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STEPHANIE LIU: Hi everybody.
Welcome to Women Techmakers.
This is Episode 3.
For those of you just tuning in, this is a series that we
started back in Google I/O this year and with Susan
Wojcicki's senior leadership here at Google.
And it was really well received, so
we're expanding it.
We're really excited to bring on some really
fabulous guests today.
And I'll be one of your hosts.
I'm Stephanie Liu.
I work on the Developer Relations team.
Our team is a team of engineers that helps
third-party developers be successful in
our developer platforms.
And we're also the team that helps bring you Google I/O as
well as well Google Developers Live.
MARY GROVE: Great.
Hi everyone.
My name is Mary Grove, and I'm the head of Global
Entrepreneurship Outreach at Google.
Our team runs the Google for Entrepreneurs program, which
basically includes all of Google's programs and
partnerships to support startups and entrepreneurs
around the world.
We have about 50 different efforts live in over 30
countries, and we're always looking for ways to get more
engaged and help foster entrepreneurship in local
communities.
So we're delighted today to have two
wonderful guests with us.
I'd like to turn it over to let them introduce themselves.
First is Angela Benton, the CEO of NewME Accelerator.
ANGELA BENTON: Hi.
I'm Angela Benton.
And as Mary stated, I'm the CEO of NewME Accelerator,
which is a technology accelerator/incubator for
underrepresented minorities.
We specifically focus on African Americans,
Latinos, and women.
And our mission is really just to accelerate the growth and
the success of those entrepreneurs.
MARY GROVE: Next we're delighted to have Stephanie
Palmeri of SoftTech VC with us today.
Steph, welcome.
STEPHANIE PALMERI: Thank you.
Hi everyone.
I'm Stephanie Palmeri.
I'm a venture capitalist with SoftTech VC.
We are an early stage micro venture capital fund.
Our current fund is our third fund and it has $55 million
under management.
And we focus on investing in early-stage startups,
primarily in consumer, web, and mobile.
Some of our larger investments and more well known
investments include companies like Eventbrite,
fab.com, and Fitbit.
And actually a few months ago, one of our companies founded
by a female founder, Victoria Ransom, was actually acquired
by Google and that's Wildfire Interactive.
I focus specifically on our next-gen commerce and a lot of
our ed-tech investments, but the fund really works across a
number of sectors, including next-generation commerce,
marketplaces, the next wave of e-commerce, SaaS, and then
mobile services and infrastructure.
MARY GROVE: Fantastic.
So thanks for kicking us off.
Stephanie, we'd love to explore a bit about your
career path and journey and sort of what was your
background experience that led you into venture capital?
STEPHANIE PALMERI: Sure.
I have--
well, I don't think there's any one path into venture, and
I have a relatively nontraditional path.
I actually spent the previous 10 years living and working in
New York City.
And I began my career at Accenture as a consultant
working with the market data practice.
And then I wanted to gain operational experience.
I thought that would actually be really important.
I enjoyed the advisory service role, but I really wanted to
get my hands dirty as an operator.
And I ended up having the opportunity to join Estee
Lauder in their marketing department for Clinique,
working really closely with sales and retail.
And so I spent a few years there and realized I was not
cut out for large companies.
And in fact, I really liked working
with smaller companies.
And I then jumped over to an early startup in New York
building applications for sales and marketing teams,
essentially enterprise suites to enable sales forces and
marketing teams to communicate better and to distribute
content globally.
So I worked really closely with companies
like SAP and Diageo.
And at that point, I spent about two years there and
decided to go back to get my MBA at Columbia
Thought I was going to stay in New York the rest of my life,
spent two years heavily involved in the New York scene
and the startup community there while getting my MBA,
and worked with a seed fund called NYC Seed, helped them
run an early incubator in New York City.
And worked with a women-led high-growth
accelerator called Astia.
And then finally worked at Lot18, which was an e-commerce
start-up, all while getting my degree.
And finished up and decided to move out to California with
just two suitcases.
So ended landing in a role with SoftTech after quite a
long journey and about two years of networking and
getting to people in this space.
And have really had the opportunity to leverage my
background as both a marketer but also as a consultant and
someone that had to jump in and figure out how to solve
problems really quickly and get to the
heart of a story quickly.
So it's been quite a journey.
MARY GROVE: We're really glad to have you
out on the West Coast.
STEPHANIE PALMERI: Yeah, I'm glad to be here.
STEPHANIE LIU: Angela, do you want to tell us a little bit
about your journey and how you ended up founding NewMe
Accelerator?
ANGELA BENTON: Sure.
I think it's actually--
[LAUGHTER]
ANGELA BENTON: --really similar to Stephanie's.
I mean, there's no kind of like direct way that you end
up starting an accelerator.
Actually my background is in design, so I actually started
out in this industry that is print publishing
that's around still.
But at the time I was laying out magazines and everyone was
saying, oh, we're not going to have any
jobs if you're a designer.
The internet is going to like kill all of our jobs, and so
you better teach yourself how to code.
So I taught myself how to code, and I ended up getting
jobs after that basically as a front-end engineer.
And I did a lot of side projects and I worked a lot of
different startups, and I eventually ended up working at
IAC, which is InterActiveCorp, for several of their
businesses, lendingtree.com, realestate.com, And Then also
several different startups actually within their emerging
businesses unit.
Which is interesting because it is similar to a startup,
but it's like working at a very well-funded startup.
[LAUGHTER]
ANGELA BENTON: So that was quite interesting.
And while I was doing that, I actually launched a site
called Black Web 2.0 mainly because I noticed there was
just no coverage of what African Americans were doing
in the technology space.
And I just started writing about it from a design
background.
