00:00welcome to the a 16z podcast i'm tahni
00:03Olguin and today we have with us
00:05Keisha cash who's the founding partner
00:07of impact America fund welcome Thank You
00:11Tommy so I think today we wanted to talk
00:14about a few things we wanted to talk
00:16about the early stage investing
00:17landscape how that's changed obviously
00:20it's the costs of starting a company are
00:23so much lower so that means there are
00:25more companies emerging very early
00:27there's a lot of wealth now that's being
00:30circulated and in the investing space in
00:32venture capital there's a lot of
00:33interest a lot of people who are maybe
00:36new to tech don't know much about
00:38technology but they're interested in
00:41kind of getting into this so you're
00:42seeing a lot of new angels and a lot of
00:45people flooding angel list forming
00:47syndicates so you know how do you
00:49interpret that especially taking a focus
00:52with impact America fund on looking at
00:54the early-stage companies ideally with a
00:56social impact tell us more about what
00:57that means to you yeah we actually you
01:01know our investment thesis were
01:03investing sort of pre or post seed stage
01:06pre series a and then participating
01:08series ain't going forward and because
01:10of our mission you know we're investing
01:12in underserved companies that impact
01:14underserved communities in America the
01:16types of companies and opportunities
01:17that are particularly interesting to us
01:19are oftentimes very unfamiliar to those
01:21folks who you're talking about that have
01:23money to invest their new angels etc so
01:26we spend quite a bit of time educating
01:28individuals on what this means in terms
01:30of investing in companies to impact
01:32underserved communities in America and
01:34interesting enough there recently
01:36JPMorgan and the global impact
01:39investment network Jin released their
01:42annual survey of impact investors so the
01:45survey says they in the they interviewed
01:48or surveyed 146 impact Fester's around
01:51the globe and these impact investors
01:53account for about sixty billion dollars
01:55of assets under management ten billion
01:58dollars was invested last year and these
01:59are larger investors foundations pension
02:02funds etc and I read through some of the
02:06report I need to read the rest of the
02:07report but something that stuck out at
02:09me was that over 91% of that
02:13capital was invested into later stage
02:14companies so there's a clear gap of seed
02:18capital venture capital early stage
02:21capital that's available for new
02:23innovations and impact investing so
02:25everyone talks about you know there's
02:27sort of a lack of capital at the on the
02:30risky side and people are trying to
02:31convince you know the foundations and
02:33others to play in that area so for us
02:35you know we are you know we think that
02:38there's capital out there and there may
02:39be capital out there that's unfamiliar
02:40with opportunities that are several
02:42above and beyond kind of traditional
02:45tech place right right so Keisha can you
02:48just help us understand what is impact
02:49investing there are a lot of different
02:53terms and meanings for impact investing
02:55depending on where you sit on the
02:57spectrum I will you know give you kind
02:59of the the global impact investment
03:02Network definition of impact investing
03:04that I tend to follow and many others do
03:06but it really you know if you're an
03:08impact investor you are investing in a
03:11company or an organization to generate
03:13not only financial returns but also
03:16social environmental and environmental
03:18returns so that means actually a lot of
03:21different things to a lot of different
03:22people and there's a spectrum of how to
03:25invest that capital some folks are okay
03:27with below market rate returns others
03:29are shooting for like our fund impact
03:31America fund we're shooting for a market
03:33rate or above returns and then there's a
03:35spectrum of you know of people in the
03:36middle and then from an impact
03:38standpoint you know people there there
03:41are groups of people individuals who are
03:43diehards and care about the environment
03:45and they want to invest all their money
03:46into environmental issues that are
03:48others that are concerned about the food
03:50system and food justice there are others
03:52who are concerned about education and so
03:54within the sort of larger context of
03:57impact investing there the sub sort of
03:59cultures or subnetworks of people who
04:01are particularly interested in different
04:03social or environmental issues gotcha I
04:05find it fascinating to think about
04:07striking the balance between you know
