A Seat at the Table: Women in Venture Capital and Tech with Jess Lee

Well, thank you so much, Crystal. It's great to be here tonight. And thanks to Jess for joining me. Before we kick things off with our discussion tonight about women in venture capital and tech. I see we have a lot of women in the audience tonight here. And so just to get a sense of the room, could you maybe raise your hand if you work in the tech industry? Okay, so I see a lot of hands. And so Jess was CEO of Polyvore for a long time. Could you raise your hand if you're considering starting a company and running it? Okay, still some hands there.

Good. We need more.

Well, great. Well, so maybe just to kick things off, Jess, I know you've had a really interesting career here, here so far in San Francisco, and I wanted to talk a little bit about that path that you took. So could you tell us a little bit about your road to becoming CEO of Polyvore?

Sure. So I don't think I started with a dream of being CEO of a tech company. When I was growing up, I grew up in Hong Kong. I wanted to be a graphic novelist. I really love comics. I'm going to Comic Con this week, and that was my plan. I was going to draw comic books, but my parents are Asian, so. So they said, no, you can't go to art school. You should go study, be a doctor, a lawyer, or an engineer. None of which I did. No doctor, lawyer, or judge. Those were the three. But I ended up coming to the U.S. i went to Stanford University, studied computer science, and then ended up as a product manager at Google. So that was my first experience in tech. It was an amazing time, a great place to be to sort of learn from what great tech cultures look like and to get a chance to work on products that really impacted a lot of people. Then one day, someone showed me Polyvore. So Polyvore is this fashion platform where it lets people mix and match their favorite products and create outfits, and millions of people shop those outfits. And I started as a really passionate user of Polyvore. So I fell in love with the product. I started using it every night for hours. And then I got annoyed with little things because I was a product manager. And so I started to keep a list of problems. And I wrote in to the founders to say, hey, I have some suggestions and complaints. And they wrote back and they said, these are all great. Why don't you just come work here and fix it all yourself? So that is literally how I ended up with a job at polyvar. I was one of the first hires. I was the first product manager. And from there, I think inside of a startup, one of the best things is there's way more to do than anyone then there are people. So you just have this opportunity and a lot of autonomy to volunteer and pick up different things. So I just kept volunteering, whether that was washing the dishes or selling the ads or finding the office or writing code. I just kept picking up responsibilities.

Because.

No one was stopping me. And then along the way, the founders came to me one day, probably a couple of years in, and they said, hey, we've always thought of you as a founder. You've always acted like a founder, so we'd like to just start calling you a founder. We're going to make you an honorary co founder and we're actually going to give you some of our shares. So they actually gifted me some of their ownership in the company, which is an incredibly generous thing to do, which I think just speaks volumes to the culture and the sort of character of the three original founders. So that's kind of how I ended up a founder of Polyvore. And then a few years after that, I kept volunteering. And so most of the new departments were reporting into me, even though my title was VP of product, but everything else reported to me except engineering. And at that point the CEO said, hey, maybe you should be CEO. And then I stepped into the CEO role.

Sorry, having a little technical difficulty.

So that is how I ended up CEO. I mean, it was definitely not a planned thing. It wasn't a company I started. I thought, let me just go to a startup and learn as much as I possibly can. And that turned into me running the company. So I think anything is possible in tech, but it is a pretty unusual path.

Got it. And so can you talk to me a little bit about that decision to leave Google for a much smaller company that a lot of people maybe weren't familiar with?

