Ep. #6, Feat. SoftTech VC’s Stephanie Palmeri

Peter Chapman: Stephanie welcome to Venture Confidential.

Stephanie Palmeri: Thank you for having me.

Peter: I'm real excited about this, let's start with you, how did you get into venture?

Stephanie: So I spent the first decade of my career, living and working in New York City, and at the very end of that I was in business school at Columbia. And during the time I was at Columbia the New York startup scene was really starting to take off. It was 2009, 2010 and not a great time to go into banking. Excellent time in New York to go into startups. So I spent my two years at Columbia really working with the evolving, New York ecosystem.

And the reason I went to Columbia is I was thinking I was going to spend the rest of my life in New York, and instead I finished up that time and realized, A) I had a big interest in working in venture. And B), if I'm going to do this venture thing, I think I need to be in California. At least for a couple of years, and build relationships out here. And so, I threw my stuff in storage. I got rid of my apartment, and I moved out here with two suitcases, and I just started networking.

And I had a pretty limited network in California. I'm a lifelong east coaster, and I was sleeping on a friends floor. And through some folks in my network I got connected to one of SoftTech's LP's. And for your audience, in case they don't know what an LP is, an LP is a limited partner. So they're the investors in a venture fund.

And so Hans at Industry Ventures, said "here are a couple people that I've just given money to. This one's hiring, this one needs to hire. This one probably isn't hiring, reach out to them, tell them I sent you."

And Jeff Clavier from SoftTech was one of those people that I reached out to. Jeff was not hiring, but kind of maybe needed someone. And so I sent him a note, and he gave me some great advice about why I should do venture later in my career. And then published that advice to his BOT audience, took out my name, but people I knew realized it was me. And so I kind of ignored that he did this. And I was like he had really great advice, and I want to talk to him about doing venture at some point, and maybe working at a startup out here.

Peter: Yeah, well what did he say? Why defer venture?

Stephanie: I think he thought I was younger than I was, and didn't have any operating experience. He kind of read the three lines of, "hey I just graduated", and thought I was undergrad, or, something like that. My goal was to get a meeting. I wrote a couple very effective lines, and effectively got a meeting. And so I wrote back to him, I was like "hey, I'm interested in this venture thing, I'm also very interested in operating startup, so if you have time, I'm living out here now."

And that meant sleeping on a friend's floor. And he ended up having me come in, I sat down with him, and he says to me, "so I'm supposed to convince you to not work in venture." And I looked at him and then I was like, "well yeah, but I just got here, and I'm pretty stubborn, so I'm going to try for a couple of months at least. But why don't we talk about startups?"

So we talked for 30 minutes, great conversation. Couple of days later he says come in and meet my partner Charles, who is Charles Hudson, who was the other partner at SoftTech at the time. Great conversation with Charles about startups. Jeff wants to chat with you, go to Jeff's office, and Jeff goes, well you're not going to take my advice so here's what you're going to do.

You're going to work for me for the next eight weeks, prove we need someone, and that you're the right person, and then maybe I'll hire you. Can you start today? So that's how I started at SoftTech. And so about four weeks in he made me a full time offer. And I've been at SoftTech now, I think it's actually six years this week.

Peter: Congratulations.

Stephanie: Thank you.

Peter: What were those first four weeks like?

Stephanie: They were a little insane. The fund was going through a transition of Jeff on his own to having a small team. And Charles was a venture partner at the time, so he was also running a company. And we had Ashley Cravens who's now our head of operations, who is helping Jeff administratively. But, there was a lot of just stuff that needed to get done in terms of putting processes in place, from a deal flow management standpoint, Jeff has amazing deal flow.

At the time the expectation wasn't on me to bring in new deals, it was "hey, we don't want deals to fall through the cracks. So, we've got all of this stuff coming in, filter through what makes sense, take meetings with things that make sense, that maybe I don't have the time to meet with".

And so, if I think about it, at the time, I used the time to try to very quickly get up to speed on what the SoftTech portfolio was. Which at the time was probably 65 or 70 deals that Jeff had done on his own. So, you're looking through, you're trying to figure out "oh, what are the ones that are interesting? What are the ones that maybe I'm going to help support for the next couple of months? What are the newest companies that have come onboard?"

