Season 1 Recap: Claudia & Madison

Come on into The Room. The Room is the series that lets you get a view into the room where it happened. If you're a founder facing questions about your first customer, first fundraise, or first hire, this is the show for you. I'm Claudia Laurie.

And I'm Madison McIlwain. Your co-hosts. On today's episode of The Room, Claudia and I take a step back and reflect on the key lessons our first season's guests taught us and pull apart themes we saw woven throughout the episodes. Let's open the door. Hi, Clads.

Hi, Mads.

How's it going?

Good. How are you?

Well, I can't believe that it's been almost 6 months since we even considered starting a podcast together.

I know, it's so crazy. The 6 months have flown by and I am just so excited because Season 1 was really just the beginning. I feel like a lot of our listeners probably don't know sort of how we actually got to starting The Room Together.

I know.

I remember the day so clearly. I think it was like late July and I got a text message from you. We were talking about like meeting up or something.

Yeah.

Because we hadn't seen each other in a while and you said something around, hey, by the way, have you ever thought about starting a podcast? I was driving. I remember this so clearly.

I was literally driving in Noe Valley and I pulled over and sent you an audio voice recording and was like, have you read my mind? This past week, like 3 different people asked me if I'd ever thought about starting a podcast and I would not wanna start one with anyone but you. Like, we actually need to do this and I'm dead serious. I hope you are.

What's so funny was that on my end, when I sent you that text message, it was sort of the beginning of quarantine. I was at home alone and I was like, okay, what am I gonna do this year? Like, is it just gonna be work and staying at home? And I had started listening to some more podcasts given the downtime and I remember thinking, I was like, you know who would be so good and who I'm surprised doesn't have a podcast? Madison. Let me text her immediately because I feel like, you know, we've always known that we wanted to do something together. I was like, I have a feeling this might be of interest.

I know. It's so serendipitous because like obviously we've been friends for, I mean, 2 and a half years now, but over quarantine we just were texting because like back and forth, you stayed in SF and I had gone back to be with my family at the beginning of shutdown. Yeah. And we just didn't have that like normal touchpoint. We usually, usually can like was going shopping together or seeing each other on the Embarcadero, which is like where I used to work and right where you live. And it's funny because I think we set up like a weekly call on Tuesdays where we just kind of were just talking and chatting about things we were seeing happening in the market. And you were exploring some ideas and I was exploring some ideas. And I think that was probably the foundation for me of, wow, like every time we chat, I like leave our conversations being more informed and more excited about something that I'm thinking.

Totally.

And there we have it. They're like, that was the room.

And then I feel like the room and those conversations that we had really just sowed the seeds for so many other things to come, which we'll talk more about later this season. And it really was just a perfect storm.

Truly.

And so as we kind of look back on Season 1, what are some things that really stuck out to you as key themes or moments with all the amazing guests that we were able to chat with?

Yeah, I think what was so interesting was that our conversations with our guests were very thematic to what was going on in the year. I remember one of our first conversations was about the future of work. I mean, we talked with Shashir from CODA. and it was so funny because Coda was my lifesaver during day-to-day. And then chatting with Matt and Swati about the election when that was on everyone's minds. And then around Christmas where, you know, e-commerce was clearly going up and to the right. We chatted with so many brands who really gave us an inside look of sort of what that ecosystem looked like. And so looking back, it's just almost a fun way to document kind of all of these pivotal themes throughout the year. Reflected in our podcast. One really kind of interesting theme that I think we dug into a little bit this season is the future of work. I mean, I think I mentioned in the podcast, Coda has been a lifesaver from a team organization and collaboration standpoint. Coworking has been like a really interesting thing that was such a given and now has gone very virtual. What are your sort of hot takes or predictions for what work will look like in 2021?

Yeah.

Oh my gosh.

