Season 3 & 4 Recap: Madison & Claudia

Welcome to The Room Podcast. My name is Madison McIlwain and I'm a partner for seed stage investments at DefyVC.

And I'm Claudia Laurie, a co-founder of Pryve. We're a founder and funder who are in the room where it happens. If you're a first-time founder or an emerging venture capitalist, we're glad you found us. We share inspiring, authentic, and insightful stories from founders, funders, and operators who have been in the room and provide tactical feedback on their early aha moments and learnings along the way. Before we dive into this week's episode, we have a short message from our partners.

Support for The Room comes from Silicon Valley Bank.

What's next? What if? Now what?

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-based 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. The firm has been devoted to entrepreneurs and investors, partnering with both to transform breakthrough ideas into successful companies. Cooley works with thousands of entrepreneurs and newly formed companies to ensure that they are structured for growth and long-term success. Since 2005, Cooley has been ranked the number one most active law firm by representing VC-backed companies going public. Learn more about the firm at cooley.com and also at cooleygo.com, Cooley's award-winning free legal resource for startups. Hello, Madison, how are you?

Hi, Claudia, I'm well. How are you doing?

Good. I cannot believe it is the wrap for season 4. I know we didn't do a recap for season 3, so it's really been 16 pretty awesome episodes that have flown by, but the there's so much goodness that I've gotten from those conversations and definitely were a major pick-me-up moment every week.

It feels like Season 3 into Season 4 was just a whirlwind because it was the middle of summer and we both had a lot going on. And with COVID restrictions lightening up, we were able to travel some. And now all of a sudden it's November, and November was when we initially launched The Room a year ago.

That's crazy. We'll have to definitely do like a 1-year anniversary special thing.

It's crazy to think about how far we've come since begging our initial guests to come on and how generous they were with their initial time. They had no idea who we were, what we stood for, and just see the progression from our earliest guests, Matt and Swati, who were so incredible and told their amazing story, through to our guests for the last two seasons, like Sierra or Michelle Zatlin of Cloudflare and so many others. It's very cool to see. Before we dive into our reflections on the last 16 episodes, You've had a lot going on in your life since we have spoken, really just you and me. Maybe update our listeners on what's new with Priv and a call to action if you have any for our listeners and how they can engage with you and what you're building.

And it, it truly feels like we're just getting started. The last time we did an end of season recap, I'd announced that I had left my prior company and have started something. We were still deep stealth mode. Over the past couple of months, we did our public announcement, so you can go to our website and we're really trying to innovate how folks buy online and really trying to enable new purchasing experiences for e-commerce brands. So we are focused on subscriptions as a new way to buy, and we're really focused on solving some meaty hair on fire problems for this new generation of D2C brands and the current struggles that they're facing with mobilizing online experiences. So if you are a D2C brand that is interested in recurring revenue subscriptions, prepaid subscriptions, or other creative ways for your shoppers to buy, we are here for that. So that's what we're working on right now.

That's tryprive.com, correct?

That is correct. Thank you, Madison.

Prive spelled P-R-I-V-E. Important, important to note.

I love that.

Other listeners might know that I had the pleasure of investing in Claudia and her co-founder Alex through DeFi, which was a really cool experience for us to find more ways to collaborate, because we all know we love collaborating on The Room, but to see We see also organically how there is pull happening from the market on why this solution needs to exist from even the people we've interviewed in the room. I remember distinctly Sashi, yes, one of our founders from season 4, just point blank saying, yeah, subscriptions are gonna be a huge focus for us. And I just looked at Claudia and was like, exactly, that is spot on.

And even Kara Golden from Hint, another season 4 guest, chatted with her after the podcast and went so deep on subscriptions and really figuring out how to meet customers where they buy. Awesome to have those threads woven into the podcast and could not have wished for a more incredible investor in Madison. And it's just been awesome to have you on this journey for 6+ months now. Similarly to some updates on my end, you've had a lot going on as well. What's been new for the past couple of months for you?

