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.
Heather Harnett, CEO and General Partner of Human Ventures, joined us in a conversation led by Callie Schweitzer to chat about her work.
Human Ventures started as startup studio, when the team saw a need in NYC for a platform to help builders build, and essentially deployed an operational SWAT team around founders as they were growing their businesses. Now there are 20 employees working there, covering everything from business design, to gaining conviction around an idea, to testing to make sure there’s a market. Alongside that team, they’ve launched a fund invests in those companies as they achieve certain milestones.
Harnett sees a big disruption happening within the venture ecosystem, and she feels well-poised. As capital and technology become commodities, the thing Human Ventures really focuses on is talent and humans, and it’s the lens through which they assess opportunities.
We talked more about this philosophy with Harnett, along with why NYC presents a unique competitive advantage within this context, Direct-to-Community as the next DTC, making a good first impression, and hacking your calendar.
Let’s talk more about technology as a commodity. It’s a through-line in every industry, and the companies that you co-built and invest in all have technology as their underlying backbone. Where do the humans come in?
There have been a couple of phases of the “tech industry”. In the ’90s, there was an original startup studio called Idealab, and they offered an infrastructure for startups to be created because it took an entire room this size for a server to exist. There was no server up in the cloud. So if you were building a technology platform, you needed to have servers, which were then a shared resource.
The second wave then was around the engineering talent. If you were an engineer, you could build products. Those products became companies.
Now, when most of the tech giants are the incumbents, you can create product very fast. You have to look for the next wave of innovation.
So when we talk about humans being at the center of innovation, we think about what the human trends are, the human problems that people are facing. And that should be at the center of the technology that you’re building. The technology shouldn’t be driving the business, the human challenge should. At that point, technology is facilitating the flow of commerce and the flow of frictionless pain points.
How about the founders? If a founder came in to meet with you, what’s the framework that you’re looking at them through?
This is my favorite part of the entire thing. VC is really a people-picking game.
My father was an entrepreneur. My grandfather was an entrepreneur. I was not introduced to traditional industries and the path of taking a job or having linear career path. I was taught at a very young age to think about what the problem was and how I was going to solve it. When I graduated college in 2005, my dad asked, “What company are you going to build?” That’s a daunting task, but I’d grown up with him talking about the skills we valued in our family – constantly figuring out where the problems are, testing, iterating, understanding how to take risk. So I have that lens baked in.
The unique investing angle I bring to the table is around people, and finding unique qualities and talented people that go beyond a resume. At Human, we look at three different components:
- Your skills: How you actually create and what you’re good at.
- Your personality traits: Do you have a growth mindset? What’s your tolerance for risk? Are you a self-aware person? Are you almost maniacal about growing? You have to be comfortable being uncomfortable because you’re constantly growing. And I always say, “If you’re not out of your comfort zone, you’re not growing.”
- Your experience.
My goal was to find a framework that looks beyond the resume, because I think it’s very difficult to know who somebody is if you’re looking at the attributes from a resume. It tells a very, very small portion of who that person is.
Our thesis with Human is really about the next 10 years. What’s going to become less and less apparent is where you worked, the logos. It’s about what work you’ve done, how you work, your personality, how you work with others, your relationship to your team. Also, from the business standpoint, should you be early stage or late stage? Are you really good at taking something that’s already been established and growing it, or are you good at the zero to one? If you’re able to take people along in your vision.
I think the best part about the future of work is understanding how we work as humans. So there are two components to Human. There’s one around types of companies that we’re building, and then the other one is around the people we’re building.
Tell us about humans in NYC specifically. There are real competitive advantages here, and you’ve been a very vocal supporter of New York versus Silicon Valley. Why?
It’s ironic because I’m from the Midwest, and Chicago was the closest big city to me. That was huge. New York was this big scary city that I never thought I was going to go to. In 2008, I came to New York, and I just fell in love with it as it pertains to the venture landscape, startups and the entrepreneurial environment. It’s been the most exciting 11 years.
First, all the other industries that New York has been known for are coming into the startup ecosystem. For the first time, people have realized you can disrupt an incumbent. You can be in New York and survive as an entrepreneur. You can find community.
There are multiple generations of startup founders now that have also spawned new talent pools. Gilt Groupe is one of the fastest growing venture-backed startups here. Ten of their senior management have companies worth $100M or more now 10 years later. Now those companies are going to have babies, and those companies will. So in the next five years we’ll have hundreds of thousands of people in the startup ecosystem, which is something New York never has had.
We also have really smart people coming from industry – whether it’s fintech, fashion, beauty, media – you have incredible talent that has seen these industries through a different lens. That makes more experienced founders. It’s not just a 22-year-old hoodie who graduated from Stanford. That’s not bad, but why are those the people who should disrupt these industries or see the nuance in these industries? We’re valuing different types of entrepreneurs.
You mentioned community, and you had a thesis, that DTC, which is normally Direct-to-Consumer, is shifting, and that Direct-to-Community is the future.
New York was one of the biggest proponents of Direct-to-Consumer, very much predicated on advertising. Facebook, Instagram, and other platforms gave rise to an easy customer acquisition platform – you could pay for customers. It was really beautiful advertising that was right there in your feed alongside your trusted friends. So direct-to-consumer made sense.
Now that the advertising model is breaking, you need a lot more for your product than just to sell one unit. You need to know who the cohort is that you’re selling to, what community it is that you’re resonating with, and how that community is changing over time. Where you could’ve had razor blades for one community, and I could have grown, it might plateau.