04:10you men should you're more on the side
04:11of the scale where you're focused on you
04:13know financial returns as much as you
04:16know the social impact right so how do
04:19you measure these things and and how is
04:21social impact measured when you're
04:22serving investment opportunities there's
04:25an organization called gear
04:26and they are an impact measurement
04:27organization it's a non-profit and we
04:30are impacting America fund as a geared
04:32certified fund our portfolio companies
04:33will complete an annual survey each year
04:36based on certain metrics that are
04:37relevant to that company and it
04:39basically says here's a baseline of
04:40where you at from an impact standpoint
04:42there are other organizations that are
04:44working on you know different ways of
04:45measurement internally for ourselves
04:48because we care about the impact other
04:50underserved low and moderate income
04:51communities in America we're creating
04:54our own benchmarks and metrics
04:56internally to say hey look what's
04:57important to us is job creation what's
05:00important to us is that your value chain
05:04whether those are your employees your
05:06suppliers your end-users that there's
05:08some value there there's impact there
05:10there's an organization transform
05:12finance and they you know tend to be a
05:14bit more progressive where they are you
05:16know you got to look at this we want to
05:18make sure that there's more value in put
05:20it that's being input then then we're
05:22extracting and so you have various ways
05:25of thinking about impact measurement and
05:28the valuation of that impact gotcha you
05:30mentioned underserved communities help
05:32us understand in your mind and what
05:33you're looking at what are these
05:35underserved communities that you're that
05:37you're targeting yeah we are you know I
05:39guess taking a step back I grew up
05:42low-income I grew up low-income
05:43fortunately I grew up low-income in
05:45Orange County California so while you
05:48know my family we use food stamps at the
05:50grocery store we were on section 8
05:52housing I had the benefit of a great
05:54public education my father whom I you
05:58know he's in South Carolina my mother
05:59left my father didn't brought us from
06:01South Carolina a very low-income area to
06:03Orange County California my father
06:05doesn't read or write and so for me
06:07being first-generation college student
06:09having the benefit of a great public
06:11education going on to work in you know
06:14Wall Street and in various other
06:16activities I recognized because of how I
06:19grew up as a low-income individual the
06:21opportunities that exists really in
06:24low-income communities and so for us the
06:27way that we define sort of underserved
06:29communities our markets with with
06:31untapped potential these are markets
06:34that are you know these are markets
06:37where there is high potential in these
06:39the human beings in those markets are
06:41assets and they're doing great work and
06:43they need a little bit more support in
06:45terms of you know technology solutions
06:47in terms of business infrastructure in
06:49terms of creative ways to think about
06:51how to better manage their businesses or
06:54how to better manage you know if you're
06:56a teacher your data in schools and so
06:58for us it's you know looking at
07:00underserved communities particularly
07:01interested in low and moderate-income
07:02communities believing that there are
07:04inefficiencies looking at ways to cut
07:07those inefficiencies to generate more
07:08income and more outcomes for that
07:10community so what do you think the role
07:13of impact investing should be for the
07:16kind of traditional venture capital
07:18community how you know if do you have a
07:21greater message and how do you think
07:22about working with larger firms you know
07:25like ours or others in the community
07:28educating them on this space and
07:30introducing them to the kind of
07:32companies that are leveraging technology
07:34in a way that's serving you know under
07:36utilize our untapped markets and
07:38underserved communities like you're
07:40mentioning mm-hmm yeah we I mean we are
07:42truly we stand you know one foot on one
07:46side and one foot on the other in terms
07:47of impact the way that we think about
07:49our investments in the way a traditional
07:50venture capitalists would think about
07:52their and their investments we believe
07:54that there are a billion dollar market
07:56opportunities in underserved communities
07:58there are people that are making you
08:01know plenty of money on underserved
08:02communities whether it's financial
08:04services whether it's health and
