If you think that the hottest innovation in Silicon Valley ends in ".com," then meet Catherine Muther. Muther invests in great ideas — some of which do end in ".com" — but she doesn't define success as the shortest distance from here to an IPO. She's an incubator of social equity, creating new markets for giving, rather than for buying and selling. "Venture philanthropy is really a metaphor. It's philanthropy with attitude," she says. "I'm interested in bringing philanthropy into the new economy."
Muther knows a lot about how the new economy works. She was the senior marketing officer at Cisco Systems Inc. from 1989 to 1994, during which time the company grew from $25 million to $1 billion in sales. Muther was at the heart of Internet business even before there was any such thing as the current .com boom: She worked at one of the pivotal companies that built the networks that would create that boom.
But while today's Silicon Valley is dizzy with the heady .com gold rush, Muther has moved on to create the next revolution — one that combines social equity with technological innovation and economic growth. "Why shouldn't the Internet have as much impact on how we think about philanthropy as it has had on how we think about commerce?" she asks pointedly.
The first step in Muther's vision of creating the philanthropy of the future might seem traditional. She has formed a foundation called the Three Guineas Fund, a grant-making organization named after Virginia Woolf's meditation on philanthropy ("Three Guineas"). In that classic essay, Woolf considers requests from three organizations asking her to support various causes — the education of women, the prevention of war, and women's professional employment. The mission of Muther's foundation is, fittingly, "to create access to opportunity for girls and women in education and the economy." Muther initially used $2 million of her personal capital to kick-start the operation. But her commitment is more than financial. She is also investing her intellectual capital and leveraging her network of Silicon Valley peers to open up opportunities for women entrepreneurs who are looking to make their mark in the new economy. "I want to bring what I have learned from high-growth Silicon Valley companies to the philanthropic sector," she says.
In particular, Muther is applying the lessons that she learned and the relationships that she built while helping to create a $1 billion poster-child high-tech company to two issues that define the future of the new economy: How can women become bigger players in Silicon Valley? And how can Silicon Valley develop a passion not only for making money but also for giving money back?
The Three Guineas Fund's first major project is the Women's Technology Cluster, a nonprofit incubator in San Francisco that's now home to 10 new Internet and technology companies where women hold a major equity stake. It's in the Cluster that you can see how Muther answers social problems with direct action. Launched in February 1999, the Cluster is a kind of learning laboratory for startups. Through the Cluster, startup founders get mentoring and support from experienced business leaders. Each CEO or founder who joins the Cluster is assigned a mentor from among the group's advisers and board members. That relationship gets leveraged into a larger network composed of mentors' contacts. Entrepreneurs share office resources, like conference rooms, fax machines, and computer networks, as well as information, contacts, and support. Every Thursday afternoon, the CEOs of the enterprises gather to talk about the challenges that they're facing, whether those challenges are fund-raising, recruiting, generating buzz, or putting together an advisory board. "All startups have common problems and issues," Muther explains. "We're helping them come together on a community basis to help each other."
A lunchtime seminar on designing a stock-option plan is typical of the Cluster learning environment. On this particular Thursday, 16 women and 4 men learn about the differences between incentive and nonstatutory stock options, and find out how much equity an EVP of sales can get away with demanding in today's white-hot job market. It's a seminar taught by Silicon Valley law firm Pillsbury Madison & Sutro LLP, one of the Cluster's sponsors. It's the kind of information that ordinarily would either be unavailable to these eager participants or too expensive for them to obtain.
At the core of the Cluster is the idea that you're more likely to be successful if you don't go it alone. That extends not only to the community climate but also to the structure of the enterprise. Muther's Three Guineas Fund contributed $150,000 in startup capital to the Women's Technology Cluster and raised $700,000 from local companies, charitable foundations, and governments, including Bank of America, W.K. Kellogg Foundation, the City and County of San Francisco, and the San Francisco Foundation. Companies like Pacific Bell, Pacific Gas & Electric, and Cooley Godward LLP have all become stakeholders in the project.
