General Partner and Founder at Red Bike Capital
Rachel ten Brink | General Partner and Founder at Red Bike Capital

"Go find those funds that believe in your vision, that believe in your space and learn the vocabulary, the language and the metrics that they're looking for. Do your fit and leverage on that."

- Rachel ten Brink

Rachel ten Brink on the emotional rollercoaster of being a founder.

Talk Takeaways

(JP) Jeffery Potvin takes us on another phenomenal episode with an exclusive interview with the GP of Red Bike Capital, Rachel Ten Brink.

Rachel details her life journey from her roots in Costa Rica, her humble beginnings as a brand mogul in the cosmetic industry, to the birth of her startup, Scentbird. In Jeffery’s words, the audience is looking forward to yet another episode filled with valuable insights from Rachel’s vast experience that everyone, from those just starting out to those working in the business, can learn from.

  • Rachel’s Costa Rican Roots
  • Rachel’s Career in the Cosmetic Industry
  • The Birth of Scentbird
  • Rachel’s Obsession with Consumer Behavior
  • Rachel as an Entrepreneur
  • Rachel as a CMO
  • Transition from Entrepreneur to Founder
  • Lessons from her experience as a Startup Founder
  • Rachel as an Investor
  • Rachel’s Advice to Founders
  • Rachel in the VC World

About

Rachel ten Brink is the General Partner and Founder of Red Bike Capital, a seed stage fund based in NY that invests in founders that are improving lives and powering the economy. Named Entrepreneur Magazines’ 100 Powerful Women of 2020, Rachel is a Data Driven, Product Obsessed Investor, Founder, and Board Member, and a Top Latinx in Tech leader.

Rachel was the co-founder and CMO of Scentbird, a Y-Combinator backed fragrance subscription service that raised $29M in venture funding. As a founder, Rachel led Growth, Brand and Business Development, scaling the company to over 500,000 subscribers. Before this, she spent 20 years building billion dollar global brands at Elizabeth Arden, Estee Lauder, Gillette, and L’Oreal. She is a mentor at Techstars and Y Combinator. She is one less thank 100 Latinas to have ever raised over $1M in VC funding, and part of the 0.01% of Latina Women that are GPs in Venture.

Rachel is an early stage investor and advisor to several consumer-tech companies. She frequently writes and speaks about consumer technology, growth, influencer marketing, venture capital, entrepreneurship, and diversity, and has been featured in Forbes, Inc, Entrepreneur Magazine, WSJ, Latina, and Refinery 29. A native of Costa Rica, Rachel holds an M.B.A. from Columbia Business School and graduated magna cum laude from Babson College with a B.S. in International Business.

The full #OPNAskAnAngel talk

Jeffery: Welcome to Supporters Fund Ask An Investor. I’m your host, Jeffery Potvin. Let’s please welcome Rachel ten Brink, the GP of Red Bike Capital as our investor today.
Rachel: Hi. Thank you. I’m delighted to be here.
Jeffery: awesome. we’re so excited to have you join us today Rachel for many reasons. But the biggest one for me is that you have been a branding mogul for so long, jumped into entrepreneurship and then now running a fund. you’ve got like the trifecta effect going here. you’ve got all sectors. It’s just amazing. And the way we like to start our show off is we like to learn a bit more about ourselves. So, maybe you could share a little bit about your time from way back in Gillette schooling, all that great stuff, all the things that you’ve done to where you are today with the fund. And then we’re going to interject and we want to know one question about you that nobody would know.
Rachel: okay. So, in terms of my background, I’m originally from Costa Rica. my parents were Cuban immigrants left right. When the pastor came, I was born and raised in Costa Rica and came when I was 18 to the States to go to college. My career really started at Gillette and I think there’s a lot to learn from a very classical CPG training to your point about understanding brands and building distribution and building products for mass appeal. So, I started my career at Gillette. From there, I did my MBA at Columbia and then spent the next 15 years of my career building dollar brands. I was at Estée Lauder. I was at L’Oréal. I was at Elizabeth Arden. And around 2014, I met my co-founders and we started a company called Scentbird. That’s a subscription service for fragrances. We really thought about the category and the way you bought the fragrance category was very broken, very confusing, very much driven by what the manufacturers wanted and not what the consumers wanted. So, Sanford was an incredible ride. We were backed by my combinator. We raised almost 30 million dollars in venture. My job specifically as one of the four founders was growth and revenue. So, on the growth side, I like to joke that there isn’t a marketing tactic that I haven’t tried, so if you want to talk paid social, if you want to talk influencers, affiliate podcasts, radio tv, you name it. Subways, I’ve literally tried them all. not all of them work. Some of them do very well. And then on the growth side, it was really thinking through the CAC 2 LTV ratio unit. Economics.
Jeffery: how do you build a sustainable business model? So for Scentbird, a big piece of that was the biz dev side of it, the b2b relationship. So, build partnerships with 74 brands. Everybody from Cody to Macy’s, to Glossier and company’s done extremely well. It’s close to half a million monthly paying subscribers at this point and still scaling and doing great. But a couple of years ago, it started really organically. I love early stage founders. I love that inflection point where you just start to see a little bit of product market fit and you can really take off and I think that’s such an exciting time of the interpreter and of a startup’s journey.
