How Kirsten Green Built Forerunner Ventures

One of the big things that I learned through that experience was how important it is for a startup to be nimble. It's certainly one of your biggest advantages as a startup is to be nimble. And if you give that away, you're adding risk on risk. Right. And so really knowing what the levers are in your business, having enough traction on revenue before you build infrastructure, having enough understanding of your unit economics before you hit the button on growth, particularly when some of that growth is in the form of long term commitments for inventory, for leases, et cetera. Like you've sort of taken your ability to be nimble out of the equation.

And you mentioned something before, One of those SPVs 2008 didn't end well.

I definitely felt that the pressure and the worry that it was over before it started, like literally before it started. To me, being able to leverage where you've been with a push for where you want to go is like great tension to operate in. I got way out of my comfort zone. But if anybody could break through those, work around them, challenge them, I believed he could. And that is exactly why startup investing is so exciting and fun. That is always the truth. That is always the truth. There is. It is so easy to out diligence yourself out of every single opportunity. But at some point, some part of the process, the founder, I don't know, compels you in a way where you're like, we're gonna go for it and hopefully it's gonna work.

Some people say consumer's dead. Do you agree? Welcome to the Peel, where we explore the world's greatest startup stories. I'm your host, Turner Novak, founder of Banana Capital, the world's most nimble venture capital firm. I'm excited to share my conversation with Kirsten Green, founder and managing partner of 4Runner Ventures, a San Francisco based venture capital firm and among the best consumer investors in the world. We'll go back to the very beginning of Kirsten's career, including how she did in person market research at malls to stand out as an analyst and her journey from public markets to venture. Kirsten takes us inside what it's like to build a firm from scratch. And we'll talk about how she raised her first $5 million angel fund and how she transitioned to institutional investors for her next four, $42 million fund. She also shares a lot of stories I've never heard her go into publicly before, including why she almost didn't invest in one of her first big winners. Dollar Shave Club, her first big investment that went to zero and how she led fairs Series A despite having a small fund. She also answers the burning question on everyone's mind, is consumer investing dead? I also want to apologize for something a lot of you like, watching these with a video. But we had a complication and this interview is our first ever audio only episode. It was still a lot of fun and I had many takeaways. Let's jump in. Kirsten, how's it going?

Good. Turner, nice to see you.

Nice to see you too. I wanted to kick things off. So you started your career covering retail investment banking. You used to go to the mall and observe. Why did you do that and how did that work?

This was nearly the beginning of my career and I was fortunate to work with a bunch of people that had a lot of experience and credibility in the industry. And I was trying to figure out what do I add to this conversation as a newbie who was coming in, just, you know, pencil notebook in hand, ready to learn. And it occurred to me that the companies that we were covering were addressing consumers that in many cases at the time were closer to my age than they were to some of the other people in the room. And I thought that I had an opportunity to go to the mall and have a perspective on what was going on in the retail stores that we were covering that might be unique to the rest of my team and maybe I could figure out a way to make that relevant or useful in our coverage.

What did you find?

It was not because I loved hanging out at the mall.

Okay, what were some of your most interesting insights that you picked up on?

It turned out to be, honestly, like, one of the most productive things that I did as a research analyst, both because I got observations while I was there specifically that I could use and interpret in my own way, but also because it gave me a touch point to go back and have conversations with companies or customers. And so I would go to the same four malls. This was either a weekly or a bi weekly Friday exercise. Go to the same four malls, try to keep it consistent because you're trying to get a picture of how things are evolving over time. So if you go at the same time and generally you know whether, like, the traffic is more or less relative to when it was the same week before. And what I was looking for was how many cars are in the parking lot, how many people, like, the people that are in the mall, like, where are they? Are they in the food court? Are they in the stores? How many bags do they have? Bags? Do they not have bags specifically? Like, are the Products in the stores, have they been handled and touched? Are the shelves messy or is everything perfect? And it kind of all of these little points gave you a window into whether people were engaging with the product, turned on by the product, interested in what was being sold, actually buying stuff. And then there was the exercise of counting discounts.

Was that a big deal?

It was a big deal.

Really? What, how did discounting work back in.

Or when back in the whatever age it was. No, you would like, you know, product had price tags that had markdowns on it or you sat on a rounder that had X percent off or you were a table with X percent off. So we're kind of tracking like okay, a store, you know, one visit to the mall, a store would be set with new product. Then you'd go back a couple of weeks and you'd say like, oh, I can see that, like this product or that product's been sold through, this product hasn't moved. And at some point you see things move to sale and you see like wow, there's a lot of stuff on 25% markdown or there's not so much because you kind of had sell through at full price. And that would sort of give you an idea like none of it's perfect. Right. It's all just fodder for consideration and for, for asking questions.

And so if something was marked down, probably not a good thing, versus if someone didn't have as many sales or less aggressive.

Right. If they had had more full price sell through, they would have less stuff in the back of the store on some form of discount. And then you would judge the depth of the discount to know like how much trouble were they having moving the product.

Interesting. Yeah, that's going to show up in the financials. It did show up like later.

Yeah, it did show up. And you know, I think one of the things about covering retail stocks that was, it was actually a challenge because I think I always wanted to be an investor and more have a more long term focus. But because retail stocks in particular public retail stocks at the time were covering monthly sales, it became like a heavily traded group right on what was going on month to month as people would try to then infer, like okay, with the top line trend is this what will the impact be on the quarterly results? And you got these windows into it, but you can go to the mall like throughout the course of the month and get a pretty good beat on what was happening with same store sales which was the key metric they were reporting. Now it's One data point and one market. You know, it wasn't, it's, it's certainly again, it was enough to sort of like have some insights and some material to work with that was unique.

Yeah, but it probably gave you something like you said it did, sustainable.

Also. I was, I was doing this at the time. It was shortly after Reg fd, which was the SEC regulation that basically limited information and limited who had access to management teams at what times. So people's edge for information had kind of had gone away in most respects. And so it was like trying to figure out like where could you find something unique. But I think what maybe is more relevant is like it sort of started my love for like the investigative part of investing, you know.

And then you said you always wanted to be an investor.

Yeah.

You moved still public markets, right?

Yep.

Got an investing role. How did that come about?

I went from being a research analyst to being an investor public market side and did that for a few years. And I think, you know, listen, at the time, there's a lot of things going on for me, I think it was 10 years into my career. I was really thinking about kind of, wow, this has been a fast journey for the last decade. Do I want to be doing this for multiple decades? Like, what do I like about this job? What have I learned about myself, my strengths, my weaknesses going on in the market that I think is unique opportunities. I really grew up at the time period where it was like the proliferation of hedge funds. I think it's interesting in the context of the venture market and what we've been through the last 10 years too. We can get to that later. But I think all of that gave me some pause on whether or not my passions were being met with how investing was in the public markets. And ultimately I craved something that was more longer term focused, that had an element of relationship focused. I liked being like, I liked the opportunity to be in front or ahead of things. And so I think I was kind of drawn to those types of opportunities. And it was an unplanned but evolved over time process where I went from exploring a move from public market investing to private investing. The most obvious thing was people know more at the time about like the private equity industry looking at kind of like the buyouts and then the growth equity all the way down to venture. It was kind of a journey to discover what venture was. And I think at that point it's, you know, I kind of fell in love with the idea of sitting across the table from a founder and this somebody who was all in on something they were passionate about, had a unique view of the world and had this ambition to build something that would be unique in the market and stand the test of time. And that seemed to align with kind of dreams I had as it related to investing.

Yeah, and when you talk about, you know, trying to get in front of things or trying to kind of invest, like proactively getting like finding things earlier, meeting a founder who's starting a company, that's as early as you can get, like, they are the ones that are really seeing how things are changing, that.

