For A Woman In Venture Capital, Courage Is The Asset That Matters

Susan and Tom Choe

Susan Choe and her husband, Tom, hiked in the Gobi Desert after her startup’s board of directors … [+] removed her as CEO. It was “soul filtering” she said. She’s now a leading woman VC.

Susan Choe

Susan Choe was in the Gobi Desert in 2011 when she got the call that started her new career path, in venture capital. She and her husband had climbed to the top of a hill to get a signal.

It was one of the investors in Outspark, the startup she’d founded. The board had removed her as CEO – they’d disagreed with her about whether the firm should be sold at two times profit at the end of an M&A process. She swallowed her feelings, and left on good terms, somewhere between believing and trying to believe the next turn in her career would lead to better things. 

“Believe me, that was really hard, it was like being kicked out of the house and family you built,” she said. “That’s why I was climbing in the Gobi in 2012.

It was soul filtering.”

In the Gobi, the investor call was from Taizo Son’s group. Taizo Son is brother to SoftBank’s Masayoshi Son. The question was: “Do you want to come help us with Softbank and Sprint-related stuff?” as she remembers it. 

The conversations evolved into founding a venture capital fund, Visionnaire, in 2013. At the same time, she had been in conversations to join Twitter as a senior executive. But after due diligence on her own ability to source deals and fund operations, and after nine months of due diligence by institutional fund investors, she thought to herself, “I’ve worked in corporate development, I’ve had my own startup, and most of all, I trust and respect Taizo and his team. ”

That same week, she discovered she was pregnant after three years of trying.

Nearly six years later, she has a daughter who has grown up in the world of entrepreneurship and venture capital, and she’s founded a firm of her own, Katalyst Ventures, on the strength of what she says is IRR of 16.6% for Visionnaire companies she invested into. She’s one of the few women VCs to reach the top echelon of the business.

Her investments have included Zipline, the drone unicorn; Arine, virtual pharmacist A.I. company reducing hospital readmissions in Oklahoma; and Truvalue Labs, which helps investors leverage ESG news daily into their $8 Trillion AUM portfolio management across global clients in the European Union, United States and Asia. 

Women in venture capital are like unicorns themselves – and it was fascinating to hear the twists and turns of Choe’s story. It was clear how narrow a path she’d walked, and how crucial support from mentors has been, including male mentors. What was also clear was the emotional toll that succeeding in a man’s world takes on women.

This is the subtext, and sometimes the text, of many interviews I do with women – though for years I haven’t included it in stories, because it felt somehow like it didn’t belong. It’s only lately that I’ve begun to realize how much other women shared this feeling. It’s that sense that what we thought was important didn’t even belong in the room, perhaps because there were a lot of signals telling us that we didn’t belong in the room.

“I wish I had other female founders I could have spoken to back then,” Choe said. “In my generation, there just isn’t a lot of women who could get support to found companies or be an exec without abandoning their personal lives.”

“Even now, I have to say the same. I still ask myself: Is this normal? I’m not sure what normal is, for a woman in this place.”

The World Of Men

The emotional subtext rarely comes up in interviews with successful men. In part, that’s probably because they don’t talk about their feelings as much; and in part, because men are so comfortable with success. It’s expected of them, and they expect it.

I was at a women’s empowerment breakfast recently, where the publisher of a major publication blithely described how he’d finished up a job in investment banking when someone called to drop a great new publisher job in his lap. I wondered how he could be so insensitive, to describe the ease of his career in front of an audience of women who had probably struggled for every step up the ladder?

On the surface, his call looks like the one Susan Choe got. Two experienced, well-networked people got recruited for high-powered jobs. But there’s a fundamental difference. I’m sure he worked hard, but the Ivy League-educated publisher waltzed through his career, because he knew his part in the dance.

There are no instructions for women who want to lead.

Choe started off in tech research and corporate development in 1995. In two separate stints, she worked at Yahoo, eventually running international operations in the number two position. She’d also worked as the International COO for a publicly traded holding company of South Korean search and media company NHN. At NHN she had the idea for how to take the premium digital gaming business model of free-2-play games global.

It was a novel idea, but she discovered a corporate environment in flux that was not ready to drive the project beyond launch.

In 2006, she quit the high-paying corporate job to found Outspark, bootstrapping it with about $250,000 of her own money. It went from concept to over two million users and more than $7 million in annual revenue within just a couple of years, she notes on her bio. The company evolved into a data driven content publishing platform for game developers.

“It was really tough recruiting, especially the COO. As a female in tech and games. It was like finding a needle in a haystack,” she said. Still, she loved building an environment where people could thrive. “I meet up with a lot of our old teammates across U.S. & Asia now,” she remembered. “We had five marriages come out of there. Unintended KPI.”

But she also decided that she’d like to hire someone – a C level exec – who could share some of the recruiting and board management while she focused on building the company, which she loved. Sony Online and others wanted global partnerships.

“He pitched me on joining the Board, then eventually becoming the CEO. And I thought, ‘You’ve got the CEO hair, you’ve got the background … maybe the Board will be easier to deal with given a man as CEO.’”

In retrospect, that was a mistake. His ability to scale in a start-up versus corporate environment was the issue.  “At the Series C level, you still need to push forward every day. You can’t bring in people who are used to working at corporate pace or resources.  We both learned a hard lesson,” she said.

