Insights on Ideation, Founding Teams, and Hiring from AlleyCorp’s Wendy Tsu

When searching for an idea to turn into a profitable business, should you focus deeply on one area or should you case a wide net? Shikhar Ghosh sat down with Wendy Tsu, Partner of New Business Ventures at AlleyCorp, who investigates new business ideas, focusing on early-stage investments. Tsu has a knack for identifying potentially lucrative business ideas and building the teams to execute them. She started her career at PayPal on the product side, focused on mobile payments. She was introduced to the Silicon Alley ecosystem when her team led the acquisition of Venmo. After spending time as a consultant leading the expansion of KIPP Charter Schools on the West coast and earning her MBA from Stanford Graduate School of Business, she started working for the Chan-Zuckerberg Initiative and became acquainted with AlleyCorp. After joining the firm officially in 2017, she has led investing efforts in over a third of AlleyCorp’s portfolio. She also helped conceptualize, develop, and launch two vastly different companies in AlleyCorp’s portfolio. CoEdition is a fashion marketplace that provides designer styles for women sizes 10 to 26. Truebird, a pioneering concept co-designed by coffee experts and engineers, offers fully-automated micro-cafés that provide delicious coffee without the long wait times and higher costs of traditional coffee shops. In this conversation, Tsu and Ghosh cover myriad topics related to starting new ventures. Learn how Tsu and other investors evaluate ideas, CEOs and other executives, and founding teams. She shares tips on ideation and recruiting, including practical steps for interviewing. A lightly edited transcript follows the video.

Wendy Tsu interviewed by Shikhar Ghosh on various topics related to starting new ventures, following AlleyCorp’s model. Interview on occurred March 6, 2020, at Harvard Business School. 


Insights on Ideation, Founding Teams, and Hiring

SHIKHAR GHOSH: This is Wendy Tsu, she’s the Partner of New Business Ventures at AlleyCorp. This is a group that was founded by Kevin Ryan. Kevin Ryan is a storied investor that we have in other interviews here and she’s been really building out the teams, the structures, the processes and so on within AlleyCorp to create a community of entrepreneurs and a whole– She calls the mafia in New York. How did you end up at AlleyCorp?

WENDY TSU: Yeah, so I’ve now been in AlleyCorp three years formally, informally, probably closer to three and a half, four years.

SHIKHAR GHOSH: How old is AlleyCorp?

WENDY TSU: AlleyCorp itself is around 10 years old, it was formed in 2008.


WENDY TSU: Yeah. And so the original team, it was really Kevin, it was Dwight Merriman and we had at one point actually in HBS alum Rizwan Abasher, who’s since then started her own company, it’s now series C back and she had worked actually at Gilt and so she had spent some time at AlleyCorp as well. But it’s really sort of the new guard really came in when I joined AlleyCorp in 2017 formally. And a little bit of my background, I started my career at PayPal on the product side, focused on mobile payments. Our team then led the acquisition of Venmo and so that’s really what was my first foray really into the New York ecosystem.


WENDY TSU: Venmo being one of the more forward-thinking FinTech companies and spent some time then in consulting and spent then a couple of years as the expansion lead for the KIPP charter school, so launching new schools on the West coast for KIPP. Went to the GSB, started working for the Chan-Zuckerberg initiative. And how I got introduced to AlleyCorp actually was through getting to know Shan-Lyn Ma at Zola and Shan is an incredible product person and I actually met her very, very early on during my time at the GSB at an event, I had cold emailed her and we had built this connection and that’s really how I was shepherded into the AlleyCorp family.

And so what’s amazing about sort of being a part of these grad school ecosystems is you can get to know some incredible people and you never know where a connection or relationship, how it will build over time and how it might lead to either find your co-founder, find your organization to work with, finding an investor who wants invest in your startup.

SHIKHAR GHOSH: Just get an idea.

WENDY TSU: Yeah, I mean, being in the hub at an institution there, HBS alone has over 900 students in every single class. Those are so many different nodes that can be made. And beyond that, each class has so many different speakers that come in and it’s amazing what one single connection can make. And it’s been incredible to see Zola as one of our AlleyCorp companies grow and for me to continually be inspired by Shan in everything she’s doing at Zola.

SHIKHAR GHOSH: Yesterday I was talking to somebody who’s a new VC, a student, and he was asking me, he said, “I go to these networking events two or three times a week, what should I do there? And it feels kind of superficial.” And I said, “The first thing is you don’t know what’s superficial and what’s not. Because sometimes these weak connections then yield something later. But the primary thing that you should be doing is saying, how can I help each person that I meet. Not how can I get something from them?” Because these things all just come around in that process. So you started there. How did you actually get the job at AlleyCorp?

WENDY TSU: At that point in time, AlleyCorp was thinking about a new concept in the end of life, call it death care, space and building a thesis around that and Shan, actually I remember her emailing me during my second year and saying, “Wendy, I think that you should chat with Kevin Ryan about this idea that the firm itself is noodling on. You have a great background in ‘X, Y, Z’, you’ve done ‘X, Y, Z’.” And a lot of that was just my relationship, having nurtured my relationship with her and at that point in time, I actually didn’t know really who Kevin Ryan was. I think Kevin does an incredible job at being very humble and being very involved in the companies and what was once– I think at that point in time, I think he was in Africa and I had done a lot of research ahead of time around this space. It’s a topic that I’ve experienced personally having experienced a loss of a couple of my loved ones and had chatted with probably 20 or 30 other people who’ve experienced the loss of a loved one to develop my own point of view.

And I think what was a 30-minute conversation quickly became almost like a one-hour, two-hour conversation, while he was in Africa and that then led to organic conversations over time, during the school year around, how do we want to dig into this research topic? And that then led to working essentially full time, we’d gotten to know each other and over the course of four to five months I’d moved to New York post graduating from the GSB, really still more on a, call it, contract basis. And it organically led to a conversation around, “What would it look like for you to join us full time and to lead research and incubation for us?”

Our firm since then, since 2017, we’ve been a partner now in the fund, we’ve brought on our healthcare partner, we have our associate who comes from a data scientist background, we have our head of platform who thinks through network and engagement for us. And what we do at AlleyCorp, people are the most important thing, getting to know people and making sure we support people. And so platform engagement is actually very, very important. So our firm now it’s– it was just really Kevin and myself and the chief of staff and now it’s over seven people full time.

SHIKHAR GHOSH: Okay. So, when you started, one of the things that strikes me about your story is A) there’s a weak connection, that you first start just with a cold email and then slowly that builds up and you never know where this thing is going to go. You reach a point where there’s a topic that you’re interested in and they’re interested in, and then you spend a while, again, not knowing what the transactional thing is going to be, not knowing if you’re going to get paid, you’re just interested in it, you’re helping out.

WENDY TSU: Maybe I should be thinking more about title and payment transaction, but you’re exactly right, there hasn’t been a point in my career and this stems from also having gone from PayPal to consulting at monitor group to then KIPP charter schools which is a totally different industry, to then Chan-Zuckerberg initiative to AlleyCorp. In my mind there was never this question around, “What could pay look like? What could my title look like?” It was always this conversation around, “I’m just so intellectually curious about payments. I’m so intellectually curious about education nonprofit. I’m so curious about then what impact investing could look like.”

And it was a very sort of natural transition and I think because of this curiosity, it makes it so that when I have interactions with people, I just want to know everything about what they’re doing and I want to know everything about what I can do to be just as thoughtful around their thesis on this space.

SHIKHAR GHOSH: And what I found is that people who do really well often have that, it’s just a curiosity, it’s not transactional. You don’t come in and say, “Okay, what do I get for this? How much are you going to pay for my time?” Any of those questions. But it turns out that those things sort of sort themselves out.

WENDY TSU: Yeah, I would say that every single person on our team, I’m continually so impressed by everyone that I work with because of their deep intensity for learning about different trends, different companies, different models across spheres and industries. Every week for AlleyCorp, we have a weekly stand up, which in our calendar is just called ideation, which is we come to the table and we note down exciting people or interesting models or interesting companies internationally as well as domestically across nonprofit, for-profit, that are things that are worth us talking about.

