Elizabeth Yin (Hustle Fund)
We caught up with Elizabeth Yin, co-founder and GP at Hustle Fund, about her experiences growing up in Silicon Valley. From working in big tech and starting her own company, to becoming a partner at 500 Startups and raising her own fund, Elizabeth has really seen it all. With Hustle Fund, she’s now on a mission to democratize wealth by investing differently (earlier, quicker, and to a wider pool of people). Together we explored how, as an Asian woman, she has been able to navigate the culture in Silicon Valley and, in spite of all the assumptions and stereotypes she regularly comes up against, she has attained investor positions where she can “try to change the system.”
Interviewed November 2020
Getting Started in Silicon Valley
Johannes Lenhard (JL): Let’s start with the very beginning, when you started in tech in the mid 2000s. What was the tech world like then? How bro-y was it back then in San Francisco?
Elizabeth Yin (EY): Wow, what a question to start out with. So I’ve grown up in the San Francisco Bay Area and in what they call Silicon Valley; I’m from Mountain View, California, which is the heart of it. So, I’ve been in tech in many different ways, for a very long time, even before my professional career through a variety of internships, even before college. Even from that time, the stereotype of white and Asian men with geekier tendencies very much resonates, and I think that that’s the foot that the industry got started off on. From there, it just flywheeled into many other ways.
I do think, just intuitively, there is something to the fact that people tend to hire people who are their friends and their friends tend to be people who are like them, which certainly extends into race and gender. So that is also where I got started, even way back when I was a child in the 90s. It has just bloomed into what we see today. Where we are today, we are playing defense or catch up [to the people the industry started with]. The way out is to get other flywheels going and to get them going fast and to the same scale. That’s just a very challenging problem.
Combatting Assumptions and Stereotypes
Erika Brodnock (EB): How does this relate and work with the idea of meritocracy? For instance, you started your own company quite early, LaunchBit, where you were the CEO; you managed to exit that in 2014. How was it being an American-Asian female entrepreneur and founder of a tech company, and what was your experience raising capital?
EY: So sometimes, one of the challenges is that you don’t know if people are responding positively or negatively to something about your company or because of who you are, your race or gender; it’s really hard to separate that. In other words, if an investor passes, you don’t really know why it is. And I would even go as far as to say that sometimes the investor may not know because unconscious biases are a real thing.
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That being said, on occasion, you are given a little bit more. I’ll tell you a story about how I pitched an angel investor for my company LaunchBit. At the end of the pitch, I asked him, so what do you think? And I’ll never forget his response. He said, “I don’t want to say the wrong thing and call you a meek Asian woman, but I question how you’ll lead a company of 100 people.” And at that very moment, just all kinds of thoughts were going through my head. I studied engineering, I went to work at big tech companies, including Google, all of those places are very skewed in demographics. In many of my classes, I was the only woman, and even at Google, there were not that many women. I just actually had never heard anything like that before. Nobody ever said anything like that to me, even if people felt like, “oh, she’s incompetent,” or even if people felt like “she’s just here because she’s the token woman.” So that was the first time I had ever heard anything questioning my competency because of both race and gender.
After that experience, I really thought very deeply about it. I actually walked away from it rather positively, as weird as that sounds, because it made me think: if this person is thinking that, then perhaps a lot of people are thinking that, either consciously or unconsciously. Maybe everyone out there thinks I really am a meek Asian woman and am unfit to lead a company. Therefore, if I want to do this, I must do everything I can to combat that stereotypical impression. After that, actually, I started focusing on my posture, sitting up in my chair, speaking even louder, even though often I felt like I was shouting, just bringing extra energy to the table—all this stuff that is stereotypically associated with being a good leader. It actually worked out a lot better; I started closing checks. I don’t think he should have said that; it was very inappropriate. But it actually was a gift in a weird way.
Can Fitting in as a Leader Mean Behaving “Like a Man”?
JL: So, the takeaway is that you have to behave like a man, stereotypically speaking, in order to be successful in this world.
EY: Oh, 100%. And, to be clear, I’m not saying that either his behavior was right, or that the stereotypes people have around what is a good leader are right. I’m just saying that from that particular situation, for the situation I was in, I was able to take something away from that, and apply it to that at hand.
At Hustle Fund, we are trying to change how people think about what a good leader is. A good leader, almost by definition, is somebody who can lead a group of people to execute well, right? That says nothing about what you look like, or how you talk or how loud you are. And I know plenty of CEOs who are not charismatic people, but have led very effectively. But people do have all these stereotypes, and that was one of the first times somebody explicitly said that to me. I had heard all these murmurings of how people think about things, but that was an experience where somebody explicitly just laid it out.
A second example, where I left actually dejected, also involved in fundraising for LaunchBit. I was pitching a VC and my contact at the VC firm was very excited. He took me to the all partner meeting. The firm is big—they had seven partners, two of whom were remote, five were in the room. And you can imagine video conferencing back then was not that great. So things kept on dropping all the time. All the partners were also men, and the reason I bring that up is, I think, from a physiological perspective, it turned into a big shouting match. You have seven men yelling, two on video conference yelling, and I’m trying to get a word in edgewise and yell over them, which is entirely impossible. I knew leaving that meeting, I did not get the money, because I just could not even be heard. I felt like, “Okay, this is an example of where gender does not help me, for sure. The whole setup of that meeting did not work in my favor, already I was going in at a disadvantage.”
