My guest today on Wings of Inspired Business is Kay Koplovitz, a true superhero, and entrepioneer. Kay founded USA Networks, the SyFy channel, and is the visionary who created the business model for cable networks by introducing the concept of two revenue streams, both licensing, and advertising. She's also the first network president in television history, and since 2000, Kay has been helping other female founders, like me, manifest the capital they need to grow their businesses. As the chair and co-founder of Springboard Enterprises. Springboard is a venture capitalist accelerator, and so far, it boasts eight billion in capital raised for women entrepreneurs, 170 exits, and 15 IPOs. She was inducted into the Advertising Hall of Fame in 2016. Kay, it's great to have you on. Welcome to Wings.
Kay Koplovitz: Oh, thank you so much. It's a pleasure to be here. And may I add something to your list there? Actually, in addition to Springboard Enterprises, I also am a general partner of Springboard Growth Capital, and we invest in companies run by women entrepreneurs. So, it's exciting to have all those different opportunities.
Melinda Wittstock: Yeah, that's fantastic. And I want to get into Growth Capital, because I know you founded that to add to all of the things that Springboard does, in 2016. And it's really exciting, because women, as we know, struggle to get the kind of capital that they need to really run, and grow, and scale their businesses.
Kay Koplovitz: Mm-hmm (affirmative). Yes. That's true, and we want to make sure that the capital is available at all different levels of investment, all the way too liquidity events. So, there is a considerable amount of capital in the marketplace in very early stage, seed stage, with a growing number of micro funds out there, and angel funds that are investing, particularly in women-led companies. The growing number of those, and there's a lot of capital around in the A series. But as companies start their really exponential growth phases, it is become also a challenge. So we want to make sure that there's capital as companies grow.
Melinda Wittstock:: Absolutely. But, you know, when I think of the eight billion raised, 170 exits, 15 IPOs, that's amazing success. What is Springboard's secret?
Kay Koplovitz: It's a vast network of experts, 5,000 in all, that are experts in different levels, and sectors of the economy. All different kinds of technology, and biotech devices, diagnostic, healthcare IT. It's just a broad bench of sectors of the economy, so we have experts in all those different categories, and as companies grow, different types of experts that have experienced growth, or are operating in different categories in growth stages of companies. We have to be able to tap into the right people, at the right time. And that is really the secret sauce of Springboard. Because that is what really helps companies grow.
Melinda Wittstock:: You know, this is so important, because just having capital isn't really enough. I mean, we're really as good as our networks. And women being able to mentor each other, and really help each other along the path, is vital. Entrepreneurship can be so isolating.
Kay Koplovitz: Yes, it can be. And when we started Springboard Enterprises, back in 1999, and had our first demo day, in January of 2000, there was no entry point for women in venture capital. That's why we started it. Because I recognized the lack of women in venture, when I was asked by President Clinton to head the National Women's Business Council. And I was looking at what could we do, as a council, and looked into the marketplace, and saw all this money pouring over transom in venture capital, 104 billion dollars in 99, early 2000. And no women! And I thought, somebody has to kick the door down here. Something has to give. There has to be women out here in technology and life sciences that are seeking capital, but why aren't they in the market? What's happening?
And what we found out was, there really just wasn't an entry point. The guys who were investing in venture capital had their own networks, they didn't have these women in their networks. They didn't even know about them. And the women didn't know the men, who were investing. It was just a disconnect. It really wasn't … Refusing to invest in them, they never even saw them. They never even got there. So, it was really important to us to be able to establish a marketplace for women entrepreneurs, in the technology sectors. And today, those sectors are very broad. I mean, they're not only software enterprise, but media tech, [inaudible [spp-timestamp time="00:08:07"], fashion tech, [inaudible [spp-timestamp time="00:08:09"], there's all kinds of technology, applied to all different industries, cyber tech, etc. There really are a lot of developments in technology now, in so many sectors.
And we want to make sure that women get a hearing at parity, with other companies in the marketplace. And we have worked to get that. But we certainly have opened up the market to the companies that we're working with to raise capital. And that's what the eight billion dollars in capital raised represents. For these companies that start early in the beginning, and build a sustainable company, scalable, and sustainable companies. That's our goal.
