April 1, 2025 • 55 mins
In this episode, Joel Palathinkal is joined by Erin Harkless Moore to discuss the significance of continuous learning for investors. Erin shares her career journey, early influences, and experiences in discovering investing. They delve into the role of communication, curiosity, and team dynamics in making investment decisions, as well as the challenges faced in fundraising. The conversation covers building long-term investor relationships, frameworks for emerging fund managers, and assessing investor potential. They explore strategy alignment in the care economy, technology's impact, and quantitative metrics for fund performance. Erin offers advice for finance students, emphasizing mentorship and the importance of successful women in finance.
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Episode Transcript
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(00:00):
Yeah, it's a great question and I think of it,you know, we're constantly learning.
(00:06):
If you're not learning, if you're not pausingand trying to improve, you're not doing your
job investor, as an allocator.
I firmly believe that.
Welcome to The Investor, a podcast where I,Joel Palafinkel, your host, dives deep into the
minds of the world's most influentialinstitutional investors.
(00:27):
In each episode, we sit down with an investorto hear about their journeys and how global
markets are driving capital allocation.
So join us on this journey as we explore theseinsights.
Alright.
So we are alive, and I'm really, really excitedabout the guests that we have today.
It's someone that I look up to in thecommunity.
(00:47):
A lot of the people in the investmentmanagement ecosystem, you know, definitely see
Erin as a mentor.
So I wanna start by introducing Erin HarklessMoore.
She's a senior director of investments atPivotal Ventures.
It's a company created by Melinda Gates toadvance social progress in The United States.
And, you know, Erin, I I told you this off therecord.
(01:07):
I just wanna personally thank you and give youa shout out.
You know, you've been a huge, supporter of theSutton ecosystem.
You've come to some of our community events andhave really inspired a lot of people,
especially people that are building their ownfirm, a firm that's gonna be durable for the
next generations, but then also institutionalLPs that are looking to think you know, be
(01:29):
thoughtful about how they're allocating for thethe decades to come.
So personally, I just wanna thank you forsupporting me and the community and then also
just, you know, making time for us.
I know you guys are really busy, so reallyappreciate it.
No.
Joel, it's just it's such a treat to be withyou today on this podcast, and I'm a big fan of
yours and the community that you've built withSutton Capital.
It's just so important for emerging managers,for new investors to to have that that
(01:54):
community to support each other and to grow.
And so it's been really fun for me to get toknow you and and be a part of some of your
events, and I'm excited for our conversationthis morning.
Yeah.
And I mean, look, I mean, a part of it too is,you know, building your career.
You know, the way that I look at the assetmanagement career, I think, you know, you might
remember, like the first time we hopped on likea a call, you know, I I think about it as like
(02:15):
the entire career journey.
You know, a lot of us get into this industryfrom a non traditional pathway.
Some of us come from a healthcare background orsome people come from a consulting background.
But the truth is there's no degree in privateequity or venture capital.
You have to kind of like maybe study find yourway.
(02:36):
Yeah.
Yeah.
Find your way and I I know people that havegone to Ivy League schools and still were
unemployed and then they they ended up gettinginto, know, a large firm like Blackstone or so
through just kind of the network and, you know,being part of community.
So I wanna start this discussion maybe makingyou reflect a little bit thinking back to, you
(02:56):
know, your early days and maybe thinking aboutyour family.
Tell me a little bit about where you grew up,your family, your early education, what did
kind of your family have interest in terms ofyour career?
And I'll start like my family, they like, look,you can either do medicine or engineering.
Those are the Those are the only twoindustries.
(03:17):
Yeah, that's it.
Yeah.
So that was kind of like, that's how I grew upand you know, it's always really interesting to
see kind of what people thought they wanted todo when they started out their career and then
where they ended up, which obviously you'vebuilt an amazing career and you're still
growing and developing.
We're all learning, but we'd love to take astep back and learn about your early education
(03:37):
and what you thought you wanted to do and maybesome of the pivots and thought processes around
that.
Sure, sure.
Well, grew up in San Antonio, Texas.
I'm a native Texan.
And that means I love a couple of things,barbecue, Tex Mex, and the San Antonio Spurs.
So just putting that out there is sort ofpersonal things that bring me joy and are deep
(03:58):
in roots.
But I have a younger brother, grew up with himand my parents.
And it's funny you were describing, Joel, thesignals and the messages that your parents
maybe sent.
My dad's a doctor.
My mom has worn many different hats, managedhis practice, had her own small business, was a
stay at home mom for many years.
(04:19):
But for both of them, just the dedication andfocus on service, a life of service and
aligning your true north star and passion inthe work that you do.
As I've reflected back, I think that was alwaysthe message that they said.
It wasn't you have to do x or y.
It's find the thing that really brings you joyand where you can serve and partner and lift up
(04:41):
others and work with others.
And so that was always in my mind even from thevery earliest days and some of those values.
You don't have to be nice but you should bekind to people.
Do unto others as you want them to do unto you.
Those were very common phrases and values thatwere instilled in mottos in the heartless house
(05:01):
as I was growing up.
But I actually wanted to be to one part of yourquestion, that early career thought I wanted to
be a journalist.
I would go around the house Thanksgiving andholidays with a little notepad and effectively
spy on writing down what I was hearing, askingquestions of cousins and aunts and uncles and
(05:21):
writing these little stories and creatingnarratives.
And I look back on that now and I think what istrue is I'm a very curious person.
I've always been a curious person, someone thatloves asking questions, digging into problems,
trying out new products, connecting with peopleas well in that relationship building that I
(05:42):
think is essential to success as a reporter oras a journalist.
And those skills have translated to myinvestment career as well.
And I really fell into investing somewhat maybeaccidentally in college.
You talked about mentors and role models, andthere were a couple of friends.
I went to Washington University, an undergradthat I looked up to.
(06:02):
They were a year or two or three years ahead ofme in school that had these internships on Wall
Street.
And they would talk about the fast pace and thepeople that they were interacting with.
I'd also always loved numbers and, again,problem solving, the kind of duality of the
left brain and right brain.
And so I pursued that for an internship in thesummer, really following the paths of a few,
(06:25):
again, kind of key friends and mentors thatwere a few steps ahead of me that showed me
that way of kind of how to break through someof those doors.
And once I discovered this world of investing,I was so intrigued by it.
And like you said, there's no major you kind oflearn by doing, around the job.
This is really a true apprenticeship business.
(06:47):
And I was very fortunate to kind of start mycareer on Wall Street and learn from amazing
institutional investors at places like GoldmanSachs and later at Cambridge Associates that
really formed the foundation of the base that Ibuilt my career as an investor on.
And for me over time there was always thistension of, again, kind of going back to what I
(07:11):
mentioned about my parents and this life ofservice and the values of wanting to give back,
you know I love the investing, love thetechnical aspects of that work and the modeling
and all that nerdy stuff like you know being inExcel.
And then I had my values of wanting to see morediversity and being around different types of
people and asking questions kind of like why amI the only woman in this room or the only
(07:35):
person of color in this room?
Like how do we increase that and do more?
So trying to get more harmonization of myvalues in the work that I was doing, I've
really been on and it's going to get easy withhindsight to say like I was on this journey or
this intentional path.
Yeah there was intentionality to it but I thinka lot of it was again back to asking questions,
(07:57):
being curious and pushing and trying to findways to harmonize my values and the work that I
was doing.
That's really kind of manifest itself in thejob I have now at Pivotal Ventures and getting
to lead the investment team here and backingvisionary women, founders and investors that
are going to change the face of venturecapital.
(08:18):
And I would say to all that, one of the mostprolific investors was a journalist.
I mean, Michael Moritz, he was a journalist.
So I think what you're also saying is we haveto utilize the gifts that we have.
I mean, I think journalism is really factfinding, investigating, and then also just
communicating that clearly.
Because if you have all the facts and you'veuncovered all of these great learnings, but
(08:43):
then it's hard to digest, right?
It's just really hard to get through.
Or persuade, right?
It's about you think about as an investor, evenif say if you're a solo GP, maybe this isn't an
issue, but you've got to bring along yourpartners, right?
And get them on board or your investmentcommittee.
I spend a lot of time working with ourinvestment committee with our team, like
(09:05):
building consensus.
And like you were saying, Joel, that comes backto communication, right?
Like, you take the threads, pull it together ina way that is clear, makes sense, you can make
that case, you know, why I think this fundmanager is gonna deliver outsized returns,
piecing together that mosaic, takes time,that's hard work, And I do think, I look back
(09:30):
now, like I said, I wrote for the newspaper incollege and had those early aspirations of
being a journalist.
Some of my classmates have gone on to verysuccessful careers in journalism, so I'm proud
of them.
But I think I'm still, like you said, utilizingsome of those core skills and just that
instinct to be curious and kind of asking,what's next?
(09:51):
What else?
What else?
What other questions have we not asked?
We have our rubric, how can we make it better?
How can we take bias out as much as possible tomake sure that founders and fund managers, like
you said, that don't maybe fit the typical moldor pattern have an opportunity to shoot their
shot and be able to build their companies andbuild their investment firms.
(10:15):
Yeah.
What's also interesting is, you know, seeinghow journalism has evolved and, seeing how
storytelling can be used as a tool for both LPsthat are voices in the community and then also
emerging managers, but seeing the differentlayers of communication.
So right now we're doing long formstorytelling, but we're seeing a lot of people,
I might experiment chopping samples of this andmaking it short form as well.
(10:40):
So I think it's just amazing to see how that'sevolved, right?
From writing a column in a newspaper to nowshort form columns on Twitter and then, you
know, video content really being, you know, atool for for fund managers to to share their
mission, right?
If they have a certain mission that's reallyimportant to them that drives them kinda like
you've had, you know, it's it's important tokinda like concisely and precisely communicate
(11:05):
that.
I've and then, you know, I I recently thereason why I talk about this is because I
recently saw a short form video of Jeff Bezos.
Mhmm.
And he was talking about his whole process ofmeetings and his meetings.
I mean, they spend thirty minutes in themeeting reading together, because obviously if
you throw if you throw an entire memo over thefence, nobody's gonna Right?
(11:28):
But if
you can allocate time So it's interesting howlike some people still adopt the long form in
more of a thesis type of style, like a writtenkind of memo style.
And what what Jeff Bezos was saying was a lotof times when you have slides, like, you have a
deck that you send over before the meeting, thedeck is, you know, usually used as a tool for,
(11:51):
like, sales.
Right?
For, like, kind of Yeah.
Influencing or or selling where, like, youknow, you wanna have a narrative.
That's a whole spirit of an investment memo,right?
It's usually like a neutral viewpoint.
It's like, hey, here's an interesting deal.
These are the benefits.
This is why I think we could invest.
However, there's also all these risks that weneed to think about.
(12:12):
So that takes us to our next question, whichis, what are some of the learnings that you've
developed maybe in the last year or maybe inthe, obviously in the last month, because we're
just in the new year in terms of just kind oflooking at direct deals, especially in this
environment, and then also evaluating managers.
Yeah.
It's a great question, and I think of it, youknow, we're constantly learning.