Seeing Funding from the Other Side of the Table
JL: After LaunchBit’s exit, you switched camp in 2014 and became a partner at 500 Startups. How was it to look at it from that side of the table, from the perspective of an accelerator?
EY: It gave me a lens that I think a lot of people don’t have, because 500 Startups has invested in so many companies over the years—at this point, it’s well over 2,500 companies. They invest all over the world, all across demographics such as race, gender, age, types of people, just everything. So basically, I got a snapshot into a lot of different teams. That was very informative for me, because as I mentioned before, when it’s just you, and you’re pitching your startup, you’re a data point of one. But when you see larger sets of data, then you can start to see very interesting patterns. One of the interesting patterns that got confirmed for me was the following: if you’re a white male who worked at Facebook and went to MIT, it almost doesn’t matter what you’re working on, it will be really easy for you to get funded.
The other interesting thing about working at an accelerator is that we would fund all these companies, and then they would come into my office to work. So I had information that many other investors didn’t have. How did these teams actually work? Do they get along? Do they actually work hard? Are they focused? Are they executing with speed? You see the day-to-day, the week-to-week; that granular level of information that investors don’t see is very telling. After every batch for me, I could pick a subset that were really interesting. And time and again, the companies that I thought were the best did not necessarily overlap with the companies that other investors thought were the most interesting, because they were making decisions based on very different methods.
Different Founders and Companies Don’t Get the Same Shot
EB: The companies you chose from the batch looked different—can you give us any example of what one of them look like?
EY: Yeah, so actually one of my best companies from 500 Startups was passed on many times. In fact, she basically couldn’t raise any money, but now is doing incredibly well. She owns most of the company, she raised a large Series B from NEA, which is a big VC firm here. She raised on her strong traction at this point, rather than based on a pitch deck. The company’s called Mejuri; they make custom jewelry. The founder is a kick-ass female, originally from the Middle East, but she has made her home in Canada.
Why was she not able to raise money for a long time? A lot of VCs just don’t understand jewelry, or women’s products; certainly direct-to-consumer is not a big thing for them, just in general. Female founder, more or less solo founder, not from Silicon Valley; she didn’t really fit the mold.
But now, I think in retrospect, after she’s grinded this out for many years and eaten glass to get to where she is, things are wonderful for her because she now owns most of this wonderful business. It’s a good example of somebody who was able to do it partly because of a specific trick in her business; she didn’t get VC funding, but she did get debt funding. What underwrites the debt funding is the jewelry. She was able to stay on for that long because of receiving financing to get to that stage, even if it wasn’t VC financing. Think about all the other entrepreneurs who, like her, don’t check a number of those boxes, but just cannot get any financing. They just don’t even have a shot on goal.
Change Is Starting, but It Will Be Long Term
EB: Since you joined 500 Startups, has the number of investments in companies led by diverse founders increased?
EY: Intuitively and knowing some of the data, it feels like there are just more founders in general, including more overlooked founders. So I think numerically, I do want to believe that more people are getting funded that come from diverse backgrounds and don’t tick all the boxes, but not relatively speaking.
Now, that being said, it takes like seven to ten companies to build a big company. So when we go back to this concept of flywheel, I know a lot of people are really frustrated. Not a lot of funding is going into overlooked founders, and not a lot of overlooked founders are building big businesses yet, but I think it just takes time. You start the flywheel now, you find some people, a percentage of those people will build big businesses, and then will become funders, and then they’re starting another cycle in another ten years. You cannot get this flywheel going in this manner fast enough. There need to be other solutions here. I do think that flywheel is starting, but you’re talking about like a 30-year process or more.
Advice for the Next Generation of Diverse Entrepreneurs
JL: Looking back at what you’ve gone through and knowing the world as it is now, if you were asked for advice from your own 18-year-old self about going into entrepreneurship and venture capital, what would you say they should do?
EY: One person said it very elegantly to me recently; he said, “My melanin does not work for me.” Other people in my portfolio have been very blunt like, “They’re not going to fund me, if only if I were a man.” I’ve heard a spectrum of comments now from my own portfolio. The data is maybe not in their favor, statistically, but the problem is, you cannot go in psyching yourself out. Statistically speaking, you should not be building a business if you’re looking for your optimal chance of, for instance, making a lot of money. There are much better ways to make a lot of money. You go into entrepreneurship to play your own game—maybe you’re going into it to solve a particular problem you’re really passionate about. Along the way, you just get inundated by all these other people, rightly or wrongly, and mostly naysayers. The way to play the game is to mostly ignore them and take in some tidbits of feedback here and there. Too many people, especially overlooked founders, end up getting into this weird mind trap of what all these other people are saying to them. That’s a problem, because most of the battle with entrepreneurship is with yourself. You are just psyching yourself out. But the way to succeed is to just focus on what you need to do and ignore everything else.
I completely agree that the landscape is unfair, everything from the pattern matching to even the setups of how investment meetings work. But that being said, that isn’t the thing that a founder should be trying to address right now or even necessarily be worried about. It’s probably because I have gone through this myself, where I know that the best path forward is you have to just work with the system and just plow through it for now. Once you have been successful, maybe you can come back and we can work together and try to change the system.