Q&A with Kirsten Green, Founding Partner at Forerunner Ventures

How did you get started in investing? What drew you to the consumer retail sector? 

I was guided by my parents to do something practical with my career, so I went to work at Merrill Lynch after college, where I landed in equity research. I fell in love with the idea of learning on the job – being curious, asking questions, trying to connect the dots. I started out by covering REITs, and I wiggled my way into retail. I liked the retail sector because it presented the opportunity to combine qualitative and quantitative analysis. I was comfortable with numbers and analytics, but I also really loved people and have always been intrigued by human behavior. I think every good investor is trying to think a little bit differently than everyone else; that’s where you find the alpha opportunities. If you have a point of view of consumer behaviors from the qualitative side and you can combine it with expertise on the quantitative side, that’s where some unique perspectives can be formed.

How did you decide to start your own fund?

I didn’t have a plan to start a venture firm until about six months before I started the fund. I am not by nature entrepreneurial; I have a healthy appreciation of risk. I decided to take some time off to figure out my next move, which was scary, to be honest. The one thing I never doubted was that I wanted to be an investor. I started raising individual special purpose vehicles to invest in private companies and slowly developed a portfolio of seven or eight investments. I had raised almost $20 million by getting tiny checks over the course of a couple years. I was doing this all on my own, and the only reason that was even possible was because I loved it. By 2008, I had a nice little portfolio – it wasn’t wrapped in a bow the way I wanted in terms of how I would present a fund offering or a thesis, but I had some good companies, and I felt like I could leverage that.

Did the funding come right away?

It definitely did not. The turning point for me was one specific individual, who I had met early on in my career. He was starting a hedge fund when we met that he ultimately built to be a several billion-dollar firm. In one of our periodic catch-ups, he asked me to come work with him. I said, well, I just met these companies that I really want to invest in. I told him about Birchbox and Warby Parker – and both those teams were still in business school. I explained how I thought they were changing the industry by combining online and offline retail to deliver a full experience to the consumer – an experience that was way beyond a flat website. He became my partner in the angel fund, and this was a chance for me to say, I have a blind pool of money and someone who trusts me to make decisions – I can show the world what my thesis is and really create something. At some point, I just realized I’m doing this; I’m starting a fund.

How do you think about building a strong relationship with a founder as a VC?

This might sound simplistic, but my playbook is to explain to an entrepreneur what I’m trying to accomplish with the deal. They’ve told me their personal story, why they’re building their business, what they’re hoping to achieve, and what success looks like. I’m going to assume that part of this partnership is that we both want to be successful – so I explain what success looks like for me. I have a fund that’s a certain size, I have a certain number of deals, and I can only pay a certain amount for each. I find that people are rational when you put things in those terms – we want to find a place where we can both be successful. You need transparency on both sides for that to happen. The fact of the matter is, founders have good ideas, dynamic ideas – crazy, awesome ideas – that are going to change the world, and there are less of those than there is money.

Your experience with Glossier is pretty unique. The founder, Emily Weiss, made it clear that she pitched her idea to hundreds of people, and the only one who saw the vision was you and your firm. Can you tell us about that journey?

Emily is special. She had a clear idea of who she was, what type of consumers her business would serve, where those consumers were headed, what they were missing, and how she could sell to them. She gained all that perspective because she was interested. She picked up a camera and a notebook, built a website that drew in millions of unique visitors each month, all on her own. When I think about characteristics I look for in entrepreneurs, she had all of them. Most importantly, she married a vision for what the world could look like with a business model for how to turn that vision into action. Emily pitched to rooms full of men, who weren’t engaged in what she was doing, and you can’t fault them for that. Investing is very personal; you spend a lot of time with a company and product. That’s why it’s important to have diversity on the investing side of the table and more women writing checks so they have a broader view of what different companies need in order to come to life.

How do you think consumers today are re-shaping the investment landscape?

Access to information is reshaping so many parts of our world, and you can’t put that genie back in the bottle. People now have an expectation of access to information. They have an expectation that they have a voice and a role to play. This makes the consumer, the end user, much more present in business today. Also, I think being able to compete on the service and values level is more important than ever, and it’s actually one of the things that makes me the most optimistic. I think the younger generation is taking responsibility by voting with their dollars and thinking about their purchasing decisions. 

What do you look for in an investment?

We try to answer the question, “Who are the disruptors that will make it?” We try to find companies that will hit a sweet spot in five years but are timely enough today to be adopted. Part of the challenge is rising above the noise. I’ll give you an example. We met a lot of direct-to-consumer luggage companies. They were focused on the suitcase, and how they had built the perfect one. When we met the team at Away, they were focused on the experience, and how there’s a movement and shift in how consumers want to spend time. They spoke about how there is a re-prioritization towards adventure and experiences, and there was no brand for that person. They wanted to build a travel brand, not a suitcase brand. The suitcase was simply an easy way to start telling the story.

You’ve now grown to a team of ten. How do you think about driving the culture of your firm, and how do you think about hiring?

After meeting general credentials, I try to find people who love investing. If you really love what you’re doing, you’re going to lean in naturally and be better at it. My first three hires were women, but I wanted to make sure our team didn’t think, look, and act the same. It’s so valuable to have different people with different opinions. My team is now diverse across the board – diversity of gender, ethnicity, and perspective. That’s part of what makes our firm so special. This is a people-driven business and you can only make a few investments per year, so they need to be the right ones. I do not believe in consensus investing. To have a diversified portfolio, you need a team in place that provides a wide range of thinking and experiences. That said, if we do decide to invest, the whole team is behind it – it doesn’t matter who brought the deal or who voted in favor or against it.

 

To hear more from Kirsten, watch her Talks at GS session here.