(12:35):
If you're not learning, if you're not pausingand trying to improve, you're not doing your
job as an investor, as an allocator.
I firmly believe that.
And for me, the last year in change has justreally learnings that I think maybe had really
you know were like floating in my head had it'sbecome very concrete and clear and that's
(12:57):
driven a lot by the market environment thatwe've experienced you know in the last
eighteen-twenty four months.
Prior to that, candidly, I mean there were someebbs and flows, right?
But coming out of the financial crisis in02/2008, basically only gone up into the right,
you know.
You had low interest rates, like it was easymoney.
(13:17):
And again not to say it was easy to invest butI think the conditions that the wind was behind
you a bit more than what we've experienced inthe last few years and so to get back to that
learning for me, both investing directly intocompanies and also into fund managers, really
comes back to the team.
The team matters in the mindset of the founderor the GP, the kind of lead investor, how they
(13:45):
think, do they have a growth mindset, are theyreceptive to feedback because again when money
is easy, when you can you know write on yournapkin and then all of a sudden you know raise
another round of capital at a huge valuation,you know it papers over potentially both for
you you know the person that's the founder orthe investor and then someone in my seat who's
(14:06):
evaluating them, you can kind of brush pastsome potential red flags around you know how
decisions are made, how people work together,how they again take, receive, and deliver
feedback.
And so for me that learning of like reallyboiling down and asking tough questions about
the team collectively or the founderindividually is so important, particularly when
(14:32):
you're experiencing an environment that's alittle bit choppier and more difficult.
So that's one.
I could list a few others, but I'll start I'llstop there.
Let's double click on the team.
So on the team, what are some of the newbecause that's really interesting.
Mean, you could do some social experimentswhere you ask the team a question and then
maybe you ask the founder a question and maybethe response is completely different.
(14:55):
Maybe it's a little more polished as a founder,but is that kind of something some of the
things?
No, mean, these are like straight out of theplaybook.
Worked at Cambridge Associates for over eightyears and doing fund manager diligence.
That was a tactic we use all the time.
Like in the kind of on-site, you'd separateout, you'd have the lead investor, the GP,
(15:18):
managing partner, meet with them in one room,and then you go with the other partners or even
the associates, right?
I like to ask just when you come into a place,like maybe it's the executive assistant or the
office manager who greets you.
Ask them a few questions, right?
Like how they show up, how the team isinteracting.
Because all of that, the polish of the kind ofmost seasoned person probably comes through,
(15:44):
but you're looking for that consistency.
Just one more example I can think of recently,we were doing diligence on a fund.
The managing partner was very explicit aboutthe criteria that she was setting for growth of
the team.
Like they need to hit this milestone, I'mlooking for this type of experience but I want
to see them be able to source in this this typeof deal, bring the founders along in this way,
(16:05):
add this, know, like very clear rubric, right?
Yeah.
So I stepped back and I said, that's great.
We had a call with the more junior partner onthe team and asked him the question, well, how
are you seeing your path at this firm?
And it wasn't word for word, but he was hittingon the same thing.
And then unprompted sort of said, well, she'sbeen very the managing partner has been very
(16:27):
clear and intentional about how she brings mealong, opens up opportunities for me to lean in
more and to lead.
And so that was great because she wasn'tnecessarily promoting herself as I'm doing all
these things for my team.
The fact that he brought that up unprompted wasa very useful, again, kind of validation of
(16:48):
what we were finding attractive about thatfund.
So all of those are great tactics.
And again, I think it's doing the referencestoo, and that's something I've learned to not
rush through.
That's when mistakes happen, when you don'ttake the time to do your references on list and
(17:09):
off list.
I actually take it as a point of pride that forour team, we try and find as many off list
references as we're seeing on list referencesbecause you might get some unvarnished
perspectives or just different perspectivesfrom someone who hasn't already been identified
as a potential point of connectivity to providefeedback on that founder or that investor.
(17:34):
Yeah.
And even just when you think aboutrelationships 101, when you're collaborating or
even if you're romantically involved withsomebody, right?
Mean, you say something and it's not actuallyheard, like when you say something and what
they hear is like completely different, that'sdefinitely a problem.
So in this situation, the manager, the leaderof the firm kind of was communicating something
(17:56):
and the person was able to repeat back thesame, pretty close to like what it is.
It's an issue when like, there's a breakdown intranslation, right?
When you're trying to share something or sharesome type of mission or just share like how you
feel and
then the
person hears something completely different.
Completely different.
And then that's where, you know, again, youcould have access, you could be sourcing the
(18:18):
best founders, have a great thesis.
I think the things that derail fund managersover time is that inability to build a firm.
Right?
Just because you're a great investor does notmean you're gonna be a great firm builder.
Yeah.
And in our diligence, and that's anotherlearning, right, like separating those two out
(18:39):
and setting up a line of inquiry in yourdiligence process to get it both is really
important.
That's why we ask the question, even for a funone, what is your vision?
What kind of firm do you want to build?
What kind of firm do you see yourself as?
Are they starting to think about or howresponded when I asked questions about how
they're thinking about that evolution when youget to fund three, fund four, fund five?
(19:02):
Those are the types of firms at PivotalVentures that we want to partner with that will
be enduring franchises, That next generation ofventure capitalists that will look a little
different, that will be women led, but thatstill have that in their DNA, right, that
ability to lead, to grow a business and also begreat investors or build a team of great
(19:25):
investors too.
No, absolutely.
Well, I think you had a couple other learningstoo, right?
Oh, yeah.
Well, one more is along a similar line.
And so you just drew out too, Joel, around justlistening.
Again, in that going I think Daniel Kahnemanand his research around going slow to go fast,
(19:47):
I'm always reminded that you may misssomething, right?
And I think we saw that a lot in the last fewyears, direct investors term sheet on Friday,
round closing on Tuesday.
And that FOBO or that velocity look, you haveto build your system and your models to adapt
(20:09):
and adjust to that.
But I think listening and slowing down isanother learning that I've internalized.
Because again, when you don't follow yourprocess, that's when mistakes are going to
happen.
And just really pausing to make sure you'relike you said, hearing correctly.
Like, did you say what I thought you said?
(20:30):
Understanding what drives people, what theirmotivations are, what they care about, what
really matters to them is so important,particularly for founders, right?
They're putting their blood, sweat, and tearsin their life, like their capital, everything,
into growing and scaling a business.
And what's at the core of that?
And listening to that and understanding that issomething else that I've taken away for sure in
(20:56):
the last year, just again, times have gottenmore challenging because it's much easier to
just say, you know what, I'm done.
This is hard, right?
This is not an easy business to be in.
And so I think slowing down and just beingdeliberate in your process and your decision
making and treating people with that care,right, because and offering to be helpful.
(21:19):
I always say this, I think our team, and wepride ourselves on this too, even if we don't
invest, say, in a fund, we try to open a doorfor that GP, right?
You're not a fit for Pivotal.
Let me give you some feedback why.
But actually, you know, this investor, thisother fellow LP that I know well, I know is
actually looking for, you know, a strategy likeyours.
(21:44):
You should talk to that team, or a founder.
You're seeking intros to x y z.
Let me make that connection for you.
And next time, next round, there might be spacefor us.
Timing might work.
Next company you build, you'll look back andsay, wow, the team at Pivotal Ventures was very
gracious with their time and their resources,even if we didn't get an allocation.
(22:08):
So I just come back to that as it is nothingthat's rocket science here.
I think in the velocity and speed of trying tocompete and win, it's easy to miss some of
these things.
And those are just key learnings for me to losesight of of that because it's really important.
I would say also with the tough fundraisingenvironment for both managers and founders, you
(22:32):
know, there there you know, I think there's athere's a mode of just being really stuck in
pitch mode where, you know, they're they'recoming in and they're selling and they're doing
the road show where, like, I think taking astep back to kind of understand what is
important to Pivotal and understanding kind ofwhat what the criteria is, what's you know, how
how they fit in.
I think those questions and then also kind oflistening more thoughtfully is a struggle, I
(22:57):
think, for both founders and
No, it's fund managers.
It's a two way street.
And I'm heartened when we start a meeting.
We'll take typically a thirty minute call withmost founders or fund managers that meet our
criteria as the sort of top of funnel.
And in those conversations, saying like, wedon't get questions of, what are you focused on
(23:20):
year?
Tell me more about your mandate.
Yeah.
You know, what are you looking for?
I often I'll I'll often ask this of founders,like what what value do you think we could add
for you?
What are
you looking for?
If they haven't asked me, well, know, this iswhy I want to partner with Pivotal or like, you
know, let's make sure, again, we're securingeach Like, it's hard out there.
(23:40):
Let's acknowledge that.
Like, you're on that hamster wheel and may notget off.
Like, you're fundraising.
You're fundraising.
You're fundraising.
You close the fund.
Then you got to start fundraising again for thenext fund.
But just having that opportunity because as afund manager Mhmm.
You're building partners.
Your LPs, if all goes well, hopefully, will bewith you for a really long time.
(24:02):
Yeah.
These are marriages, like you said.
This is not this is not dating.
Once I've signed that subscription document,we're in it for a decade plus.
And so you want to make sure that you havepeople around the table that are going to be
with you through good times and bad and thatare aligned and that will be supportive of you.
(24:24):
And so taking the time to ask those questionsis something I've seen many investors, many GPs
do.
And it may lead them to say, you know what?
Yeah, you're maybe not the best fit for usright now.
This is an LP.
And that's okay.
That's okay.
And I think to your point, I mean, pumping thebrakes and really focusing on just building a
relationship.
(24:45):
Right.
I think we'll compound over time than justleading with the deck and kind of running into
the performance all that.
So I think it's really relationships first andpeople invest in who they really want to be
aligned.
Well they want to win and they're aligned with.
No, totally, totally.
Because again we spend a lot of time at workand doing this work, you want to be surrounded
(25:10):
by people that you are excited about whatthey're doing and you've built that
relationship with.
I often will say, if I can't get to a pointwhere in like sixty seconds I can summarize why
we backed this fund or why we're excited aboutthis founder and this opportunity, that's a
(25:30):
problem, right?
Because that should be just blatantly clearthrough the relationship that we built.
Obviously, the diligence and the financials andcrunch of it, but it's something about what
makes that team distinctive, that strategydistinctive, that if I can't articulate that in
less than a minute, then, you know, we haven'tinvested appropriately in building that
(25:52):
relationship as you described.
No.
That's great.
And, well, maybe I'll jump to the nextquestion.
Yeah.
Feel free to weave in the other learnings tooif you got Sure.
Yes.
Yes.
But I think and maybe you can weave in some ofthe learnings along with the frameworks that
you think are important when emerging fundmanagers are developing their craft and
investing, right?
So maybe they're starting out maybe they were afounder in the past and now they're switching
(26:16):
into being on the buy side.
What are some of the basic frameworks that youthink is important?
And again, feel free to weave in your learningsalong with this Sure.
An
investor, boils down to particularly the earlystage in venture capital.
And I think this is consistent in other ways asyou migrate up the capital stack.
(26:39):
It really comes down to three things.
What's your strategy?
How do you source?
How do you put this portfolio together?
And then what value are you bringing?
