MELINDA: Welcome to Leading With Empathy & Allyship, where we have deep real conversations to build empathy for one another, and to take action to be more inclusive, and to lead the change in our workplaces and communities.
I’m Melinda Briana Epler, founder and CEO of Change Catalyst and author of How to Be an Ally. I’m a diversity, equity, and inclusion speaker, advocate, and advisor. You can learn more about my work and sign up to join us for a live recording at ally.cc.
All right, let’s dive in.
MELINDA: Well, hello, everyone. Today our guest is Katelin Holloway, a founding partner at Alexis Ohanian’s Venture Capital Firm Seven Seven Six, where she invests in people-first companies and manages the firm’s programs, including 2% Growth & Caregiving Commitments and Operator in Residence Program.
Today, we’ll be talking about the role of venture capital in diversity, equity, inclusion, and belonging across the tech industry, how the venture capital system can evolve to be more people and culture-focused, create new opportunities, and access wealth for underrepresented founders, and invest in companies that shape the future of work in a positive way.
So hello, my friend. Welcome.
KATELIN: Well, hi, Melinda. Thank you so much for having me on the show. You know I’m a big fan of your work in general. This podcast has been absolutely a shining light through the last rough few years here. I’m really excited to be here. I’m so grateful for the inclusion.
MELINDA: Awesome. I’m excited for you to be here. And of course, I’m a big fan of yours. I’ve loved working with you over the years when we worked together at Reddit on a DEI strategy with Steve, Alexis, and the rest of the executive team. I was thinking about this. It feels like ages ago when I first walked into the Reddit office and met you and Steve. I think there were maybe 100-150 employees at the time. It was a small company at the time.
KATELIN: It does feel like ancient history. Even just in the time that we worked together there, together on that strategy, we grew from about that 150 mark all the way up to 750. I don’t know if you even registered that track and change while we were there together but we grew a lot in a really short period of time.
MELINDA: Yeah, I know. Maybe we’ll get to that a little bit but I think it was really important that you reached out at that moment as Reddit was just starting to really grow and take off to work on diversity, equity, and inclusion.
So, flash forward today. And now you’re working with Alexis as a founding partner of Seven Seven Six. I want to start with your story first. We always start with a little bit of background on where you grew up, and how you ended up getting to where you are today.
KATELIN: Oh, that is such a big question. I appreciate you asking. I will do my best to keep it somewhat short. Let’s see. I’ve been on this earth for over 40 years now. I have not yet sorted out a quick and easy answer to this question. So, let’s see.
Maybe I start with who I am first or who I feel I am today. From a work perspective, I’m an early-stage investor and I am a recovering HR executive. Back in early 2020, I transitioned from operator to investor and I’ve had the pleasure of building this brand-new venture capital firm called Seven Seven Six, as you mentioned, with my longtime business partner, Alexis Ohanian.
I am passionate about helping founders and their leadership teams build scalable inclusive organizational cultures from day one. Thriving cultures enable people to produce beautiful, innovative products that change the way the world operates. I’d like to think that I can help our founders get there faster because of my background.
And so, when I say I have been a recovering HR executive, I’ve worked in the trenches of what we now know to be Web 2.0 for well over a decade. But I wasn’t always in tech. So, prior to making the leap into just the world of tech, generally, I actually worked in film. I worked at Pixar Animation Studios for several years, over five, for fun dating myself facts. This was back when Steve Jobs was still around and active at the studio.
Ed Catmull was our president at Pixar. I learned a lot of what I still use to this day about building inclusive cultures from that moment in time in my career. All of the things that brought me to Pixar are wide and varied as I found myself and figured out my career in my early days of post-college.
I’ve literally done everything. I was a public education teacher. I taught first and second grade. I taught high school at one point. I worked in the hedge fund world. I was in real estate. I worked actually for a police station at one point. I was the fingerprint gal and I was the police chief’s assistant up in Humboldt County. You name it, I’ve done it.
All of those things had some sort of impact on my worldview. And really, what I am most passionate about, as I mentioned, is helping build very inclusive and thriving cultures that scale.
MELINDA: I think it’s fascinating. There are so many young people that think that they have one track. I want to go here and get here. And the reality is, I mean, my background is equally kind of circuitous. I went all over the place before I ended up where I am, and I’m probably not done. Right? I’m still going to go on to something else. I think that’s really important. It also adds to our experiences and adds to our diverse set of experiences that really make innovation happen. So, I love it.
