Investor Spotlight - Judith Dada
All Things Venture #081
We’re diving right into today’s article. I had the wonderful opportunity to recently sit down with Judith Dada, General Partner at La Famiglia, one of the leading seed stage firms based out of Europe. La Famiglia’s reputation precedes them, and while this interview is on the longer end, there’s so much learning packed into that I’m excited to share, so I’m just going to go ahead and shut up. As always though, let’s dive right in.
Judith! Thank you for coming on to All Things Venture! Per usual, my first question for you is, can you tell us a little bit about yourself, what you focus on at La Famiglia, and how you got into venture?
Of course! That's a bunch of questions. So, first of all, who I am: my name is Judith. I’m a general partner at La Famiglia. Americans tend to think we're like some mafia club when we're really just a regular venture fund. Anyways, think of us as a seed stage venture fund investing into the best breakout technology companies across Europe and the US. We've been around for six years now since 2016. We're just launching our third seed fund, and we're a team of 15. We have a couple of offices, but the main office is in Berlin, about 80 to 85% of the portfolio is in Europe, and then we have a bunch of co-investments in the US. Our focus is enabling B2B companies to go to market, because we have a big network of enterprise and SMB companies. Typically, in B2B the toughest thing is getting from zero to one. We meet founders all the time who are thinking, “how do you get that first big contract? How do you get that first partnership? How do you get the trust that many other of your B2B peers will have had for decades and you as a startup don't have?” Some of our companies, you maybe know Deel, for example, is a really notable one, then Personio in the HR space, Forto, which is similar to Flexport in the US, so a big digital freight, or Y42 in the data space
And then the last question was how I got into venture. So, it was not at all a straight line. I didn't wake up one day and think, “Oh my God, I really want to be a venture capitalist.” I always feel bad saying that because I know how many folks these days try to break into venture, and how competitive of a space it is. I had the incredible luck and fortune of not even thinking about that too much. I think if I had thought about that too much I might have been scared off and never even tried it or ever considered it, but I've really stumbled into the job.
My background is a wild mix of different things. I'm originally a social scientist by training - social science, economics, that type stuff. Then, really quickly, I got fascinated by technology and I realized that I didn't understand much about what made the Internet - this thing that I was spending all of my day on. So, I decided to do an additional degree in technology management and from there, I moved into data science. Ultimately, I ended up joining Facebook working on the sales side, and as I’m managing some of the really big clients on the platform, a lot of my peers that I went to uni with, are all starting companies and they suddenly started calling me. They were like “Oh, we're hearing that you're doing all this data optimization work to bring down customer acquisition costs, and increase customer lifetime value for these really big advertisers, like Facebook and Instagram. Can you support us? Because our VCs are getting angry that our numbers are not what they should be in terms of performance.” Over time I was able to start this initiative, which still exists today, which is called the Facebook VC Initiative. We didn't invest any money, we didn’t hold any equity or any anything like that, but it was really just engagement and tooling a little bit similar to Google for Startups, and we were just trying to provide a launch pad for the venture backed and fast growing companies to grow effectively on the platform.
Through that work I got to work with lots of VCs, and one of those VCs was La Famiglia. Full disclosure, at La Famiglia at that time, Jeanette, who's one of the co-founders of the firm, she also became the first investor into my husband's company. So, on the private side and on the work side I suddenly had a lot to do with this very new fund. This was before the final close of fund one. And so, I just met Jeanette, and I wasn't planning on moving into venture, but they were looking for their first investment team hire to set everything up and build a portfolio of the first fund. In the beginning, I was very much going into the call thinking like, “Oh my God, I'm not going to take this job. I'm just doing someone a favor to talk to her because they've been very persistent.” But then I just absolutely had this surreal moment. I think sometimes you just meet people in the business context where you just know you should be doing something together because there’s a really strong connection. I had that with Jeanette, and I just hadn't planned on going into venture. All my like friends at Facebook were like, “You’re crazy. Who's this venture fund? Why would you ever leave this job?” But I took a leap of faith and just said, “I want to work with this woman, and I want to work with this team.” That was five years ago, and that was how I got into venture.