Yeah. So let's see, when the opportunity came to me and they said, hey, why don't you just join? I could hear my parents, my Asian parents in the background saying, why would you ever leave Google? That's a great job. But I really thought to myself, how rare is it to find a product you're really in love with and an opportunity to shape it from the very early days. Right. And so I thought about it a lot. I weighed the different decisions. It definitely wasn't an easy decision, but I realized that one of the best things you can do for your career is to optimize for, to maximize for learning and growth, which was some of the advice that I got in the beginning of my career and is actually why I ended up at Google in the first place was Marissa Mayer, who was at Google at the time and later became the CEO of Yahoo. She told me in my very first interview at Google, she said, when you have two decisions, two past, try to optim. Try to pick the more challenging one, because even if it's as long as it's hard, at least you'll grow and learn and maybe you'll succeed. So optimize for the learning. So I just kept thinking about that advice and realized, if I go to this tiny company that might go out of business tomorrow, at least I'll learn and grow. And then after I made that very difficult decision, I remember I walked into the office of the VP of product at Google and he said, you can always come back. And then I realized there are lots of opportunities where there are ones that come and go that are fleeting, that are once in a lifetime, and there are ones that sort of are steady and available to you, and you should, if you want to be 80 and look back and not regret any of those things, you have to go for the one that's a little bit more risky and the one that's fleeting. So that ended up making me feel a lot better, and it totally turned out to be a great turning point in my career.

And so you just mentioned how you worked with Marissa Mayer during your time at Google. Also wanted to ask, eventually, you did sell Polyvore to Yahoo. So can you talk to us a little bit about that decision and what that process looks like?

Oh, so Polyvore was a total rollercoaster of ups and downs. We built a pretty incredible user base, a community of women all around the world who loved expressing their style. And, you know, part of what we were trying to do was democratize fashion. And instead of editors at Vogue saying, this is what you should look like and this is what you should wear, you know, our approach was, let's let the community decide what's cool and everyone should, you know, be themselves and dress the way they want and feel great about it. And if you feel good about how you look, maybe you'll feel more confident in general and you'll be better. So that was always the thesis, but we. We built out this great community. We built out a shopping engine that helped people buy things, and we built a business and we had a great technical team. But as the winds of desktop and mobile were shifting, I think I realized that we weren't on a path to the IPO or that sort of magical Silicon Valley outcome that people shoot for. So I realized it was time to sell the company. And. And so it turned into that became a merger and acquisitions process. So talking to a lot of the partners we had worked with over the years, and it just so happened that Yahoo was looking to invest in lifestyle. So those conversations ended up working out. Yeah, got it. But it was a very difficult, very hairy decision, very long, arduous process. Selling a company is not a wonderful, I think, TechCrunch or it gets glorified in tech, what that feels like and what the process like and those outcomes are celebrated, but it's very arduous underneath. And in general, I would say founder life is a little bit glamorized and it's actually really hard. Yeah.

And so can you talk to me a little bit about your decision to leave the company and then move into bc? When did that happen?

Sure. So I had gotten to know Sequoia Capital, which is where I work now. Over the years, some of the partners, I think we met at a conference and I shared a cab ride home with or to the, to the airport with one of the, with one of the partners. So we just kind of got to know each other and then we kind of kept in touch over the years. And as I was after Polyware was acquired, I'd been there for a while. I just started to think like, what do I want to do next? And two things occurred to me. One, I was like, well, how do I take my very. All the lessons I learned as a founder? What can I do with that? I could do it again, but the problem is the type of company I love or the type of company I want to start is in the wacky social entertainment consumer end of the spectrum of companies. And that's the hardest space. So if my odds before as a first time founder were 0.1%, as a second time founder, maybe they would double to 0.2%. And I was like, is that what I want to do? Am I excited about any, enough about any of the am I excited enough about any of these ideas to want to do it for another 10 years? And I decided I don't know. And at that point, Sequoia had been reaching out and I thought the other way to take make something useful out of what I've learned is to help the next generation of founders. And I also thought about, is there a way for me to change the ratio? Because I was a female founder pitching a product targeted at women, you know, 9%, 91% of venture capitalists are men. And so to go into a room full of men and tell them, imagine this amazing app where you can shop all day long. It's amazing. A lot of them were like, wow, that sounds like my worst nightmare. So you could never rely on that innate empathy to sell the company or to, you know, to pitch the company. So instead we had to come up with other tricks. But I just remember that struggle, and I thought, okay, maybe if I go to the other side of the table, maybe I can make a little bit of a difference. Maybe I can find great female founders and spaces that are actually massive markets that cater to women. Maybe I can work on some of that and learn something new. I'm optimized for learning, going back to that lesson and do something useful with all the things and all the painful lessons I took away from my founder journey.