KATELIN: I should also mention. So, that’s my work side of myself. I know that as we talk about the intersectionality that is us in human and identity. The other big part of who I am is I’m a mom. I have two little boys at home here. I’ve got Luca and Juno. They are seven and four. They are my other startups.
Technically, I have three startups right now. I have Seven Seven Six. I’ve got Luca, and I’ve got Juno. And so, between the three of those, my dance card these days is pretty full. I wish that there was more room for other things that make me whole like travel, music, and art and all of those things that we love to love. But here we are. So, yes. That pretty much sums me up these days.
MELINDA: Yeah. I was surprised you didn’t mention that earlier. So, I’m glad you did because so many of us, including me, have kind of watched them grow up. During the pandemic, via Instagram.
KATELIN: My little stars.
MELINDA: Yes, exactly. I believe they were even on CNN or something, right? Were they? Yeah. Yeah.
KATELIN: They were. Yes, my partner, my spouse, Ben. He started something through the pandemic where he was making coffee. This really bougie pour-over coffee for our neighbors and all of the first responders and frontline workers in the very early days of lockdowns here in San Francisco. He and the boys would serve it.
To maintain social distance, they would serve it out of our kitchen window with a very long extended, like grab hand that was an arm. It looked like a gorilla arm and so it was called Gorilla Arm Coffee. It was entertaining and it was our only contact with the outside world. So, it was a lot of fun.
MELINDA: Yeah. I think it brought a lot of joy to all of us even though you were across the city. We couldn’t partake, but we’re still glad about it. Yeah. It’s always important, especially then. Yeah.
So, I want to ask. You said a recovering HR professional. I think you still use a lot of your people and culture skills. How do you see that intersection with venture capital?
KATELIN: Yeah. The reality is I think that once you go to HR, you never really go back. And so, maybe I should amend my introduction to not say recovering because I very much feel that venture is actually an extension of my HR work.
I’ve thought about this for a long time. Several years, actually, before I ultimately made the transition from operator to investor. Here’s some framing. I’d sat on the executive side of the table, so to speak, for well over a decade, and I thought that I had a pretty unique perspective on the role of investor. The more exposure I got to venture capitalism by being on the startup side, you know, needing capital going through different fundraisers, sitting in board meetings, needing to tap and call on our investors at various stages of evolution through the different companies I had worked for. An
This is going to sound not very kind, but the more I worked with our venture capitalists, the more I realized how they weren’t really terribly helpful outside of the general business side, or the business advice, and/or making introductions to other investors. And so, the thing that was rubbing for me was the standard line of venture is, you know, how can I help. Investors view themselves generally as very, very, very helpful. But the reality was I hadn’t really experienced that. And that’s not to say that they weren’t great people, or lovely people, or weren’t helpful in their particular areas of expertise.
But for me, and again, knowing the lens that I had of being an HR professional was that most of the challenges in our organizations were really people problems. They weren’t generic business problems. And again, this might sound not very kind, but an Ivy League business or finance school degree could actually help us solve. But these were like real meaty people problems. They were things like how to hire, how to shrink, how to manage, how to develop, how to level up, how to engage, how to retain our talent, how to manage conflict more specifically, and how to fire folks.
And yes, to the point of our conversation, how to build a diverse and inclusive team. Here’s the zinger for me. These weren’t problems unique to one particular company. I experienced them at every company that I had worked at and with, but it was beyond even my own experience. This is across the board, across industries. It didn’t matter the company size or stage. These were really the problems that organizations were bringing to the table, and we’re trying to solve we’re stopping or inhibiting their potential growth and success and creating those outsized returns.
And so, I think that after the initial check is written from a VC firm into an organization, the best way for an investor to really, really be helpful is to know how to help with these people problems or these challenges that are not written in any book because they are messy, like us as humans.
And so, once I started to connect this dot or I started to kind of form this observation, I started to look around and look into the world of venture capital. It was shortly after we met, probably in 2018, or 2019. There were really only about a handful of investors that I saw that actually had a real HR operator skill set. There were a few, so I don’t want to nag them at all but that was it. It was a really, really small cohort of people.
I saw the gap, and I did what I know how to do best. I just started to write. I wrote out a proper thesis on why the natural progression of an HR career or the career development path for an HR professional should not actually stop at that, you know, VP of HR or the CHRO rule, but it should actually be straight from the boardroom onto the venture capital side. And to be more specific, not just, as an HR professional in a venture, but actually as an investor as a proper check writer. This gets into several different prongs here, but I think that the real influence and the real opportunity for impact with folks that have the people background or skill set, the impact to change or to influence an entire industry is at the investor level, not just at the practitioner level.
