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Inside the Mind of a New York Angel Investor: Joanne Wilson

 

Welcome back to Inside the Mind of a NYC Angel Investor, a new series at AlleyWatch in which we speak with New York City-based Angel Investors. In the hot seat this time is Joanne Wilson of Gotham Gal Ventures. Joanne is a prolific blogger, Host of Positively Gotham Gal, and Co-Founder of the Womens Entrepreneur Festival. Joanne sat down with AlleyWatch to talk about the red flags she looks out for in entrepreneurs, the qualities of female founders versus male founders, and the good, bad and ugly realities of startup world.

If you are a NYC-based Angel interested in participating in this series, please send us an email. We’d love to chat. If you are interested in sponsoring this series that showcases the leading minds in angel investing in NYC, we’d also love to chat. Send us a note.

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Joanne Wilson of Gotham Gal Ventures

Tell us about your journey into angel investing and how you came to found Gotham Gal Ventures?

I’ve had several careers, and I really believe all of the dots connect. I was involved in the tech industry in the mid-‘90s, when there were not that many people in the tech space of New York City; I think we all knew each other. I was involved with a startup then, but as we all know, after the dotcom crash, the entire internet sort of imploded. Many people left the industry and never returned.

As time went on, I found myself watching the second generation of the web unfold. It was around 2006 when people were starting to come back into it, and at the time I was really mesmerized with one particular company, Curbed Media.

I was reading Eater, Curbed and Racked a variety of times throughout the course of the day, and I essentially said to my husband [Fred Wilson], who is an investor but it wasn’t part of his thesis to invest in media, “it’s too bad you won’t invest in this space, I really believe this is how we’ll take in content in the years to come and what Curbed is doing is unique. They are a business to business and business to consumer read.”

Fred came back the next day and said Lockhart Steele, the Founder of Curbed, is raising money, and that I should go talk to him. He effectively said, “you know how to build businesses, you know how to make money – you would be a phenomenal investor.” And that’s how I started my journey in angel investing.

You are an incredibly prolific blogger on your site, GothamGal.com – what compels you to write as regularly as you do?

It’s a practice. You start writing every day, you start building an audience, and it’s directly tied to my connection to the tech community and all of my investments – it’s all part of one circle.

I find it very cathartic. I like the sharing, I like the thought process – it’s sort of like, here’s what I’m thinking about now and I’m putting it out there.

You started as an angel investor in 2007 and have invested in 101 companies. From what you’ve learned and experienced, how does investment 101 differ from investment 1? How are you different as an investor?

I made my first investment in 2007 although I had invested in a friend’s company a few years back and sat on the board. Curbed Media was my real first entry into angel investing. It was a big check, but I also don’t think I realized at the time that I would continue writing more checks to more companies. I had yet to build a financial thesis.

In terms of what I’ve learned and how I’m different as an investor? A couple years ago someone wanted me to write a book, but in the end I didn’t do it because I didn’t want to go on the road to promote it and everything else you have to do when you write a book. But it did compel me to go back and read all of my blogs.

It was very helpful towards answering the question, “how have I changed?” The truth is, I was writing about the same shit then as I’m writing about today. The one thing that has changed is I see the red flags more clearly. I trust my gut like I always have and I have better instincts now. Age does that, too. In general what I think is consistent among my investments is I invest in survivors.

I am investing in people when I put a first dollar into a company. They might have a phenomenal idea, show traction and it’s obvious to me that they’re filling some void in a market, but regardless of all of that, I’m investing in people.

You say you’re better at identifying the red flags – what are the red flags?

It’s an onslaught of things that I watch out for. It’s the people who say they know what they’re doing but they don’t. It’s people who don’t have a fire in their belly. People that you just don’t think are going to survive. People who don’t listen. Businesses that, as much as you think it’s interesting, there’s no way in hell they’re going to get funded in the second round. 

