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Kirsten Green Interviewed by Michael Carney | Upfront Summit 2020

Kirsten Green
Founder and Managing Partner at Forerunner Ventures
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Upfront Summit 2020
January 29 2020, Pasadena, CA, United States
Upfront Summit 2020
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Kirsten Green Interviewed by Michael Carney | Upfront Summit 2020
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About speakers

Kirsten is the founder of Forerunner Ventures, an early stage venture capital firm. She combines an experience and thesis driven approach, with a consumer centric view, to identify visionary entrepreneurs and compelling brand platforms. Through her work at Forerunner, she has partnered with some of the most promising companies in the current evolution of commerce.
At my core, I am an ultra-curious, hyper-competitive individual with a love for the big challenges and bigger adventures.

At Upfront Ventures, I am blessed to work alongside a team of brilliant, competitive, and high-integrity investors in the greatest city in America – Los Angeles (#LongLA). Together, we work to identify and support the world’s best entrepreneurs in building lasting, industry-transforming businesses.

Prior to Upfront, I spent three years launching and building PandoDaily, a next generation media company seeking to document and make sense of the massive power shift currently underway from the corridors of Wall Street and DC to Silicon Valley and the broader global technology industry. Before this, I co-founded a merchant bank making opportunistic early-stage global investments across technology, natural resources, real estate, and a variety of other industries and assets. What ties together these seemingly disparate roles is the challenge of evaluating people and dissecting markets and business opportunities.

In classic LA fashion, I’m a transplant. I grew up in the suburbs of Philadelphia and still miss the direct, authentic, and unapologetic style of people across the Northeast (but not the weather). That said, one of the best decisions of my life was cross-country to Santa Barbara to study Chemical Engineering at UCSB, while competing as a Division I golfer.

About the talk

Topic: Business

Founder of Forerunner Ventures Kirsten Green talks with Upfront Ventures partner Michael Carney about her path to starting and building a consumer-focused firm; how her investing process and thesis has evolved; building a diverse investing team; the challenges of building and acquiring consumer businesses; and how the environment is improving for female founders and funders.

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All right. Well, I clearly Save The Best For Last. Just great afternoon everyone. Up front and I'm here with a woman who I think needs no 00:00 introduction. Kirsten green Forerunner Ventures. One of the most successful emerging VC funds are the last 10 years. I'm I'll be shocked if anyone in 00:09 the in the room is not familiar with her work, but we're going to spend a little bit of time today talking about how far can you be in what division 00:19 was early on how that has evolved over time. And in what form it looks like going forward so back in 00:26

time and then I guess start at the beginning or even before the beginning of Forerunner fairly. Well known that you were career early on was on Wall 00:36 Street first year on the on the Southside innuendo by side a friend described it as you covered teen retail stocks. You spend a lot of time thinking 00:44 about how consumers buy what consumers buy, you know that I'm involved and so forth with strikes me as a a good A crown for Consumer investor 00:53 obviously, but I'm curious when you decide to leave that world. What was the inside? Why did you think it was time to start looking at early-stage 01:01

disruptors in Commerce Target career really stand almost 10 years and it matches pretty closely to a psycho. So at the beginning 01:07 it was I did Cover retail stock to put this lady I moved later on into consumer more broadly defined but in retail in particular the 01:17 growth cycle was fueled by the mall and buy teens having a place to congregate and spend money and it turns out if you give teens 01:27 $20 and drop them off at the mall, but that is a lot of money getting sent a whole generation 01:36

of new stores propped up to take advantage of that new customer and of the real estate play and so there was this time. Where it was about gross 01:46 and it was about New Concepts and new models and following that path. I'm being an investor at that time. I really fell in love with investing. I had 01:56 a chance to kind of appreciate the qualitative and quantitative merry enough and that's what I started spending time in the middle of getting to know 02:05 the customer and everything and Cycles play out and during the time of the growth in the mall technology was also becoming something that was more 02:12

