S5E4: Kelly Graziadei and Joanna Lee Shevelenko of F7 Ventures Create an Inclusive Space for Women In Ventures

Welcome to The Room Podcast. I'm Claudia Laurie, co-CEO and founder of Pryve.

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We are so excited to welcome you back to the room.

On today's episode, we sit down with Kelly Groseday and Joanna Lee Shavanko, general partners of F7 Ventures. F7 is a venture fund comprised of 7 female operators and leaders with over 20 years of experience in the fastest growing technology companies in Silicon Valley. F7 has a unique value add perspective around helping startups specifically with execution. F7 firmly believes strong execution determines a company's outcome and thus supports companies at their foundational stages to help drive these outcomes. On today's episode, we chat about Kelly and Joanna's respective career stories as operators in Silicon Valley and how they came together with the formation of F7. We discuss barriers to entry as women in the investment world, common mistakes and advice for early-stage founders, and what the ladies at F7 are excited for with what's next in venture. Let's open the door.

Joanna and Kelly, we are so excited to have you on the room today.

Thank you for having us. We are thrilled as well.

We are excited to explore your founding journey to building F7 Ventures, an early-stage venture firm made up of 7 incredible female operators with the mission of providing operational expertise at the early stage for founders. But before we dive into F7 and hear your advice, We would love to learn a little bit more about the two of you. Joanna, you were notably at Facebook for 9 years since 2006. Tell us more about how you ended up in Facebook and how your time there shaped your path towards F7.

I was born in Hong Kong. My mom worked hard to get us out well before the '97 China takeover. We immigrated to Canada. That's where I first was able to benefit from an equal starting line. And this is a big part of our firm as well. Going through the public school system, was put into the gifted program, IB programs, and was able to get into Harvard as the first generation in my family to graduate from college. And throughout that time, everybody was going into consulting and investment banking after graduation. I decided instead to drive out to California and explore tech. Took an entry-level role at Facebook at the time. The job was everything from customer support to helping define some of the site's policies, um, site integrity teams. And from there spent 9 years at Facebook doing everything from operations, helped to start the India office, worked in product growth as as well as partnerships. From there, I actually joined Social Capital, which was my first foray into venture. And then I spent my last 5 years prior to F7 as COO of Series B and C companies. Facebook obviously taught me a ton about execution. As you all know, Facebook wasn't the first social network site. They just executed incredibly well. So I absorbed a lot over those 9 years. And it was really when I came out to operate at startups when I realized founders actually struggle a lot with executing on their great ideas. Wasn't something to take for granted. What I really wanted was to take the lessons I had learned through Facebook, through those operating roles, and help founders see around corners, secondarily to put more women around the table. So those two things motivated me to join forces with F7. And then as we saw the thesis and strategies of F7 work over the last two years, that's what really compelled me to double down on this with Kelly as my new career and last career that I'll have.

Kelly, you've had significant experience mentoring founders. You have been a mentor at First Round and Sequoia. Tell us about how you broke into venture and why you saw the need for App7.

First of all, I love how you call out the mentoring piece. One concern or warning we often hear is that moving from operator to investor is really challenging and that being an operator is very different than being an investor. For me, a hallmark of my operating career is building and leading teams and managing and developing people. Coaching and mentorship have been core to that, from building high-growth teams at Facebook to mentoring and coaching individuals outside of that, as you referenced, through First at Strand Sequoia and as an executive coach. And this is directly transferable and core to how we work with founders at F7. We're not looking to operate a founder's company, but we want to be that hands-on coach to ask good questions, to connect the dots when needed, and to help see around corners. We're a resource for founders and leaders as they are hiring their first executive team and thinking about how to grow and scale. And we also bring functional expertise and experts to the table to help founders focus on their own superpowers and move faster when they need it. And I share all that just because is coaching and operational support is central to F7's motivation for coming into existence, and it's core to our ethos. As Joanna and I continually make decisions about where to invest time and resources, we're always asking ourselves, will this add value to founders? And we are maniacally focused on building trust with the founders that we work with. So we're the first call they make when they need help, when they're at a crossroads, or when they have a difficult situation.

As a founder myself, being able to have someone who's done the job and has that experience is really unparalleled. Kelly and Joanna, how did you first make the transition into venture? Did either of you have this aha moment that venture was next for you in your career?