Yes, thank you, Claudia. Over the past 6 months, I have been, uh, promoted to partner over our seed practice within Defy VC. We're an early-stage venture firm in the Bay Area, but we invest all over the country, and I've had a lot of fun leaning in and spending more time in the seed ecosystem, both investing in amazing founders like Claudia and Alex, but also just getting to know how that world is evolving. So much has changed in terms of what people call seed or pre-seed or seed plus, but I think the fundamentals of building a business have not. So if you are a founder listening to our pod, I would love to hear about your ideas and you can look us up on defy.vc.

Major plus one. Madison is an incredible partner to work with, so Definitely give her a call.

She has to say that we're co-hosts on the pod, but you can talk to her offline and get her real scoop. DM her on Instagram. But okay, that's enough self-promotion. Let's talk about the incredible and inspiring guests we've had on. And we just touched on Sashi and Cara, and I think you all should know by now Claudia and I are massive consumers and we love all things D2C fashion, CPG brands that both resonate with us in terms of our personal missions for whether it be more sustainability or healthier lifestyles or empowering people to be their best self. A lot of the brands we were able to have on these past two seasons embody those characteristics and are empowering individuals. So let's just take a step back and think through some of the unique stories we heard in the consumer CPG bucket.

One story which really jumped out to me was Heidi Zak of ThirdLove talking about just the early burgeoning days of D2C channels. It was fascinating hearing her talk about early on they were in department stores, they were trying to figure out their supply chain, and now they're known as one of the world's or one of America's largest intimates category brand, but primarily on D2C. And so it was awesome to not only talk to founders like Sashi, who really focused on D2C, came on the scene like in the past 5 years, but also talk to founders who have really been there from the beginning 10+ years ago.

Heidi said D2C, direct-to-consumer, consumer wasn't even a phrase when she was starting fundraising. I was fascinated by the comment she made about their early supply chain challenges. What I don't think the modern consumer of ThirdLove would remember is that they actually started off being entirely custom bras, which from my days at Gap, I know it's really hard to do individual single SKU products because that just doesn't scale. And she shared some really funny hair on fire moments of trying to scale a custom bra company. Ultimately, that isn't where they landed, but they were able to still gather some of those learnings from those crazy early moments to create bra brand that still feels consumer first without necessarily the supply chain challenges of being custom.

It was honestly a very similar anecdote to Ajay Kaur's anecdote of UrbanStems when he was talking about all of this chaos in the back room with flowers everywhere. Heidi mentioned The factory and the fact that there was like Frankenstein bras being put together with all these half cup sizes and like missing pieces. And I think from the founder's perspective, that was incredibly encouraging to hear because even though I'm not in the physical goods e-commerce space, similar analogies of these chaotic rooms with broken products is definitely a reality. And being able to see the incredibly successful brand that ThirdLove is now, knowing that those moments existed and and those kind of times where like the product wasn't working out existed, I think is just par for the course. And so definitely an encouragement for all founders out there who are in that moment of this is just chaos. Like where is the light at the end of the tunnel?

The founder journey is so glamorized today. It's like you see the Forbes spread and that just is where you are and people believe that's how it's always been. But the guests debunk that myth in a really awesome way. Cara, the founder of Hint, explained her journey of getting her early products into Whole Foods. Whole Foods back in the early 2000s when definitely Whole Foods wasn't bought by Amazon and they also were much more niche. But do you remember her story about when she dropped off her first pallet of products?

She was on the way to the delivery room, 9 months pregnant. How wild is that? Seriously. And talk about resilience too. Get up and go and gumption and passion for your product. You're about to deliver a baby and yet you are also delivering your literal product baby to your distributor. It's awesome.

Talk about trying to get product market fit like under the wire. Like that's really cutting it close. These happen to be all female founders, but I think they all shared that thread of tenacity because especially in the CPG or consumer world, I mean, I'm sure you get told no a lot as a SaaS founder because these are physical products and you really have to find the right buyer cuz the price points just aren't as large as an enterprise SaaS sale, you have to repeatedly find ways to grow your company. I was inspired by the way these women have pioneered and persevered against the, the odds of people saying, I don't think this makes sense.