Is as early as you can get, you know, And I think for a lot of times it's just, it can be a dreamy experience to sit around the table and debate, like, why do you think that? Why you think now? How do you think about the approach? You know, what do you know about your user base? What do you know about your market? It's all about the possibilities. And I find, you know, that can be captivating.

So then how did you get your first job or insert whatever the move was to start going a little bit earlier. How did that evolve?

So literally I've been on this, like, you know, pretty intense work around the clock time period in my early, earliest days of my career. And I kind of had to force myself to call a halt on it and say that, like, I'm not going to figure out what I want to be doing. Even if it's in and related to this realm while I'm working at this kind of pace, I need to allow myself to take a step back and explore a little bit. And I, you know, I probably, I didn't need to do this, but I justified it to myself as I didn't go to business school and I thought I was going to go to business school. So I was like, I'm going to give myself this like, break. I'm going to call it my own business school, so to speak, you know, and kind of like get out there and like really kind of kick the tires and learn about what other ways there are to be an investor. And so that was a journey that I started. And I think it was very uncomfortable for me at that time to not have a job. So I had to sort of make a pact with myself to take the time to really prioritize this learning journey and not take a job. And that was hard. But it got easier over time as I got more comfortable with meeting people, with identifying more with ideas than I was with working at a particular firm and liking the process of learning of like, being out there and thinking about having an opportunity to ask somebody about their job and what they liked about their job and where they saw the opportunities. And a lot of those conversations over time turned into consulting work, which gave me a chance to sort of be around the table in some of those different types of situations and get a window into what does, you know, a buyout firm, what conversation are they having around the table about a deal, and what does a growth firm look at, et cetera. And I think all of that again, like, led me to kind of early stage founders and really falling in love with that space and then deciding that, like, I wanted to pursue something there. And I think that that was meeting a founder that had a business that I felt like aligned with, where I thought an opportunity going forward would exist. And then I just, I had to like, make that work on my own because there wasn't a place to go do that.

Really. Did you try to get a job somewhere? No.

I mean, I don't. I don't know. That's actually because, like, in some ways I was like, maybe always trying to get a job, but I never went to a recruiter and I never went to an interviewing process, but I certainly was open for business. I didn't have dreams originally to be an entrepreneur of my own. I was more interested in partnering to support entrepreneurs. But at some point I get enough conviction of the kinds of things I wanted to invest in and the role I wanted to play and what I thought I could offer to help and that I just felt eager to do it. And the way to do it was to make it happen myself.

Interesting. So one of my friends, Nicole, wish off prior guest of the show, I told her I was going to talk to you and her question was, what made you do it? Like, the decision to go for it.

I think there were really two time periods where that was. It was like this first investment that we were talking about, which then led to this time period where I did a bunch of sort of separate investments, like I guess raising SPVs to make the investments. And then there was the time where it was like, okay, start Forerunner. So the first one was really organic in the path of like, project work, diligence work, turning into a company that I really liked, a company that I thought had some potential, a founder, didn't know where to start raising money. And not that I necessarily did, but I was like, I'm not, I'm not afraid of trying. So I will come in and help and be a thought partner in business strategy and Thinking about, like, the model and what's possible, and let me see if I can bring some investor money to bear. And I really went back to all the people that I worked with in my first work journey. You know, I think those people probably thought that I was a diligent, hard worker, really trying to make something happen, and invested because of that more than they did, maybe because of the company. But, you know, it was kind of like it was that organic process that got it started. And once you did one, then it was like, this is an interesting way to be engaged. And so I did six or seven of those.

Yeah, it's kind of one of those things where it seems intimidating. It's maybe kind of hard. But then once you do it, you're like, oh, maybe it wasn't that hard. Maybe I could do it again. The next one's probably easier, too. So maybe you had a little bit.

Of momentum or, you know, like, I think all of life is a series of ups and downs. Nothing is a straight line. Nothing is, like, you know, hard. And then all of a sudden, easy and starts to become easier. Like, there definitely was some momentum that I was fueling to get the first one off the ground. I think that lent itself to the second one. By the third one, I didn't have any more contacts to go to for 10, 15, $25,000 check. So then it was like a whole nother level of like, okay, what does it take to go outside of my immediate circle and start talking to investors about a business?

So how did you do that?

It became about the business that I was invested, that I was sponsoring an investment in, and not about me. Okay, right.

So initially it was like, I'm cursing. You've known me for 10 years.

You know how much heart and soul and everything I'm gonna put into trying to make this a great investment for you. And I think that was a primary. I certainly don't want to say it was the only factor. They asked a lot of questions about the business, too, but I think it was a driver of it. I think the second one, similarly, these were both, like, beauty product companies. It was similarly kind of like another brand product in the space. I had some experience like, that was. That made sense. The leap from there was just like, okay, now I've got to go outside my immediate network to try to get people excited about the business and solely the economic opportunity that they were signing up for. And I think, listen, I. I guess I look back on that time period, and I look back on, you know, all the Journeys or the chapters of forerunner that, you know, hopefully are still very much in the. In the process of being written. And I like the new challenge. You know, I think it made it exciting. I think it's exciting to always have something that you're stretching for. To me, being able to leverage where you've been with a push for where you want to go is, like, great tension to operate in. And I got way out of my comfort zone because when I started this whole thing, I was a shy person, unlikely to be going out and fundraising. And I had to kind of build confidence into going outside of my own network to ask for money and to really own that. Like, this was about making money, and I wanted to make money. I mean, I think getting comfortable saying that, like, we're here to make money. We're here to be capitalists. We're here to, like, yes, we want to build a good business. Yes, we want to have jobs and great products in the market, everything. But ultimately, like, we are here to drive top returns. You know, that is.

Sometimes it's just a different way of thinking.

It's a different way of thinking and just owning it and saying it and feeling great about that as opposed to feeling like somehow I'm being greedy for wanting to make money. I think that's just, you know, there's various stages of hurdles of, you know, getting through things anyways. I moved outside of my own circle, into a broader circle and continue to meet new people along the way and unlock new relationships.

Do you. How did you go about doing that? Because that was one advice I've gotten is when someone invests, you ask them to introduce you to two other people or something like that. Is that a good way of thinking about it?

I think that is a good way of doing. Doing it. I mean, I think that that process, and probably any process, does involve a lot of conversations and a lot of no's. And I think getting comfortable or getting okay with saying no, you know, hearing no is like, it's. It's a. It's a requirement. No's come before yeses. You know, declines to RSVPs come before yes. It's just like, no. You know, So I. I think that, like, nobody, you know, people don't. People don't like to say no, but I think that, you know, it is. It is. When you're talking about money, it's harder to give people money early on. And so you. You got to get comfortable with that.

And what year was this? Was this 2006-8ish?

Yeah. Good.

Okay. And you mentioned something before. One of those SPVs 2008 didn't end well. And I believe your, your quote that I, I listened or heard or read. You said you thought Forerunner was done and I guess technically it was just barely getting started.

Yeah.

What happened?