What will work look like? Well, I'm hopeful that I don't have to go back into the office every day. Not that I don't love my team, but I feel like I actually am productive in different ways at home than I am in the office. Venture is such a people-first job that when I am talking to people, I get so excited and I feed off that energy and that's what I love about it. But then it kind of gives you this momentum where you're just an Energizer Bunny talking to people and it's hard to sit down and do email or, you know, do some deep research and deep work. And I think The benefits of being home is I actually have way more time for deep work and way more time for that kind of heads-down style. But that balancing act is something that I personally really want. And I think others have felt that way too. And so once we have this vaccine, I'm, I'm predicting this hybrid model and I'm hopeful, maybe this is an optimistic, um, personal goal, but that balance gives you the best of both worlds where you're not going and doing too many things in person to the point where you're exhausting yourself. But you're finding a balance of good work, deep work, as well as the energizing work with people.

Yeah, totally. I, uh, tweeted this yesterday, but Jessica Lessin, also a season 1 guest, posted this really interesting report from the information of like what different big tech companies are planning to do this year. And it's fascinating how you would expect kind of Google, Facebook, Netflix, Uber, like everyone to kind of have the same back-to-work strategy. But it's fascinating that a couple are now going to be fully remote. I was just chatting with a friend earlier today Madison McIlwain, who's at Google, and she was like, she thinks because being able to be remote is almost like a competitive benefit at this point, Google will be forced to be somewhat of a hybrid company insofar as there has to be flexibility allowed, even if that's not something that they really want in order to be competitive. Yeah, I think it's going to be interesting to see how decisions around being in office, being in a hybrid, being fully virtual will actually just like shift company culture and who ends up working there. And by construction, like the types of products they build potentially.

I wonder what that means for like real estate. I feel like when we look around in SF right now, both of us live in San Francisco and it's just shuttered doors. People are moving out of the city, our friends are going away, and there's just no reason to be here, quite frankly, for a lot of people. And I think that's led to kind of a real estate crisis. I mean, rents are so cheap now comparatively to what they were. We saw a really cool company that is innovating on the third space, and this is something that we talked about with Amy Nelson, the founder of The Riveter, and the idea that people have homes and they had work prior to COVID and they kind of still want a third space. There's kind of a philosophical component to that, but this company is actually iterating on the workspace and saying, well, actually you don't really need to go to the office, but you might live down the block from another coworker of yours. Why doesn't the enterprise company allow for micro workspaces in your zip code, helping you find and source almost apartment-style work, but that's not your apartment. So there's a little bit of a third space component to it, but it's still the workplace. and I just think that's such an interesting mode of work.

Yeah, that's fascinating. What I'm really curious about, and I think we should ask some of our guests in this next season, especially companies that are maybe slightly earlier and are kind of doing this work from home thing for the first time and, you know, formally had a WeWork or, or office space. I'll be curious to hear how they're thinking about it and how they're thinking about sort of how to create culture while doing this. Because I think that's so critical, especially in earlier stages of companies. Speaking of learning and culture, I think this year has, you know, not been without some pretty crazy national and also global changes. The election, for one, happened, and it's definitely an interesting time. I think sort of this transition period is going to be something that everyone is glued to their screens about. Something that I did not realize that I learned this season was how similar the startup fundraising process is to fundraising in the political space. As our resident venture expert, what are your thoughts on that?

I loved our first episode with Matt and Swati. I think it was just so special to have a couple, a partner in life and in work, come on and share their mutual story of building a business together. And they had such different paths that brought them to the same place. It was a good reminder, I think, at a high level to both of us that Many paths can lead down to the same outcome at the end of the day, especially being so young in our careers. It's a helpful reminder, um, that the decisions we're making now, um, yeah, they will inform where we are in 10 years, but at the same time, a lot of things will change too. As it related to the fundraising, at the end of the day, you're raising capital from people and whether you're raising it from limited partners or from high net worth individuals or institutions. It's still people behind them, the capital. And so I just think that was a really helpful reminder that almost like sector agnostic to the type of capital you're raising, it is important about relationship building and it is often about them and you working together for a better goal, whether that be in the political sphere or the sustainability sphere or the social sphere. That was a similarity that she'd kind of connected the dots for me in a new way between venture and political fundraising.

