As part of our Founders + Funders NYC 2019 summit, held on November 8th and co-organized with Seneca VC and SheWorx, we brought together an exciting group of startup founders and investors for a day of learning, networking and growth.
Courtney Connley from CNBC sat down with Lindsay Kaplan, Co-Founder of Chief, and talked about building a professional space for women leaders with a waitlist in the thousands, doing it without social, raising $25M from VCs, privilege, investor relationships, raising while pregnant and more.
In January of 2019, you and your co-founder Carolyn Childers started Chief. Explain what Chief is and also how, even though you have a physical space, you’re far different from the other co-working spaces out there.
My co-founder and I both came from companies where we were rising VPs, and we felt like we hit a point in our career where we were taking a lot of coffees. We were taking a lot of meetings and calls with young women who were asking us for advice.
You hit a stage in your career where you want to give back. You want to mentor. And both of us realized: When was the last time we asked for mentorship? Who were we going to for support, for guidance? We were at a stage in our careers where both of us felt like our decisions mattered more than ever. Our teams were growing, and yet we had less support than ever.
That led us to a place of wanting to create a network of women, that was VP through C-suite. Structured this way not to be exclusive, but to actually allow women who are in this mentorship role to actually mentor one another. The second you start bringing in younger women, you become de facto mentor – which is amazing and incredible – but no one’s mentoring the mentors. That was the spark that led to Chief.
We were really inspired by a nonprofit called YPO, Young Presidents Organization. You have to be a president or CEO to get in. You’re going to be shocked. It is 95% men, mostly white men. It’s a great organization because it’s vetted and it allows presidents and CEOs who find it lonely at the top to get together and find mutual support.
We opened the doors to Chief in January. We expected 75 members to join us. We were welcomed by 200 incredibly powerful founding members.
We found that, because our women are busy – these are all women who are C-suite, really important senior leaders in their companies – they don’t actually need a co-working space. They needed a community, and they needed a place where they could meet and network, something that felt more tangible and real.
That was our driver, to create a community, and build a physical space that was less co-working and more about grounding the community in a place where they could go and feel like it’s where they feel they’re going to have confidential conversations, they could go to programming, and they could be real.
Clearly, you all are filling a serious void, because so far you have 1,500 members. You have 7,000 women on the waitlist. You’ve had people such as Whoopie Goldberg and Lindsay Vonn…
All my personal friends. I’m just kidding. I was like, “Whoopie.”
…participate in events at Chief. You’ve done all of this without social media. How did have you been able to grow without social media to help promote it?
I previously was running social media, communications, PR and content at Casper. Casper grew on social. It became a phenomenon in the Unboxing-the-Mattress. It was this young hipster millennial mattress brand. I don’t know how you could be a hip mattress brand, but we did it.
I felt like we were paying this massive tax on social that I’m sure some of you have felt, just trying to figure out to go up against competitors. I have to pay for the ads. I have to build a community. I mean, that was my bread-and-butter for a decade, doing social media.
There was this part of me that just wanted to focus on the experience of the member, and not be distracted by figuring out what to post on Twitter or Facebook. I didn’t even know what to post – pictures of women holding a glass of wine and laughing or inspirational quotes? That was it. I asked a million people. They were like, “You could do an inspirational quote.” We’ve seen them all. It’s kind of bullshit. [laughter] I’m sorry. Does everybody here like inspirational quotes? Okay. Sorry. They’re great. They’re great. It’s just there’s plenty of accounts that do that. You didn’t need another one.
I wanted to focus on creating the experience of the community. Then we hit a point where we were like, “Well, why be on social media at all?” This is a place that is rooted in confidential conversations and supporting women, and social media has become a distraction for all of us.
Chief represents the vacation you didn’t go on and the kid’s room you didn’t decorate. We don’t even know if we should ever be on social media. We’ll occasionally post on LinkedIn because that’s where our ladies are. But I wanted to reject Instagram and Facebook and Twitter and focus on the actual customer experience and building real recommendations and referrals through our network and connections.
But I’m on social media, so I’m really guilty.
Did you post inspirational quotes?
No. But if you do look at my Instagram, it’s like, “That woman did not decorate her kid’s bedroom. It is ugly.”
So many of us in this room are well aware of what the numbers show in terms of women founders receiving 2.2% of VC funding, which is ridiculous. And women of color receive even less.
It’s a tenth of a percent?
We should be rioting. Everybody here’s very polite. We should be angry.
Within less than a year, you all have been able to raise $25M in VC funding. How? Did you face any challenges trying to present to investors that you have a business, for woman and by woman?
