# How To Win The Strategic Process Of Fundraising and Optimising Co-Founder Relationships and Break Ups with Kathryn Minshew

Founder & CEO @ The Muse

20VC · Sep 2, 2016 · 33 min · 5,640 words
Speakers: Harry Stebbings, Kathryn Minshew
Source: https://www.996.fm/episodes/20vc--ep-a92594ba/

## Cold open

**Harry Stebbings** [0:00]:

This is Founders Friday on the Minute VC with your host Harry Stebbings at hstebbings on Snapchat. Now for the today, I'm delighted to welcome Kathryn Minshew. Kathryn is The Muse's CEO, named to Forbes 30 Under 30 in media and Inc's 15 Women to Watch in Tech. Before founding The Muse, Kathryn worked on vaccines in Rwanda and Malawi with the Clinton Health Access Initiative and was previously at McKinsey. Kathryn's also spoken at MIT and Harvard and appeared on the Today Show and CNN and contributes on career entrepreneurship to the Wall Street Journal and to Harvard Business Review. I'd also like to say a huge thank you to former guest Orloff, founder at Lendup, for making the intro to Kathryn today, without which the interview could not have happened. And in the interview with Kathryn today, she deep dives on how to really optimize the fundraising experience for you, the startup.

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## Conversation

**Harry Stebbings** [2:09]:

Kathryn, such a pleasure to have you on the show today. Huge thank you to Sasha Orloff at LendUp for introducing us, but I really appreciate you taking the time out so close to coming back from the honeymoon. So thank you so much for joining me.

**Kathryn Minshew** [2:19]:

Of course. Happy to be here.

**Harry Stebbings** [2:21]:

Now, I'd love to get the ball rolling today by discussing how you came to co-found The Muse and a quick kind of backstory for you.

**Kathryn Minshew** [2:28]:

Great. So the the idea for the Muse really came out of my own life. I grew up outside Washington, D.C. I was dead convinced that I was going to be a CIA officer or an ambassador or a foreign service official for my career. That was the dream. That was the path. I studied French and Turkish. I majored in international relations, and all of a sudden I had the opportunity to have my first real professional work experience, and I was an intern at the US Embassy in Nicosia, Cyprus, in the Regional Security Department, and realized very quickly that the idea I had in my head of that career did not match the reality of working for the Foreign Service. And so that kind of kicked off this several year career exploration. I worked at McKinsey Company as a consultant. I worked in Kigali, Rwanda with the Clinton Health Access Initiative. And while I loved and learned from each experience, I found the process of figuring out a career path, navigating that career path, and learning the skills that it takes to be successful to be a challenging one. And so about four and a half, actually nearly five years ago, my co founder Alex and I started The Muse, and our idea was very simple. We wanted to create the most beloved and trusted career destination, period. We wanted to give people a place to get great career advice, to learn skills that would help them move forward in whatever job they had or acquire a new job, and then really give them the insights into companies and career paths that would help them find that job.

**Harry Stebbings** [4:03]:

And I spoke to many of your investors before the show, and one very common theme that cropped up was was the relationship between you and your co-founder, Alex. All of them citing its brilliant togetherness and and working so complementarily, terrible word, in terms of skills and approach. So I'd love to discuss then kind of the fit there. if you ever disagree, that was from Adam Quinton, how the relationship dynamic works between you.

**Kathryn Minshew** [4:31]:

Yeah, I mean, is my other half, right? Without her, there be no Muse. And I think we have been an incredible pair since day one, although it's not always easy. And of course, sometimes we disagree. So Alex and I met while we were both at McKinsey. We met in 2008, so we've been friends for eight years and counting now. Very quickly, I think it became clear to us that our skills were very different and very complementary. So today at The Muse, Alex manages our product dev and operations team. She designs and codes. She is the person that can come in and bring order to chaos. as she's brilliant operationally. And I found that the areas that I really loved and excelled at, speaking to our users, managing the marketing team, sales, getting early customers, raising capital, sketching out the big picture vision to investors, speaking to the press. And so she and I have been this kind of, I don't know, Tweedledee and Tweedledum duo of sorts. And it's certainly not the case that we agree all the time. think that would probably be bad for the Muse. But firstly, we both have a very deep respect for the other. I think we have a very deep understanding of where each of us is stronger. And so there are certain areas where I would absolutely defer to Alex, even if I disagreed, because at the end of the day, I understand that that's an area where she is going to be most effective at making a decision.