I have a whole soap box about the wealth gap and who the founders are and what they look like and what their perspectives are, what the funders look like, and what their backgrounds and perspectives are but I’ll save that for later in the conversation. So, anyway, long story short, I created this idea, this thesis around the HR professional growth path, and then I wanted to go out and investigate it. And so, I marched my little honey down to see until the road, and like a fool, I started knocking on the doors of the different firms. Weirdly enough, they opened. People were curious. They were like, hello, what are you doing? And I was like, hi!
MELINDA: People knock on these doors. What are you talking about?
KATELIN: Exactly. So, I was surprised. I was let in but I was not surprised at their reaction. I got a lot of no. Well, you can be our HR lady. I even got a few kinds of snarky investors who wanted to tell me why I was wrong. And why this idea was completely out of line, which I found fascinating.
One investor who I will not name even went as far as to say that a woman of my age should not be so audacious. I was like, “Excellent. Thank you for the feedback. Noted.” I came back. Basically, I went and I had this little tour of duty that was not in hindsight, very well planned out. I kind of tucked my tail between my legs. I went back to Alexis. He had left Reddit a few years prior, and we had remained very close. I just asked him honestly. I said, “What did I do wrong here?” Am I really this far off base? How did I miss the mark?
Lucky for me, Alexis had been waiting and watching. He knew what I was capable of. He knew what he thought was maybe off or wrong about the industry. He knew that I had to kind of go out for myself and really see what was out there and get a better sense of the ecosystem. And so, when I came back to him and said, what, what gives man and he just looked at me and he was like, “Let’s go build a new one. Let’s go and do it.” I was like, “Great. I could do that.” I hadn’t even considered it. So, that’s kind of the long-ranty version of my perspective on HR playing with venture capital.
MELINDA: Wow. Yeah, thank you for sharing that. Those who are listening or watching that don’t have a good sense of the problem here, I want to just kind of paint that for a second here. Katelin, you know, but the audience may not know that Wayne, my husband, and co-founder, and I have been working on diversity, equity, and inclusion in the tech industry for years. Part of that work has been in the venture capital ecosystem because it really starts there.
We’ve worked with VCs and startup programs and startups as well. Less than 5% of venture capital goes to pretty much anyone who is not a White man. And so, that’s women. That’s people of color. That’s everybody else, right. And so, that is a deep problem in and of itself. And then, on the other hand, we have tech companies that have a severe lack of diversity as well, and they grow big. When they get big is when they realize, “Oh, wait. We have a problem.”
And so, many people ask me why. Why is that such a big problem in the tech industry? It’s because, over the years, most of the big tech companies came about because White men had an idea and they were able to work for free on it for some time, which requires some privilege, requires some wealth, right? And until they were able to sell the idea to wealthy White men, right. And then, once they sell the idea, then they have to scale pretty quickly. And so, when that happens, when you’re hiring so quickly, you’re hiring your friends, and then your friends are hiring your friends. And then you end up with a company that looks a lot like those founders. You end up with a company that is severely lacking in diversity. And then, when that company IPO or has another type of exit, all of those folks become wealthy and a lot of them become investors. So, it completely perpetuates that system.
And so, there’s a lot of room for disruption, and then a lot of ways to address it. Katelin has talked about several of them from diversifying venture capital partners who are making those decisions, and who are gaining that wealth from those visions to supporting founders to build companies that are diverse, equitable, and inclusive. And then also diversifying portfolios and really supporting underrepresented founders.
I interviewed Dr. Vivienne Ming on a recent episode, and we talked about trust, and that we tend to trust people who are like us, right? We tend to trust people who have similar backgrounds, identities, cultures, schools, and so on. And so, we have this kind of myth of meritocracy in the tech industry, where people get there based on merit. And also, we have a kind of pattern matching, where we’re looking for similar patterns like those original founders. Again, there’s a big need for disruption. There are several folks that are working on this.
Katelin, let’s talk about some of the ways to address it that you brought up earlier. You’ve been on both the startup side and now the venture capital side. Where do you see opportunities to really move the industry when it comes to diversity, equity, inclusion, and belonging.
KATELIN: There are so many, and I wish that we had so many more hours. And we have. First of all, I just want to say thank you for setting the table here by describing the system and how it has worked. I realized that that context is really, really helpful for folks who are not as familiar with how the whole “ecosystem” works.
I’ve heard people say things like, you know, the system is broken. I’ve heard others and unfortunately, I cannot remember where I heard this, otherwise, I would cite them. But, you know, they’ve said things to the effect of the system isn’t broken, it was built that way. I very, very much feel that way about venture capital. And so, I really appreciate you laying out the kind of that flywheel effect that happens.