Yeah, that's true. So in this, in this chapter of kind of like individual SPVs, there were seven companies I invested in. And it was like a real representation and mixed bag of like what outcomes can look like. And it sort of supports the theory that like, to do early stage investing you really need a portfolio approach, remember? And each of these had individual investor groups which carried an extra whole level of stress with it. But with each company, you know, there was maybe some bigger ambition, some bigger complexity to the business, some more innovation, some more capital. So they kind of got more ambitious in time. And I don't think that was, I think that had as much to do with, again, my desire to keep learning and keep pushing as anything. And when I first met this company that you're referring to, I was wowed completely by the experience of the executive team that had come together and just, you know, at the time, the audacious vision for what they had, as far as you can get as audacious in, in retail was still a branded product company. And it was a really, it was a new retail model at the time. And these people had hailed from big companies, they'd had incredible careers, they'd had C suite jobs and incredible access to all the manufacturing partners that they were going to need to bring these products to life and throughout the industry with respect to getting real estate and all the things to put the business together. And they really had like, we're going to have our own product line, our own manufacturing lineup, seven stores, you know, hit the ground running, build tech. This was before there was something as easy to work with as Shopify. You had to build your own website from scratch. So it was a lot of effort on all these fronts and they had this all, and they, they had all of those, like, contacts and, you know, experience, but inside of big companies that they were looking to kind of, you know, now harness in the context of this new start. And they were innovating on the product, they were innovating on the supply chain, they were innovating on the retail model and they were honestly innovating at the time on even the E commerce angle.

Interesting.

Yeah, so it was a lot of big swings at once and they helped you invest, which is what made it so exciting.

As somebody who's just Getting started like, that's pretty impressive.

Yes. I bet you they, you know, there was some element of. There wasn't somebody else, you know, maybe that had experience that was willing to take a bet on something as, you know, kind of fraught with challenges that they were going after. And then I'd like to think that I had spent a lot of time working my way through different sectors and through industries. And this was in a space that was touching on the different verticals that I had covered for 10 years back. So I had some, you know, I had some credibility in that category in particular, and I had some good contacts that I think could vouch for me. And now I'd had some experience from a couple of other startups that I could lean on. When I thought about being a voice of support or questioning in the boardroom. It was a significant financial raise, too. So I had. I had institutional investors that I had worked for in the context of my public market days that were now doing privates that were part of the capital that I was bringing. They'd also raised a lot of money or a good. A good amount of money outside of me too. So there wasn't another firm or whatever, but there was definitely, like, experience, like people who were kind of institutionally minded about building the business involved. Anyways, it was a. It was a exciting business. They were named as kind of one of Time's 10 most innovative companies of the year. There was a picture of the whole team on the front page. Things had been going really well with respect to kind of following the plan that they had set out to launch. And then 2008 happened, and, you know, they got really caught off guard, like many companies did at the time, where their capital plans and the way that they had plan to continue building their business got disrupted by big changes in the financial market. So I remember it was like, you know, kind of the eve of this second tranche of funding that was due to come in when Bear Stearns collapsed and we needed to go out, you know, kind of immediately on the heels of that and try to get another new funder to come in, because the money that we had secured had hedge fund ties and their market had, you know, completely changed overnight.

I mean, parallels to 2022, a lot.

Of parallels to 2022, which I think actually, you know, let's, let's make this story relevant today, because it's highly relevant today. Which, you know, I think one of the big things that I learned through that experience was how important it is for a startup to be nimble it's certainly one of your biggest advantages as a startup is to be nimble. And if you give that away like you're adding risk on risk, right. And so I think, you know, really knowing what the levers are in your business and having enough traction on revenue before you build infrastructure, or having enough understanding of your unit economics before you hit the go, you know, the button on growth, particularly when some of that growth is in the form of long term commitments for inventory, for leases, et cetera. Like you, you've sort of like taken your ability to be nimble out of the equation and then you're at the mercy of the capital markets and they can change. And you know, that was definitely the moment this company caught in. I still think that they could have made a series of decisions to change the course, but the big company mindset still ruled the day. And going back to being scrappy and going to kind of like the lean team, the journey that so many founders went through from kind of 21 to 22 in whipsaw fashion, where we went from, you know, a lot of money, being relatively easy to raise, a lot of companies, really, growth ruled the day. For a conversation, you know, for, for any priorities, people were leaning into team building, leaning into setting up structure ahead of the business scale, you know, and needing to make a quick pivot from that. And you know, fortunately I think that many founders made great decisions over the last year and a half or two years towards that. But in this case back then, that was not the, that was not the course they went on. And it was, you know, the same week that they were on the front of Time magazine that they also had to decide to close the company. And the first call I ever got from a reporter was from like cnbc because this company was a big deal. I have no idea how they, you know, got to me. But anyways, to talk about like how this company went away overnight, all of this was upsetting and scary on so many levels and particularly in the moment and in the time period afterwards, I think, you know, kind of as I got further and further away from it, I learned how many or I recognized how many lessons there were that I learned from that and how much growth and even sophistication that I gained in that short period of time that I think I've been able to like leverage in super meaningful ways. And even as, you know, recent as last year when we went through this kind of upheaval in the financial markets.

Yeah, I mean, I can't even imagine you, you had just you know, you'd spent quite a bit of time learning all these skills, working, working for someone else. Finally started your own thing. You put your name on the door and then it's like, shit. Like, that's gotta be probably one of the most difficult.

It was so difficult. I felt like I hadn't necessarily. I certainly hadn't formalized Forerunner in the way it was today. You know, it was me. I had a business card, I needed a name. I called it Forerunner because I was trying to be ahead of trends and in front of things.

That's the reason. Yeah, interesting. Okay.

And I definitely felt that the pressure and the worry that it was over before it started, like, literally before it started. And I think that, you know, I. I can still remember almost as clear as day, a conversation that had high impact for me was with an investor who had had a lot of experience, had seen a lot of things, and, you know, he sort of asked me a lot of questions about the experience, probing questions, questions that sort of, you know, I. I kind of, in reflecting back on it was a lot of like, did I learn the lessons right? And so he said after that meeting, like, good for you. You just, you know, it's expensive. No one likes to lose. Learn lessons that way, but you. But you learned a lot. And the next thing you have to invest in, like, I will seriously consider investing. And I think that was just the thing I needed to be able to put it in context and appreciate that, like, I could figure out how to use this as. As an inflection point for the good and not be crushed by it. But I had. It was like, you know, a lot of mental gymnastics to get there, to be really honest with you.

Yeah. Well, I'm sure people listening who were investing in 20, 21, 22, like, SPVs were fairly common.

Yep.

And guarantee if you did at least. At least four or five, you probably had at least one during the last couple of years that didn't go well. So probably a lot of parallels for people to think through right now. How did you then navigate that time period to. Then you raise your first kind of institutional fund? What was that like?

During the. In between that time period and going to raise my first fund, I. I had my first child. Some of the other investments kind of played out a little bit more. Some successes, some failures. And I think what I really, like, learned through that whole time period was how committed I was to investing at this stage and how convicted I felt that there was a lot of opportunity. And the opportunity, broadly speaking, was still 1012 years ago, tech was definitely part of our business ecosystem and part of consumers, but it was still on a really high adoption rate and a really steep trajectory of change. And there's been a lot of new businesses and value created in the last decade. So imagine sitting here before that time period and seeing like, okay, there's Facebook started, there's a couple of big companies, but we're really just getting momentum and I think the combination of, you know, both of those. So my own experience and then where the market was just made me feel like it was like the time to kind of go for it.

So then how did you raise that first fund? I think I saw you had kind of an anchor LP that you'd known for a while. Maybe I don't quite have the story straight, but how did that come about? How did you do it?