And that site gained community kind of on its own, and Wayne
and I ended up doing NewME Accelerator.
That kind of birthed out of NewME Conference.
And it's been a great, great journey.
It's kind of one of--
I guess when you think about kind of what your passion is
and how you got there, I'm like I would have never
guessed I would have ended up here.
But it's been great so far.
MARY GROVE: And along those lines, Angela, you and I first
met almost two years ago now, and you had just launched
NewMe Accelerator and the program was just kicking off.
Google's been really proud to be a supporter and a sponsor
for all three cycles.
How has the reception or the perception of NewMe changed
over the last three cycles, and what has the welcome been
both from members of the community in Silicon Valley
and also nationally and globally?
ANGELA BENTON: Sure.
It's been overwhelmingly positive.
I was surprised mainly because I did not know what to expect.
And especially when you see something that doesn't exist,
you're like well, why doesn't it exist?
Is it because people aren't open to it?
And when Wayne and I started reaching out to people about
what we wanted to do it was so amazing.
Everyone was like, yes, I'm in, yes, I'll mentor, yes,
I'll speak.
And so we were able to build off a lot of
momentum from that end.
Then, of course, we're in the CNN documentary last year, and
that was amazing.
And I was talking to someone the other day, and that
exposure really kind of accelerated our own growth,
whether we like it or not.
But it's been great because now we have people literally
not just in the States that are interested in kind of
self-organizing under our brand and building community
around it, but we have people in other countries that are.
And so that's been an amazing journey.
I'm glad that we've been able to have you guys on board from
start to now, and I'm looking forward to continuing that.
STEPHANIE LIU: Yeah.
So me and Mary do a lot of work with startups and the
startup community as well.
And I think we were just talking outside about how
amazing it's been the last three or four years has been
so much interest.
Like from governments to all these accelerators popping up,
and people wanting to get involved, mentors and
everything else.
So let's bring it back to the election because I know much
of our US audience, even our international audience , is
aware that yesterday you know we re-elected
President Barack Obama.
And so what's the role of government in entrepreneurship
and what are the opportunities there?
Steph, do you want to give some of your thoughts?
STEPHANIE PALMERI: Yeah, so were just talking about this
before we walked in, and I think there's a really
interesting opportunity right now.
So let's talk about two things.
First I'd say consumer health, and a lot of the regulation--
the fact that Obamacare is going to be around now, and we
know that, is going to really change the face of how we can
begin to bring more towards consumerizing health.
I think we're going to see a lot of opportunity there.
But just broadly speaking in general around
entrepreneurship and fostering that within our communities, I
see a lot of things happening on the ground.
The combination of the JOBS Act, the proliferation now of
crowdfunding platforms here within the U.S. Are really
enabling everyday people to be entrepreneurs.
Not necessarily for high-growth ventures, but you
can become a small business in and of yourself a lot more
quickly and to have access to capital.
And on top of that, we're seeing this movement in the
maker community and the ability to produce physical
product again relatively cheaply and at scale.
And so I think we're going to see a lot of companies that
are going to be emerging to provide services and
infrastructure to support this next wave of entrepreneurship
in the U.S. And I think it's really exciting.
[INAUDIBLE]
MARY GROVE: I couldn't agree more.
I think that this is happening around the world.
We're seeing a lot of governments asking us, as
Google, what are recommendations for what
governments.
What are the best practices for how we create an
environment that is really conducive to startups,
encouraging them to get off the ground and really helping
them scale.
And we've run a number of pilots over the last year in
trying to learn from them.
So in Korea, for example we, launched something called
Korea Goes Global, which is a partnership with the Korean
government.
And they've run a competition and selected the 30 top
companies who've just gotten started.
They've been incubated in Korea for three months, and
they're currently spending a week in London in our Campus
London project and coming out here to Silicon Valley next
week for a week.
So figuring out how can we actually pilot some new models
that might be effective and then use those as examples to
really set the tone for what's effective.
ANGELA BENTON: Yeah, I'd actually piggyback off of what
Mary's saying.
I'm seeing that too just here locally in the States, but
when you're talking about local
governments, it's really global.
I mean in how each governments can actually
work with each other.
I was talking to someone in Israel, and they're interested
in learning from Silicon Valley but also bringing
entrepreneurs from Atlanta and Detroit there as well.
And so I think if we can continue to foster that kind
of communication and that global sense of community
around entrepreneurship, it can help all local ecosystems.
STEPHANIE LIU: So have you see anything with crowdfunding,
for example?
You're more at a the very early stage with Accelerator.
Has that affected anything with your companies and how
they're approaching funding versus traditional VCs?
MARY GROVE: Sure.
So not as of yet.
However, there are several crowdfunding platforms that
continually reach out to us and--
[LAUGHTER]
MARY GROVE: --want to start these kind of huge platforms
for our founders that are coming through.
We only have, I think, a couple of startups that have
actually tried to use crowdfunding, but not
necessarily with too much success yet.
And so many of them are going the traditional route, if you
could call it that.
STEPHANIE LIU: You still got a job, Steph.
Don't worry about that.
[LAUGHTER]
STEPHANIE PALMERI: You do.
But you know, interestingly enough, I was going to say,
one of the most recent deals we've done at SoftTech, and
I'm taking the board seat on the company, is a company
called Ubooly.
And it's actually a smartphone-enabled toy.
And it originally began as a Kickstarter project.
And then later went and joined the TechStars Boulder class
this summer, and we actually funded the company coming out
of TechStars Boulder.
So I do you think from time to time we will see these
projects that will gain traction and will offer a
broader opportunity where there's potentially a platform
that goes along with the physical product of the play.
