Twitter's Glaring Missing Asset

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Twitter (NYSE: TWTR  ) wasn't a social-media early bird to the public markets, so it didn't share the IPO spotlight with Web 2.0 brethren like Facebook (NASDAQ: FB  ) . However, Twitter's IPO debut is now upon us. Looking past the fanfare, it appears it's stumbled in an area that should have been elementary good business sense.

There are no women on Twitter's board of directors. During Facebook's IPO process, I thought we had already established that when it comes to social media and its strengths in the modern online world, this oversight is disgraceful -- and strategically stupid.

If Twitter's management and board had been paying attention to similar criticism aimed at Facebook before it went public, they could have already nipped this in the bud and worked to build a stronger board. This could imply that this is an arrogant, one-dimensional management team that investors might want to think twice about.

Power differentials
Granted, American corporations don't have a great track record of female representation in high-ranking areas to begin with. However, for companies like Facebook and Twitter, there's a fundamental business reason that missing female perspective leaves holes in the fabric of their businesses.

One of social media's most important factors is that females are power users. In 2011, the Pew Internet and American Life Project pointed out that young females are a particularly strong force in social media, with 89% of women between 18 and 29 who hang out online using social media, and 69% stating they use the medium every single day. That figure compares with 60% of all online men.

A recent update from Pew showed that female social-media users continue to outpace male counterparts. The average gap between the proportion of male and female social-media users is 8% since May 2008.

There's something creepy about the implication of social-media companies' relationships with women. Surely they appreciate strong users and enablers of these businesses' own traffic, appeal, usefulness, and stickiness, all of which are important to the companies' yearning for ad dollars. This appreciation apparently doesn't stretch into recognizing who many of these users actually are.

Given what we know about social media and usage by gender, we can see an outright lack of respect for customer demographics and those who would understand a huge chunk of users the most. Considering board composition alone, whether women are only welcome on one level of the framework is a very good question.

Wouldn't you think new-school companies, like Twitter, would be among the most enlightened and evolved? Seeing a jarring lack of women on social-media companies' boards brings to mind little boy bullies on the playground replacing the old-boy networks of yore.

Bro-boards and other modern missteps
Facebook's journey to IPO and beyond included many bumps and skids along the way. One of the qualitative critiques was its 100% male board of directors. The social-media giant did respond, placing Chief Operating Officer Sheryl Sandberg on the board. In the corporate-governance sense, that's not the ideal solution -- she's a company insider, after all, not an independent director. However, Sandberg is a competent and respected executive, and her appointment is better than no female representation on the board at all.

So far, Twitter's response to its parallel situation is that it's going to tackle its lack of female directors after the company goes public. The official version is that this is a complex decision that should take into account things like international expertise.

Apparently being careful and measured depends upon the situation, though. Twitter CEO Dick Costola used the Twitter platform to rebut Vivek Wadwha, who criticized the all-male board as something akin to the mafia brotherhood -- common in Silicon Valley.

Wadwha also pointed out that the one female highlighted as top management, Vijaya Gadde, received about a month before the fast-tracked IPO filing.

Obviously, Costola's rebuttal was very soberly and carefully thought out: He called Wadwha "the Carrot Top of academic sources."

Twitter's bro-board brings up a lot of the churning problems regarding women in all levels of the workforce, particularly tech. Females are venturing into tech more than ever, and apparently some guys apparently are taking it badly. The "brogrammer" joke exists for a reason. Tech's reputation for being innovative and forward-looking makes the situation even more puzzling and downright sad.

Fortunately, some companies are aware of male-dominated areas, and trying to do something about the idea that their companies might be all about the bros.

For example, take Google's Women in Tech conference, which reaches out to young women for its workforce. In the spring, co-founder Larry Page talked about the company's drive to bring in more women into its company's techie area. He stated the need to "start early and make sure we get more women and girls excited in technology. There's no question we will double the rate of progress."

Meritocracy: the rhetoric vs. the reality
The problems inherent in Twitter's board composition go beyond the simplistic idea that it's rude to exclude certain types of people from top spots and influential positions. Adding more females into the highest levels of corporations actually does have to do with business success. Cognitive diversity has been studied and underlined as a strength, not a weakness, in business and investing.

Plenty of research shows women make great leaders, directors, and investors, whether corporate America has completely opened its eyes to the fact or not.

In just one example, last year a Credit Suisse report, "Gender Diversity and Corporate Performance," showed that over the previous six years, the shares of large-cap companies with female board participants outperformed their counterpart companies with 100% male boards of directors by 26%.

This outperformance reached beyond the vagaries of stock price fluctuations, too. These companies exhibited stronger fundamental factors, such as higher returns on equity, lower leverage, and higher valuations.

I'm a fan of meritocracy, but examining issues like this one makes me think about how we actually define it. In too many cases, meritocracy's disconnected, twisted definition seems to be limited to dudes. (And let's face it -- in areas like CEO pay, the meritocracy argument is a usually a complete joke.) I'd like to see a world where merit truly is the main focus. Right now, though, that rhetoric isn't reality.