So before I had an institutional fund, I had an angel fund. So I did. So to, you know, I had these SPVs that I did over a handful of years that I had this, okay, this is what I want to do. I want to invest in these kind of companies. This is the kind of partner I want to be. Here's, you know, how I imagine setting up a portfolio and that lived in my mind as much as anything. I had somebody who had been very successful in his career as an investor that I'd known for 20 years. And we had kind of, you know, over the years we had conversations about me coming and working for him, etc. And I think, you know, he was planning for kind of like another chapter in his business and mentioned to me what a great time it would be to get involved and start. And I mentioned to him like, actually I've just really kind of landed on what I want to do. And there's this, you know, there's this, this opportunity in early stage investing. Consumer is really waking up to a whole new way of doing business. They're driving a lot of this trend alongside the innovation on the technology side. And I think there's a chance to invest in some game changer companies. And that conversation turned into three hour discussion which he then committed to being my first angel investor.

And you'd known him for 20 years?

I had known him for 20 years.

So this wasn't a zoom call.

And then I went back and really put pen to paper and came up with a business plan and came up with a portfolio model and came up with what the resources or things I'm going to need to try to be successful and commit to a set of goals for myself. As much as anything. Right. Because I think at that point I was making the decision to kind of go at it on my own path as opposed to throw my hat in the ring and hope somebody would take a chance on me and hire me. Right. Because that was still maybe a possibility. And I hadn't explored that, really.

I'm glad you did.

This conversation had a lot of momentum and I had a lot of energy behind it. And fortunately, the plan that I laid out, like, furthered my conviction and my investors, Sandy's. And. And so I had an angel fund that I invested over the course of a year and a half, at which point I was also thinking about, like the next stage. So knowing that, like, this wasn't going to be the way that I was going to continue to grow the business, that I was going to need to leapfrog into the institutional market and so I could do some work while investing the angel fund on, like, what, what does the institutional market look like and what do I. What do I need to look like to be appealing to them? And I think Turner, like this was actually at. In a lot of ways, it was sort of how I'd been thinking for the last decade. You know, I'd been taking every conversation and trying to turn it into, like, what's the next opportunity after this conversation? You know, I met with you today. It's great. I learned something. Like, now I can go learn about X, Y, Z, because I have a little bit of perspective. I can ask better questions over here and I could take that to ask more questions. That led me to a consulting job. Eventually led me to the conviction to invest in a company. Investing in a company, you know, kind of broadened over time. I could feel more confident in understanding more dynamics about business to expand the purview of what I was investing in, you know, So I think it's like very much a stepping stone and is the opposite of overnight.

Yeah. So it's always. You are always thinking about the next step, but it's like 20 year journey. I mean, it's not something that happens immediately. You're in the moment, you're learning things, but you're always thinking about what comes next.

And I think before I got comfortable with that, I was uncomfortable with that, if not frustrated with that, but if I hadn't allowed myself to lean into that, I might have not ever learned how passionate or turned on I felt by early stage investing. I might have taken a job and things might have played out very differently. Maybe good, but I'm happy they played out this way. And I think that, you know, that same philosophy has really underpinned foreigners growth for the last decade to just to.

Kind of level set how big were the SPVs and then how big was the angel fund?

The first SPV was a million and a quarter.

Okay. That's, it's a decent, decent size.

Do some damage like $25,000 checks. Let me tell you.

It's kind of like raising a precede round today for a founder collect all the checks.

One. Exactly, exactly. And, and, and, and one of them was 10 million.

Oh, wow. Okay. And then the very first angel fund.

Oh, the very first angel fund was five.

Okay. And big, big chunk was from the, the friend, mentor, partner that you've known for a long time.

Yes.

Okay. And then what was the composition like?

And actually I don't think I invested the whole five before I went out and raised the institutional fund. So I think ultimately ended up being a little bit over $3 million in that five first fund.

Oh, so you did not call all of it. Oh, interesting. Okay.

To me it was a business building exercise. You know, it was a proof of concept and it was, it was my first time really engaging with the venture ecosystem. Right. Most all of this has happened outside of that, even though I was living in San Francisco. San Francisco, you know, it's always been a financially centered economy. Also travel, but financially centered economy and, and, and startups. But back in the late 90s, early 2000s, there was an incredible boom in the public market of small cap, mid cap stocks. And those businesses were all different kinds of businesses. And a lot of the banking was happening here. And so I had been able to do these things that we talked about, like with a rich ecosystem around me that were deep ties into just tech. But now you kind of got over to the venture side which has been really rooted in technology. And there's all kinds of really qualified reasons for that. But that was out of network for me largely. And so my job really was to understand this ecosystem, figure out could I be relevant in it, how to make myself relevant in it, and then was there a value prop that maybe I could build a team around that was also relevant. And once I gained conviction in that, then it was an exercise in okay, how do I go about fundraising, what should I fundraise, how should I go about fundraising?

So how did you get into the ecosystem?

A definite framework for working for me always has been like fewer things better, like quality versus quantity. And my fewer things better thing at the time period was I'm going to make These angel investments got to make some great angel investments. I got to work with great founders. I got to show up and be a good partner to these founders, and hopefully good founders know other good founders, and I start to build a deal flow wheel. In addition to that, good founders would have other good investors around the table. And so that thesis played out. And in that first angel fund, I had a chance to meet a lot of people at firms that, that we know of, that are reputable and start to build relationships. And at the time, like, I, I was ambitious to do this, so I was intentional about doing that as well. Right. Knowing who I. Who. Who was. Who else was around the table and how I could show up and contribute and build some, you know, start building some relationships. And. And it was, as much as anything, it was to learn. I just wanted to learn, too. I wanted to, one, further confirm that I wanted to do this. Second further confirm that I had a right to do this and that. And. And then it was about the how.

And then you raised. So was this 2010 that you did? Angel Fund.

Angel Fund 2010, and then the institutional fund was 2012.

Okay. And yeah, you said it was what, a year and a half?

Yeah.

And you said you kind of raised it before you were really done deploying. How did that go, raising it? How did you meet them, convince them? What did the conversations look like?

Okay, so now, like, not to miss the context, I've been, you know, I've been doing this in some way, albeit maybe a circuitous way, but I've been out there, like, driving my own efforts to make things happen for almost a decade. Right. So this has become like a muscle of, like, okay, I got to do it on my own. How do I figure out how to do it? And I always think that in, you know, back in 2012, the market was different than today. Plenty of similarities, but there were some differences. It was really. There had been an evolution of the venture market after 2008, and this idea of the lean startup had sort of, you know, been a. Been a big topic in Silicon Valley. And there was a number of emerging managers that started after the crash, you know, before the crash, on the lean startup, after the crash, because the market was reorganizing. And so I always, you know, kind of think, like, the good news was there was a handful of people that had already done some version of what I envisioned doing. The bad news was it was still a handful of people, and those people were largely qualified or endorsed because they'd been part of Silicon Valley. Right. So I still had to kind of fight that tape, but there were some people to look up to both in. In. In the firms they were building and in their path to fundraise. And, and so I made every effort to get to know those people. Unfortunately, they were. They were kind to me and, And. And gave me some, you know, told me their stories, how they'd started their businesses and what their approach to fundraising was, and offered suggestions on how I might think about fundraising. And I left all of those conversations feeling inspired because nobody told me the same story. Everybody did it in a different way. Everybody did it in a different way, and everybody had a bit of a different piece of advice to me. So what I concluded after all of that was I would just do it my way. Okay, Right. Which is, I think if I had to describe myself other than an investor, it would be a student. I like the mosaic approach of learning. I think we apply that a lot as we think about what's going on with consumers as our kind of Norse star in setting up our investment thesis. And I think about that in terms of how I thought and learned about venture to begin with. It was like all these different people's experiences and stories that they told, the different experiences that I'd had along the way kind of added up at some point to make sense to me in the way that I decided to move forward. Like, I couldn't have come up with this path myself. I came up with it after the benefit of all these conversations and learnings and experiences that I'd had. But at some point, it becomes your own, too. And so, you know, this good news that there was an identified universe, there was also an identified universe of LPs. So my thought was, if I'm going to do this, I'd like to build a team, because I didn't want to do it alone. I really love sitting around the table and debating with people. I think that you get better with other people's challenges and inputs. And I think from public market days, even, like, the power of portfolio diversification and diversified thinking was something that I was really interested in. So I wanted that in doing this. And with that in mind, I was like, I have to build. I have to think about building a team or building a firm or something like that. And so I wanted institutional investors. And I thought, I'm going to have to. I'm going to have to convince somebody to give me a shot as a new manager and. And not as somebody who maybe came from the more likely path or what they're used to. Seeing in venture. So at least I'll go to LPs that have already decided that they're willing to take risk on first time managers because that, that at least that will be off the table. Like they're willing to do that. Now I just have to work on getting them to believe that, that my.