Rachel: So, I really started with loving talking to founders, giving advice, helping out and sorting of founders. I kept on calling other founders, talking to Rachel, talking to Rachel about influencer marketing and fundraising supply chain. you name it. And at some moment, I took a breath and realized, oh my god, I have incredible deal flow. So, we had some friends who also wanted to invest and that’s how Red Bike Capital got started.
Jeffery: That’s amazing. And one thing about you that nobody would know?
G: oh, you know what, I am a huge yoga fan, avid fan of yoga. So, that’s really my thing.
Jeffery: Oh that’s good. That’s a good thing. I was thinking you’re going to say Costa Rica, you’re a surfer and you’re a big fan of it. you’re going back to surf every week.
Rachel: like, no. yeah. Well, it’s funny. I was going to say I’m Cuban, Costa Rican, Turkish, German with a Dutch last name. But it’s on my twitter profile, so I guess a lot of people know that.
Jeffery: That’s awesome. All right. well to go back, I think what I really want to dive into is maybe the first question is, what got you started in working in the cosmetic category. I guess it is a broad category because there’s a bunch of different areas that you jumped into. But what got you started in Gillette? What was the drive there? Was it that you saw something broken even back then or was this just out of school jumping into this new opportunity and while you’re in there you start the wheels turning as you’re learning the ropes of what’s going on in this big branding company?
Rachel: So, for me, my obsession has always been consumer behavior. I’m obsessed with what makes people tick. Oh, here’s something that people don’t know about. When I was growing up, my dad had a canned tuna brand. It was called Splash Tuna. And the reason I bring it up is because I think it really started on Sundays when I was eight, nine or ten years old. We would hang out in the supermarket and I would stand by the canned tuna aisle and observe people and count who was buying my dad’s tuna brand versus other brands. And as a 10 year old, hey, why did you pick up that brand? What made you pick that one? so that’s really where it started for me. It was this idea of consumer behavior. Where’s the consumer mindset going? What makes people tick? what makes people drive towards certain brands, certain behavior, certain technologies. that that’s been something that’s always obsessed me. And I think that if you think about Gillette and the sort at the time, the best a man can get is the emotional connection that they were able to build how they were capturing at the time things have changed. But at the time Gillette had I think 80% market share in the US. So, like how do you understand the consumer to that level? and obviously, fast forward to today, the consumers become a lot more complex, a lot more nuanced. And you see that market dominance has definitely faded a bit. although it’s still significant, but that’s really something that I’ve always been obsessed with is the cons the future of consumer. Where is the consumer going? What is driving them? That’s really what made me start on that journey.
Jeffery: That’s a great segue to that entrepreneurship world as well. So, you were learning in the background from what your father was putting into a brand, what he was putting into the business. you were on the front lines working that counter. if you will, and making sure people were picking that brand but collecting data in the background in your own mind on why and how this was going to work. And the word I loved the most that you said about in all of this was you were obsessed. And I think that this is a really defining moment for any entrepreneur is that they are obsessed with learning something. they’re obsessed with changing the world. they’re obsessed with fixing a problem. And that I think really defines entrepreneurship on what makes you great or what makes you strive to get to greatness. So, now working your way through all of these roles that you were in, they were all pretty much centric around marketing and branding and really building that up. And you worked your way all the way up to the senior level side of things. And while you were doing that, was it again reinventing these brands? Was it coming in from that perspective of you guys not having enough data or you’re at the top of your game and I’m going to bring you to that next stage. How did you look at these stages as you were working through these roles?
Rachel: So, I think there was always this obsession with how do we learn more about the consumer, how do we build more personalized connections, how do we understand their needs and preempt their needs right. like how do you, the famous Steve Jobs of like building things that people don’t even know they want right like how do you build that. And I think that was really interesting for me. If you think about even my career arc, it is like I started at Gillette and L’Oréal on the math side of the business, which is literally like you just put items on a shelf and they got to sell themselves. And then I moved to Estée Lauder where you’re selling in a department store or Sephora where you have a beauty associate, somebody who can help you, who can guide you through the process. And what happened was, I became obsessed with how do we use technology to sell better, how do we use technology to take that next level of consumer data of understanding the consumers. And that was a real impetus for me to start Scentbird. I felt that there was this level of innovation and one-on-one connection that technology enabled and I wanted to be part of that and that’s where I made the jump to entrepreneurship to start Scentbird which is phenomenal.
Jeffery: And when you came up with this idea, and I listened to lots of your stuff and read lots of things which is obviously amazing, just the way you met your co-founder, it was a great story. How did you turn that dial? was it, you got to an end point in big corporate where you felt you’ve accomplished everything, you saw everything and now you wanted to go back? because when you’re upper management, you’re obviously doing very well from all aspects. And now to go back to the grind even though you have this CMO title.
Rachel: CMO is not a CMO. And a startup when you’re four people, you’re not a CMO. you are a jack-of-all-trades or however you want to frame. I was literally filling little bottles of perfume and schlepping them in our bag too. I did that. The post office in Herald Square is open 24 hours. I do that.
