This Week in Startups - E988: Aileen Lee, Founder & Managing Partner of Cowboy Ventures, pioneered actionable change to diversify tech & VC, shares early days innovating in e-commerce, insights on current funding landscape, dangers of prioritized growth over sustainability, & lessons learned from backing winners like Dolla

Episode Date: October 15, 2019

0:51 Jason intros Aileen Lee 1:36 Aileen on her time at MIT, early bias against women in math 5:56 What brought Aileen to San Francisco & working at GAP in the early days of the Internet 9:40 Aileen on working for Mary Meeker & what makes her special 10:25 “All companies that leverage technology are not the same.” 13:10 What made WeWork attractive to investors in the early days? 17:54 How the market is skewed to reward growth 22:35 Thoughts on SoftBank increasing valuations 28:24 How Aileen got involved with Dollar Shave Club 31:07 Jason’s experience with Dollar Shave Club 32:07 “Crushing it” culture in tech 35:12 Aileen’s history at Kleiner Perkins 36:27 Being a woman in VC in the 2000s 41:12 Starting Cowboy Ventures 43:46 Diversity in tech 48:38 What are they working on at All Raise?

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She's seen it all, and she doesn't really need an introduction. Please join me in welcoming Aileen Lee from Cowboy Ventures. So you started in venture capital, I think, through what was the traditional route, which was going to business school back in the day. I know you went to MIT and then Harvard. So obviously there's some kind of slacker, I guess. coming up actually you know it's funny I kind of was not like I'm not trying to say like I'm I just I'm very lucky that like I think MIT had like a fluke in admissions that

year where they were looking for people who were more well-rounded like they changed that policy after we graduated what did you do at MIT I actually was a Sloan undergrad ah what does that mean business yeah I mean it's business I to be honest like I kind of I grew up at a great public school in New Jersey I never had met an engineer my I'm a first generation immigrant where in my parents' minds, engineering meant civil engineering. And that was kind of a tough job. You would go work for a city or a utility. And that was their version of, so they had, and so I never had met an engineer. I didn't understand what it was. I think I kind of figured it out a little too late. But you wanted to be one. I, you know what? I was a real procrastinator. I did not

have great executive function in high school. And so I knew that if I went to liberal art, I guess I knew enough about myself to know that if I went to liberal art school, I would just keep on with my procrastinating ways for the rest of my life, just writing papers like last minute. And if I went to a school that actually was like more homework-based and problem-set-based where you really can't learn it all like two days beforehand, that it would be like my boot camp, and it would kind of get me out of my ways. And also, I had read an article at the time,

so I graduated from high school a long time ago, where it was an article about scientific illiteracy and about how girls were being left behind. of the scientific revolution. Girls were being brought up to be less comfortable with numbers and less good at math, not because they had less innate capability, but kind of society was saying that boys are good at math

and girls are not. And that really pissed me off. And I had been good at math, but never encouraged to pursue anything in math and sciences. And so when I got into MIT, I was like, I'm fucking going. So you had this observation at the age of 16 or 17. But it's kind of sad that basically that problem is still true. Like we haven't fixed most of the things that people were writing about in the 70s and 80s.

Yeah, but you know what? I read the memo from James DeMoor from Google and he said this is just biological differences. What did you think when you saw that memo and I guess we're getting right into it, but it is interesting. There is scientific evidence that the genders are different. It doesn't take a genius to figure that out. But what did you think of that moment in time? So I kind of remember when I was in elementary school,

we used to take these standardized tests, like the CTBS test. I don't know if anyone here remembers like coloring little circles with pencils. And apparently I think when I was in fifth grade, I did the best in the math test. And I got called to the principal's office. And he wanted to know if I cheated. And so I kind of, I never really attributed that to gender bias. Right. I never got in trouble.

I had just been like a regular kid and never been called to the principal's office. And he wanted to know like if my parents got me tutors or if maybe I had like cheated in some way. And I went back to class very steepest and embarrassed that I'd been called. And I never thought twice about it. But now when I look back, I think that's like that's how we grew up at the time. It's just this weird signaling like this is maybe not for you. Yeah, right. Yeah, I got that too.

I was like, I think I read an article that at Brown, you didn't have to have a major. you can make your own major up. And I was like, that sounds good to me. Yeah. And so I asked my advisor in high school, I said, hey, what about Brown? And he literally laughed in my face. He said, I think you should go to the police academy. That would be better.

He did not. No, literally he did. And I took the policeman's test. You do? Really? I took the police test. And my brother went in. And then I said, you know what?

I'll go to college at night. And then maybe I'll meet you on the other side if I get my degree. But I was going to be a cop. Wow. Yeah. That's crazy, right? weird. That's so cool.

It is a little weird. It's a little known fact about you that I didn't know. Yeah. Then I was going to go to the FBI. I went to, I was going to go to John. We could use you right now. I would have been good. Well, I read Andrew McCabe's book.

You read that book? Andrew McCabe's book. It's really good. And I was like, yeah, that would have been the perfect job for me. So I was going to go to John Jay for criminal justice. That's cool. And then there'd be an FBI agent. And then the Internet happened.