Pitch is compelling because that is a like tight funnel. Just somebody who invests in venture and then also new emerging.

So again, like I call that good news, bad news. Like bad news. It was a tight fuddle, but good news was it was a short list that could be actioned against. And literally, I mean I probably in my file have this list somewhere, but there was maybe 10 institutions on it. But also the other edit I had was what's the hardest? Quote unquote, hardest kind of LP money to get? Because if I'm going to go do this and prove myself out, like at least if I get that then I can do dominoes on the other things.

Yeah. So what is the hardest?

I don't know. I mean we can, you know, people could, I don't. What's your opinion? But at the time I concluded that the hardest was like, you know, endowments that had like vc like had been entrenched in the VC business, in the VC industry since it had started. And I, I think their experience made them a receptive audience, but it also made them a hard audience because they had access and, and they had, they.

Had knowledge and they'd seen it all. Like they know what looks, what good looks like and what not good looks like. So. And you convinced one, right?

I did.

Did you? More than one or was it really one big one?

No, I had, yeah, I had more than one.

Oh, more than one. Okay, so how did you do it?

I think actually if I think about this question, the sincere answer is, is like if I've convinced anybody of anything, I did it because I was working to convince myself of it too. And so I knew that like, okay, I'm going to set up something that has a process around it that demonstrates being thoughtful, I want to make sure I'm challenging the rigor of my own investment criteria, diligence process, follow through, all of that. So even when I was doing my angel investments and I didn't necessarily need to, I was writing memos and it was for, it was for my own conviction. Like if I could organize my thoughts on paper and I could read it back to myself and I was like, yeah, I buy that. I felt better about what I was doing that allowed me to start this initial institutional fundraise process with, like, materials, 20 investment memos.

Yeah.

So I put up a diligence room, you know, and I put up a PowerPoint presentation on. Here's my thesis. Here's where I see the market going. Here's why I'm credible in this space. Here are the investments I've made. If I can, you know, if I am fortunate enough to have enough assets under management, I can start to build a team. Here's the kind of people I want to hire. And, you know, it was probably overkill, but it was work that I had been doing and it was, you know, it was work that I could do and at least it could showcase that, like, I was really committed in a way that I was being this thoughtful about it. And I think that resonated. Right. I didn't, I didn't come in there with like a flash of pan story or, or, or thinking that I was ultimately backable. I mean, I believed I was back. Well, because I know I was responsible and really dedicated to doing it. But I wanted to give as. I wanted to try and make the decision as. As easy as I could for people.

Well, I think you did one thing that made it easy. I heard that while you were raising the fund, very first investment that you made was Dollar Shave Club, which was a good investment, if I'm remembering.

I'm not entirely sure it made my fundraise easier though, really, because since you brought up Dollar Shave Club, I have to give credit to that investment and to that founder, Michael Dubin, who did such an exceptional job building a business that I think everybody was interested enough in to give him angel checks, but nobody wanted to give him an institutional check, really. I think they, you know, I think it was like, with good reason. Like, you're gonna go after Razors. It's a commodity product. You're gonna compete with, you know, the biggest conglomerates on the globe who have huge marketing budgets, huge reach and resources in all shapes and forms.

And it's men's personal care. It's men.

It's men's online. And like, your video is rockin'. But like, maybe that's one thing you've got, you know, I don't know.

Well, you hadn't even seen the video. That's what.

I hadn't seen the video. I hadn't seen video. But I did have a really super first conversation with Michael. So somebody had. Somebody had actually, like, loosely, like, pitched me the deal or told me about the deal, and I was like, no, for all the Reasons I just told you, it's all hard. All startups are hard. This is why I don't need to do this one right now. And then I don't know if it was two or three days later I met Michael and he was like, wait, I know your name. You're the one that didn't want to meet me for my deal. And from my perspective, all you needed to do was spend half an hour with Michael and decide that he was someone you wanted to be in business with, that he was the real deal and he didn't change the dynamics of the challenges that I just pitched to you. But if anybody could break through those, work around them, challenge them, I believed he could. And that is exactly why startup investing is so exciting and fun. That is always the truth. That is always the truth. It is so easy to out diligence yourself out of every single opportunity. But at some point, some part of the process, the founder, I don't know, compels you in a way where you're like, we're going to go for it and hopefully it's going to work, you know, but it's going to be very different than we think it is today. And so we've got to, we've got to be nimble and we've got to, you know, execute and change to meet the moment. And I think that's when you're really trying to understand who this person is that is taking on this ambition and this challenge. And I, I knew that Michael was like the real, the real deal. And so I felt really lucky that he was willing to take me along with Ailee Lee, you know, as co lead investors in his, in his seed round. But I then had to answer for that because LPs were like, what is this? What is this?

That's what they said. What did you say? How did you answer that?

All these things I'm saying to you and I think that like, you know, probably everybody could have continued to debate the merits of it with me, but I think that like what it showcased is a thought process that I had around something criteria that I was putting through an openness to recognizing what the challenges were, not being totally turned off from those challenges, but you know, hopefully practically thinking about how we could rise to the moment against those and then having the conviction to go for it on something. So I do ultimately think that it was a positive lever in a fundraise, but not in the way, you know, not in the easy way.

Yeah, it probably gave you like a case study of like this is A Forerunner investment. All the things you just described. And we did it. We had an opinion or we were compelled before anyone else. And then, you know, it's like a body of work.

And I think, you know what, it's been 12 years. You have to do that every day, all the time.

Yeah. That's fair. So how did that one go? Are you allowed to say numbers on that investment? On the Dollar Shave Club? Yeah.

Well, it was a four million dollars, maybe a four and a half million dollar pre money valuation that exited just less. Just shy of one month over four years later for a billion dollars of cash. Okay, so it was okay.

Yeah. So how much of the company did you own?

Oh, goodness, Turner, you want me to start doing math? Not enough.

So if you would have a bigger fund, could you have probably written a bigger check?

Well, so I didn't have a fund.

Oh, that's true. It was.

I hadn't raised the fund. I went to Sandy and I was like, I need a loan to make this investment.

So did you then put it into the fund as the fund was raised?

I definitely always put it into the fund, but it was like a warehouse deal for the fund.

Okay, can you explain how that works for people who aren't familiar?

Yeah. Made the investment with the intention and the commitment that it was going to go into the fund. And then when the fund had a close, simultaneously the shareholder of record was changed from whatever entity name I used, that was some version of me over to the fund version.

And then you kind of pay back the person who funded that investment or whether it's you personally or another party. And then usually there's like kind of some interest or something like that. I mean, sometimes there is, sometimes there isn't.