Jeffery: That’s amazing. Yeah. That’s good knowledge. It’s good knowledge. So, I think that it was interesting because it was a transition. And I think that I have a lot of respect for the Estée Lauders and L’Oréals of the world. I think they’ve built incredible companies, but the speed at which they can innovate and adjust to new technologies. big boats are hard to turn. So, at some point, I found myself at the time working for Elizabeth Arden. And I was working on a special project for the CMO and I negotiated so that I could have Fridays off and I figured, okay Fridays. I’ll do projects for startups. maybe I’ll just be a consultant and within very quickly realize that startups are terrible consulting projects because they have no money to pay you. But b, the part that really struck me as I worked and I probably worked on like 10 or 12 different projects is I found startups and founders that were incredibly smart, that had really creative ideas and it wasn’t that they needed somebody to come in and tell them what to do, they knew where they wanted to get to but that journey from point a to point b, it was actually getting them there. So, it was like startups need a lot more than just consulting advice. like you’re either going to jump in and be a founder and build it. But staying on the periphery and just being an advisor. I wanted to have that full experience. So, that’s what pushed me to make the jump to being an entrepreneur and joining as a co-founder of ScentBird.
Jeffery: I love it. And the thing is that you recognize what the push was. So, you were getting a flavor of both sides. it wasn’t just cut and dry. It’s amazing that you were able to test it, work through the consulting side and really look at and say man, I could really do more here. or I could actually do this all myself. I’m going to actually shift into this and I think that that’s really again that entrepreneurial drive that you’ve built into that obsession of how can I fix something or what can I fix. And I guess call it serendipitous that you met with your co-founder. you guys come up with this great plan, work on this idea, really dig this through. I guess at that time, you found a couple of other people that tied in that had some amazing expertise. you guys really started with, I would almost say the A plus team. you didn’t have to go into business with a B team and just hoped that you would be able to make it through and then shift the team. You guys went in right away with a very solid team, a lot of experience and a lot of background knowledge to really drive this business forward whose responsibility was to raise the funds because you guys did a great job on that aspect as well while you’re building the brand.
Rachel: I credit Maria Anoreslamova who’s the CEO of Sanford and still continues there. She was very thoughtful from day one about the fact that it needed to be a team. I think the fact that Andre, our CTO, was there from day one enabled us. And don’t forget, this is 2014 where everything was being built from scratch. I think right now there are a lot of tools in Shopify that enable you to probably start a little faster. But I mean Andre did an incredible job just building from scratch and Maria really thought through and was leading a lot of the fundraising. Amazing. So, now the exciting part happens. you’re wearing a lot of hats. you’re building this company. what was it like to go back to almost when you first started at Gillette in a startup and having to do everything but putting together these real plans, executing them and trying to figure out what works? because you guys started off the first year like any startup, just trying to figure it out and try to get to where you needed to be. What was the drive for you and was it exciting? Was it scary? was it, ‘oh my god! I can’t believe I’ve done this’? what was your reaction at this time?
Rachel: I think that it’s a lot of blood. It’s the way I talk about it. And I think it’s something that I talk to founders about a lot. It is an emotional rollercoaster. I think there’s a big part of being a founder and an entrepreneur that is about the emotional roller coaster because the highs and the lows are so augmented when it’s your own business, right. Again, I spent 15, almost 20, years in corporate. you have good days, you have bad days. your project is rejected, your one advertising program does amazing. like you have good days and bad days. But when it’s your startup, like it’s your baby, right. So, for me, I think one of the things that I had to learn very early on was like I’m a very high energy person. I’m a very effusive person, so managing that a little bit because it’s a long road. It’s a long slog and there’s a lot of ups and downs and there’s a lot of good things and not so good things. So, I think for me, because it was my baby, because it was something we were starting from scratch. I think managing the emotions of that was a big piece of it. I also think that there is a resetting of the mindset of failing fast right. It’s not something that is taught in corporate. So, this idea to me was incredibly empowering and freeing but also terrifying . Let’s just try it. if it doesn’t work, we move on right. So, even within Scentbird, I mean we started with a different business model. we started, we tried. So, first, we tried just recommendations and thinking that it would be an affiliate model. That’s a horrible idea. don’t do that. Then we tried a trial before you buy where we would send you three full sizes with sample sizes and you would keep what you like, and send back the rest. That was an even worse business model. lots of fraud. terrible things. lots of shipping costs. don’t do that either. And finally we landed upon the subscription model which is where the company is today. But even that level of iteration and shifting and having the openness and sort of, it’s something I always talk about. like the most successful founders have this innately opposite push and pull where on the one hand, they need to believe so much in their business, they’re going to bash their walls. But on the other hand, they need to be humble enough and thoughtful. And just listen, right. listen to your customers, such that you can pivot, that you can integrate feedback, that you can evolve. And having that push and pull. I think it is something really, that really sets successful founders apart. And it’s something that was hard to cultivate. initially that really helped build out the culture behind the brand, what you guys are working on as well. And now that you have four co-founders, there’s a real fine balance of smarts in the room. But they’re bucketed to each individual’s areas of expertise which is also interesting because a lot of startups, and I don’t have a percentage, but they’re usually one founder. maybe there’s ten percent that are two founders and then anything over that is probably sitting in that maybe three to five percent. So, you’re an outlier group and successfully you guys were able to work through this and pull it off. And I think that more hands makes less work which means four founders probably were able to drive the business in a lot faster, rapid speed in growth and understanding and operability and being able to maneuver quickly.