Truly evolved corporate managements, boards, and shareholders need to question the status quo. Those of us who invest should look for truly deep thinkers to manage our companies and remember that conventional wisdom is often stale and completely wrong. It's sad to think that enlightened, modern thinking on issues like this one may be considered fringe, and met with fear.

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Check back at for more of Alyce Lomax's columns on environmental, social, and governance issues.

Read/Post Comments (13) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 29, 2013, at 7:35 PM, 407rotorhead wrote:

    Facebook's famous female didn't negotiate her salary. He husband did. She was going to take the first offer she got.

  • Report this Comment On October 30, 2013, at 1:42 AM, somethingnew wrote:

    I wonder if maybe Facebook lacked female board members more because of how they started rather than arrogance. It could be that they were part of the old boys club idk. All five of the original founders were male and young so maybe their closest backers back then were also predominately male as well and as a result this kindof became the norm and influenced board positions down the road. I'm not saying this is right just that maybe it had to do more with who they knew best from the beginning rather than excluding women purposely from the board. There's always the possibility too that they did reach out to women programmers or influential women backers back then and there could have been little interest from them. I just think that to narrow it down to the boards being strictly male due to sexism might not explain the issue completely.

  • Report this Comment On October 30, 2013, at 10:31 AM, gskinner75006 wrote:

    "There are no women on Twitter's board of directors." (that's as far as I made it into the article. I saw no reason to go further). Did you talk to all the board members of Twitter? Did they tell you they didn't want any females sitting at their table? I doubt that. It may be that no female that is qualified to sit on the board of a public company has approached them yet?

  • Report this Comment On October 31, 2013, at 12:15 PM, howietime wrote:

    gskinner: reply. second that! It is disgraceful to not have a woman on a board??? what a close minded fool. How does he/she know why or why not there are females or males or young people or old people or white people or black people or light brown, dark brown, blue, green.... maybe it is disgraceful to judge how company boards are set up when there is no evidence of bigotry other than someone's opinion.

  • Report this Comment On October 31, 2013, at 1:38 PM, CMF_KBecks wrote:

    Right. If you don't have a woman on the board, you are not a good business. Glad that Tom and Dave use better criteria than that for evaluating businesses. They care about the leaders, not their body parts.

  • Report this Comment On October 31, 2013, at 2:02 PM, dziga wrote:

    I see the boys have already piled on, but I am here to say I loved this article!

    I think Twitter's lack of female representation reflects a cynical attitude. They know they can sell to women and they know women power-use media products and services. There are qualified women to bring on board. To suggest otherwise is laughable. It is a glaring absence.

    Under-representation is endemic and it's not just a Twitter problem. But as the article pointed out, companies such as Google are trying to bridge the gap. Given that Twitter is basically a young, second generation tech company, and given that they are located in uber-liberal San Francisco (because of the massive tax breaks that city gave them) the dearth of women seems very strange indeed.

    The time to add women would have been before Twitter went public not "after". It would have shown good faith. It would have been smart. On the other hand, name-calling ("Carrot Top") and hedging (We'll do it...later) is not smart. Unprofessional. Tone deaf.

    Having high ranking women in your company is smart. So yes, I think Twitter is cynical, and also...not very smart.

    And therefore, like many other small investors, I'm going wait on buying TWTR. See what happens. Because to me this issue, and their response, is an indication that leadership just might not "get it" on the bigger picture.

  • Report this Comment On October 31, 2013, at 3:59 PM, TMFLomax wrote:

    Thanks so much dziga for your awesome thoughts. I also think you're wise to wait. As a rule of thumb I consider big-name IPOs like this one to be dangerous, and it's doubly disturbing when there seem to be management issues like this one. Unprofessional and tone deaf indeed!



  • Report this Comment On October 31, 2013, at 4:05 PM, TMFLomax wrote:


    I use many of the same approaches Tom and David use to assess management, so that isn't a fair assumption. I have utmost respect for many male leaders -- my favorite CEOs of my favorite companies/stocks do happen to be males, although I am also a fan of Indra Nooyi's attempts to transform Pepsi for the future and Marissa Mayer does seem to be doing a lot for Yahoo, and has many interesting qualifications (in tech -- she IS a techie actually).

    On the macro front, this is a major problem in corporate America. Much like there are many major corporate governance problems in corporate America, including paying CEOs a lot for failure.

    These are big issues and DO say a lot of about management and vision, not to mention who a giant portion of the population actually are.

    Oh and as dziga said, there ARE qualified women for corporate boards. It's one of the lamest excuses out there.


  • Report this Comment On October 31, 2013, at 10:18 PM, PRStew wrote:

    I think we all know that despite some of the above comments, certainly some women exist in the tech sector who are well qualified for these positions. Still, if those women are more rare than their male counterparts than it will help the business to hire the better qualified - not necessarily the one increasing diversity - applicant for any position. I believe meritocracy is more useful than diversity in company demographics.

