By Angie Chang (Co-Founder & Editor-in-Chief, Women 2.0)
At the 2012 PITCH NYC Conference, CNBC reporter Seema Mody interviewed Sandy Lerner of Cisco Systems, now a large cap company which Seema Mody speaks about on CNBC. Sandy Lerner co-founded Cisco Systems on December 10, 1984 and then started Urban Decay, a cosmetics company sold to LVMH. After starting life as a farmer, she still now involved in organic farming – and book writing, having just published Second Impressions, the sequel to Pride & Prejudice.
Better, Faster, Cheaper
The serial entrepreneur talks to being first to market and owning your IP. She adds, “You just have to stay in the rat race,” said Sandy Lerner. “Be better, faster, cheaper.”
She encouraged women entrepreneurs to seek an alterative funding model – to make sure a business has intellectual property. If not, have a customer base, revenue base and either intellectual property or brand credibility. For example, Urban Decay was able to be sold to LVMH thanks to six long years of building strong brand credibility.
“Look at the makeup business which in a lot of ways is like what you are trying to do with social media. There is a relatively small kit of tools and everyone is playing with the same one. If you don’t have intellectual property which is technology because that is the only thing people can’t copy… look and feel, Apple lost that suit. There is no good idea that nobody can copy if you are playing with all public tools. Even if you have that technical IP, it will only buy you time before someone reverse engineers it. But what you can do is buy yourself time.”
She talks about cosmetics as being a bad business, with no ability to gain a competitive advantage. After six years, her company Urban Decay had “brand cred” with a reputation for being “really good makeup” so LVMH bought the company.
“I am very lucky,” said Sandy Lerner.
CNBC’s Seema Mody asked about social media, to which Sandy Lerner asserted, “Social media is an information channel, it’s like radio or TV… In Cisco, we made a lot of money on public protocol. I think the social media model replicates that protocol. We could involve a wider marketplace as a customer base but we also had a significant technical component of intellectual property which was unique to the company. I think it will be hard to make that social media channel…”
Sandy Lerner asserted, “Amazon is a social media company. There are three or four companies right now clawing at Amazon’s heels. People have figured out how to do it better, faster, cheaper. They did not have a technology but a method of information retrieval, and that’s a very high barrier these days for a new company – when you start out, you have to be Amazon, and then you have to be something better, faster, cheaper or deliver more value.”
Afterall, “Who can argue with success?” said Sandy Lerner.
Men, Women And Venture Capital
Sandy Lerner said, “We were taken to the cleaners by the venture capitalists. If you can, fund your venture by yourself. Cisco never had a red quarter. Never. Took us three years to get funding, and in those three years, we were never in the red and that was because we had two products to sell. They were not sexy or cool but we had enough of a market that we could generate enough of a cash stream to grow the company. Three years later, we had 50 people working and we believed what other people told us – we could not generate enough revenue to build future orders.”
“Looking back on it, I think it was hogwash [that we needed to find venture capital]… but by the time Valentine invested and he got a third of Cisco for $2.6M and that Cisco was selling a quarter million dollars a month. We were making in a year that mezzanine investment and he got a third of the company. Think really hard – can you build this company on your own? You build it and it gets to be your decision. I’ve never really seen other people spend other people’s money wisely. We didn’t – we spent our own money. We mortgaged our house. Our parents crawled around the floor making cable. And in the end, we only gave up a third of it – usually you give up seventy percent or more.”
Sandy Lerner said, “The venture community is largely male. They all happent o be largely be old salesman, which is one of the male chauvinist anti-female people I have ever dealt with. They haven’t all died off yet, which is probably not a good thing. I am not seeing a lot of women at the second tier waiting to take those places. The board seats are even worst, because it’s really the board that drives the company, not the CEO.” Overall, she asserts “Women always want to play fair, but it’s not a fair game.”
“Yes, this was a long time ago,” she admits, “but the numbers don’t bespeak the change we would all welcome and would certainly make that playing field more fair.”
She reveals that she wish she would have networked more and crossed bridges – for example, as a technical person she should have befriended the non-technical woman in the room. Why? “It would have been harder for them to fire me – I was not a very smart organizational player.”
“As I look at my life, I made my own life harder to hoe, in the context of an organization, I made myself an easy target wen you only have one person on your side instead of three.”
She concedes that things may be changing for the better now with women becoming better at networking.
Women 2.0 readers: What is your takeaway so far from the PITCH NYC Conference? Let us know in the comments.
Angie Chang is Editor-in-Chief and Co-Founder of Women 2.0, a media company offering content, community and conferences for aspiring and current women innovators in technology. Our mission is to increase the number of female founders of technology startups with inspiration, information and education through our platform. Previously, Angie held roles in product management and web UI design. Angie holds a B.A. in English and Social Welfare from UC Berkeley. Follow her on Twitter at @thisgirlangie.