08:05wellness whether it's education and
08:08unfortunately in our opinions these
08:10markets there are there are plenty of
08:12also market failures where low income
08:15people tend to spend more on basic
08:18essentials and yet the quality of those
08:20basic essentials and basic needs is poor
08:23and so we believe you know by working
08:25with traditional technologists and
08:28traditional technology investors we have
08:30a lot to learn and believe that there
08:32are tools that can enable and
08:33essentially undercut these traditional
08:36markets that have taken advantage for
08:38many years of vulnerable populations who
08:40haven't had options otherwise so they
08:42are stuck paying high fees they are
08:44essentially being penalized for being
08:45poor or penalized for not having a lot
08:47of money and we you don't have a lot of
08:48money you typically don't have a lot of
08:50time and so you're late and your fees
08:52late night you know I saw my mother go
08:54through this when I was younger I mean
08:56it's just not fair and so we wonder why
08:57there's no upward mobility in
08:59communities the extra income that they
09:01have they're spending on ridiculous
09:03amounts of fees and prices of services
09:06and products that are poor quality and
09:07aren't actually helping them advance how
09:10do you dispel and I don't know if this
09:12is a disbelief that impact investing
09:14comes across as charity you know how do
09:17you make that differentiation and and
09:19what lesson can we learn from that ya
09:21know it's you know it's it's interesting
09:23because we are even as an impact
09:25investment fund and we have investors in
09:27our fund you know we're you know have
09:30thought carefully about how we present
09:31our fund and that we want to generate
09:34returns for our investors and we also
09:36believe an impact right and most folks
09:38are still of the notion that you have to
09:40choose one or the other and because
09:42impact it's not new it's been around for
09:44many years but because it's sort of a
09:47new mainstream concept it's still people
09:50tend to feel like it's something less
09:52than what you know a traditional venture
09:54firm would invest in or traditional
09:56market would have an appetite for so for
09:59us it's less you know about I think the
10:01best way for us are our approach to
10:03dispelling the myth is to prove it out
10:04there are folks there are impact
10:07investors who are ok with below market
10:09rate returns we think that there hasn't
10:12yet been a really I guess interesting
10:19approach to investing in underserved
10:21communities in America and typically the
10:23people who have been investing in those
10:25communities don't look like the people
10:26in those communities so I think with the
10:29structure of our team and who I am being
10:30from the community that we have it you
10:32can unique positioning where we can
10:34identify real opportunities in the
10:36community that again people we aren't
10:38making up a new business model people
10:40are spending money on these businesses
10:41already and for us it's identifying the
10:43inefficiencies identifying the cost
10:45savings identifying where people within
10:48the value chain can to get more value
10:50out of their participation I'm in these
10:52economies and for us we think if we can
10:54create a win-win for the community and
10:56investors then everyone walks away happy
10:58so you said impact investing is not new
11:00so who has done it and and how has it
11:05yeah great question and so just thinking
11:08about over a hundred years ago when I
11:11think about madam CJ Walker and as a
11:14businesswoman and an African American
11:16businesswoman the type of business she
11:17built and why she built that business
11:19and she was you know the creator of hair
11:22products and manufactured her own hair
11:25line haircare products and the
11:28interesting thing about our model is she
11:29built a national network of agents of
11:31women who she trained who trained other
11:34women and you know we applaud her for
11:37becoming one of the first female
11:39millionaires in this country but but
11:42really when you look at the Corps that
11:43business model it was about empowering
11:45women I mean the majority of those women
11:47in her case were African American women
11:49and so you look at the context of her
11:52providing a product to an underserved
11:54market who you know has a complex a hair
11:58texture and you know some days it's
12:01straight some days it's currently and
12:02figuring out a product that work for
12:04that market but in addition to simply
12:06selling a product that worked she
12:09created this national network to empower