And really related to that, another common discussion point in our episodes with those lovely women, it wasn't obvious that taking venture funding was going to be the path from the very, very beginning. It was fascinating to hear what the fundraising journey was like for Sashi, or was like for Katie at Carbon38, or what it was like for Acara. And I'm curious, Madison, from the investment perspective, what are some things that aspiring consumer founders or like CPG physical good founders should keep in mind as they're pitching for an investment?

That's a great question. First off, I would make sure you're pitching the right investors. A lot of firms today are decently clear on their websites or with a back channel. You might be able to find what their core strategy is at the time. And I am hearing a lot on the ground that companies are, or firms are switching to being either pure play enterprise or severely diminishing the amount of capital they're deploying into a consumer company. And I wouldn't want founders to waste their time. So that'd be my, like, my biggest tip is making sure you're talking to the right people.

That's incredibly helpful. Even in my fundraising journey, it was so interesting. You would talk to a fund and they were like, how does AI play into this? And it's 'cause like they only invest in AI or other funds are like really pro at enterprise SaaS, and that's what they care about. So it's often not obvious that you really need to tailor your pitch to your audience, but also understand if you should be pitching to that audience. Another theme that really came up was related to early fundraising was the non-traditional backgrounds that a lot of our founders had. Not all of our founders were software engineers who had 10 years of experience at a Google and then had a bunch of friends in venture and then raised a massive round. And so I think it was really encouraging and eye-opening what the path actually looks like to raise your first round. And the fact that if you're really passionate about building for a certain problem or space or customer, you don't have to have the standard founder background. I don't even know what that is anymore in order to be a founder.

I don't think there is a standard founder background. And I, I will say, I think that's also true for venture. I do get asked a lot, how did you break into venture? What was your path like? None of my partners have the same background as me. No one else at a venture firm that I know of has the exact same path. And so both venture and being a founder have these really unique positions where actually your differences, your differentiated experiences are what might enable you to be that person to start that business. And that proved to be true for a number of our founders over the past two seasons. So the most untraditional we had probably was Ciara Wilson, who both is a Grammy Award-winning singer, but also is the founder and CEO of Beauty Marks Entertainment, which is her own music label. And she shared this story of how basically her preexisting music label said to her they weren't gonna publish her Level Up song and subsequent album. From there, she literally just walked outta that room and was like, I believe this is a hit album. I'm gonna build it myself. And that's what launched her own label.

A recent conversation that comes to mind is with Katie Warner Johnson of Carbon 38. She was professional dancer, then turned fitness instructor because she had an injury, so she couldn't keep performing. And being a fitness instructor in New York City, although you meet a ton of interesting people, it's definitely not one of those high-paying jobs. And so she ended up moving out to LA in order to start her business without a lot in the bank. Coming from the dance background and coming from the fitness industry, although she didn't have the traditional founder background, what was really interesting was that she deeply understood her customer. That's another common thread with founders with non-traditional backgrounds. They really understand what problem they're solving for and for whom. And so with Katie, she had been around her archetype customer, the boss in New York, as an instructor, seeing them in and out every single day, understanding their mentality, understanding what they liked and what they didn't and what they thought was flattering. She had a unique learned insight that others would not have if they weren't in that space and said, hey, I'm gonna start a retail brand that sold activewear. She understood what they were looking for, and that was feminine fit products that were not designed by men and made women feel a certain way. And they were really dressing women in a very specific time of day, specific headspace, incredibly aspirational. And that's an incredible example of if you understand whose problems you're solving for really deeply, that's most of the battle.

And I think when you come from an untraditional background, it plays to your strengths to build what you know. And so we saw that both with Ciara, we saw that with Katie. What I'm What I'm trying to say is that indication of what you start your career out as is not going to indicate necessarily what you're doing 5, 10, 15 years down the line, but each of those experiences probably holds nuggets of wisdom that's going to help inform and ultimately build what you are one day. And we just are seeing how people have been able to leverage multiple types of experiences to get to where they are.

