62. Diversity in Venture Capital, Part 2 (Christine Tsai)

The Full Ratchet Podcast on iTunesNick Moran Angel List

Today we cover Part 2 of Diversity in Venture Capital with Christine Tsai of 500 Startups. In this segment we address:

  • tsai diversity venture capitalYou’ve said “The best thing women in tech can do is to invest in other women,” Last fall, 500 introduced its 500 Women AngelList syndicate and pledged to invest $1 million in 10 female-led companies in the portfolio. What are the goals and results you’ve seen from this initiative?
  • What other 500 initiatives focused on diversity, whether internally or the startups that are admitted to the accelerator?
  • How do you rate yourselves in-terms of gender and ethnic diversity?
  • We recently had John Greathouse on the program and he talked about how difficult it is to recruit women founders to come speak at events. And I’ve noticed here on the show it’s much more difficult to recruit women than men. Do you think this is common or an anomoly that’s unique to our situations?
  • What are you currently most focused on at 500 startups?
  • If we could address any topic in venture, what topic do you think should be addressed and who would you like to hear speak about it?

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Guest Links:

Key Takeaways:


 1- Not the Target Market
We’ve talked about this in the past, but the investor is often not the target market. The objective for the investor is to listen and try to understand markets for products they have little relationship to and may never use. As fun and familiar as it is to see a pitch for something you know and use, the reality is that most disruption is not targeted at the 78% of white male senior leaders at venture firms. This is where traction and due diligence calls to customers can be very revealing. As an investor, if you are in the target market, great. If not, the question is not if you “get it,” it’s if the customer “gets it.”
2- Better Diversity, Better Performance
While Christine doesn’t have hard data on this, her position is that firms with a diverse makeup for their team and the teams that they invest in will be positioned for better performance. Clearly there are large diverse markets with unmet needs that are waiting to be disrupted. And the white male founder likely does not have the founder-market fit to be the agent of change. Those investors ignoring diversity, in this respect, will miss out on massive opportunities in large and growing markets.
3- Supporting Diversity in the Ecosystem
We also talked today about some initiatives and groups that are organized around diversity. Christine had mixed opinions on these. Supporting those that furthering the efforts of diversity and questioning those that are restricting access to only one member type. She also talked about how powerful groups have been for her in networking through the ecosystem and sourcing dealflow for 500 startups. Organized groups and tech meetups are a great way for passionate individuals to connect and support their efforts. If there isn’t a tech meetup or a women in startups meetup in your city, why is that? And if there is an obvious omission and you’re looking to get more involved, why not start a group or create an event of your own. There are many success stories in the industry of folks that started w/ a tech meetup. And from my standpoint, it seems that the mission of the group is more important than restricting membership. If the mission is to support Latino founders, then design the objectives and actions around that instead of closing off the group to anyone who’s not Latino. The integration piece is critical for us all to enjoy the benefits of a diverse perspective.

Tip of the Week:   Checking the Diversity Box

*Please excuse any errors in the below transcript

Nick: So, you’ve said in the past the best thing women in tech can do is invest in other women. Last fall 500 introduced its 500 women Angellist syndicate and pledge to invest one million dollars in ten female lead companies in the portfolio. What are the goals are in the results that you’ve seen from this initiative so far?


Christine: So, the interesting thing is like that the goal of that syndicate wasn’t necessarily to invest in more women because we already have actually been investing in a lot of companies that are led by women as founders and C.E.O.’s. It was kind of like another emphasis of say, “Hey, we’re so bullish on this and we feel so passionately, we’re going to actually launch an  Angellist syndicate”. We actually want to invite… Actually a big part of that was trying to get more women to invest because our thesis was that, there is certainly a lot of women who have worked in tech and probably have. They do have the network to do Angel investments but they don’t. On the flip side, you see a lot the angel investors and you know, just largely tend to be men so it’s encouraging more women that they can do it and they can whether  you’re male or female or whatnot. It’s if you have the means to say buy a new car or you buy a house you know, potentially could also invest in companies if you feel very passionately about helping you know, the next generation of founders and they’re being more a woman in tech 1:19 (unclear). This is quite a sort of a way to encourage that and I think you know same reason why are there not more say women who are in Angel investors, a lot of it does come down to kind of the network. Like, well there are a lot of angels who are men and you have kind of have that network in terms of women who are Angel investors it’s not quite as much so it’s maybe either not seen as an option or they don’t consider it or it’s just something that’s maybe viewed as like not as welcoming. I don’t know. I mean, there’s probably a number of reasons but… So that was part of the pledge that we made publicly the results of the actual  Angellist  syndicate so we have run two companies on the women syndicate specifically. I think it went okay I’ll be honest. I don’t think that the results were quite as strong as what you would have liked but I think that was largely just 2:08(unclear) width of  our team because you know,  typical 500 style we do would you like to try a lot of new things and some things work and some things don’t and this is actually something we’ve been considering just for our  Angellist  syndicate strategy in general. We have a couple others that I think they have done okay. They’ve done well for some companies and for others maybe not quite as much but big thing for us was also to get more familiarity with the  Angellist syndicate platform and we’re you know certainly Angellist and in general I think with the women syndicate, we are certainly really you know passionate about investing in companies with female founders and if you look at our team, probably almost fifty percent the team is female. Investment team it’s I think maybe around thirty percent and then you know, the management team with the four of us you know, half of us are women and obviously do with the co-founders, it’s fifty percent you know David and myself. So, it’s something we’re very passionate about in general.