So it can be a great source of deal flow, really early deal
flow for us to pay attention to what's going on.
And then, more broadly, I think you've got a lot of
products and companies that are launching after that and
they're going to need distribution once they go
beyond the crowdfunding platform.
So I'm starting to see a lot of early rumblings in the
market around people thinking through that problem too.
STEPHANIE LIU: Interesting.
MARY GROVE: Very interesting.
So last week we hosted NewMe Accelerator's Demo Day and
their graduation of their most class, and we were in the
process of helping them prepare for their pitches.
I wanted to ask you both what advice do you have for these
entrepreneurs who are just getting off the
ground in terms of--
so maybe Stephanie--
what are the key attributes that you really look for in a
great pitch, a great team?
STEPHANIE PALMERI: I hope I can say this
word on Google TV.
At SoftTech we have this rule.
It's called the "Three
*** Rule." [LAUGHTER]
STEPHANIE PALMERI: It's on the back of our business card and
we're pretty liberal with cursing a bit at work, so
anyhow let me tell you a little about the Three ***.
And it's kind of how we go about thinking about
deals we look at.
So the most important of the Three ***
is a smart-*** team.
And the reality is early stage investing is really just a
founder, maybe a co-founder, and potentially a few other
team members.
And that team is the core team that's going to get that
product and that idea off the ground during the seed phase
and move on to hopefully Series A and beyond funding.
So really, at the heart of it, we're investing in a team.
And what we look for in those teams are people that have a
combination of vision and insight into the market that
they want to get into, potentially some practical
experience, and I'd say at the end of the day the ability to
walk through walls.
It's founders that just have a tremendous amount of passion
and gumption and the ability to execute and make sure they
can make things happen even in the face of huge obstacles.
The second thing we look for is a kick-*** product.
A kick-*** is a product that ideally when companies come to
us they have got at least a working prototype if not a
launched product, some customers, even if it's just
people that have played around with it a little bit, or maybe
even people that are paying to use the product.
That's awesome.
Doesn't happen a lot, but it's awesome.
STEPHANIE LIU: Revenue's always great.
STEPHANIE PALMERI: Revenue's great.
Never going to complain when I see a company--
STEPHANIE LIU: [INAUDIBLE] says there's no problem that
can't be solved with more revenue.
STEPHANIE PALMERI: Definitely.
Exactly.
So a kick-*** product.
And then the final thing look for is the big-*** market.
And rule of thumb, it's a billion-dollar market.
And we don't expect our companies to capture 100% of a
market, and so therefore if you capture 10% of a big-***
billion-dollar market, you've got $100 million in run rate
somewhere down the road, a few years down the
road, from seed funding.
And so we ask ourselves how does a company get to a
million in run rate?
Are they going after a large enough opportunity?
And then I'd say the other things we think about right
now are what's competition in that space look like?
So are there other players?
Are they well-funded?
How deep are the pockets?
Or is there still a lot of opportunity to come in and
capture a substantial share of that market?
And early stage, we think it takes about 18 to 24 months of
capital if you're going to raise a proper seed round to
really make that happen if you're going after a
venture-backable business.
ANGELA BENTON: So some of the things we look for, though we
don't have the Three ***--
[LAUGHTER]
MARY GROVE: --we do look for a team that's resourceful.
And so we have a set of 10 core values that we use to
hire for our team internally, but it actually extends to the
people that we want in the program as well.
And being creative and resourceful is
definitely one of them.
We're not too particular on, oh, we only want to see
technical founders.
That's always great because you can actually execute on
your idea, but even if you're not technical, if you're a
business founder, we are hoping that you learn the
skill to recruit a technical team.
Generally, we try to make sure that they're
coming in further along.
Initially we had several companies that were kind of
just in idea phase, but now we actually have teams that are
executing well before they come in.
And then we are basically helping them refine throughout
the program, which is a lot of fun.
We do look at markets and things like that too, but
where we really are focused on making sure that we get the
right type of entrepreneur that's for our program.
And then I guess chief among all the things that we look at
is we want someone who's comfortable in their own skin.
STEPHANIE LIU: So especially for the Accelerator aspect,
how much are you-- you know, you're looking for this
gumption, right, this like X-factor or whatever.
So what do you hope to teach them?
You see somebody and you're like, OK, I
can teach you this.
I can see that you have the passion.
MARY GROVE: Yeah.
So we're looking for people who are coachable.
And one of the things I've learned is
not everybody's coachable.
But yes, so people who are open to actually learning and
thinking about things a different way.
Our program is actually residential, so people live
and work together for 12 weeks.
It's very, very intense.
STEPHANIE LIU: Like a reality show.
[LAUGHTER]
MARY GROVE: It is.
It's very, very intense.
And throughout that whole time, I mean, there's not a
lot of time for personal time.
You're talking to mentors basically all day, every day.
You're getting so much advice.
One of the great things that I love about being based in the
Bay Area is so many smart people condensed in one area.
So you get a lot of really great information, but we're
looking for people who can take that information and not
necessarily have it change totally what they're doing but
that they can make an educated decision.
Like, this is my long-term goal, this is where I want to
get to, and this thing that this person said might apply
to it and so I'm going to take this into account.
But this person over here maybe not so much.
So I think that's one of the things that's hard to do, and
so we're looking for someone who's open to that but still
is very kind of secure in what they want to do.
MARY GROVE: Wonderful.
So we talked a lot about mentorship and the importance
of a network of mentors who have failed and succeeded and
can sort of help walk you through that.
For both of you very accomplished entrepreneurs in
your own right, what are some of the best pieces of advice
that you've received from your mentors?
STEPHANIE LIU: I like the Three *** thing.
[INAUDIBLE].