12:10other women to make money off of selling
12:13that product and so when you think about
12:14you know if madam CJ Walker was an
12:16entrepreneur today starting her business
12:19for us that would be an impact
12:22investment given that she's empowering
12:24these women she's created this national
12:26network she's providing them an
12:27opportunity to generate income mm-hmm so
12:30I know that in your portfolio there's
12:32actually a company that now is catering
12:34towards women female stylist in in the
12:37african-american community it seems to
12:40be enough role kind of progression from
12:42from the story that you just mentioned
12:44tell us more about that company yeah
12:47maven is an e-commerce platform and led
12:51by a brilliant founder Deshawn and a
12:54co-founder who's just as brilliant but
12:57essentially what the company does is
13:00hairstylist at least in african-american
13:02communities in particular for many years
13:05have been free sales reps in their
13:08communities and the majority of
13:10african-american hairstylist they don't
13:14inventory they don't hold or manage
13:16inventory right and most of them I'd say
13:18probably can't afford to do that or may
13:21not you know just have the understanding
13:22of how to do that and so what's happened
13:25for many many years in the community is
13:27that me as a hair stylist if you're my
13:29you know client tiny and you want you
13:32know a hair extensions and I will
13:34install those hair extensions for you
13:36prior to that appointment I'll recommend
13:38you to buy your hair extensions either
13:41at the corning beauty supply store or
13:43you'd make a decision about where to buy
13:45those extensions but nine times out of
13:46ten I'm going to recommend a corner
13:47beauty supply store the problem with
13:50that is that the majority of those
13:52corner Beauty Supply stores aren't owned
13:53by the majority of the people in that
13:56community and the stylists being a free
13:59sales rep doesn't make a commission off
14:01of referring her clients to that corner
14:04beauty supply store so what maven is
14:07doing is disrupting a piece of this
14:09supply chain really by building his own
14:12supply chain of the company's supply
14:14chain and now instead of me as a stylist
14:17recommending my client to the corner
14:19beauty supply store or in some cases in
14:21many cases you know my client and me as
14:25a hairstylist we are located in areas
14:27where there's not a corner beauty supply
14:29store right and so then I have to dry it
14:31I have to drive an hour two hours to get
14:34what I need in order to then get the
14:36service that I need from my hair stylist
14:38so maven saying hey look we're gonna
14:39leverage technology we're not inventing
14:42you know the next rocket to go to the
14:45moon but we're gonna leverage technology
14:46to say hey hair stylist now you have an
14:49online portal on maven and send your
14:52clients there and for every product that
14:54they buy on maven through your web
14:57through your portal you get a commission
14:59check and then the part that I love the
15:01most about this model right it's it's a
15:03big market opportunity black women over
15:05index in hair spending we've heard the
15:06stats I think a lot of folks are talking
15:08about in the mainstream but what I enjoy
15:09most about this model and why we
15:12invested in this company sort of
15:14pre-series a is because the founder used
15:18the hair stylist as an asset and he
15:20knows that that hair stylist is a key
15:23driver to the revenue growth of the
15:25business model and so for hairstyle
15:28who on average in America makes $24,000
15:31a year and oftentimes are working
15:33additional jobs to support their family
15:36receiving in an additional $100 200 $300
15:40check each we have significant is
15:42significant yeah and the costs of
15:43maintaining purchasing inventory upfront
15:46you're alleviating all of that right so
15:49they don't have to worry about where
15:51they can money what are they gonna store
15:52all this inventory introducing them to
15:54technology it feels like there's some
15:56really broad sweeping network effects by
15:59just implementing this ecommerce
16:02platform for this entire community how
16:05do you guys think about what comes next
16:07and how you know this is just the
16:09beginning and how what are the network
16:11effects from there ya know that's what
16:12that's a great observation in that
16:15really you know maven is meeting the
16:19stylist where they're at and it's sort
16:21of impact investing Landers you know
16:23some folks have some great ideals about
16:25how communities will advance and uplift
16:27our approach to impact investing and
