Having fun with VCs & Foundry Group

Jason Mendelson & his partners @Foundry Group posted a great song “I’m a VC” to promote their book Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist.  This song is really catchy but also really hysterical.  The book is fabulous too!

I interviewed Jason & here are some excerpts from his interviews

& Brad Feld his partner @Foundry Group

This post was reposted by TheNextWomen A Monday Morning Giggle: Jason Mendelson As You’ve Never Seen Him Before

Patricia Nakache, Trinity Ventures: Investing in the Woman’s Web

Video interview with Patricia Nakache, General Partner Trinity Venture.   Since joining Trinity Ventures in 1999, Patricia has focused on funding companies launching innovative online consumer and business services. She is particularly interested in the impact of social media and mobile on the next generation of Internet services. Prior to Trinity Ventures, Patricia worked at McKinsey & Company helping enterprises in technology, financial services and retailing address their strategic and operational issues. Previously, she also contributed to Fortune magazine and other publications on management best practices in technology companies. Patricia is a member of the Stanford Business School Trust Investment Committee. You can find Patricia on Twitter @pnakache

Transcript follows & video below

Which themes do you like to invest, what is your sweet spot?

Yeah you know one theme that I’ve been spending a lot of time on over the last couple of years is what I call the Woman’s Web. So leveraging the fact that women now spend much more time on social networks than men, are spending more time online. In fact in terms of socio economic activity, the web is starting to reflect the real world offline. So I’ve invested in a bunch of companies along that theme Care.com which is a marketplace for care services, child care, elder care & pet care. Last year I invested in a company called Thredup which is an online exchange for secondhand kid’s clothing, it’s all based on flat rate ratios because its in boxes. Last year I invested in Beachmint which is a subscription service for jewelery $29.99 a month, pick a piece of personalized jewelery. So that’s the theme that I’ve been pursuing & really feel like the wind’s at its back. Just related to that, have also been spending time in the social web in general.

Patricia Nakache

It is interesting how women are really taking up the web. I remember when Farmville really hit the scene, they said that there were more women playing that game on facebook than men.

Absolutely. That’s one of the things that I find so exciting about this theme of the Woman’s Web, is that when you look at Zynga or you look at Gilt or you look at Groupon , the 3 big themes on the web, their success is largely driven by women. So the female consumer is a really important consumer. I think figuring out what her needs are & building products & services around those needs, I think there’s gold in those hills!

Patricia Nakache

And the best people to do that is women, to work that out really!

I do think that women have a more intuitive sense for those needs. But I would say in all fairness, when I look at a company like Thredup that I mentioned, founded by 3 men. Actually until recently none of them had children. The founder & CEO has a child now. I wouldn’t say exclusively that it’s the domain of women but there is an advantage.

Patricia Nakache

What do you look for in women entrepreneurs & startups that indicate interest to you in investing in their businesses?

I’m not sure that I look for anything different than I would for male entrepreneurs. I mean clearly have they identified a big needy problem that represents a significant market opportunity. Do they have relevant domain expertise to go about tacking that problem? Have they built a great team or surrounded themselves with great people? Have they developed an innovative solution for approaching the problem & does that involve some technology that is defensible? Then finally have they demonstrated any traction yet? It’s mainly the same criteria that I would use in talking to male entrepreneurs.

Patricia Nakache

So that’s great there’s no bias at all is what I’m hearing.

For me, I don’t think so!

Patricia Nakache

What can women entrepreneurs/startups do to increase their chances in sourcing venture?

I think the number one thing is networking. The reason I say that is that we are much more likely to invest in an entrepreneur that we have some history with or have gottent to know over a period of time, rather than an entrepreneur that we meet for the first time a week before they’re expecting term sheets. That’s not to say that we don’t do that but we’re much more likely if we’ve had an option to get to know that entrepreneur, see how they perform over time or if somebody we know has the relationship with the entrepreneur (somebody that we know & trust). I think it can be one step removed. But it just comes down to, I think an entrepreneur should think about fund raising not just in the moment when they need to fund raise but over a long term relationship building process. Just getting to know a lot of people, particularly in & around the venture world so that there’s almost more leads. By the time they really do want to fund raise, they’re in that window they’ve got a bunch of warm leads of people they can go talk to that they know at some level.

Patricia Nakache

I think from the other side, from an entrepreneur’s side definitely would change their level of confidence & their ability to pitch as well, I would imagine?

I think that’s right, because I think that meeting people in a more informal setting allows you to surface a lot of the objections & understand where an investor might be coming from in their position & be prepared. Frankly it’s good feedback, right? If you’re incorporating in your business what metrics you should be tracking, what investors care about. I think in those informal settings, you may be more likely to get really frank feedback than in that moment of the pitch? Maybe? I’m not saying that it’s always true, but I think that it’s possible that would be the case.

