Risk Analysis: Failed Company Early Employee vs. Founder

One of the weird things about being in VC now for almost 5 years, is that there are some topics on VC Twitter that feel like groundhogs days. They are debated in earnest at least once a year, and nobody in that conversation seems to remember or care that this happened exactly the same way a year prior. I think this probably happens in many crevices of the internet, that is just the one that I occupy most time in so I see it very plainly.

One of those groundhog day topics is the VC Twitter version of oppression olympics. It’s the discussion about what is riskier: to be an early employee or to be a founder. The funny part about this topic is that most of the people who weigh in are founders. They weigh in as if they can speak for both founders and employees even though they have only been founders. In many cases, they are airing out their own traumatic founder experience and can’t imagine someone else saying that their experience could be more (or equally) difficult. Especially if those people are their own previous employees who they paid when they were depriving themselves of any salary. I get it, being a founder is an extremely isolating, expensive, and overwhelming experience. And I don’t want to take that away from anyone.

My experience though has only been as an early employee at Pre-Seed/Seed* companies that failed. The conversation I think we aren’t having enough is how to process your work product and history after a company you worked for fails. Especially as that pertains to your own feelings of self-worth. From my perspective, in every early startup I worked for, I was underpaid, overworked, and had few (or 0) coworkers to lean on or to learn from. If I had to pick the most important part of the riskiness equation though that made the early employee role that much more risky for me is that in those roles, I didn’t actually learn any skills. Instead, because I was constantly reacting to ever changing inputs, I had to rely on what I already knew to produce some semblance of a useful output. If I didn’t know something, Google was my best friend. The expectation at an early stage company is that as the company grows, the resources it has grows. Those resources can be used to help you hire a team, to get you access to information databases, to increase your pay. But what happens if those resources never arrive?

As a non-technical early employee, so much of the work that I did at the startups I worked for was very tedious, very unsophisticated labor. The lasting impact, in many cases, was nil because things changed so constantly. You didn’t know if anything you built or created would last until the next week. In my first role, I was in charge of supporting one person on the team to help her collect data into her spreadsheet to track the sustainability of the company. Then I moved into a more R&D role to explore a product launch (the product never materialized). In my next role, at a second startup, not a single one of the projects I managed actually materialized. So after a few months of that, the CEO transitioned me into more of a sounding board/advisor role where I was basically just performing emotional labor. Even in my early days at Precursor, I spent much of my time building (and then scrapping) CRMs, and tracking down a lot of paper trails. The administrative labor was overwhelming.

The hard part too about the employee vs. founder conversation is there is a strong bias towards founders. They are the avengers, the masterminds, the leaders. So as a result, “failed founder” has a certain gravitas to it that failed employee does not.

In my work as an early employee, on the good days, what I gained was perspective. I was given a spot in a growing ecosystem that I cared a lot about and so I was able to use that vantage point to better understand how I wanted to navigate that ecosystem. On the bad days, I was so exhausted by my ever-growing workload that I was in a constant fight or flight mode – unclear where I could even fly towards…

Obviously, things turn out well in the end. The third startup – Precursor – ends up not failing, my role expands and I get to grow in my own skills and experience. But I want to be honest about my early experiences so that others know what the real cost of joining an early company can be. I am also using my new position as an investor in companies to coach founders I work with on how they can be more thoughtful about their early employees and my hope is that this next generation of early employees receive the skills, experience and knowledge they need to fly towards something amazing.

*I can’t speak to the risk/reward profile to employees who join Seed+ companies

Inspiration from this post comes from:

1) a few conversations I’ve had with our MBA interns who are thinking about that first employee role at startups

2) a few conversations I’ve had with our founders – many of whom who have been founders before, but few of whom have been early employees are failed companies before

3) Yoni’s recent post – so honest, loved it!

4) Karla’s recent post really spoke to me and this is exactly the type of leader I hope to become, which requires being honest about the work I’ve done and how it impacted me

5) Ashley Ford’s interview on Brene Brown’s podcast about her memoir. Her decision to own her own story despite whether or not it implicated others is powerful and I plan to do the same. My story is mine.