I’m always curious about how angel investors decide to remain angels versus going full-on VC. What does being an angel investor allow you to do that you otherwise couldn’t as a VC? And what limitations does it impose?

 I’ve had plenty of opportunity to take other people’s money – and I have no interest in doing that. I don’t want LPs, and I don’t have to take LPs – I’m very lucky that I can invest our own capital and make a difference in the world.

Because of that, I think I sit in a very unique place, which is, I can be vocal, champion ideas and be extremely verbal about things that many others won’t because they are beholden to an investor base. I think that’s been a good thing, particularly for females in the tech community. I have no problem saying what I think, and that’s worked for me. It has pretty much worked for me all my life.

I think what’s different with how I operate is, this is a full time job for me. I spend all day on the companies I’m invested in, and the people I’m invested in, and I’m constantly looking at new deals and sitting on boards.

As an angel, I’m never going to write that million-dollar check, and that does impose certain limitations, but because of that I think I become the consigliere to every single founder that I’m invested in. I can help them navigate the startup world, I can be the person they can call when they’re having a miserable day and the entire world is caving in on them. You don’t necessarily want to pick up that phone and tell that to the investor who just gave you $3mm.

How do you describe your investment thesis?

I’ve stayed consistently with a financial thesis: I put in $50k or less to own 1% of the company. I get a side letter so that I continue to own 1% of the company so long as I want by putting in my pro rata share at every capital raise. It’s that simple. 

What do you look for in a founding team?

Tenacity, smarts, and someone that is curious. I also look for someone that I can have an easy banter and back and forth with – about thought processes and ideas and concepts. I don’t expect a founder to do what I tell them to. They’re going to figure it out on their own, but they are looking for some kind of advice and counsel.

I back entrepreneurs. Entrepreneurs are wired differently. They have to start businesses and they have to report to themselves. I backed one entrepreneur whose company didn’t succeed, and we had to close the company. He went on to work for another company for a short stint, and I knew in my gut “this is not gonna last.” Sure enough, two months later he emailed me that he’d started a new company – and I said, “of course you did.”

A question here from Ayah Bdeir from littleBits, a founder and a company you backed early on: “Joanne is very passionate about investing in women, what are the qualities you’ve seen in women founders?” And if I may add to that, do those qualities differ from the ones you’ve seen in male founders?  

They completely do. Women take longer to build their businesses. The good thing about women is, they cross their T’s and dot their I’s – and the bad thing about women is they cross their T’s and dot their I’s. They’re very good team players. In many ways they want perfection before “good enough.” They do not jump in with two feet and apologize later – it’s just not how they operate.

But I do see that as women founders as they become more successful, they begin to blossom and have much more of an “I own this” orientation, and “if you want to put money in my business, you’re lucky to put money in my business.” That shift occurs when they see the success starting to happen.

Men have much more bravado, and just spout information and bravado. I would say the men I’ve invested in are more female-centric than they are male-centric. They’re very team-focused, and they’re certainly not your classic bros. I wouldn’t invest in one of those if you gave me the stock for free.

On this topic – how do you assess the progress that’s been made by women in tech, and what more needs to happen to gain greater parity between men and women in the field?

I think there’s been huge progress. The data is there: the ROI on female-founded companies or companies that have gender equality within the borders of the C-team have a better chance of success and a higher rate of return on investment.

I think one of the things about women in general, unless you happen to have one who’s Twitter-happy, is that most of these women are under the radar. I’ve invested in companies comprising 70 or more female founders. If all of those women have exits, go public, whatever it may be – that will shift the conversations that take place at the table when they go and talk to VCs.

And we’re seeing more women enter the investor space, too. I think one thing nobody talks about in the investor space is that it’s very lonely. Founders, partners in VC firms, they have their Monday morning meetings, all hands on, everyone talks about their investments, and then you’re on your own. Women in general like to be part of teams.

What would your founders say about you as an investor?

She’s the first person I call. She’s been incredibly helpful, and she really cares about me. I’m really lucky to have her as an investor – even the ones that have lost their businesses.

