Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.
Today, we have the great pleasure of chatting with Rudina Seseri, Founder of Glasswing Ventures, an early-stage venture capital firm investing in AI-powered software companies. With over 17 years of investing and related experience, Rudina has led investments in companies such as Celtra, Crowdtwist, ChaosSearch, Plannuh, Reprise, Inrupt, and Zylotech (recently acquired by Terminus).
Prior to moving into venture capital, Rudina was a Senior Manager in the Corporate Development Group at Microsoft Corporation and started her career as an investment banker at Credit Suisse. Rudina was appointed by the Dean of the Harvard Business School (HBS) for four consecutive years to serve as Entrepreneur-In-Residence for the Business School and has most recently been named to the HBS inaugural group of Rock Venture Capital Partners.
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In this episode we discuss:
01:01 What inspired Rudina to become a full-time investor and what was her early investing philosophy
03:06 The firm’s structure and methodology
05:42 Learnings from the first fundraise
08:35 Frontier tech investing
12:13 What type of frontier tech companies the firm looks for
14:11 How Glasswing specifically evaluates companies
21:01 How they thoughtfully built the team at Glasswing to drive unique support to their founders
25:03 Preserving ownership in companies during the current market conditions without having to substantially increase fund size
28:36 Deciding on when to make an exception on valuation or ownership
30:44 How the firm deals with unconscious bias and group think when evaluating investments
34:50 Using diversity of thought to drive better decision making
38:55 The most counterintuitive lesson Rudina has learned as a VC
40:52 The investing miss that taught her a lesson
42:13 The investor she most admires
Mentioned in this episode:
Glasswing Ventures
I’d love to know what you took away from this conversation with Rudina. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.
Transcript:
Samir Kaji:
Hi, I'm Samir Kaji, welcome to another episode of Venture Unlocked, the podcast that takes you behind the scenes of the business of venture capital. Today, we have the great pleasure of chatting with Rudina Seseri, founder of Glasswing Ventures, an early stage venture firm investing in AI power technology companies. With over 17 years of investing in transactional experience, Rudina has led investments in companies such as Celtra, CrowdTwist, Talla, and Zylotech. During our discussion, we talked about her view of what frontier tech means to them, the KPIs that Glasswing uses when measuring value add services to founders, and why diversity is so central to their investing ethos. Now, let's get into the episode to hear all of them and more. Rudina, it's great to see you and thanks for being on the show.
Rudina Seseri:
Hello, Samir, happy summer and thank you for having me.
Samir Kaji:
Now, let's get into your start into venture capital. You had a myriad of other roles before you became a full-time investor. What inspired you to be a full-time investor? What was the opportunity you saw and what type of investment philosophy did you have?
Rudina Seseri:
I had been in investment banking as a little low analyst. Remember those? 120-hour weeks. And I was in tech investment banking. So I joke that after three years of investment banking, I was done with the banking hours, but I had permanently caught the tech bug. So and this was the early 2000s, both the bubble and the burr. So both sides of that equation, but really became hooked and was excited by the innovation and the transformation and that passion. So, I knew I wanted to do tech of some sort and VC sounded very, very sexy. Have you met an MBA that doesn't love VC? So, I went to HBS to get my MBA and there I met Rick Grinnell, who was already a VC, and not coincidentally today my co-founder and partner at Glasswing Ventures.
Rudina Seseri:
We launched the firm together, but Rick was already a VC. And as a student, I actually did a few projects with him, particularly one around the mobile landscape. Mobile and smartphones were going to be a big thing. This is 2003 and 2004. And then I went on to join Microsoft, always with an idea that four or five years down the road, I would come back to venture and the notion of balancing sort of the passionate for tech and the background in M&A and financing, et cetera, with operational experience at Microsoft. It happened sooner than I expected under two years because Rick and our old firm were raising a new fund and they were building the team, so they poached me, but that was sort of the genesis of my coming onto venture. Put differently, on a good day, I thank Rick. On a bad day, I blame Rick for my venturing experience.
Samir Kaji:
I think it can be a little bit of a roller coaster for sure. And the two of you did launch Glasswing in 2016, you're effectively a lift out. Tell us a little bit about Glasswing itself and what really catalyzed the start of that firm.
