Ann Winblad - Founding Partner at Hummer Winblad Venture Partners
Ann Winblad is the co-founder and managing director of Hummer Winblad Venture Partners, an eminent VC firm investing in early-stage software companies. After working as a systems programmer with the Federal Reserve Bank, Ms. Winblad co-founded Open Systems, Inc. in 1976. This lucrative accounting software company sold for $15 million six years later, and Ms. Winblad went on to work as a strategy consultant for IBM and Microsoft, among others. She co-authored a book titled Object-Oriented Software and numerous articles in the space. She holds a bachelor’s degree in mathematics; a master’s degree in education and international economics; and an honorary doctorate of laws from the University of St. Thomas of St. Paul, Minnesota.
Ms. Winblad graciously agreed to a 30-minute telephone interview in July 2017. This transcript has been lightly edited for length and clarity.
[OnlineEducation.com] Who have been your greatest mentors? Who inspired you first to work as a programmer, to establish your own software company, and finally to become a VC?
[Ms. Winblad] I am the oldest of six kids, and my dad was a winning high school basketball coach; he ended up with five daughters and a son in the middle, so we were his team. It’s always great to be on a winning team and my dad was really inspirational to me. I wish that Title IX had been implemented when I was in high school because I would have loved to have been a point guard, even though I’m kind of short.
When I was in second grade, there were several of us that went ungraded for three years, from second to fifth. I had this amazing teacher named Tina Fossum and she loved math; she basically inspired in me a great love of arithmetic and later, math. But that was really unusual. I’ve asked many women who were math and science majors how many women professors they had; in my case, it was was none, so Tina was really instrumental in building my confidence, teaching me that mathematics was something fun, and that I was really great at it.
[OnlineEducation.com] What does it feel like to be at the epicenter of innovation? You described it so beautifully in your TED talk, referring to it as “auditioning the future.” When investing at high risk points, what’s your deal flow? How do you discern a winning idea?
[Ms. Winblad] You just need to stand in the river of innovation and never take your deal flow for granted. I try to have meetings with three to five people a week that I’ve not met with before. Sometimes those meetings I wish I hadn’t taken, but many times they’re surprisingly interesting and reveal a new set of ideas, as well as a new set of people. And we’re constantly changing, so it’s not like once you find one set of really great entrepreneurs, that same set redelivers that next set of ideas; it’s really about being open-minded and meeting a lot of new people…really meeting them; not just connecting with them on LinkedIn, Facebook, or some social network, but actually sitting down, sharing a conversation, hearing new ideas, and hearing the way people are thinking about new businesses and new problem sets.
[OnlineEducation.com] Do most people reach out to you, or do you seek out the ideas and verticals that interest you? How are you usually connected?
[Ms. Winblad] Both ways. When you have money, that’s a great magnet; it’s like walking around with a big dollar sign on your head so people can come to you. You get the direction of the flow, but you have to make sure that you’re not just seeing the runts of the litter, that you’re actually seeing the championship dogs.
You do really want to step out yourself; I speak at university campuses; I meet a lot of enterprise customers to talk about new problems they might have, and new people that they’ve met or new software they’ve seen; I talk to existing entrepreneurs because the quality of deal flow is really paramount to a successful venture fund.
[OnlineEducation.com] What do you think will be the next most disruptive ideas in the next five to ten years specifically in software? What ideas make you the most excited when you get up in the morning?
[Ms. Winblad] The one thing to remember is that we’re the opportunists and the entrepreneurs are the visionaries, so I’m always a little put off when the venture capitalists act like the visionaries. We don’t run the companies; we don’t invent the ideas; we just see patterns.
We recently had a company go public called MuleSoft; it had a very successful IPO in March, and that company has a thousand employees now. We funded it when it had five employees across four countries. At that point in time—this was ten years ago—they talked about what it would mean to be in a connected world where you had billions of devices, tens of thousands of software applications in the cloud, and smart devices that actually had to be connected via software. When they started, none of that existed, so it was an assumption about the future. They assumed that these would be accessible by a technology called “Application Program Interfaces” and driven by a services bus—techno-lingo there. Did that vision of the future align with what we were hearing? There was a general pattern with someone working on the internet of things and someone else working on APIs; was all of this going to come together? That’s all transpired.
We have billions of devices—mostly smart phones—but we have smart things all over the place from our Amazon Echos to our irrigation systems or Nest devices, to a gazillion things in factories. Everything we can think of is a smart device, including our car. It’s really about how pieces come together.
Sometimes we see false futures. Right now, everyone strongly believes that we’re going to go from machine learning to even deeper artificial intelligence. That has been one of the themes of investing by venture capitalists; that does not mean that the venture capitalists made up the themes and the entrepreneurs created companies to please the themes; it means we started seeing the convergence of a computed infrastructure called the cloud. We’ve harnessed big data, and there was a specific technology that did that. We have these open APIs, so we can feed the thinking machines much more data.