I think the other thing that was a closer tie than I realized, mostly because I think we hear about quick funding stories, someone raised $50 million in a weekend because that's like the really exciting shiny story to tell. I think it's really easy for young entrepreneurs to think that's the norm. We're gonna get our first round in 2 weeks. We're gonna raise our Series A in 3 days. And from speaking to almost every entrepreneur we've spoken to this season, that was so not the case. I mean, maybe for your second startup, but the first go around took months, if not years. And similarly to the political landscape, like, yes, we saw Pete as a strong candidate right off the bat, and it seemed like he kind of came out of nowhere. But no, like, it's been a decade in which he's been fundraising and sort of finding supporters and refining his message and his point of view. It's so interesting how With startups and in politics, it's so easy to be like, "Oh, this person's a genius, overnight success." But that work is always there for years and years prior to that kind of headline moment. And I think that's why it's important for us to keep sharing these stories because I think it'll be really easy for anyone, whether they're a young politician or a young entrepreneur, to be incredibly discouraged when a month in they feel like they're not getting anywhere, where the reality is, is like, that's just par for the course. The relationships you build through those tough processes that will then lead to those like quick, big stories potentially like 5 years down, down the line.

Yeah. I have so many thoughts swirling in my head after all those good wise words. I think, you know, from my perspective on the other side of the table, we have to say a lot of nos. Like we see hundreds of companies every year. And so it's oftentimes not anything to do with you and everything to do with where we are and what you're looking for and what we are looking for in a company. And so that taking that personal nature out of it is something that I really struggle with that I I think especially as young innovators, like we're not as conditioned and seasoned to not take nos as personal. And that is something that you learn probably pretty quickly in the political fundraising sphere cuz you're more directly asking for money.

I feel like with venture there's a little bit of a song and dance, like, yes, we're asking for capital, but we're really into asking for you to invest in the future of enterprise SaaS, right?

You mentioned how you've heard these crazy stories and I think they are crazy because it's pretty unrealistic for most entrepreneurs and first-time founders to expect to get a term sheet from Sequoia after one meeting. Seems like there's stories out there that, you know, say that's true. So not going to dispute that, but I've heard from more seasoned investors than myself that this is quote, a really frothy market.

Now I'm not really sure what frothy means or how people are using it. Sounds like a really delicious latte, but at the, at the same time, it is a frothy market if you want to call it that.

I mean, people are deploying a lot of capital. The markets are really high. I think this is just the first time they've gone down 3 days in a row since October. Like that's really abnormal. And so Keeping that in the context, it's a boom time. We're really at the highs and it's suspiciously similar to a time really when we were quite young in the late '90s where people felt like we were on top of the world. The internet was a thing and the boom was happening then. And that was something interesting about our guests from this season. A lot of them had early learnings that really shaped who they were and who their career was. At that same time.

This kind of reminds me of Jessica Lessin's comment around the entrepreneurs she was friends with coming out of the financial crisis. I mean, it's fascinating to sort of see where the companies that were founded in 2007, 2008, 2009 have netted out and how she sort of like kept personal relationships with them and have sort of seen their path. I think we're going to see a similar set of kind of founder groups or kind of like categories of company coming out of, you know, last year, this year, and next year potentially. So that's kind of a prediction that I have.

Wait, I wanna, by the way, as a shout out, I would love to meet you if you think you're gonna be the next Drew Houston coming out of this, uh, this down cycle or up cycle.

I will, uh, DM you about that.

Perfect. Yeah.

I'm excited to hear a little bit more about sort of the, the female perspective in venture, and I know we're touching on that next season with Jesse Draper from Halogen. And so I think this is a theme that we're going to continue to hit on time and time again.

Yeah, no, thanks for bringing that up. I think that the female component is an important aspect of our podcast because obviously we're both young women in tech and we've been fortunate to have guests that skew, I think 75% of our guests from season 1 were women. And that was important to us because it's really easy to find, well, not really easy, but it's not as hard to find great male founders who have amazing stories that are inspirational and inspire us all. But I tend to believe they face generally less adversity in the fundraising process. That's totally an opinion, but I think would be true by the numbers, given that, as we've quoted before, TechCrunch reported in 2019 that we had an all-time high of venture-backed dollars at 3% in women founders, which is just so incredibly low. I can't even believe that that number is considered a high. We really wanted to be intentional about who we brought on the room, and we were fortunate to find incredible female founders whose stories are compelling and inspiring. There was, you know, no, we didn't lower our standards. Standard of guest for those, but I think it helps to showcase this like wide variety of types of founders, uh, in an effort to show that not one story is the same, but there are themes that show adversity and challenges that come along the way that if you're a woman, maybe you're more likely to face. But really honestly, I do think just the founder journey has as well, but showing the female founder journey is something that is really important to us because I don't think you can do what you can't see. And as young women in tech, it's really been valuable for me to see these incredible stories from Hope and Jessica and others.

