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Amanda Reed - General Partner, Palomar Ventures


Amanda Reed is a third generation entrepreneur in the Silicon Valley with extensive knowledge of early-stage investments and a keen eye for innovations in software. In addition to delivering top-decile returns when she opened Palomar’s Silicon Valley office, she has a wealth of experience in executive leadership, having served as the SVP of marketing and strategy at LogicTier and the VP of corporate development and marketing at Connect. Today, Palomar Ventures manages over $500 million in capital.

Ms. Reed graciously agreed to a 30-minute interview in June 2017, which has been edited for length and clarity.

Interview Questions

[] I want to hear about your career trajectory. I noticed that you’re a third-generation Silicon Valley entrepreneur, which is cool and unusual. Can you tell me a little bit about that experience?

[Ms. Reed] My father and my grandfather were both entrepreneurs. My dad moved back to Silicon Valley in the early ’70s and was an early player in the personal computer revolution, and I came out to the Silicon Valley when I was in high school. I would spend summers out here working for one of his companies, and got bit by the bug of technology. When I graduated from college, I moved out here full-time to start a career in tech. I remember when I was working in one of my summer jobs, and he came out and said, “You’ve got to see this cool, new thing for computers. It’s called a ‘mouse’,” and I was like, “What do you do with it?” So, it was back then.

[] A lot of kids today probably don’t even know what a mouse is. It’s all touchpads.

[Ms. Reed] Yeah, I used to sell computers in the financial district in San Francisco; that was my first job. I would get people who would put a mouse on the floor—women who were admins—because they thought it was like a sewing machine pedal. Then I had someone who’d think that their DVD drive was a cup holder, telling me, “My cup holder doesn’t hold my drink.” I’d say, “Your cup holder? You don’t have a cup holder!” That was in the days when people were buying PCs as fast as they could in the switch to personal computing in their workplace. I had customers who were major retailers in San Francisco and transportation providers; I think one of my favorites was a Chinese fortune cookie company.

[] I heard that fortune cookies got their start in San Francisco.

[Ms. Reed] Oh really? I didn’t know that. When the printer would go offline and one of us would have to go out there and fix it, we would come back with a bag of warm fortune cookies, and I can tell you: there is nothing quite like the smell of a bag of warm fortune cookies. I’d be like, “Oh, I need their printer to break again!”

[] Where did you go from there?

[Ms. Reed] I went from there to a series of tech start-ups, and in doing so, I moved my way up from sales to marketing and from marketing to strategy, and I was interviewing for the CEO job at a startup. One of the VCs who was interviewing me was interested in opening an office in the Bay Area and hiring a partner to help staff it, and offered me the chance to cross over. The first time they offered it to me, I said no. As I put it, I wanted to quarterback it and not coach, and then I realized that these guys were some of the best at what they did; it was one of those rare career moves to be taught a new business by people who I thought were master-craftsmen in the business. That’s one of those career moments you have to recognize when it’s in front of you. So I agreed to make the funds office in Northern California sort of like my next startup. It was clear that if they were there to invest time in teaching me their venture business, I wasn’t just going to walk out and grab the next hot ticket that I saw. But that was in 2001, which was a time in the midst of incredible chaos in the business, and most people were exiting—not getting into it. I think I still only have one friend I know who started when I started in the business; it was an unusual start year.

[] That was right after the first tech-bubble burst, right?

[Ms. Reed] Yes, exactly, bubbles are cyclical in venture, but unfortunately a lot of people run away when they should be going in the opposite direction; that’s when you start companies. A lot of things happen: people get laid off their companies, so they start their own; valuations come down because people are all freaking out. It’s exactly when you want to start businesses. Some of the best businesses were started during the darkest hours; Uber and others began in 2007 and 2008. Those were pretty dark times with the market, but they proved to be great vintage years for original start-ups. Great vintage years for venture funds are also found in the down-period.