We have a leg up. My co-founder and I are white women. So that right there, the numbers are in my favor. I went to college, I have privilege. That alone, I don’t think people talk about. Money gets raised by privileged people. My parents paid for half of my college education, and I moved to New York. I knew that I always had my mom’s credit card as an emergency backup if I couldn’t afford groceries. We don’t talk about that enough, about the privilege that almost every founder has to take the risk, of which my co-founder and I had.
I came from Casper. She had worked at Handy, which was acquired by Amazon. So we also had startup experience. That was really helpful. I worked at startups that were successful like Casper, and I worked at a few startups that were less successful. It’s easy to ride a wave and say, “I worked at Casper, so I’m really smart and talented.” It’s much harder to work at a startup that is not doing that well, that is scraping by for money, where people are pointing fingers. She and I both brought to the table a knowledge of what works when things are working but more importantly what failure looks like.
When we raised, we had a really strong knowledge of founders that had inspired us, men who had raised money. Both of us felt this fire of well, those guys raised money. If they raised money – I’m older, I have more experience, I’ve been doing this longer than they did – I should be able to raise money too.
We went out, and Seed was hard. Seed was difficult. We raised $3M led by Ben Sun at Primary, who is a guy who was – forget the fact that he believes in women and loves the cause – he really liked the business, and he liked the total addressable market, which is the 5M women sitting in VP-level-and-above positions in America. It became less about the mission and the passion that we had and more about the business model.
But it was tough. We went out to San Francisco. I remember this awesome investor that I love. Man, I wanted him to join. He was like, “You guys are great. I invested in an awesome unicorn suitcase company led by women. They make one product, and they’re really good at it. You have an organization, and there’s five different things going on. And in a way, you’re launching five products, and it scares the shit out of me.”
So he passed, and it gave us fear of God – “Oh my God. What are we doing? Can we actually launch a membership organization, a clubhouse, peer groups, programming, a digital product? Are we going to be able to do this?” And it lit a fire. We had a moment of, “Do we go back, burn down the deck, and start over and simplify? Because, smart guy! Great advice.” And we didn’t. We persevered, and it just lit a fire for us to make this work.
The $22M after that was just extortion and blackmail [laughter]. No. From there, we had a proof of concept. We had a waitlist. We had members. Once you have this traction, it’s a lot easier to raise. It became a little bit of a bidding war. We actually had eight-term sheets, and we had to stop the process because we had too many term sheets. We were taking too many conversations. This is a luxury, it’s not normal. It never happens. But by then, we had perfected what we were selling. We were perfecting how we spoke about the business and getting people really excited. And we just knew how to run the process better.
You spoke a bit about privilege. What advice do you have for people who don’t have that privilege, who don’t come from big-name companies, and are trying to raise money? What’s your advice for them?
There are fundamentals of raising that a lot of people don’t talk about. What I’ve noticed from young founders who haven’t worked at startups before or who maybe have less experience – privilege or not – is that there’s an outsized focused on obsessing with perfection of the product. Investors look at three things. Product is just a third of it. But people put 100% of their effort into product. Investors are looking at you and your perseverance, not just your background.
It’s not just, “Do I want to get a drink with you, and do I like you?” Likability is overrated. I’m not very likable. I’m kind of an asshole. It’s not about being likable. It’s about believing that this person can run the business, they can sell me, they can hire, they can take this to market, they make good decisions.
The third piece that doesn’t get enough attention that is arguably the most important piece of raising is, is this a VC-sized business? Just because it’s a good business doesn’t mean it’s VC-sized. I don’t think people spend enough time thinking about their term, about what multiple their company could be trading at in the future. What is the exit strategy? Show me the path to $1B, and I will show you a term sheet.
People have great ideas and great products and great teams, and that little piece of trying to twist that story around is often the most neglected piece. It’s less fun, and it’s less sexy.
My co-founder, she lights up talking about spreadsheets and business models. And she loves projections. I suck at it. Find somebody that complements you. I see people that are like, “Me too.” But find somebody that complements you. If you’re that person that has the business passion, find somebody who is equally as passionate about the product. If you’re that product person, my advice is to find a great complement to you that can really drive that business strategy.
How did you know when it was a good deal to take money from an investor? How did you know whether a business person would be good for you or not?
There were some red flags – I’m going to contradict myself – do I like this person? With the Seed rounds, we had such a tough time raising. I love our seed investors. Thank God. But we didn’t really have the option of weighing offers. Do I like this person? Do I want to call them in the middle of the night? I just needed the money, right? Thank God they turned out to be amazing. Jesse Middleton at Flybridge is a saint and is incredible. But we didn’t really have the luxury of choosing.