And those topics can range from things like psychedelics to topics like coffee, to rum, to autism therapy and because we’re industry agnostic as a firm, there’s no such thing as, “That topic too taboo.” I mean, we’re investors in a sexual intimacy concept that is aimed at being an app for couples to better engage with each other physically.

That would normally be a very traditionally taboo topic, but us having talked to so many couples on our own and realizing that actually is such a big pain point for a lot of different people who have been in a long term relationship, there’s an area where we can actually help guide and coach this customer segment.

SHIKHAR GHOSH: Which is kind of everyone.

WENDY TSU: Yeah. Which is truly—it’s everyone. And so if anything, my weekly conversations with the founders there, who are so smart, is we could be the thing for everyone, but what are the first couple wedge customers that we really want to focus on? Just want the first.

SHIKHAR GHOSH: One of the debates in entrepreneurship is often, “Do you need to go really deep into one area so you know everything and everyone in a particular area or can you go wide?” And Kevin and AlleyCorp is taking this view of, “We have all of these companies and every one of them is doing something completely different.” Since you don’t have depth in weddings or in database systems, how does that actually work?

WENDY TSU: Yeah, so our point of view is it depends on the industry, right? Certain things in healthcare, you do need someone in house within healthcare ecosystems because they truly understand the pain. But otherwise, our point of view is that innovation actually comes from those that are from outside the industry because they’re able to see the inefficiencies of a product. There’s two questions that we live by in any idea which is 1) what’s a process that is too inefficient? It’s costing someone too much time to do. 2) what’s a process that is too expensive? And those are the two questions that we ask anyone that we interact with as we–

SHIKHAR GHOSH: And expensive can be not just money, it can be time–

WENDY TSU: It could be time, it could be–

SHIKHAR GHOSH: So intimacy is not expensive, but it’s costing—

WENDY TSU: It costs a lot of thought-ware time.


WENDY TSU: Yeah and those are the two questions that we essentially ask every person that we interact with. We, at AlleyCorp, host small focus groups, oftentimes bringing marketers together, or CFOs together, or customer success specialists together. So sometimes it’s functional, sometimes it’s industry-based, so bringing together chief medical officers together, those who are often decision-makers and we ask them, “What is just such an inefficient process that is very annoying for you? And/or what is just too expensive that you wish was cheaper or easier to do?”

WENDY TSU: And that’s how Mongo came to be, right? Mongo came to be because our companies then were using older existing incumbents like SAP and Oracle and it was just too costly, it was too expensive. And on the engineering side, it wasn’t a great product for engineers to query from, it took too much time. And so we thought, “Okay, is there a new form of a database that can be created that is cheaper, had more flexible contracts, and perhaps volume-based pricing and is better for the engineer that is leveraging, call it, NoSQL or open source.” Because now they can share, I’ll call it, best practices around how to use the Mongo database. So while it was a team that had not, call it, not been from the database world, it was a technical team though that very much felt the pain. So in every company that we’ve launched, it has to be a team that has felt the pain.

SHIKHAR GHOSH: And that cares about solving that pain in some way.

WENDY TSU: Absolutely. Zola, Shan’s not married herself, but she’s gone to so many different weddings. Oh, I think that a rich business school person probably goes to 12 weddings a year. And so she knew she was going to so many weddings and in any article you’d read you, she’d say, “I’ve experienced this pain point. I wished that registry experiences were better. I wish I could gift something in a more unique way.” Whether it’s a cash fund, whether it’s more niche products and while she never came from, call it, the registry space, she was a product person and what ultimately Zola was creating was a better product experience for registry. She viscerally felt the pain.

SHIKHAR GHOSH: Yeah. So if we step back a little bit, you have your standup meetings, right? You’re discussing kind of general trends and it’s just a way of exposing everybody to a set of interesting ideas and so on. And what’s the rest? Do you have a formal process and what’s the rest of your ideation process look like?

WENDY TSU: Yeah, so for us there’s a couple of different ways in which we, call it, source pain-points and we actually keep a tracker of all different pain points that we hear. From perhaps seemingly boring ones like managing international payroll taxes, which is one that our director of people at Mongo certainly feels. Having multiple offices at Mongo, when I have my conversations with her, she’ll say—I’ll just ask her, “What has been unnecessary taking up a lot of your time?

WENDY TSU: “Wendy, what’s been unnecessary taking up a lot of my time is actually managing international payroll taxes and reconciling different tax codes for different countries. I wish that there was this thing that did this.” And I think, “Interesting. Okay. Not sure–”

SHIKHAR GHOSH: We do that for states over here, why can’t we do it for—

WENDY TSU: Yeah, “Not sure what the solution is, but let’s let’s flag it.” And so the first step is we keep a tracker of all of our pain points, we then organize our pain points, call it, into–

SHIKHAR GHOSH: And the pain points come from everywhere, right?

WENDY TSU: They can from everywhere, they come top-down, bottoms up, and the top-down approach really is, “Is there a new way of solving for a pain point of which there’s already an existing company that’s doing it, but quite honestly, is it spending time thinking about the customer in the way that they should?” So in the top-down approach, SAP would be to Mongo DB, right? In the case of Zola, it is The Knot to Zola, right? Zola is a re-imagined version of The Knot as mobile-first, mobile-friendly and focused around more small niche brands and experiences and. Mongo is NoSQL open source database. Nomad Health is another example of this which is there are many privately owned search firms that help hospitals find travel nurses, local nurses and they end up costing hospitals a lot of money. And they’re family-owned, privately owned and they’re worth over X billion dollars in revenue every year. And we think, “Gosh, I can’t believe there’s that many companies helping hospitals find nurses. There must be a way to make it cheaper. There must be a way to have it be more digitally forward.” It’s also, the top-down approach is looking across the sphere at different companies who’ve been around for quite some time, probably went public before 2008 and are just rather stale. A company like Amazon is adding so much value a year over year, and you can see in terms of their revenue growth over time.

So what we’re really looking for is companies that have shown that there’s already a large market, but where growth is relatively, it’s slower and the companies almost become too bureaucratic for new innovation, that’s top-down. Bottoms-up is then, so say we find–

SHIKHAR GHOSH: And It doesn’t matter what the sector is?

WENDY TSU: No, it doesn’t matter.

SHIKHAR GHOSH: These are all sort of people problems in some way, they’re business problems.

WENDY TSU: They’re business problems, they’re businesses. Yeah, there are so many, it would be hard to come up with a category-defining a new idea. There are just so many companies that are out there. That’s what we always focus in on, these two questions, “how could the process be more efficient and how can it be cheaper?” Because at the end of the day, if you can deliver a value prop that is better, cheaper and or faster and ideally is operating on at least two of those spheres, customers will pay for what you want.

And the bottoms-up approach really then is, okay, so we have perhaps found a really interesting company that is doing ‘X, Y, Z’, that is a large privately owned or publicly owned company, but that customers don’t really like as much. We’ll then start talking to that customer segment and we’ll ask them, “Hey, what do you not like about using ‘X, Y, Z’?”

WENDY TSU: “Oh, I really don’t like this, I really don’t like that.” And those then help surface up the user pain points and so–

SHIKHAR GHOSH: But then the company’s become a monopoly and they’re charging huge amounts.

WENDY TSU: I mean, academic publishing [inaudible] or Harvard is a great example of this, right? In the academic publishing world, you have incumbents here, the journals, that have created almost like their own–

SHIKHAR GHOSH: Monopolies.

WENDY TSU: Monopolies, oligopolies in a sense. And these contracts, these universities are expensive. And so if I’m talking to a librarian, and this is research that we’re actively doing right now, the librarian would say, “Oh, you know what’s too expensive, paying for these journals is too expensive. Access to these journals is too expensive.” And then if we talk to the academics, who are the users of these journals, of course submitting articles to these journals, they would say, “It’s hyper bureaucratic.”

SHIKHAR GHOSH: “It’s taking three years to get something through and we don’t even know why.”