prevalent and Amazon was born at the kind of midpoint of that cycle on eBay as well and after the.com crash and a little bit 02:22 of a week or consumer the conversation really changed and it went to technology is going to take over everything on buying online is so much better. 02:32 They'll never be another store and I don't know whether people believe that or not but it was enough to get people to think differently about 02:40 investing and so went from a growth mindset to kind of a you know, how can we either get operational efficiencies or squeeze out cost in our business 02:48

and as an investor who really kind of fell in love with Best thing I really lit up when you could bring the qualitative side in that wasn't as 02:57 interesting as exciting and I think you know my only big observation at that point was when cycle has played out and Cycles are there will be another 03:04 cycle starting and I would like to play a role in that. Is it before you went out and and launch the firm? I know you spend a lot of time with 03:12 Founders as an advisor consultant as an angel investor when you were in this was in a 2010 maybe time frame for approximately what 03:22

were the trends that you believe you invested in things like Warby Parker in that area before 4Runner vinegar 03:31 Brands about what it took to succeed online vs. Offline. How did you come to pick out those early adolescence 03:38 which were ultimately so very successful when I first quit my job thinking I would, you know try to find a way to play in the next generation of 03:48 retail companies. I sort of thought they were right around. And if somebody had told me it would be six or seven years before I felt something that 03:57

you found something that I felt was truly compelling and lined up with a good investment. Thesis might have done a whole lot of other things but the 04:05 way you know, you had a chance to kind of learn more about investing from various different perspectives, either private Equity or Venture and meet a 04:12 lot of different entrepreneurs and the first group of people I met were maybe they were building good businesses, but they weren't really different 04:20 than the last generation and I think I was really had my heart set on somebody doing something transformative and somewhere there being an 04:28

intersection with technology and people were still you don't have me up with a retail concept but it wasn't really considering the change. It was 04:35 happening on the technology side until several years into that journey, and when and I did start to kind of meet a few people who were thinking about 04:42 how do we leverage technology to create a really the best customer experience the customer experience at the consumer we want to Today that consumer 04:51 has evolved and what was being served up in the malls or just in the store was no longer satisfactory to them. They wanted something that had 05:01

understood the way they move today, which meant I have meeting them in digital channels. I'm thinking about service at way. It didn't mean not 05:08 doing that was never not a good idea but there was no opportunity to at least launch. I'm just really excited to coalesce all this 05:18 learning and excitement about the category and kind of GoPro and and build a firm at the institutionalized investing. What was your vision for for 05:28 what 400 be in his early days. Did you do it as a specialist firmware you a retail or Commerce specialist permitted you pitch it that way. Did you 05:35

think about yourself? That way me and this all started with me just really wanting to invest and being really passionate that there was an opportunity 05:42 and along the way while I was really thinking of my job is being a student of investing as much as anything while I was working alongside other people 05:49 getting closer and closer to I own idea of what would it would mean to be a good partner. What I would look for in a Founder how I would think about 05:58 building businesses are scaling businesses and I think through that passed I got greater and greater conviction on kind of wet. My version of that 06:05

would be that was happening at the second time the bed soon as we talked about earlier today and and Josh was talking about the other was is Rise of 06:14 the micro VC firms and I kind of in a while. I was new to the Venture ecosystem. I was looking around and wondering whether the landscape will change 06:22 and maybe as somebody who was thinking about going to really making this moment to be serious about their career and their move. Maybe there was a way 06:29 to think differently about it. And I know at that point in time, so it's good news was there was not so many people there was a relatively small group 06:38

of people and you could build a relationship with them and I learned a lot from those people through conversation on that first generation of kind of 06:47 new firms that emerged and I think you know through the combination of all of that. Don't convection to enter the market and an idea originally 06:54 thought was the vision has always been to be a good early stage investment firm to be hopefully a best-in-class investment firm. But even at that 07:04 moment in time when the landscape wasn't as crowded as today, it was still there was there was still plenty of options for entrepreneurs and I really 07:13

wanted to think about what did the market need. What was the market missing or what can I do differently? Why would somebody new on the scene make a 07:19 statement and anyone want to have us on their cap table? And so this idea of leveraging and expertise or at a particular area is as much of a 07:26 go-to-market Siri as anything. I think the idea of being my schematically oriented investors and research-oriented investors has something. Through 07:36 with me for my career and is the heart of it was a go-to-market effort to and sort of those early days your first phone with 2012. 07:45