When did you first become aware of the Internet? You know, I was a little bit of a late adopter. So when I graduated from business school in 1997, we had these study groups that would meet before class and go over the cases and kind of divide and conquer to make sure we were prepared. And one of the guys, when we were graduating, we had like a final, you know, we would meet in the mornings

a couple times a week, and one of the guys was going to this dot-com startup that was going to sell books on the internet. And I totally remember, like saying goodbye to my friend Brian when we were graduating, I'm like, hey, good luck with that book thing. So he went to Amazon. And another one of my study group mates went to Netscape. And then I moved to San Francisco. I moved to San Francisco for Gap for I thought I might want to, I loved consumer businesses,

and especially consumer businesses I thought made really great quality products and didn't really have to rely on paid marketing to build customer love, just like building true brands and loyal brands. I was really fascinated by that. And so I went to go work at Gap and living in San Francisco at the time in 98, 99, especially leading up to the dot-com boom, I thought the internet people were super annoying. You would go to a cafe,

and some of you, if you were from out of town, you might find this when you go to a coffee shop now. Everyone's talking about, like, hey, I'm in bizdev at Yahoo. It just was super annoying. So I kind of was trying to stay away from those people. They're kind of like the crypto people today, where they're the dot-com people, because they're kind of like, whatever you're doing,

it's not as important as what's happening in crypto. Yeah, maybe. And you're like, I'm not so sure about that. I'm curing cancer. It's like, yeah, but not on the immutable blockchain. Yeah, yeah, yeah. That's what the internet, the dot-com people were like in San Francisco in like 98-99. And so, but then I was chief of staff to the CEO at Gap,

and then after you survive your tour of duty, you can kind of pick a job. And the internet job was the most exciting place to be at Gap at the time in 99, because it was a tiny team of five people. We had just put up our first website. And we were trying to figure out, like, this new internal business. And it was a real fight about whether the Internet was going to be a fad or not. And so we were under-resourced. It really wasn't an in-house startup.

So I went there. And it kind of became, like, the front-end marketing manager, biz-dev person, product manager for... The website manager. Yeah. It was like websites were kind of like, yeah, it's kind of like a billboard or a business card or a catalog. Like, that was the metaphor people were using. Nobody ever really thought, like, what about something? selling the clothes on it.

Oh, we had, I mean, we were selling the clothes, but even just building the processes in terms of, like, do we just set it up in our internal systems, like, a different store, or do we set up a different system? We had to build, like, there was no one who actually was fulfilling this stuff. So do we go pick a new warehouse, build a new warehouse to be our, like, internet distribution center, or do we try and do it out of existing warehouses that basically had no technology whatsoever?

Do we make, do we buy different merchandise? Like, is it a place where you could buy a winter coat all year long, or do we only sell the stuff that store, are selling. There was just so many, and then also we had no one's email address, and most people were afraid of putting their credit card on the internet. So it was a totally different time. It really is worth taking a pause there because people don't realize, at that time, people thought the internet was a fad that was going to crash. Yeah, right. It couldn't possibly stay up because nobody was in charge of it, and there were cover stories on the New York Times that said

people, unlikely, 78% of people, unlikely to put credit card in the internet. internet website. Exactly. And now today people are like, yeah, absolutely, I've got all 12 credit cards. In fact, I'll let the internet save my credit card. I won't even know the number. Yeah, you're just like, yeah, fine, whatever if you, I can always cancel or return it. All these problems got solved. You wound up working for Mary Meeker somehow when she was at Morgan Stanley. Well, when I was, I was an analyst at Morgan Stanley after college. And Mary Meeker, even then, was like this world-class, famous research analyst. What makes her so special over this, like,

we're talking about close to three decades, of her being one of the most respected voices? What was it, even at that early time? You know, I think, and it's very relevant for the venture job, which we both are now, or all of us are, is that the willingness to have conviction and also standing up for what you think when no one else thinks it.

you know and I think you know she was very bullish on Amazon when a lot of people were writing about amazon dot bomb and like literally there were more than one point in history when people thought Amazon was going out of it was the we work of our time of that time that it was going out of business they were spending so much money and they were losing so much money there was no way it was going to be a sustainable business literally this happened a couple different times yeah and mary just said no I i believe in this in the long term and here's why and she was like the only one I know you want to turn your idea into a beautiful website. You want to start a company.

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team over there. So thanks again, Squarespace. All right, let's get back to this amazing episode. It is fascinating. What do you think everybody got so wrong about the Amazon story? And then what are people getting right or wrong since we went there already about the we work collapse that occurred over the last, it feels like three weeks? Yeah. I mean, wow. You know, it's interesting. It's a confusing time because on the one hand, you know, that saying like software is eating the world, I do believe that, and there are people who say like every technology is going to be, every company will be a technology company in some form, right? And I think that's true.