WENDY TSU: Exactly. So, and this is actively a topic that we’re working on right now and that was actually looking at a list of, call it, publicly and privately on companies and saying, “Okay, it’s interesting how journals, they own such a big market and yet, when I talked to the people who are using it, they don’t like their experience as much.” And we think through, “Okay, what could a new world look like for academic publishing?” And by talking to librarians and talking to postdocs, what we’ve been hearing is the pre-print space. Is there an opportunity where we actually create the marketplace for academics to talk to each other before a journal is even published, before they’ve even picked the journal they want to publish the article too?

And we’re seeing actually with Covid-19, with coronavirus right now, everyone’s trying to figure out, there’s so many different institutions who are working on different research, there’s no way that an article’s going to be published in the next week or two, but all these different academics, they need to talk to each other to figure out what are the best practices. There really isn’t this collaboration ecosystem, call it, the curated Reddit for academics. And so it’s a hypothesis, the next natural step is 1) we always will craft a one-pager that describes the idea. We then use that one-pager and we share it with all the different, call it, decision-makers that touch this.

SHIKHAR GHOSH: And is the one-pager focused on the problem or on the solution?

WENDY TSU: It’s focused more on the problem actually. Usually, in one-pagers, we’ll walk through the– it probably only takes two hours to crash one of these one-pagers and it’s meant to be quite simple. An easy document that I could share with you and say, “Hey, we’ve just briefly started looking into this. Just want your active thoughts around, is this a pain point that you’ve experienced around the publishing space?”

“Okay. Tell me more, tell me more, tell me more.” It’s used as a document to get the conversation started with people in a thoughtful way that sets the stage for, “This is how big the market is. These are some competitors or, call it, tools that the academics are using right now. These are some of the pain points that we’ve been hearing. Do you agree? Do you not agree? What else are we missing?” They’re used as a way for us to engage in thoughtful interviews, call it, our focus group interviews, product discovery interviews. And usually, a rule of thumb is try to interview ten people or interview– 1) you have to come up with your list of who are the decision-makers ultimately for whatever this concept could be. So in our case, it’s librarians, it’s postdocs, it’s donors and it’s the grant foundation directors. And so making sure we then are able to reach out to, call it, a few different people in each of those different customer demos, share a one-pager with them, write reflections–

SHIKHAR GHOSH: And you’re still saying, “Describe your pain.”

WENDY TSU: “Describe your pain?” Yeah.

SHIKHAR GHOSH: It’s not, “Is this a good solution for your pain?”

WENDY TSU: No, it’s too early to introduce a solution, yeah. Because otherwise, I’d be sort of forced feeding them a thing that we’re not yet sure about, is this even the right solution? So the first set of conversations are usually discovery. Try to do ten-ish discovery interviews, where we’re not putting a point of view. We’re merely here to solicit their pain. Come back and then think through, “Okay, it just so happens that this pain point, every single one of our interviewers said is really meaningful.” And this is what, essentially, product people do in their job, which is why we ultimately try to find product founders as our CEOs.

And we synthesize then our learnings and our findings and then we start thinking through, what could different solutions look like? Then we’ll create little almost, call it, concept decks around each potential type of solution. So in the case of academic research, and again, this is still active, this is live right now, one pain point that we’d heard is on funding. Grant academics spend over a hundred hours writing grant proposals, it takes up too much of their time. And we said, “Hm, okay.” And we’re starting to see them actually apply to more foundations instead, to the Gates, to the bros, to the Warren foundations because it’s just easier and quicker.

And we think, “Okay, well what could then a curated Kickstarter look like? Where now the you’s and me’s of the world could actually could contribute ‘X’ amount to that cutting edge researcher focus on infectious diseases. What could that look like?” And then we start developing, call it, the concept deck, which is more of a description around what the product flow could look like.

So in that world maybe we’ll draw up some mock screens of the product and another potential solution is around this pain point of–

SHIKHAR GHOSH: But you’re not at that point writing code or any of that?

WENDY TSU: Oh no, no, no. Very rarely we’ll actually create a product ahead of time. Then another solution that we’re thinking about in the academic world is around the publishing piece, postdocs and academics telling us, “We wish there’s a way that we could collaborate with other academics before we even print in journal.” And we’ve been seeing more and more institutions doing that. Of which we think, “Okay, Hm. Could we become actually then the go-to marketplace?”


WENDY TSU: “Or perhaps the white label solution that sells into the university.” And we say, “Hey Harvard, we want to be your entity that allows for academics to talk to one another within your institution.” Maybe that could be it. So we’ll create our concept deck there, but those were born out of our product discovery conversations. And then from there, we will then share those with a new set of those decision-makers, librarians, the postdocs, the academics, et cetera, et cetera, and we’ll gauge their feedback on does this potential solution resonate with them? And they’ll give us feedback on, “Oh that Kickstarter idea. Yeah, that’s interesting, but you got to make sure that you have it so that if an outside donor like you and me donates money or gives money that the university doesn’t take a huge overhead on that cause right now 65% of the–”

SHIKHAR GHOSH: Money coming in goes–

WENDY TSU: “– will go to university overhead.” So actually not much of it actually really goes to the academic. And that was a new nuance that we’d heard by doing that and by sharing that breathing its solution. So you end up doing a few rounds of these, actually. Every time can get more and more distilled around and more and more insights and you get more and more of a point of view around what the concept should look like. And what you want to ultimately hear is you want to hear from all different stakeholders, “That solution you have right there, what you’re thinking about, yes, I want it. When you guys are thinking about creating product or piloting this, call me up because I want to be one of your first customers.”

SHIKHAR GHOSH: Right. And three months later, in the ideal world, they call you up and say, “Hey, how are you doing with that?”

WENDY TSU: Yeah. If someone says, “Oh, that’s interesting. Oh, that’s cool.” That’s a euphemism for they don’t really care.


WENDY TSU: What you want to hear is, “Wow, I really need that now. When you guys launched this, please keep me posted.” That is when you know that you have the beginnings of something, that’s when you know that you probably should go on a deeper dive into actually then building, call it, mockups of the product or whatever it might be.

SHIKHAR GHOSH: So one of the things I see a lot of students over here is initially they start off saying, “I need a technical co-founder.” And what they mean by that is, “I need someone who can write code.” And then they go in and they hire somebody and that person wants to write code, but they don’t know what they’re really building. And so they think about the best solution they can when they haven’t fully understood the problem, they haven’t done all the steps that you’re describing in this process. And that’s one of the risks of having someone who sees their job as building the product.

WENDY TSU: Yeah. A lot of what is a model in our team is, assume the product is real today, what would you do? So in the case of academic publishing, if I were to assume the product already existed, the first thing I would do is I would go to academic institutions and I would say I would show them my sales deck and I would say, “This is my sales deck. The product already exists, I’ll show it to you later. But based on this sales deck, you want it?” And then if they say, “Yeah, I want it.” I know that I have something.


WENDY TSU: And so the question that everyone goes through is, assume your product already exists, assume the codes already been done. How are you going to sell it? You’re going to sell it, usually, through– Like when we’re selling Mongo, it’s not that someone’s using the demo product, there’s a sales deck that we send to the customers and they look at it and they say, “Okay, I’m intrigued. I want to actually poke around.” That is enough to know if you’re actually solving a pain point for them.

SHIKHAR GHOSH: Right. This is Dropbox, Drew Houston did that. Before he had a product, he did the video saying, “This is what the product is going to be.”

WENDY TSU: You just assume it’s real, assume your product is real.

SHIKHAR GHOSH: How do you know that when you do the sales deck and the person says, “I’m interested” that they’re really interested in it? They’re not just sort of keeping you happy.

WENDY TSU: So we experienced that a fair amount at AlleyCorp because we have a brand behind us, “Oh it’s the team behind Mongo and Zola and Business Insider.” There’s sort of his bias around, “They must know what they’re doing.” Right? And so we’re, as a team, actively thinking about this, how do we make sure that we’re not biasing others? It’d be like if Elon Musk were to come here and say, “Oh, this is a new idea that I have.” When maybe my hearts of hearts, I might say, “I’m just actually sure about this idea.” But because it’s him and he’s so iconic–

SHIKHAR GHOSH: Also, I don’t want to piss him off.