Just so that I would know what the portfolio was. But then also a lot of this internal, kind of systems and process, and then over time I started gradually building out my network, and bringing more and more deals to the table as well. But, yeah, it was a lot of just helping a firm get off the ground and running.

Peter: Sure, and so what was the SoftTech portfolio? Where does SoftTech play?

Stephanie: A little bit of everything, we're a generalist fund. We're a seed stage fund, so SoftTech focuses on early stage opportunities. Today we're generally, I would say the largest, or the second largest check in a series seed deal. We're typically working with companies that are raising, anywhere from one and a half, to maybe three million dollars. So they may have raised a couple hundred thousand dollars before getting to us, what we would call like a pre-seed these days.

And then we're coming in, either as a lead, or co-lead, or another large check in the round. And the types of companies, it's a combination of what I would consider to be consumer services, so monetizable consumer. Marketplaces, which could be consumer B2B. A lot of SaaS, and enterprise, and then we do a lot of hardware. So we have this part of the fund,

Roughly 20% of what we invest in pro fund is what we call new areas. And we've had this for a long time. It's a really good way to enable us to experiment with things that could become their own categories.

So, in 2011 when I invested in Class Dojo, Class Dojo was a new areas company, because it was and education technology company, and we had never done anything in ed-tech before. And in 2008 when Jeff invested in Fitbit, Fitbit was a new areas company, we had never done any hardware before. Well now if you fast forward 2017, we have a number of ed-tech companies, and some of them are consumer, some of them are SaaS.

So education is an industry that we look at, hardware is not its own category. And I'd say roughly 15 to 20% of our latest fund is hardware investments. So a lot of times it's a way for us to explore what we think are going to be either frontier technologies, or even frontier industries that we haven't gotten familiar with. It's a chance for us to get to know a space through doing a deal, and to test out a thesis. And sometimes that thesis really worked out.

Peter: What lead to that initial investment in Class Dojo?

Stephanie: Well, some of it was proximity, which is kind of cool. At the time, SoftTech's office was in Palo Alto. On Pagemoore Road, and right down the hall from us, was this thing called Imagine K12. Which was run by Jeff Ralston and Tim Brady. And it was the kind of y combinator off-shoot for education technology startups. Class Dojo was one of the I'm guessing 6, or 10 companies in the very first batch.

And so they were close, they were right down the hall, that's not why we did the investment. But we got a chance to meet the company really early on. And get a first look at some of the companies in that batch. And one thing that stood out to us about that team, was, even though the founders were young, they actually had some really unique experiences within education. And they had a really teacher centric approach to what they were building.

And so Sam had spent some time teaching, Liam had also taught in a different capacity, Sam had worked at McKenzie in the education space, and so they were bringing these interesting insights. Spent a lot of time with teachers in the classroom, and were really focused on bringing some level of utility to teachers that could make their lives better. And I mean the company has massively evolved from that early point, but we got a chance to meet them that very first year when they launched. Like probably a month into them launching.

Peter: Cool. I get the impression that you're now one of the education experts at SoftTech, is that fair?

Stephanie: Yeah, I mean of the three of us on the team, for sure. But no, while I'm not exclusively focused on doing ed-tech deals, for a non ed-tech focus fund, we do a lot of education technology. And I would say we have a really solid portfolio in the ed-tech world. Probably the three relevant names to mention out of the Class Dojo, Clever, if you know Clever. And Panorama Education in Boston is another great one.

Peter: And you don't come from education yourself, so what are some things that you've learnt along the way. What makes for a successful education company?

Stephanie: I think you want to know who your user is, and what channel you want to go in. With Class Dojo I think one of the things that Sam and Liam have done really well, is understanding how to leverage, providing really simple, core values to teachers in the classroom. To spread through word of mouth, they spent zero on marketing, to students, and then to parents.

