Why Kirsten Green Might Not Invest in the Next Warby Parker
Forerunner's Green explains why she's investing in startups selling to businesses.
Getting interviewed is an unnatural act. It’s a performance of authenticity.
Each subject’s style is reflected as much in how they answer the questions as what they say. Keith Rabois spoke to me from an informal upward sloping angle from within a large central room in his showy $28.9 million Miami Beach house. He doesn’t care what I think of him, but he cares deeply that you are impressed with him. Dara Khosrowshahi, also dialing in from Miami, talked to me from what could have been a broom closet. He’s the master of doling out only bits of himself and keeping things professional. (Unless, I guess, Maureen Dowd is in town.)
It’s not only how interview subjects present themselves in this Zoom era, but how they open the conversation. Some jump right into it; some wait for me to take the lead. Others try flattery. I’m convinced Chris Sacca said more than he bargained for in my latest interview because he cut me off to pay me compliments for my bravery in going independent. I never got a chance to warn him that my interviews tend to sprawl; we’d already started gossiping about Jack Dorsey.
So, when I spoke, Tuesday, to Kirsten Green, the venture capitalist who has built her brand around being a brand expert, I told her that she had a lot to live up to after Sacca’s negative ruminations on the founders who’d made him a fortune. She’s someone who established her reputation in Silicon Valley by investing in direct-to-consumer brands. She’s built a big public profile. She’s a regular on the Forbes Midas List and the magazine’s list of the 100 most powerful women. In 2017 Green earned a spot on the exclusive Time Magazine’s Most Influential People’s list. That same year, the New York Times profiled her in a piece headlined, “A Rare Venture Capitalist — Female and Retail-Focused.”
Green chatted with me over Zoom from her home in San Francisco. On her wall, neatly positioned in the video frame, hung a photograph of a woman holding a rifle pointed directly at the viewer. The woman in the photograph is wearing a white nightgown and pearls and has one-eye closed, aiming her gaze down the barrel of the gun.
Green, clearly a student of doing things the right way, wanted to know what a bullseye would look like for this interview. Who was my best interview subject? Did they do well because they were famous or did they build their reputations because they were good at being interesting? I told her that my interview with Bill Gurley was perhaps my favorite. Green asked me, “So, was it because Bill Gurley is Bill Gurley or did Bill Gurley say something that people were like, ‘Whoa’?”
These are the big questions to which I do not have complete answers. I deflected mildly, responding, “It’s always hard to disentangle.”
This is the era when venture capitalists are professionally obsessed with self-presentation. They’re telling their own stories. Green said she hadn’t given an extensive interview in the last year and a half.
“I feel like the more time that we’re all at home under the computer, the more introverted I get,” she says. “The industry has been pretty good to me in terms of PR and exposure.”
“I was at the right time for if you wanted exposure,” she says. “And then it was just like, maybe it was different to be a woman. And maybe it was different to try to do commerce or whatever. But I didn’t have a strategy about it as much as — I developed some good relationships or whatever. And now I’m just trying to be like, okay, what do I really want to say? I don’t really want to just say something. I don’t really want to be out there to be out there. Because that’s pretty lame.”
As we got into our interview, Green threw up an early warning sign that she wasn’t interested in the sort of retrospective second-guessing that provides juicy fodder for a certain newsletter writer. I asked her if Dollar Shave Club — her venture capital fund’s first investment, which sold to Unilever for $1 billion back in 2016 — should have stayed private longer. “I think it’s important to go through life reflecting with an eye towards learning,” she said, teeing up a big deflection. “But I also really prefer being at a crossroad, stepping through a doorway in one direction or another, and then just being focused on making the most of it, as opposed to going back and rehashing what could have been if you had done this. You’ve done that other thing, right? So, I’ve spent about no time on should Dollar Shave Club have stayed private longer.”
It’s certainly a healthier way of living life than the one I practice.
Going into the interview, I knew what I hoped Green would say, or at least I wondered if she’d go so far as to say it.
We’d talked a few months ago off the record about her views on direct-to-consumer brands so I had a sense for what was on her mind. And she’d published some of her latest thinking on Forerunner’s website. The piece was titled, “The next revolution in commerce will be driven by the seller.”
It’s a well-executed essay for what it is. It’s constrained by the strictures of VC business speak. The writing can’t be so dense that it’s alienating to a reader who isn’t particularly fluent in ecommerce jargon. Yet it avoids the conflict-oriented framing or interpersonal drama that can make journalistic pieces propulsive.
Her piece positioned Substack as one of the key markers of this new seller-first online commerce world. I certainly appreciated the future she was painting. She writes, “Think of the journalist, who no longer needs to cater to a publication’s vision for his work. He can start his own newsletter on Substack, tap into his engaged Twitter audience, and charge a subscription fee to generate content completely in line with his own vision.”
The broader argument is that it’s much easier for small retailers to open their own businesses now. Many businesses are moving from making money from selling advertising to selling products directly to their customers. Stripe, Shopify, and a host of financial services companies have given small businesses the power to sell directly to their customers. And for venture capitalists like Green that often means investing in tools that serve these micro-entrepreneurs rather than necessarily investing in the brands themselves. “We’ve been investing in more B2B type business,” she says.
Green is an early investor in many of the big-name online brands — Warby Parker, Glossier, Bonobos, and Hims & Hers. But her portfolio also extends beyond her reputation for iconic online brands: she invested in Jet.com. She’s among the earliest investors in wholesaler Faire, now valued at $7 billion, and online bank Chime, worth $25 billion.