Nick: Well if you ever want to talk offline about Angellist Syndicate to give me a shout. I’ve traded a lot of emails with the #Naval and #Nivea about the mechanics of various things but…


Christine: Great.


Nick: It’s great but there’s certainly a lot of nuance to and there’s so much detail that I did not expect when I first got involved with it.


Christine: Yeah, I remember when Angellist syndicate first came out. A lot of people didn’t you know quite know you know, it’s very new and I’m sure Angellist even for themselves they were trying to figure out how a platform when take off and…


Nick: Yeah.


Christine: … there’s a lot of talk about, “Oh, is this going to kill V.Cs or you know this is not” but I think it’s actually it’s great to see another channel for companies and yeah, I’ll definitely pick your brain about it.


Nick: Yes. So Christine, are there any other 500 initiatives focused on diversity whether internally or maybe the port cos that are admitted to the accelerator?


Christine: We’ll start to be doing more, hopefully more diversity initiatives that are a little bit more outbound. I think you know if you talk to a lot of founders just anecdotally in terms of like how they see 500 and comment on these qualitative feedback is like, “500 is very diverse”, “They invest in a lot of diverse founders”, “Their team is diverse” and the other thing is that we do a lot of investing outside of Silicon Valley too and even out of the U.S. So International founders, we unofficially or officially are known as you know one of the most diverse V.Cs  or diverse accelerator but in terms of kind of more explicit initiatives like the women syndicate or whatnot, I think we’ll start to release that a little bit more next year. I think a lot of what we’ve done has been not so much kind of packaged into a campaign but we’ve tried to really infuse it into the everyday investing in a lot of companies who are diverse or hiring people or you know what a great example is, we run a lot of events and conferences. We’ve tried to do a lot to get more of a diverse speaker set for example. So, you know I do think that ultimately that’s probably more important that it is actually integrated into our day to day , not just a splashy campaign, one team campaign but we would like to do a lot more of if it’s meetups or just more interaction with diversity groups. That’s what we’re hoping to do more of.


Nick:  so I’ve got to ask; how do you reach yourselves at 500 in terms of both gender and ethnic diversity?


Christine: So I think… Let’s see… Do you have a scale or should I pick the scale?


Nick: I’ll let you pick the scale.


Christine: Okay, so I guess let’s say one is Iike absolutely horrible, us guys are racist all the way to ten; “Wow, it’s astounding. You know there’s just like no question” and the five being like ‘”Oh, you guys are you know, doing some stuff and you’re OK”, I think we’re probably maybe seven. I think that we certainly compared to the standard which is probably a pretty low bar, we’ve done extremely well and we’re very proud of our team and the companies that we funded and I think that that’s just something that’s fundamentally different, I think about us versus other accelerators or other funds. That’s not I don’t think that we’ve done a good enough job in terms of more in the perspective of there’s actually even more opportunity whether it comes to diversity in terms of doing more like L.G.B.T. or either investing or reaching out to those groups. You know, we have invested in several business is actually that’s a target in L.G.B.T. audience but you know the other… Aside from 6:32 (unclear), I don’t think we have a problem putting money into companies that are tackling diversity or have founders who are kind of the typical founder but we certainly want to take a hard look at even our own investment team and want that to improve from the diversity perspective and I think it’s you know, women is great. Like we have a lot of women on the team but we definitely will admit, we don’t have people of color. We did at some point but on the investment team is something that we’re going to change hopefully very soon with you know some folks who’ve been talking to you but you know I do think that that’s something that I’d really want us to improve on in terms of the diversity in our own team. Like just being even more aggressive about having that representation on our team and I hopefully you know, terms of just the culture of the team and how we… our values. It’s not going to be so much a stretch than say a firm that has nothing but it is something that we are very aware of and I think if anyone who you talk to, a lot of people say, “Wow, your team is diverse” and then others will say, “Well you’re not that… there’s no one in your investment team. You have no  black partners, no Latino, no Latino partners etc, etc”.  So, we don’t want to see it as like, “Oh, yeah we have a black partner. You know, check that box.” The way I mentioned it as how some firms do but I don’t think that’s great either I think it’s just more like we want to have that diverse perspective and it’s not so cut and dried like, “Okay, it’s just women. Just one minority group etc” It’s just kind of holistically as a team how do we look at diversity and kind of opportunities and you know, we still think that a big part of that is having a team that is best set up for success. You know, long story short probably seven. I don’t know how you would rate us but…