I was reflecting the other day of what did I wish that I did differently when I was in college or a little bit younger, earlier in my career. And really careers are not a straight line and they shouldn't be. I reflect on experiences that I thought were a waste of time or just me figuring out what I didn't like, but in fact they were actually experiences that really gave me a unique perspective on what I'm building right now. And I don't think I would be able to be doing what I did now without those experiences. So, uh, a plug that everything that you do will shape you moving forward. And even if something that you did doesn't make sense or doesn't immediately show how it's going to connect in your career tomorrow, it could very well shape your own founding journey in later years.

Completely agree. Very well said. As you were talking, what came up for me was this idea of access, because we are fortunate to be able to look in the world and say, wow, there's so much opportunity. I'm going to try to be the best version of myself. And we both feel empowered to go solve problems when we see them in the world. But we've had the chance to talk with these incredible individuals who, of this past couple of seasons, 88% of our guests, they have happened to have been women. And there's something powerful about seeing what you can believe you can be. Yes, right.

Totally. One thing that I really struggled with a little bit earlier in my career was that the network wasn't as obvious in terms of women leaders that could mentor you and that you could look up to. A lot of these high-powered people in business were men. And if you could think of a high-powered leader who was a woman, it would often be really hard to get to her. And in part that's because if you have a household female leader, she's probably stretched incredibly thin because there's so many other people that want mentorship from her. Something that I really struggled with was seeing other women who were founders that I could identify with and then be able to get in touch with them and actually talk to them and understand their story and get advice from them. The thing that has just been so incredible about the conversations that we've had is that there have been so many women who are leaders, who are entrepreneurs, who are investors that I could see myself becoming or identify with and I didn't know about them before this conversation. And I really hope that these conversations are helping others see people that they relate to and see that they can do it themselves. But even for myself, I'm always inspired after these conversations.

Ditto. And you do have to know where to look. I was— this idea of seeing, being what you can see came up when I was at Princeton last week speaking at this incredible businesswoman and Professor Anita Sands' class. Underneath that, we talk a lot about mentorship and we talk a lot about kind of uplifting other individuals who might not necessarily always see themselves in the room at a high level. And then of course on this podcast, but Amita introduced this second type of framework that isn't mentorship. She called it sponsorship. And I really liked that idea because it's not enough to just mentor. You do ultimately need to help individuals get in the room. And the idea that there is going to be someone who is looking out for you, advocating for you, opening doors is a different role in someone's young career than a mentor because they can hold two different purposes. Sometimes they're the same person, but sometimes they're not. And I can look back and see a lot of really incredible individuals who have sponsored me. I wouldn't have called it that at the time, but now that I look back, I can see threads. I'm curious, Claudia, have you had people that you would have considered a sponsor?

One woman very early in my career, Arundhati Singh, who's a senior director of product at Uber. She was one of my managers very early on. And whenever someone asks like, who was a mentor that has like really impacted your career? I often just say, you know, Arundhati, but you're right. She was more than just a mentor. She was absolutely a sponsor because she tactically gave me more scope than I probably should have. She made sure that I was in the meetings where decisions were being made so I could not not only see what that looked like, but also contribute. She let me do presentations and pitch new ideas that really someone a few months into their career should not be doing so in front of a bunch of executives of an almost public company. And I think that's very much an example of that. And now she's also one of our angel investors. And so I think Madison, you're completely right. Mentorship is incredibly important, but sponsorship is doubly so in many ways.

Each of these people shared a woman in their life that has had a profound impact on them. They had different moments of where those impacts happened, either at the beginning of their career, in their day-to-day life, maybe someone from childhood. And it, I think it's just important to note that a sponsor doesn't have to be one moment in time. It doesn't actually have to break you into your ideal career job, but it can just be someone that is a light in your life and can empower you to be the best version of yourself, whoever that may be.

Madison, you touched on the topic of access, and I think access is incredibly important from the founder perspective, but also from the perspective of venture. And I know in our previous season recap, I shared a little bit more about my perspective as someone who's come to America as an immigrant. Would love to just recap on our episode with Maria Salamanca from Unshackled Ventures and just her story as an immigrant and also as an investor.

