Twitter (TWTR +0.00%) 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 (FB 1.29%). 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.
Check back at Fool.com for more of Alyce Lomax's columns on environmental, social, and governance issues.