Melinda Wittstock: So, in news headlines, suggest that women still aren't getting their fair share, I guess, in aggregate of venture capital money. What do you think is the block here? What will it take to get closer to the … You use the word “parity.” Because right now, qualifying companies that are female founded, depending on what's stats you read, are only getting like two to five percent of the venture capital money available.
Kay Koplovitz: Well, I think there is a misconception of what parity actually means in the marketplace, and let me give you at least my perspective on it. We came to the market as women entrepreneurs, in the venture market, much later than the guys. They had started back in the late 60s, 70s, to start invest in this category in high growth businesses. They had an established marketplace. We came 30 years later. So, we had to sort of kick down the door, and get into the marketplace. We don't have, yet, as many women starting companies, that are backable by this kind of venture, and private equity capital. What we're interested in, is the ones who are there, that they get funding at parity with the marketplace. We're still not there either, but have made substantial changes, I think, in the marketplace. And this is where we need to accelerate growth.
So if you looked across the broad scope, you'd say, oh, women are only getting 3%, 5%, of the venture capital, but there's a distortion in the numbers. Because the biggest firms out there, the [inaudible [spp-timestamp time="00:10:32"], the Benchmarks, [inaudible [spp-timestamp time="00:10:33"], etc, raise billions of dollars. And they have to put so much money to work, to move the needle for themselves. So, they're investing at the high end evaluations, in companies like Uber, and Airbnb, and companies like that. And those numbers actually distort the amount of money that women are raising at the A series, and first round institutional, or B series. So they distort the view of it. But if you took, across the board, for women who are in the category, against men who are in the category, head to head, you would still find that women are raising capital at a discount, sometimes as high as 30%.
That's the gap we want to close. We want to close that gap, and we want to actually make the market more friendly to bringing more women in these startups, to marketplace. So, there are two different factors in place. There aren't as many women in the market as there are men, in this category. A lot of people talk about how many companies are started by women across the board, but that's not our sector. Our sector is narrower than that. It's companies that are raising outside growth capital. Institutional capital. And that's different than an organic, local business of sorts.
Melinda Wittstock:: Yeah. Yeah, by definition.
Kay Koplovitz: You have to really drill down into what you're really talking about. And you really focus on. So, I have a little bit of a problem with talking about 5% or 3%, which, across the board, would be right, but I think it's a distorted number. And I think if you look at companies that were just in this category, we'd be a higher percentage of companies, and we still have a gap to close, in terms of the amount of capital raised by women in the category vs. men in the category. So, that's where I'd like to focus.
Melinda Wittstock: Yeah. Thank you for explaining that, because I think that makes a lot of sense. That women, just as group, are at an earlier stage, so we're raising lower amounts of money. If we're at seed stage, angel stage, Series A, as opposed to Series E, you know? D, E, or whatever. Obviously, larger amounts of money. And then, of course, the types of businesses that women tend to go found. So, what's interesting to me, is that I think a lot of women gravitate towards small business, rather than going for moonshots, and with scalable technologies that can disrupt whole industries. You know, the type of companies that qualify for this sort of growth capital. Really big, scalable companies. Is there something in women's DNA, where we think we have to start small, or we unnecessarily limit ourselves, instead of going for these big moonshot-type companies?
Kay Koplovitz: First of all, all big companies start small. Every single big company started small. It was somebody's idea, with some … One, or two, or three people, that are in-sync, for launching this big idea. We concentrated Springboard on entrepreneurs that have the vision, the experience, and the potential to grow a scalable, and sustainable business. So, we're looking for entrepreneurs that are in that category. So, not everybody is in that category, and not everybody wants to do that. There are lots of entrepreneurs out there that are sole proprietors of their entrepreneurship. They're the only ones … They're working for themselves as consultants. It's not for everybody. But for those women who really have this vision, those are the type of women that we're talking about in the category which Springboard operates. So, that's a qualifier, for us.
And we're not looking at the organic. Because a lot of women are in business to augment what their family has an an income. They're often working online. They're, maybe, the categories that a lot of them are in, are podcasting, communications, They might be influencers. They might be things that they can do, themselves, easily access, even from their home desk. And so, that's great. It's just a different category of business. Or they might have a local shop of some sort. Great! We love our local shops. But that's not a vision for a scalable and sustainable business. It's a vision for a local operation that has revenue, and produces an income for people, hopefully, and is very prevalent across the United States. Not just women. All businesses are … That's the dominating category for businesses. Small businesses.