And so, but now I think the pundits are saying, well, we work as never a technology company, right? It shouldn't have, no, I think from a margin perspective, that's definitely true, right? And so, you know, how companies get funded in terms of multiples, multiples on revenue, multiples on gross margin, multiples on EBITDA, like a lot of companies that don't have the margin structure

of software companies are being evaluated and invested in like they have the margin structure of software companies. and I think that is, I think maybe one of the lessons learned that all companies that leverage technology are not the same. And if and when there are bumps in the road, and we mentioned cycles, Jason, right? Like, there are, you know, people have been, it's been a bull market for a pretty long time. Yeah, and now we're 11 years. And, yeah, it's just not possible that it's going to stay, that there's going to be so much private money valuing companies at the rate that they have been for another. five years. So I don't I can't say I don't think anyone can say when it's going to change if it's

going to be a year from now or four years from now but things will get tighter at some point where it's hard it's already hard to raise money for certain types of businesses and certain types of people but it will get harder for everyone and also multiples will contract. Let's take apart the we work ride up for a second. It's very easy to kind of dance around like as it's tripping and falling and stumbling down the stairs like, ha ha, like all those mistakes. But there was also this, you know, incredible run they had.

What was it that people were so attracted to there in terms of it's an office suite company, but people seem to suspend disbelief that it was something more than an office suite company? I think there's a couple things. One is that we're actually in between major tech trends right now. Like social was a big

important tech trend that made it much easier to market to consumers than it had been in the past and even businesses. And then cloud and SaaS and mobile basically created this amazing window of opportunity for new companies to dislodge incumbents or create new categories.

But all of those trends are actually 10 or 15 years old. And a lot of those categories have quite a few competitors already. And so, to be honest, like, investors raise money, and a lot of them have an incentive to deploy it. And they're always looking for the new hotness, right? The new hotness is scooters. The new hotness is, like, you know, retack, which is, like, real estate technology. And I do think that this whole combination of, like, somewhat, like, technology-facilitated community bundled with real estate became this category that people were flocking to,

partially because there aren't that many other places to deploy that much capital. or there haven't been in the past couple years. So a capital oversupply can lead to weird behaviors? I think so. And the other thing is also, how many of you have been to a week work or passed by a we work or had a friend working in a we work, right? It's pretty unusual for, like, when you have a product that people use, right, you go to a farmer's market and you see a square and you see a merchant selling honey using that dongle, it's a visceral reaction.

It's a proximal experience. you can understand how it's changing the life of the person selling honey, or it's changing the life of the person who wants to buy the honey and had to pay cash before, right? So, like, those kinds of, and, like, WeWork has physical locations that people actually go to and can see. And so it makes, also for investors and consumers, it makes it seem way more accessible than, I think,

a piece of software that none of us will ever use. Yeah, I think Sacks calls it real, David Sacks from Crafts, calls it real world virality. So his concept was, well, if you're looking at, you know, the way most of us found out about Uber was, somebody ordered an Uber and we jumped in it with them. We're like, oh, you have a driver, and it's like, I have my own personal driver in an app. Yes.

And it sort of spread that way. And We work was like that. It's like, where am I? What is this? This is cool. What happens to something like we work if there's too many desks available in the world? And, you know, people charge a lower price. Well, I mean, I think it's harder.

You mean competitors. A competitor or, like. It seems to me that they're this third party between the owners of the real estate and the consumers of it. They've inserted themselves. And isn't the idea behind the Internet is to remove that kind of friction? Well, you know, it's also interesting because we have been in the past five to ten years also in this like war chest strategy period of time. Define what that means. Where you and generally the market and investors are rewarding.

growth, right? They would rather, for not necessarily a same reason, invest in a business growing 20% month over a month than a company growing 10% month over a month, right? Even if the company growing 20% a month is burning 2x the capital of the former company of the other company or even more, like the market has really been rewarding growth. And so they will invest at high prices in the company that's growing the fastest or seems to have the most momentum in traction. But then that company has more money than everyone else, right? So they can afford to burn more. And they can afford to acquire more customers, right? They can afford to expand faster.

And then other people are afraid of investing in the other companies that are off in the market. Which feels like the Uber Lyft dynamic, almost. Yeah, so it's actually kind of interesting that Lyft actually wound up catching up in some cases in some markets because they had such a disadvantage capital-wise for so long. But that has, like, that has been the strategy

of a lot of the companies playing in like the big league's money game is like, you know. And it's a winning strategy. Move fast and break things, raise a shit ton of cash, and then you can outspend and outlive everyone else in the market. And so I think it'll be interesting to see if the performance of these companies in the public markets and what's happened to we work, if that changes the game at all. Yeah.

And it seemed to be a winning strategy. Is it illogical as a founder in an environment where, okay, there's piles of money around, you've got three people going for a trillion dollar market, whether it's transportation or, you know, lodging or some enterprise software, it seems like the logical thing to do, it's almost like a prisoner's dilemma, is, well, I will take the money, and I will give those investors what they want,

growth at all costs, and then we'll figure out later how to get the union economics, right? It almost seems like the logical decision in the moment. Yeah. I mean, I think it's a high-stakes game, right? It's a little, it becomes a little bit of a shoot-the-moon strategy, and I think for the employees

who work at those kinds of companies and the founders, right? It is important to understand on the risk that you're taking. Because, you know, for investors like us or the VCs that you may talk to, they may be encouraging founders to shoot the moon because that company is one of 30 companies that that fund is invested in. And they just need three or four of the companies in that fund to be successful. It doesn't actually have to be yours. And I think that's really important when you're getting pressure from if you have a board of directors or you have, if you take on a lot of money or you're thinking about taking a lot of money. Like the downside is that it can

cause you to create this like addiction to potentially unsustainable sustainable growth. And I also think there are plenty of companies like PagerDuty or Data Dog or other companies that have gone public and kind of done it up. Like look, they're still growing incredibly fast or Zoom, right? And they have great growth rate. But they've kind of done it a little bit more like one foot in front of the other, like slow and steady, just grow in a sustainable way. And I think those companies are great examples.

