Transcript follows & video below. This is Pt II of the interview. You can view Part I and Part III here
What do you see as the obstacles for inclusion of women entrepreneurs in achieving funding? What you’ve said already is that a woman has to be comfortable in who she is!
They should really partner up with someone who’s done Harvard & is a white young geek! (That was a joke!) Let me think. Well listen the number one factor, whether you are a man or a woman, nobody likes to back single person teams. There were a couple of young ladies who recently got funded doing a jewellery business out of New York & that’s an all women team. That’s even rarer. You sometimes see a mixed team but an all women team is even rarer. No matter who you are as an entrepreneur, your first hurdle is to get a couple of co-founders on board who are willing to embrace what you do & do it not for cash but do it because they believe in the idea & in the very unlikely event that this piece of equity that they are given is likely to be worth something some day. So when you build that original team, also look for that recipe. I think you have to be realistic, you have to recognize the fact that the market is not that woman friendly & there are people that are going to question some of your skills. So one of the things that women are blessed with more than men & I guess is both a blessing & a curse, is self awareness. In fact when a guy gets told no after a funding meeting, he’ll probably say ‘Screw you, I’ll go & demonstrate that I can build it!’ Whereas when a woman is being told no, she’ll probably go home & say ‘What did I do wrong? What is fundamentally inappropriate about my behavior, who I am or my idea? And why did this person reject me?’ So there is a tendency to deal with rejection here, that is quite different, where women tend to internalize it & look within themselves as to what they need to change & what’s wrong. Whereas guys will tend to almost be energized by rejection & they’ll want to get into a fight & go prove that they can do it better than you think they can. So I would be cognizant of that & recognize that the natural tendency is going to be to turn inwards. Whereas the natural tendency could be to say ‘Hey you know Fred at Atlas Venture is really a dorky, European guy who didn’t get my idea. I should focus on going to whoever it is that will fund us, who’s going to give me money!’
Fred Destin
Cindy also says:’ VCs tend to say that they back the person, not the idea. But if they always back the same kind of person — male — then women entrepreneurs have a better chance of getting funded when they have something that’s actually working in the marketplace.’ Do you agree that women need to have their business developed before they can achieve funding?
If the generic point is that it is harder for women to get funded, then if they push the business further that lowers that hurdle because now people can rely on evidence of the team. I think it was Ben Holmes @Index Ventures once used this on a panel he was running. He used a triangle ‘Team, Technology & Traction’. He said depending on if you score really highly on Team, I won’t be as bothered with Traction. But if your Team doesn’t score that highly, I’ll ask you for more Traction or more Tech. So trying to explain the tension you might have between the various dimensions of financing. So if there is really a negative bias applied against women so that negative bias can be overcome by showing fantastic tech innovation or showing more traction in the marketplace. There are some forces of nature that seem to defy all the rules. A friend of mine Indu Navar on the west coast & she was voted best entrepreneur by TIE a few times etc. She’s a woman who’s built a business out of just sheer strength & basically being such a force of nature that nobody could really resist her. Then building a team around her that was fantastic. I don’t think she ever let being a woman stand in her way. But having said that, I’m absolutely cognizant of the biases & I do think bringing your business further kind of helps you get over that for sure.
Fred Destin
Often advice for sourcing venture is equated with dating, implying that there is a matching that needs to happen with entrepreneur & investor. Have you noticed a general psychological profile of venture capitalists and also of entrepreneurs that promotes the attraction & synergy between them to develop a great startup?
It’s an interesting & relatively complex question. There are quite varied profiles in the venture industry. There are some people who love the hunt & the deal & putting their money to work. There are other people, like me for example, I’m much more about what happens next: figuring out product market fit & strategy & building a team up. I would tend to have a slightly different profile from the pure hunter, the builder category. The vc is a schizophrenic role because on the one hand you have to love the businesses you invest in, on the other hand you have to be reserved portfolio manager. So you have that tension in your brain between loving the entrepreneurs & wanting their projects to succeed & on the other hand knowing that half of them go bust & that you have to go through the process of identifying which ones you have to let go. On top of that you’re a mentor, you’re a shareholder, you’re a friend, you’re an advisor, you’re a tough investor! I mean?
Fred Destin
It’s complex!
The net of that is that vcs tend to develop relatively thick skins. It is tough to push a project through inside your organization. Most startups go wrong & that’s a mathematical fact! You can steel yourself over time. The difficulty is not becoming blasé but keeping that passion & genuine connection with the entrepreneurs whilst recognizing that you are in a tough business where most of the time it goes wrong. Now the people that do well hence in terms of entrepreneurs that have the right psychological profile tend to display some but not all of the same characteristics. There is a certain level of suspension of disbelief, in other words I’ll break down doors, I’ll will negate the probabilities, I will fight against the gods. At the same time I’m thick skinned enough that when we disagree on stuff, I will make it through & it will never break the relationship! And I won’t take it personally because I understand you’re doing your job by building company stuff. I understand you have to be mature & realistic about what it takes to build a business. So you need a dose of absolute (I guess) ignorance & enthusiasm & at the same time you want a certain grittiness & toughness that says ‘Hey, I’m gonna make it, no matter what. I’m also gonna make it in spite of you! If you give up on me, I won’t give up & I might pull a rabbit out of a hat & make it happen!’ So you kind of need these alter personalities with enough self awareness & enough grittiness that you can make it through the whole process. And I think we tend to be absorbed & fascinated by highly ambitious, highly energetic profiles that also at the same time have this real world toughness to them!
Fred Destin
And when you’re talking, it makes me visualize that both the VCs & the entrepreneurs are quite extremists & complex in their personalities, so similar in that regards.
Listen, the answer is that it depends. I’ve seen a lot of vcs are alpha males. They’re generally very smart (but they’d like you to know they’re smart!) Unfortunately that applies to me, but I’m working on it! You get a fair amount of ego! You get people who want to be respected, want people to recognize their smart, feel they’re important. Even though the vc industry is an absolutely tiny industry but nevertheless. Then combined with a general passion for creating stuff & so there’s a ton of very different profiles out there & there’s also a lot of marketing hype! So we always say success has many fathers & failure is an orphan! The reality is the vcs basically direct money & vaguely influence the course of the company. In rare cases do we play a fundamental role in shaping it but I would say that’s the outlier. Usually the better the entrepreneur, the less we provide in terms of absolute value add, right. So fundamentally our role is to help the entrepreneur spread their wings & add really create value & avoid massive mistakes we’ve seen before to help them attract good talent. But there are as many personalities as there are vcs. It’s hard to derive generalities.
Fred Destin
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