And they understand that interesting dynamic and relationship around a child. And how there's different constituents, the parent and the teacher, and they've been able to really evolve their offering of a new product, from taking to something just used within the classroom, to something being used between the classroom and the home. And to now being something used at the home itself.

So I think, here it's a consumer product with a entry point, through schools. Something like Clever, Clever really understood where to attack the value chain within education apps in general coming into schools, and how to capture value there. So, taking a step back,

One thesis that I bought into with Clever, is that you're going to have more and more technology being utilized in classrooms.

It doesn't necessarily mean that every educational tech app is going to be a billion dollar company. There may be tons of great products to learn math for third graders out there, what they need is distribution. And one thing that Clever does, is they help provide easy distribution and utilization in the classroom.

Peter: So alright, let's take one more step back, what is Clever?

Stephanie: So think of it as a way to pull information from these really clunky student information systems. That schools have. And there are tons of them out there. And make it very easy for students and teachers to do single sign on in the classroom, but also kind of be that kind of control dashboard for using apps in the classroom.

Peter: Cool.

Stephanie: So they provide really great utility throughout the education tech ecosystem. Both to the schools, in the classroom, to the administration as well as to the actual ed-tech companies. So it's really understanding where you're capturing value in that chain.

Peter: Awesome, I want to come back to the Stephanie Palmeri story. So you graduated from Columbia, you moved to San Francisco, you're crashing on a couch, networking furiously, you get this eight week stint at SoftTech, you get hired, and over the next six years you get promoted a couple of times and now you're a partner. Tell me a little bit about that journey.

Stephanie: It's been pretty crazy, in fact, I mean I'm shocked sitting here telling you it's been six years, I think this week. When I think about it the time's in some ways just flown by. When I came onboard it was about how to build relationships that I thought could be long term and meaningful. But by providing help and value. And I think, I give this advice when I meet new associates, in venture.

The one thing you have stepping into a new firm that your partners don't necessarily have is time. You don't have the load of boards. You don't have a legacy portfolio that you're sitting on. You actually have a lot of capacity to spend meeting people, and to spend figuring out ways to help the portfolio and help the firm.

And so if I think about the first couple of years at SoftTech as I was building out my own portfolio, starting to take my own board seats, I was able to provide leverage to the firm, specifically to Jeff. So I was able to take over some deals. But in addition to that, I got to build relationships with some of SoftTech's founders, because I was able to kind of go to the office and spend time playing around with products, and give a lot of feedback.

I still do that today, but I didn't have the same amount of time. And so that was really a big thing, I think, for a lot of new associates. Sure you need to build your deal flow, and top the funnel, and build a brand for yourself, but one thing that I've found is my best advocates are the founders that I've worked with. And so making sure I've built really strong relationships with those founders. They can specifically speak to things that I've helped them do. That's really valuable as you're growing your brand, not just for the firm, but within the ecosystem.

Peter: What are some of the ways that you provided help as an associate?

Stephanie: So we were really early investors in Poshmark. Which is a huge company today, are you familiar with Poshmark?

Peter: Tell me about Poshmark.

Stephanie: Okay, you're probably not a Poshmark customer, Poshmark is a peer to peer, marketplace, mobile first for fashion. It started with women's fashion, and now it has kid's and men's, but at the time when I got involved with Poshmark it was pre-launch, and I was one of the first 100 users. So I would go to these posh parties, where we would sit in the Poshmark office in Menlo Park.

And the five or six of us in the room would be listing items out of our closets. And we had our early users that we knew. And we would be adding items in this hour that the party was going on on the mobile app, and then suddenly someone you didn't know would buy. And it was awesome, right? So I got to be part of experiences like that. Where I was able to provide product feedback. Where I was able to, just again spend time, that maybe I wouldn't have been able to do if I had the load of boards that a senior partner would have.

Peter: Sure, how have your relationships with startups changed as you've gotten busier, how do you maintain that sort of intimacy?

Stephanie: It's still my top priority, and I think that's really important. People ask how I split my time, I usually say, it's a third, a third, a third.

A third of my time is spent on new deals. A third of my time is spent on portfolio companies, and a third of my time is spent on everything else.