Patricia Nakache

Sounds very fertile soil, I would imagine?

Yes, yes.

Patricia Nakache

What sort of challenges do women face if they become a venture capitalist?

I think some of the challenges are similar to what women face in any profession. There’s a style challenge: how do you be assertive without being perceived as a bitch? How can you be warm without appearing soft hearted? Finding that stylistic sweet spot that everybody is comfortable with & you can appear assertive in a board setting & not have negative repercussions. Then also how do you show warmth without being perceived as too feminine. So I think that that’s true in other professions as well. It’s not unique to venture capital. The other thing, given that networking is super important both for entrepreneurs & venture capitalists, one of the challenges is that some networking venues are more or less comfortable for women. Finding ways to network effectively that are comfortable for you as a woman venture capitalist, I think are important.

Patricia Nakache

What needs to happen for venture companies to employ more women venture capitalists?

I think that’s a chicken & egg question. To answer that question, to start with where do women venture capitalists come from? Where do any venture capitalists come from? Typically these days they are recruited out of startups, successful startups. Or they’re a senior executive in a large technology company. Those are the 2 major places they come from these days. So I think to have more women venture capitalists, you have to have more women who’ve been successful entrepreneurs. Or women who’ve been senior executives in technology companies. So that is one mode. Then I think some venture firms have more of a tradition of nurturing, more of an apprenticeship model where they’ll take bright people with a small amount of experience in a startup or some experience in a large technology company. Then will nurture that & train them. Trinity for example we do both. We hire people who’ve been successful CEOs out of industry. then we also hire people right out of business school & then we promote them from within. We do both models. So I think to have more women venture capitalists, we need more women who are in those senior positions in technologies. Or they could actually be at more junior levels in startups but then there would probably be more of an apprenticeship model.

Patricia Nakache

OK & it probably starts even further back because apparently figures have dropped 30% in the last 10 years of women studying technology subjects. Organizations like Anitaborg & NCWIT are trying to encourage young girls to study technology.

Yeah I totally agree. You’ve got to take the pole back to it’s root, yeah.

Patricia Nakache

Beth Seidenberg, KPCB: Training in Venture Capital Success for Women PtII

Video interview with Beth Seidenberg,MD,  partner @ Kleiner Perkins Caufield and Byers.  Beth joined Kleiner Perkins Caufield & Byers in May 2005 to work in the life sciences area.  For the past 20 years, she has focused her career on introducing new innovative treatments for AIDS, arthritis, asthma, cancer, psoriasis, cardiovascular, metabolic, neurological and renal disorders. She introduced 10 innovative products to market and achieved over 40 regulatory approvals (including new indications and formulations) on a worldwide basis. These products have been successfully commercialized and have generated several billion dollars of revenue.

Transcript follows & video below.  This is Part II of the interview.  You can view Part I here

What sort of challenges do women face if they become a venture capitalist?

Kleiner Perkins Caulfield & Byers is a very unique place, I’ll say that up front. There are 8 women partners here.  So I face no problems as a woman & I’m incredibly grateful to the firm & the founders.  At the end of the day everything about the firm & the way we do business is based on merit.  It is purely a meritocracy.  We’re gender blind & race & ethnicity blind! It doesn’t matter & I don’t feel any special treatment or special needs here as a partner. I would say that’s a unique situation & its a privilege to be part of the team here.  I was in corporate America before, it wasn’t as easy. I think that a lot of the time, you have to select the environment that is friendly & it may be based on gender friendly but it also maybe based on personality or skill set.  But a lot of women, I think as much as we talked about the emotional connection, when it comes to themselves & figuring out who they want to be around, they’re more tolerant of being around people who are not as friendly to them or who they are. It’s ok to select & as I’m getting older I’m being much more selective.

Beth Seidenberg

And not tolerate people or conditions that are not supportive of who we are?

Absolutely & I’ve been in those situation.  Every woman has, every woman has!  And don’t tolerate, you don’t have to because there are a lot of friendly places out there.

Beth Seidenberg

What needs to happen for venture firms to employ more women venture capitalists?

I don’t think it’s different in venture capital than anywhere else.  Many businesses have been male oriented for many years & the venture capital business is coming around.  I’ve met women partners at firms who have been venture capitalists for 20 plus years. I think the key is don’t be afraid to ask & take a risk. If you really have a passion for backing entrepreneurs & backing new ideas & technology then venture capital could be a great fit.  Make sure that you are accomplished in the area that you want to invest in, & I think that’s true for men or women.  I can tell you at our firm, that every partner has an expertise, a deep expertise, in an area in which they’re going to invest. And I think that that should hold true for any firm that you work for or in.  If you’re an expert in an area, you will garner respect.

Beth Seidenberg

And also be able to judge the merits on a much more equal playing field with an entrepreneur or startup?