Peeling back the layers of a quick VC diligence call

As part of my day-job, I invest in founders. A lot of them happen to be women. A lot of them also happen to be Black women. I am so grateful for the opportunity and the honor that I have to invest in founders at the earliest stages of their journey. It is really an amazing experience to be able to say: “I believe in you so much that here is a six-figure check to help you build towards your dreams.” If you told me as a young Black girl growing up in San Diego, that this was my future, I would have never believed you! This is an amazing privilege and I don’t take it lightly.

For founders who are starting technology companies, I invest in their Pre-Seed round. The expectation is that the founder will, after raising their Pre-Seed round, raise follow-on financing. Their Seed round, Series A round, Series B round…, all the way to IPO.

When founders in the portfolio fundraise for a follow-on round, I often get e-mails and requests from VCs who are considering participating in that round. The questions they ask are usually focused on trying to get to the same answer: “Do I trust your judgment on this deal?” Peeling back the layers on that question is: “Was your judgment similar to mine on this deal?” In these conversations, very few people are asking me to introduce new facts to prove them wrong, instead, they’re looking for me to confirm their own ideas. Some firms even have a name for this “confirmatory due diligence”.

Peeling back the layers on this again. The questions that I get from VCs about my decision – especially given that I’m investing in the Pre-Seed stage – are often specific to the founder. Which is fair. At the time that I invest, my main bet is on the founder. VCs ask me questions like: But she’s not technical and/or she is a solo founder, how did you get comfortable investing? How do you feel about her leadership skills? Aren’t you worried that she won’t be able to build a big business?

Peeling back the layers on this again. Most often, given the racial make-up of this industry, the questions I’m asked come from a white person. Sometimes a white woman, sometimes a white man, but white all the same.

When they ask these questions about a Black woman founder to a Black woman investor, there are undertones here. There is history here.

Which leads me to the questions I’m starting to build the courage to ask in response. They are: So, is this your first investment in a Black woman? I’d love to know if these questions were explicit parts of your diligence for other investments. Have you considered how it might feel for me, a Black woman, to try and convince you (who might not have any Black female co-workers, friends or founders) to invest in a Black woman? Or how it might feel for me, a Black woman, to convince you, a white person, that we see the world in exactly the same way? How might that diminish my own confidence in my own unique perspective? How might that be tied to larger issues about how you might not see Black women as leaders, or as convincing, or as likeable, or as capable of building billion dollar companies?

The list goes on. These dynamics cannot be ignored. The world is propped up by racist institutions and we have to acknowledge this openly and honestly and its impact. If we don’t we are complicit in it.

From CTRL to HeauxTales

I have listened to Jazmine Sullivan’s Tiny Desk Concert more times than I can count. If you haven’t watched it yet, do yourself a favor – it is below, you’re welcome!

I love it. The storytelling and honesty are unparalleled. I was introduced to her new album via her TinyDesk, and when I started digging into the entirety of HeauxTales, I was similarly blown away. She is sharing such vulnerable stories from women – rarely shared – and with so much empathy for the women. Usually I think when these stories are shared, they are accompanied by some level of shame (a number of people have written about this better than I have – this one from Pitchfork was my favorite) and she shared stories in a way that showed the full humanity of each person. So amazing.

I haven’t loved an album this much since SZA’s CTRL. When it came out in 2017, I think I played it every day for weeks – maybe even months?! The main difference that I saw between the two albums is that HeauxTales is a women-only album. There are no men on the tracks. I love the focus that gives to the listener. While CTRL doesn’t have any songs only by men, it does have a number of songs with prominent male rappers featured on them. I distinctly remember reading this one critique of CTRL that the men who were featured took too much control (hehe) over the lyrics and transformed some songs that were supposed to be liberating for women into something else entirely.