That's stuff like this, doing podcasts. I go back to Columbia and I guest lecture a couple courses a year. All that kind of stuff, general networking, conferences. The first thing you cut out is all that stuff. Right, you got some really big, meaty, things you're tackling with the company that stuff gets pushed to the wayside. Certainly take fewer pitch meetings because you're focused more on the companies, the existing companies that you're working with.

So, I think my time ebbs and flows in terms of how much I spend in each bucket. But at the end of the day the bucket that I prioritize is that bucket of portfolio companies, because ultimately that's where my investment dollars are, and my responsibility is to be a good steward of the capital for the firm, but also to be a good resource for those companies.

Peter: Time management is something that comes up pretty consistently in this room. Lots of VCs struggle with it, are thinking about it all the time. Have lackey systems for monitoring their own time. Any learnings that you can share for staying sane?

Stephanie: Oh I wish I had a great time management trick, but I frankly that that I'm pretty bad at it myself. I'll tell you something that I have been working on lately. Again this goes back to when I was starting out you can take a lot of meetings because you had the time, and now I have to be more and more careful with how I spend my time.

I've actually started to pull all of my appointments into a spreadsheet. And I go through it at the end of the week and I rate how valuable that meeting was.

And if it was a good use of time or not. And whether it was a meeting I chose to take, or a meeting someone else asked that I take. Like, did I have to take the meeting or not? Should I of taken the meeting or not? And I try to find a rank, and the thing that I'm trying to do in that is to go back and say, am I spending my time in places that were valuable? And, it's arbitrary, what is a valuable use of my time, could be in some cases a giving back meeting. And it feels good to do that, and to help someone who's new in the industry, or a woman who's trying to land a new venture and how do I try to help her? I am attempting to do this in a way to say, "hey, spending the time I have, as valuable as I can."

Peter: Cool. Have you notice any traps?

Stephanie: That's a loaded question, let's see.

Peter: Or maybe, what has this spreadsheet caused you to change?

Stephanie: It's making me pause before just blatently saying yes to a meeting. And, it's made me be a lot more conscientious of when I take time to meet with a entrepreneur, versus taking a meeting that I don't think will lead to investment. I mean you have to be careful, because it's really easy to pass on an idea, and then down the road say "hey, Air Bed and Breakfast, what is that?"

So, it's important to make sure that you're not passing without good reason, but you can't take every opportunity that hits your plate, and so for me it's helping me further refine my filter. I've gotten pretty good at refining my filter in terms of which pitch meetings to take. But I think it's helping me get to the next level in terms of "hey, should I really have spent an hour with that company, I was thirty minutes actually the right amount to take that first meeting."

Peter: I'm wondering how you do this filtering?

Stephanie:

The vast majority, 99.9% of meetings that all of the SoftTech partners take come through very warm introductions.

Peter: Sure.

Stephanie: So, I don't believe we've ever invested in a company that's come in completely cold.

Peter: So I shouldn't just email SoftTech saying?

Stephanie: You should definitely not just email SoftTech. It's a really bad way to get the attention of the partners. Now that doesn't mean that we don't meet companies through accelerator programs and things like that. But they're still coming through some sort of trusted network. So we look to the source of the referral. And this is the thing that I spend a lot of time on with my portfolio companies, as they go out to raise capital too, which is figuring out, who's the right intro into a firm?

So I like to advise companies that are looking for funding, whether they're mine, or whether they're companies coming in and

An introduction from someone's who's invested in you, or someone who's spending time with you in some other capacity like an adviser, is a lot stronger than someone who met you at a conference once.

So, what's the signal to noise ratio? How quality is the introduction, and how quality on both sides? How well do they know what I'm looking for, and how well do they know the founder? And so the stronger the signal, the more likely I am to say "hey, absolutely, definitely want to meet that company." Otherwise, I probably need to take a few more steps to figure out if it's really worth my time, and the founder's time.

