You're a hot dude, so this sounds like a good business plan.
August 15, 2015 3:46 AM   Subscribe

Attractive entrepreneurs get more funding – but only if they're male. The research paper "Investors prefer entrepreneurial ventures pitched by attractive men", written by researchers at Harvard, Wharton School and MIT, found the gender and attractiveness of entrepreneurs have a significant effect on whether their business ventures will receive funding.

From the paper abstract (2nd link above): Investors prefer pitches presented by male entrepreneurs compared with pitches made by female entrepreneurs, even when the content of the pitch is the same. This effect is moderated by male physical attractiveness: attractive males were particularly persuasive, whereas physical attractiveness did not matter among female entrepreneurs.

From the newspaper summary (1st link above): In the first study set in an entrepreneurial pitch competition, male entrepreneurs were 60 per cent more likely to achieve pitch success when compared with female ones. Among the men, being more attractive further increased the chances of success by 36 per cent, while no such effect was shown for women.

In the second experiment, participants heard pitches narrated by either a male or female entrepreneur and decided whether they would invest in the venture. The male pitch was overwhelmingly more likely to be funded over the female pitch: 70 per cent versus 30 per cent.

The clincher? Both the male and female pitches were identical.

Finally, when participants heard a pitch paired with the photo of an attractive male founder, they were much more likely to invest than when they were shown a not-so-attractive founder. Again, attractiveness had little influence for female entrepreneurs.
posted by modernnomad (19 comments total) 15 users marked this as a favorite
 
I read the paper and it was soothingly theory-free. So here are some conjectures.

1. The five-minute live pitch, while an obviously flawed way to evaluate the long-term potential of a new business venture, is unkillable by virtue of its social usefulness.

1.a. It flatters rich businesspeople’s ideas that they owe their position to uniquely rare (and unmeasurable) abilities and experience – in this case by expensively acting out the fantasy that going by their ‘gut feeling’ is likely to yield better decisions than careful analysis. One may interpret the ‘extras’ (advice, contacts, office space, brand recognition) provided by the best ‘angel investors’ as the premium they pay to attract startups who would otherwise apply directly to venture-capital funds staffed by spreadsheet-wielding salaried analysts. On the other hand, even corporations must occasionally defer to leaders’ ‘gut feelings’, since the privileges of the investor/executive class depend on an ideological exemption from the weaknesses ascribed to the mass of interchangeables below (condemned to monitoring and second-guessing by algorithms).

1.b. The pitch helps avert a danger to the investor’s self-esteem when faced by an entrepreneur with a bold new idea – is the ‘angel’ superannuated, only good for loosening the purse strings to bet on a more capable person’s success? The pitch situation places the entrepreneur in a vulnerable and unpredictable position (‘how can I make this person think I am a winner?’) while depicting the investor as one of superior ability: the judge of character, the dragon in his den, the one who picks winners and culls the losers.

Corollary: Because the system of the five-minute pitch emerges from social dynamics, the fact that an individual investor uses this method in no way implies that they have useful heuristics to apply to it. This is one of the reasons why many apparently fall back on looks, a primitive heuristic for identifying social ‘winners’, as a heuristic for commercial success. The implication of Studies 2 and 3 in the paper seems to be that professional investors are no less biased by looks × gender than random experiment participants (!), but the authors do not explore this aspect.

2. Like people making hiring decisions in élite firms, people funding business ventures are to some extent recruiting into their own social group. The higher they place the barriers (prestigious degrees, good looks, athletic distinction), the more exclusive they make the club they are already members of, reflecting glory on themselves – retrospectively, for free. What would it say about them if they let in ‘losers’? When the recruit’s ability is either known to be sufficient (because of an oversupply of highly-skilled labour) or unknowable (as with startup investing), this dynamic operates all the more strongly.
posted by ormon nekas at 6:26 AM on August 15, 2015 [19 favorites]


Does this say a lot more about people who can fund ventures than pitch them? Or is that just me. All those citations and graphs had me confused. White rich people buy stuff, I guess.