Another really exciting theme that has come out of season 1, which I wasn't really expecting, was e-commerce.

You weren't really expecting?

Claudia, come on. You and I—

Fair enough. Fair enough. And I think there's going to be more of that in season 2.

Well, for our listeners, Claudia and I are avid shoppers and basically bonded on our mutual love of fashion tech.

Exactly. By unexpected, I mean that I think a lot of VCs and like tech historically doesn't think of like a retail store as a tech company. But I think that is like clearly not the case from, from the stories that we've listened to. But yes, we are kind of e-commerce addicts. And this this sort of past few months in COVID and holidays and online shopping and my credit card balance has definitely reflected that. But we chatted with some like pretty awesome e-commerce folks.

We chatted with Koral from SunRev, Alexa Buckley from Margaux, and then on the flip side in terms of e-commerce infrastructure, we have Amit from Narvar, which is the, the company that powers basically everything once you have purchased something.

If you've returned something this holiday season, like you probably returned it via Narvar's online portal.

And I think what is so fascinating is that it really is a miracle that you can buy something online, something that is dispatched from inventory. Somehow it shows up on your doorstep. Then if you say no, you don't want it, then somehow it gets back to the hands of the brand again. And I think e-commerce infrastructure is just beginning. It's something that consumers sometimes don't think about, but it really underpins this whole operation. What are some insights or stories or moments from our conversations with our e-commerce guests that really resonated or stuck with you?

I love the supply chain callout. You know, I'm a huge supply chain nerd, and I do think that it's so astounding. The way that we purchase online today is just not how these brands originally found themselves being purchased. I mean, like, we went from catalogs to putting our stores online to then consumers being like, oh, I'd like to check out online. I don't just wanna browse online. And now FedEx and UPS and all these carriers are powering you know, this direct-to-the-doorstep experience that, that honestly, that they weren't built to do. Like, those shipping platforms were built for courier logistics for large businesses. And so I feel like after talking to both Coral and to Alexa, who were on the brand-building side, like, they really have a strong customer loyalty. They have an incredible brand. They're expanding to Asia. They're expanding their, their line of shoes and bags. Both Alexa and Coral, they're at the mercy of so many enterprise SaaS solutions that are enabling their businesses to run in a way that is cost effective. No longer do brands have to build their own website, build their own shipping system, build their own order tracking. They're using Shopify, UPS, FedEx, and Narvar to do all these things for them, but they're still responsible for this like brand building component and meeting their customers' needs. And, and customers are just turning to the brands rather than turning to these authority figures. And I feel like the authority figures of old are like Vogue and supermodels and top-down people who are telling us what we like and don't like. Now the brands are doing that, but they are reliant on technology to be able to meet these customers, because without technology they would be stuck within the supply chain challenges that is the fashion industry. Not to go on too long, but I just It's so cool to me to see the symmetry between the rise in authentic brands that really are meeting the core of what the customer wants and needs in their closet alongside the technology boom that is enabling these clothes to be delivered to your doorstep.

Authentic brands. That's really interesting. You've hit on something that I'm curious to see how this plays out over the next 2 years. Authority figures like a Neiman Marcus or a Vogue, or, you know, an editor of a fashion magazine. They're the ones who have sort of been aggregating all the brands and all the points of view and selecting, you know, a very few strong points of view saying that's a trend or that's a hot thing. And that's where consumers go. I think something really interesting about D2C right now is how difficult it is to be unique and consistently unique, because I think it's so easy to build a store on Shopify and have all of your logistics taken care of and find a factory in Asia manufacturing something. I've seen a lot of copycat brands and I've seen a lot of brands that say, okay, we're going to use the same sans-serif font, the same packaging, the same pastel colors, and are selling the same product essentially, or a very similar product. That it'll be really interesting to see how brands manage to have a strong point of view and manage to mark themselves as the thought leader of their category. The theme of being D2C, but also a heritage brand is something that will be critical in the next few years.