I think the best sources of referral for us are first and foremost, our CEOs, and founders. I mean, they know what we like. We've invested in them, they have a really good sense of what it's like to work with us. And so if one of my CEOs makes this introduction, well, that's coming in really warm on both sides. One of the deals I did last year was a referral from a CEO that I've worked with for the last five years. So I think that was a really good mutual fit. And in both cases we both knew what were getting into starting to work with one another because we had this trusted connection between. I also get a lot of interesting referrals through founders we've passed on.

Peter: Huh?

Stephanie: Yeah, I mean founders know good founders, and sometimes you pass on a deal because the timing's off, or it could be competitive with something in the portfolio, there's a whole list of factors. But, if you treat a founder fairly, and they feel like they had a good experience and they got to know your firm, and they know another founder who could benefit from getting to know the firm, it sort of works out for everybody.

Over the years we've invested in quite a few companies that have come through people we've passed on.

Peter: Awesome.

Stephanie: Yeah.

Peter: You said your CEOs know what you like. They sort of know the SoftTech brand, how would you describe that SoftTech sweet spot?

Stephanie: I think that if you know myself, and if you know my partners Jeff and Andy, we're all pretty direct. And we're a little bit of what you see is what you get. We don't sugarcoat things, we aren't afraid to have tough conversations, we also step up when we need to step up and roll up our sleeves and help out. And so a lot of that brand is carried through in the relationships we build with our CEOs.

If you come to a SoftTech Founders Summit, or one of our founder networking events, you'll find there's always really good wine flowing. And we have a lot of conversations over meals, and over good wine. And it's very much a kind of family like atmosphere, from that perspective. Sometimes your family gives you some tough love, and they're also the ones to pick you up when you skin your knee. And so I think that's a lot about of what it's like to be a part of the SoftTech family and brand.

Peter: Cool so SoftTech likes to get in on the seed round of the company. Do you re-up?

Stephanie: Yes, that's a really important question. I think founders don't always understand how this works. So SoftTech invests, we try to own 7 to 10% when we make our first investment. So that's probably a check in the range of half a million, to a million dollars. Maybe even a little bit more. And then we reserve roughly 60% of the fund for follow on investments. And that is with intent on investing in the series A, and the series B.

It's not a given that we're going to invest in the A or the B. But the majority of the time I'd say

If the company is successful getting to raise a series A. Well then we're going to want to maintain our ownership, maybe even buy more.

And so, our entire fund model is predicated off of backing up more and more dollars into companies and eventually we'll know they'll start to dilute over a certain period of time. But in the A and the B we're going to be really supportive partners. But I think I should mention, we never lead series A deals. And that's a really important distinction. And I think you'll find that amongst micro VC firms, which is kind of the class of seed investor we would consider ourselves, we would be competing with the hand that feeds us.

We don't want to compete with our friends at series A, we want our friends at series A to come in and participate in our deals and lead our deals. And so if I'm leading a series A, well what kind of signal does that leave to the market about this company or any of my other companies. So we're really, really conscientious to only invest at seed.

Peter: Say that one more time, why would leading a series A send a bad signal to the market?

Stephanie:

It might signal that I am picking the best companies and I am putting more money behind the best companies. And I am not showing the market my best deals.

It also could mean that the company is really struggling, and nobody was able to put more money into them, and so we're leading the series A, because the market wouldn't want to put money in.

So either way, it's really, really important that we maintain our focus on seed. And we enable the next round of investors to come in. The other thing too is, we're seed stage investors. We really focus on getting companies from zero to something, and we look to later stage investors to come in and help accelerate their growth. And so it is about knowing where your strengths are, and knowing where you help a company best.

It doesn't mean we step away from our involvement in the company. I'm still a board observer at Closter Joe, at Poshmark, and a number of companies that have continued to go on to raise multiple rounds of successful funding. But, there are a lot of other great people around the table too.

Peter: How does your relationship with founders change as companies move down the fund raising funnel?

Stephanie: You go from being the lead and the board member to maybe being more of an advisor, and a coach. And maybe even a friend, and so you're still an investor in the company, but from a cap table standpoint you're more aligned with the founders as they raise more and more money, and they take more dilution. And you have a history of knowing what it's like to work with these people, and they have a history of knowing what it's like to work with you.