Many young companies have been funded in the last two to three years on the themes of machine learning, artificial intelligence, and in that general vein, so we are going to see things get much, much, much smarter in the future. Not all of these companies that have gotten funded will be successful; the timeline is always unknown, but my guess is that in the next ten year batch, we’ll have a lot of intelligence—including autonomous driving—which will be really exciting since the fifth leading cause of death in the world is car accidents. In the next five years, it’s expected to become the third largest as more and more cars get on the roads in places like China. With self-driving cars, we’ll save lives and have an interesting driving experience.
[OnlineEducation.com] Moving to the demographics in the industry, only 7 percent of partners at the leading 100 venture firms are women. Why do you think that women are still relatively underrepresented, especially in the higher echelons of leadership?
[Ms. Winblad] We’ve got underrepresentation of women all over the map, as you’ve pointed out in some of your writings as well; not only do we have only 7 percent of senior partners—although interestingly enough, there has not been a real official census, so that number could be different—but also on average, only about 16 percent of the graduating classes in computer science, mathematics, and engineering are women. And the number of CEOs is low, as well.
We fund enterprise software companies in the first round, or the “A Round.” In 100 percent of the cases, at least one of the founders has a strong engineering background—the one who built the product. So we’re dealing with that 16 percent graduation rate. We don’t see enough women, and it’s not like we’re turning down women; one of our recent deals was with a very bright, young, Israeli woman doing a security software startup.
We’ve got stumbling blocks all along the way. I mentioned earlier that many years ago, I was the only woman in the math class, the only woman in the computer science class, and one of three women in the business class. I never saw a female instructor, and I bet if you ask women today, they’d say the same thing.
It’s not a lot of fun for women to be the only one in the locker room at all times—although I was in a locker room a lot since my dad was the coach—but why is that? How do we get more women all along the line? How was it that my third grade teacher, Tina Fossum, was the person who inspired my confidence in mathematics that had to last me all the way through college? There was not another woman instructor in any of those engineering disciplines.
The venture industry is really small; it started around the semiconductor industry, and I know no women who worked in semiconductors. The software sector has brought in more women; Diane Greene is a great example, who started her own software company with her husband, VMware, and is now running the cloud division at Google. In fact, Google has many women: Susan Wojcicki runs their video division.
There are many broken parts along the pipeline to becoming a venture capitalist. You don’t graduate from college and become a venture capitalist; you need operating skills, so that means you have to have success in operating a company; you need the technical acumen to be able to build these products, which means that you probably have a technical background. Eighty-five percent of venture capitalists have advanced degrees, as well. It’s a high bar.
[OnlineEducation.com] Mainly MBAs?
[Ms. Winblad] No, not just MBAs, but master’s and PhDs in the sciences.
[OnlineEducation.com] To be able to recognize the promising products?
[Ms. Winblad] Yeah, otherwise we would not have an idea what they’re talking about. We need improvement all along the chain here, in the pipeline of teachers and professors that are women. We need a pipeline of women staying in these degree programs and graduating with them. We need a pipeline of people being successful operators, so that they not only have the skills to build products, but they also know how to build a company around them. We need to have a pipeline to yield more women in venture capitalism as well.
[OnlineEducation.com] I read an anecdote about an early software conference you attended where you were the only female speaker, and you were forced to share a hotel room with an exotic dancer. And when we have the resignation of guys of Dave McClure and Travis Kalanick…
[Ms. Winblad] Yes, that happened when I was a young entrepreneur.
[OnlineEducation.com] Hopefully things like that don’t happen anymore, but where do you think the culture is right now?
[Ms. Winblad] Women get to choose which cultures they join. It’s really important for young women starting their career journey to not only find the right starting point or company—because this is a journey—but also to really understand the culture that they’re joining. Uber has changed their mission statement now and they needed like a task force to do that, which was ridiculous. If you read that kind of mission statement—which basically is “winning at all costs”— that culture’s going to be prevalent. Most of these cultures are not hidden from view. Frankly, one of these guys that was talked about, every time he spoke publicly, it was a series of profanities.
[OnlineEducation.com] So it was pretty obvious on the surface?
[Ms. Winblad] Well, to me it was. I never did a deal with him. Don’t ignore the obvious, number one. Talk to other women before you get funding or join companies. Ask what it’s like there; ask what kind of family you’d be joining. Some stuff might be in full view. There is surprisingly bad behavior at times by people. We’re not going to eliminate all the bad actors, but hopefully we eliminate some; hopefully the bad actors have such bad karma that they eliminate themselves, that they’re combusting at all times. We’ve certainly seen that with Travis Kalanick and David McClure—they have self-combusted.
[OnlineEducation.com] Yes, and probably for behavior that wouldn’t have been brought to light in the past.