How do you pick the slow and steady versus, let's call it, Warchess strategy? Right. When do you know which one to pursue? Or is it all situational? Gosh. I mean, I think some of it has. I don't think, obviously, there can be winners and losers in both categories. Yeah. Some of it comes down to personality, I think, right? Do you want to?

Your DNA and, like, how you want to run your business. And some of it also depends on the investors that if you have choices, that you choose, and that you have an agreement of how you want to build your company. I was just talking earlier today with an executive at one of our portfolio companies that's in a category that has lots of war chess players. And we're growing well, but we're definitely, like, just slow and steady up into the right. And we do talk a little bit about whether that makes it seem like we're playing checkers and everyone else is playing chess, right?

Because those people are raising a lot of money and they're getting very sharky. And the founders are very secure with obviously, yes, we have to know, like we don't want to be playing checkers when everyone else is playing chess, but we have great product market fit. Our customers love us. We are not going to let ourselves get distracted by all this noise in the market because our product is differentiated and we are just going to stay true to who we are. And if we try and pretend that we are something or we are people, we are not, that's how we're sure we will lose. Right. Do you have to play the game that you want to come to work every day and play? Yeah.

What did you think when we saw Masayoshi San come into the market and start giving these incredible valuations? I was a beneficiary of that. Obviously, I sold him a big chunk of my Uber, and that was my own personal IPO. Congratulations. That worked out okay. I was like, well, I think this is great. Like, he's going to come into the market. But I did have big reservations.

I think Jason just said that the next time we do this, we're going to be on Calkanus Island. Yeah, absolutely. Well, we'll see. I think it's trading it like 30 bucks right now. So you sold yours? Yeah, I sold the big chunk. Okay. I still have most of it.

But my point was, you know, like sort of when we saw that big money, like Yuri Milner, when he came into the market, it was like, whoa, this guy's putting $100 million dollars. And we were all in shock. I know. Then this next guy comes in and he's like, $100 million, $200 million. How about $2 billion? How about $15 billion? And you're like, what? That seemed crazy.

What we should take on that. Obviously, I think one, I'm looking at your cast of characters here on the logo slide, I think only one brand listed. And that's probably the one that's had the most problems or challenges in your portfolio, correct? So whether it's soft bank or someone else, if someone offers you the next round and the next round's money and price, you do have to know that there are, you know, there's some attractiveness, like to the War Chess strategy

conversation that we just had, to that, right, which is having, if you're building a business is going to be very capital intensive, it can be really nice to know that you don't have the distraction of the next two rounds, and you also have someone who has deep pockets who can keep backstopping you. But you also

have to know that you are signing up, like there's not a lot of other people who are going to help you or who are going to backstop you when that person is involved in your company. And so it does definitely, it limits your degrees of freedom. And so you have to be very cognizant of the deal. Like, am I doing a deal with the devil or not? Yeah. Yeah. And in the case of Uber, I think it was a catalytic event because it ensured that Masayoshi San didn't invest in Lyft. So back to that prisoner's dilemma, my advice when that was all going down was take Masa's money. Let's not

overnegotiate. Let's get him on the cap table because if we all dilute 12 percent or whatever he winds up buying, isn't the company worth 25% more, and then we backstop against Lyft, you know, encroaching on it? It seemed like the perfect move. With brand list, they put in 100 million or 200 million. It was a total disaster. They didn't put in the second 200. Well, I'm not going to comment on it. Okay. Active litigation. But I think it's a mutual friend, T and Asharky. It's a great brand, an amazing product. I think she's an incredible visionary. But she's not there anymore. She's still really involved. Oh, she's still really involved. Okay. I wasn't sure. I ordered brandless and it's an incredible product.

You just don't have to think. You just order stuff and it's amazing. It's super challenging, though. On the human rights level, I know it's important to you. It's important to me. And my first job was that Amnesty International. You found it all right. I know it's surprising.

I know since you think like I'm a Trump-like. No, no, no. I was just saying that when I saw Jason in the green room, I was like, wow, you look good. Like you're, you could be going on a Republican debate stage right now. Mayor Jason.com. I have the domain name. So when you keep getting me off my game, I mean.

Sorry. Right as I try to get the question in there. You should do your Trump impression. No, I can't. I can't do it. Don't encourage me because it's such a great impression. It's tremendous, obviously, but I don't want to trigger anybody. It's so good.

It's just a little more, a little more. Do you want a little more? No, no, no, no, no more, no. Hiring is not as easy as just putting an ad on some message boards somewhere and hoping for the best. No, that's not how you do it. That's not how you do it right in 2019. No, you want to use LinkedIn. If you're growing your business, you need to reach the right candidates at the right time.