WENDY TSU: Yeah. That I’m going to–

SHIKHAR GHOSH: It’s his idea, yeah. There’s no value to saying, no, there’s a lot of value in saying, “Yeah, that’s intriguing.”

WENDY TSU: Exactly. And so we do experience a bit of that At AlleyCorp, I think we do. And we’re actively thinking through, how do we hedge for that? Right? And I think a few different ways for that is removing ourselves from– In our pitch decks and one-pagers, nowhere does it say that this is an AlleyCorp backed concept. Nowhere does it say who the people who are involved

WENDY TSU: –often this. Sometimes I actually have it so that we’ll bring on consultants who will work with us on projects. They’re almost like this third-party perspective who can help lead the interviews. We’ll listen in, but they’re the ones really leading it so it’s less associated with AlleyCorp. We keep most things very much low fidelity so that things are more raw and that people-

SHIKHAR GHOSH: That concept has to come through. It has to be powerful enough.

WENDY TSU: Yes. The concept has to be powerful enough where it isn’t disguised under a pretty deck, a pretty well-designed deck. Because the more polished something looks, the harder it is for me or anyone to say, “I’m not sure if this is actually what I really want.” Because they’ve clearly spent a lot of time on what they’re working on.

SHIKHAR GHOSH: When they say, “I’m interested,” do you ask for a deposit, something that indicates that’s a little bit more expensive than just-

WENDY TSU: It’ll depend on the kind of company it is, right? If it’s a consumer-facing company, a lot of what one should be testing for is conversion. I recommend everyone if it’s going to be an e-commerce site or a consumer-facing site, put up a landing page. There’s a bunch of free sources that are out there where one could easily test copyright– or sorry, language on the site. You should be seeing 20%, 30% conversion into a wait list of people signing up. The enterprise side is tougher. The enterprise side is having a company commit to saying, “I want to be your pilot customer.” That’ll depend on the type of industry.

SHIKHAR GHOSH: Or at least, “I want to be considered to be a pilot customer.”

WENDY TSU: Exactly. Enterprise companies as a whole, it’s a little bit harder. But if anyone’s creating a company one of the most telling things will be, “Hey, I have two large whales who are signing up as pilot customers. Here are their LOIs, the letters of intent to work with us.” Consumer though, I mean, the digital world are all your customers.

SHIKHAR GHOSH: You go through this process of first starting with the problem, then coming with sort of early versions of what a solution might be, at each stage going back to the customer. When do you know that, “Okay, this is the time for us to actually start building, building up a team,” doing all of that? Because you must have so many ideas. Then you’re whittling it down to a few that you actually don’t know. How do you compare depth to a technical database?

WENDY TSU: There’s a few different factors. One is the defensibility of the business model. Is this the kind of business where we’re the first mover, but where barriers to enter are incredibly low? That means then we have to move incredibly fast. There’s an element around what is the overall defensibility of the business model? How do we create a moat around us?

Businesses where barriers to entry are low or scarier. Because if you don’t execute well, then you’re not going to be executing really at all. Someone else’s going to come in and enter and do it much better than us.

SHIKHAR GHOSH: If we look at Zola, which is a registry and technically it’s quite easy to do, is that a high barrier or a low barrier?

WENDY TSU: It’s medium. For Zola, our power now is that we have over 65,000 or 85,000, somewhere in there, thousand brands now that are on our site.

SHIKHAR GHOSH: That’s really hard to replicate.

WENDY TSU: That’s very hard to replicate. In CoEdition, which is our 2017 company e-con platform for plus-size clothing, there are over probably 6,000 plus-size brands internationally. Most of the brands for plus-size women are actually international. They’re not in the US. The Bloomingdale’s of the world, the large incumbents, Macy’s don’t really service this plus-size customer. In that world-

SHIKHAR GHOSH: Getting started is easy, but the building is heinous.

WENDY TSU: –Getting started is easy, but building scale is tough. You have to have a cutting-edge merchandise team. One of our founders, Brooke Cundiff, she comes from the merchandise world. She was the former essentially merchandise exec at Gilt Groupe. She knows all the top brands already. The ability to onboard them is so much quicker than a founder who does not and did not come from that world. Defensibility of the business is definitely one thing.

Monetization, the ability for this company to monetize. Media-based companies are just harder now. Anything that requires ad revenue just isn’t really a great business. Quite frankly, our work in the death care world was. There were concerns around, “how would we be able to monetize?” One, there are certain regulatory laws that prevent certain types of monetization to happen when it comes to sort of-

SHIKHAR GHOSH: Bereavement.

WENDY TSU: –medical advice. The law being Stark’s Law. Two, who we’re targeting here doesn’t really live online. If we’re targeting sort of that 50, 60 year old, they’re not really responding as much digitally. Being able to reach the customer, I’m not saying it’s impossible, it’s just more difficult. Defense of the business, monetization, the regulatory environment, there’s some industries where we’re looking to a concept we’re on telehealth for pets. There are laws and regulations in place to prevent that from happening. Although we believe that probably in the next year or two those will be lifted. We could perhaps be a first mover, but that is a big also, “What if?” Truebird there’s a lot of Department of Health relationships that need to have it.

SHIKHAR GHOSH: That’s the coffee.

WENDY TSU: Coffee, and so in that world– and we’re also launching a new company that’ll be supply chain for food trucks. Both of those require working closely with city governments. That’s another piece as well. But on the regulation side, that also can be a competitive advantage because that is probably what will prevent many other people from entering. Then, of course, market size. I would say that’s really the fourth pillar is, “Is this a big enough market?”

SHIKHAR GHOSH: What’s big enough?

WENDY TSU: Big enough is there an opportunity to be a billion-dollar company.

SHIKHAR GHOSH: Billion-dollar valuation?

WENDY TSU: It sort of depends. Is there potential for this company to grow into the multi-hundreds of millions in revenue, which usually then will lead a billion-plus valuation. That being said though, there are some businesses that are meant– say we go down this academic route. Defensibility, mmm, not sure. It would depend on how we enter. If we ended up creating a consortium with all these different institutions, yeah. Then we can really create a moat. Monetization, harder. It’s harder to sell them to a university system. I’m not saying it’s impossible, but it definitely is harder, sales cycles are longer.

WENDY TSU: Market, it’s not that huge of a market. There’s only probably around 100,000 call it post-docs in the US. It’s not a huge labor pool. As I look at that business, I’m like defensibility, unclear monetization, unclear TAM, maybe big. There’s some companies that are quite big doing this. Regulatory, for the most part also a little bit unclear in that there are embedded peer review systems.

While it might not be potentially a great area to go into, it’s pretty easy to test. In that world, we could probably hire a outsource engineer. Very quickly build a Reddit-like site and share it with the university and just say, “Hey, we want to give this as a free solution and sort of just see what happens.” It would only be maybe a $50,000 project. Then you sort of just see what the flywheels are after that.

SHIKHAR GHOSH: I just saw a company a couple of weeks ago that’s doing a similar kind of thing. They’re saying, “Universities have a really difficult time doing exec ed locally and around the world.” But you go to India and they still want the brands from, they want an HBS brand or they want the Wharton brand and so on.

Or you go to Ghana and people will pay a lot of money to get those brands and the quality that comes with it. They’re signing up all these universities where the brands are known internationally. Then offering their courses in these countries that these universities cannot get to. It’s just a pure source of revenue.

WENDY TSU: It’s almost like creating a franchise amongst other countries.

SHIKHAR GHOSH: Right. Once you have it, the university is not going to have two providers in Ghana. There’s a lot of relationship and building ties that’s defensible. That’s just an example. How big is it? I don’t know.

WENDY TSU: That’s so interesting because corporate learning is a whole other area that we’re poking into. A lot of companies like MongoDB, they have large L&D budgets. But the big next question is, “Well, how do you deploy L&D credits?” There’s this sort of discovery mode, which is for execs or for call it rising managers, which is, “Yes, you can take that exec ed course from an institution, but what else exists out there for me that I could take?

What if I want to be a better public speaker, but I don’t really want to do Toastmasters. I don’t really know what the best public speaking courses are out there.” Or there’s another version where you were seeing this start to happen, which is professors creating almost franchises around themselves.

