Learning and Change - Catherine Muther

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.