June 6, 2020
Hello and welcome to Pipeline. This week: Venture capital's wake-up call, Citizen's big moment and San Francisco rents are finally falling.
If you were forwarded this email, be sure to sign up here.
Let's acknowledge that it's been a hard week. When I started thinking about what to write for this issue of Pipeline on Monday morning, I wondered if people would care to read about diversity by Saturday morning; if there would be fatigue over the discussion; if the diversity theater would be over.
We've known for years about VC's race problems. Only 2% of all partner-level investors at firms are black, according to BLCK VC. More than 75% of investment rounds go to all-white teams, according to Kauffman Fellows research.
This week was a critical inflection point in the venture industry. Of course firms have issued a flurry of statements acknowledging support for racial equality, but there's also been a push to actually take action and do more than just write corporate chicken soup for the soul.
That's all a good start, but plenty more needs to happen. On Thursday, I tuned in to BLCK VC's We Can't Wait event alongside 3,700 other people to learn firsthand from the experiences of black entrepreneurs and investors. That was 10x more viewers than there are black venture capitalists, its co-founder Frederik Groce pointed out.
The key is to make all of the efforts institutional — not a one-off or a special case.
Join us for Protocol's Transformation of Work Summit on Thursday on June 23 at noon ET. A discussion of where in-demand skills meet job opportunity. First speakers announced: Congressional Future of Work Caucus co-chairs Representative Lisa Blunt Rochester (D-DE) and Representative Bryan Steil (R-WI). This event is presented by Workday.
Who is a person in tech you've never met but would love to have dinner with?
Judy Faulkner, founder of Epic. I have never met her, and it's a system that so many hospitals use. It started with good intentions and has created many, many complexities, so I would find her very interesting.
What's your favorite part of a startup's pitch?
A lot of times, when you get pitched by a founder, you're focusing on what they do. And I think as important as what they do is: why. Being a founder is not a rational choice, and there's usually something deep down inside of them that's motivating them to do something that has a high failure rate, that they feel like they're uniquely capable. That's one of my favorite things: getting to the "why" behind the "what." And what I have discovered over 20 years of investing is the what often changes as the market changes, as product changes. The why never does. You will be a better partner to your founders and be a better mentor to them and be a better guide if you can really understand the why.
What's a secret obsession most people don't know about?
I actually studied political philosophy and I worked with the ACLU on prison reform. My honors thesis as an undergrad was a Rawlsian critique of the American justice system, basically saying we were using the justice system as a way for social and racial controls. One of the passions for me is Rawls' invisible veil: If you had to create a system not knowing where you would be in the system, how would you create the most just society possible? I care about politics, but I care about the philosophy. I'm also obsessed with chocolate souffles: like at my wedding, we had a wedding cake but i didn't care because I served everyone a chocolate souffle.
What's one of the worst predictions you've ever made?
Just a couple months ago when we went into shelter in place. I thought the market was gonna tank. I was convinced this was like a 2000 type moment. In some ways I was right because there was a massive economic cost, but the market is being decoupled from the economic consequences. But in that moment, if my husband hadn't stopped me, I would've been like: Sell everything! My prediction in terms of where the public markets were going to be is not where we are today.
What was your first check?
My first investment as a partner was in Redfin. I had just bought a house, and it was so frustrating. [Redfin CEO] Glenn Kelman is also one of the greatest people in the world. The day it was announced, I was flying high, and then I got an email from a friend like: "Oh, I'm so sorry." Valleywag had written an article saying: Glenn Kelman gets fundraising, but not from star investor — like, why didn't any of the men invest, like, why not Tim Draper? They had a picture of me — young, blonde — and it was the first time I really, really realized the perception that I wasn't taken seriously. All my partners or the young guys didn't have that.
It's been a great investment, but the one thing that I really remember is that Glenn went onto [the article] and made a comment, like: She is as sharp as anybody else. Usually you make an investment, and you're defending the investment. I made an investment, and my founder had to defend me. I think that, for me, has always led to the way I think about it — such a symbiotic relationship, that if we're really successful we help fund founders, and the founders help us. It's that give and take. So it was a really poignant one for me in a lot of ways.
Thanks for reading this week's Protocol Pipeline. If you like what you're reading, sign up here to get it in your inbox. Send story tips and Pipeline feedback to email@example.com. See you next week.