**Harry Stebbings** [6:12]:

How do you handle founder disagreements when they do crop up? It's a common question I get asked. Is there a resolution method you go for?

**Kathryn Minshew** [6:19]:

I mean, yes and no. Handling founder disagreements, first of all, is a baseline. You have to be respectful, you have to disagree in a constructive fashion, and you have to put the company first. So it's much easier to come to a resolution when you're both framing your arguments in terms of here's why I believe X decision would be the best for the company. And it doesn't mean, again, that you agree on what would be best for the company, but at least you're playing within the same space. Secondly, you have to understand how each other operates. For example, there are times when it's very clear to Alex or I that we need to stop discussing and move on to another topic, or in some cases during the meeting. and by the time we come back, it's actually very common for one of us to say, now that I've slept on it, I think you're right and let's move forward. But sometimes you need that space to come to it. And again, I think anyone who says there's a magic formula is probably trying to sell you something, but there are ways that you can set up your communication, your process to most likely be able to reach a decision. And again, I think a big part of it is founding a business with someone that you respect, that you trust, so you know that even if you think their idea is batshit crazy, they're coming from a good place.

**Harry Stebbings** [7:40]:

Absolutely. And I do have to touch on prior to The Muse, you had a venture, and there was a founder disagreement or breakup. So I'm really interested to hear what were the takeaways from you from that and how it compares then with Alex and the kind of the takeaways you just mentioned there.

**Kathryn Minshew** [7:56]:

Yeah. So I learned so much from that business, even though I don't often end up getting to speak about it because only so many things you can talk about. But I think it was really transformative for both Alex and I. So she and I were group founders of a company together before the Muse that was operating in a somewhat similar space. It was, in some ways, it was some of the early seeds of this idea that navigating your career is hard and the existing tools are woefully inadequate. And I mean, without going all the way on my soapbox, I remember doing a search on Indeed, or on monster.com, and looking for business strategy director and getting a job at a 7-Eleven in Secaucus, New Jersey, and thinking to myself, you've got to be kidding me. This cannot be the state of this industry. And in some ways, when I started this first company, which was called PYP, we were providing career advice to young professionals, particularly people in the first ten or so years of their career with a focus on women. And people in the industry would say, I don't really think that this is all that relevant because there's plenty available online. I just remember thinking like, are you kidding me? And it was really motivating. But know, to your specific question about founders, that was a tremendous learning experience. So Alex and I were two of the four founders of that venture. We had two other co-founders, and we really had differences in vision, in style, in approach right from the beginning. And so, in retrospect, there were people who told me, I don't know that you and Alex should be working with that other group. But I didn't listen because I loved the idea. I couldn't imagine going through a founder breakup. And I think, that's kind of a classic inexperienced mistake, because you're like, well, I can do things to make sure it doesn't happen to me. But in retrospect, we wanted very different things out of the business. We thought about it differently. It was really important to Alex and I that we create very much an everyman or an every everywoman type approach that felt really relatable, whether you lived in New York City or Omaha, Nebraska. We also wanted to cater to a really wide variety of people and experiences, you know, from EA to associate to executive to everything in between. And I think that those things weren't necessarily shared. And, to make a long story short, we had a really painful breakup, outside of the kind of obvious lessons around picking partners more carefully, which I have very much taken to heart, I think Alex and I have also learned to tackle some of the big questions early. If you suspect that you have a difference of opinion or a difference of vision with someone, you don't necessarily have to have it out that second in that meeting. But don't let weeks go by. Probably try not to even let too many days go by before you have a conversation to bring that things out into the open. And I think it helped us with problem solving, with people management. You know, it was also really meaningful that when the split happened, every single person who'd been working on that project chose to follow Alex and I instead of the other two. you know, it was a time when I don't even know if we believed in ourselves, but there were other people out there who were willing to believe in us. And that was pretty incredible. And I think you can do almost anything well, as long as you are open and honest. And also share some basic values about how to treat people, which, you know, evident in the first founder relationship. And that was also a lesson of like, never compromise on values ever, because you will regret it every time.