[LAUGHTER]
MARY GROVE: Three *** Thing.
ANGELA BENTON: And that will probably be a recurring theme
that comes up throughout this session.
[LAUGHTER]
[INAUDIBLE]
ANGELA BENTON: Yes.
One of the best pieces of advice I've gotten in my
career as a whole is, you know, I have three kids and I
wanted to try my hand at entrepreneurship but that's a
scary thing to do.
That's a big risk to take.
And I was talking to someone about it and the only advice
they said, they were like-- well, I was kind of not
feeling sorry for myself but like oh, this would be so hard
if I took a leap and did this.
And they were like, so what?
Just do it.
And like that was it.
So what do you say after that?
I'm like, yeah, that's right.
So that's probably my biggest piece of advice.
STEPHANIE PALMERI: I'd say, similarly, I had a professor
who was an adjunct at Columbia who, as I was pursuing venture
after graduation, he was pivotal in my decision to keep
pursuing that.
And he said to me, look Stephanie,-- and I think that
the advice holds true for founders, too-- there will be
many, many people who won't understand your background and
won't want to take the time to get to know your story, but it
just takes one.
And the reality is you just have to believe enough in
yourself to keep going, and I think constantly reassess
whether or not you're on target and you're on track,
and take each bit of feedback you get as one data point.
But ultimately, if you believe in yourself and you believe
enough in your story it does just take one person to begin
to believe in you.
And I found that in my own job search process and as I kind
of move along in my career at SoftTech.
It just takes one person to believe in your idea or to
believe in you as an individual, and then the next
person believes and the next person believes.
So I think it's you've just got to take that leap of faith
and believe in yourself.
MARY GROVE: I love that.
I was reflecting on the question myself.
And for me I think it's about mission, defining mission, as
well as defining non-goals for oneself.
Right?
Both for myself and then for the effort that we're building
here at Google around entrepreneurship, that's been
really important to have that laser focus on the mission,
which is very broad, right, to empower entrepreneurs all over
the world by partnering with great organizations, by
creating your own programs, but then also defining what
we're not trying to do.
For example, we're not trying to create our own incubators
or accelerator programs at Google.
We're trying to be a platform that supports and
partners with them.
So equally this is--
my dream is very big, but my focus is extremely precise.
STEPHANIE PALMERI: We tell that to our
founders all the time.
Early stage founders have so many things that they want to
try with their companies.
And they get capital in there and they want to go in a bunch
of different directions.
The reality is there's usually one or two key things you have
time to focus on in that first year or two, and laser focus
gets you to the next phase.
And then you can begin to do more.
So even if--and it's great to hear that at large
organizations, you think the same way.
The laser focus is really what I think moves the needle.
MARY GROVE: Absolutely.
STEPHANIE LIU: I mean, Mary's team is basically a startup, I
think, too.
[LAUGHTER]
STEPHANIE LIU: She's doing the whole world
with like three people.
[LAUGHTER]
STEPHANIE LIU: So you've still got to focus, for sure.
MARY GROVE: Trying to be lean and scrappy.
[LAUGHTER]
STEPHANIE LIU: So we're talking about mentorship, and
so what do you think is the most important lesson-- is
that also the most important lesson you've
imparted on your companies?
Do you find that you're saying the same things over and over?
Or is every case a little bit different when you go in?
And like I'm going to build this up in you, so this is the
background I can bring here.
STEPHANIE PALMERI: I mean, each founder's a unique
snowflake, right?
So each company and each founder is slightly different,
but there are a lot of repeatable patterns that you
begin to see.
And so I can look at a subset of founders and say these
founders are really great at doing X, Y, and Z, and
potentially their businesses would improve by
pulling this lever.
But the reality is that you try to customize your advice
and the relationships you help those founders build to each
unique case.
But I think the way in which a firm like mine scales is that
we do begin to recognize those patterns.
We do one to two deals a month, right, so we're 40
deals into our current fund.
We'll do another 20, 25.
And so in three years' time, we'll really begin to
recognize patterns out of that cohort of companies.
So yeah, you customize what you're saying, but I think you
begin to recognize these patterns over
and over again, too.
STEPHANIE LIU: So just to shift gears a little bit.
Angela, you coming from a design background.
You have a marketing background, like kind of a
different background than like tech, what you might think of
as a tech background, right?
I think something that came out of the original panel back
around Google I/O was Susan was saying that what brought
her to tech was the deep creativity that
was available here.
And that deep creativity you had, the freedom you had, to
just build something.
And I think that a lot of women are sort of put off by
tech because they see it as maybe too sterile or they
don't identify with the culture.
So I guess I wanted your guys's thoughts on the role of
creativity in entrepreneurship and technology.
And maybe talk to some of these women and tell them like
what kind of experience you're having here.
ANGELA BENTON: Yeah, so one of the biggest things that I tend
to tell people about the technology industry is I
really just think it's like an image problem.
[LAUGHTER]
ANGELA BENTON: Like people think that you're like a nerdy
white guy in a room or in a basement coding and that's it.
And that's what technology looks like.
But it's really creative.
You do get your hands dirty.
I love what I do because I not only get to build NewMe as its
own startup, but I get to help other
people with their startups.
And it's a lot of tangible work.
I mean, my design background, while I don't design as much
and I don't code as much anymore, a lot of the way how
I think is kind of design thinking.
You know what I mean?
And so really like how we're thinking about executing on
the next cycle or how we're thinking about scaling, all of
that really kind of goes back into the creativity that I
learned like in Design Theory 101.
STEPHANIE PALMERI: I totally agree.
It's a little bit of an image problem.
Not only is it creative, but I think the reality is the
stereotypes we have around tech are, again, sitting in
that room, dark, working alone and solo.
