VC Corner Q+A: Trae Vassallo

Trae Vassallo is Co-founder and Managing Director of Defy, an early stage venture capital firm. She is an engineer, an entrepreneur, and an investor, and her passion is collaborating with the world’s best entrepreneurs. In addition to Defy, Trae is on the board of directors at Telstra, an international telecommunications company.

Trae recently co-authored the study “Elephant in the Valley” to help highlight the underlying data around the experiences of women in technology. She was previously a General Partner at Kleiner Perkins Caufield & Byers. Over her 14-year investing career, Trae invested in number of leading companies including eero, Nest Labs, Dropcam, Aggregate Knowledge and Opower. A “design thinker” and engineer at heart, Trae thrives at the intersection of great products and big markets.

Please enjoy this Q+A with Trae Vassallo.

Q&A:

What is your / your fund’s mission?

We started Defy to build a firm focused exclusively on early stage venture investing. We saw that many entrepreneurs would go to raise money and constantly hear “you’re too early” or that they were pushed to raise more money than they needed. Our check sizes range from $3–10M, we typically take board seats and we work closely with entrepreneurs to help them navigate their growth. We love investing in what we call “authentic entrepreneurs,” entrepreneurs who deeply understand the problem they’re solving and have a talent for creating real change.

What is one thing you are excited about right now?

I’m excited that everything that’s offline is being brought online. Everything that is important to us will have a digital interface. For example, the home and car are becoming full blown computing platforms, while experiences like retail are being transformed with blended online/offline experiences.

Who is one founder you think we should watch?

All our founders are working on exciting new things, but our newest company is Elevate Security. The incredible duo, Robert Fly and Masha Sedova, left Salesforce to build a company that enables “people powered security”. Elevate focuses on training, communicating and interacting with employees in a proactive way to make sure businesses stay secure. They prevent your employees from being a security weakness and help transform them into a security asset.

What are the 3 top qualities of every great leader?

  1. Tell a compelling story — that gets people excited and motivates people. The company vision drives everything and if it’s not compelling or doesn’t solve a real problem, then it is significantly harder to hire great people, bring customers on-board and create momentum.
  2. Be maniacally focused on the things that will kill you — understand the major risks that you’re facing, and be absolutely rigorous about how you’re going after and mitigating risks.
  3. Healthy sense of urgency — people glamourize the 24-hr workday in Silicon Valley, but it’s important for us to recognize that life is a series of sprints. You must recover and take time to think and be strategic. BUT you do have to sprint and be scrappy. Sprint when you need to.

What and when was your very first investment? What struck you about them?

My first investment was in 2006 when I was an Associate at Kleiner Perkins. The company was called Aggregate Knowledge, and Paul Martino was the CEO. Paul had a vision and clarity of thought that really struck me. The company took lots of twists and turns, but it eventually sold to Neustar, and I learned a ton along the way. Paul went on to found Bullpen capital and so our paths continue to intersect.

What is one question you ask yourself before investing in a company?

Why now, why you? It combines lots of questions into one concept: why hasn’t someone done this earlier? What’s special about you and your team that no one else had before? What’s different about your technology that makes it possible now? And on the other side- is it too early?

While not always a specific question, we also always pay attention to how the management team interacts and how they empower their team. Scaling a team is hard and founders who are more in tune with how they manage tend to build a stronger and more resilient team.

What is one thing every founder should ask themselves before walking into a meeting with a potential investor?

Understand and have a clear idea of your goal. What are you looking to get out of this specific meeting? It’s not always about getting a term sheet.

If you’re lucky enough to choose your investors, pay attention to qualities about that person to make sure that this is the kind of person you want to work with for the next many years. Do your diligence. Call people who work with those investors.

Try not to take the ‘no’s personally— it’s not always about you!” Investors may be making 3 investments a year — it could be equally something on their side versus someone on your side. That said, if you’re getting lots of the same answers, there may be a trend in there, and in that case, you need to adjust.

What do you think should be in a CEO’s top 3 company priorities?

  1. Building a much needed product or service that people want. That means dialing in product market fit by being able to iterate quickly based on observations and feedback and learning how to effectively drive adoption and growth
  2. Building the best team to execute on the vision
  3. Finance your company and keep it alive with capital. Manage the fundraising process, the burn and the spend.

Favorite business book, blog, podcast?

Lost Connections — it talks about the rise of depression and anxiety in our society, and the role that technology and loss of community plays. I’m a parent of three kids, so it’s important for me to raise them to use tech in a healthy way. It makes me think, “What can I do to invest in places where it makes a positive difference in helping people find the community that helps keep people healthy?” Technology has engineered community out of how we interact with each other — but there is no substitute for face to face interaction.

What is your favorite thing to do when you’re not working?

Spending time with family while also being curious and continuously learning through play and activity. I always have a new hobby where I’m actively learning something: guitar, gymnastics, paddle surfing. It’s a fun way to keep your brain active and to not get too comfortable. And since I have a family that loves to be adventurous, my husband and the kids are learning these skills with me, so it’s a wonderful shared experience.

Who is one leader you admire?

I adore Reed Hastings. He’s an amazing person who set an incredible culture at a respected company and who has weathered several iterations. It’s amazing to see what they’re doing today with where they started. He shows that you don’t need to be the “asshole leader” mythology. I wish that we would shine the light more on great humans who are leaders.

What is one interesting thing that most people don’t know about you?

I’m from a rural farming community in Minnesota. We send our kids back each summer to experience how different it is from the Bay Area.

What is one piece of advice you’d give to every founder?

When pitching your company, be as explicit and visual as you can. Founders spend every day thinking about their business, and often don’t realize that venture people are notoriously bad at visualizing a product or service. You want to create an immediate emotional connection to what you’re trying to build. Remember that the person you are pitching to doesn’t often have much (or any) context.

How can startups reach you?

Startups interested in an opportunity to pitch Defy can apply here.