I mean LaunchPad is a great example. LaunchPad is now a course, it’s Steve Blank’s course. It’s taught at Columbia. It’s taught at Stanford. It’s taught at a few other institutions. He’s essentially creating this franchise around himself as a professor. That leads us to another world of, “Okay, well what could another alternative education pathway look like?” Which is really an amalgamation of a bunch of different professors from different institutions creating their own content. That’s interesting.

SHIKHAR GHOSH: The whole field of ideas is unlimited and what strikes me in listening to you is the process, you’re very disciplined about the process. But the particular idea can be anything.

WENDY TSU: It can be anything.

SHIKHAR GHOSH: Because the same process of customer discovery, solution testing, and then evaluation of the opportunity—that’s something that’s common across all of these things.

WENDY TSU: Sometimes for us, we clearly can’t go deep into every space. But that’s why we also in addition to incubation, we also invest in other people’s startups. In academic research, I’ve gone down this rabbit hole. I now empathize with the pain. I’ve talked to over 50 academics and 20 librarians and over 10 grants or donors. We definitely know of his pain. Not at an expert level, but know it well enough where we might not ever come up with what the right solution is, but perhaps a year from now we’ll meet an entrepreneur who is doing and solving for this pain and we say, “That is the entrepreneur we have to invest in.”

That’s the benefit of being really pain-point driven. A lot of times we’ll end up with one-pagers and call it concept-x that are shelved, but they’re not shelved because it’s a bad area, they’re shelved because we just weren’t able to get there. But then when a founder comes to us and they are solving for that pain it makes it a lot easier for us to empathize with what they’re trying to solve, what they’re trying to create.

SHIKHAR GHOSH: Let’s talk a little bit here, you’ve got the problem, the idea, the solution, and obviously the other ingredient is who’s the team? Who does it? How do you go about selecting co-founders, founders, teams? How do you put them together? What’s the process?

WENDY TSU: The first part is one, what is the business model? How is this business really going to run? Is it a marketplace business? Is it a more deep frontier tech kind of business where really the first two years are just building a technology?

SHIKHAR GHOSH: Mongo is an example.

WENDY TSU: Mongo is a great example of this. To some extent, Truebird is also a very good example of this. Is it a kind of company actually where there is no tech involved and you just really need really great marketing or really great X, Y, Z? Business Insider is a good example of this. It’s a media site. It doesn’t need complex tech. It’s just built off WordPress.

SHIKHAR GHOSH: Business Insight is built entirely on WordPress?

WENDY TSU: Yeah, the beginnings of it absolutely were. Yeah. I don’t think we had an engineer for the first few years because people are just reading content. Whereas Zola is a product-oriented company. It’s both product and marketplace. The team at the home there no doubt is a very well-experienced product team. At Mongo, that’s a very technical company. The initial team really is a very technical team of engineers.

SHIKHAR GHOSH: It’s sort of what’s the core problem here where you need someone with deep insight and passion for that particular thing. Then you say, “Let’s find somebody who has that expertise.”

WENDY TSU: Yes, who has that functional expertise. Yeah. They might not have that industry expertise, but they have the functional expertise. In the case of Truebird, that company it’s a mixture of hardware as well as software and food and beverage. It’s impossible to have that all in one person. We had started off though with a founding team that was a technical team. We knew that we needed to bring on a technical hardware engineer. We knew that we needed to bring on a technical physical product leader.

WENDY TSU: Those were really our first two that we’d brought on to build the product. Both of them though, their DNA is they get excited about building products.

SHIKHAR GHOSH: Literally building products.

WENDY TSU: Like literally physically building products. Once we knew that we had called it a prototype that was running where we could serve X-hundreds of coffee a day, where our NPS score then was around I think 87 of a sample size of 140, very solid score, we knew then, “Okay, we need to now get this into more locations. We need someone that understands and can appreciate the product. But moreover is someone that has excitement around being able to call it, sell into other corporate lobby buildings. Eventually, we’ll have to hire a separate BD person for that, but we need to have a CEO who’s managed teams in the past who comes from a world of product and ideally has a passion for coffee and for food and beverage.”

When I say product, we had a few different options. We had one that had come from Amazon world and really has a background in more supply chain and manufacturing who would have been great at, call it, the supply chain area of scaling the business, but less oriented around actually thinking through, “Okay, how could the actual user flow of our product experience be better?”

We had another candidate who came from more of a typical sort of general management background, was a GM at a high growth startup. Then we had Josh, our CEO at Truebird. He’s been there now for over a year. Yeah, it will be actually, yeah, a year in a couple of months now. Josh is this very amazing blend of having been a product person in the past, while not hardware, software. Two, has also come from the food and beverage world in the past having been one of the directors at one of the largest call it restaurant franchises before entering his role in a product function. Three, he is someone that can really sell the vision and really excite people, real estate operators.

SHIKHAR GHOSH: Both investors and employees.

WENDY TSU: Investors and real estate operators, exactly, around what Truebird can and can be. What was amazing about talking to Josh was that, while all of the cans they were talking to were incredibly well-experienced, Senior had been in high-growth startups a few times over now. Josh was able to articulate what this could become in a way that, quite frankly, was bigger than even we’ve thought it could be, Truebird could be.

One of the most telling, actually, observations was that he actually just would spend days at New Lab, which is where our first location for Truebird is and was, just observing, observing people interacting with a Truebird. Talking to people and asking them.

SHIKHAR GHOSH: This is even before he got the job.

WENDY TSU: Oh yes, this was a month before he got that job. This was in the very early stages. He asked—he warned me—”Is it okay if I come and just hang out at New Lab?” I said, “Yeah, go for it.” He would just sit there. He would watch. He would take notes. He would talk to customers. He would work with or had a product co-founder and share feedback there, solicit feedback from him. It was already a sort of a natural organic chemistry that was starting to happen.

SHIKHAR GHOSH: If you contrast that behavior to other candidates?

WENDY TSU: Everyone was incredibly sharp.

SHIKHAR GHOSH: Right, but then when you get to three, you’ve already got really good people in each.

WENDY TSU: Yeah, I would say that going back to how we had started the conversation, which was not having it feel transactional, but just being intellectually curious. It came very natural, his natural desire for wanting to work with Truebird, working with this team, building this team. He, compared to the other candidates, there was a level of deep diligence that he was doing around just seeing how people were interacting with the very basic prototype.

SHIKHAR GHOSH: I’ve seen a lot of students over here. They go in for an interview and they’ve looked at the website, they kind of know what the company does, but they’ve rarely done sort of harder work, talked to the customers, talked to people who’ve used the product. What do they like? What do they not like? But they just sort of stay at that surface level. Then they say, “I’ll do that hard work when I get the job.”

WENDY TSU: You got to do the hard work before. Every single founder that we’ve probably worked with, there’s always, I hate to call it the dating process, but that’s really what I was. Zola is unique because Kevin had worked with those founders before. They were some of our best operators at Gilt. There was already embedded trust there. Same with Mongo DB. They’d been part of the DoubleClick family.

WENDY TSU: But for those where it’s sort of newer people that we haven’t really worked with in the past, there’s this element of us diligence them, them diligence us by just working together. Having them sit in brainstorming sessions together with us actively. Have them spend a few weeks with us and cut in conducting their own user interviews or own user research, pushing our work forward. A great example of this-

SHIKHAR GHOSH: That’s really different from a traditional interview. You show up at 2:30. “Let’s have your resume.” I’ll ask you, “What did you do in college? Why are you interested in the job? Tell me three things that are great about you. What’s been your biggest challenge?” You don’t do that much or that’s not as valuable.

WENDY TSU: There is value in that, but at the founding level, you’re bringing them into your family with you. You want to see them be successful. You want to trust them to be at the helm. With that, it’s a little bit more than just, “This is our recruiting process.” It’s more of, “Let’s do things where we can brainstorm together to solve X, Y, Z pain point. Let’s talk to the customers together to do X, Y, Z. Let’s set up some conversations together talking to real estate brokers.” That way we can see how we both interact.