**Harry Stebbings** [11:42]:

And you said there about kind of never compromising on values and the importance of The Muse being for everyone. And that can be applied relatively to kind of Silicon Valley ownership culture within companies of kind of everyone feeling like an owner when they work at a firm. So I'm really intrigued. And a question from Adam Quinton again. You've scaled the team now to over 100 people, if I'm right. So So how have you managed to maintain such kind of startup ownership culture with such a scaled team? And was it difficult for you to let go as a co-founder and and trust other people as much as you have done?

**Kathryn Minshew** [12:14]:

You know, I think it was one of the most exciting parts of scaling because when you're a founder, you have areas that you love and that you are gifted in, and you have other areas where you were just muddling through, trying to do the best you can until you can bring in someone to help that part of the business grow. And I actually, I've loved the process of being able to really double down on where I can bring the most value to the muse and the areas where I love interacting and the things only I can do, and finding people who are brilliant at other functional areas and giving them the space and the authority to build those teams. And that doesn't mean not being involved. I still interview, actually until we got to 100 people, Alex and I both interviewed every single person who joined The Muse. Now at least one of us interviews everyone and both of us still interview about 50% of hires. So I'm deeply involved. I spend lots of time with the teams, but I think to recruit great leaders, it has to be their team. You have to give them the latitude. I sometimes describe it as if we're an armada. And, I may be the commander of the fleet, but each of my battleships has a general and that general needs to be able to run their ship. And yes, my job is to make sure that we have the ships in the right place, that our fleet of airplanes is providing the right coverage, that we're heading in the right direction, that we've got the supplies and the provisions that we need. But I cannot run their ships. And if you have to run someone's ship, then you probably have the wrong general. And if you've got a great general, like let them do their job and give them that space and that authority.

**Harry Stebbings** [13:53]:

Okay, so let's keep this nautical theme going. I'm enjoying this. So So we these generals and we need these crucial ships. So when you look at the team now being over the what were those crucial ships slash hires that you made along the way? What were they that really allowed you to kind of elevate yourself out of the weeds?

**Kathryn Minshew** [14:13]:

Yeah. So it's been a combination of skills and culture fit. We early on laid out six core values that we think every single person who works on The Muse needs to abide by. And we interview for those, although we don't talk about them in too much detail publicly because the last thing we want is someone coming in and you know, gaming their stories to try and hit on all of the core values. But I think that for us, was important to make sure that we weren't screening for these critical hires just on, you know, oh, would we want to have a beer with this person because you can end up with a really undiverse team that way. We wanted to be looking at can they do the job and can they do it in a way that really builds the type of organization we want to create at The Muse. So to give you a couple examples, our Head of Sales, Doug Freeman, our VP of Sales, absolutely tremendous hire. He joined April Fool's Day 2014. It's like a holiday I celebrate every year. Before that, I was managing the sales team. And you know what? I am smart and I learn quick and I'm capable and I can do lots of things, but I have never run a sales team. And I think that it was very challenging for the team because there's a lot about sales and specifically sales team management that some people are truly experts in. And we interviewed a lot of people. And there were times during that hiring process when I was tempted to say like, let's just get anybody in here because we need this role so badly. But we waited and we waited. And when Doug joined, it was night and day, both in terms of my role and being able to move into other areas of the business where I could add much more value, but in his ability to really build up a team that stayed very true to our core values. And if you look at when the Muse's revenue really took off, it's very closely linked to his joining and building out that team. And that's, been a huge driver.