But we never have small in the same sentence with Springboard entrepreneurs. Because that's not the kind of entrepreneur that we look for. There are different categories. And I think we just need to be more cognizant of what that is. And, by the way, over the 18 years we've been doing this, we have seen almost 700 entrepreneurs now, who are going for the moonshot, and have a number of companies that are valued at over a billion dollars today, in market cap. So, we're producing the right kind of companies for our target.
Melinda Wittstock:: And so, name some of those companies. What the companies that are Springboard's biggest successes over time?
Kay Koplovitz: Well, there are a lot of … I mean, if you are talking about ones that have had liquidity events, you're talking about … Our first IPO, 51Job of China, listed on the NASDAQ 2004, was valued at a couple billion dollars. Today companies like Zipcar, iRobot, ConstantContact, these are all companies that went public, at substantial valuations. So, MinuteClinic … MinuteClinic is the core, today, of CVS, and CVS' pivot from being a drugstore chain to being a healthcare provider. And MinuteClinics are now distributed in over a thousand of their stores, and growing. And the amount of services they are giving are growing too. So, it's really … These are some of the really big names that people would know, and we have many more coming up behind them, that are … I don't know how many people know the biotech world, but ViaCord, and Xenagen, and companies like that, Icagen, are all large companies within other entities today.
Melinda Wittstock:: So, when you look … I mean, since 1999, when you've been looking at this, what are the … You must have a lot of data, I guess, about what are the qualities, or the DNA of a successful female founder of these sorts of companies, that you're describing. The ZipCars, the iRobots, the PharmaJets, all these amazing portfolio companies, that have come through the Springboard accelerator. What are, say, three things, that a woman who wants to do this really needs to possess in her DNA, and her characteristics, in her mindset, to be able to succeed?
Kay Koplovitz: Number one, she has to have a vision for what she is disrupting, or bringing to the marketplace that is differentiated, and can be a big market. Two, she has to be able to attract the A team players. Not just your best friend from college, but real A team players in the sector. That makes a big difference, to have players on your team that really know the market, have experience in accelerating the growth of companies around you. That's really very important. And a very important attribute is agility. What does that mean? It means that this person has to be able to learn, and adapt quickly. We have to move quickly in this marketplace. The marketplaces, across the board, are moving at a speed faster than we've ever experienced. And agility, being able to access, and move quickly, on what you learn in the marketplace, is very important for the strategic growth, because timing is very important. When you move, and when you do certain things, the timing is important, as to whether or not you can be a success in the market. So, those are … There are other attributes we look for, but those are key attributes we look for.
Melinda Wittstock: So, Kay, let's go back in time a little bit. I want to know the inspiration, the “aha moment” that led you to create USA Networks.
Kay Koplovitz: Sure. I was a student at the University of Wisconsin, between my junior and senior year, and I was on a backpacking trip to Europe. And I am an endlessly curious person. And I saw this poster, when I was walking past the University for a lecture being given on satellites. Now, when I was a kid, I was really impressed by Sputnik, the challenge that President Kennedy gave us to put a man on the moon. For some reason, space intrigued me. And I thought, satellites, that'll be interesting. So I go in, and listen to this lecture, and the lecture was talking about geosynchronous orbiting satellites, which had just been launched. Although we knew what they were, since the end of the second World War, they had just been launched in the middle to late 60s, through the 60s. And he was talking about the power of these satellites to be able to communicate around the world.
And, at that time, we had the Cold War. We had the Berlin Wall, and the Great Wall of China. The Berlin Wall doesn't exist anymore, and the Great Wall of China used to be to keep people out, now it's to bring tourists in. We live in a different world. But back then, we had very few television networks, we had very limited amount of transmission, and none behind those walls. And I thought, wow, satellites can penetrate behind those walls, they can't be stopped. This is so fabulous! Well, this gentleman, who actually had an immense impact on my life, was Arthur C. Clarke. The great science fiction writer, but also scientist. And probably his science fiction includes more real science than any other fiction writer that I could name. And I was compelled. It was an idea that I grasped from what he spoke to us about. And that idea would never let me go.
