Miriam Rivera
A little faith can make all the difference!
A recent HBR article by Wharton School Professor Samir Nurmohamed titled the Upside of Being an Underdog sums up a lot of what I’ve learned, first in being an underdog and later investing in them. I’m an inner-city, Spanish-speaking-first, free-lunch kid born out of wedlock to a mother who initially had less than an 8th-grade education. Domestic violence, crime, mental illness, and trauma punctuated life in our household.
Most people wrote off kids like me. But I had angels in my path–great public and later private school teachers who didn’t. They understood what most VCs still don’t—that while such realities can destroy anyone’s spirit, faith, talent and hard work can make all the difference! Both capital-F Faith and little-f faith, à la Miley Cyrus’s “The Climb.” My mother made many mistakes, but she kept picking herself up. She proved others wrong; she advanced her education—earning her GED and her driver’s license in her 50s.
The work ethic and response to challenges in “The Climb” could be the theme song of my life. When Eric Schmidt interviewed and hired me at Google, he said, “We take the smartest people we can find and we work them to death.” I laughed to myself because few have ever worked as hard as my migrant farm-worker parents or my mother as a woman raising 5 kids in poverty; not me and I’d been attending some of the country’s most competitive schools and helping support myself since age 14.
I doubt there are many Googlers whose early childhood education consisted of Sesame Street and Title 1 Head Start who later earned 4 degrees from Stanford, co-founded a VC–backed software company, and developed a technology services agreement that became Google’s model for revenue partnerships–generating billions of dollars. The longshot can be very profitable!
Ulu Ventures is like the old commercial that said PB&J were two things that are better together. We see an opportunity to invest in startup founding teams that represent all Americans, many of whom are first-time entrepreneurial teams and overlooked, despite their merit, by traditional venture capital. Decision analysis, however, is proven academically (a required text book in many engineering and business programs nationally) and considered best practice in businesses like oil and gas exploration and pharmaceutical development. It’s a methodology developed at Stanford University that Clint and I applied successfully to financial decisions and investments for over a decade before Ulu and at Ulu for over 15 years.
After I left my Fortune 500 VP role in a technology company to found what became Ulu, I learned that less than 2% of all dollars from the largest pools of capital in the US are invested in firms led by anyone who isn’t a white male (30% of the population). According to Robert F. Smith, about 40% of the dollars in those pools, come from contributions of teachers, municipal workers and other pensioners who are from the other 70% of the population.
While Americans enjoy one of the most robust economies in the world, the economy is worse off because of this underinvestment. Many talented, well-educated, hardworking, skilled entrepreneurial teams and the insights they have aren’t turned into companies. Because they’re not funded, they don’t create revenue and jobs from servicing emerging needs, large customer segments and markets. One recent study by McKinsey & Co. indicates, for example, that underinvestment in Latino entrepreneurs alone costs the US $1.4T annually.
Seed stage investing became the focus of Ulu because a lack of data and heightened risk at the earliest stages is something most VCs don’t have a methodology to address according to a National Bureau of Economic Research Working Paper with faculty at Harvard, Chicago and Stanford business schools. Cognitive bias reduction and risk adjusted return prediction are difficult to perform at such early stages. Decision analysis is demonstrating that in the land of the blind, the one-eyed person does indeed have a comparative advantage.