That story blew my mind. First of all, Maria is just a lovely human. It was really fun to have a conversation with her. Second of all, She moved to America, I wanna say around the age of 10, plus or minus, with her family from Colombia. I don't wanna misspeak, but I'm pretty sure she was able to claim refugee status at the time, given what was going on in her home country, and was born, raised in Florida. From there, ultimately she found herself at Berkeley and through a series of fortunate events helped to be one of the early junior investor team members at Unshackled, which is entire mission is surrounding backing first-generation immigrant founders. And helping them at the earliest stages of growth. So I believe they're primarily a pre-seed fund. And she just unlocked for me things that I would not have known as someone who has the privilege of being born in America and not having to question or ever think about my ability to work in this country. And I was taken aback by the amount of capital it takes to get the proper work visas in the US and the unique offer Unshackled is to founders, which is that they have in-house counsel that handles some of those really expensive processes of being able to work in America.

The whole visa situation is such a big issue for founders. And so also there's new visas for founders under the current administration. So hopefully it'll be easier for immigrants to really go after their passions. And then we also chatted to Sidney Sykes of BlackVC, also an incredibly a practically helpful episode, but also was so cool to hear her perspective and how she's empowering underrepresented folks in venture as well as founders. What was really interesting was her perspective about raising a fund and how not only is it difficult to get investment as a founder if you're not from a traditional founding background, but the same case for underrepresented investors. What was your take on that conversation?

I had a lot of takeaways, mainly that Sydney's amazing. What stood out to me most about Sydney's perspective was this concept of having differentiated backgrounds actually driving better returns. If you look at the venture ecosystem at large, that's everyone's goal, right? Everyone wants to be a top quartile fund. Every LP wants to be in the best funds. And to Sydney's point, if everyone is investing in the same companies, then there is a less high likelihood that they're going to be truly unique and truly have outsized returns. And so frankly, I loved the comment that she made. I think Defy really tries to embody that as well with kind of our namesake around defying expectations, but also in the way that we've been careful about building an incredible diverse team who has these really unique backgrounds that are not overlapping networks that hopefully create a wider net for the founders that can get access to us because ultimately it does come back to access. And as we create better structures for better access across the LPs, across the VCs and entrepreneurs, I actually think we're gonna be seeing better returns than historically. So I'm really excited about what's to come with more people and friends like Sydney in the ecosystem who are starting nonprofits like Black VC that are actually doing the hard work of creating inclusivity across the ecosystem.

Definitely a point that was also echoed by Jesse Draper around when you invest in women and you have a fund that is run by women, you also have a different perspective on investment opportunities and female founders actually do better business. So it's cool to see that theme here as well.

Not mad about that statistic. I think that's a good one to be putting out there. One other person we haven't talked about was Michelle Zatlin of Cloudflare. I don't want to like like say this is without a doubt true, but I'm pretty sure she was one of 3 females to take a company public in 2019. Of— there was probably almost 200+ companies that went public in that year, which is just embarrassing, honestly, that that's where we are today. And so more power to Michelle for being able to go up against a lot of stereotypes in that way. And then even more so in the fact that her company is in infrastructure.

She has a non-traditional background for cybersecurity founders as well. She met her co-founders at Harvard Business School. She did not have any sort of industry expertise in cybersecurity and yet has been able to build a multi-billion-dollar business. It's, it was definitely inspiring to hear her perspective from her early days at business school where maybe a lot of you listeners are starting to meet potential co-founders all the way to 2019, taking a company public and it's doing incredibly well. We are a customer of Cloudflare. So, and I think most startups are, so most software startups are, so it was cool to be able to get her perspective.

One thing I'll just call out is that Cloudflare has had quite a year. Need to double-check this, but I'm pretty sure when we interviewed Michelle, it was at somewhere around a $25 billion market cap. I'm looking at it right now. It is at a $54 billion market cap.

That is crazy.

My jaw is dropped for listeners who cannot see my face.

We should've invested once we had recorded.

I knew she was impressive then, and I really regret not Not putting some money down. Yes. Really cool to see even post-IPO, the founders that we're having on this podcast have outsized returns, both as in this case as a woman, but also with their unique ideas.