And the privilege required to even just be able to explore an idea when somebody has that little thought bubble. For so many people, that little thought bubble turns into being written down in a notebook and put away somewhere because there are other obligations, and they don’t have the privilege that others do.
You can see. You and I both live here in San Francisco and we’ve been here for some time. And so, to see the wealth that this town has brought to people is absolutely phenomenal. The amount of money that has been generated that has created generational wealth for many is absolutely fantastic. Now, how that wealth has been distributed, because of this system, is a lot less heartening. You see it show up in the millionaires that have been minted over even just the last 10 years. It is very homogenous.
And so, I just want to say thank you for kind of painting the picture of how the system was built because it was something that developed, and then we just kind of didn’t keep a mindful eye on it, or we weren’t intentional about things as we went along the way. No, it was 100% built that way. It was by design. And so, our opportunity is to make adjustments to that.
Something else that I think is important to say here is that there is room for both. When I say both, I haven’t articulated what both means. I mean, I’m not trying to take the capital out of venture capital, to be very clear. There is a wonderful space for nonprofit work and there’s a wonderful space for folks to have an impact in many, many different ways.
Something that I am personally very deeply passionate about is adjusting the wealth gap. This is something that I learned as I was an HR practitioner. Something that I felt very proud of in my work as an operator was ensuring that every organization I worked with, every organization I worked for, and every company that I advise for did not have a wage gap across all of our different communities within our companies. I was very, very proud of that for a long time.
The challenge was that I could only impact that one organization at a time or a few, right, if I was in a position of advising others. And so, the opportunity of kind of swimming upstream to venture is now, you know, at Seven Seven Six we have a portfolio of over 80 companies. And so, I’ve been able to build out and take some of those tools and templates and best practices around creating equitable compensation strategies and plans to so many more than I could actually sit through and cycle as just an operator, someone who’s going in to say like, “Hey, let’s do this.” You have to get the executive buy-in. You have to go and do all of these things. You have to make sure that the board’s on board, et cetera, et cetera.
And so, I think that the opportunity that we had to change, even something as small. Let’s start with the wage gap because there’s a difference between the wage gap and the wealth gap. The wage gap is our cash compensation or the components of our cash compensation as an employee. I’m speaking very specifically about tech right now because there are a few different modes of compensation here. But if we’re talking about just our salaries and understanding what benchmarks are, understanding what career pathing looks like, ensuring that we have levels that are set and mutually agreed upon, that we have performance management in place, that we have managers that are equipped with management training so that they know how to develop and grow their team in the appropriate way, that those feedback cycles and loops are in place.
You’re smiling and nodding because a lot of this is the work that we got to do together when we were at Reddit. And so, really understanding that this isn’t just about hiring, which is what a lot of people think. “Oh, it’s a hiring problem. It’s a funnel problem.” No, it is so deep. When we talk about diversity, equity, inclusion, and belonging, first of all, those are separate things. We like to say them really quickly or lump them into an acronym but these are separate initiatives that impact different parts of our business, but all of them need to be influenced by/supported by the entire organization. And so, training and education are a big part of all of this.
Sorry, I digress. I’m talking about the wage gap. We manage our salaries, right, that’s something that we have control over. And so, again, by me moving from an operator in-house at one company and running my playbook or working with that founding team, that leadership team to develop the right compensation strategy for that organization, I can now do this at scale. So, moving from one to one to one too many.
MELINDA: By the way, just to interject. This is why I do what I do, too. I moved from being an executive to being a consultant and working with several different companies to create change. Same reasons.
KATELIN: It is very rewarding. I definitely feel the reach that we both can have by doing it this way. I think that you know. I’m sorry. We now have a car alarm going off. Okay. We’re good. Sorry. The joys of living in the city. So yes, moving from that one-to-one model to the one-to-many model. We can have a bigger impact. But if I go back and investigate or share a little bit more about the wealth gap, that lives beyond our paychecks, right, our day-to-day, you know, what’s coming into the bank, which is, again, I don’t want to undersell the wage gap. That’s very important. We got to make sure that’s locked in and square. The component, especially in tech, that we give a little less consideration to is the part that can actually create wealth, and that is the equity side of the equation.
Oftentimes, organizations will offer their employees stock options. And those stock options have the potential to either wind down to nothing at all, absolutely nothing, which is the fun of the startup ride, or can create incredible wealth for people.