Rudina Seseri:
So the idea was that while we were in our old firm, we kept seeing opportunities around sort of the evolution, if you will, of frontier tech, particularly having crossed the chasm from advanced analytics to something else, which became really AI and narrow AI and applied AI these days. But we kept evolving our thesis in that regard and we're seeing the impact because we're end market investors, so we look at enterprise security platforms but with an angle around frontier tech and this is going back really to the sort of 2012 through '14 timeframe.
Rudina Seseri:
We were particularly seeing that emerge out of academia with deep learning. And some of the emergence of that wave and making its way into academics and, fundamentally, all our thesis and the investments we had made were telling us that it was going to become all pervasive. It may sound strange today in 2021, but there were a lot of nonbelievers. I mean, when we did the spinout to have this focus around frontier tech with their AI and applied AI being a driver, I had many, many, many questions around, was AI really a thing? Was it really a wave? So you look back and you're like, "oh, my gosh. Now, it's an entirely forgotten conclusion." But from the perspective of the time, we really thought there was a big, big market opportunity for a focused strategy. And so far, so good, knock on wood, but it has panned out quite nicely.
Samir Kaji:
There's a number of ways that people start their own firms. It's usually with a few backgrounds. They were an angel investor and decided to be a full-time investor. Somebody that was an entrepreneur, an operator that decided to be a full-time investor. And then sometimes, it's coming out of another shop and starting really your own firm. And the latter is kind of where you and Rick were. The two of you had worked together for almost a decade investing, started Glasswing in 2016 as a newly formed firm. But a lot of people asked me the question when I have people that are effectively spinouts, do LPs give you a lot of attribution for what you did in your old firm? And how do you navigate through some of those questions in the early days where some people may wonder, "well, your track record before was maybe not as relevant as it is now and you were part of another firm," walk us through a little bit about that first fundraise.
Rudina Seseri:
It's the crux of what your product is. And I joke with software founders and technologists, even when they pitch VCs, they have a demo. They have something to show. You walk into a room and you're pitching an LP on a new firm and a new fund and your track record in your strategy, those are your products. So with that as the backdrop, I'm really sort of proud of the approach we took with our spinout and how we launched Glasswing at multiple levels. One, it was probably one of the friendliest spinouts that I could have ever envisioned. With our partners in the old firm, we did not abandon them or the LPs in the funds, or most importantly, perhaps our founders. We literally did a legal spinout to where we have been seeing that portfolio through and maintained our board seats, did not orphan our founders, and got track record attribution.
Rudina Seseri:
The track record attribution really speaks again to the fact that prospective LPs would not have to call five different folks to get to, "did Rudina or Rick really lead that deal?" We had the legal attribution. We were on the board. They could call the founder. We had access to our track record. So from that perspective, we lowered the barrier, if you will, to diligence. And also, there weren't five partners making claims to X, Y, Z deal. It was very clear who sourced it and who led it and who was seeing it through. Fundraising is never easy. Even when it's easy, it's not easy. And it's even harder when it's a first time fund and you're just establishing and a new firm, but I will say that doing a spin out on the up and up and that dynamic helped matters a lot.
Samir Kaji:
The continuity aspect does help a lot when you have a team that's been together and that's one of the main risks that LPs do underwrite too. The other one is looking at the investment thesis itself and understanding why is this manager uniquely positioned to execute on a certain thesis. You're right. Five years ago, frontier tech was something that a lot of people didn't understand, or at least at worst or at best rather, skeptical of. Today, you see firms like Lux and DCVC doing Founders Fund doing a lot of it. Take us back to 2016 for a second, how did the focus on frontier tech guide your investment thesis and strategy in terms of the type of companies, the stage of companies? And what type of risk you were underwriting to with those early stage frontier tech companies?
Rudina Seseri:
Absolutely. So the good news, going back to 2016 and onward, is that it's not as though we were in a different focus or different space and woke up and said, "Oh, my gosh. I got to do frontier tech." It has been very, very much continuation of strategy. So we came out of a generalist tech, early stage tech fund where Rick and I had this focus. And we and the LPs that backed us fundamentally shared the view that it was a bigger enough opportunity for us to stand on our own. So in many ways, going back also to your earlier question around how did the spinout happen and what helped it, it's been a continuation of strategy. It's been an evolution. So, our focus and our strategy is very much around end markets. And then from wave of disruption to wave of disruption, what the catalyst is evolves, changes, or transforms over time.