So as much as I would give advice on who to choose from, money is the money, right? Get good terms and advocate for yourself.
For Series A, when we had eight-term sheets, it became more about what the partner – not the firm – stands for. Are they aligned with our mission? How do they fit into the rest of the board dynamic? We had Alex von Tobel, who is incredible, from Inspired Capital. She joined our board. Alexa is an entrepreneur. So she is in it to win it, super aggressive, can tell us, “Guys, I think your product – you need to be focusing more on in-house technology.” Really nitty-gritty but also thinks big picture.
We also brought on, to compliment Alexa, Ken Chenault, the former CEO of American Express. Ken Chenault is not telling us which developers to hire. Ken Chenault is like, “What’s your 20-year plan?” And having that balance has been crucial for us to think about long-term where Chief is going. What do we stand for? How do we make really smart long-term decisions? But also the savvy of knowing every choice and every quarter and every week-to-week call counts.
We’ve recently heard about a lot of entrepreneurs who have openly talked about raising money while being visibly pregnant. We even saw Audrey Gelman from The Wing become the first visibly pregnant woman on the cover of a business magazine. Have you experienced any difference in treatment with trying to raise money with progressing your business as you’re a new mom who’s expecting?
No. But my co-founder is not pregnant. So I wonder if we were both pregnant if that would have mattered.
When we were raising the A, I was on Sand Hill Road, and I was like, “I am going to puke.” And my co-founder looked at me, and she was like, “Are you pregnant, and are you getting morning sickness on Sand Hill Road?? Are you serious right now? Because this is ridiculous.” I didn’t puke, but I was pregnant. I went into all of these pitch meetings just super nauseous. I don’t know if anybody has ever had morning sickness. It’s worse when you’re pitching because I also don’t like public speaking. So I was nauseous, and I was like, “I shouldn’t drink, right? I shouldn’t drink with you.” I’d had one. But I didn’t look visibly pregnant, so I don’t know if that would have affected it.
I will say I wear my pregnant belly, my second one, like a badge of honor. And it’s hard, physically, to run a business, to be a mom– it’s hard to run a business, period. It’s hard to be a mom, period. All of these things are really difficult. It’s tough. And so to take all of them at once – I just stop dressing up. I was like, “You do you.” I just don’t care if people think I am not polished. I don’t care. Yeah. You look great by the way. I’m so jealous [laughter]. I walked in and I was like, “Oh, my God. She looks amazing. This is like my style.”
We’re talking about you?
No, you look so good. Yeah. But I had to stop caring, and it’s like a badge of honor for me that I’m not going to wear the fancy clothes. Everyone’s like, “Get Rent the Runway maternity. It’s amazing.” And I’m like, “I don’t want to.” Then I have to bring shit back to FedEx. That’s like another job.
I just feel like owning whatever is going on in your life and not trying to cover it up, not trying to dress it up works for me. It may not work for somebody else, but I wasn’t visibly pregnant. Now, I am. And I’m like, “This is me. Give me a cushion.” Kate was so sweet. She was like, “Do you want a cushion.” I love you.
We’ve talked about how you all have grown pretty quickly within this first year with $25M of VC funding, 7,000 women on the waitlist. As someone who’s seen success in your first year as an entrepreneur, what are some of the mistakes you’ve seen other entrepreneurs make when they first start out that could be blocking them from getting to that next level?
It’s a really good question.
Hiring is a huge, huge, huge piece of success. The first employees at Chief are amazing. The second batch, the third batch, who you surround yourself in your personal life, in your professional life is everything. People tend to hire people that they like, people that they trust, people they’ve worked with before. Go outside of your comfort zone. It’s why white women end up hiring other white women. It’s confirmation bias.
Bring in cognitive diversity. Bring in people who have totally different skills than you have. Don’t clone yourself. You’re pretty good. If you’re here, you’re amazing. So don’t clone yourself. Find people that are nothing like you that help drive your business forward.
I had a great boss once who said, “Hire slowly. Fire quickly.” Take your time. Find the right people. Even if you’re dying, don’t make that snap decision. And if you bring somebody on and they’re not working out, just fire them. It sucks. I don’t know if you’ve been fired. I got fired once. It’s better for you. It’s better for them. And ultimately, if you took VC money, you’re working for people. You need the best crew alongside of you, so hiring is essential.
Any last-minute words you want to leave with the room?
Yeah. I just need a cushion now. Thank you. I mean, I’m in awe of the women and the men who are here, and I’m really proud of everybody. And I think that you should persevere and don’t let any of those doors in your face discourage you. Just keep going.