This isn’t the first economic downturn All Raise CEO Pam Kostka has been through.
“I was here during the dot-com bust and rush, and here during the financial fallout that happened, so we’re a little overdue for some corrective action in the market,” Kostka said. “While I’ve been through boom and bust cycles before, this one is more meaningful because life and death are associated with it.”
All Raise is a nonprofit that focuses on increasing diversity within venture capital, both from a decision-maker and a deal perspective. It recently released its annual report, and we covered how female-founded startups landed more deals than ever before in 2019, per PitchBook data.
After our piece looking at the numbers came out, however, some readers weighed in that our coverage missed the mark: In the headline, did we focus too much on progress and not enough on what is left to be done?
Because we’re both social distancing, I caught up with Kostka on the phone and got her take on how to report numbers around diversity without glossing over the work that remains to be accomplished. We also discussed how to stay optimistic during a downturn, potential innovation that might come out of COVID-19 and why diversity matters now more than ever.
Due to a mix of technical difficulties and software being the worst, I couldn’t fully transcribe all of the audio. But, here are some bits edited for clarity that I pulled from our chat.
Despite the outbreak, founders can keep moving forward
If there is one thing for certain, it’s that we are in uncertain times. Yet entrepreneurs specialize in uncertainty and resiliency dealing with the unexpected. Some companies are well-positioned to benefit from the current environment, while others will have a range of negative impact, from mild to severe. For those founders and operators that haven’t experienced the Great Recession or dot-bomb correction:
Tighten up operationally to ensure you have the cash runway to weather the current economic climate. Lean out non-essential expenses. If you have to cut headcount, which is always the largest expense, make sure that you only have to cut once (multiple reductions are detrimental to team morale) and if you have the ability, make sure to provide a soft landing for the people you let go — your current team will care.
If you are early on in your startup, this is a great time to go heads-down and focus on building out your product to ensure you are well-positioned to take advantage of the upturn when it happens. There are hidden opportunities to change go-to-market opportunities, delivery and product changes. Think creatively how to make the environment work in your favor. Pivot if you need to, and determine if you can make your business more recession-proof.
What we know for certain is that the next great companies are born from these correction cycles.
Industries likely to be impacted by COVID-19
I’m interested in seeing what this does for connectivity operations. The last economic downturn, we saw social media rise. It connected us, but it bifurcated us as well. The concept of groups coming together, either professionally or personally, is something we are going to see change.
We will think more about the Silver Tsunami, or population aging. And of course, the future of work. You can keep pulling the thread on healthcare and innovation and education, COVID-19 is bringing vast experiments to all of these sectors.
Tips on working from home
You should still stick to your same schedule and use your commute time not as work time but as time for you. Also, use video on Zoom. So many people turn the video off, and seeing somebody’s face on a 1:1 meeting or in a larger group meeting makes you feel more connected. Don’t do the pajama drill, because keeping to having a schedule and showering is so important. It keeps the kind of rigor and pace of normalcy. There will be a time where we all go back to work, physically and in real life, this keeps you on a schedule.
Addressing nuance in diversity numbers and presenting the facts
“You can’t change what you don’t measure” has always been our philosophy.
Perpetually negative headlines do not help. We want to acknowledge this in a sound-bite world that might only read a headline.
When reporting data and headlines, we like to celebrate progress made while also spotlight the work that still has to be done. In doing so we can encourage the focus on changes that are taking root so they continue to grow, while not providing the convenience in today’s fast-moving, information-overload environment that we’ve checked the box on equity in technology and moved on.
With data, you need to dig into the details to understand the narrative. But not everyone will take the time to click through and read the story, so the headline takes on importance to boil things down to the bottom line take-away and hopefully encourage people to read and dig into the details.
Some metrics are unquantifiable
What we choose to focus on is how do I make sure when a woman makes partner that she has the best chance of being successful as a partner in the ecosystem. And that may look different for an early-stage firm versus a late-stage firm. Or if she’s starting up her own venture fund.
We also unpack what is behind and driving those overall numbers we share. Like, what happens during the interview process. And what happens from a compensation process for women in tech.
Diversity and inclusion hiring is as important as ever
We cannot afford to take our eye off of [diversity and inclusion] in these trying times. We will focus too much on economics, but [diversity and inclusion] will help us get a better outcome. All the statistics point to the fact that women can be more capital-efficient and that diverse teams tend to be more capital-efficient. So that should factor into having a diverse team.
It is already harder when you are at 10 people and need to turn your ship, it is even harder when you have 100 people, or 1,000 people.
What she’s reading
“The Over Story” by Richard Powers. It is just about nature and forests and climate control. It’s a beautifully written, immersive story. And in today’s troubling times, you get to immerse yourself in a completely different world.