What do you do to position yourself that way and be the first person your founders call?

I care more about their success than my success. I’ve had some exits that are phenomenal, and it feels great, but I actually prefer the journey.

I think it’s more exciting to put money into a company where you gave that founder their first dollar, and then three years later you walk into their new offices and there’s 100 people sitting at the desks. That feels really good. You’ve changed that person’s life; they were able to build something from nothing and you were a big part of that. It’s immensely gratifying.

How do you assess your performance as an investor?

It usually takes 5-7 years in this asset class, but I think for the companies I’ve invested in with the first money in, it takes even longer and women take longer – maybe 10 years. I’ve invested in 101 companies, and 12 have failed – I think that’s pretty good.

The ones that failed – some I had kind of known it would happen, and that goes back to those red flags. I’m sure I’ll lose more companies as times goes on, but I’ve been lucky. A couple of years ago a bunch of my companies got to Series A, now some of them are getting to Series B. I feel I’ve had a really good track record.

I think it’ll take me about two more years to really see where I’m going to be, but I feel really good about my investments. I love them all – even the ones that fail, I can’t wait to see what comes next. I have some I know are going to be huge home runs, and I’m thrilled for them. Others might not be as large but I am OK with that and they should be, too. Life is long and there will be other companies for those founders to build.

How has the New York City ecosystem evolved over the 20 years you’ve been in the community here?

It’s totally evolved. First of all, what makes New York unique more than any other city in the world is we are the epicenter of the world – in every single industry you’ve got the best. Medicine, media, food, commerce – we can go down the line.

Technology has changed every one of those industries. You might be a journalist, but you also have your foot in technology. You might be a restaurant, but you’re going to open 10 more of those restaurants and so what tech infrastructure do you need to support that? That combination of technology with the best people in the world makes New York unique.

I spend my winters in LA. Los Angeles today looks very similar to me to what New York looked like in 2007-2008. All of these businesses that are being built have nothing to do with Hollywood. They’re building great businesses in a city that is creating its own technology community, which is fantastic. I’d love to see that in other cities – it’s good for everybody, it’s good for our economy, it’s good for jobs and communities.

When New York was ascendant we started as number three behind the Bay Area and Boston. Today we’re number two. With LA ascendant, will it someday overtake New York or will we remain where we are?

I think New York will always remain the number two. The Bay Area is extremely mature. It is a very unique hub of technology. But listen, when Google opened here they said, “we’re going to open a small office, we don’t think people are going to want to live here.” Wrong!

In a recent blog post you mentioned something in passing – that founders may “perhaps discuss the reality of start-up world.” What did you mean by that?

That it’s hard. It’s fucking hard. It’s depressing. You want to go home and cry everyday. You think everyone around is just killing it and doing amazingly well. You think everyone has better investors than you do. You look at other companies and think “how did they raise money? I can’t raise money.” You look at companies that have raised $40-50m that have crashed and burned and you knew all along it sucked and you’re frustrated because you can’t get invested in even though you’re turning a profit.

We spend a lot of time hyping each other up, but no one wants to look behind the wall. I had a founder that we gave money to and he was afraid he was gong to let us down; he was watching all these companies like fake news, and then he realized, “wait a second here, they gave me money because they believe in me.”

I’ve said this to founders: trust your gut. If you succeed, everyone around your table thinks they are geniuses, but if you fail it’s all on you – because everyone in the investment world just goes on. No one talks about these issues and how hard it is. When you hear a successful entrepreneur get on the stage and say, “I went home and cried every single day,” you can see the impact it has. You can see all the people in the audience think to themselves, “thank god, it’s not just me!”

You go to these events most of the time and it’s people talking about how smart they are and how they got this or that. It’s not real. No one talks about how they have two kids at home, they never see them and they’re like “where are you?” and you feel guilty – these are conversations nobody has and should.