Let's unpack the modern heritage brand in one second. But I have a question for you because you're touching on this fact that there's so many direct-to-consumer brands these days that in some ways look identical to the consumer, which is a problem. And then you have what I care or not care more about, but I spend more of my time looking at, um, from a venture side is this e-commerce infrastructure solutions. But I feel like there is so many e-commerce infrastructure solutions that are gonna help to innovate and disrupt the brand. And at the same time there's a lot of brands, but who do you think there's more of?

Do you think there's more e-commerce infrastructure solutions or do you think there's more D2C brands? Because I'm starting to think there's more solutions than there are brands who need the solutions.

That is such a good call out. I think there is going to be a need for an aggregation on the software side. It is just not helpful to have a million piecewise solutions that a brand has to fund subscriptions to use. I think there is going to be a consolidation and I think e-commerce and for companies that make it long term will have thought that through and will have to figure out how to maintain their market position in the midst of a lot of noise. I do think, though, there is still a lot of innovation to be had on the infrastructure side. One, because I think there is still core problems like, yes, it's much easier to ship something and return it, but it isn't a solved problem. And yes, it's much easier to get personalized recommendations But that's still not perfect. That's not a solved problem. I do think though, where a lot of the needs will be, will be in traditional retailers, large stores, heritage brands crossing the chasm, playing into this next wave of e-commerce that already the D2C brands are playing in. How do you bring them up to speed?

I like that. I think that's a good call out because there's just so much room for modernization in those brands. Obviously I came from one with Gap. I think that that big difference really for heritage brands that is being challenged by the Senrevs and the Margos of the world is I think accessibility is what it comes down to for me, both because they're online and they're accessible. But you know who Senrev is, you know who they stand for, you know what kind of woman is wearing their bag. She's a working woman. She needs her laptop that has her, you know, her work stuff and her workout clothes and all of her things. And it's luxury. I mean, it's not a cheap price point. Price point by any means, but it stands for something. It's approachable and you can find it online on your phone versus like, I mean, you can't buy a Goyard bag online. I mean, if you go to the goyard.com, it's like, even if you wanted to buy a bag from them online, they like, they force you to go to a store. There's like, what, 2 stores in the US and you have to go to New York or SF. I mean, how are they? I mean, I guess they've built the legacy such that the people will come, but is that gonna work long-term for them?

Actually, a really funny random aside. I was in LA a few months ago, still during this quarantine COVID time, and Goyard has a store in LA. And I was walking down the street trying to be as socially distant as possible, and there was a line of dozens of dozens of people right next to each other waiting in line to get into Goyard because Goyard was only letting one person in at a time. And almost everyone in line was on TikTok, doing an Instagram Live, filming something. And it was fascinating how everyone in line to go buy a Goyard bag was more there for media content creation than they were there for the bag. That might be a thread to pull on next season.

That is so interesting.

Like, what a crazy story. And like, who knew that it was Social Hour in the Goyard line?

I mean, that's good to know. Also, like, who are those people that have all the time to afford a Goyard bag but also stand in the line?

Well, I think a lot of the folks in line were actually hired by the buyer to go and pick up the bag in line. Basically, maybe Uber for shopping to some extent. And I'm actually curious to see what tech companies or startups steps pop up to productionize that social interaction. To your earlier point around heritage, I think data is really important. Data is something that many of our guests touch on, looking at data, looking at what the customers say they need, and then building a product they want, which is why the center of BAG is so functional. In a world where we are able to collect more and more data, and brands and infrastructure companies for that matter, get a better snapshot of what the customer wants and are building what the customer wants, who is putting the idea in the customer's head of what they want? I think it's going to be interesting to see brands reacting to data and building for those folks versus someone with an opinion like an Anna Wintour saying this is the next new thing and then people wanting it.

I mean, if the Pantene color people keep coming out with yellow and gray, I'm definitely gonna look elsewhere for next year's color.

So yes, there is disruption to be had in the kind of sphere of authority.

And yeah, I'm looking forward to seeing how that evolves for consumers and for brands.

And so Madison, you're telling me we should not rebrand The Room Podcast into Mercury Gray and Canary Yellow.

I think I'm gonna pass on that one, but I appreciate the offer.

