Jenny Friedman is the Co-founder & Managing Partner of Supernode Ventures, a pre-seed VC firm investing in entrepreneurs who help transform the way people live, work and socialize.
Briefly introduce us to Supernode Ventures and how you came to found the firm.
I started my career at Goldman Sachs, working in investment management and getting hands-on experience managing clients’ portfolios. While GS was a great place to start my career, my ultimate goal was to work in VC. I enjoyed the process of managing many positions across asset classes, but I was most interested in compiling a portfolio of early stage tech companies.
But, it was 2014, and the opportunities weren’t the same as they are now. I was warned so many times about the inherent stigma of transitioning from a big bank into tech. I realized that in order to get into VC, it was going to take a bit longer, and I thought it would be beneficial for me to get operating experience as a segue. I ended up working at Minibar when the company had only raised a couple million dollars in seed funding from NYC based investors. It was a super scrappy early stage company, and I was able to learn a ton about marketplaces, e-Commerce, and logistics. I then went to Business School at Columbia mostly to help facilitate my ‘career transition’ from traditional finance to tech/VC. I interviewed with my former boss one morning and he gave me an offer that afternoon (shoutout Nihal Mehta!) which was definitely not a typical situation, but I was so grateful to have landed a gig at Eniac at a time when they were really solidifying their presence in NYC.
I met Laurel at a UJA tech event in NYC, and I learned she was looking for a business partner to launch a VC fund. I hadn’t met her prior to that, but I knew she had a tremendous network and was a proven founder with an impressive exit under her belt. Laurel had been investing in early stage startups through her own angel fund called Flatiron Investors for seven years after she’d sold her company. Between both of our experiences in operating and investing, and a shared genuine love of networking and connecting folks within the community, we had a really good pulse on the NYC tech ecosystem and saw an enormous opportunity in the pre-seed space. We decided to join forces and start Supernode.
Why do you like being the first institutional investor?
It’s interesting because you get to grow and develop alongside the company from inception. You have to really believe in the founding team to withstand unanticipated pivots early on, policy changes, just about anything that’s thrown your way. Every year my job becomes more difficult due to the increasing number of entrepreneurs, and I love the challenge. Because of this constant influx of founders, seed is what Series A used to be and pre-seed is what seed used to be. Some ‘pre-seed’ companies may be pre-traction/product/revenue, but because the bar is so high these days, founders try and put themselves at an advantage by indicating that there will be a product market fit, whether that’s through beta testing, customer research, surveys, etc. With seed companies, we can use KPIs and relevant metrics to evaluate a startup. At that stage, you can still get legitimate ownership, and you’re at the perfect intersection of validating product market fit and measuring the qualitative and quantitative factors of a founder.
What is a thesis that you hold that most people would disagree with?
The Food Revolution! Cell cultured meat will eventually replace traditional meat.
What is one business characteristic or metric that you prioritize above all else?
At the earliest stage, when some of these companies are pre-traction and pre-revenue, the most important factor to evaluate is the team. When you’re lacking traditional metrics to assess startups, you can very well determine the grit, hustle, and resilience of a team. As an investor, particularly in the very beginning of a company’s life cycle, you’re trying to mitigate as much risk as you can. I typically prefer two or three co-founders to one and really emphasize synergies between founding team members. Putting aside the fact that having one or two co-founders lessens the load for a solo founder, it’s so valuable to have another set of eyes while making decisions, brainstorming, expanding the domain expertise of the C-Suite, the list goes on. It gives investors confidence to know you have had a proven healthy working relationship in the past, you can be a team player, and of course that the company will still live if one decides to leave. High level research shows that the top three reasons a startup fails are due to 1) a lack of market need, 2) don’t have cash, or 3) wrong team. About 1 of every 4 startups fail as a result of the wrong management team.
What is a particular category that excites you?
I am interested in analyzing short and long term changes in consumer behavior as a result of COVID. I’m not just talking about Zoom and Slack versions 2.0; there are so many more means of interaction with products and services that will be affected. I want to understand how the pandemic has permanently impacted the way consumers live, work, and socialize. Are we betting on an exodus of cities? If so, what implications would this shift have on proptech and on tech in general? Or should we be focusing on remote learning and the future of EdTech?
If you could join the crew from Inception and implant one idea into the minds of entrepreneurs, what would it be?
First time founders don’t realize the worth of each basis point on the cap table. Founders think it’s impressive to have people on their boards and big name advisors, but advisors don’t necessarily offer the value add that you might think.
What fictional character do you identify with?
The energizer bunny!
What is the most spontaneous thing you’ve ever done?
Starting this fund under the age of thirty.
If you could live in any civilization throughout history, which would it be and why?
I am the type of person who thinks there’s no time like the present. Corny’s not really my thing but I’m going to go with that.
Often, when we are faced with obstacles or things go wrong, we think something is happening to us. But, when we reflect on these moments later on, we tend to find that it actually happened for us. What is one such example you have of this?
I have learned so much managing this fund over the past 3 years with Laurel, both personally and professionally. When I met Laurel, I didn’t know her well at all, so starting Supernode together was definitely one of the riskier things I had ever done. I am very much a traditional, linear person, and this was the first time I was going to detour from what I’d say the typical trajectory would have been for someone in my cohort. Right as Laurel and I began drafting our partnership agreement, I remember wondering if I had chosen the wrong path because we had essentially skipped the “dating” part of our relationship and jumped right into the deep end into this “arranged marriage” as business partners. But as soon as we committed to each other and to the fund, I never looked back. Three years later and I can honestly say I took a risk, challenged myself, and it was the best thing that has happened to me.
What is a memento from your childhood that you still keep and how does it serve you?
I am actually camping out in my childhood bedroom right now in the pandemic… I grew up in a household where my dad was constantly telling my siblings and me that nothing is handed to you; the only way to be successful in life is not to take short cuts, and there is nothing that can’t be accomplished through hard work. My dad always told me to put yourself in situations where you’re constantly increasing your chances of getting lucky. That advice is always in the back of my mind, and while not a physical memento, it is something that I have held onto.
What is your creative outlet and how does it help you channel a flow state?
Most recently, I have been a regular contestant on Primetime VC; the show is basically a take on ESPN’s Around the Horn, but for VCs. It gives me a platform to express my creativity both personally and professionally and has just been a ton of fun. Its tagline is “The Show of Accredited Banter” and has actually been featured on Cheddar TV and TechCrunch. I love that it gives VCs an opportunity to incorporate their personal, gregarious sides in (somewhat of) a professional setting, especially since I have found that in the past couple years the lines between professional and personal have become blurred.
What is one daily ritual that you cannot live without?
Verb energy bars. Full disclosure they’re an investment of ours but they are absolutely amazing. Only 90 calories, and I eat them instead of drinking coffee. The caffeine is time released, and made from natural green tea extract that gives you the perfect energy boost. My dad loves them even more than I do. In the beginning of quarantine my whole family made sure we had enough to last us years!!!
What is the last:
TV show you binged?
Movie you watched?
Song you listened to?
Heartless by Kanye West.
I strangely don’t listen to podcasts :/
Decoding the World By Arvin Gupta and Po Bronson.
Up Next: Veronica Lee, Founder of Remrise