Her identity as a venture capitalist is closely associated with direct-to-consumer brands. She’s not so much second-guessing her association with that group of companies as trying to grow beyond it.
Green made the case that the direct-to-consumer category never really existed.
“To me, direct-to-consumer businesses are really vertically integrated retailers,” she says.
Warby Parker, which has filed for a public offering, has a bunch of stores these days. Ray-Ban is making Facebook’s new glasses. The distinction between online brands and old-fashioned ones is evaporating.
“If you think about vertically integrated retailers and the business model that they followed — it was the mall,” Green says. The GAP is a vertically integrated business; it just knew how to sell at the mall. Glossier figured out how to sell online. Now, Green is thinking about what it means for companies to grow up after a generation of the businesses born on the internet and social media.
What I really wanted to know is would she even invest in Dollar Shave Club or Warby Parker again today if they were in a new category?
“I mean, I’ve been pitched, we’ve been pitched every version of that,” Green says, before offering a firm, “No.”
“That doesn’t mean we wouldn’t invest in another product business, but they would need to be doing something fundamentally different that meets the current moment.”
When Dollar Shave Club represented fresh thinking, its ideas attracted public attention and helped to propel its business, and then when it came time to sell, it made for a compelling compelling acquisition target.
“I think the market rewards people that are innovating. You know, M&A, a lot of times, is motivated by somebody who’s on that path of reshaping the future, showing how the future is going to be. So, if you think about Dollar Shave Club, that was Unilever recognizing that the consumer was changing, the journey was changing.”
We drifted from talking about how online commerce companies need a wedge into the market to her own venture capital firm’s tactics for breaking into investing.
“A way to think about being good at this job or having value or occupying a space in the ecosystem was to have like a thematic focus,” Green says. “I wanted to be a great early-stage investor — not in DTC companies for the rest of my life. But you have to start somewhere.”
Green isn’t spending as much time looking at those one-off brands anymore.
“The connective tissue is the way we ever got interested in these things in the first place was to follow our nose with the consumer. The way we talk about it is the consumer is our North Star. We try to find an edge by thinking about what’s going on with people.”
Green built her reputation in Silicon Valley as an angel investor. Then she founded Forerunner.
The firm has raised a steadily growing pool of money.
$41 million (2012)
$75 million (2014)
$122 million (2016)
$360 million (2018)
$500 million (2020)
You can see a trend there if you look closely, so I wouldn’t be surprised to see a new fund next year.
Forerunner also has three funds for growth investing — each totals about $60 million. The latest “Build” fund was raised this year.
Green’s investing strategy is clearly creeping up to wherever she can find the right deal. Forerunner recently participated in a $100 million Series B round in Humane, which describes itself as “an experience company that creates products for the benefit of people, crafting technology that puts people first.” Tiger Global led the round and SoftBank, BOND, Qualcomm Ventures, and Forerunner participated.
About 80 percent of the money invested out of Forerunner’s current fund has been poured into Series A rounds. “But we’ve done seeds, and we've done a very select few B’s,” Green says.
Green is worried that she’s missing deals as the velocity of deal-making moves so quickly. “I’ve been turning things down lately, as has every other investor in the Valley, because I don’t have enough hours in the day.”
That seems to have made Green more interested in finding ways to invest in later stage companies that might have gotten away.
Finally, I asked Green what she thought of the world of NFTs. She said that her firm spent some time recently working on projects that they otherwise felt got neglected during their day-to-day work life. Green dedicated that time to digging into NFTs with her 11-year-old son. She bought a few. And she says Forerunner has made one or two unannounced investments in the world of digital goods and the metaverse.
Green slipped into nostalgia, remembering herself as a 23-year-old who was being told that Abercrombie & Fitch and Urban Outfitters were the pinnacle of cool. She remembers a snarky thought about older businesspeople trying to convince her that those brands were hip: “I’m pretty sure you’re not hot or cool, or whatever.”
So, she formed her own views.
Now Green is turning to audience panels and younger founders to read the zeitgeist.
“Now it’s on me to realize that I’m the older person in the room,” she says. “You’ve got to be willing to make yourself a little vulnerable. And just be like, I’ve got to learn new things. And I’ve got to have people of different generations show me the way. And maybe the tradeoff is ‘Hey, I’ve been around the block enough to know about building teams, about setting motivations in place, unlocking people’s talent, goal setting —and you know the product better than me. So, teach me about the product.’”
Two Newcomer Updates:
This newsletter will be quiet for the next two weeks. I’m going on vacation to France. I’ll be back on the grid October 5th and will publish again that week. I’ve published every week since I launched almost a year ago so am excited to disconnect.
I’m making a big publicity push for this newsletter on the week of October 25. I’ll be marking one year since the launch. I’m calling in all my favors or whatever latent good will I’ve got out there. I’m looking for prime interview subjects and scoops. Email me! email@example.com. (You can also just reply to this email.) I’m always grateful when people tweet out their support for this newsletter (or surprisingly LinkedIn posts can be super helpful as well). I’ll be especially appreciative if you all help get the word out the week of October 25.
In a hosts-only episode, Katie Benner, Tom Dotan, and I talk about whether the media has overplayed the Theranos story and argue about whether the public is still interested or what lessons can be learned from the verdict. That turns into a debate about other media-driven tech spectacles, like Facebook's camera glasses, and why reporters gladly play up the hype about hardware.