Wow, I love it. I normally ask this question later on in the interviews, but there's a theme I see across a lot of my conversations in venture. It sounds like there's a fair degree of serendipity in your life and in your journey so far. And so when you reflect back on that period, what does serendipity mean to you? How do you make sure you leave time to make sure that kind of randomness or serendipity of life can occur, especially in the context of being a venture investor?
I one hundred percent subscribe to that idea. I think serendipity is one of the most powerful driving forces of my path so far. I think, looking back on those really early days, the way that I originally got into the whole digital technology thing was I’ve always been really passionate about writing and journalism.
I never wanted to do that as a full-time job because I thought that's a horrible way to earn a living. And so I just did it as a side hustle, and I was basically leading the biggest student magazine of my university, and I decided to take that from a print to an online edition. When taking that to an online edition I was like, “What is HTML? What is all this stuff?” That's how I got into it. It wasn't because suddenly one night I woke up and was like, “Technology management was what I want to do.” It was really kind of driven by just allowing myself to indulge in this hobby that I always had, which is journalism.
When taking that online, I faced a real hard business problem, which was that I didn’t understand anything that I supposed to be doing here. And so that's how I got into technology management. In technology management, I met all these people that I would have never ever met if I hadn't done that, and they then opened so many more doors, and just really expanded my horizon and my perspective of what could be possible. There's many more such examples of people randomly just opening a door that otherwise would have remained shut. So I one hundred percent agree with that idea of serendipity being important, especially in venture. I think La Famiglia is one of the best examples of stuff that came out from that whole serendipitous phase in my life. I don't think I intentionally make space for that on a day-to-day basis. I think the thing that I’m a real fan of is, I'm not a person who believes that you always have to focus on just one thing. Like, I get the whole, “Be a founder, and just focus on your business 150%, because you can't have three side hustles at the same time.” I get that. Starting a venture fund didn't leave space in my life for other things because I had to learn to do this from scratch. So, I had to read all the books and term sheets, like all the legal docs, and fund structuring, and all the stuff that's involved in raising funds. It's not like you learn that in business school, right? So I would say that a lot of my focus was on that, but at the same time, I think - and this is also something that we live really culturally at La Famiglia - I think that we all have our other passions. It could be design, it could be software development, it could be art, it could be literature, but it’s so important to just really allow yourself to make space in life and space in your head for these things, and also to meet people from those spaces. Then at the end of the day, really wonderful things might happen.
So, another interesting thought about Berlin - having recently been there and having spent some time with you and Jeanette - Berlin is a really special place where it feels like this is a confluence of technologists, politicians, artists, social scientists, you name it. Can you kind of help the reader understand what's in the water over there? And why do you think it's becoming such a great hub for tech in general?
Yeah, so I would say three things. I haven't read a ton of books on this, so this is not an informed social science perspective. That said, Berlin signifies three things. The first is rebuilding and a clean slate of being able to test different things. When the Wall came down there was this real energy in Germany of “Let's go to Berlin. Let's go to the place where new things are happening and there’s this new beginning.” It was this moment in time that I think attracted a lot of folks that wanted to be part of that starting energy and so I think that's what probably led a lot of pioneers and people who you would probably describe as avant-garde to the city. Second, there is a close relationship to the East, and also a rather left-leaning ideology, which very often plays a huge role in social sciences, or certain avant-garde fields. Especially in philosophy, or in social science where people really push the boundaries of new beliefs and new ways of expression and so on and so forth. I think that closeness to the East and to that energy and ideology, I think, is part of Berlin's very special charm. I think the last thing probably is that it’s really cheap. If you're an artist, you don’t make a lot of money. Most people who are young are trying things that you probably wouldn't be able to get a 9 - 5 job and get a nice salary for. A lot of this stuff is super risky, and you don't know what's going to happen. And so, in Berlin - I mean, it’s changed a bit now that all the venture capitalists, the tech boom, and the startup world is catching up - but for a long time it was dirt cheap to live in the city. I think taking these three things together, it’s blossoming a new canvas where ideas, talent, and many different streams come together and meet.
So, kind of connected to that, one of the things that I've observed in venture, is that venture capital is very much a people business. And from your perspective, I think you touched a little bit on the types of people you like to bring into La Famiglia, but when you are thinking about partnering with the founder, what are some of the qualities that you look for in them?