A few years ago, I made the decision to leave Facebook. I was there for 7.5 years. I joined the company in 2010. They were about 750 people. When I left Facebook, it was over 40,000 people. It was an incredible professional experience. And when I joined, I had an offer on the product side and the sales side. I chose the latter and built the mid-market sales channel. In North America, growing it to 150 people and $1 billion in revenue in less than 3 years. I then made my way to the product side. I managed a global product marketing team, um, which was really focused on understanding customer needs, product road mapping, and taking products to market globally. So all that said, incredible experiences without question, but I looked up after 7.5 years and I was really ready to go back to building and ready for something smaller. But when I left Facebook, I wasn't sure if I wanted to start a company or pursue investing and supporting other founders that way. Way. So my first step, I did an EIR at a VC firm, which was an absolute gift and a fantastic off-ramp after being so heads down at Facebook. And it was there that I sat around the investment table each week. I began meeting with early-stage founders on a regular basis, and I also met with over 50 different investors and VCs as I was determining my next steps. And there were a few distinct learnings during that time. First of all, I was shocked to learn how few female checkwriters there are and how few venture firms are led by women. I think it currently sits at 4%, which is pretty unbelievable. Even when I say those stats out loud, and I know them and know them well, I was all the more shocked when I learned what little venture funding is going to women and other underrepresented individuals. 2.2% for women, even less for Black, Latinx, and LGBTQ+ founders. With that, venture is a very network and relationship-driven business. And as a result, we need to change the networks and diversify the decision makers to diversify who is getting funded. I also heard time and time again in my meetings with other investors that you learn by doing. And so my first step there then was I started angel investing, writing small checks. In that, I learned that I loved meeting and finding ways to be helpful to early-stage founders, but I wasn't really accountable to anyone in my decision-making. I wasn't always translating my operationally derived intuition into firm investing criteria, and I didn't have the opportunity to really learn from anyone else when I was making those decisions. So, my next step from there was I started talking to some of the other women of F7, and some were angel investing, some were institutional investing. And I shared that I think we can make a bigger impact on the numbers in the ecosystem by coming together. We can deploy more capital, we can learn from one another and refine our investment philosophy, and we can bring our functional expertise and networks together to have a bigger impact on underrepresented founders. And with that, thankfully, the women of F7, Joanna, Keerthiga, Yvette, Sarah, and Robin, all said an enthusiastic yes, and F7 was born. And for me and my personal journey, this became the perfect combination of investing and supporting the next wave of incredible entrepreneurs and starting my own company and firm that reflects our values and what we want to see exist in the world.

Every time someone mentions the statistics around venture dollars to female founders, it just shocks you every time.

It really does. We have a lot further to go to move those further and faster.

You mentioned a few of the other F7 women and definitely want to chat on the team building aspect of F7. It's really unique that F7 has a powerhouse team of 7 female operators. Tell us a little bit more about how that team came together.

We'd all had worked together. We'd known each other for over 10 years working together at Facebook and beyond, and really took that step to come together and make a bigger impact by combining our capital and expertise for founders.

It's really helpful to hear about the framework for how you met these incredible women who you're investing alongside. I think a lot of our friends, Claudia and myself, are asking about how do I become an angel investor? Or what does it look like to start investing myself to get that track record you're referring to, Kelly? But a lot of us are at the stage of our career where we can't really spend more than maybe $5,000, $10,000 max on any sort of one check. And maybe that's even only once or twice a year. And so thinking through how we could in a smaller way think about bringing our friends together who we know and respect their opinions. Is an excellent model to think about. But looking forward for F7, talk to us a little bit about the initial mission and investment thesis alongside these incredible women of operators that you were having as your sources of deal flow and community.

When Kelly and I decided to double down on this, the first thing we did was write down our sort of vision, mission, values. Earlier on in my introduction, I talked about the ability I had to benefit from an equal starting line, and our vision is that The future is going to be accelerated by having an equal starting line for bold entrepreneurs. There are a lot of women and diverse individuals out there that are starting companies. It's just about network diversity, and we believe in creating that equal starting line. Our mission is to really get our hands dirty and help extraordinary early-stage entrepreneurs focus on their superpowers and scale to maximize their impact on the world. We operate with integrity. We work hard and smart. We produce excellence and generate trust. And the two drivers and motivations that fuel these strategies are extending our collective 140+ years of deep operating expertise across almost every single function— product engineering, operations, business development, sales, marketing— and extending that to founders so that they can avoid some of the mistakes that we've made in our careers. And then the second is to increase the number of female checkwriters because it's a virtuous cycle. When you have more female checkwriters, you're going to have more female founders as well. And so to introduce that network diversity is really a driver for us.