Nick: Certainly at the top of this Future list if they would fix their criteria and start including 500…


Christine: Yeah. Yeah, yeah.


Nick: You know, I’m on your point about panels and like speaking engagements. I was talking with #John Greathouse at Rincon in Santa Barbara and he was talking about how difficult it is to get women to come speak. Even entrepreneurs because he tries to bring in entrepreneurs frequently and I was looking at my final metrics for the show here and recruiting men, it’s like eighty percent. So, when I reach out to people it’s just a very high conversion rate but when I reach out to women, it’s lower than fifty. It’s like in the thirties. Any thoughts on why it’s so difficult or maybe are we seeing an anomaly when it comes to the stats with the two of us?

Christine: No, actually I’m not surprised by that. I think even our own events team has said that that they work very hard to try to get more representation in terms of female speakers. I mean, I focus just on that because that’s what you’re talking about but like for female speaker, they found it’s a lot harder. I even notice that when we’ve tried to invite some of our posts seed companies to present at our demo day, we’ve kind of introduced this new section of our demo days where the main attraction is still the current batch that’s sort of graduating but we include maybe ten to fifteen sort of post-seed companies that’ll look more like Series A level traction and you know even for that you know, we really want to get diverse set of founders presenting from the portfolio and often times like women will say no more than the men because they say, “Well you know, we’re very heads down and I’d rather you give the spot to someone else who’s actually raising.” Whereas for a lot of the guys, they could have close around this and they say, “Okay. Yeah, I’ll do it. Great!” So you know I talked a lot about that. You know it’s something like our Director of Events, like we’ve talked a lot about. A lot of different theories as to why it could be a lot of how in general men and women operate in terms of what they think is valuable professionally versus not and it could be that the kind of typical format of like presenting at a conference is very kind of skews, very male versus what most women would find useful and it’s more the format. I don’t know but it’s interesting and then you can get into the whole topic of just general kind of like the work environment of an office and going in and I’ve seen some kind of editorials about that, about how it’s general corporate life is very much male oriented. Basically, it was designed for an era when men and women, married couple men you know, are the breadwinner and women stay at home, that’s sort of how a lot of folks have argued the current kind of corporate structure is in terms of the day to day. You know, go in at nine come out at five and whatnot but… Anyway, so just… It could be a lot of things. Maybe it’s how you pitch the opportunity to a certain speaker or you just kind of keep being persistent and as we’ve you know,  we certainly have had that challenge but I think we’ve done a pretty good job trying to get if not even fifty-fifty ratio , it’s  close to it. So it’s never like one reason. It’s always like a lot of things as to why there’s other like a diversity or lack of this and that. So…

Nick: Yeah, I’m sure I think a combination of factors.


Christine: Yeah. Yeah.


Nick: Yeah. You know from my standpoint I was thinking, we’ve done such a poor job in the past of creating diversity so now the few women in venture capital for instance, they probably have people grabbing at them all the time for speaking engagements and stuff. So that’s probably part of the reason why they have to say no more often.


Christine: Yeah, I’ve heard some of that were you sort of see at conferences the same women either get asked or the same women as if like there’s only these five women but actually I mean, I think it’s you know, some of it for events I think it ultimately is also like who if you have kind of a more well known speaker than you sell more tickets or get more people attending, more people listening. You know, on one hand I kind of see that perspective. That’s why sometimes the same women get asked like #Hailey Lee is probably on everybody’s list because she’s very well known but I think that will change I think as there is more investors and great founders. Like more of them start to be either women or are just you know, see people of color etc. So hopefully that will change so it’s not just like these five people particularly.