**Harry Stebbings** [16:12]:

What were your big lessons then from running sales? And as you said, a very intricate and detailed organization that really does require significant experience to run a sales org. So what were the big learnings from that?

**Kathryn Minshew** [16:25]:

You know, I think that building a business, one of the core skills is understanding where you can figure out the answer and where you need to find the answer that already exists. To give you a very clear example, there are other areas of business where there are best practice. And so it's about identifying somebody who is world class in that area and again, giving them the space, the authority, the resources to build out that team. And so, in hiring Doug, A, I think making sure that every hire has really strong values is aligned with your core values and your vision for the company. That's critical no matter what, but it is 10x critical for your leaders because they will replicate themselves on a team. And I think, anybody who's ever hired the wrong person and seen them hire in other people who might, also have some those same challenges, that's a very real problem in companies. And so I think the bar has to be even higher. But also it's making sure that you have someone that has the same aspirations. And I think it's people that both bring an incredible skill set, but there's also just something else. they're the glue of your exec team and your business, and they're the people who are interviewing and hiring those next people. And I think that that getting those right is really important.

**Harry Stebbings** [17:52]:

Now, before we jump into the quickfire, I do have to touch on on the funding. We are a VC show after all. And you've now raised large Series A and B recently. A huge congrats on that. So so I'm really intrigued what were the learnings you made along the way on how to successfully deal with investors and then what mistakes you made and how you'd counsel others on not to repeat them.

**Kathryn Minshew** [18:14]:

So, you know, I think that there's tremendous learning that takes place whenever you're raising capital. We had an incredibly challenging seed round, a very, very, successful and oversubscribed A, and a B that was more like the A than the seed, but obviously the funding environment certainly meant that there wasn't quite as much frenzy or FOMO as our A round. So a couple of the lessons. One was that the biggest difference between our seed on one side and our A and B on the other was numbers, but the second biggest difference was process. So leaving aside numbers because like, yes, it's great when you've got hockey stick growth, it makes things a lot easier. process is still important. And so one of the key learnings was that we really ran a process. we structured ahead of time before we talked to a single VC, we said, who do we want to speak with? What are our introductions? Contrary to, know, most people say we got to get a warm intro. One of the investors that gave us a term sheet is someone that I sent a cold email to about a month before we started raising, because I had seen something that they'd written on the internet and thought it was brilliant, and so wrote back an answer and we ended up developing a relationship. But, I had the spreadsheet, I said, here's who we like, here's how we're going to get in touch with them or who that we know knows Strength of the connection. What is this VC's sweet spot? So, I a spreadsheet with a lot of information. And then when we were ready to go, we said, great first meetings for the Series A, think it was February 2nd through 13th, And we essentially needed to run it so that everybody was more or less in sync. And it's tough, you know, you reach out to email someone, they're like, yeah, I'm really excited. I would love to learn more. I'm out at ski week for the next two weeks, but how about March? Like, sorry, can't do March. You want to meet, you know, and it's obviously you've got to be flexible. But but you can't be too flexible because otherwise, you'll never get anything done.

**Harry Stebbings** [20:15]:

I'm always intrigued with regards to transparency with founders and VCs and how transparent founders are with VCs. How did you approach that in terms of, oh, you know, we've got we've got X investor who's close, you know, you're to need to hurry up, basically. How transparent is a founder with VCs for you having done it successfully?

**Kathryn Minshew** [20:33]:

So it's funny. When you started asking that question, I thought you were talking about transparency about everything else in the process. And I was getting ready to say, hell yes, like, the last thing I want is for someone to invest and then be surprised by anything.

**Harry Stebbings** [20:45]:

No, I'm not saying hide the numbers. Don't hide the numbers.