Ok, but back to the similarities. The songs that I hear talking to each other on both albums are Girl Like Me & Normal Girl. What I hear from both is this pressure to be who they think the person in their life wants them to be; instead of focusing on becoming their authentic selves. I take it out of the romantic context and see both songs talking about the pressure to conform. I can relate so strongly to this.

The specificity of both of their albums – each focuses on specific stories shared by women – also gives them a weightiness. I am a Revisionist History superfan right now and it reminds me of what Malcolm Gladwell shared in the episode The King of Tears. A reason why country music moves us so much is the specificity of the story told in the lyrics. This is completely different from traditional pop songs that are generalized to mean everything to everyone. He highlights how rap music actually mirrors country music in this way – it’s specific and thus more powerful. He didn’t dig into neo-soul in his podcast (which is the category I put Jazmine and SZA’s album into), but I think if he would have he would have seen a similar trend in neo-soul as he did for rap and country.

Both albums also come at a point of significant transition for me. During CTRL, I was just getting started at Precursor. HeauxTales comes at the tail end of a pandemic where a lot of transition. Very grateful to have this music to guide me during this time.

What album got you through a big transition in your life?

What is giving me life this week?

I don’t know if you ever listen to the NPR podcast, Code Switch, but they have a segment each week called “Songs Giving Us Life“. There used to be a similar segment on the NPR Politics Podcast with Sam Sanders during the Hilary/Trump campaign, and his was called “Can’t Let it Go.” Both segments were/are so great. Well, today is Friday and I had a really intense week so I’m going to do a “What is giving you life this week” for me!

I watched Notorious BIG’s Netflix documentary last night “I Got a Story to Tell” and it started getting me thinking about how music influences people across time, across continents. I loved that his neighbor was a jazz musician who walked BIG through drum segments. I loved that his uncle in Jamaica was a rapper. I loved that he listened to country westerns. What an eclectic life that should not be reduced to “gangsta rap” or whatever new term there is to describe black men who choose to engage in musical careers.

I was introduced to Camilo’s new record called Mis Manos this morning and it is fire! His first song, Millones, sounds like I’m in Colombia (which is where he is from). Which reminds me of what P. Diddy was sharing when he was collaborating with BIG. He wanted his music to transport you somewhere when you listened to it – for the song itself to feel like how you feel when you’re watching a movie.

Camilo’s second song, KESI, feels like afrobeats! If you don’t believe me, listen to it first and then listen to Burna Boy. The african influence should come at no surprise to you if you know anything about the history of Colombia. If you don’t, this in your invitation to dig deeper.

At the end of the album, he travels to the DR with a bachata song, BEBE. I love bachata. One of the main reasons is because when I used to go to salsa clubs, it was honestly the only dance I was really good at. It’s also just absolutely beautiful music.

Ok, that’s all I got for what is giving me life this week. Happy Friday!

Why I Joined Colorwave’s Advisory Board

I am so excited to announce the I joined Colorwave’s Advisory Board! Colorwave is a two-part solution to accelerate equity and economic freedom in the tech and startup industry for Black, Latinx, and Native Americans. Our fellow program bridges the gap by giving early career professionals of color the training they need and connecting them with leadership opportunities at VC-backed private companies. We are also building partnerships with organizations that are looking to hire this talent into their leadership.

This is a full circle moment for me. In the summer of last year, I tweeted:

I realized through my responses that nobody else had solutions either. I’m so grateful that around this same time, these leaders came together to start building this.

Leandrew – who is an entrepreneur we backed at Precursor – asked me to join right around the same time as Jose Lopez in November of last year and we’ve hit the ground running. In only a few short months, I’ve been so overwhelmed by the fellows themselves. All 22 of the fellows who we are working with in this first cohort are brilliant and any startup would be lucky to have them.

I’ve also been so grateful by the outpouring of support by the ecosystem. From Mandela at Founder Gym who brought her wisdom to bear to build out the curriculum to VC partners like Lerer Hippeau who quickly signed as supporters to invest in this pipeline of black and brown talent to industry experts like Aston Motes who have offered their time and energy to talk with the fellows about what it’s like to be the first and only at a venture-backed startup. It’s been such an honor to work with this team!