[] What does it feel like to be at the epicenter of startup innovation? I lived in San Francisco for many years and there’s a different energy there, but I’m sure being a VC takes that to a new level.

[Ms. Reed] It’s a privilege. You’re working among people who put everything on the line every day to innovate and start new businesses that create job opportunities, and so the opportunity to work with them and help them; you have to think of it as nothing other than a privilege because they’re the creators of the future and you’re the financier. On your best days, you try to get out of the way of the brilliant people. There’s the “Hippocratic Oath” of venture which is first, do no harm; then, help if you can; and in any event, try to be supportive and lend your network, your expertise, your perspective, and your ability to recognize patterns over time. I’ve had people say, “How is it that you can see around corners?” and I respond, “Well, when you’ve been through the scenario multiple times, you start to develop that skill and you can coach people through things.” So, it’s a tremendous honor.

[] Is it something intangible? How do you glean the great ideas from the duds? What’s the process you go through?

[Ms. Reed] Pattern-matching is a VC’s best friend and can also be their worst enemy, so you have to know how to use your ability to recognize patterns judiciously. I think that really, the people with the most experience will tell you that it’s people and markets, but people first. You find the “A Team,” and if they’re wrong about the market, they focus on a market that is moving. If you invest in the market but you don’t have a top team, they can get donors, be in the world’s most vibrant market, and still screw it up. So, you really start with the people. You look at someone who’s come in and you contemplate whether you think they’ve got that special factor—the ability to go day after day on ramen noodles, no sleep, and bad furniture. I joke that I think people can study entrepreneurship, but there should be a twelve-step program; it’s something that the toughest entrepreneurs are born with—an inability to work for anybody else and an indefatigable requirement to create. If they also have a keen insight for market opportunity, it can be an incredible combination. We seek out those people who are game-changers, and try to get money in front of them when they’ve identified an opportunity that is big enough to get you a venture level of return.

[] Do you get a lot of startup CEOs who are trying to reinvent the wheel, or do you get a fair share of people with brilliant, disruptive ideas?

[Ms. Reed] Oh, you wish you had those everyday. Sometimes they come along once in a career, sometimes they come along once a year. It’s a little bit of what you know and who you know—that you have an ability to get in front of those people, or get those people in front of you. The market has changed a lot in the past 20 or 30 years, but now, everybody is an investor because there’s crowd-funding and crowd-sourcing opportunities. The government has relaxed its regulations around who can be an investor, so everybody is technically an investor, which creates a huge abundance of money.

Also, people are graduating with the intent of being entrepreneurs. That’s something that you didn’t see as much in my generation in the 80s. I usually joke that in those days, if you said you were graduating and becoming an entrepreneur, it’s because you didn’t’ get picked up in recruiting. It was like something you would tell your boyfriend or your girlfriend’s parents: “Oh, I’m an entrepreneur,” meaning, “I don’t have a job.” Now, of course, the major universities are competing with each other and offering entrepreneurship programs. Anywhere that doesn’t have an entrepreneurship or an innovation program at the undergrad level—much less the business school level—is really not competing. People are graduating with the idea that they’re going to move to the Silicon Valley, New York, Boston, or Seattle and start businesses. This has happened only in the past ten to fifteen years. It’s been bubbling for a while, but it’s really crossed over.

[] Where do you think San Francisco and the Bay Area are right now in the cycle, since you’ve seen it through so many booms and busts? Do you think that there still is a lot of room for innovation and that things will continue at this pace?

[Ms. Reed] I think that we’ll continue to see cycles; I think we always do, but the presence of artificial intelligence and the impact that it will have on various industries is a major trend, and I think that will keep things chugging along nicely for awhile. I think we’ll see more small corrections than we will massive ones in the foreseeable future; the change that is coming through now is one of the biggest platform changes we’ve seen in recent memories.

[] One of the biggest platform changes? Can you elaborate on that?