16:30while we're you know greatly deeply
16:33appreciate the Maven model is that he's
16:35meeting that stylist where they're at
16:37and once he is loyal to that stylist and
16:42you know that stylist doesn't have to do
16:44anything else other than what they're
16:45doing and what they love doing stylist
16:47our artisans they've been artisans right
16:49and so they have a skill they have a
16:51talent and so to the extent that he can
16:53help that individual further their skill
16:56and their talent and make more money
16:57doing it and maybe not take that second
17:00job or you know work less or you know
17:02whatever whatever the situation is he
17:04creates a loyal customer base and then
17:07that loyal customer base there that I
17:09think the sky's the limit in regards to
17:12then distributing other products and
17:16services that are well that will benefit
17:18taani we had an early discussion about
17:22Mavis and Andreessen led the series a
17:26round why you know for you this is a
17:29company that you understand mission and
17:32you appreciate impact but you all are a
17:34serious traditional technology investor
17:36did you all consider you know the impact
17:39piece or why did they ask
17:42this round I think that's really
17:43interesting so with my particular focus
17:45being on early stage you know we we
17:49invest across all sectors all stages so
17:52we're still investing at the seed stage
17:53but we have to be very careful where we
17:55do invest so a big part of my effort is
17:57finding untapped areas not relying on
18:01the traditional expected companies to
18:04come to us for those fundraising
18:05opportunities but instead kind of being
18:07more proactive in seeking out new spaces
18:10this is a perfect example when you and I
18:12you know first met the the companies
18:14that we talked about that you had
18:16already discovered and invested in there
18:18were great opportunities for us to
18:20leverage the support system the
18:22operational you know infrastructure that
18:24we have here as a firm introduce them to
18:26you know the more traditional route and
18:29and show them ways that we can be of
18:31value not with the expectation
18:34necessarily that you know we are
18:36definitely going to invest or looking
18:38for an investment but as it turned out
18:39you know dushawn is a very very
18:41compelling founder and his mission and
18:43his connection to the concept that he
18:46that he's really building a business
18:48around I think is what has compelled us
18:51all and is really inspiring and
18:53empowering and we do see that huge
18:56market potential you know and on top of
18:59that has a serious impact on an
19:02underserved community and I think we do
19:04think about the network effects and what
19:06this could possibly mean for you know
19:08introducing technology leveraging
19:10technology in these spaces you know
19:12software eating the world this is just
19:15part of that this is just the beginning
19:16of that so there's a meme around mission
19:21driven founders versus mercenaries and
19:23what does that mean to you and why is
19:26that an important debate yeah I've heard
19:29the debate I've heard that two terms
19:31sort of tossed around you know it's for
19:34the companies that we currently have
19:37currently invested in under sort of the
19:39old umbrella I worked on I worked under
19:41the companies we invested in then none
19:43of the companies to be honest I
19:47self-identified as mission driven
19:49investors so for our mission driven
19:51entrepreneurs and so for us
19:54you know we are sort of putting that
19:57label on the types of companies we
19:59invest in as mission driven
20:00entrepreneurs but they did not come to
20:02us saying hey look I'm in a mentioned
20:03driven entrepreneur I'm seeking impact
20:05capital while we were able to find them
20:09as we sought them out right they're not
20:10in our impact investment networks
20:12they're not at the impact investing
20:13conferences the entrepreneurs that we've
20:16invested in understood a pain point
20:19based on their own experiences and we're
20:21building great solid companies around
20:23that pain point and it happened to
20:25overlap with our thesis that there are
20:27large market opportunities in
20:29underserved communities so while I
20:30understand there's a debate out there
20:32and I understand the debate of an
20:34entrepreneur you know going out seeking
20:36purely financial returns or you know a
20:38mission driven entrepreneur who wants to
20:40do good by the world I don't know what
20:42you call the types of entrepreneurs we
20:43invest in you know for lack of better
20:44words we call the mission driven but
20:46these are solid business savvy
