Why I’m leaving Venture Capital to join Route

Date

September 28, 2020

Tags

ProfessionalPersonal

I was 24 years old when I first started writing this post.

At that point, to everyone’s surprise (my own, especially), I had been a venture investor for 3 years already — just 5 years after cold emailing my way into my first job in tech. I received Forbes’ 30 Under 30, sourced over a dozen investments for my firm, and had gotten board exposure to companies that would go on to reach 10-figure enterprise value. Most importantly, I had done it my own way — with an upstart firm rather than a big brand where I’d be known more for my firm name than my own. But something still didn’t feel right.

I’m 29 now and my friends will tell you I’ve been a reluctant venture investor for a bit too long. In the last 5 years I got to help start a fund, invest in nearly 100 companies, and work with world-renowned entrepreneurs, but yet this whole time I felt incomplete, as if there was a great unknown I hadn’t explored. It wasn’t a success metric, though, just a personal desire. I’d been itching for a new challenge.

. . .

All this to say, my decision to leave day-to-day venture capital has been a long time coming, but has finally come because I met Route and get to join them as VP of Strategy. For more on my decision to join Route, jump to the end of this post. For more on the decision to leave VC, continue on.

At the start of my career, someone warned me not to stay in venture too long or else I’d get comfortable and never leave. That followed me around like a shadow these last few years. I kept questioning why I’m still in it, had I in fact gotten comfortable, or was it something else? I was envious of my friends who had such resolve in their roles as investors and wondered why I felt such doubt. I’m proud to say that what kept me here for so long was simple: I kept learning. Venture investing is a platform for continued learning. It’s put on a pedestal for a reason; it’s truly a privilege.

I’ve now worked across 3 different investment firms: a family office, an institutional seed fund, and a holding company. I’ve led and co-invested from pre-seed to Series C into both consumer and enterprise as well as both minority and majority investments. I got incredibly lucky to get into this business in the first place and then only got luckier with opportunities to stay in it. I was able to get the 10,000 hours it takes to truly understand this craft, a unique blend of art and science, but now it’s time to reset that clock with a new one.

With those experiences behind me, I’ve reached the point where venture is no longer providing the type of learning I am seeking. I’ve learned how to analyze industries, run competitive analysis, and do my best at predicting trends for the future. I’ve also learned how to form funds, raise capital, and manage investors. And I’ve come to understand very well how to help someone build a company, make introductions to new partners, recruit and close a candidate effectively, yet what happens behind the curtain is still unknown to me.

In this next chapter, I want to see behind the curtain and understand what’s backstage, not just support the show. Steve Jobs was notorious for caring about the inside of the machine as well as the outside, and I feel that way about company formation. As an investor, I’ve been able to study it from the outside, but now it’s time I study the inside, too.

Every couple of years as an investor, I had a new challenge and learning opportunity present itself, but the moment I stopped learning was the moment I knew it was time for me to finally leave. In venture, you’ll never stop learning new things, but you will likely hit a point where you stop learning new skills. And I’m not ready to stop learning new skills.

Reflecting on my time in VC, I wanted to write the post that rarely gets written. A balanced representation of the wonderful parts of the job, as well as some of the negative parts that often go unwritten. Venture capital being a role of such immense privilege, this discussion is one of champagne problems, but they are realities nonetheless and important to consider for those considering getting into the trade.

The benefits of venture capital are countless, so I’ll be brief in my recap, but to list a few of my favorites:

you get paid to learn
you meet wonderful people, some of whom will become life-long friends
you’ll come away understanding a bit about a lot. I tend to say “a mile wide and 3 inches deep, not just 1 inch deep”
a flexible schedule where you can optimize your day-to-day behavior around your own priorities
latitude to approach the job in whatever way best suits your skills (some like to read all day and reach out to the companies they like, others like to meet everyone and learn through conversation)
you get to work closely with dozens of fascinating businesses and learn from both their accomplishments and their mistakes
your ability to make an impact (though a diffused one) grows exponentially with the number of companies you work with
you constantly meet incredible, hard-working, driven, and often brilliant people. Sometimes this goes overlooked, but the life of a VC is usually one spent with mostly motivated high-achievers.

This list could go on and on. Even with all of these amazing attributes, I’m looking forward to getting out of the game for a while and being reprieved of the drawbacks.