Choe returned as CEO, and then the final disagreement with the board happened. A year after Choe was removed , the company was sold to Axel Springer. She’d moved on – but she learned hard lessons she’s now applying in her work with start-ups.

Success for women comes at a high personal cost. It means committing to a world of uncertainty and confusion. Because there are so few role models around you, it’s not clear what the rules are for women. Often, it means putting aside your feelings after years of being told to “trust your gut” and stand up for yourself more. 

At several points along the way, mentors were important. Choe mentioned Rosemary McFadden, now managing director at CSFB, which acquired DLJdirect. “I worked for Rosemary covering greater China at DLJdirect,” Choe said by email followup. “I learned quite a bit about international deal making, including dealing with male executives: Ignore their bias and push forward with laser focus, and tenacity to execute.”

McFadden stood 5-foot (in heels) and started her sentences with ‘Listen, Missy.’

Choe appreciated the toughness McFadden instilled in her

She also listed Taizo Son as a mentor. In venture capital and among fast-growing entrepreneurs, male mentors are particularly important, partly because there just aren’t women to be mentors. The percentage of women in leadership roles at venture firms only rose to 9.5 percent in 2018 from 8.9 percent, says All Raise, a non-profit that focuses on promoting diversity in the industry.

It’s also riskier for a woman to mentor other women. In an HBR interviewabout their book, Athena Rising, authors David Smith and Brad Johnson noted:

I also just want to note that when a guy stands up and publicly promotes and sponsors a woman, we find research showing that his end-of-year evaluations actually go up. When a woman is a public sponsor for a junior woman, her evals are more likely to suffer. You know, she’s viewed as showing favoritism; he’s viewed as a champion for diversity. So there’s even some inequity there, but all the more reason men have got to be willing to engage here.

I asked Choe for examples of the way she handles succeeding, and now leading, in the world of men. It was clear from our conversation that direct conflict is rarely her style. For instance, when her startup board disagreed with her vision, she noted, she could have gone to the press – but didn’t.

One of the reasons she founded Katalyst, while still supporting companies at Visionnaire is that she brought a general partner to join as the final condition of Fund I closing. Eventually the firm, which had raised $90 million and deployed its capital, needed one leader – and it was clear the start-ups that she’d invested in needed more investment.

Eventually, there were a handful of limited partners, including Taizo and the ex-CIO of Temasek, among others, who supported her move in opening Katalyst. “Most of all, Zipline, HelpShift and others reminded me of the need to push through the challenges of evolving a fund,” she said.

“My LPs appreciated that I was very transparent and delivering results,” she said. “They told me “You’re good at the one thing that matters most, which is picking winner companies.”

Katalyst launched in January 2018. It has two employees and many carried interest holding advisors across industries who support start-ups. Katalyst has raised $47 million, with capital deployed into 14 companies. Four of those companies, including Zipline and HelpShift, came from Visionnaire. Some 45% of the capital is deployed with companies where the CEO or CTO is a woman. “It’s really cool result of discovering great teams and technology vision, she said, noting that the capital is coming from investors, a group of Asian men, who aren’t seeking to invest in women particularly.

The firm focuses on early stage enterprise companies using AI. Her daughter has been in many conference calls and recently asked Choe, “Mommy, what’s a valuation?” which made her laugh. The number of women in the portfolio adds a sense of social responsibility, Choe notes. “I don’t want women to be let down.”

She avoids getting into the middle of conflicts – those moments, which are common in the world of finance. .

“I don’t walk into big board meetings and feel fear,” she said. “I listen more. I observe the interactions. At the usual first board meeting, everybody is sort of trying to establish their persona.”

She’ll wait for a moment to make a fact-based point, which speaks for itself. “I try to be me.  I find being earnest, thoughtful and supportive is appreciated,” she said.

I pointed out that sometimes, conflict is unavoidable. Yes, Choe acknowledged.

When that happens, courage is the asset that counts.

 “I’ve had a company that was advised by well-meaning but aggressive  advisors. The Company missed the KPI line goal by 80%. I said ‘No, here your plan said that you’d reach this goal by this date’,” she told them.

Rather than coming back with a plan for addressing the problem, they tried to enforce legal actions for additional investment, she said. She told them that if she got off the board, she’d write off the investment. “There are times when you have to fight fire with fire,” she said.

The advisors backed down.

“These are the values I hope my daughter has,” she said.

The hardest points, she says, are when she has to say no to a really good founder, or when one of the portfolio companies is not doing well. “I’ve been in their shoes so I can really think about them,” she said. “But if I don’t perform, I can’t continue to support all of the other teams.”

Now that she’s become a general partner, she is putting more thought into how to bring more women into her profession. “Women’s style is a lot more nurturing, and close to heart. We have to learn how to delegate better,” she said. “I’m always working on that.”

“But a lot of real mentoring relationships are needed. A lot of my male allies are older white men.”

The conclusion she’s come to is that women haven’t been shown how to be a mentor.

That’s the next step, then? For someone who keeps climbing, it’s obvious: Once you’ve figured out how a woman can lead, you figure out how to teach other women to do it.

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