Tell us about the Women’s Entrepreneur Festival – what compelled you to found WeFestival, what has it accomplished, how has it grown, and what does the future have in store?

My cofounder is a professor at ITP, the Interactive Telecommunications Program at the Tisch School. She was very frustrated one year that there weren’t enough women in her class; ITP tends to be 50-50 gender balanced, but this particular year she had two classes that were 60-40 men-to-women, and it changed the whole dynamic. She said, “there aren’t enough women in tech,” and I said “yes there are, women just network differently than men. They’re out there, I talk to them all day long.”

We decided to put on a conference at NYU. We knew within the first 10 minutes of our first event that we had really created something unique. Each year for five years it grew, and then my co-founder and I agreed we were done, until one night over drunken margaritas with my sister and my husband, I was convinced I couldn’t close shop.

NYU was a huge success. I took it out of NYU on year 6 and the event was a huge financial success as well. We did it at 1 World Trade Center; there were 400 women in the room, we had fantastic sponsors, and it was awesome.

Beyond the event itself, I know the long tail. And the long tail is that many of these women still get together and have MeetUps, they act as mentors to one another, they’ve found their partners at those events – it’s been a tremendously successful event and probably more than I truly realize.

After the success of year 6, because I couldn’t help myself, I said: “world domination; this is so successful, let’s do LA, let’s do Berlin, let’s do a thing with TechStars.” And then Trump, and the whole fucking disaster of the election campaign, and I think a lot of people pulled back on budgets, they were super scared, I didn’t have 3,000 women in a room I had 400 women in a room, and so a lot of sponsors said they wanted to give smaller amounts. I just didn’t have the time or energy to work with that many sponsors. Putting the event on was a no brainer, but finding the capital to do it properly was not easy.

So the decision was to put this thing on ice. I’m hoping I can find the right partner that already has all these sponsors where this is just an addition to them and they’ll view this as a wonderful asset to their brand. It really is an amazing event. There is something very unique that goes on when you have 400 women in the room, who are all the cream of the crop entrepreneurs, at all different levels of their businesses. Amazing conversations take place that would never take place in a typical tech conference.

You recently became chair of an organization called Path Forward – as a new parent myself I was quite intrigued. What’s the mission there and why was it something that resonated with you?

Path Forward came out of Return Path; the CTO there kept encountering people, mostly women, who had left the career world to have kids or take care of family members, and had a hard time when they tried to get their careers back on track.

The CEO of Return Path, Matt Blumberg, agreed there was an opportunity to help these women get back on track. Return Path created their own return-ship program for themselves. They launched it internally and then began working with other companies who had heard about their success. They have essentially established product-market fit.

They thought about the best way to move forward and in the end decided that operating as a non-profit made the most sense; our hope is that we don’t have to exist in 10 years’ time because we’re training companies how to onboard employees who have been out of the workforce for years and it will become common practice.

It’s been great. We’re working with large companies like Instacart, Verizon, and PayPal, and we’re talking to many more. There are some startup companies we’re working with because they are hiring quickly and want their cultures to be gender balanced.

Why am I so passionate over it? I have been talking about this issue over the years. There are so many amazing women out there who want to get back on the track but don’t know how. They have lost their sense of identity, their mojo. There’s a huge community of really talented women who can come back, feel good, send an important message to their children, have their own life through working and be part of companies that interest them.

Why is non-profit the right decision for Path Forward?

To create a program to onboard people who have been out of the workforce for 10 years and set them in jobs is a really hard thing to build a for-profit business around – the need for quick ROI adds unnecessary friction to the system. Going non-profit helps us help more companies build these onboard programs for themselves.

Right now we’re in New York, Boulder, San Francisco, and LA. Our placement rate has been almost 100%. The results have been fantastic. The fact is, running a family for 10 years is a very entrepreneurial venture. You may not know what Slack is and you may not use Google Docs, but there’s so much you have learned and accomplished in that time that can be leveraged in the workplace.