Rudina Seseri:
What do I mean by that? So end markets being really enterprise platform security, okay? But I've just said to you, this is... What? Trillion dollar market opportunity, so that's not really focused. Where the focus comes in for us is that I'm not just looking at an enterprise SaaS business in X, Y, Z, I'm actually looking beyond the execution, the founder, the usual criteria you'd see. I'm looking for that frontier tech that is so disruptive that it will transform the current market either to disrupt the incumbents or to market make in a new category. And for us and where we are in the evolution, AI has been the grand majority of that. Now, that's sort of one piece of the equation. The other piece is the stage that we invest in. I am very, very nervous to even throw sort of letters or nomenclature today because I assure you if this podcast stays on for a few months, the nomenclature will have shifted.
Rudina Seseri:
So five, six years ago, I would've said, "oh, we're the first institutional or maybe a little longer than that, but we're the first institutional investor in, hence the series A round. And oftentimes, the first capital in." Today, the series A has taken a very, very different dynamics. So, let me articulate it differently in a way that I think has persisted time. We are early stage investors. Right now, that nomenclature is seed, but I'm not married to it, you can call it whatever you want, where we are investing in companies that are two to four quarters away from product launch or the product has been in the market for a couple of quarters. So we're not really taking any raw, if you will, tech, algorithmic, and even data risk. What we are taking is product market fit and go-to-market risk. And that's what we have done for many, many years and that's what we will continue to do. So let's focus on nomenclature, more around what stage can we come in, and how do we help the business derisk from there.
Samir Kaji:
You're investing in these companies that are six to 12 months away from releasing a product. And one of the things that a lot of folks think about frontier tech is high technical risk. It could be two, three, four, five years sometimes before a product goes to market. And sometimes, these companies raise tens of millions of dollars before that happens. It sounds like what you're focusing on is a very different type of company that is a little bit more conservative when it so early cash or in getting a product to market.
Rudina Seseri:
Not necessarily. I think maybe we alter our definition a bit. You might be equating frontier tech and deep tech. And sometimes, they are the same. Oftentimes, they are not. Frontier tech, I'm talking about really at the cutting edge of innovation, not necessarily that it is deep tech, that's going to take three to four to five years before you can commercialize it. That, in fact, would be beyond our horizon for launching. And that's why I prefaced our discussion by saying I'm in marketing. We're end market investors. So, pick DeepMind. It has its AI as much AI as you'd want. And in fact, it's probably one of the more forward sort of oriented companies if you think about it around the area of general AI.
Rudina Seseri:
But we would've missed it every time by design because we do not invest in companies that have tech in search of an application or a use case. Instead, I'm starting with, "okay, within enterprise, I'm a thesis-driven investor." So, we haven't talked about that. I have this five or six or seven themes or thesis. And then underneath them, I go deeper and deeper. I'm looking for this type of opportunity to apply to this problem with this budget or with this budget in the making or with this pain point and it's a must have. So when you come at it, if you will, I'm already looking for a solution to a problem, but instead of your run of the milll SaaS, I'm looking for a degree of tech that is truly cutting edge that can give you an advantage in addition to the execution play.
Samir Kaji:
That's helpful to further define it. I'd be curious in understanding just... If you could break down the anatomy of what you consider a successful frontier tech company and when you are looking at these companies, how do you analyze and go through that discussion within your partnership as well as in your own head?
Rudina Seseri:
I mean, what I consider a successful frontier tech company is what you consider a successful tech company period in the sense that, ultimately, it's capital in and returns out. Along the way and a little bit tied back to... Now, contradicting myself for a second. While it's not deep tech, along the way you want to see the progress of unprecedented growth and sort of the tripling year over year, et cetera in ARR. But what I notice about and what we sort of have a view around frontier tech is, especially if you're leveraging AI, where just for the purposes of this discussion, knowing full well that they're not the same thing, I'm going to use ML and AI interchangeably, knowing full well that they're not quite exactly the same.
Rudina Seseri:
But especially in the beginning, when you're training the algorithms and to take advantage of ML with the data, typically frontier tech but especially applied AI companies leveraging data, their early days, they take a little bit more time because you're training the algorithms as opposed to just starting straight up with software alone, without being informed by data. When that happens, you see a little bit of a sort of longer window of time to get to market. But then, if all goes appropriately and according to what one plans, then you should see them outperforming. And so the adoption curve once in the market should be steeper, if you will, and the time shorter.