And you mentioned some tricks that you kind of developed to raise funding in that tough environment. Can you maybe share with us what some of those were?

Yeah. So, you know, I think it can be a mistake sometimes to rely on empathy to make someone else understand what your company does. You know your user better than anyone as the founder, but someone who's an investor or someone new, or even a new employee, they don't, they maybe don't have that intuition. So coming up with the right analogies ended up being the right trick or, or coming up with sort of illustrative examples. So what I ended up doing is I took a stack of Vogue magazines September issues, the really thick, like thousand page ones, and I would take them and I would throw them on the table at the conference. And I would just say, this is hundreds of millions of dollars in revenue for this one month issue of Vogue magazine, the September issue. Imagine that on the Internet. And they're like, oh, I get it. I don't have to understand why people read these things because I'm not interested in them. But I understand the value. I see them all over the place and I can imag imagine the analogy of that on the Internet. So that's what ended up working.

And so you were the first female investing partner in the US For Sequoia. So what was it like to come into that role?

So I was the first partner, but we had other women inside of the firm as well as other women investors. And we had lots of women in the China and India office who were investors. So I think I came in and already, you know, they say there's a difference when there's two women in the room. So I Felt very supported right from the get go. And honestly I wouldn't have gotten there if I didn't already feel like it was a diverse and inclusive an environment that was inclusive and would allow me to be myself. And one of the things I looked for when I joined Sequoia was can I be myself? Can I find my own authentic style as an investor? And I looked around the table and I saw everyone was very different. Like we have the former CFO of PayPal who's very financially minded. We had the CEO of Zappos who knows how to run like is very operational. We just had lots of different types. We had a two time enterprise founder, the founder of AdMob. Everyone though was very operational, but different. So I felt like, okay, they're clearly all very different. At least there is an acceptance of diverse intellectual styles. And then I heard about other programs inside of Sequoia. Like there was already before I got there, a program targeted at mentoring women at the portfolio companies. I was like, okay, this seems like a place where I can be myself and where I can learn from some of the best. Because Sequoia has been around for 45 years. It's one of, it's remained one of the top venture firms throughout that time, which is actually pretty incredible. And it's not because it's the same person running the firm. It's not. Don Valentine, the founder of Sequoia is not active anymore. So somehow they've captured this sort of magic and tribal wisdom and they've passed it down from generation to generation. And I can see that now, now that I'm there, I can see all the investment in a culture of apprenticeship and training and that's what made me comfortable about going to Sequoia.

About a year before you joined, Michael Moritz, one of the most prominent partners at the firm, made some comments in a TV interview about how they wouldn't lower the bar to hire a woman. How did you weigh those comments when you were making your decision to join?

So they were talking to me before he even made those comments. So I, I remember thinking at the time I, it would be, I wish someone knew that they were talking to me because they wouldn't. Yeah. Anyway, so that's kind of how I felt. Yeah. But I mean that that relationship pre existed by like multiple years. Right. So, yeah, got it.

And so what has the biggest difference been between your life as a founder CEO and now as a venture capitalist?

So as a founder you have this sort of daily checklist or regular set of goals. You're working towards you feel this constant sense of accomplishment. Even if things are not going well, at least you know you're working and you're making progress in some direction. The weird thing about venture capital is, you know, you, it's very serendipitous. Like you can't necessarily control who you meet or when you come across what you think will be the next great company. So it's very, it's very an undefined kind of job. And there's many, many different ways to meet companies, right? Like you could be a networker and a hustler who goes to every event and meets all the founders. Like, that's not my style. You could come up with something programmatic. You can, you know, call on the right all different types. So it's very unstructured and you're not checking things off a list. And the other part of it is you don't have any idea if you're good for eight years. So, you know, I could make a bunch of investments now and have literally no idea if those companies are going to, you know, be amazing or shut down for a very long time. So that, that's one unusual part of being a venture capitalist.

And so the firm has such a strong reputation and there's a lot of partners who have been there for a long. How have you found your role as a new partner within a firm like that?