And what we don't talk enough about is
that it's about teams.
And it's about teams working together to create and build
products and to test and try ideas.
And that as you move up within that team, there's opportunity
to take on leadership roles and management roles.
And you're potentially not in the daily grind of writing
code anymore.
Now suddenly you're a leader as well.
And you can be a leader on a small team or a large team,
but I think the reality is we don't talk enough about the
progression of what those careers look like.
And then how you can take something in that career and
apply it towards something that's potentially not as
technical but more management-related.
Right?
So I've always been interested in the
intersection between the two.
You know, I studied management information systems and
marketing in college and so kind of continued to always
find a way to merge technology and marketing
throughout my career.
And I'd agree that I don't think it's talked enough about
about what career diversity looks like.
And you think about oh, an engineer or a computer science
major does X, Y, and Z and sits in that dark room and
they really don't.
ANGELA BENTON: Yeah particularly as it relates to
entrepreneurship, though.
It's like there's all of this training and activity around
building the product, finding out who the customer is,
launching, scaling.
There's not enough information around actually developing
leadership skills.
And I didn't realize that until we started to get a lot
of alumni out of the program, and they're coming back to us
with questions and they're really management and
leadership questions.
MARY GROVE: Very interesting.
So the other spin on the question of diversity and the
importance of diversity in teams or in the ecosystem, the
industry in general.
I would love to get both of your thoughts.
Clearly, Angela, your program is to foster female founders,
African American, Latino founders.
And Stephanie, you talked about investing in startups
that have female founders as well.
So talk to us about the state of the landscape, and how has
it evolved over the last few years.
What do you think are effective mechanisms to really
help foster diversity among teams and within companies?
ANGELA BENTON: Sure.
Well there's been so much activity.
For me I think back to 2007, when I couldn't find anything
and it's like I just started this little blog.
So for me I'm like, whoa, it's all of this stuff now.
[LAUGHTER]
ANGELA BENTON: And so that's really, really great.
That's really great to see.
I'm hoping what the future landscape
includes is kind of--
I guess to piggyback off of what I just said, there seems
to be this sequential number of steps that need to be
integrated where maybe you're in a pre-incubator and then
you go to an accelerator and then you get funded.
But I feel like all the activity is great, but it
needs to be a little bit more kind of cohesive so that we're
really making the kind of impact to change
what things look like.
STEPHANIE PALMERI: All right, let me see if-- can you repeat
the question again?
MARY GROVE: Sure.
I guess we were talking about diversity.
And then so there's diversity--
STEPHANIE PALMERI: We see a lot of diversity, right?
MARY GROVE: You do.
I'd love to--
STEPHANIE PALMERI: We do.
MARY GROVE: So among the startups that you've met, for
example, have you noticed any noticeable trends in teams
that are [INAUDIBLE]
and women [INAUDIBLE].
STEPHANIE PALMERI: So first off, one thing I notice is a
lot of times I'm the first female investor that a lot of
these companies meet with.
And that's particularly exciting when a female founder
walks in the door.
And the conversation sometimes completely changes.
And we just step aside from talking about the business to
kind of talking about some of those dynamics as well.
And I think that's exciting.
It's exciting for me to be at a place in the industry where
I can have that kind of connection to a founder.
Whether or not I end up doing the deal, I am able to
personally connect.
Because I know what's it's like to walk in the room and
potentially be the only one sometimes.
We actually meet with quite a female founders, and I think
some of that is the fact that I'm a woman in our firm and we
have a relatively diverse firm to begin with.
And we're early stage and so there's a lot of women that
are sort of getting into starting companies these days
as opposed to women that have been leading companies looking
for follow-on funding.
So that makes a lot of sense.
The other thing I've noticed, though, is that previously a
lot of the female founders that were coming to SoftTech
were building companies not necessarily focused on women.
So we've seen definitely a shift towards female founders
building companies focused on women.
And particularly within the next-gen gen commerce space.
I'll give you an example of a deal that we did recently is a
company called True&Co.
And it's an e-commerce play around a fit
algorithm to fit bras.
So kind of applying, in a sense, the home trial model to
ship five bras, see how they fit.
And the interesting thing about that conversation was
that when Michelle Lam, the founder, came to us to pitch
the idea, she and I didn't have to spend 20 minutes
talking about what the issue was.
[LAUGHTER]
MARY GROVE: What's the problem you're trying to solve?
STEPHANIE PALMERI: What's the problem
you're trying to solve?
I understood the problem.
And I think the reality is there's a lot of women that
are starting companies these days that are focused on
problems that women have.
And then female investors can kind of get to the core of
that problem much quicker and move on to
the meat of the business.
And I think that's exciting.
I do, however, think just in general, the lower barrier you
talked about, the need to not necessarily be an engineer to
launch a company, there is a lower barrier--
it's easier to get an idea into testing and to determine
feasibility.
And so you don't necessarily need to have a technical
background.
I think you do hit a wall eventually if you don't have a
technical team in place, though.
MARY GROVE: Um-hmm.
Makes sense.
STEPHANIE LIU: So I had another question based on you
said that you don't use design as much anymore.
And there was something that came up which is that there
are a lot of companies--
the barrier to entry is low.
So it's pretty crowded space.
So more and more marketing and design--
who happen to be the two experts we have over here--
are now like big differentiators.
Especially in early stage, when you're trying to fight
your way out of this like pit of [INAUDIBLE].
STEPHANIE PALMERI: So you're saying
it's all about execution.
[LAUGHTER]
STEPHANIE LIU: So what advice could you give a startup out
there about either looking at their design or looking at
their marketing techniques to differentiate themselves?