What’s great about Path Forward is that not only are we helping these people feel confident again in the job market and get their careers back on track, but also that we’re building a community. For a smart, talented person who is onboarding, getting skilled up is relatively simple; it’s the mental onboard that’s so difficult. To have a community of others they can commiserate with about their situation, that’s really powerful and helpful.

It’s really important work. The fact is, your life changes when you have a family, and companies need to be thinking about how they can help their employees put their families first, because it’s in their interest to have gender balance and age balance, and because it’s in their interest to have happier employees.

I believe that companies need to say to men and women, when you have a child, or a family member gets sick, you get time off and you have to take it. If both parents take off when a child is born, they feel a different level of connection to their children and family because they were there from the very beginning. That will truly change the gender roles we fall into.

Switching gears a bit: on top of your blog you also have a podcast series – what was your goal in starting that and how is what you get out of that different from what you get out of blogging?

For years, once we started the Women’s Entrepreneur Festival, I started writing a blog every Monday called “Woman Entrepreneur of the Week,” because I felt that I should be highlighting these women. It tied right into the event I was doing and the women I was supporting. I must have written 300 of them – and you know what, they’re hard to write. It’s a lot of work and you don’t want to make mistakes – and I made plenty. I started getting burnt out on it.

I was thinking about it one day that the podcast medium had come back and perhaps that would be a new way to highlight these women entrepreneurs. People had said to me many times that I should do a show because I talk so easily to people and I have a knack for getting them to open up about things. I told my daughter I was thinking about doing a podcast and she said, “you totally should.”

It’s no different from the conversations I’d have with the women I’d been writing about. I think there’s a lot of great little nuggets about failure and mistakes, successes and accomplishments and how hard it is. The topics cover everything from brand building to where you came from – each story is unique and they’re brief. I don’t want to have an hour-long conversation; not that we can’t but we try to cut them down to the length of a subway ride or 30 minutes of exercise.

I will say, I would love to do something where people call in. Questions are so much more interesting than just talking.

You have a Books section on your website – what’s your favorite book and why?

I have no favorite books. I really enjoy really good novels – I’ve read a tremendous amount of Paul Auster books, he’s a great writer; I just finished 4 3 2 1. When you read Jonathan Safran Foer, you just recognize how good it is to read something from a great writer. When you read Freedom or The Goldfinch it’s amazing writing.

I like discovering the new new. I like finding the new restaurants, finding the young artists, finding the young entrepreneurs or going to a city and discovering the culture there, and I find the same thing with books. So I don’t have anything favorite that I go back to, but I do have authors that I continue to read because their writing is great. Crazy as it seems I don’t watch TV, I read. I do love movies though.

On your website you say you’re an insatiable foodie – what’s your favorite new NYC restaurant, and what’s your favorite classic NYC restaurant?

If it’s new I’ve been there. I do have certain ones that are faves that I’ve returned to time and time again. I have a history with the front room at Gramercy Tavern; I spent years there, that was my office once a week in the ’90s. The Spotted Pig is one of my all time favorite spots; I can’t count the amount of times I’ve been there.

It’s fun to see what new people are coming up with. It’s harder to make money in Manhattan these days, and it’s really great to see what’s happening in Brooklyn with new food, new concepts, new chefs, and new neighborhoods and communities that are booming.

To see the next generation has always been interesting to me. Even though I do startups, it’s sort of my DNA for everything: clothing, designers, books, food, travel, art – I was always excited by what comes next. I guess that is why I called my blog Gotham Gal.

About the author: Bart Clareman

Bart Clareman is the Founder of Clareman & Co. LLC,  a management consulting firm offering sales and marketing, business development, product management, and fundraising services to startups and other companies in the media, hardware/IoT, retail, and e-commerce spaces. He previously was Cofounder and COO of Tiggly where he was responsible for consumer retail sales and marketing from 2013-2016. He has an MBA from Harvard Business School and a BA, cum laude, from Williams College. He volunteers for Venture for America.

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