Nick: Right. Yeah. Just trading e-mails with her actually and she said she’s a listener of the show and she’s a big fan so…


Christine: Oh, that’s great!


Nick: Fortunately, we’re trying to get her on in Quanah in 2016 but…


Christine: Well, I certainly like really look up to Hailey.. I think she’s just very intelligent investor and #Cowboy is a great term so hopefully she can you know, get there too.


Nick: Right. Just to close out here, Christine can you talk about some of the things you’re currently most focused on?


Christine: So, right now I think a lot of my focus has been on helping grow the team itself. Both in terms of you know, how hire great people but also helping my team hire great people and and perform you know kind of whatever metrics they’re looking at and I think my role has certainly changed a lot and I think this is the case with a lot of founders and C.E.O.’s. Like when they first start the company, there are a lot more hands on and you know see building products or whatnot and as they grow their rule changes, so you know they eventually build teams that are maybe like running the product and they’re like a little bit more removed from that. and that’s certainly a very hard transition to make. So, for me what I tend to work more closely with is the accelerator teams and our growth teams and our distribution teams and then get involved in with a lot of different areas the 500, particularly when it comes to be investment team in general and what’s operational about the company like legal and finance but what has been a big focus… At least in the very near term is we have a big company retreat coming out for January and getting everyone together and kind of talking through what they year going to look like etc… It’ll be pretty big. It’s going to be like one hundred people so…


Nick: Wow!


Christine: … but yeah, I think you know going into next year is really like had to be you know especially as we are raising our new fund and we’re now all you know one hundred people, it’s very different from just a few months ago when we’re only maybe fifty people. So we’re certainly… We’re sort of like that puppy that still think it’s a puppy but has grown up into a big dog or you know or like a kid who’s you know kind of growing up and still does things as if they were a kid. I was thinking of my son who is potty trained but you know sometimes, you know has accidents. It’s like you forget like, “I actually you know… You should be potty trained now. You shouldn’t be having accidents” but I feel like that’s a lot of you know, for us there’s certainly been a lot of growing pains in terms of just like how we should be upgrading at this level and at this many people verses like what we’re used to which is probably a little bit more chaotic and a little more disorganized but I mean you know that’s despite. You always think about what are the problems or the challenges. Have to really you know remind myself about, “Well, look how far we’ve come and how much more opportunity there is so, that’s what I try to do.



Nick: If we can address any topic in Venture, what topic do you think should be addressed and who would you like to hear speak about it?


Christine: I think what would actually be an interesting topic is more for the perspective of people who came from… I mean, it could be people who have a similar background to me in terms of like they’re part of this kind of generation of the newer investors. Either we’re doing some angel investing or whatnot or this is a kind of like an extreme way of saying it but like anyone could be in V.C. where you know, like anyone…. It doesn’t take like a certain type of exclusive background or whatnot to be an investor. It’ll be great to actually hear from more individuals who either come from a very different background or came from you know more of the operational background versus having being in V.C. and actually think that kind of like the newer generation right… at least in Silicon Valley and you still have a lot of VCs in general who come from kind of banking and finance but it would actually be great to hear about people who started their own funds that are, like funds that are less than five years old and hear their stories.


Nick: And finally Christine, what’s the best way for listeners to connect with you?


Christine: I think the best way to connect is one, if it’s more of like an actual like wanting to connect and talk; probably what would help get my attention is getting a referral through someone. Like if it’s someone that is in the 500 network or someone that might have a connection, if they’re able to make kind of a warm intro. I think I just unfortunately, sometimes serendipitous as it might be if I decide to just respond to a google email. It’s just I can’t keep up with it so I don’t usually respond to cold things I’m linkedin or our Twitter etc… But if it’s a warm intro to someone, that’s fine. You know my emails probably pretty easy to figure out but I will say it here but I think that you know definitely if it’s connection whether it’s like a company that’s great or whatnot, I think if… You know, our network is so expensive I don’t think it’s too hard to find a connection but worst case that’s probably e-mail or maybe an Angellist message but yeah. I think that’s probably the best route if we can find a warm intro somehow.


Nick: Well, Christine I’m really impressed by all you’ve done over at five hundred and just really appreciate you spending time with us today.


Christine: Great! Thank you so much for having me and it was a lot of fun.