Intersectionality in 2020

I had found that the art of simplicity 

Simply means making peace of your complexity 

India Arie, Wings of Forgiveness

As I write this:

If this year has taught us anything, it is our lives are inextricably intertwined. We are called to take actions to protect one other at a level I’ve never personally experienced. What a lesson to learn.

My hope is that this lesson has taught us that intersectionality is not only important when talking about how different women have different levels of access, privilege, etc, but that intersectionality applies to all things.

Real change happens at the intersection. How do we continue to build bridges so that we are walking towards that intersection instead of away from it?

Nothing without intention

Do nothing without intention

Solange, Do Nothing Without Intention

Personal Reflections on Accumulation Theory

I have been so grateful for audio this summer. My ability to concentrate has been impacted severely by the global pandemic-induced onset of ADD. So I haven’t really been able to read books like I used to. Instead, I have turned to audiobooks and podcasts to help me digest the same content in a different way. I usually listened to audiobooks or podcasts on BART during my commute when I didn’t have the capacity to digest the words fully because I was also paying attention to the people around me, checking my e-mail, watching insta, etc. What a gift to be able to silence those distractions and actually listen to these words.

Because I haved loved it so much, I decided to use audio to get my thoughts out too. I am not going to edit it like a podcast or anything because that focus on form (editing, music, etc.) impacts my ability to create. It forces a really specific constraint on what I want to be a more free-flowing exchange of ideas. I also realized though, that my voice conveys so much meaning, and only reading my text can limit my own ability to get across what I truly am saying.

I have been talking a friend of mine in the art world and she is writing something on Robert Venturi – an architect. I started going down a rabbit hole of what he wrote and was instantly inspired. He observed everything and constantly analyzed how people used spaces and how the architecture of those spaces impacted how those people used those spaces. How often do we take on the role of architect of our own content? Architect of our own lives?

Here is my first attempt at architecting this new way of content creation. Would love to hear your feedback!

Part 1

Part 2

Why I’m Reimagining America’s Healthcare System

I grew up in the healthcare system. As long as I’ve lived, my dad has been a kidney doctor. I remember spending days I took off from school for being sick in his doctor’s office and following behind him as he would greet his patients one by one at a dialysis clinic. I remember watching him take tests to continue his board certification. I remember the lovely nurses who gave me all my shots and took extra good care of me because I was Dr. Thomas’ daughter. It was fun!

I also remember the day my dad came home and told me he didn’t want me to be a doctor. He said that his work was not like it used to be. It was harder and harder to make a living and really impossible to make a life (he was on call all the time).

Despite this lifelong education in healthcare, when I got into venture, it took me a while to start getting excited about healthcare investing because I felt like there was just so much to learn. Like you couldn’t invest in healthcare unless you had spent 10+ years working full-time in a healthcare system. It reminds me of a quote in Angela Davis’ book – Freedom is a Constant Struggle – where she talks about the challenge of getting people interested in building solidarity movements for the people of Palestine. She says: “too often people feel that they are not sufficiently informed to consider themselves an advocate of justice”. And it is so sad.

How much should you really need to know to be an advocate of justice? When a system deliberately obscures how it works so much so that getting involved in it feels “overwhelming” – who does that benefit? The advocate or the status quo?

All that being said, I did start reading about the healthcare system more generally. I was introduced to An American Sickness by a friend of mine and it was such a wild read. My final conclusion was that every single piece of healthcare is intricately linked to another piece in order to reinforce the underlying system. It is impressive and really terrible for citizens. I recommend it to anyone looking for window into the healthcare system.

This inspired me to focus on companies that were building radical healthcare solutions. It bears mentioning the definition of radical which is: of, relating to, or proceeding from a root. In order to fundamentally disrupt our current healthcare system -which is generating unheard-of profits to healthcare leaders while still inflicting economic uncertainty on the masses – we have to get to the root cause of it, which for me meant investing in companies that are challenging the current system with alternative systems.