[Ms. Winblad] Well, I don’t know. When a CEO says, “I am a follower of Ayn Rand,” what does that tell you? It tells you something, unless you’re a follower of Ayn Rand. But these clues… it’s not like you’re going to a forest looking for one torn leaf. It’s like a boulder in front of you says, “Hey, this guy speaks constantly in profanities. Do you want to work with him?” Or another company has issued statements to their employees before outings stating, “Have fun together, but avoid threesomes.” I mean, come on!
We can look out for each other, that’s true, but you’re going to end up looking out for yourself; you should look clearly and don’t ignore bad signs. Usually bad behavior is not a one-off; it’s symptomatic of a self-destruct button that’s pretty obvious when you look at it. So do your homework before you join any of these companies or work with investors. And if you don’t feel comfortable with the person that you’re looking to get funding from, don’t take money from them because they’re not going to go away. They own part of your company.
[OnlineEducation.com] There’s been a rise of female-operated investment funds, which are backing an increasing number of female-founded businesses, so those are some positive indicators.
[Ms. Winblad] Yes. We’ve got a lot of issues to work on from the standpoint of the business climate here. We’ve got immigration issues; we’ve got pay-quality issues. Kudos to Mark Benioff who runs Salesforce and noticed a discrepancy between his pay for females versus males and fixed that publicly.
[OnlineEducation.com] In your 2011 TED Talk, you encouraged women to make the gender disparity among VCs a challenge, a challenge to be overcome. Do you think that women have risen to that challenge? How can we go further?
[Ms. Winblad] Yes, I think there are a few ways to enter the venture community. First of all, try it out. Most of the venture firms hire summer associates. When we look for someone, we seek out strong technical chops. We’ve hired many summer associates that ultimately are not part of the venture firm; they go back to operating. Women should aspire to the summer associate jobs while they’re in college and getting their computer science majors, mechanical engineering majors, biotechnology majors, etc. They get a taste of what it is.
It’s a very mysterious career path. People go, “What is venture capital? What do you do every day?” When you’re in college, really understand entrepreneurship. Take a class on entrepreneurship, where you’re likely to have a VC come in and be the guest lecturer. Most schools, even mid-sized schools, have a School of Entrepreneurship. I think that’s a real opportunity for young women to really blend entrepreneurship studies into their core science curriculum. There were no classes in entrepreneurship when I went to school. That would have been very helpful for me; I don’t know if it would have changed my career journey, but I think it’s an opportunity for women to think of themselves in a leadership role by understanding what it is to build a company—in the problem-solving sense versus the aesthetic sense.
Also, someone said to me today that confidence is a great elixir. It helps you with everything. Having the confidence to fail, as well. John Hummer, who co-founded the firm with me, said, “You haven’t had any failures yet. Are you willing to fail? Because that’s why we’re called ‘venture’ capitalists, not just capitalists. Do you have the courage to fail?” It was important for him to ask me that because not all of our companies will be successful. We’re going to have to shut some of them down because they weren’t the right people; it wasn’t the right product; it wasn’t the right timing; the competitors were unknown…we’re dealing with assumptions, not facts. So having the courage to make mistakes is what you need to be a venture capitalist.
There aren’t that many venture capitalists, but one of the ways that women are getting into this business is starting their own firms. Aileen Lee started Cowboy Ventures. That’s how I got in; no one invited me—I arrived. You have to go raise the money, which is hard, but that can be overcome if you can describe a place you want to own in the investing market landscape.
I don’t think it’s a great idea to bang at the doorstep of a 50-year-old venture firm that’s never had a woman partner. It’s back to this culture thing. It’s like, “Hey, you didn’t invite any women and now you’re going to add one just because everyone’s giving you a lot of grief?” That’s not a good starting point.
[OnlineEducation.com] That might give some failure experience at least…
[Ms. Winblad] Exactly! The hard way. Aileen Lee from Cowboy Ventures is a very skilled venture capitalist. All of her partners are not women. She started with a male partner as well, because she needed to diversify her expertise.
[OnlineEducation.com] Let’s pretend I have a daughter: in addition to your advice about having the courage to fail, developing technical skills, and possibly pursuing a summer associate position through a VC firm, how else can my hypothetical daughter become a venture capitalist? Do you have any other advice?
[Ms. Winblad] First of all, she has to become a successful entrepreneur. If you look closely at the most successful venture capitalists, they’ve walked in the shoes of the entrepreneur.
Also, when she’s young, make sure that she has an entrepreneurial job, whether it’s similar to Warren Buffett who managed a paper route—which she won’t have, because no one sells real papers anymore—but something that requires her to manage the problem set, accomplish goals, achieve the goal lines, and earn money on her own. I think this is a common success background in almost everyone. It really is the equivalent of managing the paper route in the olden days, when you got all the papers, you had to figure out how to deliver them on time, you had to collect the money from people to pay for papers…what’s the equivalent of giving your daughter a paper route? Also, look around at her school. Does she have strong women forming her confidence? Does she have role models like Tina Fossum?