At some point, you need say, “What is the brand that resonates with the community and what does that community need next?” So yes, the new DTC is direct-to-community.
We also look for founders who resonate with a certain audience and understand that pain point. That gives a lot more room for different types of founders. We have an incredible company called Tiny Organics with two incredible female founders. One is a mom. They know deeply what the eating cycle is, from six months to two years and the exact pain points that moms are feeling. They’re also multiple-time entrepreneurs. I’d much rather back that person than somebody who came out of a CPG company. They know the business model, and they’re just figuring out how to optimize a new brand. It resonates with the actual mom community that they’re aiming for.
Life stages is something you think a lot about. Can you talk about the field areas and categories that you’re most interested in investing in?
It’s pretty broad because whenever I used to invest in humans, I was asking myself, “Everyone’s great, how can I narrow that down a little?” Then I started to say, “Well, we invest throughout your 100 years of life.” What I mean by that is that you’re looking at generations and how they move through life stages and what the unique challenges are that arise with those generations.
The millennial parent is very different than the baby boomer parent. The baby boomers now are going through a different life stage than their parents ever experienced because they have empty-nester mentality. They’re traveling more. They want more experiences. One in three are single now. Social isolation is a big challenge.
We like to see what some of those human trends are, and as entrepreneurs you should think about that too. What are the core experiences of people who are our customers? What are they experiencing? Why are they experiencing them, and then, where are they growing in the next 10 years? That just fascinates me. I love generational sociology. I love the fact that Gen Z is unlike any other generation. I’ve been thinking about the Alpha Generation, born after 2010 – which is nuts – and what they’re going to be thinking about in terms of identity, community, where they’re living, how they’re thinking about ownership, how they’re thinking about the planet, all this type of stuff.
You talked to Fast Company about how to make a good first impression, and that’s something that everyone can benefit from regardless of if you’re pitching or going on a date or anything. What are you looking at in your first meeting with someone?
This might be really esoteric, but I love energy. I operate off of energy. If somebody’s really passionate about what they’re doing – everybody has good days and bad days, but if you truly believe in what you’re doing – it comes through. I don’t care what you say. It’s how you make the person feel on the other end of the table.
So I talk about people being the catalyst for ushering in the product or service they’re supposed to be doing. Some people call it Kismet. Some people call it Dharma, your path of evolution. Whatever you’re supposed to be in, when you know yourself, when you have some of that self-awareness, and you know that you’re supposed to be doing what you’re doing, that’s infectious. And if I feel it, your employees feel it, other investors are going to feel it. Your customers know it.
Be really intentional about what your personal brand is and how you want to leave somebody in a meeting. Do you want them to feel energized? Do you want them to feel that you know your numbers really well? By the way, you should know your numbers really well in any investor meeting. What are some of the first impressions that you might be able to hit off in the beginning?
I look a lot younger than I am. I kind of called that out in the past in a lot of my investor meetings. I’m like, “I know I look like I’m younger than I am. I’ve done three different careers.” And if you put that at ease, and then they go, “Okay. I had that judgment, but now it’s good.”
What would you give to every single female funder and every single female founder?
I’m really putting you on the spot here.
Well, for founders, I love thinking, “Why you? Why now?” Why should you be building this, and why is this the time for you to build it? There are two things that have to be right. It has to be you, and it also has to be timing. Timing is everything.
It’s not too dissimilar for female funders. A lot of funds weren’t bringing female partners up into the partnership, so people spread out, and they’re starting their own funds. We are founders just as much as you are. We have to convince LPs to give us capital. I had to build the companies in my portfolio. My Dad joked. He said, “You’re the only person who raised a fund and then had to build the portfolio of companies as well to prove to everybody you know how to do this job.” And it’s true. You have to do more than the average person, but doubt the doubt. Keep going. And if you know this is what you’re supposed to do then don’t take no for an answer. Nobody else knows more than you.
If you’re a constant learning machine then that’s your advantage. That’s your edge. So just don’t stay stagnant.
How do you keep growing? What do you read? What do you look at? What do you consume?
I have a constant group of people around me who are also, what I call, growth junkies, and it’s really hard to stay stagnant when everybody around you is also growing.
It’s important to know the difference between ambition and the desire for growth. Sometimes you can leave the person out of the personal stuff because you’re professionally ambitious. That’s a short-term version. So really, a desire for growth long term means you surround yourself with people who care about you as a person, your wellness, too. How are you growing?
I’ve practice transcendental meditation since I was very little. I’m not a perfect practitioner. I don’t do it every single day, but I go through periods where I will practice more times than others, and I know when I’m off-center. When I’m off-center, I’m just like, “Okay. Am I having too much caffeine? Am I having too much wine? Am I working too much?” My husband’s a great balance for me. I used to never watch movies because those two hours I could never get back! How many people have ever felt that way? You’re ambitious. My husband watches every single movie. He’s a film love. He loves it, and he’s given me appreciation for it, but it also gives me the permission to be with him, rest a little bit, and chill out. Finding people who balance your personality is really important.
Last question. You have a productivity goal for 2020. Can you tell everybody about it, and how are they going to also incorporate in their lives?
My productivity goal is to optimize time. Being proactive about your use of time touches on what we just talked about. We are all here – your inbox becomes everybody else’s to-do list for you because everybody’s just coming at you.
It’s really important to be intentional about the times you hold for yourself. Know your energy. Are you better in the mornings for getting things done that are hard, and better in the afternoon for meetings because you’re able to check out a little bit more? Know yourself, and then try to prioritize your time. So yeah, my goal for 2020 is to hack my calendar.