How to support Black Women emerging managers in VC

There has been a lot of ink spilled on how to support emerging managers more generally in VC. A lot of it is written by First Republic Bank’s Samir Kaji. I am really grateful for his writing and think it adds a lot of value and context to this conversation!

One thing that I think is missing from this conversation is the discussion on how to support Black Women emerging managers in VC. I think that Minda Harts writes a lot about how to support black women in the work place generally so that should also been used as a preface to this article – if you have not read The Memo by Minda Harts book, stop now and pick it up! It also adds a lot of value to this conversation and is useful context to have before engaging here.

Also for context, I am writing as experience as a Black Woman in Pre-Seed investing. What Black Women in Series A/B/C+ investing need might be different.

As an emerging manager and a Black Woman, I have been thinking really deeply on ways that I have had people show up for me to get to this point and ways that I wish people would have showed up for me. I wanted to write this down to share tips with people who are exploring ways to support other Black Women in VC. The hope is that every Black Woman in VC who comes after me has an easier ride. Because frankly, these past 4+ years have been a rollercoaster!

1. Answer their e-mails or LinkedIn messages – better yet, e-mail them!

One thing that I still have a chip on my shoulder about is the list of people who when I was first starting out in this industry did not respond to my cold e-mails or LinkedIn messages. I also still remember, fondly, those who did respond. One of those folks was Scott Belsky. I cold e-mailed Scott Belsky and he responded with a single line that included “sending my best”. And let me tell you, that was all the encouragement I needed at that moment. I was so bolstered by that because someone who I saw as “powerful and successful” took time to invest in e-mailing me back.

I wish though, when I was first getting started, that more GPs at funds e-mailed me first. I know that it is not every day that a black woman gets hired in VC, and I think it’s important that the greater VC community – including but not limited to the Black VC community – pays attention to, and celebrates those hires. My request is not even that you do something big like “grab a coffee” or “go on a walk” with that new hire. Instead, it is that you share a little bit of encouragement. These can make a world of difference. An e-mail letting folks know that you see them. Letting them know that you are wishing them well. Letting them know that you are grateful they are in this ecosystem. These are the things I hope younger Black Women in VC get from allies.

2. Support the deals they bring to the table

One of the pieces of advice I got when I first got into VC is that – succeeding in VC is relatively easy, all you need to do is “find good deals”. That advice really rubbed me the wrong way. Because in VC, who decides what is a “good deal”? As the old saying goes, one person’s trash is another man’s treasure. I think it is true especially in VC. And in early-stage VC, whoever has the purse strings gets to be the final say on whether or not that is a “good deal”. Because if folks have uniformly agreed that a deal is “bad”, then more often than not, the company does not get access to the capital they need to prove these folks wrong.

So my advice to people who have the purse strings is, critically evaluate what you think is a “good deal” vs. a “bad deal”. For many, I assume that part of the calculus of whether or not the deal you have been presented with is good vs. bad is whether or not you trust the person who has presented you the deal. Why do you trust this person’s opinion so highly? Is it useful to trust this person’s opinion so much more than others’ opinion? Especially on a company that is building a future that none of us can predict?

I think once people critically examine why they green light some deals over others, the bias will start to expose itself.

How can you offer the same benefit of the doubt to people outside of your “circle”? I think one way is to trust that they are bringing some unique insight to their deal that you are not capable of having because of your differing backgrounds. Once you acknowledge their insight, put capital behind it. Let their insights guide deals that you wouldn’t have otherwise invested in and see how they do.

When reflecting on your carrier as an ally, I hope that one of the things you factor in is not how many IPOs or shots on goal you achieved, but how many GPs have you created. How many ideas have you greenlit from URM communities? How much power have you given away in order to create a more equitable (and honestly more interesting!) world?