How are you stewarding the capital that you'vebeen entrusted by your limited partners over
time?
And some fund managers, I think, lose sight ofthat, that all three of those are essential
(27:01):
into defining what I think of as your edge asan investor.
Like Sure.
There needs to be something kind ofdifferentiated and that stands out across those
three verticals to get us excited and to get meto be able to have that thirty second, sixty
second like fund ABC is excellent in doingthis, this, and this that I do not have
elsewhere in my portfolio.
(27:23):
Because that's the trifecta.
That's what you need to nail as an investor.
I think having that rubric in mind, thinkingthrough as you're starting to again build your
deck, lay all that out, what's your right towin, why you should exist, how you're going to
distinguish yourself with founders, and thenhow you position that back to something that
(27:44):
feels and is hopefully differentiated for LPsthat are looking to, again, allocate to you as
a fund manager.
So I think that's the number one thing I wouldpoint to is like hitting those three points.
You gave an example if you were an operatorpreviously and then you're transitioning into
venture and early stage investing.
(28:07):
Limited partners, we want to see a sustainedtrack record of performance or success.
I
think that's what my job is to assess that.
And that could be challenging for someonethat's newer to this business, right?
Or again, you've been operating.
Maybe you're a founder, and you haven't beeninvestor, maybe you've done a few angel checks,
etcetera.
But I think what's important or what you as aninvestor should be mindful of are questions
(28:33):
like, you know, we're trying to assess how youoperate in difficult pressure field situations.
Back to that listening and learning what haveyou learned from mistakes?
It's always a big red flag for me when I askthe question tell me about a mistake or like
something that's gone wrong for you and as aninvestor, whatever.
And, like, I get not a they don't I can'tanswer that question or it's,
(28:55):
like Yeah.
Mistake.
Like, I'm like, okay.
I mean, I made a mistake.
You know, am I dragging my son to work toschool?
That's a
tough question too.
I think also, you know, going back to just jobinterviewing, I remember there was a job
interview that I went to one time and theyasked me like, what's a piece of critical
feedback that somebody's given you?
And I was just completely stumped.
(29:16):
Yeah.
Yeah.
Was actually not gonna be stumped or like tostruggle with it.
I think it's like you
got But the problem is I was really honest.
I told them like a piece of feedback thatsomebody gave me and maybe I didn't get the
job.
Maybe I was just So you're balancing, I guess,that's a tricky question because you're
balancing sharing your weakness.
(29:37):
But then if it's a weakness that they don'tlike, then maybe it's not a good thing.
But I think it also shows your authenticity.
It shows that you're humble and it's like,look, know what?
Here's something that I need to work on.
I need to listen.
Cut people off and so I think that's so Ithink, you know, observe like to your point,
observing how they respond to that question isvery telling.
(29:57):
Right, right, right.
And it's yeah, I think people, emergingmanagers can maybe get caught up in the flash
of it or like you know I'm doing x y and z.
Know we meet hundreds of fund managers here.
So if you're telling me, you know, I'minvesting in AI, okay, you and everybody else.
(30:17):
Like, that's not in of itself like a strategy.
It's like, you know, again, what is how do youwin?
Like, being able to articulate that clearly.
And if you haven't necessarily had a long trackrecord as an investor, I firmly believe that
there are patterns that can be relevant to howyou make decisions that will demonstrate your
(30:40):
potential success as an investor.
And that can be, again, if you were anoperator, how you navigated board dynamics,
right?
As a founder previously, how you coached ateam, like how you built a team, all of that's
relevant because those are direct skills andthings you'll be doing as you're investing into
(31:02):
these companies and supporting these foundersin their next stage of growth and their
trajectory.
So those are all things that I put you.
I mean, other thing is maybe it's less of aframework, Joel, but just find your we're
talking about relationships earlier, find yourtribe, like find your advocates, find the
people that are, you know, maybe a couple ofsteps ahead of you as investors and get their
(31:29):
feedback, like their coaching, their advice.
Think our elbows can be sharp, but at the earlystages, still a pretty collaborative space and
industry.
I think knowing the folks that are gonna kindof keep it real with you and give you that
honest, unvarnished feedback around yourinvestment approach and strategy and thesis,
(31:52):
also potentially in your portfolioconstruction, maybe your LP, you have the firm
building stuff like fundraising, building yourLP base.
You need those advocates, of minded travelersthat have been there and in the trenches and
maybe a few steps ahead of you.
(32:12):
So not trying to just do it all alone in thelone wolf, like leverage that community, find
those folks, and then same on the LP side,right?
Like I firmly, like I'm not doing my job if I'mnot advocating and talking up our fund managers
and our founders, right?
We can talk, we'll talk more about it in ourtime together here.
(32:35):
I am so proud and excited about what our GPsare building, what our founders are building.
So if I'm not willing to pick up the phone andcall you or call someone else in the community
and say, hey, you need to talk to this personor you need to spend time with this team.
I'm not doing my job.
(32:55):
So I think that community is so importantfinding and building it.
Because otherwise it can be kind of a lonely Ithink it can be a lonely space.
And what I see from you is I just see a lot ofexcitement and passion.
And you want to be their cheerleader and seethem successful.
And those are the people that you want to back.
It's just people that you want to see becomesuccessful.
And like, if they're successful, you just feelhappy, know, What the quantitative results are.
(33:19):
Totally.
Totally.
And then I'll say too, like, I mean, theemerging fund manager community, because we
have a lot of communities and ecosystems, it'svery similar to like a founder community.
A lot of those fund managers are looking forWe've had peer groups where like people pair
with each other and give feedback on eachother's decks, though they're essentially all
trying to get to their first close.
(33:40):
It's just really interesting to see thecollaboration.
Then obviously, at that stage they're notleading deals, so they still need to build a
community of co investors to hopefully help
build build that syndicate.
Then same thing I'd say at the allocator leveltoo.
A lot of these fund managers, they're stilllooking to close their fund and there's a
collaboration piece and knowledge sharing withthe allocators with each other.
(34:05):
Totally.
I think that's under maybe estimated orappreciated by investors, by the fund managers
is how much LPs are in community themselves.
And that a no from me, and then I turn aroundand I say, oh, but you should if you talk to so
and so and so so, let me introduce you or letme put in a word.
(34:27):
I've had some GP say, oh, well, you passed onus.
Like, they're gonna view that negatively.
Like, no.
Like, again, we know each other.
We know what our portfolio needs, portfolioconstruction goals are, and that carries a lot
of weight when another, allocator that Irespect picks up the phone and says, hey, Erin,
(34:48):
Pivotal really should take a look at this fund.
Or we didn't invest for x, y, z reason, but I'mhopeful you will if you haven't met with them,
you should take a look.
And so those conversations are happening allthe time and it's not a negative signal because
I've passed or and I always say too it's a it'sa no it's probably a no for now you'll be back
(35:09):
fundraising in another two to three years andour portfolio needs may have changed.
We'll have more data points to assess andanalyze potentially some of the considerations
and question marks that were giving us pause.
You know, we might have seen some growth andchange that we're excited about.
So I say that all the time when someone says,well you pass on us, we'll never get in
(35:30):
Pivotal's portfolio.
I can think of two examples, one that we're indiligence on now that we didn't invest in the
fund one, but we've been tracking them for thefew years and are now leaning into diligence on
the fund two because it really does fit a gapthat's missing in our portfolio.
We've been building conviction around the teamand what we think makes them differentiated and
(35:50):
distinctive.
Well, that's a perfect lead into the nextquestion because to your point, there's many
aspects of why you pass on a fund.
It could be timing, it could be the mandate, itcould also just be their strategy isn't
aligned.
Going back to tying in listening, right?
Listening and understanding what's important toyour organization.
(36:13):
We'd love to just at a high level talk aboutwhat Melinda Gates initiatives are focused on
and what you're excited about the most.
I'll lead in with like initial discussions thatyou and I had a couple of years ago about the
care space.
So we've been talking and I'll have a personalexample here, like, last time we talked about
the huge emphasis on care space and look, manymid professionals, they've got parents that are
(36:38):
getting older and then they also have childrenas well.
So they call that the sandwich generation whereyou're stuck kind of worrying about the top and
the bottom and then obviously we have ourcareer that we're developing.
So what are your thoughts on just that and thenalso just kind of the opportunities in tech and
new models?
And then also is that kind of a space that youguys are so passionate about and then maybe
(36:59):
some other sectors that maybe have evolved inyour mandate?
Sure, sure.
If relevant.
No, for sure.
Well, Melinda is our founder, set up Pivotal toadvance social progress here in The United
States and specifically women's power andinfluence.
We want to see women in seats where they cancontrol more resources, have access to control
(37:20):
capital, really influence the decisions thatimpact their lives at home and their careers,
that full spectrum.
And for us, care, the caregiving space, thecare economy is a huge example.
We're doing work there from a programmatic andphilanthropic standpoint, from a policy
standpoint.
And for me and this gets back to your question,what I'm most excited about from an investment
(37:42):
standpoint.
Just to quantify and put a number around it, wesupported some research that sized the care
economy at $648,000,000,000 That's larger thanthe pharmaceutical industry.
Every time I reread that stat or that report,I'm kind of still surprised.
It's like, woah, this is huge.
And it's still, I think, bit under the radarand under invested.
(38:06):
But I also like to say that we're allcaregivers at some point in our lives.
You just gave a perfect example of that, Joel,right?
Like whether you're a parent, you're caring foryour kids, a child now, maybe you're in that
sandwich caring for your parents, justneighbors, friends, people in your community,
(38:26):
right?
Like, we're all bearing that burden.
And that gift, too.
It's a gift, I think, to care for others as Andthe systems that we've set up are not
supporting us to have to do that in anaccessible, cost effective So I heard a couple
of times on the conference circuit last fall, afew people mentioning what are some of the
(38:47):
biggest challenges and opportunities facingperspective.
And not surprisingly, climate was mentioned,AI, and then care came up.
And I was like, oh, okay, great.
Like care is entering the conversation, andit's still a huge white space.
So we're specifically excited about a couple ofkind of sub themes within this broader care
(39:10):
economy space.
One is supporting families with high burden orsort of high acute caregiving needs.
So I think mental health challengesparticularly for youth, but I think for kids
that starts to bubble up and impact the entirefamily.
Dementia care, end of life management,postpartum, maternity care, particularly for
(39:34):
more marginalized or sort of overlookedpopulations, that's one bucket.
Improvement of existing care networks isanother.
Think about the workforce that powers thosecare ecosystems, right?
We need to upskill those care workers.
We need to extend that efficiency and qualityof care so that, again, as our parents age and
(39:57):
we're making some of those tough trade offs andchoices of where they live, how to support
them, that maybe they can stay in their homebecause there's systems that we can monitor and
support them, those high leverage tools toreduce and prevent some of those care burdens.
So those are just a couple of broader kind of,but still slightly more specific thematic areas
(40:19):
within care that we're really excited about.
We're meeting a ton of founders.
I mean, even just this, like in January alone,I think over like 20 founders our team
connected with that are touching this broadcare ecosystem.
I was chatting with one of our fund partners atMagnify Ventures the other day, and they have a
(40:39):
thesis in technology to support modernfamilies.