And I went back to the university, graduated, went on to graduate school to write my Masters thesis on satellite technology, and it's potential impact on the world scene, and communications during the time of the Cold War. And I worked seven years, in the satellite business, after that. The cable business, and I was a television producer, working my way through school. And, I just put all those things together. So that when the time was right, when the market was open … Which opened up on one particular night, September 30th, 1975, when we brought the live boxing match, the Thrilla from Manila, Mohammad Ali, and Joe Frazier, live, from Manila, to Vero Beach, Florida, to demonstrate for congressmen, and people in the industry, that satellites could indeed be used for commercial purposes. And that was really the night that changed the course of television history. And launched my career.
Melinda Wittstock:: That's just so inspiring. I think it's interesting that you mention knowing the timing. Because there you were, developing all this expertise, but you picked exactly the right time to go for it. And so, how did you get going, and what was it like navigating what I assume them was a heavily male dominated industry, where a lot of the time, you were probably the only woman in the room?
Kay Koplovitz: Yes, that's true. But I worked in the cable industry, and the gentleman who I had worked for in the industry was also the owner of the cable system in Vero Beach, Florida, and was a strong proponent of the use of satellites. And he … Bob Rosenkrantz, was his name. And he knew of my vision, my dream. We talked about it many times. And that night, he said, Kay, tonight your dream comes true. And we went out, and launched what became USA Network. It was originally Madison Square Garden Sports. It was an all sports network. I went out and negotiated for the NBA, the NHL, Major League Baseball, many other sports, so that we had live sports events every single night. And, at that time, we only really had sports on the weekend. It was like ABC Wide World of Sports, and the baseball game of the week, and things like that, but it was like a weekend thing. Assuming that the men were only available on weekends to watch sports.
And I had different vision of it. I thought we could watch sports any time. And then I was lucky enough to be able to start with 125 events from Madison Square Garden, and keep adding to it, in the first year. And we actually launched that in 1977, went live in 1977. So, it was really very exciting for me. And very thrilling to be able to put my vision, and my dreams, bring them into reality. But I had support of a lot of different men. I'm a confident person. I can project my confidence in my own vision, and my execution skills, and I think that I got the support of a lot of men in the industry, because I was bringing them a new opportunity. You know? Major League Baseball was only on the weekend, and I could bring games to the viewers during the week, wow, it might really expand their marketplace.
Same thing with the NBA: Just to give you an idea, the first year of the NBA, 1979, it was really 400,000 a year, that I paid for the rights. And today, it's multiple billions of dollars a year, they get in license fees, from distribution. So, it was a start of something really big in the sports world. And then we transitioned also into entertainment, starting in 1980. It was just breaking windows open. It was very exciting for me. I really enjoyed … I guess I like being out there on the frontier, and sort of writing the rules. The rules I want to see written. And following them. And there's something very exciting about that. Because it was really launching industries, not just a network.
Melinda Wittstock: I love that, if you could see me right now, I have this huge grin on my face. Because …
Kay Koplovitz: Yeah.
Melinda Wittstock:: I love that, too. And women who … I'm just marveling at what an incredible … You know … Success, and how you did that. So, along the way, I'm curious about your journey along the way. Because when you look back in time, you make it sound very easy. I can't imagine that it was. There were probably all kinds of, like in any entrepreneur's life, lots of ups and downs. Sometimes within the same hour.
Kay Koplovitz: Yes. Absolutely. There were, but I really felt undeterred by them. You know? To me, it was just something to figure out how to solve. And, I have to say, with all the things that are going on in the marketplace, and … I'm glad that there are enough women in the marketplace, whether it's Silicon Valley, or Hollywood, or politics, or whatever it is, that are speaking up on behalf of women, and saying look, we're not going to take this sexual harassment anymore. We're not going to be second-class citizens anymore. It's been enough. We've taken it enough. We're not going to take it anymore. I'm glad they're saying that, because I lived in a different era, when I started USA Network.