And 600 million members visit LinkedIn to make those connections and learn and grow as professionals. You know that. They also go there. Sometimes they want to discover new job opportunities. In fact, a new hire is made every eight seconds on LinkedIn. One, two, three, four, five, six, seven, eight. Somebody just got hired on LinkedIn. That's right.

And here is my CMO, Prash, who we just upgraded to an associate. He's in the game. And here he is, posting a job for us, a customer success person manager in Toronto. Here's the job function, a little business development, a little customer service. He takes our nice little job description, pops it in there. Look at that whizzywig editor. looks great, does a preview of the job, and he's ready to go. But that's not all he's going to do here.

He's going to pick that he wants them to have customer service experience for two years. And he's going to post that job, and it's going to show that job to the right people at the right time. He did that in seconds. And here's the good news. I'm going to give you $50 right now, a $50, a 50 from your boy, J-Cal. Go to LinkedIn.com slash twist, LinkedIn.com slash twist, and get that 50 right. now. Terms and conditions, of course, apply because it's 50 bucks. So go ahead and get it, LinkedIn.com slash twist. And thank you to LinkedIn for support in the show. I do appreciate it.

Let's get back to this amazing episode. What were we talking about? Startups, brandless. I was like trying to go in for the brandless comment. Maybe we get a tweet out of it. And you just totally outmaneuvered me on that one. The chessboard is now reset. Maryjason.com. Thank you. Tell me a little bit about Dollar Shave Club. How did you get involved in that one. Oh, I got super lucky. Actually, I met with them when I was at Kleiner, but I, um, and so it was probably my last investment at Kleiner and Peter Fam from science had been working with Michael and they, Michael had access to razors and he had written, started, directed in and starred in a video. Yeah. And so, uh, I met with them. They told me the idea

about reinventing the medicine cabinet for men and what, uh, kind of like a lame experience it is if you're a man buying razors and having to go to Walroans or CVS or Dwayne Reed and like asks a grumpy clerk if you can find them for the keys to the cage to open the cage. Yeah, and you can't look at anything because you're a criminal if you look at razors. You're like, really? That's how? Well, no, I mean, they keep it behind the camera. So if you're like, want to compare. Yeah, exactly. They don't even, you know. They make it really. And so he was saying, you know, there's so much margin in there. If we can sell direct to customers, we can give them better product at a better price. And I want people to smile and laugh when they get our

package. I want them to be happy. I want them to be happy. Like so many brands have the same packaging and the same design and the same marketing that they've had since 1970 and the customer has changed And that's my dream is to basically reinvent all these products for men And the first one's gonna be razor so and that was it. It was the video and I saw the video and I was like I'm in It was great. I feel so lucky that I got to work with that team The video was so well crafted that you said the business of selling razor blades versus enterprise software or Airbnb or whatever, I'm in. I just have that right, correct?

Because most people would look at the business of selling razors as dumb. Like, we're selling razors. Isn't that like, really? Yeah. Well, I think he had a vision for the category, right? And the category is huge, but even the razor business alone is quite large. Right. And I actually, to be honest, like, Michael is such a creative genius and such a, and he had,

like, he had done digital marketing before starting Dollar Shave Club. And when you think about, like when you think about building a business, regardless of whether your enterprise or consumer, you have to think about what are the biggest risks. And who's on my team? And is it my skill set or my co-founder's skill set that is going to help address the biggest risk. And if you're trying to build a new digital native brand, the biggest risk is generally customer acquisition, right? And it's, can I build a brand that's going to be compelling and resonate with the modern consumer? And the biggest risk was addressed by Michael. Yeah.

And so that kind of, it made me feel a lot better, that he had the skill set to actually, he had a feeling. for the brand that he wanted to build, and the voice and the look and the feel. Like a lot of the other stuff, we can basically hire great logistics people and fulfillment people and finance people, but that was, I think, the opportunity. Yeah, I missed it. He'd literally chased me into a parking lot after a speaking gig

and was like, I'm gonna sell razors on the internet before he had the video. And I was like, that's great. And I'm like walking backwards towards my car. And he's like, the patents are no longer a valid, For the triple, do you use the triple? And I'm like, yeah, I'm not sure which one I use, but that's great, kid. And he's like, I want you to be my first investor.

And I was like, let me tell you something. Like I invest in companies that are like technology companies. Razors are never going to be like a technology company. You should find a better idea. Like, this is not going to work. And he's like, no, but I'm going to market. I was like, listen, kid, find a better idea than Razors. Hopefully that's heartening for all of you founders out there.

which is like you don't have to make every investor want to invest in your company. You just have to find like one or two of the right ones. And that it's funny, I've been working on this blog post about batting average and about like, you know, hitting percentage. Because like the ecosystem of tech, especially if you hang out with a lot of founders, there can be a culture of like, oh, fucking crushing it or like, oh, killing it. I'm so oversubscribed or like, oh, yeah, their numbers are insane. And it makes you feel. She does a pretty good brough. It's pretty good bra.

