This series profiles the most prominent and influential venture capitalists in the country. They talk about how they broke into the industry, what drives them, and what they have their eyes on, among other topics.
In this episode, I sit down with Rebecca Kaden, a General Partner at Maveron.
Info about Rebecca:
The Interview:
How did you get into VC?
Rebecca had been a journalist on the editorial and publishing side and got involved in monetizing great content, which introduced her to the digital media space. While attending Stanford’s Graduate School of Business, she met Bill Campbell, who would soon become a mentor of Rebecca’s. He asked her what she wanted to do next and while she knew her heart was in tech, she had always assumed she would end up on the operating side. However, Bill introduced her to the Maven team. She started hanging out with them while she was in school, and transitioned to a full-time role when she finished school.
“Silicon Valley as a whole is a place centered on this idea of belief: belief in people, belief in ideas, and belief in making the unimagined imaginable, and then bringing it into fruition. That’s definitely the core of the venture capital business and I think that kind of spirit of belief and imagination runs deep in Stanford and I was very lucky to be a part of it”
Identifying the next big company
Rebecca thinks the really fun (yet also the hard) part about consumer businesses is taking rational business models and marrying them with irrational consumer behavior. Consumer act on emotion, rather than the playbook marketers set up, and that’s where Rebecca thinks the magic of brands plays a role. Along with the right proportion of luck and timing, an iconic company can be born.
The firm believes that magic happens when 3 the best in class among 3 specific factors converge: people, product, and market.
Rebecca talks about how Maveron is a big believer in the entrepreneur and the firm is willing to take the product risk early on if there’s a great entrepreneur behind the wheel, and sometimes even the market risk.
“We look for entrepreneurs who live and breathe consumer, who are obsessed with makes the customer happy, who are detail-oriented, who go really fast, who can iterate on customer experiences quickly, and can really get into the minds of what customers want and how they think. We find that’s a common theme in these consumer businesses.”
In addition to the founder, Rebecca thinks it’s crucial to build the kind of brand that integrates with the hearts and minds of customers. She says when it comes to consumer as opposed to enterprise, it’s less about building something that’s never been built before, but rather doing it in a way that marries emotion, story, and experience.
“If you can be something that people feel proud to associate with, that’s super powerful and it’s sticky and can create a lot of equity value”
Allbirds
When Maveron invested in Allbirds, they didn’t have a lot of sales data or customer response, but they knew they had a team that was maniacally obsessed with the details and extremely customer-centric. They focused on the heritage story of the New Zealand merino wool and delivered a product that met a promise: crafting the world’s most comfortable shoe.
One of the aspects of a great product that Allbirds mastered applies to almost every consumer product. I’ll let Rebecca explain it herself:
“They had a singular message that resonated over and over and over. A lot go brands start and say, ‘We’re this and also that and we’re also that,’ and there’s so many great things in it. With Allbirds, that’s true and it was tempting: they’re sustainable and you can wash them. There are a lot of things to choose from. But they did a good job in the early days of choosing comfort as the core value prop and that specificity helped them create that vibrancy of the brand and that viral factor that people knew what to say about it over and over and over with a lot of ease.”
Common hurdles consumer brands face
Rebecca mentioned how almost every direct-to-consumer brand she’s seen struggles around inventory planning and buying because it’s often not a skill that the entrepreneurs have done before. It’s also extremely hard to predict demand in the early days.
She says the core question that anyone starting a physical product distributed online faces is: “Do we have enough product, are we making it in a cost-efficient way, and are people hearing about it with frequency and at a cheap cost to us?”
Women in VC
Diversity in the VC community is a top-of-mind issue for Rebecca. One of four of Maveron’s venture capitalists are women, well above the industry average. An interesting point that Rebecca raised is that 80% of consumer spending is done by women, so particularly at a consumer fund, having both genders represented is particularly important.
Rebecca is optimistic of change because some of the best VCs in the industry are women: Mary Meeker (KPCB), Kirsten Green (Forerunner Ventures), Ann Miura-Ko (Floodgate), Jenny Lee (GGC Capital), Rebecca Lynn (Canvas Ventures), Theresia Gouw (Aspect Ventures), etc.
Rebecca is also optimistic because she says women are really supportive of each other in the industry. She herself is a mentor to Anarghya Vardhana, a Senior Associate at Maveron.
Howard Schultz
Howard Schultz, the Executive Chairman of Starbucks, is a Cofounder of Maveron. When asked about how he’s influenced the firm, Rebecca said:
“What we get from Howard is a great sense of brand and a reminder of the importance of customer satisfaction and experience. Starbucks is an incredibly detail-oriented brand. They care about every interaction. They care about the details. We really take that to heart.”
Coffee is largely a commodity. You can get it everywhere. Why is Starbucks the best brand in the world? It’s remarkably consistent. It nailed experience. It created emotion out of a product and we try to find that in all the investments we try to do.
Size and Type of Investments
The vast majority of capital in the fund (and the returns) comes from Core (Series A) Investing, where the firm writes checks, on average, from $3-7 million, leading the round and almost always taking a board seat. This, along with reserving for following rounds, takes up 95% of the capital in the fund.
However, Maveron wants to be a part of entrepreneurs’ journeys from the early days so they can see them grow the company and make decisions like hiring, scaling, etc. This is the basis of the seed program.