Kate*: Can you give me some background on your professional career?
Kirby: I graduated college in 1996 and thought I was going to go into the advertising world. I moved to New York City. And then three months later, a friend of mine called and said, Hey, I’m starting an internet company. Do you want to come and help? I said, sure. I’m from Seattle originally so I moved back out here. A month later, the guy who was supposed to run marketing for the company left. I was just doing editorial work, but I took over the marketing role and we ended up taking the company public – Go2Net. I ran marketing from 10 people through the IPO with 1000 employees. I loved it so much that I decided to do it again with the same group so we got together and founded another company in 2003 called Marchex which we took public in 2004.
Kate: Were you a marketing executive there or more of an overall business leader?
Kirby: I started out as the head of Marketing and we raised a $164M secondary offering to purchase a portfolio of domain names. I ended up being the GM of that business which was like a digital media network that we monetized through pay per click advertising. And so that business went from $4M in revenue when I started to $40 million. We took that company public in 2004.
Then I left in 2009 and ended up taking over a venture capital backed startup that was initially built to be an advertising network. The former CEO had raised $18M from a couple of big investors in the Valley. And it turned out that the network was suffering from some bad traffic and so we had to find a pivot and we moved to an advertising analytics platform. We recapitalized the company and we sold it to comScore, which was a big $2B, public market research company. I ran corporate development there for a year and a half and then I left to cofound a company called Dwellable, which was a vacation rental app. That was in 2013. We raised $2 million.
Kate: Was it similar to an Airbnb?
Kirby: It was a mobile version of AirBnb. We sold that in 2015 to HomeAway, which was bought by Expedia a week after we closed. And then in 2016, I decided to move out of the operating world and into the investing world. And I did that pretty mindfully initially by taking some money off my own personal balance sheet and invested full time in start-ups.
I wanted to try to discover if this theory I had was true, which was that the model of the ex-founder, ex-entrepreneur turned investor (which works really well in the Bay Area but hadn’t really been done extensively in Seattle, beyond Founders’ Co-Op) could work. Also at the same time, there's a real lack of pre-seed early stage risk capital in Seattle and in the Pacific Northwest. And you see most of the larger firms - who I respect and love working with - but they’re often staffed by investors who haven't operated startups or raised venture capital on their own. Which again, is not bad in and of itself, these folks have proven their value with monster returns over time! But it just creates a sort of homogenous experience for founders. Also, those firms have to write big checks, they have higher ownership requirements and it really leaves a big hole/gap in the capital stack.
So it turned out that my theory seemed to be true and that the product that I was offering was well received and was able to establish good investments and deals that ended up going pretty well and had interest from investors for me to raise a fund. In 2019 I embarked on Ascend Venture Capital I which is our first fund. It's a $15 million fund focused on pre-seed startups in the Pacific Northwest. Initial checks are $100 to $250k. Half the fund is reserved for following on the winners and we focus on three areas of the market in terms of categories and those areas where we think that the region has advantages and that I also have personal edge.
And so that's marketplace businesses and e-commerce businesses on one side, and then B2B SAAS with AI at the core on the other side. I’ve also spent the last three years advising the Allen Institute for Artificial Intelligence and have come away believing that AI is the table stakes for the next 10 years and beyond for any data driven business. We’ve deployed $6M, and we've got 30 companies in the portfolio. They’re kind of split down the middle between the e-commerce/marketplace and B2B SAAS.
Kate: Wow. That's pretty cool! What are you looking for other than businesses within the general categories when you are considering investing in a start up?
Kirby: I don’t even care about the categories. I just want to meet the best entrepreneurs. I just want to meet people who have a unique insight about the future state of the world and then the passion/reason/experience/and wherewithal to bring that vision to life and enable that future state that maybe we can't see. And that they have an unfair advantage of doing that.
Kate: Are you looking for entrepreneurs in an area where things haven't been done before? Like creating a new product or service?
Kirby: Not necessarily. I think maybe where things have been done poorly or where maybe things have been tried, but the time wasn't right. So “Why now?” is a question that we always ask founders. “Why you? And why now?” The “Why you?’ is about founder market fit and the “Why now?” is about either trends that have emerged or technology advances that enable something to happen that couldn’t have happened before. The classic example is Webvan. They were around in 1999. Because they tried to build their own logistics networks from scratch, the business was unable work in a margin effective way, and they failed. And clearly many delivery businesses today leveraged existing infrastructure and networks and are wildly succeeding. AI is a great example of this too. Even five years ago, the cost of compute to enable some of the really interesting advances in natural language processing and neural networks was so high that it was prohibitive for the vast majority of companies to implement. Then all of a sudden there were these quantum leaps in how you set up/structure and manage resources around artificial intelligence software. That opens the door for companies that would have failed three years ago just based on the technology landscape.