So the first few months was a lot of training. So I would say some firms, everything is a very individual sport and you're sort of this collective of people who occasionally meet every Monday to talk about things. And some are very, very team oriented. And so I would say we're way on the team oriented side of the spectrum. And so in the beginning, I just went to lots of meetings with the other partners, right? They would invite me to their entrepreneur, their founder meetings. And the most important part of that was debriefing after a founder meeting to sort of see how did you think through that investment, what did you think of that pitch and the learning that came from that in particular. You know, there's three things venture capitalists often look at. The product, the market, and the team. In team like you, over time you develop an ability to evaluate a team, right? Because you hire people, you work with people. That's something everyone gets to kind of know. If you understand the problem that the company's trying to solve, then you can kind of evaluate the solution, which is the product. Right. The hard part is to actually understand markets because you might be hearing about a market for a first time. Like, you know, I took a meeting with a founder who was working on fish farming. That is not something I know anything about. So it's not until you see multiple companies in one space or another, partner sort of gives you that shortcut. Here's everything you need to know about this space. Here's usually what happens. And that learning is so important. So that tribal knowledge is, you know, I think Sequoia does a really good job of trying to, to push that out and make sure it's shared, not like hoarded. So, so that was, you know, the first, first few months was just taking every possible meeting, trying to learn as much as possible, debriefing with everyone else. Then I moved into the sort of a phase of, okay, now I've seen a lot of different areas where, where do I want to focus? So then I started to specialize a little bit more. I love, like I said, the wacky social, consumer end of things. I spent a lot of time there. A big interest in mobility, autonomous vehicles. So that, that was one category. I have a lot of interest in the female consumer.

So.

So looking at companies that target moms, young millennial women, it's a space I understand. And then commerce, making direct to consumer brands, although that's a very difficult business. So those are some of the areas that I've started to spend more time in.

And so I know you just started making investments. Can you tell us a little bit about the ones that are public right now?

Sure. So one theme that I forgot to mention is the future of work. I think what's interesting is although unemployment is at an all time low, it's pretty clear that some of the country has been left behind from an employment perspective. So it's been interesting for me in particular to look at companies that try to solve the not just white collar employment, but blue collar underemployment issues. So two companies that I work with are Wonolo and Crew. So Wonolo is an on demand staffing platform. It matches blue collar workers to shifts and helps them. If you're underemployed, you're working 29 hours at your main job and you want more shifts, you want more hours and you want a diverse set of things, different types of jobs. Maybe you could be delivery driver one day, maybe you could pack meals at the airport. And what I loved about this team was that the founders, they actually do those jobs themselves. They really think about it from a mission oriented perspective. They want to make sure that they solve the underpinned. They never lose sight and lose touch with the community of workers. So the fact that they actually go and do those jobs themselves on the weekends, like, I love that about it and I love that it was a technology solution, solving for this massive inefficiency and actually helping improve people's lives. So that's one bit one company. The other is crew, which is sort of a messaging app for frontline workers. So if you're, let's say you work at Taco Bell or at Target, it's a tool that you can use to communicate with your coworkers and sort of get messages and headquarters and coordinate because there's actually a lot of coordination that has to happen. But there's no tools internally. So yeah, that's one area. And those are two of the companies that I work with.

And you mentioned your kind of interest after doing Polyvore and the out there wacky social apps. Yeah, it seems like a really difficult space to invest in, especially with some of the struggles that we're seeing the larger social companies like Facebook and Twitter have right now. So what do you look for when you're evaluating companies in that space?

Yeah, it's interesting. It's like a hits driven business almost. And you have to have a founder who. I look for two things. One, you kind of have to have a sense of what cool is. Right? Because a lot of consumer social products, they just have this moment where they're really hot and cool. And some people just know how to do that. They know how to create culture. They know what motivates people to want to try something. Whether it's the vanity or the likes on Instagram, they just know. So that's part of it. But that's not enough. Because the problem is as soon as you get too big or too mainstream, you're not cool anymore. That's like the op. Like it just, it's just the cycle. So when you work in that part of town or you know, build products in that space, you have to understand that you're on this treadmill of cool. And if you constantly keep coming up with the next thing and you have to be able to be like, you have to be okay with that. And that takes a certain psychology to like know that the thing you're building, you're just going to have to build something else again. And you have to be able to move really quickly because it's not necessarily that you're this artist who divines like what's cool. It's also because you just try stuff. And so those are some of the ingredients, I think that are really important for founders who work on that kind of product.

