What I learned From A Founder Of A Billion-Dollar Venture Capital Firm

Kathryn Gould founded venture capital firm, Foundation Capital, in 1995, which makes investments in consumer and B2B (Business to Business) companies such as Netflix and Lending Club. Her VC internal rate of return is 90% (9.7% is the average 10-year return according to the National Venture Capital Association). Before Foundation Capital, she was the founder of an Executive Recruiting firm and Oracle’s first VP of Marketing. Kathryn’s life in Silicon Valley, as a venture capitalist, was unexpected one. Anyone who knows anything about venture capital knows that it’s a difficult industry to break into. However, Kathryn said in a Stanford eCorner podcast: “If I can do it, you can do it.”

Your Path is Non-Linear and Full of Opportunities

Kathryn studied music at USC, taught herself how to program, and transferred to the University of Toronto to obtain a B.S. in Physics. After a short stint as a researcher at Argonne Labs, she attended the University of Chicago to earn an MBA and then joined a Chicago company. Geeked out by the first personal computer, Kathryn moved to Silicon Valley in 1980 and chose to work in a small startup. She met Larry Ellison, one of Kathryn’s customers, and joined him to build an early-stage Oracle between 1981 and 1984 where sales increased from $1M to $3M to $5M to $12M.

Chance Favors the Prepared Mind

During her time at larger companies, she developed perspective about what large companies needed, which enabled her to see the value and solutions that Oracle would provide for big data. This brings up a debate: join a large company to gain perspective, or join a small company to dive into the industry and learn the business. Kathryn advised that you join either, but make sure that you are learning from small people. In her experience, big companies gave her perspective, which helped her make money as a venture capitalist.

Learn to Sell

What did she learn while Oracle was taking off like a rocket? “This is where I learned to sell,” Kathryn said, “That’s really important. To all you engineers out there, make sure you know how to sell.”

Do Something Interesting

In 1984, Larry fired Kathryn (and rehired her at lunch). Kathryn quit several months later. Recruiters for startups and for big companies began to call. She thought, “Heck, I’ll be an executive recruiter. These people calling me are having more fun than I’m having.” Kathryn started her own executive recruiting firm. What she thought would be a 1-year gig while she looked for a new job turned out to be a successful 5-year run. “I’m just saying, do interesting stuff, ya know?”

Learn From Every Experience

Kathryn Gould was able to be a venture capitalist from the wealth she built up and her recruiting experience. While a venture capitalist might see 2-4 companies every year, she saw 80 companies as a recruiter. Kathryn was selective with which companies she worked with. Therefore she had to learn the market and market opportunities, learn clients’ business plans, and saw when clients were in disarray and when they were a success. That knowledge and experience allowed her to make a 90% return on her VC investments throughout her career.

Make Your Mission A Priority

Kathryn Gould has advice for all of us: “It’s not the calls you take, its the calls you make. What I mean by that is that when you’re out in the real world, both in startups and in venture capital, so much stuff is coming at you and you are insanely busy. What it means is ‘Don’t do that.’ Make sure you keep in your mind your agenda, your goals, what matters to you, and what moves the state-of-the-art forward. Make sure, every week, you work on those things that matter to you, rather than deal with all the shit that is coming your way. In my venture capital context, if you look at my most successful startups, they didn’t call me. I called them. I found them.”