How Kirsten Green defied venture capital's gender boundaries and ruled ecommerce
“When I want to do something, forget convention, I’m going to find a way to do it.”
Officially, Kirsten Green is on “maternity leave.” Which is to say, she’s talking to me from her home, holding her baby, while her team waits in the next room to catch her up on what she missed while giving birth.
The fact that Green takes an unconventional approach to maternity leave isn’t surprising. By this point, I’ve spent weeks interviewing Green, her peers in the industry, institutions who invested in her venture fund, and companies she’s in turn invested in. The one thing everyone agrees on is that Kirsten Green is not your typical venture capitalist.
In an era where operational experience, the cult of the founder, big loud personal brands, and “The Hacker Way” are everything, Green is decidedly low-profile. She has never built a company, and she isn’t an engineer. She’s never been on the board of a giant like Google, Facebook, Apple, or eBay. In fact, Green has never even worked at a tech company.
It gets worse: Green came to the tech industry from finance. To many startup purists, that’s one rung lower than an MBA. Sure, there have been other bankers and analysts who have become top VCs: There was Danny Rimer of Index, Bill Gurley of Benchmark, and Mary Meeker of Kleiner Perkins. But they at least covered Internet IPOs while working for Wall Street. By contrast, Green covered brick-and-mortar retail. Foot traffic in malls. How much glitter the Gap was putting on tank tops and how that was likely to resonate with teens. In other words, Green’s world was the same one that every VC was hoping to destroy.
But perhaps the most striking difference between Green and the vast majority of her peers in the venture industry is that she is… a she.
By most estimates women make up less than 10 perent of the venture capital industry and those percentages dwindle as you climb the partner ranks. On one level, there’s not even a lot of progress to point to. There are fewer women in senior roles than there were 15 years ago. The top five firms don’t have a single female senior partner doing early stage investments, and the recently published Forbes Midas list was exactly four percent female. But those numbers don’t capture the whole story. An explosion of wealth in the Valley means more women are angel investing than ever before, and some — like Green — are starting their own funds. Others like Aileen Lee, Jennifer Fonstad, and Theresia Gouw have left big established firms to build their own.
Sure, this surge of entrepreneurship means the number of top women at established firms has dwindled even more. But the hope is the new women-run, women-founded, and women-dominated firms will have an even bigger impact on changing gender in venture capital. And since VCs control the purse strings, that could change gender in all of tech.
“The problem (with women in venture capital) isn’t that not enough women have technical degrees, because the people we think of as great VCs aren’t particularly technical either,” says Lee, who left Kleiner Perkins to build her own firm, Cowboy Ventures, in 2012. “What they did have was this receptivity and a network of other guys that supported and helped them. That makes it harder for other women.”
That may be about to change.
THE EVOLUTION OF COMMERCE AND VENTURE CAPITAL
Green’s firm — and as the sole founder, Forerunner Ventures really is her firm — has rapidly emerged as a force in ecommerce investing. Michael Kim of Cendana Capital is her largest investor. Kim has backed many hot early stage funds including Lerer Ventures and SoftTechVC, and he’s fought to put as much into Forerunner as he possibly can.
“Kirsten Green is one of the hardest working GPs in our portfolio,” he says. Green focuses on ecommerce, or as she puts it “the evolution of commerce.” To her, it’s evolving into something that includes the Web but also mobile, wholesale, pop up stores, and even a resurgence in catalogs. With Amazon dominating the low-cost, comprehensive e-tail game, the only way to build new ecommerce companies is by delivering something that Amazon can’t. Things like brand, experience, and going deep, not broad. In other words, classic specialty retail — the industry Green knows better than any techie on Sand Hill Road.
But rather than invest in building new brands, VCs have mostly invested in lots of gimmicks: Flash sales, celebrity-endorsed commerce, commerce combined with content, and subscription commerce. Each fad seemed to have early winners, leading to a flood of copycats. Unsurprisingly, ugly flameouts have ensued. Only Zulily has gone public so far, and before that the most recent $1 billion exit in ecommerce was Amazon’s purchase of Zappos. And it was only barely $1 billion.
Perhaps the most striking difference between Green and the vast majority of her peers in the venture industry is that she is… a she
Ecommerce has made the smartest Silicon Valley VCs look foolish. Meanwhile Green has looked prescient. Three of the first deals of her fund? Birchbox, Warby Parker, and Bonobos. After Birchbox’s recent $60 million mega round, those three alone are valued in excess of $1 billion. Green has followed that trio up with other high profile investments in companies like HotelTonight, Dollar Shave Club, and Wanelo.
She missed a few big ones like One Kings Lane and Zulily, and she has also picked the occasional clunker like Pickwick & Weller, a company co-founded by Ashton Kutcher that has gone nowhere. But notably, Green has managed to miss investing in some of the industry’s most overhyped lemons: Fab, ShoeDazzle, Beachmint, and the like. These are companies that fooled the best investors, raised funds at sky-high prices, and then made major missteps.
