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Are Gay People Better Entrepreneurs?

It's rare to find an openly gay CEO of a large company. But there seem to be social and logistical reasons openly gay people excel at building their own businesses.
Fab.com's Jason Goldberg (left) and Bradford Shellhammer in their New York City offices.
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When Joel Simkhai came out of the closet at age 18, he was worried about what kind of professional future he could have as an openly gay man.

"One of my problems was I thought I couldn't be as successful," Simkhai says. "That's partially because I didn't have any gay role models who were very successful and in high-profile jobs."

Now, as founder and CEO of the location-based gay social network, Grindr, which has more than 4 million users in 192 countries, Simkhai has become the very example of success that he says he never had.

The fact is: Sexuality remains a sensitive subject in big corporate environments, especially among C-suite executives. Recently, The Wall Street Journal reported that there's not a single openly gay CEO on the Fortune 1000 list. Even those who are widely reported to be gay, including Apple CEO Tim Cook, have never publicly admitted it, a phenomenon often referred to as "the glass closet."

Faced with so much secrecy, it's no wonder promising gay business leaders are finding entrepreneurship a more attractive option. Plus, some research indicates that openly gay people might even be better suited to the job.

It's a vast generalization, of course, but according to Kirk Snyder, a professor of management communications at University of Southern California, openly gay executives may make better managers than straight or closeted executives. Snyder came to this conclusion while writing "The G Quotient: Why Gay Executives are Excelling as Leaders." His five-year study, published in 2006, consisted of interviews with both managers and employees at 2,000 businesses. The results of the study showed that employees working for gay managers reported 25 percent higher levels of employee engagement.

"What I found was that gay leaders value their employees as a whole, because they, themselves have experienced what it's like to be judged for one thing, rather than valued for who you are," Snyder says, adding that this experience not only makes for good managers, but for good entrepreneurs, as well.

"Everyone who's out of the closet has gone through a process of navigating unexpected territory and avoiding land mines," he says. "It's a developed skill that absolutely lends itself to entrepreneurial acumen."

Simkhai, for one, agrees. "As a gay person, you're by definition a minority and somewhat outside straight society," he says. "That makes me think differently, do things differently, and I think that's helped me in business."

Shareholder pressure is a big reason that CEOs of global companies aren't willing or able to come out. That, and the fact that in 29 states, it's still legal to fire someone for being gay.

According to Snyder, shareholder pressure is a big reason that CEOs of global companies aren't willing or able to come out. That, and the fact that in 29 states, it's still legal to fire someone for being gay.

Traditionally, Snyder says, members of the gay community became entrepreneurs so they could be their own gay-friendly bosses. "Necessity was the mother of invention, if you will," Snyder says.

Even as corporations become more gay-friendly places for employees, Snyder says, many openly gay people who are successful in corporate environments remain drawn to entrepreneurship.

"It's demotivating to see you can rise only so far, and then you're going to stop and hit your head on that glass ceiling," he says. "People who have achieved success in their own skin see no reason that progression of success should stop."

For gay entrepreneurs, who do choose to follow their own paths, there are now networking groups such as StartOut.org, which supports and connects LGBT entrepreneurs. Founded in 2008, it now has more than 3,000 members in San Francisco and New York, with satellite chapters in Austin and Los Angeles.

Darren Spedale, a co-founder of StartOut, was building his own media company, A-List Global Media, when he launched the group. His thinking was, when entrepreneurs share more than one commonality, be it gender, race, or sexuality, they make deeper connections and are more inclined to help one another grow.

The goal of StartOut was to help LGBT business owners make those connections, while also providing first time entrepreneurs with openly gay mentors. Peter Thiel, for instance, the former PayPal CEO and co-founder of the investment firm Founders Fund, was the keynote speaker at last year's StartOut Awards. While Thiel is an openly gay man, Spedale says, his speech was not LGBT-specific.

"He spoke about how to inspire more people to become entrepreneurs," Spedale says, "but the fact that he was sharing his thoughts at a StartOut event was a wonderful experience."

No matter how much support gay entrepreneurs offer each other, however, many agree that it's still crucial for household name CEOs to be honest about their sexuality in order for acceptance to become more widespread.

"I think it's important for people in these huge leadership positions to be clear about who they are. That doesn't mean they have to take a billboard out on the highway, but there's nothing to hide at this point," says Jason Goldberg, CEO of the fast-growing flash sales site Fab.com.

Goldberg says he wears his sexuality as "a badge of honor," and as a result, he says he's approached daily by other gay entrepreneurs thanking him for setting an example. Goldberg says, "I think that visibility's really important."

Until that belief becomes more pervasive, however, entrepreneurs such as Simkhai, Goldberg, and the community at StartOut will continue to to set the standard and encourage others to follow their lead.

"StartOut's purpose is to make people even more comfortable with being gay in the business world," Spedale says. "Over time, we hope it'll become...what's the opposite of a big deal?"




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