Jeffery: what learning can you take from all of your corporate time that really helped you define what you were doing in this startup?
Rachel: Well, I mean I think that for me, number one, I was the one who had been in the US for the longest. I knew the American customer. I knew the beauty customer. So, I think that that really helps. And just both from defining the product but also on the b2b side. As I said, one of the biggest pieces was that unit economics were greatly impacted by building direct relationships with brands. because we would get products in exchange for data or marketing and that really helped the profitability of the business. So, coming from the industry, having those business relationships, being somebody who was known in the industry was very important particularly in those early days where people were like what are you doing for a subscription, what does that mean? Do people want that much perfume?” I think having somebody who was a known voice could be very helpful and I think that’s something that now that I’m an investor. And I’m constantly meeting founders. you don’t have to come from the industry, but I think the really smart founders figure out a way to have that authority in the industry. whether it’s themselves or some really key hires, but I do think it helps sometimes having too much industry knowledge can backfire right, because you just can’t imagine it any other way. So, I do think sometimes it helps to be an outsider. But once you start scaling, having somebody who can navigate, who can help you be the official door opener, I think that’s really important as you scale. And I think the key word there is that as you start to scale, it’s really important that you do have that background knowledge because I’m sure that when your co-founder was raising funds, you were probably on the top of the list as this is our rock star because of the industry background, the expertise, the knowledge. it really defines the business at that point because even yourself as an investor, there’s probably a really low chance that you’re going to dive into an early stage company that has nobody with any background or any understanding of that space because then it becomes, well they’re going to spend a lot of time kicking tires before somebody will let them in the door.
Jeffery: So, that probably carried a lot of weight too and value for you guys.
Rachel: yeah. I mean I think that and this fills over into the conversation. the investing conversation. But the question that’s always in my mind is why is this the best team to solve this problem right? And whether it’s industry knowledge or just an authentic view part of your job as a founder, when you’re talking to investors is to convince that person that’s sitting on the other side why are you the best person here, and part of it can be a team that has experience, part of it can be just a unique perspective and insight and expertise applying a discipline from one side to the other. So, there’s different ways to approach that but I do think it’s really important to the success of a company.
Jeffery: I love it.
Rachel: And we try to share it with the founder. Go out and find somebody in your space that has 30 years’ experience, work with them, talk with them, get coached, because that brings a lot of background knowledge into your space and that can help you move a lot quicker. And really at the end of the day, as you mentioned, scaling is number one when it comes to any business. It is how fast you can move because once you start something great, a lot of people start to mirror it. And you’re trying to avoid mirroring effects that can move and propel your business forward faster.
Jeffery: to go to the comment you made about the investing side, now you guys are starting to move. I think in total, you raised 24 million to 27 million in funding up to series a which is pretty phenomenal. Now, how did you guys approach this when you’re going out to raise these funds? Are there any memorable things that you said ? Here’s what I took from raising funds, one, two and three. This is key. And today you’re still using them as an investor looking for those three things. I think that is one of the things that I always talk about and I think it’s particularly important for women. I think it’s particularly important if you’re raising for a category that is not well known investors are humans and investors only have the framework of what they know. So, one of the things that we learned very quickly when we were pitching Scentbird was we talked to mostly male investors and they said perfume. how big is the perfume category, who cares about perfume right. So, the way to address that wasn’t oh women deserve that. Nobody cares, but if you start to say well, the fragrance category is actually a 40 billion dollar category, which is five times the size of the blades and razors category which they related to because they were guys and they shaved. oh all of a sudden you start to think, ah this category is interesting. this is actually pretty big right. So, that’s one of the pieces that we learned very quickly is I think for founders to really think about that total addressable market, giving a reference point, making it something that’s relatable because founders only, again investors only know what they know. So, help them see the big opportunity in what you’re doing. I think that that was a real lesson that we learned. I think the other one was thinking about why it was a technology company. how were we integrating technology and clearly articulating that value proposition. I think whereas obviously it’s a fragrance company, it’s also a data company. the amount of information that you gather from customers, what fragrance they get to pick a fragrance every month, what fragrance did they like, did they review it positively or negatively, what were their emotions. There’s incredible rich data that we could leverage. So, understanding the full value proposition of what you’re building I think is also important.
Jeffery: I love it. And one, I was a huge fan of this, of your brand, this business and the reason being is that I had the same as a youth. I didn’t like these massive bottles of cologne. I didn’t like to have the same scent. So, to me, it bothered me that this is all I could get or I got the little tiny vial that you touched once and it was done. And you’re like this is useless. So, I do. I like how you guys approach the market. I like how you tested a lot of these different variables too from the different ways to run the SAS model and find the one that stuck best with your consumers and I think that sometimes startups get stuck in their own ways or they forget that there’s so much more of the market or so many other things that they can test to really learn more about what their consumer is looking for and the real problem that they’re trying to solve. So, you guys did an obviously pretty amazing job in order to successfully build your company and move it forward. And then when the venture capital side came in, using the data and the knowledge to sell them through obviously worked out quite well and it supported you guys as you started to grow. Is there a notable piece that you would say and share to founders? Is it just the data?