Samir Kaji:
It was something that I was thinking about and alluding to earlier. And you did make the distinction between deep tech and frontier tech, which I think is an important one, but what you're highlighting also, there are situations where it takes a little bit longer to get to product to market, to really get those pure revenue metrics. But in scenarios where you see a company that you think has this high potential, it is on the cutting edge, it has these elements that are driven around AI, but could take 12 to 24 months to show real, real traction in the traditional top line perspective, how does that instruct your own investment strategy in terms of the size of the rounds that you're leading? And how much runway you want to have these companies get to really achieve those milestones necessary for the next round of capital?
Rudina Seseri:
I mean, this is a question of how do we valuate an opportunity and an investment in a company, right? So from that perspective, we parse it around, can we derisk our understanding and can we go in knowing full well that the product works? I mean, I know it sounds table stakes, but especially when you have the AIP. So one of our partners Vlad Sejnoha was the former CTO of Nuance and former chief scientist for Kurzweil AI, Vlad is really, especially when go deep into the DD phase, he's really owning that piece. And then beyond their... I don't know if you and I have talked about offline in the past, but we have a group of about 40 advisors that work with Glasswing on a contractually exclusive basis. So what that means is they don't work with other funds and a good subset of that group is really academics and technologies out in industry focused on frontier tech in their day jobs and in AI within that umbrella.
Rudina Seseri:
So there is a lot that goes on from a diligence perspective around ensuring that the technology and product piece and access or special ownership to data, we can have a whole different discussion on that, is there. Then, the other side of the equation is around go-to-market and how can we help them go-to-market faster? And I will come to answering the question one side these two pieces around how we funded, therefore. From the go-to-market piece, that's where, again, our thesis comes in and our domain expertise comes in. Humor me if you had a company that was in the leveraging AI and all the techniques that would be familiar with and have expertise in for drug discovery, we would be the wrong fit because it's not a market I know well at all. Instead, if it is a company that is, I don't know, disrupting, for example, I'm thinking of Verusen and their portfolio. Transforming and disrupting the status quo when it comes to managing inventory in the supply chain broadly defined and particularly parts, direct and indirect materials.
Rudina Seseri:
In that one, okay, we can wrap our head around it. We have the right domain expertise. We can actually help them close customers during the due diligence process. So we know how to shrink the go-to-market and the sales cycle and get them, in particular, those first proof points around logos and customers that matter. In turn, once we sort of have those two sides... And I mean, I'm over generalizing and there's a lot more as you know to due diligence and how you help a company. But once we have comfort around that, then we always want to make sure that they have some plenty of runway to get to that next milestone. So what that means is that we typically look for 18 plus months of runway to give to the company and over 90% of the time join forces, so we lead and co-lead with other firms. And we've done them alone as well, but we have no problem or egos in terms of co-leading deals at all. The more value added investors, the better.
Samir Kaji:
Yeah. And you mentioned something a second ago and embedded in your answer around the number of advisors, some of the team members you had. And I remember you and I having this conversation. I was looking at your deck and not only did I see the advisors, but I saw a team that was significantly bigger than what you normally see for a firm that has sub 200 million or 250 million, rather in AUM. One of the questions I always ask is, is this a function of what we're seeing right now of founders want more?
Samir Kaji:
They need the level of support and to really have a comparative advantage as a venture firm. It's far more than capital. You have to have very clear thesis, understand the business, and really mobilize around it, both with the investing team, your extended network, and the other folks that play certain roles. Tell us a little bit about how you constructed the team in order to add the most value to these founders and what are some of the learnings in terms of the type of people that you need to bring on to really give the founders the type of experience that is necessary.
Rudina Seseri:
So, it's interesting because you speak of it in terms of a trend and you step back and you look at the mega firms and the mega funds, and they have the executive center. And those are actually, at this point business lines and P&L lines, not the approach we have taken at Glasswing. Honest to goodness, this was more of what Rick and my DNA was like and how could we institutionalize that. If you take a step back, how often does one in life, unless you're taking entrepreneur and you do it over and over, how often do you get to start VC firms from scratch? I assure you. I've done it once, I hope I don't have to do it again. It's the best thing I've ever done and the hardest thing I've done.