And so, as an HR practitioner, what I was noticing was the real opportunity with equity or stock options was for those folks who lived on that top quartile of the cap table. This wasn’t everyone in the organization. You could be employee number 5000 and have 500 shares or options. That’s really not going to make a significant impact on your personal wealth, although it’s lovely. It’s not life-changing money like it would be for those people who were hired very early on, or hired to particular roles. And so, again, I took my little detective magnifying glass so when I started to connect some dots and I was like, “Wait a minute. So, who lives on that top quartile the cap table, and how do those folks get there?”
And so, I started looking at that and I was like, okay, well, these are and Melinda, you painted the perfect picture. This tended to be the Friends of the founders. This tended to be the immediate first-degree network of those folks that had that initial harebrained idea that they were going to turn into something. They all had the same privilege. These were people who could start at a startup when the flow wasn’t very high. So, the resources available from a cash compensation perspective.
In order to make an offer that was high on equity and low on cash, which is typically those early-stage offers, you had to be at a place in your life where you take on a lot of risks. Your appetite for risk has to be massive. That usually means that you either come from wealth, and so you have some sort of backstop, or you’ve created wealth previously in your life for yourself. So, you can pay your rent, pay your mortgage, whatever those things are, or you were young enough to be able to not have a lot of the financial burdens in life, like children, a mortgage, having to care for your parents or disabled adults in your life or other things.
And so, what you weren’t seeing were a lot of parents are caregivers. What you weren’t seeing were people that did not come from the same college or university that the founders came from. What you weren’t seeing was, as to your point, almost everyone that wasn’t that cis-gendered, straight, White male, which tended to be that founder archetype.
The other thing that had an impact on that top quartile of the cap table was industry. And so, typically, the folks that are early coming on to build a software product, I’m talking about technology here, are the folks that come from very, very highly educated backgrounds. And so, these are your engineers, your product managers, maybe a designer, if you’re lucky got up there, that first one maybe. But what you weren’t seeing were all of the softer skilled functions that typically were hired later in an organization’s history.
So marketing, HR. Guess what? This is where the majority of professional female careers were living. And so, even if you were the first marketing hire, and even if you were the VP of marketing or the CMO, you typically were hired after that life changing wealth moment because the company was more stable, they were more secure, and they give away a lot more of their equity.
There are so many things that we can extrapolate from that. But long story short, I was looking at the top quartile of the cap table, and I set it up. So, something’s amiss there. How can I impact that top quartile, those early hires that are made? But again, not by going into the organization myself and trying to have influence over that early founding team. But I was like, “Well, if the founders themselves had these kinds of first principles going into it, and wanted to build a diverse and inclusive workforce from Day Zero independently because of their lived experiences, that would dramatically change where that wealth was created.
I’m skipping over a lot of these fine points here for the sake of time, but when I started to question like, okay, so we got that that top quartile of the cap table making a lot of money, we have the founder who’s making those selections. So, if we could tweak that founder profile just a little bit and support them, that would actually change the downstream effects. And so, again, you’re one too many in this.
Well, who picks those founders? Oh, it’s the funders. Oh. And then you start looking at the archetype of the funders, with the venture capitalists, and you go, “Oh, well, shoot. Dang. That all looks kind of the same, too.” And so, long story short, I keep saying that. I’m not doing a long story short. It’s a long story long.
MELINDA: It’s a big problem.
KATELIN: It’s a huge problem. Alexis, and I have thought about all of the many, many different ways that venture could potentially shift or change. We’ve identified a few of those problems in this conversation, which are, how do we diversify and bring more perspectives into the cheque-writing positions, those investor roles? How do we shift that standard archetype for a founder because then they will impact who gets hired and who those early employees are? So, I forgot the question you asked. I’m so sorry.
MELINDA: Oh, no. You answered it. I want to just say to our audience that there’s a great study that #ANGELS and Carta did together, called Table Stakes, and we’ll share the link to that that lays out exactly what Katelin just shared. There are some great tables that you can look at, both in terms of gender and in terms of race. That equity issue, interestingly, also is an issue when you look at founder equity. So, not just employee equity, but also founder equity. For example, women equity holders overall. There are 13% of women founder equity holders but they only own 6% of the founder equity. So, there’s a gap there too. So, there’s something else happening in the cap tables against the women founders, and likely also, people of color as well, though, I don’t think that there’s data there yet.
KATELIN: There’s a reason why because there’s not enough data. It’s because there aren’t enough people to have enough data that represent those groups. It’s tough.