And they were similarly enthusiastic about whatthey're seeing is that opportunity with more
really sharp founders wanting to build in thisspace.
And I think that intersection, another thingthat excites me, and you mentioned just kind of
areas we're interested in, is AI too, right?
(41:01):
I think we could not have a podcast in 20conversations 24
Did not mention AI.
And not mention AI.
We would be turned off, right?
Check.
Check like it's done.
Seriously, for us, at Pivotal, as we thinkabout the full spectrum of our work and
empowering and advancing women's power.
We don't want to replicate the same biases thatexist right now as AI models, these large
(41:28):
language models, all the other systems,generative AI becomes to the forefront.
So thinking a lot about how to support andcreate ethical systems.
Again, as LPs and allocators, it's on us, Ithink, to be asking some of these questions and
diligence of our fund managers as they'reinvesting in companies that are using AI in a
(41:52):
variety of different ways.
So that's something that I think is justpresent in all of our work.
For me, though, the intersections of what Ithink AI can do alongside care is also pretty
interesting.
You're seeing a lot of tools that have come tothe forefront effectively for what I think you
could call kind of household optimization ormanagement.
(42:12):
But it's all going back to efficiency andreducing some of those burdens, right?
As a parent, I can't keep track.
It's like Black History Month spirit week at mykid's school this week.
I have no idea what is happening.
Is it wear this color today?
Is it dress up like a Black historychangemaker?
(42:33):
I can't keep it straight.
There are platforms and tools being built tojust where I could chat that or text that
image, and then all of a sudden it's populatedon my calendar.
I'm getting alerts and reminders like, hey,Erin, today is the day to dress up like this
inventor or what have you.
And that just takes some of the burden off ofyou as a caregiver.
And then I can turn my attention to actuallyenjoying breakfast with my kids or making it
(42:57):
out the door in a more seamless way.
So these are all things that we're excitedabout, I think, from a more thematic
perspective.
You'll care obviously and then intersectionsof, you know, some of the bigger topics like AI
that we're all talking about and top of mind.
Yeah.
Yeah, I think totally just augmenting theworkflow so you can actually enjoy the company
(43:19):
of the people you Right.
That's definitely that's definitely hopefullythe goal for the customer and then also just
from a business standpoint.
Yeah.
You know, when it comes to repeatability.
So the next so maybe we'll go ahead because wegot about ten minutes left.
Yes.
Oh, wow.
This is going by.
Mean, time flies when you're having a lot offun.
Does.
Enjoy the conversation.
Well,
(43:41):
we'll jump to the next one.
So the next one, you covered a lot of thequantitative traits.
Yeah.
Maybe for new managers, this could be reallyhelpful in terms of, you know, statistical
numbers.
Like, you know, obviously, we have, very wellknown, you know, KPIs like DPI, IRR.
Obviously, for emerging managers, DPI may notbe as relevant, but Yeah.
(44:02):
Maybe you can talk about the spectrum of howthe quantitative metrics advance.
Right?
So you're looking at emerging managers.
Obviously, they're looking at TVPI.
Maybe we can, you know, unpack what those meanas well.
Yeah.
Yeah.
And then as they kind of get a little moremature and and I'll say this too, you know,
there is there was a panel of managers.
Mhmm.
Some of them were very, very mature, you knowYep.
(44:24):
Super, super mega funds.
And then that panel also had a couple emergingmanagers on them, some of the well known ones
on Twitter.
And they were talking about their deploymentschedule.
And they were deploying like crazy 20 to 21.
And then it's really, really slowed down bymaybe a fifth or a sixth in the last year.
That makes sense because people are just a lotmore thoughtful in terms of what they're
(44:47):
investing in.
So I thought I'd throw that in too when you'rethinking about performance.
So if there's quantitative KPIs that maybe youcan unpack from like maybe the, you know, maybe
the the nano VCs to like how they evolve, like,you know, what should they think about?
That might be helpful, you know, for theaudience.
Sure.
Sure.
(45:08):
Well, just to reinforce what you said, I mean,if you're a first time fund, you may not have
much in terms of track record on those metrics,whether it's
Yeah.
Your TVPI, you know, IRR, the return, you know,kind of multiple of money, the return metrics,
and then the distribution up to what I've putin in terms of DPI.
Over time, definitely tracking those andwanting to see performance that is in the top
(45:35):
quartiles.
But caveat that with my former employer atCambridge Associates has crunched these numbers
in data.
I mean, on average takes about six to sevenyears for a fund to settle into what will be
its ultimate quartile from a performancestandpoint.
So let's do the math, right?
If you're raising every kind of investing overa three year period, so you're raising your
(45:56):
fund roughly in that time period, I may haveinvested in two or three funds before I've seen
you know, the performance start to season andmaterialize from your very first fund.
So that's where you'll even get those are thehard, some of the hard metrics that matter over
time.
But it is really hard to kind of assess thoseinitially.
(46:19):
So what are some other things that we mightlook at?
I think it's back to if you have a prior trackrecord maybe as an angel, how the financial
returns that you've generated from that,unpacking within that.
Obviously, your ownership may be small, butunderstanding how you put that portfolio
(46:41):
together.
And I think that leads to this broader kind ofportfolio construction question that I like to
spend a lot of time really digging into yourfund model and understanding what type of
ownership are you targeting and how you'rethinking about your reserve strategy?
And we can debate.
There are pros and cons.
I don't come in with a preconceived like it hasto look this way.
(47:04):
But I want to understand and make sure you'reclearly able to articulate based on what your
thesis and strategy is why you don't havereserves or why you're reserving twothree of
the fund.
Both of those could be valid approaches, right?
And then how that plays itself out in drivingthe performance.
(47:26):
And are you being intentional in communicatingthat back to your founders as well?
Because that's something else that I think cancome back to bite you when there's a
misalignment of expectations of how you'regoing to show up over time as an investor.
So we're looking at that.
We're tracking all of those things.
And then I think just the underlying kind ofsometimes GPs are surprised when we want to dig
(47:50):
into some of the operating metrics forcompanies.
Because again, in the absence of exits or DPI,it's like, how are these businesses actually
tracking against the things that are relevantto that business?
Has there been follow on capital raised at whatprice, how we're thinking about that, and then
(48:13):
again, back to your ownership and whetheryou've been able to protect that or not for a
variety of reasons.
All of that is relevant in assessing kind ofyour track record or what you're trying to
build.
And one more thing I'll say is it comes backto, have you done what you said you were going
to do?
When you return for the fun to you diligenceand bring that deck around, what is the first
(48:35):
thing I'm going to do before we get on thephone?
I'm going to pull up all of our notes from thelast time we talked and how you were thinking
about positioning and have you executed onthat.
And if not, that could be fine too, but I needto be very clear.
You need to be able to explain to me veryclearly why that's not the case.
And so all of those things kind of comingtogether are really, really important to
(48:58):
assessing, I think, how much is maybe again,all this is a combination of luck and skill.
But there are elements that over time, I thinkyou can start to build that pattern as you move
from fund one to fund two to fund three andbeyond and being very clear about kind of those
metrics being important to LPs.
We're going to be looking at them and unpackingthem very, very closely.
(49:21):
Yeah.
Well, that was really, really helpful and, youknow, super helpful, especially for the
community.
So appreciate you unpacking that.
We've got a couple more minutes, so I'll justgive you two quick rapid fire bullets.
Okay.
So, it's great to just have seen you be a voicewithin the community.
And it's been great to see you observe, greatto observe you be a speaker on panels for a lot
(49:47):
of these emerging manager communities.
So what are some ways that you've seenmanagers, obviously some of these managers,
even at the fund one level have been able tobuild a community.
So, what are some traits you've seen in termsof community building for fund managers?
And then you've answered some of this for thelast question, which is what advice would you
give college students?
(50:08):
But maybe you could rapid fire on both of thoseand then
Sure, sure.
Yeah, we'll wrap
up.
Awesome, awesome.
Well, to the first one around communitybuilding for emerging fund managers, I'm
heartened that there are so many groups outthere.
Plugging into those, whether that's like aTransat Global or an All Rays for more women
(50:31):
female focused investors.
But if those are not the right fit for you, Ithink being comfortable with putting yourself
out there and it's easy.
I mean, I'm in several WhatsApp chats withother LPs where we're just trading notes and
ideas.
And so I think there's just so as you're out atconferences, as you're out on the road, finding
(50:55):
those folks that are kind of in a similar boatto you and asking them.
Like we said earlier, just asking questions,right?
Like, you raised your fund.
How did you do it?
And I think people are willing to share that ina one to one space, but then that opens up some
of that community aspect as well.
So if it doesn't exist in the way you like it,I think start it because you will likely find
(51:19):
others to join you or plug in to the myriadnetworks that are already out there and I think
are successfully creating that community.
And take what you will out of it.
It might not be all things to all people,right?
But there are, I believe, like little nuggetsthat as you sort of slide in that you can take
(51:40):
out and that could be beneficial as an emergingfund manager.
And to the last question around advice just forcollege students, I would say be shameless.
Just talk to as many people as possible.
When you're in that position and time of life,I think, go to your college or grad school,
(52:02):
whatever it is, network and find someone thatis doing what you're interested in or lives in
your city, has your major, they're likelyalready going to be inclined to connect with
you because you have something that's sharedalready.
And look, we're both busy folks.
But when I get an email from someone that hastaken that bold step to reach out to me, I'm
(52:26):
for sure going to try and respond.
And even if we can't find do something to behelpful.
And so I would say just don't be shy aboutleveraging your network, reaching out, setting
up those informational interviews, those coffeechats.
Is it's as much about finding out what you likeis what you don't like.
And one way to do that is just shadowingpeople, talking to people, learning from their
(52:50):
experiences.
So I think I mean, we spent the last hourchatting.
People like to talk about themselves and thework that they do.
Well, I wanted to highlight your piece ofadvice, which I thought was really good.
Just find your big brother and big sister.
There's people that are like a semester ormaybe a year before you that you're still in
contact with.
You see him the common areas of the college.
(53:11):
So those are great ways to
Just to stay connected.
And they can just give you that tip of like,don't apply for that internship.
That sucked.
Do this instead.
And as you transition into your career, I mean,I've had several women allocator CIOs and such
that I've worked with or that have met thatjust have taken the time.
(53:31):
And they'll say, well, I'm not your mentor,Erin.
I say, no, you are because you took the time toanswer a question for me.
And frankly, also, you can't see you can't dowhat you can't see.
So think Kim Liu, CIO at Columbia or others,just the fact she's excellent and that she's
ascended to the top of our profession, likethat's inspiring to me.
(53:55):
And I draw a lot of great advice from her andmany other women in similar positions.
And my hope is to do the same.
So I think that's what it's about, is just,like you said, finding that big brother, that
big sister, that cousin, whatever, and learningfrom them and asking questions and then doing
(54:15):
it yourself.
Because you'll turn around and a few years willpass and you'll have that job that somebody
wants.
And so paying it forward, paying it back is thelast bit of advice that I would share.
Well, appreciate you paying it forward, Aaron,and you just being so generous with your time
and Likewise, Joel.