"The question you have to ask is 'Who cares if this succeeds?' " Muther says. "We've created a partnership of interests." It's a principle of technology business development: You're only as strong as the interests that have a stake in you. The companies that have contributed capital not only have a philanthropic stake in the Cluster — they also have a vested interest. Their business interests are aligned with the success of the startups in the Cluster; they want to see these new companies grow — they become partners as the companies in the Cluster move from incubation to maturity.
Developing new companies is the bread and butter of Silicon Valley. But the way that the Women's Technology Cluster is doing it takes on two of the Valley's most complex and perplexing social issues. First, why aren't more women playing key roles in high-growth, VC-backed startups? In 1998, only 4% of all high-tech companies that received venture funding — including Internet companies — had a woman CEO, according to VentureOne, a Silicon Valley investment-research firm. "For the first time, there's a whole generation of women with management experience in technology companies who are ready to found companies and to lead companies," Muther says. "And yet women are underutilized."
Muther's approach is to create a pool of promising startups and network them to potential funders, mentors, and each other. But her approach is no less disciplined for having a cause: More than 300 companies have applied to join the Cluster, but only 10 have been accepted and have decided to join. The Cluster has room for as many as 20 startups in its 22,000-square-foot space. But Muther has made sure that the screening process will create a pool of startups, each of which stands out from the sea of new, risky startup companies. By getting into the incubator, they've already passed one hurdle.
The second issue addressed by the Cluster: With such enormous wealth being created by Internet companies, why isn't more of it being donated to the community? A 1998 study by the Community Foundation Silicon Valley found that 45% of the highest-net-worth households in Silicon Valley gave less than $2,000 to charity annually. Muther doesn't only want to get more money into the hands of women who are starting companies; she also wants to see more successful women pouring their personal resources and talents into solving social problems. Her own vision for the Women's Technology Cluster is "a learning laboratory for future business leaders who will give back to the community."
As much as it is a boot camp for startups, the Cluster is also a training ground for philanthropists. To become part of the Cluster, each entrepreneur must agree to contribute a 2% equity stake in the form of a warrant. "It's not a fee for services; it's a commitment to giving back," Muther explains. The idea is that as companies mature over the next 5 to 10 years, this equity will become a liquid portfolio — a body of wealth that can later be reinvested in the Cluster and contributed to other philanthropic endeavors. The goal is to make the Cluster self-sustaining, to ensure that other entrepreneurs have the same opportunities. But it's also to learn philanthropy. Muther's approach makes the Cluster not only an incubator for new companies but also an incubator for social change.
For Muther, social change is about seeding the future that you want to see. Take the Springboard 2000 Women's Venture Capital Forum, for example. A year ago, when the National Business Women's Council, a federal agency, contacted her about holding a conference to discuss why women entrepreneurs weren't winning more venture- capital funding, Muther recommended direct action: Why talk about the problem when you can facilitate deals to help solve it? Instead of another conference, why not hold an event that would put women entrepreneurs in front of venture capitalists — a venture fair, so to speak?
Muther put the National Business Women's Council in touch with the Forum for Women Entrepreneurs in Silicon Valley, an influential network. And on January 27, 2000 the first venture conference for women will take place at Oracle, in Redwood Shores, California — with the Three Guineas Fund serving as one of many sponsors. Some 25 to 30 women seeking seed or first-round investments of $1 million to $15 million will present to VCs from some of the Valley's top firms: Accel Partners, Draper Fisher Jurvetson, and Softbank Technology Ventures. Kleiner Perkins Caufield & Byers's star John Doerr — perhaps the Valley's most famous venture capitalist — is on the conference's guest committee.
"I've learned that complex problems require more than one point of view," Muther says of her approach to making change. "The command-and-control model of management is fired!" Just as a product-development team includes people from many different parts of a company, Muther believes that the best way to attack a social problem is to draw people from different spheres — nonprofits, government, and the private sector.