MELINDA: Yeah. Okay. Well, let’s talk about some solutions. If we have time, I also want to get to the product side, too, because I think that’s another component, is also products. I’m getting ahead of myself, but I’m just going to say it now because I have it on my mind as you talked about the wealth that the tech industry has generated in San Francisco, in the world at this point, and lots of different parts of the world.
It’s been generated around products as well that have an impact on the world one way or another, good or bad. For some people, and maybe for other people in the world too. Right? And so, that is another component of this that I want to touch on. But this first kind of touches on some of the details around how are you thinking about those solutions that you talked about?
KATELIN: Absolutely. Let’s see. Well, for one, we were intentionally building our firm differently. One thing that I noticed, like I said, during my tour of duty down on Sand Hill Road trying to figure out where I might fit into the ecosystem. What I quickly learned is that the majority of VC firms don’t actually post their jobs online.
Coming from tech, you know, most jobs are posted. Now, how those applications are managed and handled, and the interview processes still leave little to be desired pitch. Fortunately, unfortunately, it gives job security to you because companies need to be trained on how to hire inclusively but at least their jobs are posted, right?
In venture, the jobs weren’t even hitting web pages because they were literally being gifted to people in their immediate networks. And so, the role of investors specifically, is very, very, very rarely posted. And so, people don’t even have the opportunity to apply. Whereas the reality is, in the role of the investor there are so many backgrounds where the skills are incredibly transferable. You do not need to have gone and worked in the banking industry.
I mean, as I shared earlier, the majority of the opportunity for challenges to be solved or supported by venture capitalists are these really heavy, meaty people problems. I think if the last few years have shown us anything, it’s that money is not necessarily the solution that our companies have needed over the last few years. We’re still in survival mode here. We’ve got a global pandemic. We’ve got this reckoning with race here in America. Women’s rights are under attack. Our LGBTQIA+ community is still fighting for basic rights. Our children are petrified to go to school. And that’s because the schools just reopened because they were close for so long.
We’ve got so much at play in the world around us right now that a little precede check is not the thing that is really the opportunity that venture capital has to really support their companies and help them be successful through this. These are heavy, heavy people problems.
And so, I digress. I lost myself in this thought. I was saying that venture capitalists and firms are not posting their roles so we are not able to tap into other skill sets that are very, very transferable. And like I said, skills that are not actually going to be coming out of the banking industry, for one, to support the companies and factors that are needed right now. Those two things could not be further from one another.
One thing that Alexis and I committed to doing before we even had a name for the firm, and something that we still do today is we are committed to open applications. For every role at our firm, we post the job. We very clearly articulate what it is and what it is not. We take it even further. We run our applications through an algorithmic process where we have an intake form.
So, it’s the same for every single human. We don’t accept resumes. We do not accept warm introductions. Everyone is filtered to the exact same online form that goes into a system that will hide the names of the applicants. And then, we run through our process of identifying both the skill sets needed for that particular role, but then also a little bit about their perspective and their worldview.
We are not asking for demographics up front, but what we are asking is one of my favorite questions to ask in interviews, and this has been the case since you and I worked together, which is, what else would you like to share about your identity? Let people fill the space. It is beautiful, what people come back to you with. You learn so much more about who they are not just as professionals, but as humans who are moving about this world. I will and I do.
I do not accept resumes but I will take that question every single day because it tells me so much that I need to know about you with your permission. It tells me. So, if you want to include in that, tell me about your identity question, if you want to include that you were an HR executive at Company X, fantastic, that’s a big part of your identity. I love that you shared that. If you choose to share 20 other things, but never once share a name of a company or a logo, great. That’s what you want to share with me, right.
And so, all of our applications come in, they go through this process. And then, we begin the on-site process. Well, virtually on-site, of having those conversations and furthering the interview process. Again, in our attempt to not just operate in the one-to-one mode, we’ve open-sourced this work. And so, something that’s very, very important to us is sharing our process with the rest of venture capital in hopes that they adopt some of these best practices, or I shouldn’t call them best practices yet, these learnings that we have found and made and discovered.
And so, what I commit to doing is not just sharing the things that are going well or the things that we’re doing that we’re proud of, but also kind of where we got things wrong.
MELINDA: That’s good. That’s great.
KATELIN: Because you don’t need to learn from my mistakes. And also, this is all new, and we are far from perfect. We’re going to stumble. We’re going to fall. We’re humans. We are humans who are trying to change a system that was not made, even for people like me, is how I feel. And so, you know, being able to share our learnings as we go. This idea of building out loud or building in public has become really important to us.