Rachel: find somebody that understands your business model as an investor. It doesn’t matter if they’re female or male. find somebody that’s invested in this category. First, go to them because you have a higher chance of closing them because I think a lot of the frustration in the world today is, I don’t know where to go for one when it comes to getting investors. And two, I keep getting more no’s than I get yeses. And it’s beating me up and then I just bail out of the company because maybe I’m not a good fit. And I think that that’s the whole wrong way to look at it. And that there’s better ways to isolate and go forward and move to the right people that are going to invest in you or at least support you along your journey. So, I think that there are so many thoughts there. So, first of all I think you almost have to prepare yourself and it’s like a little bit of an internal game to get to the no. like the piece of advice I would give you on that. like feeling beat up and it’s going to be mostly no right. like the reality is, as a VC now that I sit on the other side, I probably see a hundred companies and invest in one that’s probably the ratio that we invested. And I think that’s pretty typical of a venture capitalist. we’re all looking for that outlier. We all have to fall in love and believe that this is that billion dollar plus whatever. now it’s 10 million or billion, I don’t know of any opportunities. So, I think that as a founder, you just have to go in with the expectation that you’re just going to get through this. It’s a lot easier. So, I think that’s the first thing. it is being very realistic about your metrics. And the other piece of it is don’t waste your time. I appreciate founders that ask me, like what’s your average check size, where do you invest, do you invest pre-revenue, do you like to cut through, because frankly it’s better for you and for the investor. if they’re not a fit, they’re not a fit, move on, build a relationship. don’t burn bridges. Just say thank you and move on. Maybe it’s for the next round. That’s all good. So, I think that’s a really important piece. And then you asked me another question about, oh my goodness, the ability of the lessons on fundraising right. So, I think that in terms of finding your tribe and finding your people, listen first. And foremost traction matters. like I’m going to be brutal here. But talking has great potential. It is great but builds things people want. I think we went through my combinator. It was very much a forming piece of my journey as an entrepreneur. And I very much believe their philosophy is just to get it out there, build, do things that don’t scale, show some traction, get things done. So, that’s the first piece of advice I would say. it is that at some point, very soon, like start to show traction, start to show support. And if you can’t yet, show sales. what else can you show, how else can you show progress. I think that’s really important and something that sometimes I’ll get pitched by founders and they get so lost in the romance of the brand or the vision of the idea. What have you done and how do you plan to make money? various fundamental questions like that. I think that’s, don’t look outside of that. make sure you’re nailing that piece. So, I would say that’s number one and number two. yes I do think to the point about like sifting through and getting to the nose. do your homework. What’s really fascinating and funny about VCs is that we’re all screaming from the mountaintops. what have we invested in and there’s so much written about most of us most of us are so busy producing content. you can get a very good sense of what VCs do and don’t like so use that to your advantage. don’t go looking for trouble. go looking for winners. go find those funds that believe in your vision, that believe in your space and learn the vocabulary, the language and the metrics that they’re looking for. Do you fit and leverage that?
Jeffery: I love it. there’s so many lines there that I can’t even unfold all of them. there’s so many good lines there but I do like the best one is do it, just do get it done. And the reason why this fits so well is because I think today we are a little lackadaisy or maybe we’re working towards something and tomorrow I can do something different and I’ll work towards that versus just getting it out there. And like the Techstars, just build it, get it out there and see what happens, what traction can you get, are they going to like it and then pivot and pivot and pivot and pivot until you find the right group that loves what you do and then be obsessed over it so that you can crush it. Yes. I love it. So, now taking where you’ve moved out of the business that you’ve built over, I think it was so close to six to seven years that you built, and now you’ve jumped into the VC world, what was the transition, what was the impetus that said what I need to I think when you jumped into I want to get into a startup? It was all this background learning from when you were a kid to now. all the work you had you’re like what I need to go in and rebuild something and make this great. And now it looks like you’re doing the same thing in the VC world. you’re like there’s some broken stuff here. I’m going to jump in and I’m going to try and repair this and fix this space too because I think this whole thing doesn’t make sense. Am I that fair to say that you’re really trying to look at this VC venture world in a different lens and trying to solve that as a bigger problem as your next career move?