It’s hard to find others who have invested early in this many big hits and avoided nearly all the mega-disasters. To wit: Andreessen Horowitz invested in Fab and ShoeDazzle. Accel invested in Bonobos and Birchbox, but also invested in Beachmint. And Jeremy Liew of Lightspeed Venture Partners invested in Bonobos and Honest, but he also was on the board during ShoeDazzle’s Kardashian-studded, high profile, and mostly self-inflicted implosion. Of course, more failures than hits is the nature of the venture business. But there is something special about Kirsten Green.
FEELING BRAND IN YOUR BONES
The interesting thing about Green’s hit streak — and the fact that it emerged out of nowhere — is that it’s precisely her differences that have enabled it. Because she’s not in the good ol’ boy Sand Hill Club, it’s hard for her to move in sync with them. She doesn’t have to resist the trend to move in lockstep, because she probably couldn’t march to that beat if she tried.
Asked why she backed early ecommerce 2.0 companies when others passed, Green gives an honest answer: She understood how speciality retail worked because she was a retail analyst covering the rise of The Gap, Urban Outfitters, and Abercrombie & Fitch. Indeed, many of the entrepreneurs building these companies are based outside the Valley and aren’t techies either.
It’s hard to find others who have invested early in this many big hits and avoided nearly all the mega-disasters.
She gives an even more honest answer to why she missed a once-high flying company like Fab: She wasn’t pitched. Because of her very different background and unconventional investing style, what deals she sees, likes, and how she can help them is simply different than others. “It’s better to have something that’s uniquely yours and own that than try to fit in,” she says.
This is why Andy Dunn of Bonobos wanted Green on his board. He wanted someone who “felt brand in her bones.” She has since made key introductions, like one to a real estate partner to assist with Bonobos’ Guide Shop roll out. When Dunn was launching his new women’s line, Green was in the offices scrutinizing designs and fabric. That’s just something his other venture investors don’t do. “She lives and breathes the collision of retail and tech in ways others are just dabbling,” Dunn says.
Her differentiation isn’t all about being a woman. Having missed the first wave of ecommerce, she wasn’t religious about the Internet as the only channel. She didn’t believe brick-and-mortar was going away. She looked at the industry from a different perspective — and it happened to be how many of the up and coming ecommerce entrepreneurs were looking at it too. But a lot of it is about being a woman. “I’d like to think my strengths are in connecting with people and the relationship aspect of this business,” Green says. “Some of those things are more feminine traits. There were times when I was less comfortable putting those forward as my differentiation.”
“I WAITED AND I LEARNED”
Being on the outside scrapping to get in is something Green is used to. She’s never quite been connected, prepared, pedigreed, educated, or male enough for any of the challenges she’s set out to do. She admits to having some education envy earlier in her career. She went to public school and fought her way into the finance world with a job covering retail for Montgomery Securities at 23 years old. It was a good firm, but not a bulge bracket one. And certainly women on Wall Street are about as rare as in tech. She was not only a young woman lacking a fancy pedigree, she was surrounded by an established banking team and didn’t totally know how to distinguish herself.
“I rightfully thought it was a disaster several times... I would think, ‘Thank God this is my money and not someone else’s’”
In a try-anything attempt to find a unique perspective, she started to hang out in malls. “The closer I was to the customer, the more insight I would have,” she says. “I started spending more time in stores and talking about how the product looked, whether people were going to the mall, whether there was foot traffic.”
She developed a unique pulse on the sector, which turned into a job on the buy side of the investment bank. Things were looking up. And then specialty retail fell on hard times. It was no longer about expansion and new categories, it was about contraction. It was about who could show better same-store-sales, and what analyst could build a better model.
So she decided to go where the rules were getting redefined once again — the Web. She had enough self awareness to know her public market experience didn’t qualify her to invest in young companies. So she started a five year journey to methodically develop those skills. She used whatever abilities she had to ingratiate herself to founders. She hung out in coffee shops, building financial models and writing business plans for entrepreneurs for almost nothing, just to understand how it all worked and how they looked at the world.
Green has never quite been connected, prepared, pedigreed, educated, or male enough for any of the challenges she’s set out to do.
“I did everything I could to be close to an entrepreneur,” she says. “The most I got paid was a few thousand dollars. But I waited and learned. I wanted to have a good understanding of the key characteristics of these companies before I started managing any money.”
The word of mouth about Green spread.
When she finally got enough confidence — and deal flow — to start investing she had another problem: She didn’t have enough money to be a substantial angel, she didn’t have the track record to raise a fund, and she didn’t have a job in venture capital. So Green found a way around it. Leveraging some of her past banking relationships she would raise one-off “funds” to invest in single companies.