In my experience, here were some of the downsides to VC:

It’s kind of a lonely job — It’s a team sport in the way that golf is a team sport, not in the way that soccer is. Your common goal is shared, but given that goal is ultimately a fiduciary obligation to return capital, it’s not always the most inspiring.
Chasing the deal — While your calendar is your own, you are ultimately a service provider selling the most commoditized service of all: capital. Meaning, you are often ‘chasing a deal’, rushing to close, or operating on a reactive schedule in some way. For some, this is to compensate for the lack of a differentiated product.
It’s a lifestyle, not a job — If you’re doing it right, you sacrifice your time in order to protect the time of potential investments and founders in your portfolio. This means being available at odd hours or just non-stop and can often bleed into personal life, family time, etc. Long gone are the days of the VCs who take off the whole summer, or more likely, those days never existed for emerging managers.
You don’t get to actually build anything — yes, you are building a fund; yes, sometimes you even build some tools for that fund, but it’s not the same when your customers are all tech entrepreneurs who are there to pitch you.
Diluted emotions — this is potentially a good thing, but for me it was bad. The highs are not as high and the lows are not as low. This often felt like coaching a winning term versus scoring the winning goal yourself. The coach is indeed a “part of the team”, but it’s not the same as being on the field. Sometimes it didn’t feel like you deserved to celebrate together. The flipside of this is that because the lows aren’t as low, you are in a position to be a great support partner in times of need while still standing on your own stable ground.
Long feedback loops — I’ve done this for 7 years now and am just starting to have the results that show I’m not half bad at it. It is very hard to set short term OKRs for a job that ultimately can take 6–10 years to prove. I certainly see the irony in leaving just as I’m seeing the positive results of my work.
Lack of diversity — this is a work in progress, but a meaningful chunk of the industry is still white men who went to Stanford or Harvard. I don’t claim to be the exemplar of diverse representation in venture capital, but even I am uncomfortable in many of the rooms I’m in due to the lack of representation that exists.
Groupthink — many investors will tell you that they are independent thinkers, but very few actually are. I am not above this.
Subjectivity — the nuance behind what makes a deal close versus pass can often be based on learned bias or preference one has towards or against an industry. In this case, I am speaking more to bias against industries or markets, because the bias towards or against a certain type of founder is well documented. It always felt unfair to pass on an investment because one partner had a bad experience in the category or historically it hasn’t worked. The reality is venture investment decisions are often riddled with nuance and variables, so while there may not be a solution here, it just always felt like a weakness of the industry.
Saying no — Pass emails and calls are by far the worst part of the job. I’d invest in <1% of the deals I looked at, meaning that 99% of the time I was finding kind, polite, and honest ways to say no. Either you are heartless and pass in heartless ways, or you are empathetic and passionate and you can’t help but to let this part of the job take a toll on you after a while. It can be devastating having to let people down so often.

Even with all of this, I do believe the pros of the job outweigh the cons. A part of me feels remorse for stepping away at this moment because we have such an opportunity to improve and shape the future of the industry.

With that in mind, for those who are just getting started or aspiring to get into the business, allow me to be so bold as to share some advice on how to do the job well:

Start and stay humble — this isn’t about you, it’s about the entrepreneurs you are investing in. Your job is to find people smarter than you, enable them with capital, and then work your hardest to help them (and therefore, you) succeed. Lots of people let ego into this job, so you’ll stand out just by being humble and respectful. The bar is shockingly low. Remember, most of the time, entrepreneurs aren’t there to pitch you, they are there to pitch the checkbook behind you. Get off your high horse, someone probably helped lift you up there in the first place. This job is a privilege, act like it.
Find your superpower and utilize it — I started in this business without any industry connections and very little experience. I knew I knew nothing. Figure out what makes you the best at being you and exploit that, no one else will be able to do it as well.

I overcompensated for my lack of experience by going into hyperdrive to amass a network that I could lean on to help my portfolio.

I became the person who “knows the person”, but never the person myself. My value was not me, rather my ability to find the right person.

I used that to reach out to experts, help my investments, and ultimately, myself.

Eventually, I got enough reps in where I could pattern recognize and share some thoughts of my own.

For your first 6 months, just try not to mess anything up. Listen intently, ask questions, and read a lot. Keep your head down and don’t be afraid to admit what you don’t know. Don’t try to bulldoze anything, there will be time once you’re up to speed to act strategically and drive towards your goals, but at the beginning, no one (yourself included) should expect that of you.
Find ways to differentiate yourself — given we are all basically just purveyors of capital, how can you make yours stand out? I thought because I was new, I didn’t have any “value add”. A few years in, I realized that my new-ness was actually an asset, it made me more approachable and relatable to first-time entrepreneurs. It was a bit of a shock the first time an entrepreneur said she wanted me on her cap table just because she trusted me. I felt that it should’ve been so much more formulaic than that, but the reality is, being a trusted thought partner is often the most differentiated value you can provide.
Less is often more — when it comes to deal sourcing and diligence requests, it’s more beneficial to have a few deep and trusted relationships rather than hundreds of shallow ones. It won’t feel this way in the beginning, but it’s true.
Be honest, especially when it’s uncomfortable—Easier said than done, but passing on an investment with a standard excuse (too early, market size, etc.) is an injustice to the entrepreneur. As often as you can, give candid and concise feedback, respectfully. Even if it is something cliche like “we don’t believe this can achieve venture-scale returns”, you can deliver that in an honest, empathetic way. Often times I’d share that one by agreeing that our asset class isn’t perfect, it’s sometimes full of square peg companies trying to fit into round hole investors, so it’s a reluctant truth that I hate to give but unfortunately have to. That honesty was always appreciated. Remember, you are interacting with humans and their livelihood, not just deals on your whiteboard. Oh and, it should go without saying, but don’t ghost.
Be patient, but know if you’re being taken advantage of—this business takes time. You likely won’t have many obvious early wins, so just be cognizant of that. Promotions and results sometimes will take longer than you’d like, but that’s okay as long as you feel that your partnership has your back. Don’t shy away from asking the hard questions like “is this a Partner path position” or “when will I get exposure to carry”, etc. but also don’t expect that will come just because one of your friends got it. Every firm is different so it’s important to make sure you personal priorities and goals are aligned with the firm’s expectations, otherwise prepare to fight to change them or to leave.

