Equal Opportunity Techies In New York's Silicon Alley, money is blind to gender. Meet the pioneers of tech's new world order.
(FORTUNE Small Business) – Deep in lower Manhattan, framed on the south end by Wall Street, is a gritty district with the dubious distinction of being the birthplace of the sweatshop. Millions of immigrant laborers once found their first jobs in a new land in these grimy factories. But the sweatshops are, for the most part, long gone. The raucous clatter of the sewing machine has been replaced in the past few years by the whir of the computer. A new industry is being born in these unglamorous digs: Silicon Alley, the world capital of new media. In this vast and teeming digital hive, the action is fast, hot, and fueled by estrogen. Hundreds of small companies have sprung up here to develop entertaining and educational content for the Web, many of them started by women. Women are also in the forefront of e-commerce here and in the development of new technologies that make it easier to use the Web.
Led by pioneer iVillage, the online community for women on the Internet founded in 1996, women entrepreneurs here are shattering old notions about the role of women in technology. Silicon Alley stands in sharp contrast to the nation's major centers of technology, California's Silicon Valley and Boston's Route 128, where women have historically had a limited role, especially at higher levels of management. Some cite social barriers that bar women from getting ahead. But the shortage of women can't be blamed entirely on discrimination. Many concede they are bored by the nuts and bolts of technology.
In Silicon Alley, women have found a niche. "New York is all about content and creativity and marketing," says Tom Hyland, chairman of the new media group at PricewaterhouseCoopers. "These are areas in which women tend to thrive."
Statistics on Silicon Alley are hard to come by. But the New York New Media Association, a trade group that was founded in 1992, says membership in the association doubled in the past year, to 5,300, and women make up a substantial portion of the roster.
Why, of all places, New York City? As the epicenter of media, advertising, and the arts, the city has long been a magnet for creative talent. And when a new generation of women wanted to strike out on their own--as many did because of problems advancing in the traditional media world--launching businesses here made sense. New York offers everything needed for fledgling ventures: space, money, talent. Hiring was easy, given the city's rich pool of experienced writers, artists, and musicians. Cheap space was plentiful. Raising money? The companies had it easy. A decade ago, "it was very hard for a woman to raise venture capital money," recalls Catherine Winchester, a veteran of three startups (her most recent: a tech-development company, Soliloquy).
Now, Silicon Alley is just gushing money. Raising cash for her venture took only a phone call, says Cecilia Pagkalinawan, president of the one-year-old Boutique Y3K, which develops e-commerce sites for apparel makers. "A friend of mine once told me if I ever wanted to start a business, he'd back me up," she says. Last year she called him. She got $150,000. MaMaMedia, an online educational site for young children, recently raised $50 million from a group of investors despite the fact that revenues haven't yet hit $1 million. PricewaterhouseCoopers estimates that venture capitalists pumped $344 million into Silicon Alley in the first three months of 1999, more than double the amount a year ago. That may seem like pocket change compared with the $1.7 billion in VC money invested during the same period in Silicon Valley, but the rate of increase confirms investors' keen interest.
Many women-run companies have taken advantage of that interest. The following are three of them--pioneers of the new-media world in New York City. Though their stories and businesses are different, all three typify the new order in the tech world, where money is generally blind to gender. All that counts is a good idea.
That brings us, then, to Gail Sonnenschein. Growing up, she couldn't escape Surf City. Her mother owned two swimwear shops. Her father owned a company that printed swimsuit fabrics. She even slept swathed in swimwear; her bedspread was made from a psychedelic print overstocked from dad's factory. Gail had a rebellious phase--she got a law degree at Stanford--but she returned to the fold when she realized there was more money in bikinis than in briefs.
Today, she and her brother run Bikini.com, a two-year-old site that features photos of scantily clad models. The pair launched the site in the summer of 1997, after stints as producers of fashion shows for cable television. "I produced swimsuit specials for E! and saw how popular they were," Gail recalls.
Early on, the pair hit a snag. The name Bikini.com was taken. Buying the rights cost a substantial sum, but the pair figured it was a vital investment. Once the brand name was in place, both set to work in her apartment. Gail, 39, wrote the copy for the site. Howie, 33, took the photographs. Bikini.com was an immediate hit, and not just with adolescent boys. Women like the site too. It scores a million viewers a month, and the average viewer drops in three times a week.
In an effort to lure more women and broaden the site's appeal to advertisers, the Sonnenscheins added features on fashion, travel, and skin care. Some 40% of their audience now is women. Advertisers include the U.S. Army and Barq's Root Beer. Venture capitalists want in on the skin trade. Bikini.com has a roster of influential investors, among them Ben Rosen, chairman of Compaq Computer. To date, Bikini.com has raised $5 million in several rounds of financing. Meanwhile, Gail and Howie just signed a licensing deal to put the site's name on a line of swimwear to be sold in department stores next spring.
Having done her stint in the Israeli Army, Idit Harel is trained in all kinds of combat. So she's well prepared for the warfare that will be waged to win the hearts of the youngest Web visitors. For now, Harel has a stronghold on the market. Four years ago, the 41-year-old mother of three launched MaMaMedia, one of the first educational sites for children ages 5 through 12 and arguably the most comprehensive. On her site, kids can play games, create art, and design their own home pages. Kids are flocking to MaMaMedia. Media Metrix says the number of registered kids is growing by 16% a month. Only Pokemon.com, the site for the wildly popular fad, is growing faster. (Harel's site now boasts 650,000 members.)
She also has some powerful allies and an ample war chest. Among her sponsors and strategic partners: General Mills, Netscape, and Scholastic. Harel recently struck a partnership with AOL's Kids Only channel, which will boost traffic to the site and raise her profile among parents. Her most recent round of financing brought in $50 million, which she will use to build brand awareness and develop the e-commerce infrastructure.
Harel comes by her entrepreneurial talents naturally. Her father founded the first private high school in Israel in the 1940s. She also has an impressive academic pedigree: She holds two masters degrees in education from Harvard and a Ph.D. from the Massachusetts Institute of Technology. Her keenest interest is in developing new methods to encourage children to learn, especially those born in the 1990s, whom she dubs the Clickerati. "Videogames, faxes, laptops, and the Internet have always been part of their lives," she says.
But noble sentiments don't fatten the bottom line. How will her site make money? Advertising, for one. But Harel also has a plan to open parents' wallets. This winter, MaMaMedia will invite parents to set up charge accounts online. Their kids will be allowed to spend "allowances" on books, games, and software sold on the site.
Growing up in Milwaukee, Isabel Walcott knew she was cut out for a life in business. Her first venture was selling funky earrings at the local mall. She was 13. Her next business was a housecleaning service she set up in high school.
Now, at age 30, Walcott has found another niche for her talents. She has founded an online market-research firm, Smartgirl.com, which designs and conducts customized surveys. Her target audience is the most notoriously fickle market in retail: teenage girls. Smartgirl.com recently conducted a survey for teen magazine YM on the coolest celebrities, clothes, and beauty products. Other clients include Skechers shoes.
To attract girls to the site, Smartgirl provides 14,000 pages of content on things like love, sports, and school. Once at the site, the kids are hooked by features such as "Read Love Letters" and "Ask the Fortune Teller." At some point, Smartgirl leads girls into a survey, which they answer anonymously. Some 80,000 unique visitors a month come to Smartgirl, which doesn't carry ads. At some point, Walcott intends to break into e-commerce by selling teen staples such as books, music, and beauty products. For now, she's working hard to drum up some money. An early investor put in $500,000, but Walcott figures she'll need millions over the next few years to grow her company.
In Silicon Alley these days, that's a piece of cake for a good idea.
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