Muther attributes her own openness to working with different types of people to the team model found in fast-moving technology companies, and to her experience as a graduate of Stanford's MBA program in 1978, when significant numbers of women began enrolling in business school for the first time. "There wasn't any career path or role model for us," she says. "We didn't know what we were doing. But that wasn't all bad: We were able to be more entrepreneurial because there wasn't a set path." Muther, who also had a master's degree in anthropology from England's Cambridge University, went on to become a VP of corporate marketing at 3Com and a VP of marketing at Bridge Communications.
The biggest idea that Muther is nurturing: Put the power of the Web behind a new model of philanthropy. Her vision: philanthropy that puts the giver in charge of contributing. "What if there were a global hub, where anyone, anytime, anywhere could contribute to any nonprofit?" Muther asks. "Instead of being on the receiving end of direct-mail solicitations, imagine choosing the topic that you care most about, getting all of the information that you need to make an informed decision about contributing to that cause — and enjoying that process. This is part of what the new economy is about: doing things yourself, with your attitude, and putting you in control of your experience."
Her goal is to build a group of interested people in Silicon Valley to align with existing philanthropic entities, with the ultimate purpose of bringing about strategic change in the industry of philanthropy. And she's pledged $1 million — separate from the Three Guineas Fund — to make that happen. What might that change look like? Diverse teams of experts from many different fields of endeavor — education, nonprofits, business, and government — coming together not only to work on doling out money to disparate groups but also on getting results by attacking specific problems.
"People who come out of the technology culture operate with a sense of urgency, which can be mistaken for impatience, and confidence, which can be mistaken for arrogance," she explains. "Venture philanthropy is really a metaphor. It's philanthropy with attitude." For Muther, philanthropy begins with finding an issue that you care deeply about. "If you have a passion, then you have something to contribute," she says. "It's not about asking 'What should I do?' It's about asking 'What is my passion?' "
You can see the issues that she's passionate about in the art that hangs on a wall of her home office. One contemporary piece by a woman artist is a visual commentary on the changing role of women in society: It's fabricated from the torn pages of romance novels. Muther plans for the same artist to contribute an installation to the Women's Technology Cluster — a series of aprons to be strung across the ceiling, each emblazoned with a quote describing a duty traditionally assigned to women. For example, one apron might read, "Today, I cleaned out the closets." Whenever an entrepreneur hits a major milestone, a new apron will be commissioned: "Today, I got $4 million in funding." When an entrepreneur's company gets too big and it graduates from the incubator, she'll get to take along her own apron — a reminder of where she came from and the trails that women have blazed together.
Katharine Mieszkowski (firstname.lastname@example.org) is a Fast Company senior writer. Contact Catherine Muther by email (email@example.com), or visit the Women's Technology Cluster on the Web (www.womenstechcluster.org).
Sidebar: What's Fast
Catherine Muther believes that the new economy requires a new philanthropy — a "philanthropy with attitude." Here is her quick guide to doing good while doing well — to giving in the age of venture philanthropy.
Go with your passion.
If you have a passion, then you have something to contribute. The question isn't "What should I do?" or "What would be best for me to do?" The question is "What is my passion? What can I contribute?" Look at issues that relate to your life and your values. That's where you'll have the most passion, the most inspiration, and the most impact.
Philanthropy is a team sport.
Complex problems require more than one point of view. In a company, it takes people from technology, technical support, product marketing, and manufacturing to create a successful product. Any social problem that you work on will also need a diverse team whose members bring different experiences and ideas to the table.
Don't give away money — solve problems.
Too often, people look at philanthropy as a task that requires reviewing proposals and distributing grants: "We have a certain amount of money to give away each year. How shall we allocate it this year?" Instead, organize a team around solving a problem. Make the team responsible for solving that problem, not for funding programs. Once you know what you're trying to accomplish, then see what role capital can play in accomplishing it.
Giving should be as easy as shopping.
Imagine that every Web page that offered a product or service also offered an opportunity for philanthropy. If philanthropy were made available to all people on Earth to pursue when they want to, how they want to, and as much as they want to, we could create a World Wide Web of giving. You could go to the Web and, just as easily as you order a book or shop for clothes, you could contribute to a cause.
A version of this article appeared in the December 1999 issue of Fast Company magazine.