I can't remember if there was there. I. I will, I will say, like, on all these topics, like, my mantra has been to keep things simple. So I have kept like most everything about Forerunner straightforward and simple. I haven't tried to do jazzy things on the side with interesting, unique structures and stuff. I think in general, like, I admire people who do that and eke out extra benefits for that, but I think more times than not, it can eat into what you're doing. And instead I've kept things kind of clean and easy. So it was a basic. Lend me the. I think it was $250,000 to. To, you know, to co. Lead this deal and I'll put it into the fund when it closes.

Okay. And it was a $41.7 million fund. That's just what I saw on whatever. That's not an even number. Like, were you going for that? Like, was it.

I was going for 40 for 40.

Okay. So that was a good sign.

Yeah.

Oversubscribe people.

I actually have. I've been, you know, pretty regimented around setting a cap on the fund and keeping that and being careful about how I'm marketing it along the way so that you don't have too much overage, because that just disappoints people who've then done a lot of work and then you don't have room for them. Like, it sounds great. It'd be fun. I guess it would be fun to tell people you were five times oversubscribed, you have five times the interest, you know, and turn people away before you're getting down to like the. The nitty gritty. Because that's disrespecting people's time, I think. But hitting something exactly on the nose. Like it's always been a little bit.

Yeah, Well, I think too, it's like if you tell someone I'm raising a $40 million fund and like, they have their own return expectations based on the size of the fund and all, and like, even the strategy to doing consumer, and then you suddenly say, hey, we raised $100 million fund. We're not even doing consumer anymore. They underwrote something completely different.

I mean, think about if you do that, if that happened to you as an angel investor and the founder came back and they were like, by the way, I upsize around. It's all good news. And you're like, yeah, kind of. Except for it changes the dynamics of the situation. And I wanted. Would prefer to have the chance to evaluate whether that's good or bad relative to what I was looking for for doing. I have never changed the fundraise target mid process.

So how do you approach fundraising then? And maybe a. Interesting segue would be fun too. Yeah, sounds like it was 75.8.

75. Yeah.

Okay, so how did you go about figuring out what you're going to do for upon to approaching that? I think that was the end of 20. 20. 2013. So maybe two years ish later.

So the first one was June of 2012. The second one was December of 2013, which was a little bit ahead of maybe what would have been ideal. But I was due to have a baby in March of 20, March of 14.

So it was.

And I was like, I prefer to not be trying to run a fundraise process on my way into the delivery room or on my way out and so, fortunately, people were understanding of that and allowed me to do it a bit early.

And then you kind of kept investing the first fund.

Yeah, we didn't activate that until sometime later in the back half of 2014.

Okay, and then how did you go about setting up for that second fundraise, the second institutional fund?

Actually, you know, I would say that, like, all the fundraisers have had more similarities and differences in how we've approached them and how we set them up. So starting from just a planning perspective, first thing is sort of like, take a look at the market and think about what's going on in the market. How has the market evolved since the last time you did this exercise? What does it take to lead a seed deal? What does it take to lead a series a deal? What's the set of opportunities at those different stages? Try to figure out within a small range of reason relative to where you are as a firm, what the sweet spot is.

Like, what is something reasonable that makes sense.

But first I'm thinking about it from the perspective of, like, where would I like to compete? Right. And then I think from a bottoms up perspective, what does that mean I need to do? So how many deals, what prices, what checks do I need to be writing, and then what team do I have to bring that to bear? And you're trying to find a sweet spot between those two. Right. And I think that just like a startup, you don't want to get your organization too far ahead of your. Your mandate and your capabilities. You certainly don't want to stretch too far ahead for what you're needing to deliver by getting too much money at too out of evaluation relative to where you are on a product basis. Right. Not too different than building a firm. I think we were trying, you know, always trying to find that sweet spot between the two. And that really informed what the fundraisers were. The overlay on that was the original goal going into it was I would like to build a firm that can be around for a long time, and I would like to earn the right to invest in the best, most exciting, promising companies, regardless of what stage they're at in the early stage. Right. So it wasn't like, I want to be a seed fund and consumer. It was that I want to be able to play across the spectrum within reason, but like, to have our choice of, like, the best companies that are coming out of the market at the time. And so each time, that exercise led to a little bit of a different dynamic in what the fund was. And we scaled up our fund Size. I think now we'll continue evaluating that, but I think we're at the sweet spot. We like how we're capitalized as a team and a firm now, but for so many ways the first decade was about laying the foundation to be able to do that. And each of those fundraisers were part of laying that foundation. It was like every time there was a fundraise, it was a milestone to mark and pause and say, okay, where are we as a team? What's, what's working with our team? Where do we think our strengths are? What do we need that we don't have and how do we think about that against the backdrop of the market and where we'd really like to be investing?

Yeah, it seems like generally you kind of, just in terms of how I'm thinking about the fund sizes and the strategies, all that kind of stuff. Did you, did you change like in terms because you increased the fund sizes? Were you basically writing bigger checks and having like some, some follow on reserve and then also just being able to say as we go later, just the checks are bigger. Is that generally the thinking?

Yes. So the thinking was we have always had a, what I think is, is an edited portfolio. So 20 to 25 companies per fund. So even at the early stages it's pretty, that's concentrated. Yeah, tight and concentrated. We always had some allocation for reserves until recently. We always ended up having less of an allocation than we wanted ideally because as we were investing, the market was continuing to kind of evolve and rounds were getting bigger. Right. So in order for us to kind of have the, the type of position in a round that we thought was made Fun Dynamics work, we needed to size up this size a little bit. If I step back and just think in a, in a kind of perfect world, I sort of think about allocation in like roughly a third. A third, a third, Like a third for your initial investments, a third for your initial follow ons. Of course they don't go equy dollar per company because some companies like break out faster than others. Some companies decide not to go on, you know, but like kind of that's, that's relative size and then a third or some, you know, again relative, some somewhere around that for what, what I think of as lean in positions, which allows you to create some concentration in your fund. But you need to do that before it's too late and it's a growth investment and not an early stage investment. So that, that all doesn't always align. Right. Which is, which is the difference between a fund model on a piece of paper and then how things play out in the real world. So a lot of ways, like the market did the work for us, because I think, you know, you took a $40 million fund. It was not hard to say why a $75 million made sense. It was not hard to say WHY $125 million fund made sense. Those were all seed funds. When we went from the 125 to the 350, that was. We are now ready to lead some Series A's. So we were then changing the. And we. We had started to lead some Series A's in Fund 3. We were under capitalized to do that, but we did it. So how did you want to demonstrate that?

Did you do that process? Because that's something I've always kind of. I just try to figure out, how do I land that? Where you kind of start to take the next step, but you're not quite.

You're not like, perfectly capitalized for it. I mean. Okay, so I'll give you. I'll give you my example, because I think my step up company in fund three was fair. Okay, So I invested in the seed round, but in a small way. That whole fabulous qualified team at Fair had a pretty good network, and they'd also all worked with Keith Raboy before, and so he was their first investor. And I really wanted to get in on it. I felt like that business model was like, sweet spot for what I knew in the market, and I could provide something different than the rest of the people around the table. I was able to invest in the seed round, but I said to them, I'm really here to do the A because I can't do the seed because of the setup you have. That's not enough. And this is like my sweet spot. So by the time the Series A came around, it had already gotten competitive, but I'd had the chance to build the relationship and build some. Some trust between myself and the founders and the other people around the table. And it worked out that I was able to lead the A with a smaller check or be involved in the A in a meaningful way with a smaller check.

Yeah, because usually a Series a, it's like 20% ownership or maybe a little bit less generally, is what happens, I think in this.