Rachel: yeah. I mean I’ll tell you. for me, it was a very organic start. So, I love working with early stage founders. I love having those conversations. there’s something magical about that zero to ten stage. whatever zero to ten means, that when you start to see that inflection point where there’s just a little bit of product market fit and you can really blow up and scale. So, to me, it’s a privilege. It’s fun, it’s exciting to talk to founders that are building things to be able to give them advice. And frankly, what I found even as a founder myself, is that often, when you talk to investors, the conversations were very theoretical or the usual. And an investor would be like, oh, we’re so value-added. We just sent them a Wall Street Journal article about their competition. I’m like yeah, that’s not really helpful. whereas for me, it started with founders. Again, like very specific needs that they had thing and the ability to say not just in generic terms. But in very specific terms, like this is how I solved it when I was in your situation. these are some of the people I talked to. these are some of the tools I used. I think it really just started with these conversations. And at some point, my partner and I, his name is Herman and his background is all in Asset Management, we started to invest together. we did 18 angel investments and what we realized is we just had incredible deal flow. So, some of these investments have done extremely well. But I’ll tell you, like for example. one example is a company called Caraway Nathan. I met him literally, went for a coffee in in Pancottian. At the beginning of 2018 I want to say, there was something about this guy. And I think that this is really important particularly for a product startup foreign. he understood the consumer insight. this idea of chemical free cookware, if you use Teflon, there’s chemicals in it. those chemicals go into your food. So, I think there was an insight. There was an insight about people wanting pretty things in their kitchens. They want nice colors. So, there was a lot around the brand, the packaging and the way it was stored that was all really interesting. But the real differentiator, and I think one of the things that I think about a lot where there’s all this 75, is acquisition retention. How do you build that flywheel of marketing and then supply chain unit economics? and the fact that he had the whole picture that made me so excited. So, that’s like the type of companies that we angel invested in. So, anyway, going back to reading by capital. So, we did those over like a period of about two years. And what ended up happening is we have friends who have a little money and they’d be like wow we want to, we want in on these companies. you have incredible deal flow. you’re seeing these incredible companies. they’re doing amazing. Can we put in a little money? and initially, I was like sure, I’ll go talk to the founder for you. no problem. It happened to us two or three times where founders be like, look we love you. Rachel, we want to give you a bigger allocation. We want you more involved in the company but we don’t want the random people on the cap table. After it happened a couple of times, I was like okay, so here’s where the opportunity is and that’s how we came up with the seedling of the idea that became Red Bike Capital.
Jeffery: Wow! That’s a great story. And it works the same way that as you start to put a focus on something, more is going to come out of it. And as you started to work on angel investing, it started to move forward into a bigger, better direction. because I guess in a way, it was meant to be where you were supposed to be, working next. So, that’s pretty cool. So, now, I guess the last point to where you guys are now. What types of investments do you look for? Is it CPG? Is it heavily branded? What are the real main focuses of Red Bike Capital?
Rachel: So, it’s interesting because I actually spent a lot of time talking about the fact that we’re consumer tech. And frankly where I see the opportunities in venture is a little bit broader. So, just as a definition, we’re an early stage Red Bike is an early stage fund. we’re based in New York and our focus really is startups that drive the economy and improve lives. So, more specifically what that means is we invest across consumer technologies, across fintech. So, think a lot about credit. And as I mentioned, my partner actually comes from asset management and was a portfolio manager in credit. So, we have a lot of experience in house on credit payments. again Scentbird processed half a million transactions a month. We have a bit of experience on payments, credit cards, financial education, and financial access. So, we do a lot around fintech. I think the second piece that’s really exciting is just commerce infrastructure and marketplaces. So, if you think about the last couple of years, there’s an explosion of vendors right. I think it’s 1.9 million Shopify vendors and 1.7 million amazon vendors and all these people need across the stack acquisition, retention, supply chain logistics, distribution, marketplaces, so we see huge opportunity to continue to innovate and provide tools for this booming group of just the commerce piece of it. And the third piece is around consumer and consumer tech. We really focus on that part of improving people’s lives. So, we think a lot about health and wellness. We think a lot about conscious consumption because we feel like, again, to my obsession with where the consumer is going. I think never in the history of humanity have we been more aware and concerned with wellness right in every context of it, whether it’s physical wellness, mental wellness, financial wellness. So, that’s one of the themes that we really think a lot about. I think the capitalistic markets have driven everybody to the d5 moment which we’re all thinking about because it’s really the only way left to survive. you need to be self-managed in all your finances, your health, your well-being, everything.
Jeffery: 1005 agree with you.
Rachel: if you’re not taking care of the people that were taking care of it, they’ve gotten beaten up so badly by the markets that they don’t want to do it anymore. So, you really do have to start to educate yourself and become smarter at it because in the next five years, you’re going to be your own everything and including your own teachers. So, you better start educating and learning quickly because it’s all going to fall into you as an individual to drive it forward and take care of the things you need well. And I think it goes from both sides of the market. I also think that never in the history of humanity have consumers become more educated. technology has enabled us to go get educated. my 14 year old son can go learn whatever he wants. It’s all available. So, I think that across every piece of the ecosystem, as you think about consumer-facing technologies, the consumer is so much more educated in finance. when you think about crypto and how complex it is and yet consumers are becoming so educated in skin care. there’s this thing called skin influencers. consumers know about complex chemicals in ways that were unthinkable. So, I think it goes across a very broad swatch. But is it really deep knowledge that they’re gaining or is it surface doubled? so you mentioned your partner has a very deep understanding of an area that you invest in. Do I expect that everybody in the finance world now has that same experience because they went and watched a YouTube video? I’m going to guess that that’s a no. But I think it’s surface level which is to everybody else probably seems like they’re now a god in education and knowledge. But I think there’s still a lack of expertise and I think that that’s where you’re going to find a big difference. people will have surface level knowledge but they’ll never be the expert. And the unfortunate is, they’ll feel they’re an expert until they lose all their money on bitcoin and then they realize, wow, I really did need some help or I did need somebody else to drive me in this space. So, I think there still has to be that professional, you’re still looking for that person that understands something better. But I think now, instead of being oblivious to everything, you now have at least a high level understanding which I think is better than nothing. And I think that that’s helping people really push forward in this innovation world which is the reason why innovation is changing so quickly because people are taking that little bit of knowledge and changing the world with it. And I think that’s what makes this whole thing phenomenal. Look, I think you have to be infinitely optimistic to be a venture capitalist. But buyers beware. I do think that you have to be smart as a consumer. You have to be smart as a venture capitalist. you have to to your point, about surface level knowledge. if it’s too good to be true, it probably is right. I think there is that optimism and that access to information that’s very positive. But I also think we’re all to your point, we’re all responsible for our own well-being and we all have to invest in that piece of it wholeheartedly.