I was a $40 fund and it was just you and Yuri, correct. I need and how did you decide you guys want to team up and frankly? How did you decide you 07:55 want to start a from Red then join existing from I'm so a little bit what I was just talking about just in terms of like knowing that this was the 08:05 moment that I wanted to make a mark in my career and find a place where I could really spend the rest of my career and make the most of it and and and 08:13 just gaining enough conviction that there was an opportunity to build something new and different and and participate in the market that way and then 08:21

when I had right before I erase an Institutional find I had an angel fund and at that point I was still in a really big time on anything I can do to 08:28 help an entrepreneur time. I still am anything I can do to help but I was doing everything I could to prove myself and I was kind of probably bending 08:37 over backwards and people kept saying to me you need someone else to help you on this journey, and I said, yeah, I would love to have a partner but I 08:45 can't afford a partner right now. And and so and that I had hoped that I would be in a position one day too. And so I started meeting people and I'm 08:51

thinking about like who would be a good compliment or how would I go about building a team? I think at this point I thought less about having a 09:01 Partner bit more about having somebody to join on and after probably meeting 15-20 people I met your age and who is that has been since the beginning 09:08 and is it a partner with me now and I sort of instantly knew that you're a was really special. It was kind of a little bit like how you feel about 09:17 Founders that you back as an investor. And so I when I went to raise the funds, I got the term sheet, Karen. I called your agent and ask her if she 09:26

wanted to come join me when you made that leave from Angel Investing and and Investing For STDs for each deal. But have your friend had to raise the 09:36 money to do those deals to having a fund. How did your process change? How did you look at at the deals you wanted to do differently? What were the 09:45 what was the early 4Runner deal kind of with the Box the Box really hasn't changed very much and I think that I took my angel fund really 09:53 very seriously as an opportunity to demonstrate how I would put together and create a portfolio and so was Always thinking about what the investment 10:03

thesis in a particular company on putting an investment memo together doing all of that stuff from the earliest days. But really what we've been 10:10 trying to do is think about where is the landscape ranging holding the customer at the center and thinking about how are lies all of our lives have 10:17 continued to change an evolved how were thinking differently about spending our money spending our time? What a great experience is an in the context 10:26 of that how that my re-save or inform new businesses in new opportunities that were needed and kind of time that back to like the retail sector 10:34

specifically where I spent a lot of time and I think before I thought about this like new consumer what they wanted and how much change that would beg 10:42 from a product-oriented company that was going to go from a wholesale to a direct-to-consumer company for retail. It was going to have to redefine 10:50 what their role was in the ecosystem and get stronger on the service side and then all the businesses that would need to be billed to kind of serve at 10:57 the back end of his businesses. And so, you know, we thought About kind of putting a thesis approach kind of underneath everything we were looking at 11:04

and then you know really early days when you're part of the company it is so much about the founder and no trying to have an idea around what are some 11:13 of the traits in the commonalities you left for and we have a couple of things that we sort of hold is like Northstar traits and one of them is you 11:22 having somebody has a vision who's really thinking differently about the future who kind of has an idea. It has it has their own unique idea about 11:32 where the ball is moving forward and how the shifts are happening and how they are going to leave the way for a new generation of business at the same 11:39

time. Somebody needs to be disciplined. So try to understand life is this person have the ability to kind of pick priorities and put one foot in front 11:46 of the other and really start to put some milestones in to metrics on the board. And then it's a person like compelling and magnetic. Will they be 11:55 able to attract resources to the company which is so all three of these are important and I don't want to say one is more. Inside another butt when 12:03 you think about it, you start your one person to free for 3 people starting a company you're having a first investor conversation. You're going to 12:09

have so many hundreds of industrial conversations along the way really important leave Holly more importantly than how you pick your investors. Are 12:16 your teammates who you going to track your company is the hardest thing about the only a company is building a great team and today in this job 12:22 market. It's extraordinary Li hard so is division compelling. Is it something that people are going to want to get on board before it be part of it is 12:29 the founder building confidence towards that and so, you know, but for those packaged and so you just kind of address a little bit you got some 12:36