In this case, like, you know, you got to find these unique situations. But this was a good one because, like, Keith had done the seed, and then he wanted to buy up into the A, but because he already owned it, the seed could make room for me. Right? So like it was just one of those situations. Like that was like a situation kind of built for where I was in, in the journey and, and then once, and you know, there's probably two or three other ones like that because that was, that was what I could do in the size fund that I had. And so then you go and you can talk to your LPs about like how you built credibility to be in that conversation at the series A, what you had done for the company since then. And if you had had enough money, could you have taken the whole thing? Or with the experience you have now, next time comes around, can you take the whole thing? So that's a process too. And again, like convincing myself as much as LPs, you know, because I think it's, you know, even from the earliest days, like I'm building a business that I want to be successful for all kinds of reasons, not just to please other people, but for myself too. And so I've got to make sure that like I'm building like, like the best, most responsible version of it so that I can do well with it, you know. So anyway, so then, you know, then I was able to parlay that into a fund that looked more like a series A and seed fund. And then the move from 360 to 500 was like largely market driven. And we also added a partner.

Okay. Yeah, it was Brian.

Yeah.

Okay. And then that was 2022, February of 2022, at least the date that I saw a lot of Zoom involved. Did you raise that? Mostly on Zoom?

There was two funds that were on Zoom. The approach to LP side of fundraising. You know, LPs are really partners in your business. You want to build a long term business. You're thinking about these as long term relationships. You're thinking about continuing to demonstrate various aspects of your business, build trust, build confidence with them. And so we, similar to the portfolio strategy, I've had a pretty concentrated strategy on LPs, never having over index towards one because you don't want to put yourself in that situation, but not having so many that you can't make time to sit down and have a meal with them or call them, you know. And so really investing in building relationships and then thinking every time like who are the two or three that you want to add? Because it's just good hygiene to like not everyone can stay around forever. And that way you can always kind of have like the appropriate demand on the sidelines that you're not trying to call in the middle of your fundraise process. So it's a lot of relationship building. I think we tried to be thoughtful about like what kinds of investors we were talking to and how they were thinking about their business to understand what the long term prospects were. Right. So there's some, you know, I get the chance to talk to plenty of people that are starting their own firms and sort of like my experience when I was interviewing people who started their own firms and now I look at it from the other side and see people who are doing it like there's no one way to do it. Everybody's got to do their, their own way. And there's a lot of ways that you can line this up and be successful. Right. So this just happened to be the, the approach we took, but we thought a lot about like the mix of LPs and who was in it for the long haul and committed to the sector versus maybe who was getting in and making sure that we weren't over indexed that way because that would create risk. It's a portfolio approach just like your fund, your LP base is a portfolio approach just like your fund and your LP contacts are founders, just like your founders you're backing. So it's just a lot similar in both the ways that we thought about it. So I think that allowed us in most every fundraise instance to have fundraise before we were fundraising because we were kind of knew where, where we were going to go.

Yeah, that's right. You said something about dedication to the sector or interest in the sector. This was a question. This is the most common question that came up when I told people we were talking, I think Dave Ambrose at Bungalow Semel shot Haystack. Have you ever met Semel? I mean some people say consumers dead, no exits over the last three to five years in consumer. Do you agree?

I don't agree. I actually have this blog post that I've been working on which is where did all the consumer investors go that I probably need to work on getting out. But listen, some of the biggest companies to come out of Silicon Valley are consumer first companies. Amazon, Apple. These businesses get, you know, they get to a scale where they get into all kinds of things, but they started very much in the consumer centric zone. Some of the most successful venture backed IPOs have been consumer businesses. Doordash, Instacart, Airbnb. So there's plenty of big companies that get built in consumers, which makes a ton of sense given that consumers drive two thirds of the economy. There are trillions of dollars of spending power in the hands of Consumers, they vote with their dollars. They are the customers for the business. Whether you're a business to consumer first business or whether you're a B2B business because somebody is selling to somebody at the end of the day, right? So you might be further up the food chain or closer to the consumer. Nevertheless, what's going on with consumers is like ground zero for like what is the potential for the business, right? So when we think about consumer, we think about that engine, we think about what is going on with that base of demand and what is that, their health and what are their needs and what's changing out there that business needs to evolve, to, to meet. Then we think about where is business set up to meet that opportunity and where is it not? And we're looking for the overlap between it's not and the consumer need. Right? And then really importantly, like what's changing in the dynamics of doing business to make now a good time to introduce something new? So you've already, you've already identified the demand, you've already, you know, came to some conclusion around the white space opportunity. Now you're talking about like, can we do better business today? Is there some disruption in the industry and how business is being done? Is there some technology that's going to reshape how this business, particular business comes to life? But there's something different that's like the why now? And that has to do with first mover advantage, right? So I mean we're really thinking about those three things coming together. And over the course of Forerunner investing, we've invested, I don't, I, I had this number like last year specifically, but it's like 70% of that money has gone into consumer facing businesses and 30% has gone into B2B businesses. So we also invest in B2B businesses because again like that's just the root cause, the consumer for the demand. But to specifically talk about the consumer, I actually have a blog post that I'm sitting on that I haven't put out which is like, where did all the consumer investors go? And it's a, it's a take on what's going on with consumer, you know, and, and I mean, I will tell you that we have hearty debates around our table on a regular basis about which deals are going to make it into the fund. Because there are more things that we're interested in and that we like than we can do. So like in my, my version of the story, like consumer investing, how we think about it is, is alive and well. When I look on the funds that we've invested over the last 10 years, you know, all the funds have the kinds of winners that you would like to have in your, in your funds. I think. Right. Some of them are early and it's too early to tell. And we did all of that with that same perspective that I just shared with you. That hasn't evolved or changed. So I think this year there's, there's a handful of what people, when people say consumer companies, I think they traditionally think of product businesses, you know, or product businesses. And then on the tech side like the social businesses or whatever. I think that there are businesses that have been built in the last handful of years that are now at a stage where they're interested in going public. And there are some of those that will look to do that. There are some that are at a scale for M and A. So it takes time for those businesses to be built. And so I don't think, I think it's too, I think it's premature to say that there aren't any big exits out of this last generation. But I think some proof points in like true hardcore, I guess like explicitly consumer can still be had. But along the way there have been there, there have been wins. I think you just need to pick your spots really carefully. And I would say all of the same things about any aspect of investing. When you slice down a sector. Right. So, and people, things go in and out of favor. And in the last cycle we've been in a really huge software adoption cycle and it's been enhanced by the pace of innovation. On the software side, it's been really enhanced by the user's adoption of software. I would argue that software investing has been really challenged in the most recent past because most companies are looking at it and saying, how many software tools do we have? Are we using them all? How many seats do we have? How should we think about that? So do I think SaaS is dead? No, no measure. But like you know, does. Is it going to be as hot as it was two years ago? It might take another four or five years. Things go in and out like the markets move like that. So I think as an investor, it's okay with me to be really interested in a space and have a point of view on a space that not everybody is as convicted in right now. Yeah, it changes the competitive landscape. That being said, this is an ecosystem driven business and you cannot invest in a vacuum. You know, we need to think about like what do we invest in early that someone else later is going to Buy. So you do need to think about like the downstream or want to invest in. So you do need to think about the downstream impacts. But one thing I really appreciate and like about this market right now is that traction and like real business model proof points matter. And I think that if you have those, you get people's attention regardless of what sector or space you're in.

You, you like that. But because people are.

I like that because then it's less of a debate around like that's hot or that's hot or I, you know, or. Or less maybe about like whether it's going to play out in a certain way in five years based on what else we've seen play out. It's more about like what's right in front of you right now and how, how do we think about like the controlled growth or the ability to kind of control the dynamics along the way. Right. And I think when you have a business where you challenge it to be metrics forward and you want to prove those things out before you get on a heavy set of spending on marketing or infrastructure building, like you're just, you're just in a. It's a different dynamic and different businesses will, will look interesting and appealing.