We love that framework, and we are aligned with the mission that F7 is putting forward here at the room. Particularly the idea of having more female checkwriters really resonates. The recent numbers around female investors having— deploying 2x more capital to women as well just really shows that it does matter and that the ecosystem works together to actually lift up all of us. I love the mission behind that for you all. We have a lot of amazing founders who listen to our podcast, and if they're sitting here listening right now, when should they call F7? Is it pre-seed? Is it the, I don't even have a product, but I have a genius idea, or I have some traction and some early users? When's the right moment to—

They should call us whenever. We typically invest in pre-seed and seed, but really we're trying to make the entire ecosystem better. So if you're a founder out there listening and there's an operational issue that you just want to think through, that is the time to call us.

I have heard that the numbers for female founders really drop off a cliff at the Series A mark. I can't cite my source here, so I'm not sure if that is data-driven, but if that sentiment proves true or something you guys feel is reflective, I'm curious about, in your founders that you've invested in to date, supported them through the fundraising journeys to come.

That's actually part of our ethos where we want to be known as the firm that gets you to that product-market fit Series A round. If you work with us in pre-seed and seed, we're so hands-on. We'll be with you through every single step of the journey to get you to that Series A, to get you to product market fit, and you have the tools and the foundation to scale from there. The founders that we work with, that we've invested in, even out of this Fund 1, we're working with them really closely to set them up for success once they hit product market fit to get to that A round.

There's a couple things we'll do as soon as we invest in a founder and a company. We do a kickoff call. We joke a little bit because they've just gone through the fundraising for their seed round, but we typically already start talking about, okay, what are the metrics? What are your What are some of the KPIs that you want to hit over the next 12 to 18 months? What would a great Series A look like for you? And we begin to outline some of the ways in which we can help and support. We want to be that first call. We don't want there to be any posturing. You don't have to fake it. If you've got a question, give us a ring. That's the foundation that coupled with our interest and ability to really roll up our sleeves and help. We have ongoing communication channels and WhatsApp that are one-on-one. We have, for some founders, we have biweekly calls. We also have in-the-moment calls when situations arise from trying to close a first executive hire to refining a sales compensation plan, to making sense of retention data, to reacting to an M&A offer that came out of the woodwork. That's just an example of some of the ways that we really want to support founders getting from that pre-seed and seed to Series A and beyond.

Coming myself from an investor position in the ecosystem and looking at the amount of emerging managers that are coming into play, or alpha managers as some people refer them to. I'm so inspired by both of your decision to say, hey, we can do this ourselves. We don't need to become a partner at another fund that's already established. We actually think there's a niche in the market where we're going to be a unique voice and unique champions for founders who are being underserved. Could you walk any listeners who were thinking through the barriers to entry on founding a fund? And what that process has been like for you, both tactically or just emotionally, and thinking through the confidence of, hey, I can start my own fund.

Emotionally, I think that's probably the hardest leap, right? I've always thought of myself as an operator. I imagined my entire career as operating, and it was in those last 5 years where I was COO, where I saw at these B and C companies that mistakes made in the pre-seed and seed phase, even by repeat founders, they They tend to make them a lot and they don't manifest until 2 to 3 years later. And at that point, the founder's like, oh, let me just hire a COO and it'll be fine. But they tend to be incredibly costly, like millions of dollars, lots of resources. And so it occurred to me, I could go to another company, be an operator. I'd enjoy it. There's like a lot to fix and get your hands dirty, but you could either do that at an N of 1 or be on the venture side. Put your own skin in the game with your capital and maybe have an n of 37 to 40 at a time that you're really helping. That was an aha moment for me to be able to work with founders and share what I've learned in a way that's actually helpful. That decision was probably the biggest part of the journey. To Kelly's point, teaming up with the people who have grown with you over the years, who have similar interests, but a different skill set is actually really powerful.

You're forming your own tribe, and that's what we did with F7 From the perspective of a founder, you mentioned that there are some mistakes that founders make, and sometimes these mistakes don't manifest till later. I would love to dig in and hear some examples of what some of these common mistakes are.

Maybe mistakes is a little bit too harsh of a word. Some things you have to go through, but some things somebody else has already been through the pain, and it might just be helpful to hear a different perspective. But the things we see over and over again, the initial go-to-market plan, for example, over-optimizing for logos and top-line revenue, only to have that inevitably change when it becomes clear that the business or margins aren't sustainable. And this change, like once you flip a go-to-market plan, that change causes customers to churn, you hurt your brand. It's real hard to bounce back from. A lot of times people don't put enough thought into the go-to-market and just optimize for, I just need those first 10 customers and it doesn't matter. I just need this top line revenue, even if I'm overextending on the margins, because that kind of catches up to you when you try to to scale. Another common thing that we see is hiring, hiring labels and management over execution, especially at the early stages when really you need execution, or setting the wrong expectations with employees about what they're building, why they're there, what they can expect from you as a founder. When there's a mismatch of expectation, that definitely catches up in a year. And then again, emphasizing top-line growth and ignoring everything, or holding on too long to an idea because you're so convicted as a founder and not recognizing when a pivot is needed. Or that you could be wrong, I think is another thing that we see a bunch at the very early stages.