Desitin the seed stage she knows it's kind of the messiest age of company building about figuring out what that team. Looks like what the culture is 12:44 product Market fit where you guys going to spend the most time in Catalina in the most the most heavily in terms of supporting companies along that 12:51 Journey as what other resources that 4Runner brings to Bear would it would have you thought about you you touched on earlier your kind of unique 12:58 expertise that you can offer. So I think that you know, one of the things I like about Venture is that it's a business that forces you to like to keep 13:04

learning keep changing and keep growing and so from the earliest days like I've tried to be very specific about how we could complement a group of 13:12 other investors around the table and say we can help you stand we can help them for the consumer and think about how you're building an experience 13:20 that is going to meet the market that you want to go after and that's everything from kind of, you know, a product of pricing on a product for 13:28 delivery mechanism for it the packaging around it and I think early days we spent a lot of time talking to people about sort of names but we're kind 13:35

of good go to market and and maybe how you built well to program their membership program as you go through the years and you work with more and more 13:44 companies, you know, you get the privilege if you're interested to sit there and really learn about how businesses get bills. I think we have you 13:52 invested as a team at Foreigner over 90 companies. Let's all 80% of them are consumer-facing. A lot of them have some share similarities. They're 13:59 not delivering the same product for going after the same consume the same proposition, but there's some elements that are the same and I think you 14:09

know putting yourself in a position where you're always learning and gather those forward two people are helpful as we try to kind of take that role 14:15 of being research-driven and think about where the market is going and we've got into how we talk about what the priorities are what the opportunities 14:24 are or how to stand out in the market and be different and that's obviously a collaborative exercise and I think that's when I have S, you know, the 14:31 great privileges you got a statement early stage investor is really, you know, kind of being a consigliare or UPS R Us collaborator with the founder 14:38

on their Journey. So I'll just be over the years. Your firm is growing your fund has grown as in you're now a 360 million dollars in your fourth fun 14:46 stuff graduation that your partnership has grown as well. I assume along the way you recognize that you guys had a bit of a diversity Gap the no white 14:55 men in the building and see you at and Brian O'Malley. You know, why why Brian why he was the first backing up? Why was at the time that a partnership 15:02 to partner to the team had you think about going the partnership and then why Brian answer the question why Brian cuz it definitely deserves an answer 15:12

but I'm going to put in the contract for building a team generally because it's something that I've actually it's been a lot of fun to think about 15:20 building 400 how you set a team up to be successful and I think we've had this mentality from the beginning is a start at mentality, which is your 15:26 Ambitions in your goals in the things you want to do outpaced the resources that you have and hopefully everything you do has some sort of exponential 15:34 impacts. And so when we were hiring we were thinking about that very much which is like how do we kind of you know fill the gaps and at the same time 15:42

work together to make things better and maybe the first three were kind of like obvious in terms of likes you have different levels, but when we got 15:51 to a fourth person we thought okay, you know, maybe there is some unique things were spending a lot of time talking about the consumer side of it and 15:58 marketing so Pirate somebody that could really help with marketing and that felt like a good Dynamic mix to what we were doing. They were coming 16:05 Melissa came from the operating side. And then there were four of us around the table and we kind of said, you know, we all have shared life and 16:11

opinions but we're also all different just into who we are as individuals. We are different ages we grew up in different places in the country. We had 16:20 different education, but we were all women and and we thought it would be important to have a male voice at the table. And so that was the first time 16:26 that we actually had a list called a gender lens on hiring and it was a conscious effort to not just be a bunch of people that had so much in common 16:35 or we're all women in this case. So we hired and we hired KJ and it was great. We got exactly what we wanted out of the 16:45