Know, impacting so many people.
So really appreciate you spending the morningwith us today.
(54:38):
Thank you.
Thank you for having me.
This was such a fun conversation.
Likewise.
Take care.
Well, a great week everybody.
And Erin, catch up with you soon.
Yes.
See you soon, Joel.
Thanks everyone.
Bye bye.
Yeah, it's a great question and I think of it,you know, we're constantly learning.
(00:06):
If you're not learning, if you're not pausingand trying to improve, you're not doing your
job investor, as an allocator.
I firmly believe that.
Welcome to The Investor, a podcast where I,Joel Palafinkel, your host, dives deep into the
minds of the world's most influentialinstitutional investors.
(00:27):
In each episode, we sit down with an investorto hear about their journeys and how global
markets are driving capital allocation.
So join us on this journey as we explore theseinsights.
Alright.
So we are alive, and I'm really, really excitedabout the guests that we have today.
It's someone that I look up to in thecommunity.
(00:47):
A lot of the people in the investmentmanagement ecosystem, you know, definitely see
Erin as a mentor.
So I wanna start by introducing Erin HarklessMoore.
She's a senior director of investments atPivotal Ventures.
It's a company created by Melinda Gates toadvance social progress in The United States.
And, you know, Erin, I I told you this off therecord.
(01:07):
I just wanna personally thank you and give youa shout out.
You know, you've been a huge, supporter of theSutton ecosystem.
You've come to some of our community events andhave really inspired a lot of people,
especially people that are building their ownfirm, a firm that's gonna be durable for the
next generations, but then also institutionalLPs that are looking to think you know, be
(01:29):
thoughtful about how they're allocating for thethe decades to come.
So personally, I just wanna thank you forsupporting me and the community and then also
just, you know, making time for us.
I know you guys are really busy, so reallyappreciate it.
No.
Joel, it's just it's such a treat to be withyou today on this podcast, and I'm a big fan of
yours and the community that you've built withSutton Capital.
It's just so important for emerging managers,for new investors to to have that that
(01:54):
community to support each other and to grow.
And so it's been really fun for me to get toknow you and and be a part of some of your
events, and I'm excited for our conversationthis morning.
Yeah.
And I mean, look, I mean, a part of it too is,you know, building your career.
You know, the way that I look at the assetmanagement career, I think, you know, you might
remember, like the first time we hopped on likea a call, you know, I I think about it as like
(02:15):
the entire career journey.
You know, a lot of us get into this industryfrom a non traditional pathway.
Some of us come from a healthcare background orsome people come from a consulting background.
But the truth is there's no degree in privateequity or venture capital.
You have to kind of like maybe study find yourway.
(02:36):
Yeah.
Yeah.
Find your way and I I know people that havegone to Ivy League schools and still were
unemployed and then they they ended up gettinginto, know, a large firm like Blackstone or so
through just kind of the network and, you know,being part of community.
So I wanna start this discussion maybe makingyou reflect a little bit thinking back to, you
(02:56):
know, your early days and maybe thinking aboutyour family.
Tell me a little bit about where you grew up,your family, your early education, what did
kind of your family have interest in terms ofyour career?
And I'll start like my family, they like, look,you can either do medicine or engineering.
Those are the Those are the only twoindustries.
(03:17):
Yeah, that's it.
Yeah.
So that was kind of like, that's how I grew upand you know, it's always really interesting to
see kind of what people thought they wanted todo when they started out their career and then
where they ended up, which obviously you'vebuilt an amazing career and you're still
growing and developing.
We're all learning, but we'd love to take astep back and learn about your early education
(03:37):
and what you thought you wanted to do and maybesome of the pivots and thought processes around
that.
Sure, sure.
Well, grew up in San Antonio, Texas.
I'm a native Texan.
And that means I love a couple of things,barbecue, Tex Mex, and the San Antonio Spurs.
So just putting that out there is sort ofpersonal things that bring me joy and are deep
(03:58):
in roots.
But I have a younger brother, grew up with himand my parents.
And it's funny you were describing, Joel, thesignals and the messages that your parents
maybe sent.
My dad's a doctor.
My mom has worn many different hats, managedhis practice, had her own small business, was a
stay at home mom for many years.
(04:19):
But for both of them, just the dedication andfocus on service, a life of service and
aligning your true north star and passion inthe work that you do.
As I've reflected back, I think that was alwaysthe message that they said.
It wasn't you have to do x or y.
It's find the thing that really brings you joyand where you can serve and partner and lift up
(04:41):
others and work with others.
And so that was always in my mind even from thevery earliest days and some of those values.
You don't have to be nice but you should bekind to people.
Do unto others as you want them to do unto you.
Those were very common phrases and values thatwere instilled in mottos in the heartless house
(05:01):
as I was growing up.
But I actually wanted to be to one part of yourquestion, that early career thought I wanted to
be a journalist.
I would go around the house Thanksgiving andholidays with a little notepad and effectively
spy on writing down what I was hearing, askingquestions of cousins and aunts and uncles and
(05:21):
writing these little stories and creatingnarratives.
And I look back on that now and I think what istrue is I'm a very curious person.
I've always been a curious person, someone thatloves asking questions, digging into problems,
trying out new products, connecting with peopleas well in that relationship building that I
(05:42):
think is essential to success as a reporter oras a journalist.
And those skills have translated to myinvestment career as well.
And I really fell into investing somewhat maybeaccidentally in college.
You talked about mentors and role models, andthere were a couple of friends.
I went to Washington University, an undergradthat I looked up to.
(06:02):
They were a year or two or three years ahead ofme in school that had these internships on Wall
Street.
And they would talk about the fast pace and thepeople that they were interacting with.
I'd also always loved numbers and, again,problem solving, the kind of duality of the
left brain and right brain.
And so I pursued that for an internship in thesummer, really following the paths of a few,
(06:25):
again, kind of key friends and mentors thatwere a few steps ahead of me that showed me
that way of kind of how to break through someof those doors.
And once I discovered this world of investing,I was so intrigued by it.
And like you said, there's no major you kind oflearn by doing, around the job.
This is really a true apprenticeship business.
(06:47):
And I was very fortunate to kind of start mycareer on Wall Street and learn from amazing
institutional investors at places like GoldmanSachs and later at Cambridge Associates that
really formed the foundation of the base that Ibuilt my career as an investor on.
And for me over time there was always thistension of, again, kind of going back to what I
(07:11):
mentioned about my parents and this life ofservice and the values of wanting to give back,
you know I love the investing, love thetechnical aspects of that work and the modeling
and all that nerdy stuff like you know being inExcel.
And then I had my values of wanting to see morediversity and being around different types of
people and asking questions kind of like why amI the only woman in this room or the only
(07:35):
person of color in this room?
Like how do we increase that and do more?
So trying to get more harmonization of myvalues in the work that I was doing, I've
really been on and it's going to get easy withhindsight to say like I was on this journey or
this intentional path.
Yeah there was intentionality to it but I thinka lot of it was again back to asking questions,
(07:57):
being curious and pushing and trying to findways to harmonize my values and the work that I
was doing.
That's really kind of manifest itself in thejob I have now at Pivotal Ventures and getting
to lead the investment team here and backingvisionary women, founders and investors that
are going to change the face of venturecapital.
(08:18):
And I would say to all that, one of the mostprolific investors was a journalist.
I mean, Michael Moritz, he was a journalist.
So I think what you're also saying is we haveto utilize the gifts that we have.
I mean, I think journalism is really factfinding, investigating, and then also just
communicating that clearly.
Because if you have all the facts and you'veuncovered all of these great learnings, but
(08:43):
then it's hard to digest, right?
It's just really hard to get through.
Or persuade, right?
It's about you think about as an investor, evenif say if you're a solo GP, maybe this isn't an
issue, but you've got to bring along yourpartners, right?
And get them on board or your investmentcommittee.
I spend a lot of time working with ourinvestment committee with our team, like
(09:05):
building consensus.
And like you were saying, Joel, that comes backto communication, right?
Like, you take the threads, pull it together ina way that is clear, makes sense, you can make
that case, you know, why I think this fundmanager is gonna deliver outsized returns,
piecing together that mosaic, takes time,that's hard work, And I do think, I look back
(09:30):
now, like I said, I wrote for the newspaper incollege and had those early aspirations of
being a journalist.
Some of my classmates have gone on to verysuccessful careers in journalism, so I'm proud
of them.
But I think I'm still, like you said, utilizingsome of those core skills and just that
instinct to be curious and kind of asking,what's next?
(09:51):
What else?
What else?
What other questions have we not asked?
We have our rubric, how can we make it better?
How can we take bias out as much as possible tomake sure that founders and fund managers, like
you said, that don't maybe fit the typical moldor pattern have an opportunity to shoot their
shot and be able to build their companies andbuild their investment firms.
(10:15):
Yeah.
What's also interesting is, you know, seeinghow journalism has evolved and, seeing how
storytelling can be used as a tool for both LPsthat are voices in the community and then also
emerging managers, but seeing the differentlayers of communication.
So right now we're doing long formstorytelling, but we're seeing a lot of people,
I might experiment chopping samples of this andmaking it short form as well.
(10:40):
So I think it's just amazing to see how that'sevolved, right?
From writing a column in a newspaper to nowshort form columns on Twitter and then, you
know, video content really being, you know, atool for for fund managers to to share their
mission, right?
If they have a certain mission that's reallyimportant to them that drives them kinda like
you've had, you know, it's it's important tokinda like concisely and precisely communicate
(11:05):
that.
I've and then, you know, I I recently thereason why I talk about this is because I
recently saw a short form video of Jeff Bezos.
Mhmm.
And he was talking about his whole process ofmeetings and his meetings.
I mean, they spend thirty minutes in themeeting reading together, because obviously if
you throw if you throw an entire memo over thefence, nobody's gonna Right?
(11:28):
But if
you can allocate time So it's interesting howlike some people still adopt the long form in
more of a thesis type of style, like a writtenkind of memo style.
And what what Jeff Bezos was saying was a lotof times when you have slides, like, you have a
deck that you send over before the meeting, thedeck is, you know, usually used as a tool for,
(11:51):
like, sales.
Right?
For, like, kind of Yeah.
Influencing or or selling where, like, youknow, you wanna have a narrative.
That's a whole spirit of an investment memo,right?
It's usually like a neutral viewpoint.
It's like, hey, here's an interesting deal.
These are the benefits.
This is why I think we could invest.
However, there's also all these risks that weneed to think about.
(12:12):
So that takes us to our next question, whichis, what are some of the learnings that you've
developed maybe in the last year or maybe inthe, obviously in the last month, because we're
just in the new year in terms of just kind oflooking at direct deals, especially in this
environment, and then also evaluating managers.
Yeah.
It's a great question, and I think of it, youknow, we're constantly learning.
(12:35):
If you're not learning, if you're not pausingand trying to improve, you're not doing your
job as an investor, as an allocator.
I firmly believe that.
And for me, the last year in change has justreally learnings that I think maybe had really
you know were like floating in my head had it'sbecome very concrete and clear and that's
(12:57):
driven a lot by the market environment thatwe've experienced you know in the last
eighteen-twenty four months.