Let's dig into that a little bit. The getting to product market fit. Oftentimes the idea that you raise on is never gonna hit product market fit. Walk us through some frameworks and some tips you would advise a founder who maybe their idea's not hitting it and they should really start thinking outside the box.

Oftentimes it's about execution, the how to get to that idea. A common framework might be bring the data that you have and then let's have a session and talk through how this data could be wrong. There's a story that it's telling you. What could it mean if this data was wrong? So I had this like lesson from Facebook really early on. We launched Facebook News Feed and there were protests outside the office about it. There's all these privacy issues and people were up in arms. In fact, the largest group on Facebook was like an anti-News Feed group. What we saw was that in the data, folks were actually incredibly engaged. We saw a lot of click-through rates. We had more users than ever versus the customer support data, which was showing more tickets than ever, more people being upset than ever. The common reaction would be, let's shut down News Feed. Let's make the customers and the privacy advocates really happy. But as you know, Facebook was very engaging. There's a future that we were building toward, and one side of the data was really showing that there's engagement and people were upset about minute thing on News Feed versus the concept of coming together. I don't know if that's a good example, but what I'm trying to illustrate is encourage founders to challenge their own thinking. Bring all the data to the table, talk about the arguments of why that data could be right and why that data could be wrong, and really challenge some of those assumptions so that you might get to a different outcome. Traits that we look for in a founder, for example, are folks that are humble, who are willing to listen, who are willing to introduce new ideas if they're able to, you know, quickly pivot or introduce new ideas if things aren't going as planned.

You've mentioned this, part of your thesis for F7 is that even when a founder might find product market, the company still might not be successful if there isn't good execution. And you've mentioned the importance of making sure you have good executors on board, not just managers, and that you're critically thinking about how you get to that product in market. Could you provide some examples of what it means to be a really good executor and what to look for as you hire those early executors into your business?

Think of Facebook as an example versus MySpace or Orkut or any number of social networking sites back in 2005. These examples are in every sector. The winners are the companies that execute. And you can have an idea, but if you don't know how to bring that idea to fruition, it's still just an idea. We look for work ethic, somebody that's willing to put in the hard work day in and day out, being a good decision maker, making everything actionable, setting goals and milestones for the company, and just ruthlessly prioritizing to achieve them. We screen for this sort of like founder grit. and we think that really is correlated with execution. On the flip side, it requires recognizing what you aren't as great at and potentially either hiring to fill that gap or being humble enough to accept when you're wrong and moving forward.

Kelly, who's a company in your portfolio that has really knocked your socks off on their execution?

One is actually a recent investment. Ruthia is the founder of a company called Dunn. Ruthia is a former product designer actually from Facebook. She saw her roommate and friend really struggle with ADHD and she learned that women in particular are more likely to go undiagnosed. With that, she founded Dunn, and she's making ADHD support and mental health more easily accessible. I feel like Ruthia is the definition of execution. It's been unbelievable to watch her focus and her growth. And as a result, the company's just seeing, you know, really tremendous growth and results and helping more people faster.

Joanna, as you were talking earlier, I just got this image of how the ecosystem of underrepresented founders can be expanded. And the idea for you was some people who, they're hitting roadblocks at the Series B, Series C. If we had helped solve those problems at the pre-seed and the seed, we could really have unlocked potential for them at the Series B. And I like that framework of you now, Kelly and Joanna, are going downstream to support founders from day one to really unlock and create a more inclusive ecosystem that hopefully creates creates network effects down the line. We believe this in the room, and there's a lot changing on the ground in terms of who the typical founder looks like. Where do you guys see this industry in 5, 10 years, both with the impact of what you're doing with F7, but generally as the ecosystem shifts around us?