Rudina Seseri:
So from that perspective, when we started day one, we said, "what did we want to be when we grown up?" And from day one, it's not been about, "oh, let's have the two founding partners and maybe a junior associate and maybe an EA, and let's just go do it." That's a very viable approach, plenty of firms do it. Instead, what we wanted to do is sort of live to this mantra. This is a Monday, we're recording and I just came out of a partner meeting, and I reminded the team that the goal is before we go to a founder or CEO and ask them, "What have they done in regards to X, Y, Z related to the company? How have we earned our keep with them?" And earning our keep is not investing capital. What have we done for them to be able to expect? That's the DNA. That's the mindset. That's the culture.
Rudina Seseri:
So with that, we basically have a team of 13 at this point. We have two data scientists. We have an investment team of... Let's see. Two data scientists that we don't even count as part of the investment team. Three folks on the platform. A team, so that's five. To balance effectively is all the investment team. So we have two venture partners, one visiting partner, three general partners, two associates and analysts. So put differently, we have put whatever resources. We have put them into building the team and building the firm. Why? Because the companies we invest in day one, the biggest need they have is again, honing in the go-to-market, translated as they need executive talent and customers. So how are we going to set ourselves up? And the domain areas that we are in, they constantly evolve. Doing thesis require development and upgrading and continuously evolving requires thought leadership, requires real research in the market, and in the more academic sense of the world.
Rudina Seseri:
And fundamentally, how do we help our founders beyond what your typical run of the mill VC would do? So all of those pieces together require resources. And then, we build our own sort of analytics and ML capabilities, which are not developed enough of me to even go deep into, but they're all in the making, with the notion of, again, how will we evolve as the markets evolve, but fundamentally, do our disproportionate share of contributing, not just in lingo but in actual data. And we track it. How many people have we placed? How many customers have we closed? I mean, we tend to be meticulous about it.
Samir Kaji:
I'm glad you went into detail. As my next question was actually centered around KPIs and thinking through how you measure success of the value add services you offer founders, and which ones actually lead to positive business outcomes. Turning this to, internally for a second and looking at portfolio construction, given that you spend so much time with companies, I would presume that your model is fewer companies, higher ownership, which in today's world, it creates some challenges given the rising valuations. How do you combat this internally at Glasswing? And are there things that you do from an investment standpoint, be it investing in different regions or different type of founders that allow you to continue to get the ownership that you historically have done without significantly raising your fund size?
Rudina Seseri:
I think we sit outside the Valley. So we have a particularly heavy emphasis on the East Coast, but generally the US outside the Valley. View being that there is so much concentration of dollars in the Valley, why would you take money from a firm in Boston or New York, if you will, if you have 60% of the capital there? But it's also the case that we're operating in markets where the ecosystem of startups is developed, the exit and track record exists, and the talent exists, particularly when you look at enterprise security overlaid with AI talent. So from that perspective, we're going into markets where there is a fluffiness of investment opportunities, of startups but not as much competition. Although in general, we're all seeing the upward pressure in valuations, and it would be silly to argue otherwise, but we don't see the same level of pressure as you would in the Valley, as my colleagues are in the Valley.
Rudina Seseri:
We actually get a chance to do some diligence prior to issuing a term sheet. And we are thoughtful about the investments that we make an valuations that we go in. Now, we're thoughtful about the valuations that we go in shouldn't be code for we try to take advantage of our founders, the exact opposite we're in this right for a long, long time, a decade if not more. What it is, it's a balancing act between not diluting them too much, but also having enough ownership. And the way we win, honestly, it's not on, "am I the highest valuation term sheet?" The way we win is that with my term sheet, I'm already bringing two execs to the table and customers at the same time, all sort of non-dilutive capital in at least on the ladder. So, truly proving that we are value add.
Rudina Seseri:
In your question, you use the term that kind of caught my attention because it's something that we refer to very frequently. We view ourselves as extension to the team. So when you are an extension to the team, it's not the high on my team, VC or board member walking in, it's the additional laborer here, closing deals with you or working on pricing strategy or product roadmap, whatever the case might be. You only scale so much. So having concentrated ownership is important because we're not taking a sort of a portfolio... Well, we're taking a portfolio approach, but we're not taking an index approach. We're not doing a hundred deals and let it play out. By the same token, we better contribute in that value to justify our ownership.