Also, not many pics of hot dudes in the FPP, for those of ya hoping.
posted by esto-again at 6:35 AM on August 15, 2015 [1 favorite]


The Don Draper Effect.
posted by The Underpants Monster at 6:48 AM on August 15, 2015 [1 favorite]


Not surprising at all.
posted by harrietthespy at 7:09 AM on August 15, 2015


I already knew that tall, good-looking people have better lives.
posted by colie at 7:16 AM on August 15, 2015 [3 favorites]


For the male statistic (attractive males vs not as attractive males), maybe attractive males exude more confidence because they've had past positive experiences in life because they are attractive males. Sort of self perpetuating. I can see investors being attracted to confidence.
posted by gt2 at 7:22 AM on August 15, 2015 [2 favorites]


This suggest there could be a very good opportunity for firms to capitalize on a bias induced market inefficiency by funding the less attractive. They should be both cheaper and easier to fund as well as more efficient (less attractive people and women get paid less).
posted by srboisvert at 7:36 AM on August 15, 2015 [6 favorites]


don't forget that this isn't necessarily a bad / dumb move by investors. so much of a company's success depends on being "in the club" that choosing people because they look as if they belong to the club is a defensible tactic.

in other words, you don't need to "fix" just the funding process, but also the whole environment in which a company operates.

or line them all up against a wall and start over.
posted by andrewcooke at 7:47 AM on August 15, 2015 [5 favorites]


See, this is my problem. Objectively I'm well above average height and ludicrously, almost painfully attractive.

Anyway, I just wanted to mention that.
posted by Dumsnill at 7:53 AM on August 15, 2015 [1 favorite]


that's cool. can you just join the end of the line there? thanks.
posted by andrewcooke at 7:55 AM on August 15, 2015 [7 favorites]


Y Combinator’s Paul Graham admits he’s a sucker for looks:
“The cutoff in investors’ heads is 32,” Graham says. “After 32, they start to be a little skeptical.” And Graham knew that he had his own biases. “I can be tricked by anyone who looks like Mark Zuckerberg. There was a guy once who we funded who was terrible. I said: ‘How could he be bad? He looks like Zuckerberg!’ ”
Ben Horowitz and Marc Andreessen effuse about one founder’s youth:
Horowitz exclaimed, “How old is he, twenty-four? God damn it, let’s give him all our money!” A16z provided Doshi all his B-round funding—sixty-five million dollars—for a further 7.5 per cent of the company, which was thus valued at eight hundred and sixty-five million dollars. Doshi was a little sorry that Mixpanel wasn’t valued at a billion dollars, but he told me that he could wait: his business was growing so fast, and everyone was raising money so frequently in the current boom, that “in six or twelve months we’ll be a unicorn.”
posted by migurski at 8:16 AM on August 15, 2015 [5 favorites]


Click migurski's link and you will immediately see a man with the most egg-shaped head who ever lived.
posted by colie at 8:53 AM on August 15, 2015 [4 favorites]


I worked with a startup vendor who had their terribly handsome admin do the pitching because the brilliant CEO and CTO were not pretty enough for Hollywood post. The kicker is we didn't know he was the admin until we noticed that every time we called he answered and forwarded our calls to the CEO or CTO, and that when we visited he was sitting at reception.
posted by infinitewindow at 8:59 AM on August 15, 2015 [6 favorites]


There is a lot to unpack re:attractiveness giving men an advantage, and that's worth discussing -- but we shouldn't overlook that the largest difference depended on the gender of the entrepeneur.

Which makes this comment by orman nekas upthread even more interesting to me:
This is one of the reasons why many apparently fall back on looks, a primitive heuristic for identifying social ‘winners’, as a heuristic for commercial success.
What does this mean for professional women? The five-minute pitch is a very particular business situation that might encourage people to fall back on their social biases more than others, but these kinds of social evaluations matter in a hell of a lot of other professional contexts as well.

This reminds me of all those dudes who complain that attractive women get special treatment, and that this is proof of sexism against men.
posted by Kutsuwamushi at 9:13 AM on August 15, 2015 [4 favorites]


How about Migurski's anecdotes there? How is it possible to admit to such naked stupidity and bias and just know you won't suffer any negative repercussions for it?! The world of men is a place of awe.
posted by amanda at 10:35 AM on August 15, 2015


Glad to see this here, I know all the authors and have worked with some of them. Part of the problem is that pitch heuristics work (Laura Huang has another paper showing the gut feel is a useful tool for evaluating entrepreneurs for experienced angel investors). At the same time heuristics also also allow people to act on conscious and unconscious biases. Separating the two is a challenge a lot of researchers are working on.
posted by blahblahblah at 10:37 AM on August 15, 2015 [1 favorite]


So apparently women need to do some sort of Cyrano act in which they hire a male model/Remington Steele to portray their CEO in order to get more money, then?
posted by jenfullmoon at 11:33 PM on August 15, 2015 [4 favorites]


Men can be intelligent, capable investors no matter what they look like, while pretty women are stupid and ugly women are useless.
posted by maryr at 7:14 AM on August 16, 2015 [2 favorites]


Even in well established companies, most CEOs seem to look like they stepped out from a stock photo agency catalog. I don't see short, fat, normal-looking CEOs, whether they are male or female.

I don't mean well-dressed, well-cultured people, just physical characteristics.
posted by theobserver at 8:17 AM on August 18, 2015


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