First of all, solutions we need emerging from the pandemic will disproportionately impact underrepresented individuals, and we need these founders and perspectives and lived experiences to really drive solutions, and not because it's good for the world, but because it's solving real-world problems that will result in the next wave of unicorn companies. So one of the things I see evolving is people see investing in underrepresented founders as that's good and that's a nice to have. And then the other end of that spectrum is that's incredible business. And we need to continue to shift along that spectrum. I would say the founder archetype is still the kind of young male Ivy League dropout, and we need to keep changing that. We need to amplify the data and stories around incredible companies and incredible founders that are different from that archetype. These new perspectives and individuals are who will be driving the next wave of solutions that we need. We have a number of founders in our portfolio. Another one that comes to mind, Jera Huston, is the founder of Workwhile. She grew up in Fresno, which is considered the second poorest city in the US, and from that experience, Jera really wanted to build a solution for hourly workers to create more reliable schedules to improve quality of life. And that's a great example as as we expand and open up the ecosystem to new networks, funders, and founders in terms of the solutions that are possible.

My hope, I'm gonna say this now, we'll see if it happens, I, I think it will, is that we're interviewing a F7-founded funder in 5 to 10 years who's IPO'd, just some of our other guests have, and we can say we know where this started cuz you had this incredible team of Kelly and Joanna behind you.

We hope so too.

With that, we would love to ask you both our final closing question, which we ask every guest on the in the room, and it's on theme for our discussion today of continuing to amplify incredible women in each of our lives. We can start with you, Kelly. Who is a woman in your life that has had a profound impact on you and your career?

There's a few that come to mind. First of all, I feel like I've been incredibly lucky to have some very strong and inspiring women around me in the workplace, including the women we've mentioned who founded F7, particularly Joanna and our other founding partners. They've had a profound impact on how I work, how I collaborate. I feel like we've really pushed one another to go after big things, ideas, ideas and how to make an impact greater than myself. The other thing I would say to that question though, particularly for individuals that maybe haven't had that woman or otherwise making an impact in their life, you should absolutely go and create your own support network. These may be friends, colleagues, just people that you trust that share your challenges and can also bolster you when you need it. And for me, this started early on all the way from friends from college who I'm still very exposed to today then took the form of small professional mastermind groups. But I think this is so important as many women and female founders in particular look around and feel like they don't see a lot of role models. And they often feel isolated. But I would just say, look from side to side and form your own group of powerful women and be comfortable sharing both business and personal challenges. And I'm confident that will make a huge difference and those connections will only strengthen over time.

I love that callout. I call this your personal board of directors. Everyone should have one. And Claudia, I'm so fortunate to have on mine. It sounds like Joanna is on yours, which is very fun. So thanks for framing the mentorship opportunity as something that you can build for yourself and not just in the workplace.

Joanna, what about you?

What Kelly says resonates. I've learned more from people that are entering the workforce for the first time now versus when I did 15 to 20 years ago. I don't think I can name just one person. It's like a whole ecosystem of women If I had to name it, and I can't name my mother, it would be my 3 younger daughters who are 6 and under and teaching me a ton every day. And my mother-in-law, she's like the matriarch of the family, refugee from Soviet Union, came to the United States not speaking a word of English in her late 30s, started off cleaning houses, but ended up being a VP of Merck and now has her own company when she's close to 70 years old. She's been super inspiring for me, but I think everybody has their story no matter how young or old you are.

It sounds like we should have your mother-in-law on the Room podcast.

Sounds like a rock star. 7D, love that.

Well, Kelly and Joanna, thank you so much for joining Claudia and I in The Room today. It's been delightful to learn more about your own paths and the founding journey of F7 Ventures. We're excited to see what more comes from you both and from your firm.

Thank you so much. We appreciate it.

Thank you for listening to this episode of The Room Podcast.

We hope you enjoyed today's conversation with Kelly and Joanna from F7. We also hope to see you next Tuesday at 10 AM Eastern, 7 AM Pacific for another inspiring conversation. Please like, subscribe, subscribe, join our newsletter, follow us on Twitter and Instagram, and leave us a review. We'd love to hear from you. In the meantime, we'll see you next week in the room. See you soon.

Support for The Room comes from Silicon Valley Bank. Silicon Valley Bank understands these questions can keep founders up at night like Claudia. For over 35 years, Silicon Valley Bank has helped high-growth companies through scalable financial solutions, plus insights and expertise that many other banks just can't, which could be why 50% of US venture-backed tech and life science companies bank with SVB. Learn more at svb.com/next. Silicon Valley Bank.

Built for what's next.

Cooley is a global law firm built around startups and venture capital. Since forming the first institutional venture fund in Silicon Valley, Cooley has formed more venture capital funds than any other law firm in the world. The firm has 60+ years working with VCs companies, helping form managed funds, make investments, and to handle the myriad of issues that arise through a fund's lifetime. Learn more about the firm at cooley.com and also cooleygo.com, Cooley's award-winning free legal resource for startups.

All opinions expressed by Claudia Madison and podcast guests are solely their own opinions and do not reflect the opinion of The5EC. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.