There are no shortcuts in the path to becoming a great venture capitalist, but hopefully these will help you on your way.

Similarly, there are no shortcuts to becoming a great operator, either. I’m choosing to reset the clock on my 10,000 hours in an operating role because I am satisfied with my growth as an investor and hope to grow as an operator. I realize that will take time. This is my choice, because I want it, not because I think I need it.

After a couple of years as a VC, everyone suggested I leave and go join the hot startup. I was told countless times that the right thing for my career was to “find a rocketship, take whatever job they’ll give you, and hang on for the ride”. That was the traditional path so everyone expected I would follow it, as well, but my path had never been traditional and I wasn’t about to change course because some impressive people who barely knew me wanted me to fit in their box. They gave me convenient advice, not personalized advice. Had I taken it, I wouldn’t have gotten the depth of expertise I now have as an investor.

Too often people suggest that you need operating experience to be a great VC. I don’t think you do. I think you need acumen, empathy, relatability, work ethic, patience, and many other things to be a great VC, but operating experience isn’t a pre-requisite, it’s just one way to attain those qualities. Many of the best performing VCs never had operating experience. And yet, in my own case, I still want it and it’s ok for those to be separate things.

. . .

So, how did I decide to go after it?

For a long time, I’ve thought my next step would be starting a company, not joining one. This was true until I got to know Route.

In true Millennial manner, I wanted to work for a company I believe in on problems I cared about. Ideally that wasn’t mutually exclusive from a “rocketship” company, but it couldn’t be just that without the other.

It’s a lot harder to find a company that aligns with your personal goals and has a role fit for you than to pick a company to start. When Michael Tam introduced me to Route, it all came together seamlessly in a way that I didn’t expect or plan for. It was a luxury to be in a position where I could wait long enough for the right role to appear. It allows me to utilize my existing experience but also gives me the opportunity to learn the new skills that I’ve been seeking.

Why Route

I knew that I wanted to face a new challenge, learn new skills, and work on something I was passionate about. I didn’t decide just to join any company, I decided to join Route. I wanted to work at this company working in this role.

As many of you know, I am passionate about small businesses and the way they are evolving. I’m thrilled to be working at a company that supports small and large online merchants as well as their end customers.

This is a luxury, but if it’s one that you share, I highly recommend joining a company based on its alignment with your personal mission and passions. It will motivate you and encourage you through ups and downs.
Beyond just the mission of the company, it’s important to join a company where you are encouraged and inspired by your colleagues. Throughout my process, I was continually impressed by the rigor, drive, and intelligence of everyone on the Route team. This also shows in the company values.
For me, it was important to pick a company that is solving complex problems. I’ve invested in both B2B and B2C businesses as well as many marketplaces, so it’s exciting to me that Route has elements of all of the above. There is opportunity across so many components of Route’s business that I get excited just brainstorming where we can go.
Finally, of course, pick a company that you believe has a high likelihood of success. COVID has accelerated eCommerce behavior by 5 years, but there are still many ways to make this experience better, more personal, and more trusted for consumers and merchants alike. As someone who lives in a building where nearly half of my packages get stolen, I’m thrilled that Route can help me stay apprised of and protect my purchases. The growth trajectory Route has been on is unlike any other company I’ve ever seen and I can’t wait to be a part of it.

In an ecosystem where Amazon will serve the customer to the detriment of the merchant, Shopify will eventually have to support the merchant to the potential detriment of the customer, Route has an opportunity to support the customer and the merchant both. We started with a shipping insurance for merchants to allow their customers to protect their shipments as well as an app for consumers to track all of their purchases in one place, but we have so much more to come.

As our CTO Ryan Debenham posted, “[Evan Walker, Route’s CEO] explained that shipping insurance was just the beginning and that the vision of Route was to give consumers a premium shopping experience and to help them see, share, and discover the world’s products.”

I am so excited to share Route with the world. If you are as inspired by this mission as I am, please reach out to learn more. We are hiring across the board in both LA and Salt Lake City.

Most importantly, I guess it’s a good thing I got out just as VC Guide got in.

Until we meet again, Arteen