    Instead of letting inequalities in male-female top management penetration let's leave that for feminist websites and here consider the experience and innovation of the management over their gender. Looking at Twitter's CEO's other ventures (i.e. Square) having impressive success makes me appreciate the management enough to overlook the slight imperfections like the one this article finds so troublesome.

    I appreciate your depth of consideration of this topic, but losing out on a brilliant tech IPO like Twitter's because they won't sacrifice their company for the sake of pushing forward already evolving societal norms is a mistake that you will regret. No company is perfect, but let's separate ethics and business. If you consider having no women in top management an ethical deal breaker than I simply wish you would say so. On the other hand if you are thinking of it purely economically, sure it would be nice to see women in the roles you mention but let's not let the lack of women become a barrier to proper consideration of an investment.

  • Report this Comment On November 01, 2013, at 11:54 AM, TMFVelvetHammer wrote:


    Great article. This is a topic that deserves more attention. And your point -- that women tend to be a very important user group for these companies -- seems to have been ignored by some of the commenters.

    So whether the cause of zero women on the board is sexism (not likely directly, but more of just people sticking within their comfort zone) or just more of the same who knows who, this does keep Twitter from being as strong of a company as it could be.

    And that's a critical point.

    As to continuing the push for equality? No matter how far we've come, there is still a long way to go.

    And this is coming from a six-foot tall white guy...


    Jason H

  • Report this Comment On November 01, 2013, at 1:59 PM, TMFLomax wrote:

    This is a good discussion with cognitive diversity -- including a six-foot tall white guy! :) Thank you.

    I generally do look at this topic in the general, larger investing/business quality sense and try to think of the psychology involved. Diversity does have real benefits (studies show it builds more robust companies and decision-making -- if we're going to talk about cognitive diversity, well, that goes for all kinds of people, including women).

    I agree with Jason that a lot of this is probably not overt sexism, but yes -- just the status quo, engrained but unconscious. I do think that signs of corporate managements and boards and shareholders who aren't recognizing a shift in female participation in the workforce and the need for more women at all levels are showing a dangerous management red flag. I still stick by the idea that it's shameful that modern tech companies -- after more than a decade of disruptive tech IPOs -- are still behind the times with this.

    Of course my investing decisions aren't completely predicated on women on boards or female CEOs.To play devil's advocate, though, that would leave me very few options, wouldn't it? We've established that.

    That's not to say that would be a good investment strategy in itself, but once again, that's just perspective on how small that pool really is.

    Twitter management HAD to have seen some of the criticisms lobbed at Facebook when it went public -- so this just seems incredibly myopic.

    I try to employ a lot of bigger picture thinking -- that components of behavior might actually say a lot about how managements might behave in other situations.

    A red flag example of a response that might indicate negative outlook or behavior: a CEO or high-ranking management cussing out an analyst who asked for an essential piece of quarterly information: A balance sheet. (Enron. Ahem.)

    I simply think this is a more important topic than many investors/business managers think, so I really do like to spark more thought about it, so discussion IS good.


  • Report this Comment On November 02, 2013, at 11:05 PM, CMF_KBecks wrote:

    So, Twitter should look over its shoulder at Facebook's IPO and, because Facebook was criticized for lack of females on its board, Twitter should change it's board to avoid criticism.... because... good leaders avoid criticism? Because, good leaders succumb to outside pressure?

    And if they aren't looking over their shoulder and checking themselves, this means they might be an arrogant, one dimensional management team?

    And, a board with a woman on it is absolutely more valuable than a board with all men?

    Do you likewise feel that a board made up all women would be inferior to a board with one man on it and insist that gender diversity be maintained in that case? Or would you be cheering for an all woman board?

    It's too much focus on the body parts. Focus on people, period.

    There's a lot of supposition and assumption here as to what the leaders might be thinking and what their motives might be, guessing at the psychology. A flaw is a flaw if it hurts the business, if it's a real flaw, not a supposed one, because maybe someone is thinking "wrong" for you.

  • Report this Comment On November 05, 2013, at 12:27 PM, TMFLomax wrote:


    No one should bend to criticism, but if critics are making good points, people should listen. One's critics are not automatically wrong. Listening is also a great boon in leadership -- I believe there are studies and stories that many truly great CEOs were quiet, thoughtful, and surrounded themselves by smart people and really listened, even if some of their own colleagues were giving critical opinions. (We could get into the cognitive diversity of introversion vs. extroversion, but that is another topic for another time.) I could tackle these topics another time when I have extra time to conduct research for the data (which does take time and thought).

    Again, the Facebook and now Twitter critics do have the research that groups of people with different perspectives result in better decision-making, and in some cases, say, women may also have a better track record than men. Also again, the fact that women help drive the engine of social media success in a big way, again, points out a possible lack of understanding.

    I certainly would support an all-female board adding men. We are currently talking about exclusion for random reasons and possibly intentional misjudgments about who talented people actually are. The problem with that argument is that we are so incredibly far away from anything close to that state of affairs (all female boards cropping up everywhere) in corporate America, we don't even have to tackle that problem anytime soon. Granted, it's a good theoretical.


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