spite of their dalliances?

Even if the position of power is what sparks the affair, should what happens in the motel room have any bearing on what happens in the boardroom?

So Lord Acton was right, but now what?

The questions above were asked to spark debate…so comment away!

The age-old debate between nature versus nurture also applies to entrepreneurs: are successful entrepreneurs internally wired to own businesses or did they learn the needed skills to be successful?

Some say that entrepreneurship cannot be taught — that true entrepreneurs are born with the drive, determination and burning desire to start their own businesses. People with certain personality traits are more likely to be and succeed as entrepreneurs. Results from surveyed entrepreneurs suggest that their inbuilt entrepreneurial desires drove them to start businesses. Recently, blogger Mark Suster started a series of blog posts about the traits that make up an entrepreneur. So far, tenacity, street smarts, the ability to pivot, resiliency, inspiration, perspiration and the willingness to accept risk have been highlighted, with more to come. Can these traits be taught or must they be innately wired into the entrepreneur?

The other side of the spectrum says that anyone has the potential to be a successful entrepreneur if they put in the effort and work hard. These believers say that there is no set “entrepreneur personality” and that, while successful entrepreneurs may share some like characteristics, there is a mixture of personality types that can be successful in the entrepreneurial world. This category of entrepreneurs is widespread: the ones who work hard and learn in business school, the ones who took a risk when the opportunity presented itself, and more. Their views and actions embody the American Dream — that hard work can reap desired success.

Some say that one of the most important characteristics an entrepreneur must possess is the tolerance for risk. Does that recognition of, and tolerance for, risk have to be intuitive? Or can it be taught? Or is it a mixture of both?

What do you think? Leave your comments below.

Photo courtesy of  Noel A. Tanner.

How is your personal morality connected to your business morality? Do the same ethical frameworks apply in business as apply in friendship or romance? And if not, how do you rationalize the differ

Many of us think that (and act as if) business has its own set of rules. Commerce is a contact sport where you expect rough play and strategic deception. Others contend that business is all about relationships — connections that aren’t materially different from other human bonds — and that the same standards of integrity apply anytime you’re dealing with people, whether friends or strangers.

It’s a high-stakes question: None of the young people I work with want to be naive or vulnerable in a tough world. Likewise, most have strong consciences and feel squeamish about sacrificing their moral sentiments for the sake of money.

Bart Wilson, in a provocative piece for the Atlantic Business Channel, suggests that the way Americans use the word “fair,” reveals a lot about how we manage this tension between self-interest and compassion in business.

We’re typically referring to a sense of “fair play,” he argues — playing by the rules — as if business were a game with a special set of exemptions from the usual rules governing how we treat each other. Just think how boring football would be if everyone played nice.

But the usage is unique to the English language, Wilson observes. Other languages have words for justice, but not this sense that allows for “proper,” or “in bounds” without reference to broader moral concerns.

It’s worth asking: What are the costs and benefits of being able to think of business as a game where everyone swims at his or her own risk? What do we lose when we expect more of ourselves? What do we gain?

Photo courtesy of Chowdownphoenix

Most business schools don’t care much about students or their journeys through life. Until this changes, ancillary efforts like reforming curriculum or adding ethics courses won’t make much of a difference.

At best, at most schools, the student is seen as a ‘product,’ prepared as fodder for consulting firms or investment banks, private equity funds and other financial speculators. This is not only dehumanizing but leads to faculty believing that ‘teaching’ is a matter of filling a student’s head with facts and theory, supplied by “all knowing” professors. At worst, the tenured faculty becomes the customer, and being published in an obscure academic journal becomes the key measure for success. Students are seen as an annoyance, to be kept around as window dressing to convince wealthy donors and legislators to keep subsidizing organizations that adds little, if any real value to society.

The loss of student focus has led many business schools to embrace a “pedagogy of arrogance,” where the faculty are seen as wise masters, using (boring) lectures to convey more and more detailed theory and knowledge that is less and less relevant in the real world. Graduates from these schools long to be “masters of the universe,” in a fool’s errand to amass as much riches, power and fame as possible.

There is another choice, to embrace a “pedagogy of humility.” Here, asking the right question is seen as far more important than having the right answer. Experiential learning demonstrates how business is a matter of trial and error, where perseverance and character count as least as much as financial or accounting skills. A theory is something to be tested in the real world, not simply regurgitated on a test. A student’s mission is to find a “calling,”where he or she can use precious gifts, in a way that brings great joy, serving the needs of others. The faculty’s mission is to help students find that calling.

Our school, Acton, and many brave members of the faculties at Harvard Business School and Darden continue to cling to a pedagogy of humility, despite an increasingly corrupt academy.

When an organization starts to care more about its own needs than the needs of those it serves, it begins a terminal decline. Most business schools are well beyond this point. I will not mourn their passing, but instead hope for most that it comes sooner, rather than later.

Jeff Sandefer is an entrepreneur and co-founder of and Master Teacher at the Acton MBA in Entrepreneurship. He is a graduate of Harvard Business School and serves on the HBS Dean’s Committee.