The Curse of the Husband-Wife Founder Team
Investors are wary of funding companies with a husband and wife at the helm. Is this a subtle variant of the “women in tech” problem?
Like many women in tech, I’ve been following the shocking stories of harassment and intimidation some have suffered at the hands of twitter mobs and even respected Silicon Valley VCs. As a co-founder of a successful bootstrapped software company, I thought I was pretty immune to the issue — after all, I’m the one driving recruiting and hiring and doing my best to foster a diverse microcosm of the tech industry (albeit on a very small scale).
But a few weeks ago, a candidate for a high-level position in our company said something during his third interview that hit me like a ton of bricks. Or rather, it hurled me against the brick wall that had apparently been there during the entire 16-year lifetime of our company, without my realizing it. “You know, and I just have to put this out there on the table, but there’s some concern about a company where the executive team is comprised of a married couple.”
To be fair, he was echoing the concerns of a local angel investor he respected, who claimed not to understand “our space,” and had not seen our product or any of our financials…but still felt compelled to spook this would-be VP away from the opportunity. We might have overlooked the comment as just another example of angel investor cluelessness, but he proceeded to dig the hole deeper: “I mean, you’d want to be sure you’d able to separate the business and the personal, and in the event of a divorce….”
At this point my jaw was so agape, our candidate’s voice trailed off, and he looked to my cofounder/husband for validation of his statements. I interjected with some shocked sarcasm: “Well dear, what do you suppose we do about that?” He paused for a moment and said, “Actually, I think that’s always been a problem for us with investors.”
Wow. Not only had I and our team wasted about six hours interviewing and educating this guy, demoing the product, and laying out the market opportunity, but now bad memories of awkward angel and VC pitch meetings came flooding back. That was the problem all along, the reason we never got funded despite having clear market traction, Fortune 500 customers and the most advanced product in our space?
A little background — my husband and I met in New York where we both worked at an early “new media” company in the mid-nineties. By the time that company shut down, we were a couple, and full of ideas about our next thing. We started our current business out of a rent-controlled apartment with nothing but a borrowed PC and a landline phone. The first year, we made $50,000. But the year after, we made healthy six figures, and crossed the 7-figure mark a few years later, all without a dime in outside investment.
Over the years, we moved from the tiny apartment to a bigger apartment, then to a big house with a studio over the garage, where we managed a virtual team. In the process, we helped raise his two kids from a prior marriage and had two of our own. Four years ago, we decided to hitch our wagons west for California, where we had both grown up. We set up real offices, hired real Silicon Valley professionals, and continue to grow the business. So, in my mind, we practically invented keeping the personal and business separate, and had been doing so successfully for sixteen years.
That night, my husband and I talked it over. My blood pressure was still through the roof (although I’m known for having an inordinately calm and steady disposition). We looked at the issue from an investor’s perspective: okay, say there were a divorce, and this being a community property state, we each had to split our shares in the company. Now you have a potentially disgruntled shareholder owning a significant amount of stock. But isn’t an involved shareholder, one who has staked his or her career on the success of the business, going to be easier to work with than a passive spouse who sees the company as just an asset of her ex?
What about the more common, VC-sanctioned scenario of the two or three guys in their twenties who were college roommates? Aren’t they just as likely, or even more likely, to have ego clashes, to disagree about the course of the company, and to let greed drive their decisions? How did that work out in the case of Facebook and Twitter? Expensively.
I tried to empathize with the investor point of view. Many of them might have spouses who work in a very different field, or not at all. It may just be hard for them to imagine a husband-and-wife team working out. But more and more couples are meeting in the workplace, so a shared interest and ambition in their field is part of the foundation of who they are as a couple.
I did some research. It didn’t take long to find that the bias against husband and wife teams is well-documented, but almost entirely based on assumptions and anecdotes about mom n’pop businesses who engage in nepotism and therefore alienate the A-player job candidates. There are of course well-publicized horror stories about high-profile entrepreneurial divorces such as Tory and Chris Burch in the fashion industry…but for every one of those, there are success stories, such as the married founders of Eventbrite and Houzz.
I also thought about the bias against husband and wife teams through the lens of gender discrimination in the tech industry. When our job candidate made those comments, I couldn’t help but feel like I was the problem in the situation — as the wife, the “non-technical” founder (although neither of us are engineers), I was perceived as the potentially irrational party in a dispute. Conversely, the husband in a company led by the wife is feared to be a liability in the event of investment and reorganization, because he’s perceived as not wanting to give up power.
I had experienced a similar feeling in VC meetings, customer visits, trade shows and conferences — the immediate loss of my credibility the moment it was realized that I was the wife of the male founder. No matter that I attended the same Ivy League school and had dedicated my entire career to our enterprise…people assumed I was just “helping out,” or along for the ride. Not only that, the fact that we were married tainted our company as a “lifestyle business” — a fundraising death knell that means investors don’t think your business can scale, because you probably care about issues like work/life balance and can’t make the tough decisions (or execute on theirs).
I’m the first to appreciate that I’ve been dealt a very good hand in life. I grew up in a cosmopolitan city, had access to a great education, and have essentially been my own boss for the last sixteen years. But that moment of reckoning in the job interview was my first hint at what feels like to be the victim of prejudice. Essentially what this guy and his investor friend were saying was that even if we had a great product and financials and nailed every aspect of growing our business, we had a fatal flaw that would dampen, if not doom our prospects. A flaw that was rooted not in our abilities, but in our personal life choices.
One thing I’ve learned over the sixteen years of starting and growing our business is that yes, it’s hard in all the ways you might expect, but it is especially hard going it alone as a bootstrapped company. We really could have benefited from the networking, door-opening, and advisement that venture-funded companies receive as a side benefit of raising money. Taking this journey as a married couple, our ability to use each other as a soundboard has been a bonus instead of a liability. But growing a software business really does take a village, and my hope is that those holding the purse strings and the connections and the wisdom will stop making negative assumptions about husband-wife teams.
Nobody understands better than we do the need for compromise, constant re-evaluation of roles, and the sacrifices necessary to grow a company. Every startup begins as a little family that must continually fold in new members, until it becomes a tribe, and ultimately a cluster of tribes working toward the same goal. Investors would do well to look closely at the founding teams that do this well, regardless of whom they go home with at night.