Then how did you stay disciplined? Maybe not swaying too much to certain themes like let's say consumers on sexy for a while. How do you stay focused on that core mission and not get caught up in. I won't name anything specifically, but a new thing that might seem like the next thing and maybe don't get too caught up in it. Like, how do you stay focused?

One, I think that by nature of being early stage investors, you should be really excited about what's next and what's new and what's happening. Right. So we are always like open for business on that realm, really excited about it. Right. But then you do need to say, like practically speaking, I'm trying to build a portfolio that's dynamic and I have to have an assortment of types of businesses both in terms of like the business model, who they're serving, how they scale and kind of like what the risk profile of them is. And that's just good portfolio management. And I think that, you know, maybe this goes back to like my days, you know, my kind of my initiation days as an investor and having that hat on always, like that's always been a discipline that we've had at Forrunner. But one other thing I think that captures discipline around that topic is there's more money than there are good deals or investments to make like there, you know, venture is, is far from being a cottage industry. It is a full institutional game. There is money coming into this ecosystem from all kinds of capital sources. And it's a competitive market. It's always been competitive, certainly for the best deals. But it's, you know, it's, it's, there's a lot of money and there's a lot of innovation. Like innovation ebbs and flows too, but it takes a lot more than innovation to make a company great, right? And then you're talking about teams and execution, all the things, right? So arguably speaking there, it's, it's, it's more competitive on the money side to like get the good deals, right? That being said, there are way more good deals than we can do at Forerunner. Like we aren't trying to do every deal. We're trying to build edited portfolios. We're trying to be good partners. We're trying to set ourselves and the teams that we invest destined up for success. So we think a lot on all these different dimensions, like the portfolio management side that I said and what's new and changing in the market. We also think a lot about like, where are we set up to be really great partners and deliver something that is a good experience to the founder? Like we're knowledgeable at your table. We have, you know, and so I think when you put all those things together, like, you know, there's, there's a, there's a set of companies that come into view and you know, that's where we focus our attention.

And being an early stage investor, how much do you focus on TAM and market? Like do you do a bunch of analysis and like this is how big it is or is it more of.

If you get too strict on the tam? It's a backward looking metric, right? A lot of times you are trying to, you are like in the path of progress, you are opening up new markets and new opportunities. I think you can assess like how big is the need, how big is the audience for this? Of course we sit at a seed investment and we think like, what is the upside case here? And we allow ourselves to dream big. That this nugget of an idea and the ambition that the founder has said is possible to deliver this kind of an outcome. And also this could happen, that could happen. And this could happen because it's dreamy and it's fun to do that. And if you have a great team, they probably are going to try to go off into some of those areas. But a lot of times you're talking about something that's going to play out over the course of a half of a decade, A decade or longer. Right. So getting too caught up in what the TAM is today is, is, is, is not something we over index on. That being said, there's a base size market you have to have for it to make sense to have a venture business that could have a scaled liquidity event.

Yeah, that's fair. So it sounds like maybe synthesizing all the things you said over the last 20 minutes, Dollar Shave Club is an interesting example where when you think about the tam, I don't even know how you define all those numbers, but it's like men and maybe even it's women too also do they expand outside? And then also when you talk about changing shifting consumer behaviors, it's like, well, men used to not really care about personal care, but are they, is that changing?

Yep.

Again that's another thing. There's an incumbent that's set up. Sure, they're massive, they're one of the biggest companies in the world, but they sell in stores, not on the Internet. And that takes different infrastructure.

That's been their advantage. But that might, you know, that might not. That doesn't give them the right advantage for how things are changing.

Yeah. So switching gears on questions a little bit. If you are meeting a founder for the very first time, do you have a go to really concise question or framework that you work through to just get right to the point and really understand what they're doing?

I think these conversations are not one size fits all. No business is one size fits all and no founder is. So I think it's important like I come in assuming that anything that there is a lot of things that I can learn asynchronous, there's a lot of data I can ask for that I can go through, that I can have detailed follow up questions. There's a lot of industry market work that I can do on my own. What's precious that I can only do with this person in the room is understand something about them. Who are they? Why are they doing this? What are their strengths? How well do they know their strengths? So I try to use the opportunity to create a personal moment, you know, to sort of like how is it? Can I learn something about who they are as a person? What's their, what's their worldview, what's what gets them, you know, what gets them excited, what irritates them. And I think a lot of times that starts with something that's like disarming and it's not so different than any conversation you would have when you were with somebody socially and you wanted to start a conversation and make them feel comfortable talking to you. So maybe that's, you know, something trivial or maybe it's something important. Maybe it's something specific to their company or their industry, or maybe not. But I try to allow a minute, you know, to get into the conversation and then really think about, like, what can I accomplish in this conversation that I cannot do in an async way or in some other format.

What do you think is your unfair advantage as an investor? Maybe you communicate this people a lot of. Maybe you don't. Why do you think you're so good?

That tee up is intimidating. But you know what the first thing that comes to my mind is, Turner? I love what I do. I love what I do.

Do you think some people don't?

I think people might love what they do. Maybe that works. Maybe they use that to their advantage, or maybe they don't. I think for me, it allows me to be engaged, be interested, be always on thinking about that company in whatever conversation I'm having or whatever I'm reading or whatever new thing. I learned to just sort have that kind of element of like, business is not just under certain hours in the office, but it's just like it's. It's something that's kind of permeates like so many different aspects of your day and your conversation and your thinking. And if you show up to founders like that, because that's how founders are about their business. And I think if you show up to founders like that and you know how to edit that input in an appropriate way, like that can set you up for a good partnership.

So you're kind of always synthesizing in a sense.

Yeah, I mean, I think, you know, if you, if you are in tune enough and you like it, you are interested in the business enough, you're interested in the problem, you're interested in the solution that they're offering. You're connected to the people. Like, all things flow a lot easier from that. And I think that at least for me, like the successes, and maybe this is also like how I. How I describe successes, but that I have are where a founder just texts you a quick question like, what should I do about this? Or that or this just happened. This is a great win. It's just, I think the sign that they understand that you care in a way that they care, particularly at the early stage.

You need people like that around the table.

You need people like that around the table.

Yeah. I kind of describe it as founders as the shower test. I mean, it doesn't have to be the shower, but just like if you're nothing's going on or when your mind is wandering, would you like to think about what they're doing?

Right.

And can you piece things together and just say, like, hey, I have this idea I have.

I have an edit for that these days too. Like. Like, you know, I don't think I'm the right partner if I'm not losing sleep over the same things you're losing sleep over naturally.

So if Forerunner does really well and you're investing in good things, you don't get any sleep.

Yeah, I don't sleep.

Thank you so much for listening to this conversation with Kirsten Green, founder and managing Partner of Forerunner Adventures. Thank you, Kirsten, for coming on the show. If you're building something that touches consumers, first, definitely talk to me. But second, I can't think of a better investor and thought partner than Kristen and the team at Forerunner. If you don't want to miss future episodes of the show, subscribe to my newsletter the split in the show notes and you'll get new episodes plus the transcripts in your inbox. If you want to support the show, share this episode with your favorite consumer founder or entrepreneurs investor. If you're on YouTube and want more content on charting your own venture firm, you'll see Tappable boxes to watch prior episodes with Semill Shot Haystack and Nicole Wishoff at Wishoff Ventures. Similar to this conversation with Kirsten, we go deep on how they started and scaled their respective firms and I think you'll enjoy. Thanks again to Kirsten for coming on and thanks to you for listening. I hope you enjoyed. See you next episode.