Samir Kaji:
Early in this conversation, you brought up the concept about entry and exit prices, and both of those things have actually gone up in terms of what we've seen over the last five to 10 years, and certainly the last two or three years. But when you're looking at a company that might fall outside your parameters on entry price, be it the valuations much higher than what you're normally willing to pay. And then you look at the exit price and you've assessed a certain exit price that this company could get. The thing that sometimes strikes me is that the exit prices, largely unknown, sometimes markets evolve over time and you're underwriting to an exit that might be five to 10X less than what is really possible. When you're looking at companies like that, how do you decide to make certain exceptions and not be prescriptive around a certain valuation? Is there a certain methodology or mental model that you use?
Rudina Seseri:
So, I'm going to give you a bit of an unfair question because if I think about fund one, we have about 14 core investment in the portfolio. None of them fall outside of our ownership parameters, maybe because it's wide enough, but it's 10 to 20% when we first go in and we maintain our pro rata going forward. So honestly, the answer I will give you will be hypothetical one. That's where I think discipline comes in and unanimous decision making comes in if you're going to make an exception. And there's plenty of opportunity and the right opportunities where exceptions are warranted to your point. But if we are going to make an exception, there better be buying from the team.
Rudina Seseri:
And again, I think unanimous matters because it's very easy. Founders are exceptional. I mean, God, I just love working with them. And the risk of falling in love with your own deal, it is very, very high. It happens to me every time, but that's where discipline comes in. And that's where buying from all the partners come in so that when we do make the exception, if it works out, aren't we brilliant? If it doesn't, we're still aligned that we made this decision together and what are we learning from it, and what does it mean on a go-forward basis rather than creating dynamics around "I told you so". So, I think process matter and even process for making exceptions matters.
Samir Kaji:
And maybe walk us through those partnership discussions when there is an exception that's brought to the table. Sometimes, what we found with larger partnerships is you have somebody that is very passionate about the deal. As you mentioned, it's easy to fall in love with one that you're closest to. But sometimes, when you have everybody where you require consensus, you might have a lot of conscious or unconscious biases that are brought in based on past experience that may not relate to a certain deal. And it becomes tougher to get an exception done. Tell us how that works within Glasswing, where you have made exceptions.
Rudina Seseri:
So the way that our investment decision-making works is on every opportunity, on every deal, I hate referring startups into companies as deals. It feels very transactional, whereas we waited to them for a long time, but we'll stick with it. Just now, I have bias against the word deal, but when we're evaluating a company, the investment team, if you will, that gets quickly stood up, is... It doesn't matter who sourced it, by the way. I could be sourcing a security deal, but if my partner, Rick, who is the right guy for security, then he will take the lead. But there's always lead partner and a second partner, and then one or two associates or principals. What that means is the lead partner can fall in love with a company, but the second partner is the sanity check, is the check and balance in that deal.
Rudina Seseri:
So even as we're discussing them every week, and as we're making our way to the investment committee, should everything pan out from a diligence point of view, even within the investment team, we have the checks and balances. So, we're not falling in love with our own deals. And then, even when both partners are in sync, the lead and the second... And again, the second is really... Sometimes we joke and say, "It's a no person." That person's role is really to find the blind spots, even when those folks are in sync. When we go to the broader group, we all need to be in sync. And what I love... I don't know how this is going to scale. So I don't want you to think that we have all the answers, we don't. This is a firm that's growing.
Rudina Seseri:
I don't know, knock on wood, when we get to 10, 15 partners. This probably the unanimous bit, you have to revisit. It probably doesn't scale. Do you want to focus on what not? But today, the beauty of where we are is that it's a very flat organization. Literally, there is no high in my team Managing Partner or Managing Director. I can think of a particular deal. It got killed because an associate felt so strongly and had domain expertise in the area and it just got killed. We didn't have buy-in from everybody. So I hope I don't have the answer to long-term, but I hope we preserve that spirit because I think it's what makes us good.