3. Sponsor their promotions

Over the past four years, I have had the privilege of watching more black women enter venture. I started tracking the growth of this community in 2017 here. One of the things that has been really amazing to watch is the promotion and growth that I’ve seen folks go through from Analyst to Principal. The thing that has been missing though, is the promotion to GP. In almost every case, Black women have only received a GP title if they have started their own funds. This is unsustainable. Partly because, given the wealth inequality in the US, Black women generally have 10x less capital themselves and generally less access to capital than their white male peers.

So why have I yet to see one large VC firm sponsor a black woman’s promotion to a GP? This is unsettling and worrisome to me. I am looking forward to watching this change happen sooner rather than later. A great example of what this could look like is what Jesse at Flybridge built with Lolita Taub. I think it’s such an amazing example of what sponsorship looks like and how it can leverage the skillsets of both parties to create something were 1+1=10.

Individuals > Symbols

A few weeks ago, two big things happened. Beyonce dropped Black Is King on Disney+ and an article came out that shared that Kamala Harris has been undermined by the VP Search community for being “too ambitious”.

The attacks on both Black women started immediately. From Beyonce’s art getting critiqued as celebrating imperialistic, capitalist societies to Kamala getting the feedback that she is just too conservative and also too ambitious to serve as a VP pick.

I got really angry by these critiques. Part of it is that, I identify with both of them as a Black woman who also has chosen to work within imperfect systems. (Frankly, if you are a Black woman who participates in the US in any way – buys food/clothes/shelter, you have chosen to work within an imperfect system, but I digress…)

Part of what I (and I assume Beyonce and Kamala) deal with when you choose to become leaders within these systems is the psychological trauma that often occurs as “the only”. We chose to stay within these structures in order to make them more perfect for the many who are kept outside of them.

This labor is painful, mostly invisible and, more often than not, unpaid.

As a result, I’m deeply skeptical of outside critique on this labor. I have received too many disingenuous critiques to take them seriously. I will never forget the feedback I received when I decided to boycott UC Berkeley-Haas School of Business because they only admitted 5 Black kids into the MBA Class of 2020. My classmates and members of the Berkeley-Haas administration shared with me that boycotting isn’t nice or effective, completely dismissing the years I spent on campus working within the system of Haas to help it become more inclusive. It turns out that the boycotts were effective because they figured out how to admit significantly more Black students the following year. I believe that they were most effective because they were done by a previous student who had deeply studied the institution. I knew which media outlets to leak the story to, I knew which people on campus would be my allies, I knew how to navigate the politics among those on campus who would be my detractors.

This is one example of countless others I can point to over my career and I’m sure many fellow Black women have similar stories.

So, before I accept any inkling of negative feedback of Black women who are leaders within imperfect systems, I have come up with a list of questions first to qualify this feedback. Through the qualification process, I hope that it helps all of us understand more deeply how connected we truly are.

The main questions, I have are:

How do we ensure that we are holding every person within the system equally accountable?

Is your critique of this black woman a critique that you also have of every other person who has operated in this way within this system? If you don’t know the answer to that question, why have you chosen not to research others within this system? Do you have unreasonable expectations of the labor of black women compared to the labor of white men?

What about the critique that you have of this other person are you also perpetrating? How are you holding yourself accountable?

Another way of putting this is: What are you asking this person to do/expecting this person to do that you haven’t done? Why haven’t you done it?

There is an episode of The Good Place where they figure out that nobody has been admitted to heaven for the past 500 years. Essentially, they realized that even people who were trying to be so perfect weren’t able to earn enough points to get into heaven because of the negative externalities that their efforts created. I thought it was such a great illustration of how we are navigating a deeply complex world and have to make trade-offs every day.

When we rush to judge without the full context – of both the other person and also of ourselves (true self reflection is hard and too rare), it makes me queasy. I’m not saying that full context removes accountability, I’m saying that full context forces us to move from treating the other party as a symbol to an individual. It also forces us to explore and recognize our own agency.

Sydney Paige Thomas