20:47entrepreneurs that can stand up against
20:49any other entrepreneur traditional or
20:51not who care deeply about you know
20:55generating a social or environment
20:57environmental return as well as a
20:58financial return so it's you know
21:00hopefully you know my my hope in my
21:02prayer is that this becomes a mainstream
21:04phenomenon that it's not okay to just
21:07build a business for business sake but
21:08there's a purpose and a real true
21:09purpose for that readiness to exist
21:11beyond generating purely financial
21:13returns and yeah that doing good can be
21:15good business right dispelling that that
21:18in Silicon Valley we tend to see
21:20companies emerge that are trying to
21:23solve problems that we face as people in
21:26Silicon Valley you know so how do you in
21:29terms of seeing impact investing really
21:32manifesting what does that start to look
21:35like you know I I kind of start to
21:38envision it as as seeing more companies
21:39that are catering to people outside of
21:41this space right so when you envision
21:44this you know manifesting becoming the
21:47norm the mainstream how does that look
21:49to you yeah there are a few different
21:51sort of visions of what that looks like
21:54so a when you know I've said before
21:58investors talk about investing in
22:00best-in-class I was like oh that's
22:02really tough to do when the full class
22:03isn't there right and so when we get
22:08a traditional entrepreneur looks like or
22:10outside of what a traditional
22:12entrepreneur has access to and you begin
22:14to reach diverse communities and that
22:16diversity can mean a whole host of
22:18things right it could mean I live in a
22:19region you know like a live you know a
22:21rural white region as well as you know
22:24an urban inner city that's majority
22:25black so when we get outside of kind of
22:28that traditional framework I think we
22:30start to see new and creative
22:32innovations and what we've seen the work
22:34that I did with my previous I worked
22:37with a family office and sort of a
22:38radical progressive angel investor josh
22:40metalman and our initial investment
22:42thesis was we're going to invest in
22:45entrepreneurs of color and we want to
22:46invest in mission driven entrepreneurs
22:48of color he invest capital he managed
22:51capital for a very hot net worth
22:52individual female that remains anonymous
22:54but that was our thesis how do we get
22:56more capital in the hands of
22:59entrepreneurs of color and so after
23:01doing that for three years what emerged
23:03as really the thesis for impact America
23:05fund the dedicated fund that I now
23:06manage was that investing in diverse
23:10entrepreneurs is important but the theme
23:11that emerged out of that for me was nine
23:14times out of ten if I met an
23:15entrepreneur of color they were
23:16addressing a pain point in an
23:18underserved community in that
23:20unfortunately still in America
23:21low-income communities look like you
23:25know their majority black and brown
23:26people so I think it's fair to say as
23:29well as you know what you know right and
23:31if you're unfamiliar with the market and
23:34our job is to bring more familiarly to
23:36market that you may not know about if
23:39you're you know a white man and you grew
23:40up in Silicon Valley I don't expect you
23:42to know what's going on in you know
23:44necessarily in Detroit or what that
23:47community actually needs I think what we
23:49do expect as this new economy emerges
23:52that people are willing to work together
23:54and so what we'll see when this works
23:57and that people begin to create
23:59solutions for real true pain points and
24:02what people need we're going to
24:04hopefully see a radical change in the
24:07way that black and brown folks fare on
24:10the health indices the way that black
24:12and brown folks fare in education the
24:14way that black and brown folks fare in
24:16income and the racial wealth gap and so
24:19for us this is much bigger than
24:21finding the next homerun we want to
24:24prove this out because if we can prove
24:25this out there's more capital that will
24:27be injected towards these needs so yeah
24:30I want to create the next gold rush to
24:32underserved communities if we do that
24:34and stay true to the mission of
24:35impacting these communities we're gonna
24:38see a radically different hopefully way
24:41of being for underserved communities in
24:44providing a real clear trajectory or
24:46clearer path to upward mobility well I
24:48just want to thank you so much Keisha
24:50for joining us for our podcast today and
24:52it's great talking you again thank you
24:54Tony it's wonderful to be here
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