And so, that’s one solution. Open your applications. Run a fair and do your best to reduce bias through that hiring process so that you get more people in the door learning about venture capital. Obviously, not every role in VC can be a cheque-writing position, but every role is going to have an impact, at least at our firm, on the companies that we select, the founders we invest in, and more importantly, how we help support them as they grow through the different stages.
We view this as a long-term relationship. This is not write-a-cheque-and-walk-away. This is write-a-cheque-and-partner-and-be-a-part-of-a-community-together, several communities together. And to your point, Melinda, of if we can change the face of the investors if we can help bring more perspective to that cheque-writing position, that will then influence that founder representation, which will then influence the employee pool and that talent development, what that looks like in those perspectives, which will then, in turn, impact the people who are actually using these products.
Again, this is my hope, my belief, my theory. I will die on this hill. Our products will be more inclusive. They will help more people live better lives and make our world a better place. Again, there’s a lot of hope in these statements. A lot of it. Again, this is the part that I mentioned earlier. I’m not dropping the seed from venture capital. If we can do those things, we actually will yield higher returns. We will create those outsized returns.
If you were able to sell your products to more people, and more people can actually use them in their everyday lives, you’re going to make more money. And then, that wealth flywheel goes back up, right. And so, if you’re thoughtful about and if you want to go a step further, something else that we do as we think about that stack of creating wealth, a lot of venture capitalists will not share or publish their LP data.
LP stands for a limited partner. Those are the investor’s investors. This was something that I had not even considered when I was poking about the HR world of where do we go from here. I had not even considered where that money comes from.
Fun fact, investors or venture capitalists, they’re not investing very much their own money. They are investing other people’s money. Those people matter because that is where the majority of the wealth goes. Most VC firms split their returns at 80/20%. Eighty percent go to those LPs, those investor’s investors. If you do not investigate who those people are, it doesn’t matter how inclusive or diverse the rest of that whole stack is. If you’re putting money into the hands of people who are making decisions that you are not values aligned with, we still have a problem.
Here at our firm, something that we challenge other VC firms to do is actually publish our LP data around demographics. We have a very, very thorough diversity report. We run a diversity, equity, inclusion, and belonging survey with our LPs. We have made the commitment. So far, we have stuck to this, at least. I won’t give away all of our numbers exactly, because we’re about to publish a new bout but we have committed to maintaining at least 50% female non-binary representation on our cap table, and 15% Black or indigenous.
We want our investor pool and community to reflect the world in which we live. Finding that has been challenging, and it’s taken us longer to raise our funds than we had planned or we would have liked. And it has been worth every single second and ounce of energy and ounce of a resource. The thing that I am so excited about as well as that of our LPs, we also survey the question before we take their checks. What are they doing with their money? Are they putting any of that back into their communities?
The vast majority of our LPS do put their money back into the communities. Fifty percent of those returns, again, I’m not looking at my report right now as we speak. We will be publishing it. I believe that our investors who are putting their money back into the community, which is the vast majority, 50% of that are going to the BIPOC communities. So, if you really, really care about changing the distribution of wealth, right now I’m speaking specifically about America but we can go all the way. You’ve got to be looking at that LP base.
MELINDA: I love that. I love that. We’re winding down. We have just a few minutes here. I do want to get to the product side just a little bit. Maybe we can just kind of touch on it. You invest in people first companies, which I love. And also, you’re thinking about, which every firm at this point should be thinking about Web 3.0. Right? It’s scary for some of us kind of looking on the outside. The quick emergence that on the one hand, some people say it’s democratizing creativity and potential wealth. I am not sure yet about that. It’s definitely not showing environmental sustainability, or regulation, and all of the things that we have in other big wealth-generating areas/industries.
So please, can you just say a little bit about what you’re thinking in terms of how we build that accountability and inclusion, sustainability, and Web 3.0, from an investor standpoint? And maybe just briefly, what is Web 3.0 too for anybody who doesn’t know?
KATELIN: Yes. I’m glad you asked. Right now, I feel like our industry is trying to figure out how to define it. You can ask five different people and get five different answers on this one. Recognizing we don’t have a ton of time here; I will say very quickly.
Let’s see. What is Web 3.0? I will start by saying it is not vertical. So, there are still some people who are saying, “Oh, I want to invest in Web 3.0.” I think even somewhere in my online profiles, it says I invest in Web 3.0. It is not vertical. It’s not like FinTech or health tech or education.