And so what are some cool apps you've seen lately?

Oh, I lost my phone today, so I can't pull it out. This is the worst. I have so much separation anxiety, man. I really wish I could just pull out my phone. What have. What have I been using lately? Honestly, the Comic Con app, because I was trying to plan what to do. You know, I think, I mean, Reddit is probably the app that I use the most. It's got great community. There's some wacky niches of communities in there, but that's probably the social app that I use the most. Probably after Instagram. Yeah, got it.

And you mentioned mobility, too. And, you know, I think a lot of us in this room were probably tripping over scooters a couple months ago here on the sidewalks. And so I know Sequoia just was. They just led that very large round in the scooter company. Bird, how are you thinking about what's going on with scooters right now?

Yeah, so it, you know, I don't think we've seen so much consumer demand for something. I know there was a lot of hatred of the scooters, but at the same time, there was a massive demand to use them. Because here's when something is that easy to pull up and just use and go, it kind of changes the way you think about traveling within a city. Right. Like, before, I would never walk like a mile to the restaurant nearby, but after I. With. With an easy form of mobility, like a scooter, that actually becomes like, not a bad trip. So people change a little bit of their behavior, and that's, I think, why we saw so much demand for the scooters. And the same thing happened with. With Uber. Right. The taxi industry was not huge before. Right. But once the cost structure changed and once Uber was introduced, now people started to do more of those trips. The other thing is now the streets are incredibly congested with cars, many of which are probably Ubers driving around looking for passengers. So I think we would actually end up with far less congestion and traffic if people. If those very short trips move to scooters instead. So anyway, I think, you know, I think it will happen. I think there's got to be a lot of changes to make it safe and not, you know, not all over the sidewalk and public infrastructure and roads will have to change. But I think there's a big shift happening in mobility in the way we. The way cities are formed. Right. The way traffic flows, the way we Live into cities. Urban migration is happening. Like everyone is moving more and more into cities and housing prices are going up. Right. And that's just not sustainable. So there's a lot of things going on across the fabric of a city and there's lots of interesting companies being formed. Yeah.

And you mentioned your familiarity with products for women. And so I just wanted to ask you, as one of the only female partners in the US at Sequoia, do you feel pressure to champion companies that are either for women or founded by women?

So that's the other thing that I love about Sequoia. Sequoia is when I got there, there was already a bunch of investments in women's spaces. So we were the investors in Stella and Dot, which sells jewelry to women. Investors in Houzz, which is for, you know, interior decor. The primary customer for that is actually women, as well as Dia and Co, which is a styling service for plus size women. So before I got there, there was already a. A clear recognition that women are very important. I would say women are almost the most important consumer because we control 80% of household purchasing power. Right. Like, if you think about the mom controlling parenting decisions, a lot of health care decisions, the household spend, like it's a very important consumer. And I knew Sequoia already understood that by the time I got there. So I do champion more of that stuff. Maybe the things they don't personally experience as much, but that, that was already there. I think that some study came out, someone did an analysis and showed that Sequoia has backed more women than almost any other firm. So.

And so what's it like, though, being on the other side of the table? Because you talked a little bit about the challenges pitching these largely male partnerships. But has it ever been difficult when you're in your partner meetings and discussing potential investments?

Well, I think at the end of the day, we're trying to arrive at the right investment decision. And so it's like a no holds barred, sort of like, what is the right answer? And it's really about getting to what are the key points of the investment thesis and what are the key risks. And so we walk into that room and we talk about investment. And it's not personal. Right. It's just like, are we making the right decision for Sequoia for the founder and for the LPs? Right. And our LPs are actually mostly endowments and institute charitable organizations like the Ford foundation or Stanford. And, you know, we actually think about it that way. I've definitely heard Ruloff come in and say, hey, today this company, you know, lost this much market cap and that's. And he'll count 20 Stanford scholarships. Like, we actually think that way. So it's an important decision to get right. So we go in and it's like we're talking and it can get very passionate, but we walk out of that room knowing it wasn't personal. Right. We're a team at the end of the day and we actually take the time to get to know each other. And so you just know it's not personal. But it is all about the decision.