Jeffery: Agree 100%. It’s time that people step up all around and start to learn a little bit about everything so they can take life I guess by the hand, move it forward, so very well shared. we’re going to now transition into a, we’ll call it a case study. But interesting if there’s a case study that you could share with us around a founder and really share to the audience what it takes for an entrepreneur to be an entrepreneur. And maybe it’s a story of something that you went through or another startup that you work with. But really trying to understand what an example I guess of what it takes to be a founder and breaking the odds and winning or maybe failing. But we like great heartfelt stories. So, is there something that you can really share that defines what it takes to be an entrepreneur? Well, I’ll talk about one of our first investments. It is a company called True State. And I think what’s interesting about this story is that we met the founders very early in the journey, and they both had other jobs initially. they had a germ of an idea and it’s an interesting one. So, it’s an estate settlement platform so that you can settle your estate at the click of a button. So, think Turbo Tax for a state. So, the reason I was attracted to it is I personally had gone through the experience with my uncle who passed away and I love my uncle. But I don’t have an idea where his 401k was or any of that information. And what you realize is, if you have 100 million dollars, you’re good. you have people. they will deal with it. But for most people, when you have estates, the people dealing with it are lawyers’ insurance, the family, it’s very complex and it’s really stuck in the 90s. And you have to like to go on the phone and say hey, I need to do this. So, I thought the insight was so interesting by just applying technology to something. And what I personally love is it’s really improving people’s lives. Having dealt with it, it’s a very difficult time and making it better. It’s also not trendy right? like people aren’t going to stop dying. It’s not an optional one. But what was interesting was the journey of the founders. So, when we started, they both had other jobs. they were just going down the process. And one of the things that really pushed them hard on was they had the vision, they had the idea. But to the conversation that we had earlier about building the founding team, they didn’t have the technology element. they didn’t have a CTO and they were outsourcing. And I said, guys, you have got to get that piece in. So, over conversations about six months eventually, they did raise the money they were looking for. And we were part of the fundraiser, but what was really exciting is that the people who led the team were from another fund called Impression Ventures. And they are very tech focused. they’re entrepreneurs themselves and what I’ve seen going back to the founder is a transformation in how they’ve accelerated the company, how they’ve changed, how they think about building. It’s really exciting when a founder, I think there was a point where they were like do I quit my job? and then they did, and then do I go for this? and they did. And then they started to bring in the right people and what that can do to accelerate your business. I think that’s really exciting. And I think as a founder, you really have to think about that. like what takes you to that next level?
Jeffery: I love that. And there’s a lot of companies that have been successful and they were still working full-time jobs and then they switched over and took it to the moon. So, I think there’s a lot to say about managing risk and I think sometimes we may forget the risk part of it. We just dive all in thinking this is it and we don’t realize that there is a lot of other stuff packed into this that we didn’t pay attention to or didn’t see or didn’t listen to in a podcast. And oh my god, I need some help. So, this is great that they took that approach and it’s very stable but at the same time I’m sure they’re doing very well. So, that’s a great story all right. we’re going to switch over to our rapid fire questions and we’re almost there okay. Let’s do this all right. here we go. So, you’re going to pick one or the other. coming from an investor standpoint, founder or co-founder?
Rachel: founder.
Jeffery: unicorn or a four-year 10x exit?
Rachel: four year 10x exit.
Jeffery: tech or CPG?
Rachel: tech.
Jeffery: nft or web 3.0?
Rachel: web 3.0.
Jeffery: ai or blockchain?
Rachel: blockchain.
Jeffery: first time founder or second third time founder?
Rachel: second third time founder.
Jeffery: first money in or series a?
Rachel: first money in.
Jeffery: angel or VC?
Rachel: VC.
Jeffery: board seat or observer?
Rachel: whatever I can be most helpful with.
Jeffery: I like it. safe or convertible note?
Rachel: ideally convertible note but we’ll look at both.
Jeffery: okay. lead or follow?
Rachel: We’ll do both.
Jeffery: equity or interest payments?
Rachel: equity.
Jeffery: favorite part of investing?
Rachel: founders.
Jeffery: number of companies investing per year?
Rachel: we’re doing about one a month, so 12.
Jeffery: sick! I love it. preferred terms? What do you do?
Rachel: yes. well preferred terms. I guess, if you’re looking at it from, you’ll do as you mentioned.
Jeffery: yeah. Okay. I guess investor friendly or under friendly.
Rachel: depends on what it is, on what the terms are.
Jeffery: yeah. Okay, perfect. two qualities a startup needs in order to stand out in your eyes?
Rachel: unique perspective, differentiated perspective and grit.
Jeffery: ooh. I love the grit one.
Rachel: yeah, it’s a battle zone man. they got to take a lot and give a lot.
Jeffery: So, that’s good. I like it. Okay, we’re going to now pop into the personal side. book or movie?
Rachel: book.
