The predictable and preventable problems that plagued The Wing could happen to any fast-growing company.
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Just about the only story that seemed to get much splashy coverage in the business pages over the past few weeks not tied to the current health crisis and chaos on Wall Street were several high-profile “hit pieces” about women-only coworking startup The Wing. From Fortune, to the New York Times, to a first-person mea culpa from founder Audrey Gelman published in Fast Company, the one-time media darling has stirred up conversation about feminism, race relations and startup working conditions.
Underneath all the controversy, however lie a few key lessons for any entrepreneur with a fast-growing company about common workplace culture dynamics — specifically, in-group/out-group negativity and the problems that flow when you don’t have established norms and practices. Both of these unhealthy culture dynamics are at the heart of The Wing’s troubles.
Lack of established norms and practices
Let’s start with the most basic premise. When investors give a first-time founder more than $100 million to grow a business and influence hundreds of thousands of employees and customers overnight, there will be workplace culture problems, plain and simple. This happened at Airbnb, Instacart, Slack and a host of other billion-dollar “unicorns.”
These issues are unavoidable when a startup has a steep growth trajectory before processes and programs to ensure sound corporate governance and healthy workplace culture can be put into place. Founder Audrey Gelman acknowledges it in her Fast Company article: “Rather than creating a healthy feedback loop and addressing with urgency the issues that members and employees identified, we prioritized business growth over cultural growth.”
In fact, according to 2.5 million employee responses in my company’s 2020 Workplace Culture Report, strong norms and established practices are fundamental to a healthy workplace culture. They operate as the rudder directing how people act with each other and as an immune system correcting inappropriate behavior. Even if people have different perspectives or expectations for behavior, organizational norms and practices create a shared common experience.
The Wing is an “out-group” startup having an “out-group” experience
The human brain is hardwired to categorize people as “us” or “them,” where the “us” are perceived as having higher value and the “them” are perceived as different and less trustworthy. We tend to judge “them” and their intentions and motivations more skeptically and hold them to a more difficult standard than we do people like us. In short, out-group members have a far worse experience than in-group members.
As one of the few female-founded businesses in the tech startup world, The Wing is part of an out-group, and the media scrutiny it’s coming under is a typical experience for those in the out-group. Nearly 600 founders received $100 million or more in funding for their startups in either 2017 or 2018, according to a New York Times article, which said that mega-sized rounds had become “practically routine.” And yet, only a handful of women founders receive $100 million or more in funding and according to Crunchbase, woman-only founder teams receive the smallest amount by far of venture dollars. So The Wing’s founder and CEO, Audrey Gelman, is one of a handful of women who raised over $100 million in funding and represents less than half of 1 percent of the total founders during 2017 and 2018 who received that amount of funding.
Culture issues occur at all startups experiencing hyper-growth. All 600 of those founders referenced in the New York Times article likely experienced comparable culture issues. But for the most part, media outlets didn’t focus on those cultural situations or provide a platform for the employees and customers of those other 599 startups to give their feedback. Women founders have less power and influence in the startup ecosystem than their male peers; as founders in the out-group, women get less empathy and are held to a higher standard than their male peers. So while 599 other founders get to either ignore their culture issues or address them in private, The Wing’s Audrey Gelman must publicly fall on her sword and address them under the public microscope.
We might not be able to significantly change the number of women founders who receive investment capital in the future, but we should at least acknowledge and understand that the startup ecosystem triggers a different, more challenging experience for founders who are in an out-group.