SHIKHAR GHOSH: It’s not just how do they do in that situation, it’s how do we do together in that situation?

WENDY TSU: A little bit of it is assuming that they’re part of the team already. What would I do? They would be in all of our meetings. They would help, listen, they would help guide the strategy. A great example of this is we’re launching a new company. It’s our supply chain infrastructure startup for food trucks. We just closed our rather large pre-seed round. Our technical co-founder for the company, he is the former CTO of Squarespace and Deti. He was introduced to us through one of our other founders. At that point in time, the concept was so early.

But I said, “Why don’t you come and stay out at our space for a couple of months or whatever you want?” He showed up every day, almost every day, got to know every single one of our founders who was in our office and developed this natural attraction to the food truck concept. Would start sitting then with the CEO for that concept and thinking through, “Okay, what could the tech roadmap look like?”

What had started out as really kind of more of an informal advisory role had then turned into, “I want to be a part of this team.” He’s there. He has an amazing team of engineers and product people who have followed him to this new concept. That is, I would say the preference for how we think about launching companies. It’s building relationships with people. They don’t have to be super-senior. We invest a lot in founders who maybe had just come out of business school.

Actually, one of our other new co-companies in the home management space is an MIT 2019 graduate who comes from the world of prop-tech. He was introduced to us at that point in time. We also didn’t really have an opportunity, but he was coming in every day. He was getting to know our ecosystem. As we were in the beginning phase of thinking through a home management concept, he was just spending time with us. He really pushed it to a next level where when it came to figuring out, “Do we launch this or not?” We said, “You have to be at the helm of this company.”

It ends up being a process really where it can start off feeling like it’s more of like a we’re looking for this person, do this, but the feeling that we hope to have with someone is that it’s more of a-

SHIKHAR GHOSH: It’s almost like “You’re already in sort of. Let’s just formalize it.”


SHIKHAR GHOSH: “We are working together already. We can see you’re excited. We’re excited about you and the concept.”

WENDY TSU: Yeah. Sometimes I’ll share a one-pager. I’ll share it with people who I actually think could be the founders. I’ll send them the one-pager or the concept. I can say, “We’re thinking about this.” If they come back to me and they say, “Wendy, this is a killer idea. Have you thought about X, Y, Z, X, Y, Z, X, Y, Z, X, Y, Z? Are you comfortable if I do some user interviews on my own, just organically help you push this?” That is called a proactive person. That is called someone who has passion and intellectual curiosity. That’s the kind of CEO that you’d want.

Oftentimes I share these one-pagers and these pitch decks with people who I think could be the founders ahead of time before-

SHIKHAR GHOSH: You see who it resonates with and who’s willing to do the work.

WENDY TSU: We just see who’s excited about it. An idea is an idea, but at the end of the day, it’s the team. You have to have a stellar team. Team is almost more important than the idea.

SHIKHAR GHOSH: At this point, you’ve learned a lot about this person. You’ve actually had first-hand experience with them, where do the references come in?

WENDY TSU: References happen throughout the process.

SHIKHAR GHOSH: It sounds like you go through the whole selection process, you say, “We’re almost there. Now, let’s do some references.”

WENDY TSU: That is probably one of the worst times to do the reference checks because you’ve invested so much time into that person. Then there’s sort of bias in how you treat their references. Because then you’ve invested so much time, you’re getting pressure from leadership to say, “Oh, my God. I have to go hire someone.”

WENDY TSU: You start hearing reference checks where it’s, “Oh, this person’s good, blah, blah, blah.” But in your head, you’re going to start saying, “Oh, that person’s great. I’ll ignore that,” because you’ve invested so much time. Also if you have a bad candidate, it’s better to know ahead of time because you will save yourself so much time to move on to the next person.

WENDY TSU: For us, reference checks are-

SHIKHAR GHOSH: Or there might be some things like they treat employees really badly, which you might not be able to tell as a peer.

WENDY TSU: Yeah, exactly.

SHIKHAR GHOSH: But it comes out someone just says, “Well, there were some issues about,”-

WENDY TSU: Reference checks, they have to be 360. Or they have to be peer-to-peer, bottom-up.

SHIKHAR GHOSH: People who worked for them.

WENDY TSU: Then also top-down. Actually if anything, the top-down is probably the one that’s sort of sometimes the least relevant. Because at the end of the day, you need this founder and CEO to inspire people. What’s really important actually, is that people really love working for this founder. People love working for Shan. They love working for her. Everyone that’s there that’s a new person, they just are so excited about the culture that’s been built there. That’s really important.

SHIKHAR GHOSH: For a CEO or a founder position, how many people would you talk to?

WENDY TSU: We try to have a couple at each different level.

SHIKHAR GHOSH: That’s six, seven at least?

WENDY TSU: Probably six or seven. Yeah, because you want more than one. You have to do it. You want to have it be 360.

SHIKHAR GHOSH: Are you doing that or is a recruiter doing it?

WENDY TSU: It’s always us. Yeah, never the recruiter. If the recruiter wants to do it, they can, but the recruiters are incentivized on the placement. It’s important for the hiring manager to do that. Also it’s important for the hiring manager to do that too because no one’s perfect. But if I could know what a person’s development areas are and what their strengths are and how they tick and how they work, then we at AlleyCorp can also adjust our management style. 

If we hear that one founder or one individual is hyper, hyper, hyper-structured. They’re a very organized thinker, but almost too organized, then I know that when we work with them, it’s more of working with the vendor and saying, “Hey, love the transparency. Love how hyper-organized we are, but you’re also doing twenty different things at the same time. We’re going to have to have some things not be as perfect. What are some of those things that we can just not have to be as perfect?”

We have some founders or individuals that we bring on who might not want to voice opinions if there are other strong personalities in the room. Of which then it’s AlleyCorp’s job then to make sure that we may purposely give room for space for that person to voice an opinion, perhaps a voice of dissent opinion in each meeting.

SHIKHAR GHOSH: What I’m hearing

SHIKHAR GHOSH: Saying is that so much of this process is, who is this person, but also, what’s our relationship?

WENDY TSU: What’s our relationship, how can we adapt?

SHIKHAR GHOSH: Yeah. And how can we make this person succeed? What are the things that as you’re going through this process of finding a founder for a company and you’ve been through many of these, what are the things that you’ve seen that just sort of shine a bright red light saying, “Oh, I need to be really careful here.” What are the kinds of behaviors?

WENDY TSU: When someone perhaps is too much in a sales mode. That sometimes is what can cause a bit of a red flag. Because there’s an element of being self-aware and this person knowing what they are great at and what they aren’t great at. There’s an element of also the language and when they use—is it around “I” language, or is it around “we” language? And you sort of want a healthy mixture of the two, especially if you’re subbing this founder role, your job again is to hire a great team. It becomes “we” language versus “I” language.

And there’s responsiveness as one really core element as well. When we’re emailing, how quick is this person to respond with thoughtful feedback? Or if it takes a couple of days to write responsible feedback, having them give us a note that, “I’m thinking about this, let me respond to you in the next couple days.” Because again, the role of the founder too is there is this level of responsiveness that a founder has to have.

When you’re working with—If you’re signing a MongoDB-like client to be your customer, you can’t hold them. You got to make sure that you’re responding back to them. If you’re engaging with investors, you need to respond back to them quickly. If your employees have issues arise, you have to move fast. And so it doesn’t have to be in your inbox all the time, but you do have to be thoughtful and responding back. Those are a few things that we look at.

SHIKHAR GHOSH: What about things like any ethical red flags or any red flags around sort of social sensitivity, those kinds of things?

WENDY TSU: Yeah. So that leads into sort of how they are– Are they selling too much? Yeah. Selling I can use the hyphen that it would be over-exaggeration. And that’s then also where reference checks are super important because the reference checks can also check for, did this person really increase sales by X percentage?

SHIKHAR GHOSH: And I find that sometimes people increase sales by 60% but they’ll say 90%, because in one quarter it was that. And 60% is great. They could have sold that point easily.

WENDY TSU: Yeah of course. Why did you have to-

SHIKHAR GHOSH: Why did you have to inflate? Yeah. On the thing. I’ve also found that sometimes the way people treat other people, assistants, someone else.