Thank you. Very good, bra. Who wants you here I do more bra? If you do bra for the rest of the fireside, I'll do Trump for the rest of the fireside, bro. Okay, tremendous. So good. It sounds like a great company, razors.

Okay, huge. Tell me more. I can't bra that much. But it can make you feel like everyone's batting a thousand, right? Everyone's fucking killing it. And they're not. Nobody is. investors, if we're lucky, we're batting 300, right?

And the same thing with you all in your experiences at startups. Like, you're going to make bad hires. You're going to miss quarters. You're going to ship a feature that you thought was going to be huge and it flops. Like, that is the startup journey. No one is ever batting a thousand. Don't ever let yourself feel like that is true. Some people have hit a thousand, okay?

Just saying America's winning three years in a row. So much winning. So much winning. It is true about so much winning. Is it true as an investor that if everybody understands the idea, there's probably not an opportunity? It's kind of towards the Peter Thiel, like, what do you believe that other people don't? Do you buy into that? Like, if everybody understood that razors could be shipped for 50 cents in an envelope

and that consumers would subscribe to something like that? That was the thing. That was another amazing innovation that people didn't realize was that. Sending razors was not like sending a box of shoes. I mean, you're sending like an envelope tiny. And because you're sending five at a time, it's not time sensitive. Yeah. I think it's not so much understanding, especially for consumers.

So we do about a third consumer investing in two-thirds enterprise software. And even in the enterprise software world, there's a lot of business processes that people just understand. Like you can put yourself into the position of the guy or girl who's going to have to do something of the spreadsheet or who uses old mainframe looking soft. software from 1990 and like what their business process is to check people in an airport or just, you know, the things that are kind of done by business people in businesses, it's more how you do it that has to be unique or different. You have to have a unique insight into an industry or a business process or have a technology twist that actually does it much more efficiently or more

delightfully or more cost effectively. And I think it's more the special sauces in the how, because a lot of markets today are understood by a lot of people. Like even, you know, logistics, like containers and the fact that there's a lot of containers that go around and have to empty. Like a lot of investors understand that, right? It's the question is like, how do you solve the problem? Let's go back and look at these last two cycles. You started working at Kleiner in 99, is that right? I know.

How did you get that job? So much plastic surgery. Yeah, you look great. 99 you got the gig. What was the first gig? Were you an associate? Oh, yeah, I was an associate dedicated to John Doer. Okay.

So I spent the first three or four years working. working pretty much exclusively with John Doer, who was our main rainmaker. And what was so great about John, among many things, was I think I only got hired in part because we had never had a woman on the investing team before, and he felt like it was time to do so. And so I think he really stuck his neck out in hiring me for that role. And he also worked on both consumer and enterprise, so I got exposed to both, which was great. And I also carried his bag to conferences and meetings. Sometimes I sat, like, on the couch in front of the Amazon board meetings because I couldn't go in.

but a lot of times I got to go in. And back then, a lot of Series A firms split, they split deals. So we would co-invest with Excel or benchmark or Sequoia. And so when I got to go to board meetings, I got to see the best partners in the industry working together on portfolio companies, which was amazing learning. And you were the only woman in the building at that time.

Pretty much, almost, always, pretty much always. And all meetings and board meetings for sure. What was it like at that time to be the only woman? Yeah. I definitely saw things that I wish I could unsee. People said things to me, which I'm hoping that they wish they could unsay. It was not a super awoke time, and I'm optimistic that it's better, and that we're all much more sensitive to both how people are treated,

but also that it's an asset to a company, especially if you have to hire in this kind of environment, that if you are only hiring one type of person, you're putting your company at risk and you're also making it really hard to hire. How did you feel when the whole Ellen Powell-Kliner thing went down having, this is the thing that I've always heard in the back channel of, well, Kleiner was the most open to having women of all firms, and then they're the firm that allegedly, or according to the suit,

like were the worst towards women. How do you reconcile that? Is John Doer a horrible human being or a great human being? A lot of things I experienced were in the industry, not necessarily at Kleiner, But I don't know, because somebody, like somebody, today, in 2019, 75% of venture firms still do not have a single woman on their investment team. 75. Like, I think about, like, imagine if you were going to college or you were thinking about sending your child to college, and you were thinking about sending them to a school where they had not a single female professor. Would you want to send your kid to that school?

That would seem like a completely ass-backwards school. Well, that is the University of Venture Capital right now. Why is it taking so long? Is it because the funds, I guess, get formed every four or five years? Generally, they're all private funds, right? So they don't have public stakeholders to pressure them. They're very small, and their private partnership. So I think a lot of it also is, like, one of the things that I often ask my male friends in VC

is like, look at your calendar for the past quarter. How many professional female or non-white friends do you have? how often do you grab a coffee or a ketchup or touch base with someone who is not like a white male like you are? Most of them don't have friends that are not white males. And so of course, it's going to be really hard for them to recruit someone when they're personal networks and they totally rely on their personal networks and also what they call muscle memory to hire people that are like them. So that's something that we're, I think a lot of people are trying to change. A lot of people in the past two years have hired women to their teams for the first time.