MARY GROVE: Hmmm.
Let me put my creative hat back on.
[LAUGHTER]
STEPHANIE PALMERI: I'll dive in.
You know, I work with the early stage
founders all the time.
And the reality is it's focusing on those one or two
core metrics that are to move the needle for your business.
So what is that measurement that you need to focus on?
Every decision you make about your product, about your
marketing, about your hiring, about your spending, is all
going back to those core metrics that are going to move
the needle and get enough either traction, customer
engagement.
So it's either customer acquisition, maybe user
engagement, retention, it potentially could be revenue,
but the reality is early stage, it's identifying what
those core metrics are and making really tough decisions
that you're focusing on those metrics.
ANGELA BENTON: Yeah.
From a design perspective, with HTML5 and CSS3, I mean
there's so much flexibility now in what you can actually
execute and how you actually execute it.
And so I think there is a lot of opportunity.
The issue with design then becomes how do you become the
most creative person?
How do you make sure that nothing you do
exists right now?
And I think that--
[LAUGHTER]
ANGELA BENTON: --that's an issue that designers have.
I know I've had that issue several times.
But one of the things that I was actually talking to
someone about is, again, back to this idea of being
collaborative and it's not someone solo
working in a room.
So how do you get other creatives around you, but the
diversity of creatives.
Maybe it's not just all designers.
Maybe it's someone who is a videographer or someone who
does something else, does signage or whatever.
And taking all of those elements so that you're not
just designing really kind of for like a 2D space.
With HTML5--
I just saw this, oh, it was Square's site.
Oh my gosh, I was just on their site and like literally
it was HTML5, but it was basically like a 3D type of
experience.
So that's my advice.
MARY GROVE: Nice.
[LAUGHTER]
MARY GROVE: We have an audience question, shifting
gears to our moderator page for Stephanie.
And Stephanie, it says one of the most difficult--
STEPHANIE PALMERI: Thanks, John.
[LAUGHTER]
STEPHANIE PALMERI: He warned me he was going to do this.
[LAUGHTER]
MARY GROVE: Our viewers may benefit from this advice.
The question is that one of the most difficult challenges
in starting hardware-based startups is that it's such a
capital-intensive business to scale
beyond initial prototype.
And Stephanie, how does that affect the way you evaluate
potential investments, especially at the seed level?
STEPHANIE PALMERI: Well John, that's a great question.
We've now done two investments in a physical product.
The first was Fitbit, which our founder, Jeff Clavier, did
several years ago, I think back in 2008.
And I think that may have been pre-prototype.
And the second one we've done, which is Ubooly, which I
mentioned earlier.
And Carly and her team actually had a physical
product being manufactured.
It was pretty much ready to ship by the
time we did the deal.
So I think a lot's changed in a few years, and the products
are very different products.
But the reality is it is a lot harder.
The capital requirements for a physical product are a lot
more intense.
I think to begin with, certainly crowdfunding
platforms showing some initial customer interest is one good
way to kind of demonstrate to later stage seed investors
that there might be some interest in your product.
But that being said, I think there will be certain products
that will resonate with certain investors.
And part of our job is to do enough diligence to understand
what does your model look like, what does it actually
take to get a product produced, and in what volume
and what kind of traction will be significant to get you to
the next phase.
So it may take a slightly larger seed round.
It may take a little bit more patience in terms of capital.
But essentially, when we think about investing in physical
products, we're not just
investing in physical products.
The physical products we're investing in have a much
broader platform.
Usually they're a hardware-software play.
Both Fitbit and Ubooly really are software plays.
And so we're looking--
you know, the physical product is great.
Get it there.
Show that you can build it.
Demonstrate how you will build it.
But really what we're looking for as venture capitalists is
a product that goes beyond the physical product and creates a
platform and an ecosystem around it.
Hope that answers your question, John.
[LAUGHTER]
STEPHANIE LIU: That makes sense given that "soft" is in
the SoftTech.
In the name.
STEPHANIE PALMERI: Yeah, exactly.
[LAUGHTER]
STEPHANIE PALMERI: Yeah I think that's a French
derivative there, but yeah.
[LAUGHTER]
[INAUDIBLE]
STEPHANIE LIU: So, speaking of hardware, going off that a
little bit.
So in general, though, when you guys are looking at
companies to invest in, as you're building out the
portfolio, are there certain markets, specific markets,
you're trying to hit?
Like you're trying to get a company that sort of
[INAUDIBLE]?
STEPHANIE PALMERI: Sometimes.
That's a great question--
I mean it's a split between the two.
So we deal in pretty high volume.
So one to two deals a month is a lot of deals.
There's certainly times where we sit down as a firm or as
individual investment professionals within the firm
and say, I'm really interested in exploring and looking for
opportunities within this space.
And we may make an effort to try to meet a lot of companies
in a short period of time that focus on a particular area.
But the reality is we just have a lot of inbound deal
flow through our network, and so we consider opportunities
that kind of fit with the thesis, but we also have the
opportunity to experiment and do things
outside of the thesis.
Really good example, I think, of that is we've recently done
three deals in the last year in education technology.
And a year ago, we had zero investments in ed-tech.
And we did our first investment in a company called
ClassDojo, and ClassDojo sort of opened our mind to the
opportunity within education technology.
And later on we've moved on to do an investment in a company
called Top Hat Monocle, and then finally Clever, which we
just announced a few weeks ago.
And so I would say sometimes we go out and look for a
particular space.
Sometimes a space sort of comes knocking at our door,
and it opens our eyes to broader opportunities within
that sector.
STEPHANIE LIU: Yeah, so it's interesting because from the
accelerator perspective, you expect the pivots to be kind
of like fast and furious.