Prior to that, candidly, I mean there were someebbs and flows, right?
But coming out of the financial crisis in02/2008, basically only gone up into the right,
you know.
You had low interest rates, like it was easymoney.
(13:17):
And again not to say it was easy to invest butI think the conditions that the wind was behind
you a bit more than what we've experienced inthe last few years and so to get back to that
learning for me, both investing directly intocompanies and also into fund managers, really
comes back to the team.
The team matters in the mindset of the founderor the GP, the kind of lead investor, how they
(13:45):
think, do they have a growth mindset, are theyreceptive to feedback because again when money
is easy, when you can you know write on yournapkin and then all of a sudden you know raise
another round of capital at a huge valuation,you know it papers over potentially both for
you you know the person that's the founder orthe investor and then someone in my seat who's
(14:06):
evaluating them, you can kind of brush pastsome potential red flags around you know how
decisions are made, how people work together,how they again take, receive, and deliver
feedback.
And so for me that learning of like reallyboiling down and asking tough questions about
the team collectively or the founderindividually is so important, particularly when
(14:32):
you're experiencing an environment that's alittle bit choppier and more difficult.
So that's one.
I could list a few others, but I'll start I'llstop there.
Let's double click on the team.
So on the team, what are some of the newbecause that's really interesting.
Mean, you could do some social experimentswhere you ask the team a question and then
maybe you ask the founder a question and maybethe response is completely different.
(14:55):
Maybe it's a little more polished as a founder,but is that kind of something some of the
things?
No, mean, these are like straight out of theplaybook.
Worked at Cambridge Associates for over eightyears and doing fund manager diligence.
That was a tactic we use all the time.
Like in the kind of on-site, you'd separateout, you'd have the lead investor, the GP,
(15:18):
managing partner, meet with them in one room,and then you go with the other partners or even
the associates, right?
I like to ask just when you come into a place,like maybe it's the executive assistant or the
office manager who greets you.
Ask them a few questions, right?
Like how they show up, how the team isinteracting.
Because all of that, the polish of the kind ofmost seasoned person probably comes through,
(15:44):
but you're looking for that consistency.
Just one more example I can think of recently,we were doing diligence on a fund.
The managing partner was very explicit aboutthe criteria that she was setting for growth of
the team.
Like they need to hit this milestone, I'mlooking for this type of experience but I want
to see them be able to source in this this typeof deal, bring the founders along in this way,
(16:05):
add this, know, like very clear rubric, right?
Yeah.
So I stepped back and I said, that's great.
We had a call with the more junior partner onthe team and asked him the question, well, how
are you seeing your path at this firm?
And it wasn't word for word, but he was hittingon the same thing.
And then unprompted sort of said, well, she'sbeen very the managing partner has been very
(16:27):
clear and intentional about how she brings mealong, opens up opportunities for me to lean in
more and to lead.
And so that was great because she wasn'tnecessarily promoting herself as I'm doing all
these things for my team.
The fact that he brought that up unprompted wasa very useful, again, kind of validation of
(16:48):
what we were finding attractive about thatfund.
So all of those are great tactics.
And again, I think it's doing the referencestoo, and that's something I've learned to not
rush through.
That's when mistakes happen, when you don'ttake the time to do your references on list and
(17:09):
off list.
I actually take it as a point of pride that forour team, we try and find as many off list
references as we're seeing on list referencesbecause you might get some unvarnished
perspectives or just different perspectivesfrom someone who hasn't already been identified
as a potential point of connectivity to providefeedback on that founder or that investor.
(17:34):
Yeah.
And even just when you think aboutrelationships 101, when you're collaborating or
even if you're romantically involved withsomebody, right?
Mean, you say something and it's not actuallyheard, like when you say something and what
they hear is like completely different, that'sdefinitely a problem.
So in this situation, the manager, the leaderof the firm kind of was communicating something
(17:56):
and the person was able to repeat back thesame, pretty close to like what it is.
It's an issue when like, there's a breakdown intranslation, right?
When you're trying to share something or sharesome type of mission or just share like how you
feel and
then the
person hears something completely different.
Completely different.
And then that's where, you know, again, youcould have access, you could be sourcing the
(18:18):
best founders, have a great thesis.
I think the things that derail fund managersover time is that inability to build a firm.
Right?
Just because you're a great investor does notmean you're gonna be a great firm builder.
Yeah.
And in our diligence, and that's anotherlearning, right, like separating those two out
(18:39):
and setting up a line of inquiry in yourdiligence process to get it both is really
important.
That's why we ask the question, even for a funone, what is your vision?
What kind of firm do you want to build?
What kind of firm do you see yourself as?
Are they starting to think about or howresponded when I asked questions about how
they're thinking about that evolution when youget to fund three, fund four, fund five?
(19:02):
Those are the types of firms at PivotalVentures that we want to partner with that will
be enduring franchises, That next generation ofventure capitalists that will look a little
different, that will be women led, but thatstill have that in their DNA, right, that
ability to lead, to grow a business and also begreat investors or build a team of great
(19:25):
investors too.
No, absolutely.
Well, I think you had a couple other learningstoo, right?
Oh, yeah.
Well, one more is along a similar line.
And so you just drew out too, Joel, around justlistening.
Again, in that going I think Daniel Kahnemanand his research around going slow to go fast,
(19:47):
I'm always reminded that you may misssomething, right?
And I think we saw that a lot in the last fewyears, direct investors term sheet on Friday,
round closing on Tuesday.
And that FOBO or that velocity look, you haveto build your system and your models to adapt
(20:09):
and adjust to that.
But I think listening and slowing down isanother learning that I've internalized.
Because again, when you don't follow yourprocess, that's when mistakes are going to
happen.
And just really pausing to make sure you'relike you said, hearing correctly.
Like, did you say what I thought you said?
(20:30):
Understanding what drives people, what theirmotivations are, what they care about, what
really matters to them is so important,particularly for founders, right?
They're putting their blood, sweat, and tearsin their life, like their capital, everything,
into growing and scaling a business.
And what's at the core of that?
And listening to that and understanding that issomething else that I've taken away for sure in
(20:56):
the last year, just again, times have gottenmore challenging because it's much easier to
just say, you know what, I'm done.
This is hard, right?
This is not an easy business to be in.
And so I think slowing down and just beingdeliberate in your process and your decision
making and treating people with that care,right, because and offering to be helpful.
(21:19):
I always say this, I think our team, and wepride ourselves on this too, even if we don't
invest, say, in a fund, we try to open a doorfor that GP, right?
You're not a fit for Pivotal.
Let me give you some feedback why.
But actually, you know, this investor, thisother fellow LP that I know well, I know is
actually looking for, you know, a strategy likeyours.
(21:44):
You should talk to that team, or a founder.
You're seeking intros to x y z.
Let me make that connection for you.
And next time, next round, there might be spacefor us.
Timing might work.
Next company you build, you'll look back andsay, wow, the team at Pivotal Ventures was very
gracious with their time and their resources,even if we didn't get an allocation.
(22:08):
So I just come back to that as it is nothingthat's rocket science here.
I think in the velocity and speed of trying tocompete and win, it's easy to miss some of
these things.
And those are just key learnings for me to losesight of of that because it's really important.
I would say also with the tough fundraisingenvironment for both managers and founders, you
(22:32):
know, there there you know, I think there's athere's a mode of just being really stuck in
pitch mode where, you know, they're they'recoming in and they're selling and they're doing
the road show where, like, I think taking astep back to kind of understand what is
important to Pivotal and understanding kind ofwhat what the criteria is, what's you know, how
how they fit in.
I think those questions and then also kind oflistening more thoughtfully is a struggle, I
(22:57):
think, for both founders and
No, it's fund managers.
It's a two way street.
And I'm heartened when we start a meeting.
We'll take typically a thirty minute call withmost founders or fund managers that meet our
criteria as the sort of top of funnel.
And in those conversations, saying like, wedon't get questions of, what are you focused on
(23:20):
year?
Tell me more about your mandate.
Yeah.
You know, what are you looking for?
I often I'll I'll often ask this of founders,like what what value do you think we could add
for you?
What are
you looking for?
If they haven't asked me, well, know, this iswhy I want to partner with Pivotal or like, you
know, let's make sure, again, we're securingeach Like, it's hard out there.
(23:40):
Let's acknowledge that.
Like, you're on that hamster wheel and may notget off.
Like, you're fundraising.
You're fundraising.
You're fundraising.
You close the fund.
Then you got to start fundraising again for thenext fund.
But just having that opportunity because as afund manager Mhmm.
You're building partners.
Your LPs, if all goes well, hopefully, will bewith you for a really long time.
(24:02):
Yeah.
These are marriages, like you said.
This is not this is not dating.
Once I've signed that subscription document,we're in it for a decade plus.
And so you want to make sure that you havepeople around the table that are going to be
with you through good times and bad and thatare aligned and that will be supportive of you.
(24:24):
And so taking the time to ask those questionsis something I've seen many investors, many GPs
do.
And it may lead them to say, you know what?
Yeah, you're maybe not the best fit for usright now.
This is an LP.
And that's okay.
That's okay.
And I think to your point, I mean, pumping thebrakes and really focusing on just building a
relationship.
(24:45):
Right.
I think we'll compound over time than justleading with the deck and kind of running into
the performance all that.
So I think it's really relationships first andpeople invest in who they really want to be
aligned.
Well they want to win and they're aligned with.
No, totally, totally.
Because again we spend a lot of time at workand doing this work, you want to be surrounded
(25:10):
by people that you are excited about whatthey're doing and you've built that
relationship with.
I often will say, if I can't get to a pointwhere in like sixty seconds I can summarize why
we backed this fund or why we're excited aboutthis founder and this opportunity, that's a
(25:30):
problem, right?
Because that should be just blatantly clearthrough the relationship that we built.
Obviously, the diligence and the financials andcrunch of it, but it's something about what
makes that team distinctive, that strategydistinctive, that if I can't articulate that in
less than a minute, then, you know, we haven'tinvested appropriately in building that
(25:52):
relationship as you described.
No.
That's great.
And, well, maybe I'll jump to the nextquestion.
Yeah.
Feel free to weave in the other learnings tooif you got Sure.
Yes.
Yes.
But I think and maybe you can weave in some ofthe learnings along with the frameworks that
you think are important when emerging fundmanagers are developing their craft and
investing, right?
So maybe they're starting out maybe they were afounder in the past and now they're switching
(26:16):
into being on the buy side.
What are some of the basic frameworks that youthink is important?
And again, feel free to weave in your learningsalong with this Sure.
An
investor, boils down to particularly the earlystage in venture capital.
And I think this is consistent in other ways asyou migrate up the capital stack.
(26:39):
It really comes down to three things.
What's your strategy?
How do you source?
How do you put this portfolio together?
And then what value are you bringing?
How are you stewarding the capital that you'vebeen entrusted by your limited partners over
time?
And some fund managers, I think, lose sight ofthat, that all three of those are essential
(27:01):
into defining what I think of as your edge asan investor.
Like Sure.