She’d scout an investment and then go out and raise the money to invest. Deal after painful deal. It was almost untenable managing the back-end of dozens of mini-funds at the same time she was trying to add value to companies and continue to scout new deals.
“I was just trying to build credibility,” she says. “I wanted to show I had some real skill, some tangible real examples under my belt. By raising money on a deal-by-deal basis, they were investing in the deal, not me.” This certainly wasn’t a normal way to break into the industry. But Green was a nobody in venture capital. “It can be intimidating to be an outsider coming into an industry,” she says. “Marc Andreessen never called me up and offered me a job.”
She invested this way for three years. “People told me I was insane,” she says. “But several years later, I knew some of the best and smartest institutional LPs, and I had a whole lot of experiences I could speak to of being a GP they backed. I had a ton of references.” Green also got lucky. She happened to be doing all this just as a new wave of ecommerce was building, and she saw it before a lot of people.
Traditional firms started to get interested in her, and she started to wonder why she needed them. She’d grown fond of her own weird way of doing things. But she still had a problem. She was still investing too much in businesses with some kind of track record. She was relying too much on her financial and analytical experience. She wasn’t taking enough risks. If she was really going to become an early stage investor, she was going to have to start to invest off of her gut.
It was then that she met a charismatic Stanford business student who was also having trouble being taken seriously by the Sand Hill Road establishment.
“I THOUGHT IT WAS A DISASTER SEVERAL TIMES”
Andy Dunn was not a sure thing. At all. He and his then partner were selling well-fitting pants out of the back of their cars. This was well before the ecommerce resurgence, and no one was funding that kind of thing in a Valley obsessed with Facebook and badges and virtual cows. Dunn raised $8 million to start Bonobos in almost as painful and unconventional way as Green: Some $50,000 at a time from more than 100 individual investors.
Many things seemed crazy to Green about Bonobos. It was a menswear company, a far smaller market than selling to women. He wanted pants to be the marquee product, and pants are one of the hardest pieces of apparel to sell. And he was going to count on “fit” as the differentiator, without any real way for people to try the pants on. “It was really, really risky, but one reason I loved it was because it was really, really risky,” Green says.
But Green was still afraid of putting other people’s money behind Bonobos. Most VCs spread risk over an entire portfolio, and since Green still didn’t have a fund she didn’t have that luxury. She was torn. Torn between what she knew was her shot to leap away from the safe mentality of a banker into being a gut-driven early stage investor. She had worked so hard to get to this point. But what if she was wrong? Would she ever be able to raise a syndicate again?
So like earlier moments in her career, Green came up with an unconventional solution. She invested her own capital in Bonobos under one condition. She told Dunn she wanted to learn. She wanted him to tell her everything, to answer her questions as they went along, to be her first phone call when times got hard. She figured even if it failed—likely given the state of the company at the time—she’d get something even more invaluable.
“I think I rightfully thought it was a disaster several times,” she said of the next few years. “I would think, ‘Thank God this is my money and not someone else’s.’”
Bonobos didn’t fail. Two years later Green finally raised $40 million for her first fund and opened Forerunner Ventures. She invested in Birchbox, Warby Parker, and put more into Bonobos as three of her first deals. Forerunner was taking off.
“IT’S WAY HARDER TO BE A WOMAN IN TECH. IT JUST IS.”
Green is finally a respected venture capitalist winning hot deals. But the last year of her life hasn’t been much easier. Her pregnancy was high-risk and stressful, just as her firm was taking off and her earliest investments were scaling dramatically. And she is also the mother of a rambunctious four-and-a-half year old boy. “God, I hope she loves to color,” she says of her new baby girl.
Making matters worse was a horrific case of pregnancy insomnia. The baby came early, and delivery was a relief. “Once I had a healthy baby in my arms, I realized just how stressed I’d been,” Green says. “My head hit the pillow, and I slept better than I had in a long time.”
Her pregnancy was high-risk and stressful, just as her firm was taking off and her earliest investments were scaling dramatically
The earlier generation of female leaders in the Valley was careful to project androgynous strength. Imagine the pantsuits and short, frozen hairstyles of Carly Fiorina or Meg Whitman. If they had families, they never spoke of them publicly. And you can’t blame them. The miracle of life is inconvenient for shareholders, enterprise customers, senior executives, and boards of directors.
Green couldn’t hide her femininity if she tried. She is striking, vivacious, and inherently nurturing. She wants to hear your problems and give advice. She fills awkward silences, wanting you to feel comfortable around her. She has that knack of seeming cool and together and yet flawed and discombobulated all at once. If her life were a rom-com, she’d be played by Julia Roberts or Cameron Diaz.