WENDY TSU: Oh yes. Absolutely.

SHIKHAR GHOSH: When they’re not being watched, when they think they’re not in the interview mode, that’s really useful in knowing who they really are.

WENDY TSU: Absolutely.

SHIKHAR GHOSH: If there are differences in the way they behave with you as with somebody else.

WENDY TSU: Yeah. And every time our Chief of Staff is interacting with someone—I would say Alison, our Chief of Stuff, she can almost predict if someone’s going to be a founder of bad behavior ahead of time.

SHIKHAR GHOSH: One of the things that—sort of two camps on this—is there are many things. Some people want the founders to be sort of good at everything and other people say, “I’m okay if this person’s really bad on some things, as long as they have some things that they’re really exceptional on. I’ll live with all the weaknesses and I’ll cover the weaknesses, but I want them to be really great at something.”


SHIKHAR GHOSH: And I prefer great to on average, okay. How do you think about that?

WENDY TSU: Kevin would say that a CEO’s job is to make themselves replaceable. Their job is to be irrelevant and that happens by making sure that you hire really phenomenal people. A CEO shouldn’t have to step in to be the product person.

SHIKHAR GHOSH: Even right at the beginning?

WENDY TSU: Well at the beginning, a CEO is– Your job is to be a recruiter. And it’s so funny because oftentimes we talk to some of our founders and our CEO’s and they’ll say, “Wow, I didn’t realize how much of my job is just being a salesperson.”


WENDY TSU: Because when you’re recruiting-

SHIKHAR GHOSH: And a therapist.

WENDY TSU: And a therapist. So much of that job is that. You are recruiting, which means you’re selling, you’re selling the vision to someone. You are selling the vision to investors, you are selling the vision to-


WENDY TSU: Customers. You’re selling. You’re constantly selling. And as a CEO, your job is to hire really great people to be the functional experts and slowly have it so that each function is covered by an expert so that you no longer are the expert. So that your job is to be the therapist. So that your job is to be the ultimate recruiter. So that your job is to be the one that sells the dream so that more customers want to come to you, so that more people want to work for you. So that your functional heads can get the best talent. And that’s what we hope for with our founders.

And that’s also something that requires also a bit of thoughtfulness, because when you say you come from the product tract or say you come from the GM tract, we end up indexing on those who have worked at a high growth startup before and have led teams. And so through that they’ve already built functional expertise. It is definitely a transition moving from being called a GM or the product owner at a high growth startup to then the CEO, because now you need to go higher than your product person.

SHIKHAR GHOSH: Right. And you don’t do things, you get other people to do things. And that’s fundamentally a different set of skills.

WENDY TSU: Yeah and you can’t be that person that is coming in and saying, “Oh you shouldn’t do it this way or that way.” Your job then is to make sure that you have the best product person and the best product design person, the best finance person, and so that you can have full faith in them, but also be the voice of dissent when you need to be the voice of dissent.

SHIKHAR GHOSH: There’s a bias in reference interviews, where people– There’s no great value to their saying negative things about somebody. And so people tend to overstate the positive. What are the kinds of questions you might ask to sort of get the truth?

WENDY TSU: Yeah. So one question I’d ask is, “Hey, this person is stepping into a founder role and their job is going to be a bit different than what they were doing in X, Y, Z role. What’s some advice that you’d give me around making sure I can support this founder or this person as they step into the founder role?” Which is another way of basically saying, what are some development areas of this person that one could foresee? How have you seen this person grow over the past few years? Which is also another way at getting to development areas that that person has built over time. Those are some of the few questions that we’ll ask, which are other ways of getting at the truth.

SHIKHAR GHOSH: And so you’re almost saying, they’re really good at this, and that implies they’re not so good at something else. It’s almost the things they choose right at the beginning, of saying what are the things you’d hired them for, what are the things you wouldn’t hire them for? What are the things you’d want a really great second in command?

WENDY TSU: Another question is, what kind of team do you think this person should form as they step into the founder role? That’s another way of getting to, okay, I think this person’s a really strong chief of staff. And I’m like, okay, that’s an interesting recommendation. A chief of staff, tell me more. Oh, this person’s a visionaire, comes with really good ideas, but doesn’t– Really needs someone to help create the plan to execute.

SHIKHAR GHOSH: Right. And follow up on things.

WENDY TSU: Yeah. And then I’m like, okay, that’s interesting. That’s another way of getting to– A lot of my questions are formed at, how can we get this person to be successful?

SHIKHAR GHOSH: What support do they need, which areas?

WENDY TSU: What support do they need? And that question is, it’s another way of getting to, what are their development areas?


WENDY TSU: If they say that, “Oh, you probably really need a people person, a chief people officer with this founder.” Okay, that’s a red flag then. I’m like, “Okay, tell me more why this person would need sort of a people person, a people officer.” “Oh, this person’s not really so great at career development, isn’t really thinking about X, Y, Z. Has a hard– If you bring on a people person, that’ll really help this person round out conflicts that might happen at work.” Okay, that’s interesting.

SHIKHAR GHOSH: Yeah. They probably don’t want to deal with difficult conversations. They don’t want to– Yeah. We’ve talked about getting the founder in. How do you evaluate the founders and how often do you find that in fact this person, the company’s outgrown them or they’re just not the right person in the team. And how do you sort of, as the companies grow, their needs change. How often do you change out the founder? Because it’s a very expensive thing to do.

WENDY TSU: At MongoDB, our technical founder is still there to this day, 10 years later. At Business Insider, our founders are still there to this day and we sold that company four years ago.


WENDY TSU: MongoDB, those founders are still there to this day. Sorry, Zola. Zola, those founders are still there to this day. We’re not actively thinking about changing out founders. It’s actually never something that we think about. But one thing that I wish board members did more of was getting to know the exec team of a company beyond the founding level. And getting to know then the direct reports of that exec team. And the reason why is because again, if you go back to a founder’s job, a CEO’s job is to– Of course make sure the company’s swimming or is swimming well, but it’s to make sure that they recruit great people and that people are happy.

So one of the most important signals for our founder not doing that is turn. If good people are leaving the company, that’s a signal of something’s not right. And I wish that– My hope for all investors, as a board member, is that their KPI should also be to make sure to get to know the founders, their direct reports, and perhaps the direct reports of those direct reports. And watching for turn at the leadership level.

SHIKHAR GHOSH: And also seeing, have they hired people who are much better than them?

WENDY TSU: Yeah, their ability to recruit.

SHIKHAR GHOSH: What’s the quality of the people who are coming in?

WENDY TSU: Absolutely. And if a founder can do that, if they can hire people who are better than them and have those people sustain and thrive– At Gilt we have almost zero executive– Sorry, at Zola, we have almost zero executive turn. Everyone’s still there. And they love working with each other. That’s a signal. That’s the kind of company people want to go work for. And so we never go in thinking, oh, okay, this person will only be there for a couple of years. Our hope is that this person grows and becomes someone that can hire people who are better than them and can be that person who sustains talent over time. And grows talent over time too. It’d be so great if your Chief of Staff ended up becoming the STP of growth and building talent within. It creates a positive signal internally at the company that you can grow.

SHIKHAR GHOSH: Right. So you’ve been doing this now for a few years, right? You’ve seen a bunch of companies, a bunch of CEO’s, a bunch of founders. What’s surprised you about the whole founding journey? Or what are the things that have just been more important, less important than you thought when you first came in?

WENDY TSU: Team is almost more important than idea. An excellent team is able to pivot. An excellent team is able to uncover insights that normally wouldn’t have been uncovered before. And if anything, as I think about the year 2020, for AlleyCorp and for myself, is how can we continually empower people who are just incredible humans to think of themselves as founders, to start more companies. Even if they come from what seemingly might be an untraditional background. Because at the end of the day, an idea is an idea. Ideas are everywhere. Ideas are almost a commodity at this point. It’s the teams that have to execute against the ideas that are super important.

SHIKHAR GHOSH: And so where you’ve had great success, it’s been the team.