**Kathryn Minshew** [20:48]:

Like why? I just think it's I mean, anyway, I think it's like, I think that it is in everyone's best interest, but especially founders to be upfront. this is the business we have, these are the successes, these are the challenges. And find someone who is bought in. So that's where I thought you were going. In terms of the process, I think it's a bit of both. I would never recommend that somebody be untruthful in any way about the process because people always find out it comes back to bite you. Like just, you know, I think honesty is key and you've got to be consistent about honesty because people need to know that when you say something, you're serious. But that said, I think it's very helpful to let VCs that you're talking with in on roughly speaking what's happening. So that can go both ways. We had one firm that said in this B round, hey, do we need to get you a term sheet next Monday? And I was like, no, we're not getting any term sheets for at least two weeks. Take your time. Because frankly, I want them to have the time they need to genuinely consider it. And I knew we had other term sheets coming in, but those weren't going to be in for about two weeks. And so I'd rather have them all in around the same time so that we can really consider the options. So I think that it's letting people know right now we're in you getting to know people phase of our process. All right, right now we're fairly deep in diligence with a couple of potential partners. So happy to answer any data requests. But, you know, it looks like we're going to move forward with somebody within the next two to four weeks, whatever that timeframe is, and then signaling to people ahead of time, it looks like we're going to have a couple of term sheets coming in on Monday. Let me know between now and then. Happy to answer any questions. know, we'd love to chat, but that's roughly the time frame. And I think that that's actually useful to all parties. Again, it's not it's not sort of overplaying it. It's not being bombastic like now or, you're out. I just don't think that serves a purpose. maybe that's, just I tend to prefer to be fairly straightforward with people. The flip side is, you can also get in a situation where someone says, I would have loved to do this deal, but I didn't know it was moving as fast as it was, and I cannot get alignment in time. And you don't want to be there either. So I think I would never tell a VC who else I'm talking to. That's just not great practice, but certainly giving them an update about how the process is moving and when I expect it to come together, very, very helpful in making sure that you're considering the right option set because the investor that you pick as a partner and as a lead is going to be someone that you're going to be, calling up at 8, 9PM on a Tuesday, five years in the future, jamming through a problem that you're dealing with, and you want that to be someone that is the right partner.

**Harry Stebbings** [23:29]:

The funding is the start. Yeah, Absolutely. And I'd love to dive into a quick fire round with you now. So I say a short statement and 60 seconds for your immediate thoughts. How does that sound?

**Kathryn Minshew** [23:38]:

Perfect.

**Harry Stebbings** [23:39]:

So let's do favorite book and why.

**Kathryn Minshew** [23:41]:

Arcadia by Tom Stoppard. It's a play, but you can read it as a book. It's beautiful, and it explores these fascinating questions of why people behave in the way they do, ways in which the, Newton's second law of thermodynamics is and is not like human history. Anyway, it's crazy and it's like all Tom Stoppard full of hilarious British wordplay. But it's just, it's one of my favorite plays and favorite books and I reread it every couple of years.

**Harry Stebbings** [24:13]:

Your biggest takeaway from YC, what was it for you?

**Kathryn Minshew** [24:16]:

My biggest takeaway from YC was the power of a peer network. I learned a lot from the partners and the speakers and the things that people think of when they think of Y Combinator, but the number one advantage is being in a cohort with 60 odd other companies, 100-plus 100 plus other founders that are all going through the same stage. And even after we graduated from YC and for those people who might not go through an accelerator, having a cohort of other entrepreneurs is invaluable.

**Harry Stebbings** [24:44]:

LinkedIn acquisition. What are the thoughts?

**Kathryn Minshew** [24:46]:

I loved it. I thought when I first saw the headline that somebody was playing a joke designed expressly to make me happy.

**Harry Stebbings** [24:55]:

Market validation.