Absolutely & entrepreneurs will be comfortable with you because you bring expertise to the table.

Beth Seidenberg

What qualities & experience are necessary to be a woman venture capitalist?

So expertise is number one, two & three, there’s no question.  The second would be the ability to judge people or have a sense for how to put a team together.  Sometimes you have investments where there’s a fantastic team that walks in the door & everything is great.  But that’s the exception not the rule.  So I would say really having spent time in a business or an environment where you’ve had to bring people around you & you understand how the complementary skill sets work together, I think, is very important.

Beth Seidenberg

That’s great & is where women’s strength is, if we’re generalizing.

Exactly

Beth Seidenberg

What is the key, from your experience, to bridge the gender gap with male venture capitalists, both for women venture capitalists & women entrepreneurs?

Results.

Beth Seidenberg

Ok, that women have got to produce results?

Yes just like anybody else.  If you produce results you’ll definitely gain the respect of your colleagues.  The other thing is don’t be afraid to take risks.  Because if you’re going to produce great results, you have to by definition you have to take a lot of risks.  So go out & take the risk & realize that it’s only with the big idea & your conviction behind that & pulling all the right elements whether its money, people, the right co-investors that that’s how you’ll succeed & gain a lot of respect.

Beth Seidenberg

That image or metaphor of skiing is fantastic really. It’s certainly stuck with me! That gives us some sort of pragmatic idea about how we can achieve those results. Thank you again Beth, I really, really appreciate that you’ve contributed.

My pleasure, thank you.

Beth Seidenberg

This interview was mentioned in the New York Times.

Beth Seidenberg, KPCB: Training in Venture Capital Success for Women

Video interview with Beth Seidenberg,MD,  partner @ Kleiner Perkins Caufield and Byers.  Beth joined Kleiner Perkins Caufield & Byers in May 2005 to work in the life sciences area.  For the past 20 years, she has focused her career on introducing new innovative treatments for AIDS, arthritis, asthma, cancer, psoriasis, cardiovascular, metabolic, neurological and renal disorders. She introduced 10 innovative products to market and achieved over 40 regulatory approvals (including new indications and formulations) on a worldwide basis. These products have been successfully commercialized and have generated several billion dollars of revenue.

Transcript follows & video below.  This is Part I of the interview. You can view Part II here

What kind of themes do you like to invest?

I’m a Life Science investor & so my focus is basically on patients with severe or unmet medical conditions.

Beth Seidenberg

I was interested when I read your profile because you also have some interest in AIDS?   I did work many years ago in the AIDS crisis in Melbourne.  I was a therapist in those days & worked one to one with men who were dying.  So I have great respect & any help in that area I think is fantastic!

I do!  Well that was the area that really got me focused on research & innovation. When I was in Medical School the AIDS virus, HIV, was not defined. It was in the late 70s & we were seeing a lot of men & women immigrants, who were coming over with bizarre diseases & things that we hadn’t seen for years.  Opportunistic infections & we were seeing a lot of tuberculosis & I became interested in Medical School.  The rest of my career has been focused on that passion which started out with that experience in Medical School & then ultimately doing a Immunology & Infectious Diseases Fellowship at the National Institutes of Health with Tony Fauci & a lot of the basic researchers who identified the HIV virus & then the first therapies for HIV. The message is follow your passion!  If you really see something that there is a need & you think you have the talent to contribute, go for it!

Beth Seidenberg

Good work, I’m so glad that you are doing what you are doing!  What do you look for in women entrepreneurs & startups that indicate interest to you in investing in their businesses?

Well what I look for is a great entrepreneur & I don’t really distinguish men or women.  I think that at the end of the day when you really focus on who to back, first the passion piece has to be there. A lot of times women are more open about their passion & that’s a good thing because you really know what is motivating them. You need to have the technical expertise as an entrepreneur in order for us to be interested in backing that person.  The best CEOs & entrepreneurs in general are people that really have an area that they are well trained in & have a unique idea & insight.  If they can communicate that & have a good business & market (we don’t really take market risk here) so there has to be a clear articulation of what the opportunity is. If those elements come together then usually its backable for the entrepreneur.

Beth Seidenberg

Advice for pitching for venture is often correlated with dating.  What sort of chemistry makes for a good match & is a success for both entrepreneur & venture capitalist because obviously you’re going to be working together for a little while at least?

Yes & on the Biotech side that I invest in, it’s years!  So we have to assume that when we are investing in a company that we may be married to that company & that investment for 5 to 10 years.  And so chemistry does matter, it really does!  What I look for is back to the passion component, expertise.  I really am attracted to people who are deep technical experts & also know what they don’t know.  The hardest thing for us as venture capitalists is we have an entrepreneur who may be passionate & has a good idea but they’re not aware of their gaps in knowledge or their skill set & are not comfortable articulating that. It’s very difficult to back someone like that because you need complete transparency.  You need to know that people are honest & open.  Actually the most important characteristic when you’re thinking about working with somebody moving forward is that they are very comfortable communicating bad news very quickly. And you find that out when you’re meeting people & you go through our process which takes months.  Sometimes a year before we’ll invest in a company, you get to know people & things never go according to plan.  It’s the ones who are willing to tell you that & be a little vulnerable that end up being people we’re really comfortable working with.