And I like at Allrays, which you mentioned, which is a nonprofit trying to accelerate success for people of all kinds, but in particular for women in the tech ecosystem. We are all about helping people, like, join the, like, modern society and the future. We're not about shaming people for the past. Like, obviously, we made a lot of mistakes in the tech industry, both on the kind of startup side and on the venture side. And we, like, we can fix them if we team up together and help each other do it. Managing inventory, covering payroll. and doing a hundred other things before you launch is just the average day when you own a small business. You know this.

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individual requests for capital are separate installment loans issued by Celtic Bank member FDIC. It seems like the quickest path to change since these funds have whatever cycles and they're very tiny and it tends to be like three people who went to college together or something who work together at their last company when they form one of these circles is to start your own firm. When did you decide to start cowboy and how hard was that? What was the year? So I started in 2012. I fortunately had done a couple years of being a venture-backed CEO when I was at Kleiner. I took two years kind of off, and I ran one of our portfolio companies.

And it was an ad tech company that had to sell basically ads on our network. And so I spent a bunch of time selling. And I learned through a painful experience that a lot of times when you have sales reps, it seems like they're having meetings and they're reporting on progress, and then those accounts never close. and so when I was going into this fundraise for my first fund at Cowboy, I didn't want to just like kind of deceive myself into having a lot of meetings with LPs that were never going to close.

And so I kind of realized I had to have like a kind of like account-based marketing strategy and just really target folks who had invested in seed funds before. Like they were already in first round or Steve Anderson's fund or Michael Dearing's fund or they knew what they were and they had missed it and they regretted it. they had like an open to buy for next generation managers because they didn't want to miss the next wave. So I phone screened everyone and if they didn't know what seed was or they didn't like they couldn't have that conversation and I was like it's so great to meet you let's talk in a couple years. And so it was like helpful that I had done that job before because I think I was able

to hopefully be somewhat targeted in the fundraise but there are definitely lots of people who rejected me and it's very personal because all of Cowboy Ventures was me and so I spent just an intense number of months having lots of effectively sales meetings and because you don't have a business unless you actually can raise the money and so I was fortunate to have some folks who really took the leap on me because most of them had actually also never invested in a female funded fund a single GP fund and I'm glad that I'm in business it's gotten easier to raise money you did your third fund 95 million I think somewhere around that range was it easier with the third one or is it still a struggle to do 20 meetings

or 30 meetings to get one yes. Yeah, we're fortunate because we don't have a ton of investors in our fund, and it's been pretty much the same what we call LPs limited partners since Fund 1, so not a lot has changed. So that's been nice. So no desire to go out there and raise the

$500 million fund, or do you look at it and go, you know, I see people maybe without 20 years experience raising $250, $500 million funds, I wonder if this is because I'm an Asian woman. Do you ever think that? No, I think about it more in the sense that our industry needs to change a lot,

and there is a lot of power in having a big checkbook. And there are not a lot of people who are really trying to make the changes that we're trying to make in the industry that have big checkbooks. And you can hire a lot more people. You can participate in different stages of investments. If I missling at Seed, I could participate in the B or the C or the D if I had a bigger fund. but I also want to generate I mean being a

woman in our industry it's super important hopefully that we're very successful it's pretty magnanimous but if you were a white bra with that bra accent do you think you would have raised twice as much with the signaling of a Harvard MBA and an MIT and worked at Kleiner

I mean I do I have to admit like I you know being brought up as a first generation immigrant and not like someone who always felt like you have and women in general are also like All the studies show that men are hired or promoted on the promise, and women are hired or promoted on the past. That's a mentality that a lot of women have, and if you are hiring immigrants or people who are from nontraditional backgrounds,

you usually both feel the weight of history of everyone watching you and wanting to make sure you don't fail, because you don't want that to be an example of, oh, well, we tried hiring a woman and that didn't work, or we tried investing in a woman, and that wasn't a great outcome. and also just having been brought up for years and years of having to bring it every single day. So I asked myself that actually. Like, yeah, should I be thinking, like, should I kind of let go of that and be more aggressive?

But I also, I think we're doing a fine job and happy with how things are going. What do you think the next decade looks like? The demographics in the country are changing radically. and the number of entrepreneurs we're seeing who are not white guys is tremendous now. I'd say two out of three are not white guys. And what 10 years ago when I started doing this and you were, I guess, starting your fund or just about to, what would it be like one out of five, one out of ten would be a non-white dude from an Ivy League school? You know, it's funny.

I have a friend who's at business school right now who interned at a fund. and we were catching up and she was telling me about how shocked she was that at the firm they have one of these screens that rotates the pictures of the founders and it's all dudes and all of the founders that they meet with when they're meeting with for series A, B,C

are pretty much all dudes and she's at business school where she's part of women and management, like, you know, business and stuff like that and it's been such a shock so it was kind of actually useful to be reminded of what it's like out there, for in a lot of the environments. I think that, you know,

for a lot of people who are very passionate about seeing the opportunity that tech and venture-back companies can create in society and obviously for like kind of changing the trajectory of your family, it's a huge opportunity and we know it has been close to so many people who haven't been given first chances and that we're trying really hard to change that.