Couldn't have said it better myself. As we wrap up on this season and just the conversations that we've had, also wanted to chat about the fact that we are now seeing people more in person and we're so lucky to have an in-person event to celebrate the start of season 4. It was awesome to be able to see a lot a lot of our listeners in person, and I'm so excited for what there is to come for the Room community moving forward for our next few seasons as we continue to do in-person events.

We were able to have that on the ground here outdoors, and there's just a lot of appetite, I think, for community building across the board. And we wanna make sure that the stories we're sharing are not just in a vacuum, but there's access to actually answering the questions that the founders and funders who are listening to this cast have. So absolutely ping us for some discussion questions that you would want us to ask our future guests. Potentially we'd be happy to chat with each of you some other ways and look out for more in-person events like Claudia was saying. In that regard though, as we look towards the future, Claudia, I'm sure we'll have to do a 2021 year in review, something about that. But is there any predictions or insights that the 16 guests from season 3 and 4 just things that stuck with you that you're taking into your kind of future state, both with Pryve and personally?

I think just grit and tenacity as a common trait really stuck out to me. It's really easy to feel as an early-stage startup that you're doing everything you can, but it still is ambiguous and uncertain. And sometimes it, it's easy to feel like, is it just me? Am I doing something wrong? Is this normal? And I think what was awesome to hear was, Yes. Like everyone has had a hard time and yet if you are hyper-focused on your customer, if you're passionate what you're building, there is so much more to come. And so I think I have so many friends and I know so many people who wanna become founders but are daunted by a multi-year struggle or not being able to turn the corner on a tough time that's happened early on. And I think the theme of being undaunted Undaunted, which was the name of Kara Goldin, one of our guests' book, was very much echoed by most of our guests.

The book is definitely worth a read, and I love that. I think undaunted and having that mindset is super important, uh, especially as a founder. I think that one of the themes that stuck out to me was not letting the haters get you down. And particularly Katie Warner Johnson had a quote around not being a victim of your own circumstance. It's a slippery slope to look at the numbers in the ecosystem around venture investors, women in the room, underrepresented founders, and get a little depressed and think maybe it's not for me. But rather than being a victim and kind of saying, woe is me, you can turn that around and just keep doing you and not let it actually harm your ability to be the best version of yourself. And I don't mean to be too preachy, but I just needed to hear that when she said it. I just wanna reinforce that that you can build the version of the story you wanna tell and become that person and not be a victim of the macro climate or situations or what have you, whether you're a founder, whether you're a funder, whether you're trying to break into the room. And so that's the energy and the inspiration that I'm definitely taking into our next season. And then honestly taking into the next couple quarters. Please.

This has been such an amazing two seasons and I'm so excited for the conversations we're having in season five. Definitely stay tuned for for the next season launch. And don't be a stranger. Like, Madison and I would love to hear from you. DM us, email us, reach out to us on social. We're around. Absolutely. Absolutely.

Catch us at Stonemill Matcha on a Sunday. Anytime. We'll buy you a matcha, honestly. Come meet us there.

Madison, thank you for being the ever lovely, ever awesome rockstar co-host that you are.

Love you, Clauds. This was so fun. Glad we got to take a chance from our busy lives to sit back and reflect. Select. And yeah, everyone look out for exciting new things happening in The Room. We're gonna be doing a mini series in between seasons highlighting some younger Gen Z founders. Typically we interview founders who are post-Series A in their founding journey. And so this will be an exciting opportunity to interview individuals who are a little bit early but have very compelling and incredibly inspiring stories to share. So look out for that mini series and much more. More coming to you soon.

See you later.

See you later.

All opinions expressed by Claudia and 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.

Support for The Room comes from Silicon Valley Bank.

What's next? What if?

Now what? Silicon Valley Bank understands these 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-based 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. The firm has been devoted to entrepreneurs and investors, partnering with both to transform breakthrough ideas into successful companies. Cooley works with thousands of entrepreneurs and newly formed companies to ensure that they are structured for growth and long-term success. Since 2005, Cooley has been ranked the number one most active law firm representing VC-backed companies going public. Learn more about the firm at cooley.com and also at cooleygo.com, Cooley's award-winning free legal resource for startups.