Beth Seidenberg

So part of your process actually weeds out the people you’d be able to work with & those you wouldn’t be?

Absolutely, absolutely!

Beth Seidenberg

That’s sort of good that it’s built into the process in a way?

It certainly is, for both sides!

Beth Seidenberg

Both need to know that that’s going to work for them.  In your experience are there many women entrepreneurs that are unsuccessful in sourcing venture?   We already know that the percentages of women who are successful are very low.

I don’t know those statistics of women versus men. But what I do know is that the ability to succeed or the success rate is extremely low for everyone. It’s just a very risky business!  It’s called venture capital for a reason, so you have to have risk tolerance to be in this business for sure.  But I think that the elements that usually lead to failure are not gender based.  They’re more based on a couple of areas:

1) know your market & go for technology or solutions that address a unique market need

2) technical success & in the biotech business we have a very low probability of success (it is what it is).  So the way to address that is to try & diversify & have a portfolio of opportunities as opposed to a single shot on goal.  Those single shots on goal are very risky in any business that succeeds. It’s often not the first idea or the first try but its the persistence.  It’s having a good idea & a clear market where you can iterate a few times & eventually you’ll succeed.

Beth Seidenberg

So the creativity & the flexibility are quite high up there as values for an entrepreneur?

Absolutely, if you’re not its going to be really hard!

Beth Seidenberg

I agree actually.  What can women entrepreneurs/startups do to increase their chances in sourcing venture?  You have actually covered that, is there anything else that would help women?  You haven’t identified any failings or weaknesses that women have, but some people have fed back to me that women’s innate strengths in some areas can become a weakness when they’re sourcing venture.  Things like lack of confidence & not so assertive & possibly not so risk averse that are often generalized as qualities that women may not have?

So let’s talk general & then some specific. On the general side some of the viewers of this video may be a skier or some kind of athlete?  I often find it’s easier if you can relate to something.  I love to ski & I’m a risk taker, I’ll go for the steep runs every time that’s why I’m a venture capitalist.  But some women aren’t comfortable with that.  So I would say the way to think about it, if you want to ski successfully, you have to have a couple of things.

1) the conditions have to be right.  If you go out in a whiteout, it doesn’t matter how good a skier you are, if you can’t see more than 10 feet in front of you, forget it.  So make sure that you understand the environment around you & that the conditions are right!

2) You have to have the right equipment & if you have skis that are a decade old & really long instead of short these days or your boots don’t fit you properly, you’re not going to ski well.  So make sure when you’re putting together a business plan or putting together an idea that you have all the right equipment.  What does that mean, a clear understanding of the market, the technical risks & the team that you need around you to succeed.

3) If you really want to be a great skier, you have to be a great athlete.  So you may not be good in everything, but if you work hard & if you practice a lot, you practice a lot you’ll become a better skier.  If you’re not great at certain things, let’s say you’re skiing on a team & you’re not great a moguls, then you’d better hire someone who’s great at moguls.  So if you keep those elements in mind, I think that helps a lot.  Women have different characteristics that are good & bad in general right.  There’s definitely a lot that’s carried on the xx chromosomes that’s a good thing, I think. So one of the things that we get with the xx chromosome is that many women are more comfortable with the emotional side of things & are able to feel situations as much as they can think them.  Being able to feel situations often times makes you a really good leader because you have that emotional connection to your project & to your venture capitalist & to your team, your company. I think that’s an element that can be really powerful for a woman.

You mentioned that sometimes women are not as assertive & they may not ask for what they want?  Men are really comfortable, this is just in general. I have three sons & my husband & I have a female dog.  That was a mandate, it has to be a female dog to balance the household.  But I watch my sons & my husband & they are never afraid to ask for what they want.  And I find even in myself & other women, that we tend to be tentative.  We tend to wait for somebody to ask us or we tend not to be as bold in what we ask for.  Be bold, ask for what you want, ask the hard question.  If you don’t, you’re not going to get what you ultimately desire.

Beth Seidenberg

Some entrepreneurs have fed back to me, that some women don’t like to ask for money & I said well that’s a really big stumbling block because if you don’t like to ask for money, you’re not going to be able to go for venture capital.

That’s right, that’s right!

Beth Seidenberg

So it’s I’ll do it myself or some old pattern that we must have ingrained?

Exactly, ask for money, it’s ok!

Beth Seidenberg