And you might be in a totally different space
than when you started.
So what approach do you guys take to building a good-- like
you said, you talked about this "Big Brother" living
together for 12 weeks thing.
So how do you build a good dynamic?
How much of that is in the back of your mind when you're
looking at applications?
ANGELA BENTON: So our applications have some
behavioral questions that we kind of infuse in there so it
can kind of give us a sense of who this person is, if they
fit our core values, if they would be a
good fit for our program.
But kind of to piggyback on what you said, I mean, we are
kind of not necessarily vertical agnostic, but we're
just getting a lot of different type of companies.
So for instance, this cycle we had a lot of education of
companies that applied, and so that was like reflected in the
founders that we actually chose.
And so that added an interesting dynamic that we
had at least two education companies in this past cycle
who are not necessarily competing but they're in the
same space, and so that hadn't kind of happened before.
But the dynamic, I would say we've been lucky to not have
any major issues because of the--
STEPHANIE LIU: Like direct competitors.
[LAUGHTER]
STEPHANIE PALMERI: No one's fighting it out.
[LAUGHTER]
ANGELA BENTON: No direct competitors.
And I would say as we're looking through the
applications it's not something that we're
consciously aware of like, oh my god, these two companies
are really interesting so they can't live together.
It's just something that happens kind of more--
STEPHANIE LIU: It's more organically.
ANGELA BENTON: --organic, yeah.
MARY GROVE: So to that then, Angela, can you talk to us
about some of the shining stars that have come out of
NewMe Accelerator.
Either this season or from previous seasons.
ANGELA BENTON: So AgLocal is a favorite of everyone's, which
is great, and basically what they're developing is a
marketplace that connects farmers who are growing or
raising sustainably-fed meat and connecting them with
restaurants and consumers.
But this last cycle that we had, we have--
they did a pivot, so I always want to call them Whoorli, but
their new name is Derbywire.
And they are kind of near and dear to me because what
they're building is a marketplace for creatives.
And I can't wait to put it on my tablet later tonight when
it's in the App Store because I've been trying to--
I take all these really great pictures on Instagram but you
can't monetize that right as of yet.
And so it should be interesting.
I can't wait to be like user number one.
STEPHANIE PALMERI: So it's launching tonight
in the Droid Store?
ANGELA BENTON: In the Android Store, so it's
Derbywire, so yes--
[LAUGHTER]
ANGELA BENTON: --happy about that.
Picture Menu is also one that's great.
He actually just got his app in to the Apple iPhone store.
Yeah, oops, sorry.
[LAUGHTER]
ANGELA BENTON: And Kairos is something that's a little bit
different because they're an enterprise play.
So they're not consumer and they're not B2B, and they have
a lot of traction with JCPenney.
They're actually testing their roll-out in several of their
stores, and basically what they do is they use facial and
object recognition to allow companies to manage your
businesses better, whether it's using it as a way to
check in as a time clock.
So those are--
MARY GROVE: Quite a range there.
[LAUGHTER]
ANGELA BENTON: It is.
It is.
But again, if you're like really creative, I'm like oh,
I don't have to do all this other stuff because all these
people are doing it.
And I can help them out.
MARY GROVE: Very cool.
Steph, shining stars?
STEPHANIE PALMERI: Shining stars.
I'm addicted to a company we have called Poshmark, which is
a marketplace for women's clothing.
So second sell something-- take a photo of something in
my closet, upload it on my phone really quickly, and list
it to the market immediately.
ANGELA BENTON: I need that.
[INAUDIBLE]
STEPHANIE PALMERI: I open this up several times a day and
spend way too much time on it to the extent where I'm
worried that the founders are like, what are you doing?
[LAUGHTER]
[INTERPOSING VOICES]
STEPHANIE PALMERI: Did your shoes get listed?
So that's a fun one and that's one that I really-- but I
think the interesting thing about that business is it kind
of goes off the collaborative consumption theme.
So it's recycled.
It's sharing items, or reselling, and exchanging
items from my closet to your closet.
And we're seeing a lot of interest
obviously in that area.
Yeah.
STEPHANIE LIU: So we talked about-- we touched on
e-commerce fashion and, well, with bras and reusing or open
up my closet kind of thing and edu, so do you see more women
entering these spaces?
I'm just curious.
[INAUDIBLE].
STEPHANIE PALMERI: Yeah.
Absolutely.
I mean I think the reality is you have a lot of women that
have industry background, whether it's fashion, media,
things that are applicable to the business
side of these startups.
And the lower barrier to produce, to get a site up and
running or an app up and running has enabled these
founders, and in many cases these women, to, at a pretty
low cost, begin to test some of these concepts and launch
businesses.
And to compete potentially with large players that are
burdened by physical retail.
So I think what's going on in commerce right now is quite
interesting.
We've done a number of investments in this space.
But I think it's also a great opportunity for women.
Although I hate to discourage women from starting companies
outside of those spaces, but I think absolutely, if you're a
female and you have built a passion as well as a potential
professional background in these sectors, there's a lot
of opportunity there.
ANGELA BENTON: Yeah, several of our founders have industry
expertise kind of turn-tech entrepreneurs because of that,
which actually makes them more appealing to us.
So Carolina with Spriggle, who they were just in the last
cycle, that was here last week, has experience as an
educator, had launched a charter school that has helped
thousands of families.
And now she's basically taking her experience to basically
distribute science and education toys to moms kind of
using the Mary Kay model.
And Rachel Brooks from Citizen Made is also participating in
the e-commerce and maker's market like a lot of your
founders are.
STEPHANIE LIU: Very cool.