[Ms. Reed] We went from microcomputers to minicomputers to mobile; it’s a shift to IoT where everything is “smart” in your life—your clothes, your toaster, your refrigerator, your car—and that’s a massive creation of new platforms everywhere. So people aren’t developing just for the fun; people are developing intelligence across a much broader slot. That’s a huge order of magnitude increase in financing opportunities, company opportunities, and employment opportunities, so I think it’s going to rise. And we’re just at the beginning of it. Then, I think we’ll be dealing with the fallout of that technology changing the way the labor market works, and that’s going to create a lot of challenges. The question is: who will be the winners and losers in that market?

[] That’s a good point. I want to shift to the demographics of the industry. Why do you think that women are so underrepresented as VCs?

[Ms. Reed] I think it’s a lot of things. It’s where VCs come from, right? They tend to have been entrepreneurs, corporate executives, or investment bankers in places that are also male-dominated. Also, there are still relatively few women in STEM, but one of the reasons it’s changing for the better is because investments are now being made in what you could call a “digital life.”

There are really two things that are boosting women in tech: one is that there are more women getting their engineering degrees and studying computer science. There are also more companies which aren’t “black-box technology companies”—they’re commerce companies and digital wifi-type companies. It’s a long way from the chip industry. There are networking and data innovations, and they’re areas where you’re more likely to see women entrepreneurs—it can be shopping, casual gaming, or digital home-type ideas. These are spaces where women entrepreneurs are more native. Women buy most of the stuff in the house. Again, it’s a trend toward “digital life.”

[] I also learned that a disproportionate share of VC funding typically goes to companies that are started by men. Do you think that that’s because the majority of entrepreneurs still are men? Are men are asking for more? Is it the types of companies that men are starting? Do you have any insight on that?

[Ms. Reed] I think that’s all true. There are more men starting companies that are at the venture level; I think there are more women entrepreneurs because women are opening hair salons, bakeries, and small accounting businesses, but it’s mainly men behind ventures.

Also, if there’s a woman pitching an idea, there’s not necessarily a diverse group of decision-makers that she’s facing in the office when she comes in to pitch. There’s a tremendous amount of research that’s been done on diverse teams making better decisions. It’s not just that you need a woman in the room in case you’re pitching a wedding site, a shopping site, or a beauty site; it’s that women bring a different perspective to every decision.

There certainly are studies that say a room full of men can have either conscious or unconscious biases toward women pitching ideas, and that can affect her chances of being successful in the funding effort. So, I think it’s all of the above. There aren’t enough women coming in to pitch. Keep in mind that most VCs get pitched on four to six deals a week, but close only one or two deals a year, so the process itself presents narrow outcomes.

[] Do most of the entrepreneurs come to you, or do you also seek out the ideas that you like?

[Ms. Reed] I think almost every deal that I’ve ever done has been referred to me; most deals are referred to you through the network.

[] From the perspective of either you as a VC or other women you know in similar positions, do you think there are any unique challenges that you face in being relatively underrepresented?

[Ms. Reed] Other than just getting used to being the only woman in the room? I think we’ve all had the experience where you have an insight and you say something, and people kind of shrug it off. And then a guy in the room says the same thing, and everybody’s like, “Oh my gosh, that’s brilliant.” So there’s that.

[] Any interactions that would have played out differently had you been a man?

[Ms. Reed] When I was in the corporate world, we went to these achievement clubs that are just boondoggle events, and the guys would all go out to play golf. And I’m like, “Well, I don’t golf, so I’m going to hang out with all their wives in the pool.” There’s a great New Yorker cartoon—I think it’s The New Yorker—it had this woman pushing open the men’s bathroom, and it’s got all these men sitting around this big table smoking cigars, and she says, “Ah ha! Just as I thought!” It’s the idea that these deals are done through back channels. I’m trying to think of an example where gender biases are so obvious, but often it’s subtle.