And there were a lot of things that officially women were excluded from. I mean, there were a lot of golf clubs we couldn't play at. There were eating clubs for men, that women couldn't go to. And a lot of deals were being done in these environments, and we couldn't go there. We were excluded from them. And I'll give you a little example. I first negotiated the terms for the coverage of Augusta National in 1982. And, at that time, of course, there were neither minorities, nor women, in the club. And I went to the first media day luncheon, in April of that year, and I guess there were 12 or 14 of us, from the media, that were there. And we were out on the veranda, chatting, and Hord Harden, who was the chairman of the club at the time, and the one who made decisions, and who got contracts … Was just talking, very friendly.
And I was chatting with him, and he said, “Oh, let's go inside, we've got to go to lunch.” So, we're going inside, going to lunch upstairs. And we get to the top of the stairs, and he turns around and looks at me. And he says, “Kay, we've got a problem here. And I said, “Oh, Hord, what's our problem?” “Well, you see, we don't allow women on the second floor.” And so I said to him, “Well, Hord, what are we going to do about it?” I mean, I was not going to go down, in a nice way, I was saying, “Hey, Hord, I'm not going down to eat lunch by myself.” You know? You don't want me up here, okay, but … So we all turned around and went down to the trophy room, where women could eat lunch. And we did, for the next 10 years, until they allowed women on the second floor.
Melinda Wittstock: You negotiated the rights to this, right? You're making them a huge amount of money, but you still have to eat downstairs.
Kay Koplovitz: Well, so I mean, it was a different time. And, yes, a lot of other things that happened to women, were happening back then too. And there were not enough women to speak up. I mean, if you did speak up, it was at your absolute peril. You were going to be eviscerated. So, today, it's different. We have enough women in the marketplace, and enough women who want to be successful in the business market. And it's about time we spoke up. So, I think that's a good thing happening in the marketplace, and I think it will level the playing field. Even though I know that there are a lot of men who feel, well, this is a witch-hunt for them. And, I say, hey, if you don't deserve it, nothing's going to happen to you. If this hasn't been your practice, then nothing bad is going to happen to you, in today's world.
Let's get on. Let's move on to the future. Let's correct this. Let's get investment in a lot of women-led companies. That's the thing that'll actually change the marketplace. Let's have more women among us. Let's not have one woman in the room when we do a pitch. Let's have some other women in the room when we're doing a pitch too. Like, somebody on your investing team. It'll stop this behavior. That's what we need to change in the marketplace, and I think … I've noticed in the last few months that several VC firms have brought in their first woman on the team. And I think that this will help change the metrics in the marketplace for investing.
Melinda Wittstock: Well, more women too, on the actual investment committees of the VC firms, as well. I mean, are you seeing more of a trend towards that? And what's a woman need to do? I wonder whether, just as we start to have more exits, and we start to invest in each other's companies … And that more of us, or some of us take that path, on the VC path. And what are some of the ways that you see, looking forward a little bit, of what is going to actually change this? I talk with so many women on this podcast, and in the book that I'm writing, and just that I've known, on my entrepreneurial journey, who talk about male VCs not understanding their market. Or, these days, Silicon Valley firms, some of them [inaudible [spp-timestamp time="00:31:49"] have meetings with women, because of all the sexual harassment allegations, and cases that have been going on. So, what are some of the things that you think will actually change the game? And what women who are exiting from their companies should be doing to help other women up?
Kay Koplovitz: Well, there are a number of things that I see in the marketplace, that will take some time … We have to have a little patience for the change. The pace of change. We can accelerate the pace of change by investing ourselves. And I've seen … Take angel investors, which are early … Even pre-seed investors, their lines are blurred today. But when we started 18 years ago, there wasn't … Women didn't comprise even 1% of the angel investors that were registered in the United States. Today, it's almost 30%. So women are stepping up with their money, their pocketbooks, and doing some early stage investing. So you have a lot of these different funds, or … That are out there, whether it's the Golden Seeds, or the Bell Capitals, or the 37Angels, or Broadway Angels, etc. There are a lot of them out there today, across the country, not just on the coast. So, that's number one.