And one of the things that I really enjoy the most is being a trusted guide as founders are figuring out what steps they're going to take at the later stage. So, we're somebody who knows what it was like in those early days when you're trying to get people to download your app and get it started. As opposed to coming onboard when you achieved a certain level of success.

Peter: Tell me about yourself as a coach.

Stephanie: So it's a little bit of tough love, it's about being genuine and honest with someone. And, it's also about providing really constructive feedback as well, so it's not about right and wrong. There are a lot of different ways to do things and I think at the end of the day each founder needs to figure out their own unique approach. My style and approach, and how I may pitch a company, or how I might manage executives might be different from our founders, it's not my job to tell them how to do that.

But it is my job to help them identify some of their own patterns and trends and to help them work through that. One of the advantages to being a VC, for better or worse is you start to develop just pattern recognition. I mean that's something we all talk about. A lot of times my founders will as me and I get this question all the time, "what are the things that I can avoid as a new founder, or something you see all of us make this mistake."

And I always laugh because I think one of the things that I see quite often is that the first person that you really need to fire from your team you will hold on to that person way, way longer and it doesn't matter who tells you you need to get rid of them, it's not until you get rid of that individual that you will suddenly realize how much you needed to make that change, and how much better you feel after that change is done.

And that's a really hard thing for me to tell you, and for you to understand until you've done it. It's like from all this. Nine times out of 10 that plays out, but in some point in time the lesson comes back and it's like "oh yeah, that was actually something." So, as someone who recognizes patterns, you can share these patterns, but a lot of these lessons have to be learned. One thing I also tell my founders is that there are certain things that I am in "expert in", and there are certain things you're an expert in.

You're an expert in your business, you know your market better than I do, you know your customers better than I do, you know your employees better than I do. And I'm not going to pretend that I know them better than you. I'm an expert in venture, I see way more deals than you see. I know how deals are put together, I meet way more investors than you meet, at any given time SoftTech may have 1 to 10 companies out raising on the broader market.

I look at hundreds of deals a year. And so when I have perspective it comes from deal making, and it comes from an investors perspective, that's where I'm the expert. And so as I've evolved in my career, and I've become more of an expert in venture I'm able to talk to a lot more aspects of deal making. A lot more aspects of things like. And those are areas where founders get to see that movie once, maybe twice, but VC's see that movie everyday.

Peter: Cool, do you yourself have a coach?

Stephanie: I do, I do work with a coach.

Peter: Oh cool. Can you talk about that?

Stephanie: It's something that I'm really happy that I've started doing relatively recently, but something I had looked into for awhile.

It's funny in venture unlike big companies or even small companies you don't get a lot of feedback.

Because for founders there's an interesting power dynamic there, and so it's been really helpful for me to have a sounding board. And someone who can give me feedback and help filter feedback from other people, in a safe way for other people as well, and so I'm a big advocate of working with coaches. And I encourage with my founders that want to work with a coach to do that. I think you have to be open to coaching though.

A coach is only as good as you allow that coach to be. And so if you want to step in working with the coach you've got to be receptive to doing the work, and putting in the time, and so one thing that was important for me in deciding to work with a coach was actually having real goals for myself as to what I wanted to get out of it. And knowing that I was going to be working with the coaches as long as I was working towards those goals.

Peter: Cool what are you working on?

Stephanie: Now that I'm not going to share.

Peter: Okay. It's so refreshing to hear you say that you are getting coached. I think a lot of us have this image of partners as experts, and it's really helpful to realize that everyone in the game is trying to get better.

Stephanie: Well I think the point we were talking about earlier is the role of the VC, especially in an early stage VC. And especially as the company evolves from you necessarily being a board member, and to being more of an advisor, is really the role of a coach. And so I think there's a lot of value you get from sitting on the other side of that. And seeing what it's like to work with a high value coach, and seeing how you leave those meetings.

And you can take that, and you can use that with your companies as well. So there's a lot of techniques you can learn that will hopefully pay off in terms or working with founders too.

