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Video interview with Trae Vassallo, Partner at Kleiner Perkins Caufield and Byers. Since joining the firm in 2002, Trae has put her technical and entrepreneurial background to work with companies in two main areas of focus: Greentech and Consumer Internet. Trae works closely with the management teams of Aggregate Knowledge, a data-management and ad optimization platform; RecycleBank, a green rewards and loyalty network; Altarock Energy, a geothermal development company; and Fisker Automotive, an extended electric luxury automotive company. Trae helped sell Ausra, utility-scale solar thermal development company, to Areva in early 2010, and is currently focusing on smart grid and efficiency opportunities.
Transcript follows & video above. This is Part I of the interview.
- What themes do you like to invest, do you have a sweet spot?
Yeah, definitely, I’ve been at KP for the last 7 1/2 years & started on the digital side of the world, on mobile & consumer internet companies. But over the last 5 years I’ve really focused on green tech. I work with companies like Fisker Automotive . I work on a geothermal company Altarock Energy Inc . Recycle Bank which is a consumer facing rewards & loyalty company. So it’s quite diverse. Right now specifically I am focused on some ‘demand side’ Green Tech opportunities which are really about conservation of energy & using smart systems to reduce energy use. So I’m focused on things like next generation lighting, smart grid applications.
Well I’m a Tibetan Buddhist & we would say that’s right livelihood!
I’m enjoying it, it’s a lot of fun!
Fantastic, saving the environment!
- What do you look for in women entrepreneurs & startups that indicate interest to you in investing in their businesses?
I’d guess I’d rephrase that question a little bit. You say ‘women entrepreneurs’ & I don’t look at an entrepreneur as a man or a woman. It’s really just an entrepreneur. So what we look for in an entrepreneur is:1) First of all that they’re focused on a large opportunity: a large market that’s been under served. Once they’ve passed through that filter & we agree that they’re focused on what we think is the next big thing2) Then it’s really are they focused on an approach that is somehow differentiated, difficult to copy? Oftentimes we’ll say order of magnitude technology differentiation.3) If that combination is there: great market focus & really fascinating new technology or different approach then also a very strong team. A team that’s capable of actually working towards that goal.That’s what gets us excited!
Fantastic & is there anything in particular that you would look for?
I think there’s a lot of pattern recognition as you see people come in & there’s a lot of cues you take from the entrepreneur. You want to see a real passion for what they’re doing. A lot of people can go make money but in our business, in what we do, startups are difficult. They’re highly emotional, a lot goes wrong & so you need someone who’s motivated by far more than just a pay check. It’s really their passion, their mission in life to make what they’re doing successful. You need to see the spark of that in the entrepreneur.
- 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?
Can’t say I’ve heard that!
I was just talking with Jason Mendelson, who said I was the only other person he’s heard say that. He actually teaches that in his class & he says that the law students
are always shocked when he equates dating & venture.
It is funny, I can’t say I’ve ever thought about it that way. But it is a lot like when you’re hiring a person you’re going to work really closely with. This is a relationship where you do need to have the right rapport. You have to respect each other & you have to be aligned on what your expectations are. So one of the things that we make sure that we do as potential investors in a company, are to make sure that the vision the entrepreneur has for where they want to take their company is fairly well aligned with where we want to take it. Because as investors we don’t control companies, we don’t run companies, we ‘manage by influence’. We’re on boards & we strongly suggest & may lay out certain cases for why we want to make one decision or another. So we need to make sure that there’s a relationship that can be built on trust & so the fundamentals need to be there for that. But we also tell our entrepreneurs that they should do their diligence on their investors. I think a lot of times entrepreneurs fail to take that step & it’s really important. Because once you have an investor, they can be hard to get rid of & so you’re with them for a very, very long time. They need to ride through the ups & downs of the company & so its good for an entrepreneur what their investor is like in difficult times, when things aren’t always going well.
That’s a really good point & how would you suggest that an entrepreneur finds out that information?
Talk to other companies that the investor has worked with. Often pro actively I’ll say to a potential new company: ‘You should go talk to other CEOs that I’ve worked with!” It’s just a really good thing to do, you’ll get a sense of “how involved Trae is as a Board Member, what’s she like when the company’s not going in the right direction?’ Is she helpful or too critical?” It’s important to know how people act in tough situations.
I agree, that’s fantastic advice, thank you.
- 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.
Again I’d probably change the question a little because I don’t know the percentages of success. I do know that when you look at a portfolio that the number of women in the portfolio is low. I would say I don’t think its because women get funded at a lesser rate than men. I think the problem is the funnel & the funnel starts earlier! We need more women studying engineering & science who then go work in startup companies, who then get inspired to go start companies. So again I don’t think its something structurally about women getting venture. I think its just that we don’t have enough technical women out there who want to go start companies.
Yes I interviewed Telle Whitney, CEO of Anita Borg & she said the same thing, they’re really trying to encourage women to become technical.
Yes at least in the venture world, not all companies are based on high technology, it helps to have studied some element of technology & engineering to understand how things are made & that thought process for solving problems is really important. I think if you look at a lot of venture folks have been engineers & have started companies so its viewed as very important. Personally I find it quite helpful when you’re helping a company through a problem: I’ve been there, I’ve done that, I’ve solved those types of problems before.
- What can women entrepreneurs/startups do to increase their chances in sourcing venture as we’ve both recognized that the numbers are low? Do you have any ideas from your own overview, apart from the fact that more women need to become technical?
I think focusing on how you increase your odds of getting venture funding. I think it’s important when you’re pulling together your pitch & getting ready to go out & try & raise money, that you ask a lot of people for advice. Some of the best entrepreneurs I work with are always seeking out feedback. So writing your business plan & immediately going to a venture capitalist to pitch it, is probably not the best idea. You should write your plan & then bounce it off all the smart people you know. Actively seek out the smartest people in the area you’re trying to build your business in & get their feedback. Those iteration cycles will make it a lot better! So by the time you go to raise some venture capital money from a seed person, you’ve been asked all those hard questions & you’re not caught off guard & you’re better prepared. I think really going through that process is one of the best things you can do.