**Kathryn Minshew** [24:57]:

It's not exactly. It's market validation, but more than that, when is the last time you heard someone say, we were competing with so and so and then they got acquired by Microsoft and wow, now we really can't keep up. Like never. You've never heard that. I think that the Microsoft acquisition does have shareholder value and are some interesting synergies. but if anything, I believe it will pull LinkedIn a direction that opens up even more space for us to really on the experience of an individual navigating their career and create a human experience, a trusted and beloved experience around that.

**Harry Stebbings** [25:31]:

Awesome answer. Your favorite blog or newsletter, what's it for you?

**Kathryn Minshew** [25:36]:

gosh, this is hard. I love reading The Atlantic. I mean, I'm addicted to The New York Times. It's not exactly a blogger newsletter, but if there's a copy of The Economist lying around, I have to read through the entire beginning section. I also am a big fan of The Daily Peanut and The Skim, The Broadsheet, a bunch of things. But I think my number one would be just old school New York Times.

**Harry Stebbings** [26:03]:

Biggest challenge to this day. What's it for you?

**Kathryn Minshew** [26:06]:

Biggest challenge? continuing to engage with every part of our organization deeply as we scale. How do you scale yourself when you're at 100 plus people? What are the ways in which you make sure you know what's going on? You plug in. I also love that. I mean, we are hiring some incredibly brilliant, smart, driven people into some of our entry and mid level roles. and how do I make sure that I get the time with them that I'd love to? So I would say that's probably one of the biggest challenges alongside all of the other lovely things that come with scaling at hyper growth speed.

**Harry Stebbings** [26:46]:

And then finally, the next five years for you and The Muse, what's on the roadmap?

**Kathryn Minshew** [26:50]:

I'm really excited. So for the next five years, we have laid out our big picture vision fairly clearly since the early days, and that is to build the most trusted and beloved place for people to navigate their career. so a few months ago, we launched coaching as part of that vision for people that needed more one to one help. We're actively looking at really interesting ways to partner with some of the best career development classes on the internet. I think you'll see more from us in that aspect. But ultimately, for an individual, it's about continuing to personalize the experience because we have 50 million people every year who use The Muse to find a job, get advice or navigate their career, and they are so different. And so the gentleman who's been in the Air Force for years and is looking to make a late career change to a civilian job, he needs something completely different from the 25 year old female engineer who isn't happy at her big banking job and wants to join a startup and everything in between. We are actively working to personalize the experience, to humanize the experience, and then to use that data in constructive ways to help people get what they're looking for and not use that data in ways that might prioritize the needs of an advertiser over the individual. Because at the end of the day, one of the reasons that so many companies work with us for recruiting, hiring, employer branding, career development is that we have the best people and we have their trust, we have their attention. And so by being user first and putting the individual first, I think we'll continue to serve both sides of the marketplace.

**Harry Stebbings** [28:30]:

Kathryn, it really has been such a pleasure to have you on the show. So grateful to you for giving up the time and absolutely incredible to hear the rise of the Muse, as I said from Adam and and from Sasha, now from time So thank you so much for joining me.

**Kathryn Minshew** [28:40]:

Thank you so much. It was a lot of fun, and, and I look forward to talking more.

**Harry Stebbings** [28:46]:

And again, a huge thank you to Kathryn for giving up her time today to be on the show and to Sasha Orloff LendUp for making the introduction, as I said, without which the interview would not have been possible. And if you love the show today, then you can add me on Snapchat at Stebbings. You can add Kathryn on Twitter at kmin, that's kmin, or you can sign up to the newsletter on the 20minutevc.com. That way, you never have to miss episode or an update from us. And speaking of updates, did you know companies that regularly communicate with stakeholders are 200% more likely to get follow on funding? Visible.vc backslash is the leader in stakeholder communication and engagement, powering updates updates and reports for over companies, including customers like Amazon and Skyscanner. They also integrate with apps you already use to run your business like Google Sheets, QuickBooks, Salesforce, Stripe, and more. So do check out visible.vc backslash 20 to get an exclusive deal just for you and schedule a call with your own data analyst. That's Visible.vc backslash But before we leave you today

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