Number two, I think that what I'm seeing, and what I really like about what's happening in the marketplace is when women are successful, and have a liquidity event, they're coming back, coaching entrepreneurs, coming behind them, and investing in them. So, we have … Many of the Springboard entrepreneurs are investing in other companies. And we even see them in our growth capital fund. We have Springboard entrepreneurs in each of our special purpose vehicles that we are investing in individual companies that are in the growth stage. So, I really like that. I think that'll improve our chances for women getting the funding that they want. And then, I think that a lot has to be done on the side of women who are actually launching what we call micro funds. So, they're out there raising 10, 15, 20 million dollars, as earlier stage funds. And as they grow, and grow into their second fund, and their third fund, and their fourth fund, they will become more potent investors in the marketplace.
And then, finally, I think that the funds that are out there need to look more aggressively for women with experience that they can bring into their fund on the investing side. Not just the marketing side, or the administration side. But on the investing side. So, those are the things that I think are going to change the market. And I think we have each of those as contributing somewhat to the change in the market. We just have to accelerate on those initiatives, and I think the market will change. And I think the five years from now, ten years from now, we'll see a significant difference.
Melinda Wittstock: I think so too. And I mean, one of the … My moonshot, with this podcast even, as I decided that I was going to invest in a hundred female founders in the next 10 years. I was just going to do that, right? So, I started the podcast, the beginning of it is to actually, like acclaim and affirm women who are almost like succeeding in silence. It would be fantastic to change the stereotype of the quintessential startup founder. It's not a guy, necessarily, in a hoodie, in the 20s, eating ramen noodles. It can just as easily be a woman in her 40s, coming out of the corporate world, with all this domain expertise, and then using that to transform an entire industry. So, changing the game, changing the stereotype. Really empowering women, and being the change you want to see in the world, by helping each other. And I think Springboard is such a huge Kickstarter of that, in this ecosystem. So the more opportunities-
Kay Koplovitz: Yeah. I just think we're operating at the top of the pyramid. I don't think there's anyone else that can match our results with 81% of all the companies in Springboard over 18 years, are in business today. I don't think anybody else can say that about the companies, over such a long period of time. Those companies are either operating independently, or as part of entities that they were sold to, but that is remarkable. And multiple times the national average, of companies that are starting out in this sector. So, I know women will perform very well, at some point in time it will not be a detriment that they actually deliver on their numbers, as opposed to people who project numbers, and never deliver on them. You know, which happens a lot in this marketplace. I think, we'll change a little bit how business, and the entrepreneurs, are looked at, too.
One of the really, really great things that I see at Springboard, that I'm so pleased with, is that the people who are in a class together, that are going through the boot camp together, they are really helping each other. They are really advisors to each other. They are cheering each other on. We just didn't have that before. And it's so important, as you were mentioning earlier on, it's a very lonely, sometimes a very lonely pursuit, to be an entrepreneur. And have the burden of running the company, and making the payroll, having the vision, hiring the right people, being there at the right time, and the strategy. All these things are difficult, and fun, often times. And sometimes, very debilitating, because some days look very bleak. But you come, and you have this sort of board of advisors, who are your peers, in your class, it really makes a big difference, that they can help each other.
And then other entrepreneurs, who have gone, and matured beyond that, preceded them, are also coming back to help them. This was really part of my vision of what Springboard really is. It's not only the financial capital that its raising, it's the human capital. It's so important to have the right human capital, who know the right people, at the right time. And to be able to reach them. And that's largely what Springboard really helps companies, and entrepreneurs do. Access the market at the right place, with the right people, at the right time.
Melinda Wittstock: Oh, yeah, that's beautifully said. And you know, it's so interesting that you say that. I'm still close with quite a few people in my 2011 cohort from Springboard. And for all the listeners to Wings of Inspired Business, you are hearing from so many women who have come up through Springboard, and I've started to meet, and get to know women from other years. And it's such an amazing, amazing, group of women.
Melinda Wittstock: Kay, it's such a delight to talk to you. And congratulations on all the success with Springboard.
Kay Koplovitz: Thank you so much for sharing this time with me today. I hope that your listeners will get some sage advice out of it. And the series that you're producing here is very important for the women entrepreneurial networks out there.
Melinda Wittstock: Well, thank you so much for putting on your wings, and flying with me today,
Melinda Wittstock: Kay Koplovitz, the entrepioneering co-founder, and chairman of Springboard Enterprises.