Lucky for Green, it’s different being a woman in the Valley now — an age of Mayer’s Vogue shoot and a Valley-wide baby boom amid entrepreneurs. Like a lot of new moms — and new dads — in the startup world, Green is unabashedly involving her children in her professional world. Zynga’s Mark Pincus and Yahoo’s Marissa Mayer had suites in their offices for their kids. Facebook’s Sheryl Sandberg and Andreessen Horowitz’s Margit Wennmachers have regular dinners at their homes so they can tuck their kids in before bed. And many others take young kids on business trips.
I know the playbook well. I started Pando on maternity leave with my first child, and got pregnant with my second when we were just six months old. Until recently, I’d never run my company without being pregnant or nursing. But let’s face it: Tech is still a man’s world.
“It’s way harder to be a woman in tech,” Aileen Lee says. “It just is.”
Unlike Green who had to start from scratch writing business plans in coffee shops, Lee was able to bring Kleiner superstar John Doerr on the press tour announcing her new fund.
Still, it’s been a struggle to start anew. “I feel like I am hustling every day,” she says. Lee and Green and Aspect Ventures’ Fonstad each talk more about industry reasons, not gender reasons for starting their new firms. But each also acknowledged something freeing about starting a firm and being a woman-dominated shop.
Fonstad said the culture of Aspect is about working effectively not punching a clock. If she or Gouw or any other employee has to run out to pick up a kid somewhere or make a school meeting, no one bats an eyelash. It’s freeing to be out from under the mantle of a multi-decade legacy brand. “We don’t have any of the lingering politics or concerns or dynamics that larger partnerships have,” Fonstad says.
“I like being more naked,” Lee says. “I’m either good or I suck, but I have no one else to hide behind.” And — let’s be clear — when it comes to ecommerce there are advantages to being a woman. When you are investing in areas where women are the primary audience, a man can’t go on gut the same way a female investor can. The Andreessen Horowitz partners say they invested in ShoeDazzle because their admins loved it. Benchmark’s partners said they invested in WebVan because their wives didn’t like going to grocery stores. Green invested in Birchbox because of the way she and other women she knew were spending differently on beauty products.
That’s one reason Dunn wanted Green on his board: He knew he was going to launch a women’s line in the future and knew he and his male investors wouldn’t have an instinctive feel for it. Green wasn’t only the smartest person he knew at understanding brands for specialty retailers, she was the smartest woman he knew who understood it. Her gender was an actual plus.
“I HAD TO BEG MY WAY IN”
All of the industry sources I spoke with for this story were quick to point out that the stories of people like Green, Lee, Gouw, Fonstad, and others starting their own prominent firms isn’t just a gender story. It’s part of the continuing narrative of disruption in the venture capital industry.
Andreessen Horowitz Partners are mostly dudes, but they are dudes who didn’t have a firm five years ago and are arguably a top-five firm today. It’s no longer a given that the legacy firms that built the Valley are going to stay on top. And as they become embattled, it’s opening up the playing field for others.
“It’s way harder to be a woman in tech,” Lee says. “It just is.”
It’s not just about women leaving big name firms to start anew, it’s also about male partners leaving firms because they want to return to smaller fund sizes and more hand-holding. It’s also about wider access to capital. The recent wealth in the Valley and lower costs for creating a company mean more can become angels than ever before. It’s more possible than ever to gate-crash the gatekeepers. But it’s also not a given that any of these new firms — as promising as they may look now — will succeed.
Venture capital is a marathon. Funds run for ten-year cycles, and promising companies can always fall apart. Just ask Zynga, Groupon, Gilt, or Fab. Green hasn’t yet had a large exit. That means she isn’t a successful investor yet. And Green’s first three deals are still her best. That’s unfortunate because she had the least to invest back then. She wasn’t able to lead Birchbox or put as much money into any of the three as she’d like. That means — despite her prescient views on the market — her potential upside is capped.
“They were three extraordinary deals with three extraordinary founding teams that have executed near flawlessly,” she says. “I wish I’d been able to get in in a larger way.” When it came time for Bonobos to raise its third round of funding, Dunn invited Green to join the board if she could find a way to lead the deal. That seemed impossible: It was a $30 million round and her early stage fund was just $40 million. So she went to her old playbook and put-together a one-off syndicate of $15 million to lead.
When she gets an opportunity to double down on an entrepreneur she believes in, she’ll find a way to do it. Finding the money was hard, but never the hardest part for Green. It was always getting in the best deals in a Valley overrun with capital and cozy relationships.
And that’s still the hardest part. “I had to beg my way into those first three deals, and I didn’t have anything to point to other than a handful of conversations,” she says. “It’s the entrepreneurs who have to give you permission to do this job. That’s it.”
Photography by Amy Harrity for Pando.
This article first appeared in PandoQuarterly Issue Two.