But we really, I mean, if and when you are going to raise a next round, if you're going to have choices, I hope you'll consider going to Foundersfor Change.org, which is part of Allrays, where founders have been standing up and saying, I'm a founder for change. I believe in inclusion and diversity for my company, my board, and in the future, if I have choices for whose money I take on my cap table, because when you all are successful and you're going to make money for whoever you let invest in your company, I hope if you're purposeful about who you invite to work at your company, who you invite to invest in your

company and who you have on your board, you'll be sending a signal to the market, and you'll be helping kind of change our industry with what you do with your company. Yeah, I think it's worth a round of applause, absolutely. What do you think of this weird trend I've seen, which... You can't time, by the way. We can be a little over. Okay, you've been waiting to get you for an interview for a long time, so I can go ten minutes over if I want.

And I think it's really interesting. I'm looking at the audience, and none of them are looking at their screens. They're all looking at you, so that means it's really interesting. They're really just waiting for you to do a little more. Nope. You do your bra. I'll do mine. A little more winning. If you ask me in the bra voice, I might. But what do you think of this trend where people are hiring female partners to be partners without check writing ability? Have you noticed this trend like, this is the marketing partner, but she doesn't make investment decisions.

Are you seeing enough women actually being able to write the check? So we are working on that and watching it very closely at Allrays. So at Allraise, which is a nonprofit to accelerate success of women in the tech ecosystem, we actually just hired a full-time data person who's trying to basically create a clean data set, both on the founder company side and on the VC side to track. Because with all due respect to marketing partners and HR partners who are awesome, and they provide amazing leverage and service to portfolio companies and companies, is like we are very focused on the power dynamics and the economics at funds

and making sure that more women and people from non-traditional backgrounds get to the top and are helping call the shots on how compensation is decided and who gets hired. And we are making some progress, but we also have something called cohorts, which is kind of like somewhere between a lean-in circle and YPO, which is a pilot program at All Raise, where it started with the, I think there are over 30 women that were named partner for the first time, at like we're first-time partners at venture firms in 2018. And so we put them into two cohorts of 15,

where they meet every four to six weeks, and they talk through deal dynamics, partner stuff, compensation stuff, how to handle difficult conversations, what's happening in portfolio companies, how they can become great board members, and they support each other.

So they have a support network of peers that women in this industry have never had before. And we think that, because it's not just enough about getting the job, it's about helping make sure they are successful and they thrive in the job. And I suppose as an activist, and you're an activist, in the best sense of the word, well, I mean, not only you're an activist, you're a pioneer.

And I mean that sincerely, like to come into the industry when you did and do what you did and to stay relentlessly positive about it in the face of it maybe not being a positive experience at all times and power through and set that example and take, it's so seriously that your fund succeeding that you succeed because you know what it means to other people. I think it's very significant and I think as an activist I wonder you have to you have to strike a balance between rewarding people for making change while still getting the change that you know in your heart has to occur. It's not enough that they have women on the team page but that is a big step that it's not all white dudes and now you got to get that next step right. How do you have

you balance those two things of keeping it positive and not beating people up for making some change, even though they kind of still got to make more change. Well, I think, thank you, by the way. It's a movement, right? Like this is not going. Everyone in this room can play a positive part in being an example to other industries of how we change the venture-backed ecosystem or industry, how we change companies, how we change cultures, how we change how people are higher, how they're evaluated, how they're coached or sponsored,

how people communicate with each other. Everybody here can do it, and we can, it can't be on the shoulders of women to change it. It can't be on the shoulders of a small group of women. It has to be a movement. If you think about some of the social movements or the social change that's happened in society, like, for example, maybe the change in the attitudes toward gay marriage, right?

Like, it was just this mass acceptance and support for something that just is the right thing to do, and it makes a ton of sense. And I think in tech, that's what we have to do. And a lot of industries, it's funny, like after we started All Raise, we became kind of partners with Times Up, which is also a fantastic nonprofit organization,

and there's Times of Entertainment and Times Up Medicine and Healthcare, and there's Times Up advertising, and we've met some of those, the founders of those organizations, and they've told us they're looking to us to build a playbook to show their industries that it can be done. It is interesting.

I think part of the reason, you can correct me if I'm wrong, is that people expect tech to be better. Because we're supposed to be pioneers and changing the, they expect us to change the world. So it's very disappointing to the world when we are so far behind on such a basic issue. And then you look at corporate America, cowtowing with the NBA and everything else with China and human rights

or our industry accepting. money from Saudi Arabia where gay people are beheaded for being gay and women are caned for driving. I was very uncomfortable with Saudi Arabia's having, and I would never take money from a Saudi fund. And I was very disappointed, actually, when Uber did it. But I mean, it must have been very personally hard for you. I think when you see some of your portfolio companies going that way, too. I mean, it's, it's, we don't have control of those issues, those decisions. Yeah, we don't. Yeah, I mean, when you don't have choices, sometimes you have to make choices that you don't like, but we try really hard to make sure our portfolio

companies have choices. And I also, it's, it's, we don't have choices. And I think portfolio like folks that we work with generally are kind of self-selecting into working with cowboy ventures yeah because they want to make those changes or they want to be that kind of company all right give it up one time for thank you so much an activist and an amazing investor thank you