conversation had a new Dynamic AJ brought A New Perspective. We had somebody on our team who could fill it avoid or a voice in the market that we were 16:54 missing, but it's awkward having just one. We really made a conscious effort then to like make another higher that would mail 17:02 it again thinking like Kobe get somebody to have it a different profile in background. And and I think you know your and I've tried to be that 17:11 thoughtful about every team member we weren't necessarily going to hire a partner. But Brian is somebody I've known since the earliest days is for my 17:19

first exposure to venture when Brian was an associate at battery Partners. So I think in some ways we got to grow up together and he was somebody 17:28 I always liked and respected and we had a good easy dialogue one where you can agree to disagree often enough but like it always felt inspired 17:38 by the conversations and it was nice to have somebody that you felt that way working at another firm and at some point along the way I I think you 17:48 know, it's his story to tell that I think he was excited by the energy of what we were building and for me it was one of those rare moments to bring 17:56

somebody into your partnership that you knew was well that you fell Has the same priorities and integrity and also really found star partnership so I 18:02 can have going for that whole thing with my Cafe. Now, we had three wave and then we added two men and now we had a chance to bring another singer 18:12 male team member on the idea that you know, you started off with a go-to-market strategy of the reinvention of retailing Commerce. I know 18:19 that you are investing activities in the things you're excited about these days are much broader than that. Yes. I'm curious if you know where you're 18:29

spending time where you're excited, you know where you think the consumer is today? And I guess all of that early work is translated into what is now 18:34 a much broader investment Platinum. Okay. Thanks for the question. So I mean I think as I was saying before I like we've really come from a place of 18:41 holding the consumer at the center of things and initially Marion got to the areas that I felt the most confident. I've had the most experience in 18:48 overtime. You know. Again, this is a learning job. You learn a lot more things and you follow that consumer and you follow them into new places, and I 18:55

think that you know consumers have there's a lot of Change this happening biking on from the consumers perspective. I think this moves like a weight, 19:03 you know fewer better things to rental things to hang for experiences to paying for services. There's a lot of James that's happened in our economy 19:12 because of those Dynamics and expectations and I think that like a lot of it has happened over here on out of the free market consumer place and not 19:20 as much of it as it happened in some of the areas that are kind of have your last or maybe we view them as like tax areas. So things we're like on our 19:29

education system our Healthcare System that hasn't been as much information and they certainly those areas have been held back because of that the 19:38 consumer who's participating across the spectrum of both of these things is very well formed and wants better things out of the other side and you 19:46 seen that happen like for instance and informed consumer now, you know, it looks like it's not a health care as much as Wellness. They've learned more 19:55 about their own body. They learn more about their own knees they start How to say My Health Care system is disappointing me or it's maybe not going to 20:03

be there for me in the way that I need it too. So I mean to be more proactive about it and that's expanded like a whole new category that's new 20:09 products new services and a lot of new demands on the business side to a space that hasn't had a lot of those skill-set. So there's a lot of 20:17 opportunity and I think you can follow that through in a couple of other things to what are most challenging things that we think about it up front 20:25 and I'm sure we all in the room talking about recently is kind of the challenge of kind of marketing to and acquiring consumers has gotten much less 20:32

efficient much less predictable in terms of where you find your audience and you know Santa's he's putting active on Facebook where it might have been 20:39 seven years ago in Dollar Shave Club is coming up. So as you think across all these categories in and you know large with a focus on consumers, how 20:46 much do you think about Is the team's early ideas about where those Cosby customers going to come from? How much data do you look for when you're 20:53 making a scene stage bed in a consumer business or how much it is just intuition on your part about whether you think because it was Will gravitate 21:01