There needs to be something kind ofdifferentiated and that stands out across those
three verticals to get us excited and to get meto be able to have that thirty second, sixty
second like fund ABC is excellent in doingthis, this, and this that I do not have
elsewhere in my portfolio.
(27:23):
Because that's the trifecta.
That's what you need to nail as an investor.
I think having that rubric in mind, thinkingthrough as you're starting to again build your
deck, lay all that out, what's your right towin, why you should exist, how you're going to
distinguish yourself with founders, and thenhow you position that back to something that
(27:44):
feels and is hopefully differentiated for LPsthat are looking to, again, allocate to you as
a fund manager.
So I think that's the number one thing I wouldpoint to is like hitting those three points.
You gave an example if you were an operatorpreviously and then you're transitioning into
venture and early stage investing.
(28:07):
Limited partners, we want to see a sustainedtrack record of performance or success.
I
think that's what my job is to assess that.
And that could be challenging for someonethat's newer to this business, right?
Or again, you've been operating.
Maybe you're a founder, and you haven't beeninvestor, maybe you've done a few angel checks,
etcetera.
But I think what's important or what you as aninvestor should be mindful of are questions
(28:33):
like, you know, we're trying to assess how youoperate in difficult pressure field situations.
Back to that listening and learning what haveyou learned from mistakes?
It's always a big red flag for me when I askthe question tell me about a mistake or like
something that's gone wrong for you and as aninvestor, whatever.
And, like, I get not a they don't I can'tanswer that question or it's,
(28:55):
like Yeah.
Mistake.
Like, I'm like, okay.
I mean, I made a mistake.
You know, am I dragging my son to work toschool?
That's a
tough question too.
I think also, you know, going back to just jobinterviewing, I remember there was a job
interview that I went to one time and theyasked me like, what's a piece of critical
feedback that somebody's given you?
And I was just completely stumped.
(29:16):
Yeah.
Yeah.
Was actually not gonna be stumped or like tostruggle with it.
I think it's like you
got But the problem is I was really honest.
I told them like a piece of feedback thatsomebody gave me and maybe I didn't get the
job.
Maybe I was just So you're balancing, I guess,that's a tricky question because you're
balancing sharing your weakness.
(29:37):
But then if it's a weakness that they don'tlike, then maybe it's not a good thing.
But I think it also shows your authenticity.
It shows that you're humble and it's like,look, know what?
Here's something that I need to work on.
I need to listen.
Cut people off and so I think that's so Ithink, you know, observe like to your point,
observing how they respond to that question isvery telling.
(29:57):
Right, right, right.
And it's yeah, I think people, emergingmanagers can maybe get caught up in the flash
of it or like you know I'm doing x y and z.
Know we meet hundreds of fund managers here.
So if you're telling me, you know, I'minvesting in AI, okay, you and everybody else.
(30:17):
Like, that's not in of itself like a strategy.
It's like, you know, again, what is how do youwin?
Like, being able to articulate that clearly.
And if you haven't necessarily had a long trackrecord as an investor, I firmly believe that
there are patterns that can be relevant to howyou make decisions that will demonstrate your
(30:40):
potential success as an investor.
And that can be, again, if you were anoperator, how you navigated board dynamics,
right?
As a founder previously, how you coached ateam, like how you built a team, all of that's
relevant because those are direct skills andthings you'll be doing as you're investing into
(31:02):
these companies and supporting these foundersin their next stage of growth and their
trajectory.
So those are all things that I put you.
I mean, other thing is maybe it's less of aframework, Joel, but just find your we're
talking about relationships earlier, find yourtribe, like find your advocates, find the
people that are, you know, maybe a couple ofsteps ahead of you as investors and get their
(31:29):
feedback, like their coaching, their advice.
Think our elbows can be sharp, but at the earlystages, still a pretty collaborative space and
industry.
I think knowing the folks that are gonna kindof keep it real with you and give you that
honest, unvarnished feedback around yourinvestment approach and strategy and thesis,
(31:52):
also potentially in your portfolioconstruction, maybe your LP, you have the firm
building stuff like fundraising, building yourLP base.
You need those advocates, of minded travelersthat have been there and in the trenches and
maybe a few steps ahead of you.
(32:12):
So not trying to just do it all alone in thelone wolf, like leverage that community, find
those folks, and then same on the LP side,right?
Like I firmly, like I'm not doing my job if I'mnot advocating and talking up our fund managers
and our founders, right?
We can talk, we'll talk more about it in ourtime together here.
(32:35):
I am so proud and excited about what our GPsare building, what our founders are building.
So if I'm not willing to pick up the phone andcall you or call someone else in the community
and say, hey, you need to talk to this personor you need to spend time with this team.
I'm not doing my job.
(32:55):
So I think that community is so importantfinding and building it.
Because otherwise it can be kind of a lonely Ithink it can be a lonely space.
And what I see from you is I just see a lot ofexcitement and passion.
And you want to be their cheerleader and seethem successful.
And those are the people that you want to back.
It's just people that you want to see becomesuccessful.
And like, if they're successful, you just feelhappy, know, What the quantitative results are.
(33:19):
Totally.
Totally.
And then I'll say too, like, I mean, theemerging fund manager community, because we
have a lot of communities and ecosystems, it'svery similar to like a founder community.
A lot of those fund managers are looking forWe've had peer groups where like people pair
with each other and give feedback on eachother's decks, though they're essentially all
trying to get to their first close.
(33:40):
It's just really interesting to see thecollaboration.
Then obviously, at that stage they're notleading deals, so they still need to build a
community of co investors to hopefully help
build build that syndicate.
Then same thing I'd say at the allocator leveltoo.
A lot of these fund managers, they're stilllooking to close their fund and there's a
collaboration piece and knowledge sharing withthe allocators with each other.
(34:05):
Totally.
I think that's under maybe estimated orappreciated by investors, by the fund managers
is how much LPs are in community themselves.
And that a no from me, and then I turn aroundand I say, oh, but you should if you talk to so
and so and so so, let me introduce you or letme put in a word.
(34:27):
I've had some GP say, oh, well, you passed onus.
Like, they're gonna view that negatively.
Like, no.
Like, again, we know each other.
We know what our portfolio needs, portfolioconstruction goals are, and that carries a lot
of weight when another, allocator that Irespect picks up the phone and says, hey, Erin,
(34:48):
Pivotal really should take a look at this fund.
Or we didn't invest for x, y, z reason, but I'mhopeful you will if you haven't met with them,
you should take a look.
And so those conversations are happening allthe time and it's not a negative signal because
I've passed or and I always say too it's a it'sa no it's probably a no for now you'll be back
(35:09):
fundraising in another two to three years andour portfolio needs may have changed.
We'll have more data points to assess andanalyze potentially some of the considerations
and question marks that were giving us pause.
You know, we might have seen some growth andchange that we're excited about.
So I say that all the time when someone says,well you pass on us, we'll never get in
(35:30):
Pivotal's portfolio.
I can think of two examples, one that we're indiligence on now that we didn't invest in the
fund one, but we've been tracking them for thefew years and are now leaning into diligence on
the fund two because it really does fit a gapthat's missing in our portfolio.
We've been building conviction around the teamand what we think makes them differentiated and
(35:50):
distinctive.
Well, that's a perfect lead into the nextquestion because to your point, there's many
aspects of why you pass on a fund.
It could be timing, it could be the mandate, itcould also just be their strategy isn't
aligned.
Going back to tying in listening, right?
Listening and understanding what's important toyour organization.
(36:13):
We'd love to just at a high level talk aboutwhat Melinda Gates initiatives are focused on
and what you're excited about the most.
I'll lead in with like initial discussions thatyou and I had a couple of years ago about the
care space.
So we've been talking and I'll have a personalexample here, like, last time we talked about
the huge emphasis on care space and look, manymid professionals, they've got parents that are
(36:38):
getting older and then they also have childrenas well.
So they call that the sandwich generation whereyou're stuck kind of worrying about the top and
the bottom and then obviously we have ourcareer that we're developing.
So what are your thoughts on just that and thenalso just kind of the opportunities in tech and
new models?
And then also is that kind of a space that youguys are so passionate about and then maybe
(36:59):
some other sectors that maybe have evolved inyour mandate?
Sure, sure.
If relevant.
No, for sure.
Well, Melinda is our founder, set up Pivotal toadvance social progress here in The United
States and specifically women's power andinfluence.
We want to see women in seats where they cancontrol more resources, have access to control
(37:20):
capital, really influence the decisions thatimpact their lives at home and their careers,
that full spectrum.
And for us, care, the caregiving space, thecare economy is a huge example.
We're doing work there from a programmatic andphilanthropic standpoint, from a policy
standpoint.
And for me and this gets back to your question,what I'm most excited about from an investment
(37:42):
standpoint.
Just to quantify and put a number around it, wesupported some research that sized the care
economy at $648,000,000,000 That's larger thanthe pharmaceutical industry.
Every time I reread that stat or that report,I'm kind of still surprised.
It's like, woah, this is huge.
And it's still, I think, bit under the radarand under invested.
(38:06):
But I also like to say that we're allcaregivers at some point in our lives.
You just gave a perfect example of that, Joel,right?
Like whether you're a parent, you're caring foryour kids, a child now, maybe you're in that
sandwich caring for your parents, justneighbors, friends, people in your community,
(38:26):
right?
Like, we're all bearing that burden.
And that gift, too.
It's a gift, I think, to care for others as Andthe systems that we've set up are not
supporting us to have to do that in anaccessible, cost effective So I heard a couple
of times on the conference circuit last fall, afew people mentioning what are some of the
(38:47):
biggest challenges and opportunities facingperspective.
And not surprisingly, climate was mentioned,AI, and then care came up.
And I was like, oh, okay, great.
Like care is entering the conversation, andit's still a huge white space.
So we're specifically excited about a couple ofkind of sub themes within this broader care
(39:10):
economy space.
One is supporting families with high burden orsort of high acute caregiving needs.
So I think mental health challengesparticularly for youth, but I think for kids
that starts to bubble up and impact the entirefamily.
Dementia care, end of life management,postpartum, maternity care, particularly for
(39:34):
more marginalized or sort of overlookedpopulations, that's one bucket.
Improvement of existing care networks isanother.
Think about the workforce that powers thosecare ecosystems, right?
We need to upskill those care workers.
We need to extend that efficiency and qualityof care so that, again, as our parents age and
(39:57):
we're making some of those tough trade offs andchoices of where they live, how to support
them, that maybe they can stay in their homebecause there's systems that we can monitor and
support them, those high leverage tools toreduce and prevent some of those care burdens.
So those are just a couple of broader kind of,but still slightly more specific thematic areas
(40:19):
within care that we're really excited about.
We're meeting a ton of founders.
I mean, even just this, like in January alone,I think over like 20 founders our team
connected with that are touching this broadcare ecosystem.
I was chatting with one of our fund partners atMagnify Ventures the other day, and they have a
(40:39):
thesis in technology to support modernfamilies.
And they were similarly enthusiastic about whatthey're seeing is that opportunity with more
really sharp founders wanting to build in thisspace.
And I think that intersection, another thingthat excites me, and you mentioned just kind of
areas we're interested in, is AI too, right?
(41:01):
I think we could not have a podcast in 20conversations 24
Did not mention AI.