Kate: How many people are working at your VC now?
Kirby: It’s just me.
Kate: What is the minimum investment from your partners in your fund?
Kirby: The minimum for LPs in the fund is $500,000. I have the option to drop that minimum. If there's a particular limited partner who is going to have a ton of value, but maybe is not liquid. So an example would be that we've got a number of start-up CEOs who are LPs in the fund and their startups are worth billions of dollars. But they're not liquid. In those in those cases, I'll drop the minimum.
Kate: What made you want to strike out on your own? Was it your theory?
Kirby: Yeah, I kind of tested it on my own for three years of angel investing and got the data I needed around it. I thought, “Did I enjoy the work, right?” I’d never really asked that question in my career before. I’d never asked, “Do I like this?” And I’d never really asked myself if I was good at particular things. I just kind of did what I could do and tried to press it really hard to success. It was important to me in this career pivot to take the time and be thoughtful about evaluating if I enjoyed the work and if the market validated that what I was offering to entrepreneurs in the way of advice/support, nonmonetary is different. Although capital seems like it’s not easy to get, there's lots of capital out there. How was I going to differentiate? Because long term for limited partners, institutional investors, all they want to understand is what is your sustainable, competitive advantage. And, for me, I didn't go to MIT. I'm not a computer scientist. I'm an English major. I think a lot of my edge around the way I engage with founders is the particular set of experiences that I bring to the table. So if I was going to make a career out of this, I wanted to make sure that that was validated. And it was. That made it easier to go out and actually raise the funds because I had already built a track record. I'd already gotten feedback from the market. I was referenceable. And so at that point, I've kind of done the hard part as funny as that seems. And raising the money was relatively straightforward.
Kate: With your current role, what's the most challenging part?
Kirby: Time management. There's stuff that I love doing and there’s stuff that I have to do that I don’t like doing. Which I’ve outsourced most of. But there are competing priorities within the subset of things that I enjoy doing and things that I’m actually talented at. I like marketing. Also, I like meeting with founders. I like meeting with portfolio founders who I’ve already invested in. I actually really enjoy meeting with potential LPs and talking to my existing LPs. But if you break those down into numbers, there’s more than 10, less than 100 LP’s and there are 30 companies in the portfolio, and there are 30 – 50 new companies a month that I meet with. So where am I going to create the survey that I send out to founders and create the article that I publish in Geekwire. That’s the biggest challenge: time management, prioritization so I’ve been institutionalizing against that, creating more process, built more of a software stack for managing deal flow and relationships…
Kate: Will you bring someone in to help you soon?
Kirby: Yeah, it will happen. I'm actually not super interested in bringing someone in remote. I understand that I'm going to have to spend time training someone. I would prefer to do that over an intense month in office, then over a sort of randomized 3 to 6 months remote. I know myself. I’m not great at teaching people to fish. I either need people to be really good fishing when I bring them on the boat, or I would always grab the rod from them. So that’s something I’m cognizant of.
Kate: Do you feel that having children has affected your career is an entrepreneur?
Kirby: I don’t know. Yeah, sure, the same way that having a spouse or having other interests outside of your professional life affects your career. When you’re running a start-up, anything that’s not running the start-up is disruptive to your ability to making the startup succeed. And the asterisk there is if you are mindful and mature and built in a certain way, you can have those outside things be synergistic and get energy from them and apply them to business. But I can tell you that that is a rare person. Yeah, and I’m not that person. I had more success before I had kids as a founding team member than I did after I had kids as a CEO and founder. Correlation does not equal causation. I think it varies but you can see it in the divorce rates of people who found companies and grow them. It’s pretty ugly. Founding a start-up is an incredibly difficult and trying thing. And it's not for the faint of heart. Yeah, it gets glamorized. But it’s mostly just insanely stressful and hard work that you can never turn off and it’s all on you. And it’s probably not going to work out. You’re much better off working for Amazon. So there’s my advertisement for doing a start-up.
Kate: I will let you go and I really appreciate all of the information. It’s really helpful.
Kirby: Of course. And let me know if I can help as you go through your journey.
*Huge thanks to Kate Pollock who reached out to interview me as part of her Women in Entrepreneurship class, and shared the transcript afterwards. Watch out for her, she’s good!