When we say Web 3.0, we’re actually talking about the next generation of technological evolution. I mentioned earlier, like, when we were building this last generation, what we now know is Web 2.0. We didn’t call it Web 2.0 then. We called it tech, right? You say, like, “Oh, I work in tech.” All of our friends who didn’t work in tech knew it, right. But we didn’t call it Web 2.0. This is the same as saying, like, when you want to invest in Web 3.0 or you work in Web 3.0, it really is the investment in or the commitment to this next chapter for our whole industry.
It’s so much more than cryptocurrency, NFT, Dow, like all of this. That’s the fast build that you’re talking about what’s happening. “Oh, I work for a Web 3.0 company. I’m building something on a chain. I could give 100,000 examples of all of the isms that are out there but if Web 1.0 was about reading the internet, you know, that was when the internet was brought to us and became a part of homes and households. And then, Web 2.0 was really about the content creation on the internet, and how we interact with it. So, think, about Facebook, Twitter, and Reddit. These places where we were creating our content and interacting with it and the implications thereof.
Web 3.0 really is more about ownership. And for me, accountability, which is what I love about how you framed it, because with ownership comes intrinsically accountability. When I say ownership, it’s like, who owns your information? Who owns your content? Who owns your digital assets? In Web 3.0, the answer is you do. You own that because it’s built on blockchain technology, which we absolutely don’t have time for me to try to describe. There’s a block. It’s on a chain, right? It’s the whole thing.
Just trust us. Don’t trust people that say trust me. But Web 3.0 is literally going to be a part of every business. I believe it’s going to be a part of every single business from gaming to finance to medical records, education as a whole, and the whole shebang.
So, for me, Web 3.0 is our chance to not only make a better internet, which is the promise, right, but we promised with Web 3.0, we can build a better internet. Great, I love that. That sounds wonderful. Sign me up. The opportunity here really is, I think to make better products that serve their communities and help create these new economies.
Again, all of those things will have an impact on all of the things that we’ve discussed today. And so, I think that what we have in front of us right now is the opportunity to create a more fair, inclusive, and transparent experience for everyone. This is why I love my job so much because I believe that we can do that. I know that we need to wrap it up here so I will say, the opportunity that really is sitting in front of us right now is highly dependent on our investors, where we are deploying capital, the founders that we are choosing to invest in, the standards that we need to hold them accountable to as they grow and scale.
I lived through the birth of Web 2.0. I was a very lucky participant in that boom. And the excitement that brought and the feeling that we have today in tech is exactly what I felt like 13-14 years ago when I got into it, where there’s the opportunity to do so much right. But the difference for today is that, you know, as we’re sitting here on the precipice of Web 3.0, if that feeling is exactly the same as Web 2.0, like that, “Oh, there’s a moment here. The window is open. The opportunity is ripe.” But the difference is that we’re coming to this conversation and we’re coming to this opportunity with lessons learned.
If we do not carry those lessons with us specifically around diversity, inclusion, equity, and belonging, we will have blown it. We will have blown it to the tune of billions of dollars. Again, to put a very fine point on the financial impact here. And so, I have a lot of heart in that I do see venture capital shifting and changing in terms of what our investor archetype is and what it looks like. I am hopeful that we’ll start to see the downstream effects of that shift and the growth that we’re seeing on the venture side
I really, really, really do feel like this next generation of both founders and of employees. And frankly, the world at large, the culture that has been created that’s coming out of the last two years is exhausted. It doesn’t have time. It doesn’t have space for BS, for exclusion, for not being considerate of the whole. That includes the environment and the impact on climate.
I said that I would make this snappy and I lied. For me, Web 3.0 is about ownership. It’s about accountability. That accountability, I think, is going to play a huge, huge role from the consumer perspective holding companies and corporations and investors accountable for all of the things that are going to impact the way in which we live and work with one another, and engage with one another how we build our products, to employees rising up and saying, “Nah, not on our watch.”
Again, I really, really do hope to see a lot more investors and venture capital firms holding their founders accountable for this and really helping them build for the world in which we actually live. That’s my soapbox.
MELINDA: I love it. I love it. We always end with an action that people can take and you just did. You just did. You shared with consumers that we hold products, hold companies accountable for those learnings, that sustainability, and inclusion, and that we care about our employees as well. For investors really doing that work. You’re providing the tools and resources for people to kind of learn from what you’re doing. And then, the founders as well, the founders building products that are really built sustainably, equitably, inclusively for all of us. I love it. Thank you, Katelin.
KATELIN: Thank you so much.
MELINDA: Really great talking with you. I really appreciate you as always. I look forward to our next connection. For all of you, I will see you and you will hear from us next week.
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