And not mention AI.
We would be turned off, right?
Check.
Check like it's done.
Seriously, for us, at Pivotal, as we thinkabout the full spectrum of our work and
empowering and advancing women's power.
We don't want to replicate the same biases thatexist right now as AI models, these large
(41:28):
language models, all the other systems,generative AI becomes to the forefront.
So thinking a lot about how to support andcreate ethical systems.
Again, as LPs and allocators, it's on us, Ithink, to be asking some of these questions and
diligence of our fund managers as they'reinvesting in companies that are using AI in a
(41:52):
variety of different ways.
So that's something that I think is justpresent in all of our work.
For me, though, the intersections of what Ithink AI can do alongside care is also pretty
interesting.
You're seeing a lot of tools that have come tothe forefront effectively for what I think you
could call kind of household optimization ormanagement.
(42:12):
But it's all going back to efficiency andreducing some of those burdens, right?
As a parent, I can't keep track.
It's like Black History Month spirit week at mykid's school this week.
I have no idea what is happening.
Is it wear this color today?
Is it dress up like a Black historychangemaker?
(42:33):
I can't keep it straight.
There are platforms and tools being built tojust where I could chat that or text that
image, and then all of a sudden it's populatedon my calendar.
I'm getting alerts and reminders like, hey,Erin, today is the day to dress up like this
inventor or what have you.
And that just takes some of the burden off ofyou as a caregiver.
And then I can turn my attention to actuallyenjoying breakfast with my kids or making it
(42:57):
out the door in a more seamless way.
So these are all things that we're excitedabout, I think, from a more thematic
perspective.
You'll care obviously and then intersectionsof, you know, some of the bigger topics like AI
that we're all talking about and top of mind.
Yeah.
Yeah, I think totally just augmenting theworkflow so you can actually enjoy the company
(43:19):
of the people you Right.
That's definitely that's definitely hopefullythe goal for the customer and then also just
from a business standpoint.
Yeah.
You know, when it comes to repeatability.
So the next so maybe we'll go ahead because wegot about ten minutes left.
Yes.
Oh, wow.
This is going by.
Mean, time flies when you're having a lot offun.
Does.
Enjoy the conversation.
Well,
(43:41):
we'll jump to the next one.
So the next one, you covered a lot of thequantitative traits.
Yeah.
Maybe for new managers, this could be reallyhelpful in terms of, you know, statistical
numbers.
Like, you know, obviously, we have, very wellknown, you know, KPIs like DPI, IRR.
Obviously, for emerging managers, DPI may notbe as relevant, but Yeah.
(44:02):
Maybe you can talk about the spectrum of howthe quantitative metrics advance.
Right?
So you're looking at emerging managers.
Obviously, they're looking at TVPI.
Maybe we can, you know, unpack what those meanas well.
Yeah.
Yeah.
And then as they kind of get a little moremature and and I'll say this too, you know,
there is there was a panel of managers.
Mhmm.
Some of them were very, very mature, you knowYep.
(44:24):
Super, super mega funds.
And then that panel also had a couple emergingmanagers on them, some of the well known ones
on Twitter.
And they were talking about their deploymentschedule.
And they were deploying like crazy 20 to 21.
And then it's really, really slowed down bymaybe a fifth or a sixth in the last year.
That makes sense because people are just a lotmore thoughtful in terms of what they're
(44:47):
investing in.
So I thought I'd throw that in too when you'rethinking about performance.
So if there's quantitative KPIs that maybe youcan unpack from like maybe the, you know, maybe
the the nano VCs to like how they evolve, like,you know, what should they think about?
That might be helpful, you know, for theaudience.
Sure.
Sure.
(45:08):
Well, just to reinforce what you said, I mean,if you're a first time fund, you may not have
much in terms of track record on those metrics,whether it's
Yeah.
Your TVPI, you know, IRR, the return, you know,kind of multiple of money, the return metrics,
and then the distribution up to what I've putin in terms of DPI.
Over time, definitely tracking those andwanting to see performance that is in the top
(45:35):
quartiles.
But caveat that with my former employer atCambridge Associates has crunched these numbers
in data.
I mean, on average takes about six to sevenyears for a fund to settle into what will be
its ultimate quartile from a performancestandpoint.
So let's do the math, right?
If you're raising every kind of investing overa three year period, so you're raising your
(45:56):
fund roughly in that time period, I may haveinvested in two or three funds before I've seen
you know, the performance start to season andmaterialize from your very first fund.
So that's where you'll even get those are thehard, some of the hard metrics that matter over
time.
But it is really hard to kind of assess thoseinitially.
(46:19):
So what are some other things that we mightlook at?
I think it's back to if you have a prior trackrecord maybe as an angel, how the financial
returns that you've generated from that,unpacking within that.
Obviously, your ownership may be small, butunderstanding how you put that portfolio
(46:41):
together.
And I think that leads to this broader kind ofportfolio construction question that I like to
spend a lot of time really digging into yourfund model and understanding what type of
ownership are you targeting and how you'rethinking about your reserve strategy?
And we can debate.
There are pros and cons.
I don't come in with a preconceived like it hasto look this way.
(47:04):
But I want to understand and make sure you'reclearly able to articulate based on what your
thesis and strategy is why you don't havereserves or why you're reserving twothree of
the fund.
Both of those could be valid approaches, right?
And then how that plays itself out in drivingthe performance.
(47:26):
And are you being intentional in communicatingthat back to your founders as well?
Because that's something else that I think cancome back to bite you when there's a
misalignment of expectations of how you'regoing to show up over time as an investor.
So we're looking at that.
We're tracking all of those things.
And then I think just the underlying kind ofsometimes GPs are surprised when we want to dig
(47:50):
into some of the operating metrics forcompanies.
Because again, in the absence of exits or DPI,it's like, how are these businesses actually
tracking against the things that are relevantto that business?
Has there been follow on capital raised at whatprice, how we're thinking about that, and then
(48:13):
again, back to your ownership and whetheryou've been able to protect that or not for a
variety of reasons.
All of that is relevant in assessing kind ofyour track record or what you're trying to
build.
And one more thing I'll say is it comes backto, have you done what you said you were going
to do?
When you return for the fun to you diligenceand bring that deck around, what is the first
(48:35):
thing I'm going to do before we get on thephone?
I'm going to pull up all of our notes from thelast time we talked and how you were thinking
about positioning and have you executed onthat.
And if not, that could be fine too, but I needto be very clear.
You need to be able to explain to me veryclearly why that's not the case.
And so all of those things kind of comingtogether are really, really important to
(48:58):
assessing, I think, how much is maybe again,all this is a combination of luck and skill.
But there are elements that over time, I thinkyou can start to build that pattern as you move
from fund one to fund two to fund three andbeyond and being very clear about kind of those
metrics being important to LPs.
We're going to be looking at them and unpackingthem very, very closely.
(49:21):
Yeah.
Well, that was really, really helpful and, youknow, super helpful, especially for the
community.
So appreciate you unpacking that.
We've got a couple more minutes, so I'll justgive you two quick rapid fire bullets.
Okay.
So, it's great to just have seen you be a voicewithin the community.
And it's been great to see you observe, greatto observe you be a speaker on panels for a lot
(49:47):
of these emerging manager communities.
So what are some ways that you've seenmanagers, obviously some of these managers,
even at the fund one level have been able tobuild a community.
So, what are some traits you've seen in termsof community building for fund managers?
And then you've answered some of this for thelast question, which is what advice would you
give college students?
(50:08):
But maybe you could rapid fire on both of thoseand then
Sure, sure.
Yeah, we'll wrap
up.
Awesome, awesome.
Well, to the first one around communitybuilding for emerging fund managers, I'm
heartened that there are so many groups outthere.
Plugging into those, whether that's like aTransat Global or an All Rays for more women
(50:31):
female focused investors.
But if those are not the right fit for you, Ithink being comfortable with putting yourself
out there and it's easy.
I mean, I'm in several WhatsApp chats withother LPs where we're just trading notes and
ideas.
And so I think there's just so as you're out atconferences, as you're out on the road, finding
(50:55):
those folks that are kind of in a similar boatto you and asking them.
Like we said earlier, just asking questions,right?
Like, you raised your fund.
How did you do it?
And I think people are willing to share that ina one to one space, but then that opens up some
of that community aspect as well.
So if it doesn't exist in the way you like it,I think start it because you will likely find
(51:19):
others to join you or plug in to the myriadnetworks that are already out there and I think
are successfully creating that community.
And take what you will out of it.
It might not be all things to all people,right?
But there are, I believe, like little nuggetsthat as you sort of slide in that you can take
(51:40):
out and that could be beneficial as an emergingfund manager.
And to the last question around advice just forcollege students, I would say be shameless.
Just talk to as many people as possible.
When you're in that position and time of life,I think, go to your college or grad school,
(52:02):
whatever it is, network and find someone thatis doing what you're interested in or lives in
your city, has your major, they're likelyalready going to be inclined to connect with
you because you have something that's sharedalready.
And look, we're both busy folks.
But when I get an email from someone that hastaken that bold step to reach out to me, I'm
(52:26):
for sure going to try and respond.
And even if we can't find do something to behelpful.
And so I would say just don't be shy aboutleveraging your network, reaching out, setting
up those informational interviews, those coffeechats.
Is it's as much about finding out what you likeis what you don't like.
And one way to do that is just shadowingpeople, talking to people, learning from their
(52:50):
experiences.
So I think I mean, we spent the last hourchatting.
People like to talk about themselves and thework that they do.
Well, I wanted to highlight your piece ofadvice, which I thought was really good.
Just find your big brother and big sister.
There's people that are like a semester ormaybe a year before you that you're still in
contact with.
You see him the common areas of the college.
(53:11):
So those are great ways to
Just to stay connected.
And they can just give you that tip of like,don't apply for that internship.
That sucked.
Do this instead.
And as you transition into your career, I mean,I've had several women allocator CIOs and such
that I've worked with or that have met thatjust have taken the time.
(53:31):
And they'll say, well, I'm not your mentor,Erin.
I say, no, you are because you took the time toanswer a question for me.
And frankly, also, you can't see you can't dowhat you can't see.
So think Kim Liu, CIO at Columbia or others,just the fact she's excellent and that she's
ascended to the top of our profession, likethat's inspiring to me.
(53:55):
And I draw a lot of great advice from her andmany other women in similar positions.
And my hope is to do the same.
So I think that's what it's about, is just,like you said, finding that big brother, that
big sister, that cousin, whatever, and learningfrom them and asking questions and then doing
(54:15):
it yourself.
Because you'll turn around and a few years willpass and you'll have that job that somebody
wants.
And so paying it forward, paying it back is thelast bit of advice that I would share.
Well, appreciate you paying it forward, Aaron,and you just being so generous with your time
and Likewise, Joel.
Know, impacting so many people.
So really appreciate you spending the morningwith us today.
(54:38):
Thank you.
Thank you for having me.
This was such a fun conversation.
Likewise.
Take care.
Well, a great week everybody.
And Erin, catch up with you soon.
Yes.
See you soon, Joel.
Thanks everyone.
Bye bye.
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