Peter: Anything that you can share with us in terms of how you approach a coaching conversation?

Stephanie: Yeah so one thing that I've been interested in testing out and I'm just starting to do this, is leveraging personality tests. And so when I start working with a new founder as a board member, and this is just a new test for me, so who knows if this is going to work. But I'm using DISC as one of the tests out there. There's a bunch of them there's Myers-Spriggs and stuff like that.

So I'm very happy to share my DISC results with a founder. And if the founder wants to take DISC and share their results with me, that's great.

It's up to the founder if they want to do that. But I'm more than happy to share my results with them so they have a sense of, once we're starting to work together, "okay here's when Stephanie gets really excited that makes sense given her DISC profile. I'm hoping it helps me and the founders that I work with be better communicators. And for me to be a more effective partner.

Peter: Cool, so before you came in I did some research. I read all of your Medium posts.

Stephanie: Oh nice.

Peter: One of the ones that stood out for me is you wrote this pretty fun post awhile back about what startups can expect from a Trump administration. Or how to think about this new era, the effect it might have on visas, new regulatory environment, we're now, seven months into it. I'm laughing because you're wincing in a really big way. I'm wondering, what's played out in terms of how our new president has effected the startup scene?

Stephanie: One thing that I talked about was uncertainty around startup visas and entrepreneurship, and I think it's been really interesting to see what's been playing out. And as of yesterday or today essentially Trump says he's probably going to eliminate the rule to allow foreign entrepreneurs to come into the U.S. to start companies. And I thought it was fascinating when we had the French president encouraging lots of companies to come start in France.

I think the scary part is we're going to potentially see more and more entrepreneurs realize that they're going to have more opportunities to start companies potentially in other places, and it's really sad for me.

I'm an American citizen I was born here in the United States but both of my partners are actually foreign born. And a lot of our founders, I don't know the exact number, but I would wager to say it could be close to half of our CEOs and founders were born outside the U.S. And we've brought a number of companies into the U.S. and helped them become U.S. based companies.

Now we don't invest outside the U.S. but we've invested in a ton of companies that have come from outside the U.S. Class Dojo's a great example, Sam and Liam were UK citizens and they came to the U.S. to start Class Dojo. And so they're probably the biggest immediate impact and concern for me as an early stage investor, is what are the opportunities that are never even going to come our way because we're not able to get a fair shot of looking at those founders anymore?

And we stand the chance of losing a lot of great entrepreneurs that would really benefit from being part of the Silicon Valley ecosystem to other geographies, and specifically to other countries, when we really start to mess with the Diesel Laws.

Peter: Yeah, the other news story that keeps landing on my feed is just how inimical venture can be to women. I've become increasingly aware of how difficult it is for women to raise money, and how shitty that experience often is, what are some things that you and SoftTech are doing to try and make venture a little friendlier to women?

Stephanie: First and foremost I think having women and specifically women partners at venture funds is an incredibly important part of solving this problem. It means that you potentially are attracting more women to come to the fund to raise money. It means that you're looking at things with a diverse set of eyes. And the more women that get funded, the more women GPs, the more women that get funded, the more women that can start companies, the more balanced the room becomes.

And so first and foremost I look at a big part of me going to work and being at SoftTech everyday is whether I want to or not, I'm a role model for females in the industry. And I want to be one. At SoftTech we've invested in a lot of female entrepreneurs I'm proud to say I'm not the only one who's backing those women. We have a lot of great female partners. In fact both my partners Jeff and Andy have backed as well.

Peter: We're both in LaunchDarkly.

Stephanie: Edith.

Peter: Yeah Edith.

Stephanie: I love Edith.

Peter: Huge Edith fan.

Stephanie: Edith is amazing and my partner, Andy lead that deal. In fact it was one of the first deals he did when he came onboard at SoftTech. And so, yeah it's founders like Edith. It's founders like Laura at Shippo. And Matilda at Front. They are going to forge the way for the next generation of female founders, and I'm really excited that we at SoftTech get a chance to back those women.