Jeffery: Superman or batman?
Rachel: batman.
Jeffery: restaurant or picnic?
Rachel: restaurant.
Jeffery: five minutes with Bezos or Oprah?
Rachel: Bezos.
Jeffery: mountain or beach?
Rachel: beach.
Jeffery: bike or run?
Rachel: I hate both. I don’t know how to ride a bike which is really ironic considering the name of the fun. That’s another story.
Jeffery: Big Mac or Chicken McNuggets?
Rachel: Big Mac.
Jeffery: trophy or money?
Rachel: Sorry, trophy or money? Money.
Jeffery: camera or mobile phone?
Rachel: camera.
Jeffery: king or rich?
Rachel: rich.
Jeffery: concert or amusement park?
Rachel: concert.
Jeffery: fortune cookie or birthday cake?
Rachel: birthday cake.
Jeffery: Ted Talk or book reading?
Rachel: Ted Talk.
Jeffery: most famous person that pops into your mind now?
Rachel: I don’t know. Sorry, I’m blanking. I should have prepared for this.
Jeffery: Well, this is a rapid fire. there’s no preparation. just whatever pops in your mind.
Rachel: I just think of what’s going on in the world and I think of Winston Churchill and leadership and Europe. So, that’s really what I’m thinking about.
Jeffery: I like it. the first brand that pops into your mind right now?
Rachel: Nescafe because I need more coffee.
Jeffery: All right. That’s good. favorite sports team?
Rachel: Yankees.
Jeffery: nice. Okay, favorite book?
Rachel: Love in the Times of Cholera by Gabrielle Garcia Marcus.
Jeffery: sorry her name was Gabrielle Garcia Marcus?
Rachel: It’s like magical realism. It’s Latin American literature.
Jeffery: done. Okay, very cool. what is your favorite movie? and what character would you play in the movie?
Rachel: For a long time, I have loved The Fish Called Wanda. I just love Jamie Lee Curtis’s character. I know it’s an oldie but I really loved it.
Jeffery: That’s awesome. I remember watching that many times as a kid.
Rachel: yeah. I loved it. I just thought it was funny. I’m going to have to watch that again just because it was so long ago.
Jeffery: oh, that’s cool. Okay, what is the meaning of success to you?
Rachel: Legacy. I think success is about what you leave behind. how you leave the world, how you leave those people that mean something to you. I think for me the legacy piece is really important.
Jeffery: That’s awesome. very well shared. last question. What is your superpower?
Rachel: connections. I am a natural connector. I’m very good at looking at point a and point b, making the relationship. consumer mindset. how does it connect person a person b, how do they link. that’s my superpower, connections.
Jeffery: I love it. connections are good and you, I think from our conversation, I find that carrying your knowledge and being able to network people into all of that is a brilliant way to keep sharing and moving forward. So, I want to thank you very much for your time and participating with us today. before we jump and turn everything over to you for the last word, if you can share what is the best way for people to get a hold of you. And then as we like to do, we’d like to give you the last word. So, if you can share anything you like to founders or to investors, I will turn it over to you. But I want to thank you very much for all of your time today Rachel. you were phenomenal. I could show you, I wrote so many notes. It’s not even funny but I appreciate all your time. you came up with so much great content. It’s amazing. But thank you again. Thank you. It was really a great conversation.
Rachel: So, in terms of getting in touch with me, I’m pretty active on Twitter and LinkedIn, so @r10brink1, or just look me up on LinkedIn. That’s always the easiest way. I’m pretty active in both. And I think in terms of advice, I mean I think a lot about the founder journey. I think that it’s a tough road. It’s a lonely road. But it’s such a rewarding road. So, keep building, keep believing, keep thinking, keep challenging, keep innovating and pushing, find those believers, find those investors that are going to be in your corner, not only in the good times but also in the hard times because there will come, I think it’s really important. be thoughtful about who you bring into your cap table. think about the diversity of perspective, the diversity of experience. As we were talking about building teams, I think all those are really important and I hope whoever is listening that they build great companies.
Jeffery: brilliant. I love Rachel. Phenomenal. Thank you very much again for all your time today, all of your advice and everything you shared. It was very well shared. Thank you.
Rachel: Thank you. Oh, that was awesome. I really enjoyed having the conversation with Rachel for many reasons because like the tri-factor effect of working in a big corporation working for a startup and then going on and becoming a GP and running investments. But I just loved all of her insights, a lot of great lines that she utilized that really defined startups and investing. fantastic try and move on, that was one of them. be obsessed. I love that one. be obsessed. That’s that fifth gear. We all need to have that fifth gear if you want to be really crushing it in anything. you do build things that people want. show traction, get things done. Man, I love those lines. all fantastic. So, a third unpacked. enjoy the conversation. And if there are any other things that I would say that really defined our chat there, is to build relationships, test the market, learn more about the people that you’re going to be working with. And again, the last thing is to be obsessed. be obsessed. Thank you very much Rachel. And everybody, thank you all for joining us today. If you enjoyed this conversation, please feel free to share it with your friends or subscribe to our YouTube channel, follow us on Spotify, Apple Podcast and or Stitcher. Your support and comments are truly appreciated. You can also check us out at supportersfund.com or for startup events, visit opn.ninja. Thank you and have a great day.
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