Really quickly before we wrap up, two other things I wanted to pull on that might, we, I don't know if we'll wanna go too deep here, but Madison McIlwain, but one thing that I noticed about a lot of our guests was that they were first or second generation immigrants. And as one yourself, I'm just curious about your perspective on if there's more than average, you know, founders who really make it in America who are first or second generation. Yeah, totally.

So for context for our listeners, I emigrated from Australia when I was about 8 years old, and my mom emigrated from China to Australia when she was in her late 20s. And I've spent a lot of time in both Australia and China, and definitely when I moved here, I kind of felt like the odd one out. I lost my Australian accent within 3 months in elementary school, which I think is not a surprise to anyone. But I do think there is something about coming from somewhere else to this country and understanding where your parents have come from and how much they have had to give up in order to bring you to this country, or even just how wildly different the car the cards they have been dealt with compared to the opportunities that we are given are. It's so motivating. There is truly nothing more motivating in my mind than to see how ripe the opportunities are and how, yes, they might be difficult to go get, but you can actually go get them, versus being in a context where they aren't given to you and you have to sacrifice your whole life and leave your family and give everything you have just to open the door. And I don't think that ever leaves someone. I think the other thing is, I mean, I was lucky my dad was in finance and I've seen what his career path looked like. To be honest, if I stayed in Australia, I would have been very much inclined to follow the steps that my dad did and his dad did and my half-brothers did. My whole family in Australia did because it was a very tracked path and it seemed to work. So why wouldn't I do that? When you come to a new country, you can't go to your dad's college, you can't have his job. None of his network is there. Your mom is trying to make friends for the first time. She's trying to help you, you know, make friends and to do well in school. It's just like there's none of the safety nets or crutches that you can default to that your parents have done. You have to do everything for the first time. You have to figure out what college you want to go to. You have to, you know, get the grades in school if you're motivated to go somewhere. You have to figure out what you want to major in. You have to figure out what your career path looks like, who your friends are. And there's really nothing to copy. I think a lot of the entrepreneurs we've chatted to who were first-generation immigrants probably feel the same way.

Thank you for sharing. I, I really, as not a first-generation or second-generation immigrant myself, I'm just in awe of some of the stories that I've heard and, and some of the stories you've shared with me about your experiences growing up, um, and some of the difficulties you faced. And one thing that felt consistent to me in listening to the stories of our listeners like Coral and Amit, who did move to America and started their businesses, they had to have a challenger mindset, right? Like they had to say, I'm moving to America and I'm going to challenge the status quo. And not look like everyone else and fit in and find a way to, to be my own self, but in a new country. And I think that that mode of operandus is something that is invaluable as you're going to build a company, because like we talked about earlier, you're gonna hear a lot of nos, you're gonna get a lot of doors slammed in your face. And unfortunately, sometimes that's the experience of an immigrant. And so I, I think that the value that you learn through that life process and life experience just directly translates to the skills that are required in entrepreneurship. And so it's just cool to see how people have been able to build something they wouldn't have been otherwise able to build in, in this country. And yeah, and change what I think the perception is of the entrepreneur for the better.

I cannot wait to hear more stories from more founders and funders and for us to keep sharing more of our stories for seasons and seasons to come.

Me too.

And if I may, I love that thread there as it kind of pulls into where the origins of the Rubens is, which is of course, the room where it happens from Hamilton and how he's an immigrant.

And that's a critical part of his story. I just think it's like this very fun, um, fun tie-in.

And I'm just looking forward to so many more incredible guests for upcoming season who are gonna share their stories, building companies, changing the world, um, and the firsts that were really along the way for them of what it took to, to build an incredible business. So here's to 2021 and season 2 of The Room. Thank you for listening to our special bonus episode of The Room. If you enjoyed our conversation today, please like, follow, subscribe, talk to us in Clubhouse, and share with your friends. We'll be back next week starting season 2 with Amy Chang, founder of a company which sold in 2018 to Cisco for just shy of $300 million, airing Tuesday, February 8th at 10 AM Eastern, 7 AM Pacific. Perfect. See you in the room.

All opinions expressed by Claudia and Madison and podcast guests are solely their own opinions and do not reflect the opinion of The5AC. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.