MARY GROVE: So thinking about the path from accelerator to
fully-launched company to investment, do you see,
Stephanie, any-- do you tend to see among investments that
you make a prevalence of those companies having gone through
an incubator or accelerator or--
STEPHANIE PALMERI: Majority of our companies don't come out
of an accelerator.
We certainly do invest in companies that do come out of
accelerators.
In any given month, we may do one deal coming out of an
accelerator, but we certainly don't have a bias
one way or the other.
I think at the end of the day, we're looking for just really
strong founders with ideas that have traction.
And I think the decision to participate in an accelerator
program is a very personal decision for a founding team.
I think it can provide a lot of resources.
I think for first-time entrepreneurs, it provides
access to networks that they maybe didn't
have exposure to before.
But as we look to back second- and even third-time founders,
it's really rare to see those founders coming through an
accelerator.
[INAUDIBLE]
STEPHANIE PALMERI: So it's really looking at--
for us, we're looking at the company and the prospect for
the company.
The accelerator bit comes second.
But I think at the end of the day, there's just been a
tremendous amount of interest in that area.
And I think if anything, it's producing a lot of companies,
and it's my job to kind of filter through and say what
are the best companies regardless of where the source
is coming from that are going to get to the next stage?
STEPHANIE LIU: So as kind of closing thoughts, what do both
of you think we need to be doing?
What does everyone need to be doing in the investment
community, in the startup community, entrepreneurship
community, to get more diversity?
What's the call to action now for everyone out there?
ANGELA BENTON: I think the biggest call to action is
everybody is busy, so it's really just being
conscious about it.
People aren't willfully exclusive, it's just people
are busy and they have things to do.
And so it's like when you're looking in your networks your
networks tend to be made up of people who are like you, and
so it does actually take more effort to be more inclusive.
And so just being conscious of it would be a big thing.
STEPHANIE PALMERI: I think it takes an effort on behalf of
both women and men.
And I think as women we do have more females in our
network, so it is about I'm a woman who's on an upward
trajectory, I'm going to bring two more women along with me.
Right?
And the women above me, I look to to help pull me along too.
But I also don't exclude myself in just looking for
women to provide that.
The reality is the majority of the folks in the space that we
all are in are males today.
And that only changes if both men and women are there to
kind of get a seat at the table.
And I think it's naturally beginning to happen.
I think we're just seeing trends whether you're looking
at more board seats and even Fortune 500 executives
naturally, the number is slowly creeping up.
The same is true for the number of female founders
getting funded.
The same is true for the number of females entering the
[INAUDIBLE]
community.
But I think if we're a little bit more actively involved
about asking women to take a seat--
you know what I'm excited for?
I'm excited for the day where no one invites any of us to do
a panel about women.
Right?
[LAUGHTER]
[INAUDIBLE]
STEPHANIE PALMERI: Where suddenly we're just part of
the conversation.
And it's not oh, wait, we need to remember to invite a woman
to join us.
And I think we'll get there within maybe not my
generation, but I think we're on the way.
STEPHANIE LIU: What do you guys think of Dave McClure's
challenge to get more women involved in $5,000 seed-level
funding and really put money where your mouth is?
Do you think that's going to be an effective way to bring,
like you said, a lot more people to the table, and make
more people aware of it?
ANGELA BENTON: I think it'll definitely make more people
aware of it.
Also, I think, while the barrier to entry is low to
begin with, I think having $5,000 will also kind of let
people take that leap and it's less of a risk.
Even though it's not much, it's still less of a risk.
STEPHANIE PALMERI: I think it's important to have a
conversation about having more women begin to give back.
But what I would say to any investor is you invest in the
best companies and the best people, regardless of gender.
I would like to see more female angels around the table
so that there's more women thinking about investing and
making investment decisions.
And potentially growing a portfolio at a small stage so
that they can potentially move on and do it more
professionally.
But there's a really big difference between being a
professional investor and casually making small angel
investments.
But I think any attention that's put on this space right
now is relatively positive attention, so I'm
happy to see it.
And I would encourage more women to think about how they
can get involved in the community, whether it's
mentorship, investing, or actually starting a company.
STEPHANIE LIU: Mary, any final thoughts?
What do you think about this one?
MARY GROVE: Yeah, we've thought a lot about
entrepreneurship and the cultural values of Silicon
Valley and what makes the ecosystem here thrive so much.
And I think we've been fortunate to work really in
every region of the world.
And I think that entrepreneurship is absolutely
thriving, not just in the Valley, not just across the
country, but truly across the world.
It's more vibrant than ever.
We've talked a lot about the barriers to entry
being lower than ever.
I think it's truly that time, and for all of us who are
thinking about programs or partnerships or developing
these outreach programs to have an eye for inclusion in
all senses of the word, geographic, gender, otherwise.
I think it really does take a community and takes a
concerted effort, and I'm similarly
very bullish and hopeful.
STEPHANIE LIU: Well thank you guys so much
for joining us today.
I think this was a great chat.
I feel like my next career is going to be talk show host.
LAUGHTER]
STEPHANIE LIU: Like "The View." I love this.
I love this right here.
ANGELA BENTON: We have a good dynamic.
[LAUGHTER]
[INAUDIBLE]
STEPHANIE PALMERI: Next time we need the table with all
four of us all in one tiny little place.
[LAUGHTER]
MARY GROVE: Yeah, thank you guys for joining us.
ANGELA BENTON: Thanks for having me.
STEPHANIE LIU: So and--
STEPHANIE PALMERI: Thank you.
STEPHANIE LIU: --thank you for joining us and tuning in.
Please remember to tune in tomorrow because we'll have
Diane Greene, who's the former CEO of VMware as well as she's
on the board of directors for Google.