One of the unfortunate truisms is when one woman comes into pitch, you have to be really careful not to be obviously enthusiastic about it because you don’t want to appear to like her for her gender. You’re perceived to have a bias for other women. If a deal is led by a woman, you have to put in twice as much of an effort to not be thought of as being biased. There’s so much at stake for the woman entrepreneur and for you, so you’ve got to be twice as sure because otherwise, it looks like you made the decision for the wrong reasons.

The problem is I’m always the one in interviews saying why I think it’s an even playing field. I think that the technology industry is the closest thing to a meritocracy in American industry. When I look at my friends who went into investment banking or into law firms, the tech industry—by comparison—seems to have a more level playing field. You can’t look at a business with women like Carly Fiorina, Meg Whitman, Sheryl Sandberg, and Marissa Mayer and say, “You can’t do it.”

I was back for a college reunion, and a friend of mine who was a partner at McKinsey wanted to sit down and talk about the glass ceiling; I had nothing to offer because it just didn’t feel like that to me.

Also, I had a son when I was 43 and it became apparent to me that boys were different from girls. I had just sort of plunged ahead in my career assuming that men and women see things the same way, but my son taught me that men are completely different creatures than women. My son proceeded to destroy everything in the house; I’d had a daughter first and she’s athletic, outgoing, and aggressive, and I thought, “Well, it’s just like having a boy.” It was nothing like having a boy! I joke that if I’d had my son earlier in my career, it could have possibly derailed me—the realization that there was that much difference.

[] So he just sort of acted with a sense of abandon and wasn’t as conscientious?

[Ms. Reed] Yeah. That’s it. Also, at no point did anybody suggest that I couldn’t do something because I was a girl; I was raised in the belief that there was nothing that I couldn’t do, so I was just kind of oblivious to it. There were definitely subtle things that came up along the way. Look at the whole Ellen Pao thing, and the number of promotions that women don’t get; look at the work that Trae Vassallo has been doing on this elephant in the room issue.

[] Do you think your father and your grandfather—the entrepreneurs—were an inspiration for you and supportive of your endeavors?

[Ms. Reed] My father certainly was, and my mother was very much a rule-breaker. She couldn’t give a damn what other people thought.

[] For women who are also aspiring to be VCs I think they’ll find your story very inspirational, and of course you’ve had so much experience. What advice would you give them?

[Ms. Reed] I think that when you’re starting your career, it can seem like you can make a master plan—as if there is one path to success and it has a linear quality to it. What becomes clear is that life is a string of unexpected events and decisions that end up landing you wherever you are. There’s more than one path to success; as the saying goes, if you’ve got a closed door, you go in through the window. People have ingenuity and persistence to get to where they want to be. It’s not like you’ve got to go to this specific school or get that job. There is a the “blue chip resume” path to success, but there’s also the ingenuity path.

One of the things that I tell people I’m advising on career changes is that the number one quality you want to select for in making your job decisions—the people that you work with. It doesn’t really matter what your title is or which department you’re in; it’s the quality of the people you work with; the questions you’re asking yourself; and the questions they’re asking themselves. It’s better to take a lesser paying job with a lesser title to be with an innovative group of people. Even when companies crash in Silicon Valley, the teams that come from them go on to a thousand other places. It’s not that the startup itself has to be successful.

A friend of mine went to 23andMe as a staff attorney, and I said, “Doing legal work on the front end of a groundbreaking genomics company is going to be interesting.” Going to work right now in AI is going to be interesting. It doesn’t matter what happens in the company; it matters that you’re putting yourself in the mix with really bright people you admire. It’s really the company you keep that determines your career. That’s how your network builds your career for you. It’s important to invest in networking and working with high-quality people; tt’s not about going from point A to point B on an engineering diagram.

Also, with this generation, they’ve got to stick it out. There’s no substitute for hard work. As they say, the harder you work, the luckier you get. You don’t want to job-hop without satisfaction because the company isn’t taking care of you, it’s more about not asking what a company can do for you, but rather what you can do for the company.