I think the second piece, and the important thing that I've been thinking a lot about lately is,

If you look at the top of the funnel, you need to see female GPs. And you need to see the more female founders, but in order to get that you need to see more women in executive leadership roles at startups.

And so how does the next big platform company spit out a bunch of great founders who are women? Well it starts with having a lot of great female executives on the team, and so, it's really hard to be the other on a team. And if you think about a five person company coming in and being the first female or the first non white person on the team might feel a little intimidating.

It's a heck of a lot harder if you've gotten to 10 people. It is drastically harder if you've gotten to 20. And so a really, really big important thing

I think for us as early stage investors to be thinking about and encouraging our teams to do, is to be thinking about building diverse teams early.

To be thinking about bringing diversity onto the tech team. To be thinking about bringing diversity onto the senior leadership team.

And so for every candidate that looks a little different from the existing candidates before, you start to open the door for more and more people. And so, the more that we can help our companies bring in great diverse candidates I think in the long term it starts to pay off in a lot of other ways.

Peter: I really love what you just said, you said that, building a diverse executive team has key middle benefits. If you do it early, it's much easier to keep doing it. If you don't do it early, you might get stuck. What are some things that founders can do to start building a diverse team from the get go?

Stephanie: One is to look at your own networks and recognize whether or not you have a diversity problem within your own networks. So first and foremost it might actually be reaching out to people who are in your network, who you just never thought to reach out about this stuff before. I think a lot of times we don't even realize we've got great resources, the people just maybe don't look like they fit the normal mold of the three or five people you go to first.

So that's number one. Look within your network, and understand are there people that I could be tapping in to? Number two there's plenty of resources out there, and organizations out there, that are working to bring women and people of color into the industry. And so how can you get involved in one or two of those things in a meaningful way? It could be some sort of talent fair.

It could be speaking on a panel, it could be hosting an event. One of the things that a lot of my portfolio companies have done successfully, and this works for all candidates, is host these sort of meet up events at the office. You get a chance to show the office off. And ask the people on your team to bring a handful of people. And maybe you implement something like the Broony Rule.

If you're going to host a cocktail hour at the office, or you're going to host a lunch at the office, you make sure that at least a third of the invites are women, or underrepresented minorities. And so you kind of set a quota for yourself in terms of how many people need to attend that need to be a little bit outside of what the normal network is. And I think as you become more conscientious of "wow, we're not going out of our way to add people," it becomes a little bit more clear.

And at first it may seem like a lot of work, but the reality is if you present a welcoming environment for people, again, if the assumption is my network looks like me, and you bring someone in that doesn't look like you, well their network might look like them.

Peter: Anything else founders should be aware of as they start to build a team, ways to keep the ball rolling? Good hiring practices, or interview practices that you talk to founders about?

Stephanie: Yeah I had a great conversation with Brad Feld maybe six months ago, that he pointed out to me in terms of bringing diversity onto his teams. And I thought it was really good insight.

Make sure you have your diverse employees in the interview process. And make sure that it's not just one. You don't want people to feel like they're tokens, and they're only in a process for that reason.

And so it is about showing the diversity that you do have on your team, to folks as you're bringing them into your private line, and making sure that you're bringing that across in your process. And I think it's a lot of companies that maybe don't think to do that, just because you hire a diverse team doesn't mean that the folks coming in on your pipeline know that as well.

Peter: Okay I ask everyone the same closing question, "what do you wish your younger self knew going into venture?"

Stephanie: I'm still learning to be patient, I wish I understood, especially at seed stage, just how patient you have to be. It takes a really long time to see things come to fruition. And it's a long game, and so I think if I was to give myself advice six years ago, it would be to slow down just a little bit, worry a little bit less about how fast things come at you. And understand that it's a long game.

Peter: Cool, how can our listeners find you?

Stephanie: You can follow me on Twitter, @stephpalmeri and the best way to reach me is to get an introduction through someone in my network.

Peter: That's right.

Stephanie: So you can always look at our portfolio companies on our website and see if you know any of our founders and my LinkedIn network is pretty extensive and I try to keep my LinkedIn fairly up to date, so, check me out on LinkedIn and see who I know.