WENDY TSU: It’s been the team. It’s always been the team. And you have more fun. You just have more fun when you work with people that you love, and that you like, that challenge you, or you challenge them. Where they treat your opinion with respect, where you treat their opinion with respect. That care about hiring diversity from the very beginning, rather as you said, rather than just as a talking point. That care about doing right by the customer because they deeply care about the customer, because they are the customer. There is a layer of authenticity that truly comes from people solving for a pain point that they viscerally feel or that they can over time really viscerally feel.

SHIKHAR GHOSH: Because every one of your companies has, sometimes even before they were started, has other companies in that space sort of solving the same kind of problem.

WENDY TSU: Absolutely, yeah.

SHIKHAR GHOSH: And so the problem space is not the distinguishing thing.


SHIKHAR GHOSH: It’s how you go about it.

WENDY TSU: It’s how you go about it.

SHIKHAR GHOSH: And that’s always the team.

WENDY TSU: Yeah. Because the team is going to be the one that finds a really unique, exclusive partnership and that partnership becomes the moat, right? That team is going to be the one that creates a database that goes so much faster than everyone else, because they have the best in class engineers. The team is everything. And so if anything, a lot of our time is just making sure that we continue to build great relationships with all of our people at our companies.

The nice thing for us is with our incubation and also with our portfolio investments, we try to get to know, again not just the founders, but all the way down to the associates, the interns that join the company. It’s amazing actually, we had an intern at Mongo four or five years ago from college and she was just part of the intern class, but rewind now to her current state, she just raised a pretty big seed round for her startup. And she was just a Mongo intern. I invited her to a Mongo happy hour a couple of years ago. No actually last year. And that’s an example of the ecosystem building, is you just never know who will start something, when they’re going to start it, what people inspired them to start something. It’s an exciting time to be in New York. It’s an exciting time to be in startups in general.



SHIKHAR GHOSH: So last question, what’s the role of the board?

WENDY TSU: So the role of the board is– Their job, there’s a fiduciary responsibility they have. So aside from making sure that the company’s operating ethically, legally, and is, call it meeting performance metrics that they have set to stay at, a lot of the role of the board is to be– My hope is that your board members that companies can bring on, is that they’re thought partners. That’s my hope. Every company that we incubate, we’re hopeful that every angel investor or that every board member comes in, especially at the early stage, at the pre-seed seed stage where you’re really as a company going month to month– Quarter to quarter meetings aren’t nearly enough. You really have to do them every month. The board that you have or the angel investors that you have, they’re in the position where they are able to unlock connections, or they’re able to unlock opportunities, or they’re able to provide an additional perspective on the product roadmap.

SHIKHAR GHOSH: Right. Something you can actually use.

WENDY TSU: Yes. Or they can challenge our thinking. I’ve found that ineffective board meetings are those where it’s just an update. It’s just an update on how the business is going. The purpose of the board is that you have thought leaders who are here to be your cheerleaders, but to be the voice of dissent and to unblock clogs. That’s their job.



SHIKHAR GHOSH: And when the company gets to a more stable state, where things are much more predictable and business model set, then how does the role change? Say Mongo now or Zola now or something.

WENDY TSU: Yeah. Yeah I’m thinking back to a couple of our board meetings. Honestly, I’ve found them to be more, this is the functional update, this is the business updates, this is what we’re thinking about. What are some thoughts that you have? That’s mostly been the role of the boards.

SHIKHAR GHOSH: Making sure things are not going off the track.

WENDY TSU: Yeah. Making sure that things are not going off the track. And the board is also thoughtful in thinking through “what should we as a company be doing?” Especially as we get older, around thinking about things like going public, about things around expansion. “Are we growing too fast? Are we growing too slow? Is our burden too high? Is our burden too low?” That’s where having a board that has more experience at the growth stage is important. Kevin of course, he’s been on the board and has been the chairman of the board of some of the most iconic companies in New York. And at the early stage at least, to those who are in school and are thinking about starting their company, you just really just want to make sure that you have really good board members that are there to focus on the next few years. And over time, your board naturally will transition to then, as your company gets bigger, to a more public facing board.

SHIKHAR GHOSH: Yeah. One of the things I’ve seen board members do really well is-

WENDY TSU: And the board should know, they should know when it’s their time to retire out.



SHIKHAR GHOSH: I’ve seen a lot of first time founders don’t pay that much attention to cash. They just think they’ll always get the next round.


SHIKHAR GHOSH: And people who’ve been there say, “No, be careful about this. Lock in the next round before you do it.”


SHIKHAR GHOSH: Just sort of telling them what could go wrong.

WENDY TSU: Cash planning. Yeah cash planning and next investor fundraising rounds.

SHIKHAR GHOSH: Right. How long it actually takes to get the money.

WENDY TSU: That’s why I was saying, I tell every one of our founders, I say, “You must set. You have to, even if it’s not required in your term sheet, you need to send monthly updates.” Because as an early-stage company, pre-series A, you are going month to month. Every month makes the biggest difference.


WENDY TSU: I had learned actually from one of our portfolio, one of our small investments that we had made, where the updates were more quarter to quarter, and again, we weren’t the lead on this, but I had found out later than I wanted to around the fact that they had to fundraise earlier. Of which we had monthly investor updates. I would’ve said, “You might want to be investing actually three months in advance.”

The ownership really needs to be put on the founders to make sure they update investors. You got to build goodwill. If you’re building goodwill, you’re building trust. And there’s nothing more important than transparency and honesty and making sure that you provide an update that’s functional, but also that shows how you’re tracking against plan. And if you’re not tracking well against plan, that’s okay. Just say it. Because at the end of the day, my desire to then invest in my pro rata, my desire then to want to invest in the founder in the next round, will be based on the fact. Not yes, if the company is doing well, but really on, do I like this person?

SHIKHAR GHOSH: Right. Do I trust this person?

WENDY TSU: Do I trust this person not to give me false information? Do I trust this person to do right by their people and by the company?

SHIKHAR GHOSH: And at some basic level is how badly do I want this person to succeed?


SHIKHAR GHOSH: Do I have that connection where I feel I can-

WENDY TSU: Our founders don’t look like me, right? Our founders are incredibly diverse and our founders have very different interests than me. But it’s important for us to build that connection where they can trust me not to blow up on them when things aren’t going great. Which I never do, because that only then creates a relationship where they’re even more scared to come. Right? But where I can also trust them to come to me when things aren’t going great. And that’s a special relationship that founders have to build for themselves with their investors. And step one is just provide more frequent updates.

SHIKHAR GHOSH: Right. What I’ve seen is that the willingness and the ability to live with difficult conversations, to say, “I can control myself enough that I’m willing to sort of plow through that, even though it’s uncomfortable. I’m bringing bad news.” A lot of founders just want to give good news and they think selling is giving good news. Or they put such a positive gloss that you say, “Great, I don’t need to do anything. You have everything in control.”

WENDY TSU: Yeah. In one of our updates that I received from a founder, I actually gave him feedback earlier this week and I said, “This update feels very different than the conversation that we just had with the team. Because when I asked you what your lowlight was for the week–” They were trying to negotiate real estate lease and it ended up falling through. They’d been working on it for two months. And I said, “It’s a great thing that actually this happened, because why would you want to sign a 10 year lease when the company is still so early?” It’s a good thing that happened, but it was a lowlight for the team. You have to highlight that as a lowlight. Because when I read the update, it’s just a little blip. You guys have spent so much time on it as a team, you almost want to celebrate the fact that it was a lowlight.

And so we had a great conversation about it in our in-person team weekly. But the fact that he was so receiving of my feedback and the fact that we have a relationship where I feel like I can be very honest with him and where he can be really honest with me and we’re constantly soliciting feedback from each other. My hope is that we can have that with every one of our founders.

SHIKHAR GHOSH: Great. Thank you so much.


Shikhar Ghosh

Posted by Shikhar Ghosh

Shikhar Ghosh is a serial entrepreneur, angel investor, and Professor of Management Practice at HBS. Named one of the "Best Entrepreneurs in the US," by Businessweek, Ghosh has led some most innovative tech-based companies in the US and advised hundreds of entrepreneurs.