And now that you've seen the other side of things, do you have any advice that you give to female founders now that you wish you had known when you were pitching VCs?

Yes, so much. Now that I see both sides, I see all the mistakes I made. I see sort of the differences between how women pitch and how men pitch. And I've actually that was part of the inspiration for starting female founder office hours, which is sort of one on one mentoring sessions to try to help female founders just accelerate their success any way possible. We started with fundraising, so we started that program. And I have a whole set of talks about this slide deck. I'm happy to share. But some of the differences I see are I think women often rely on empathy, like I said, to try to pitch their product versus relying on just different forms. So that's one thing. Don't rely on empathy. Explain the problem in very crisp detail. Don't jump to the solution. Explain the problem first and the size of the problem and why it's going to be a big business opportunity. The other thing I sometimes see is lack of sort of selling the big dream. Right. Instead of being worried about where I am today, you know, can I survive the next year? When you're fundraising, that's the moment to pitch. This is where I'm going to be in 10 years. If I have everything go my way. This is how big and amazing my company could be. And I don't always see that. And then the last thing is the financial slide. So a lot of women will walk in and present their five year P and L and say, even with the most conservative assumptions, here is where I'll get to, which is still a good business. Then I see a lot of men walk in and they say, here are my projections and there's like a crazy plan. And they didn't say, these are the most aggressive assumptions I could possibly make. And they're probably wrong, but they don't qualify. They just show that versus trying to show the sort of base case, which is what a lot of women do. And this is a, this is a VC pitch, right? So you have to understand that venture capitalists are not about minimizing risk. They're about maximizing like the upside potential. Right. So instead of talking about the downside potential, talk about the upside potential. So just getting people and you don't, you don't have to do anything you're not comfortable with. Right. You can always show here's the base case plan and here's the upside potential. But having showing the upside is really, really, really important. And that's one of the mistakes that I see.

And so about a year ago, the New York Times ran a front page story about sexual harassment in the venture industry. And I'm just wondering, what was it like for you to see some of those stories come out as a female partner at one of the biggest firms?

Yeah, I mean, that was a pretty incredible set of great journalism and reporting, but very like, really shone a light on all the bad behavior in tech and adventure. And I remember when I, I joined before all that happened and I thought, okay, I want to change the ratio. I will just fight by myself and try to prove that women can be good VCs, and I'll try to, you know, back women and show that they can be successful founders of massive companies. Like, I will just fight the good fight. But after all that happened, we started to organize. So a venture capitalist named Aileen Lee, who was the first female partner. Yeah, I'm going to tell her, people are clapping for, yeah, she's so awesome. But she's one of the first, she was, I think, the first female partner at Kleiner Perkins. And then she left and started her own firm. So one of the most successful female founded VC firms. So she sent out a note to a bunch of women in VC and said, hey, it feels like the winds are changing and we have a window of opportunity to do something about it. So, you know, she sent it out. I responded immediately. I was like, let me know how I can help. I'll do anything. I'll help you organize. I'll be your logistics slave, whatever. And so she, we all ended up getting together for this first dinner. And because we're women, you know, we were very organized and we walked out of that with a plan, like a very clear plan that has actually not changed over the last year. It's basically, we care about two things. Proving that women can be successful investors and proving that women can be successful founders. How do we make those outcomes happen and how do we accelerate that? And so we just started to meet on a monthly cadence and review those goals. And we had captains after that first meeting. We had captains for these teams and working groups, and we just started reporting and we kept each other accountable and kept launching these initiatives. So the first one was Female Founder Office Hours, which I mentioned is a one on one mentoring program for female founders that got great reception from the industry. So we're like, maybe we're onto something. Then we launched another one. It's called Founders for Change. You may have seen it on Instagram. It's the founders holding up signs.