toward and find this product or service. I mean there's some interesting but not so much A lot of it is kind of This research approach. I'm thinking 21:07 about like where is the consumer headed and What needs are being met in not being that I think the question is marketing is is that like marketing 21:15 is one of the most dynamic areas of business and that is always changing and then I think that you know, what is one of the first question because 21:25 we've been fortunate to work with a lot of companies that have been quite successful at marketing. We make a new investment. One of the first 21:32

questions we get is like you got to make it up on your own they made it up on 21:38 their own. You can make it up on your own. I think it's the end of the day you have to have like the right, you know product-market fit from what is 21:48 going to be driving like what someone's going to be paying for and then you have to think about like being Dynamic and showing up and all the 21:56 different places in a way to describe that value proposition in a way that's authentic to those channels and be nimble ask You move around you know, 22:04

so it is kind of Mary's to the distribution question to which is you know, there was a time. Where people really thought d2c. Like I don't even use 22:11 you to see or e-commerce anymore. I think it's just building a product business are building a retail business and having some technical skills are 22:19 having a relationship with your customer and being able to use the data is table Stakes you need to do that. If you want to build a big business you 22:28 really need to think about like, you know, where where can you meet your custom? You know, how many places can you meet your customer? And what are 22:35

they unique ways you can show up there. It's not a world where you just sit back and say everyone come to me on my terms business has to go out there 22:42 and meet the customer and the customers are in all the different places. So we've always had an attitude that like at some point as businesses scales. 22:50 Hopefully, there's an opportunity for them to play across a lot of different channels from a distribution standpoint and from a marketing standpoint 22:58 at the same time. I think they like there's this element of timeliness that is part of you know, probably everyone's in Men decision and we are 23:05

looking for opportunities where there is some inefficiency in the market or there is some nascent part of the market that they're going to be able to 23:12 exploit in some ways. And you know, you could do that with Dollar Shave Club in Facebook in 2012. Like you couldn't do that a few more years later. 23:19 So, you know, you have to keep Reinventing and creating you play book. We talked a little bit of an end kind of what the early in Dynamics Borat 23:27 at for honor and I'd be remiss not to ask you about your work with all race. I know that something is very important to you and it's been a topic of 23:37

conversation at this event in years past an end. I just be curious your thoughts on since you've been involved in in that organization in that 23:44 movement, you know kind of on the ground. What are you seeing in terms of output have things gotten better where we at in that conversation? And what 23:51 do we still need to see happen that they haven't moved enough but rather than do that. 24:00 She's the kind of look at it look and say like there are so many more women and so many more diverse people to do business with today and 20/20. 24:10

Then there were in 2012. There's not enough but there is a lot more. I think that like I certainly feel like I feel so fortunate to have an incredible 24:20 group of women in this business and forming all raised together has really created a sense of bonding which I think it's been super powerful and 24:29 hopefully we're using it in really productive ways to lift each other up and help the best versions of ourselves. I don't think we want to live in 24:38 silos, you know, so I don't think it's all about like they're having a Girls Club. I mean I want to work with you. I want to work with we have a lot 24:47

of male Partners we work with so that's not the point but it is good to feel like you have friends in the business and people that will get your back 24:53 and it was nice to have that organization that forms the foundation for that really important levy on that. We've made a lot of effort. Think about 25:01 what are the specific areas where we can drive change whether it's with getting female Founders feeling more comfortable pitching or more informed 25:10 around pitching or more Network to pitch whether it's talking Elf. He's about the advantages of diverse team and having them think about the 25:19

importance of that in the decision-making room around investing in creating programs to shine a light on that and you know, really getting into the 25:26 data and starting to show the results the results. I think, you know, we're going to have more of them going forward and I think they're going to tell 25:33 a really compelling story that diverse teams at companies and diverse team that investors like have better results. Can you get that exponential 25:39 moment where you can have a one plus one plus one equals something more than 3:00 because it's just a more Dynamic fruits and conversation. So it's 25:47

been, you know, there's a lot of more work to do, but it feels like a very constructive start and good energy feels like a great place to end and 25:56 thank you so much for your time and also congratulations and I was accepted 4Runner. 26:06

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