Rudina Seseri:
The other piece is the composition of the firm. We haven't talked about it much, but the diverse composition of the firm really, really helps and diverse in backgrounds and genders in our experiences, that vantage point of the different perspective really, really matters. And honestly, from day one, I mean, this is a women-majority firm. Two out of three Managing Directors, Partners are women. And that sort of trickles not just on gender, but on other facets of diversity, but I had never appreciated that as much as do today compared to my prior experience and how different thinking really contributes. And while D&I and sort of ESG have now become hot topics in the broader ecosystem, I mean, I tell you in discussions like this, it's the beauty, that's where it manifests the most. That's we're doing both good and great business.
Samir Kaji:
And I'm glad you brought that up because you're right. I mean, things like DI and BIPOC, and looking at backing, diverse entrepreneurs has become... There's been a spotlight. Still lagging, and the numbers are still lagging both on the founder side as well as the VC side. But one thing that I'd just be curious to get your take on is you get diversity of that when you have people of different backgrounds, but there's still this stigma that is slowly, I think, eroding that there's a trade off between social good and returns. And simply, that isn't the case. I think investing diversity actually correlates with great returns over time. Tell us what you have seen and when you say diversity of that within the firm, how does that manifest on a day-to-day basis?
Rudina Seseri:
In many, many ways. And again, to the notion of we are data driven, we actually track from the firm to the underlying portfolios to their team. So from day one, like I said, this firm started with members of the team being of very different backgrounds, sexual orientations, et cetera, genders, and that was on purpose. And then as the firm evolved, we were looking at our portfolio. We were looking at our advisors. I mean, a lot of diversity in our advisor base and even more so going forward as we're continuing to sharpen the pencil. But if you look at the portfolio companies, I mean, now it's a standard diligence question for me. I go in, no offense, three white men, where is the woman? Where is the minority? What's going on?
Rudina Seseri:
This morning, I was joking because we have one of the portfolio companies that rents for free, so I suppose, sits with us in our space and it's a lot of background diversity and I'm staring at them, not a lot of women. So I kind of poked my head and said, "guys, where are your women?" And they're all like, "oh, we're looking we're to..." I'm like, "Come on." So it is part of the culture and I'm sharing it as very casually, but now let's get real. It's embedded in the term sheet that they will recruit sort of beyond the basic... We will put best effort. We actually expect them to recruit. And then it also manifests on some of the more binding documents around simultaneously with the closing of financing from Glasswing, there will be policies in place in discriminatory policies, nonsexual harassment. So, we put some structure that may be somewhat unusual for at least historically for early stage companies, but just to get that going. And then we track and we make it a board discussion.
Rudina Seseri:
I mean, I'll give you some data and make sure they'll going to pull the latest. This is the latest that we have. But 86% of our portfolio companies have a minority Director, whether it's a woman or other background. On our executives, 30% of our executives are women or BIPOC. 42% of employees across our portfolios are women or BIPOC. I mean, think about it. Tech, where not quite half, we're going to get there are women or BIPOC. And then, if you look at Glasswing itself, 67% women or BIPOC. People are women and BIPOC. And then employees, rank and file, 60% are women and BIPOC. So I shared that and we updated constantly because once you start to put number and actually track, you then know how to evolve and you know how you are doing. So a big piece to our focus is... We haven't raised our hand and said, "Where are ESG and D&I?" It's part of who we are but tracking, start tracking and measuring. Goodness follows as long as there are good efforts and genuine efforts being put there.
Samir Kaji:
If I could just summarize a lot of it, I mean, this has been a fun conversation and never frowns. And I do want to move to our heat check segment in a second here, but you have a very clear thesis. The DNA to me is also very clear around customer service acting as an extension of the team and embedding diversity as really core value driver for not only Glasswing but the type of founders. And so, I think that's all great. To me, all of this makes a ton of sense. I've seen how diverse teams have fared and the data is actually very, very good. And it's starting to seep out more. The secret's getting out, which is a very, very positive thing for our industry. So, I want to go to our final section where I will ask you three rapid fire questions. The first, now that you've been a full-time VC for 15 years, what is the most counterintuitive lesson you've ever learned?
Rudina Seseri:
It's something that I talk often about. So, this is probably just about a freebie. Ideas are great, execution is what really matters.
Samir Kaji:
Every time you're starting something, there's probably somebody that's already had the idea. Everyone will tell you why you shouldn't do it because it's already been thought of, but it tends to be how well can you execute on that idea consistently?
Rudina Seseri:
Yeah. I mean, whether the idea has been thought of or not, I mean, there is a notion of first mover, but only if substantiated. Look, if I had to pick I'd love an awesome idea with awesome execution. I want them both. I want it all. If I had to pick between the two though, in my experience, I have found teams that where they were in okay markets, big enough markets, but because of their exceptional execution, they were able to really grow and expand the market opportunity or grow with the market or ahead of the market. I've seen others where... And I shouldn't say I've been part of those. We've had our fair share of successes and failures, where the market opportunity was amazing and we missed it. And we missed it and it came down to execution. So, sort of this sharp focus on execution is something that honestly I live by every day in myself, but also look for in investing opportunities.
Samir Kaji:
Speaking of investment opportunities, it's invariable that every single GP in the market, if you've been around long enough, if you're going to have an anti-portfolio, for our show, I'm less focused about who the miss was and what was the reason at the time, but what was the learning from it? Is there a miss or two that you can remember through your investing career, where you look back and say, "we didn't do the deal for X, Y, and Z reasons," which seemed rational at the time and maybe they're still rational, but now I look at it and it's shaped how I think about things where I wouldn't make that same mistake on a go forward basis?
Rudina Seseri:
Yep. I can think, unfortunately, more than one. Some of it had to do with the partnership dynamics at the time, this predates Glasswing, and what could and could not happen and why. So very, very, very, very, very important to have alignment around vision and honestly, as much as possible avoid politics. I can think of another opportunity where we missed it in part because the team was incomplete and I knew it. And this is where you got to embed that in the process and the team was incomplete and there wasn't faith that the existing team could grow with the caliber that we expected. And the team, IPO’d, did incredibly well and they did grow. So boy, do I feel stupid?
Samir Kaji:
I think in hindsight, you can look at everything and deconstruct it, but it happens right for a number of different reasons. We're all going to have misses. So last question, I've always felt VC, not only is an apprenticeship game, but it's a continuous learning one. I'd be curious, is there somebody out there, an investor, whether it's a venture investor or not, whose methodologies and investment philosophy particularly inspires you, where you really resonate with their messages? If so, who is it? And what about them really gets you inspired?
Rudina Seseri:
One, I will say I'm as much learned, I mean 16 years into this, I'm learning as much as the next guy or gal and it never ends. And it's the beauty of this business. Having said that rather than idolize one individual, I pick on facets of what I value about different individuals. So I will not go into specific names because I mentioned some and I don't mention others, and I don't want to hurt feelings and et cetera. But let me tell you sort from a characteristic point of view, I love, love, love VCs who are incredibly successful but down to earth. The world is filled with egos. Our owns, including, and they're a constant reminder of what makes a good VC, which is connected to the founders, aligned with the founders, recognizing when we are not aligned, whether it's an economic structures and what not, but people who say what they mean and do what they say.
Rudina Seseri:
I mean, at the end of the day, and I have a couple people in mind specifically that I'm reflecting off of the... We love to be love. We're in the business of saying no to most opportunities that we see and yet we need to be loved. So it's very easy to fall in the trap of, "oh, you're the greatest founder," and say things that you don't necessarily mean. I think if I can have a relationship with a founder where they know where I genuinely stand, whether it's good news or bad news, and I do what I say. And then some, I love those people. I want to work with them as co-investors. I want to emulate their style and I want Glasswing to be that.
Samir Kaji:
Great points of feedback in retaining humility throughout whatever levels of success is an incredible trait. And it's not very often that we see that consistently because human nature is such that you evolve as you become more successful. So I think it's a great thing to note right now, the markets have been very, very good to people. So, we've seen a lot of success very quickly. Rudina, this has been a lot of fun, really appreciate you being on the show and congrats on all of the successes over the years.
Rudina Seseri:
Thank you so much and I really appreciate you having me over the show and for the thoughtful questions.
Samir Kaji:
Thanks so much for listening to another episode of Venture Unlocked. We really hope you enjoyed our conversation with Rudina. To learn more about her and Glasswing Ventures, be sure to go to ventureunlocked.substack.com for detailed notes on the show and my ongoing commentary about the world of venture capital. Venture Unlocked is also available on iTunes or Spotify for download. And while you're there, please leave us a rating and a review as it really helps us out. And hit the subscribe button in order to get each and every Venture Unlocked episode as soon as it's released.
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