Yeah, so it always differs from founder to founder, but some funds are quite strict. Like, “Oh, we only back serial entrepreneurs. We only back founders who are also technologists.” We have none of these core criteria. We really try and see the person that's in front of us. I would say one thing that we very rarely compromise on is we really want to see someone who has an underlying deep drive and vision for creating something. “Mercenary founders” or more just execution type founders who take something from somewhere; take them out from the US and just execute that in Germany or Europe, that's less the type of founder that you'll find in our portfolio. We want to see some really unique and innate drive and passion for what they're doing. That doesn't mean that if you're going into healthcare, we need to see a founder that spent a decade in healthcare and now has found the holy grail of what needs to be fixed there. You don't need to come from the industry. But we need to get a real sense of mission and vision in what it is they're doing. So that’s the first thing. The second thing is a unique insight. The best founders we meet are founders that actually change our perspective on the world. Great meetings with founders are ones where, you come in and, you thought that the world works in ABC, and the founder makes you see it actually works in CBA. Very often it's using very simple language. But suddenly there's a completely new perspective on something you thought you had understood. And I just met a really, really strong construction tech founder last week, and I thought I understood the segment that he's in and the business that he's building. But he showed me that I haven’t understood it at all, because there are some fundamental things that I thought applied from my white-collar perspective on education and upskilling and he showed me that there was a completely different perspective to that.
So sometimes we need these super simple insights that can be really, really powerful to show us that there is someone who can shape a new creation. Very often we actually use terms that come from the art world. Jeanette, the other partner, always says, an early stage founder is like a Picasso painting. Many people would look at it and say, “But there's no paint, but there's no form but there's no color.” And other people just look at it and say, “But the early shapes of some new form of language are being formed there.” And so that sums up the two key things that you want to see. Our founders come in all different shapes and forms and sizes. Sometimes they’re post-university with zero years of work experience, sometimes they’re serial entrepreneurs, sometimes they come from the industry that they're trying to disrupt, and sometimes they come from a completely different background. It depends.
I love that, especially the Picasso reference. So, you mentioned that Deel and Personio are two of the big bets you guys have made so far. How did those two founders, or maybe other founders in your portfolio, help you see the world differently?
Yeah, so I think Deel, and anyone who's met Alex and Shuo knows that they're just forces of nature. I think they're not just insanely driven and have this really big vision for what they want to build, but they also have an incredible amount of raw aggression and energy of wanting to build this, and they’re working really hard, so that in itself is impressive. But also, back in the day when we invested in Deal, remote contractor hiring, which is what they started with, was not a thing that many VCs or many people believed in. This was pre-2020. This was pre-remote work being a big thing. I think it's this ability to draw this clear picture. It's not like we were the HR tech fund, and we had a super deep thesis on the market. Jeanette, who was actually the partner on this deal, had a really strong thesis after having spoken to Alex, and researching the market. But it wasn't like we have the biggest, deepest expertise in this very specific market segment. To me, the first part of what I mentioned shows in Alex. He has the ability to paint that picture and take people on the journey, but then also putting the execution and aggression behind it to be able to make it a reality.
And then Personio, with Hano, he’s a founder that, I think in Europe, in many ways, has redefined what entrepreneurship means. For him, building Personio really is the job of his lifetime. He really sees Personio as one of the key driving forces to a more equitable place in the world, and also more distributed wealth in some ways. So for context, Personio is Rippling in the US, it’s basically a SME HR platform. So many of their customers are small businesses, and it has this mission of empowering small businesses; and not just saying that as a tagline, but really meaning it and really working hard every day to make that a reality. Actually, quite early in Personio’s path as a company they started the Personio Foundation which gives back to the environment, which gives back to continuing education, and the founders committed quite significant amounts of their own relatively small wealth. The founder really means it when he says that he wants Personio to become not just the biggest software company in Europe, but also a key driving force behind German wealth and this idea of the social economy, and creating an open economy, but at the same time an economy that deeply cares for the weakest and creates a protective layer for everyone in society. I think there's also these new shapes of entrepreneurship that are quite unlike what we see in Silicon Valley that I think are starting to take shape here in Europe, and that's super inspiring to me.
Do you have a similar reason why you work in VC? What I mean by that is, what's the reason why you get up every morning? Frankly, you probably bust your ass every day, every week you're on calls, you're in meetings, you’re in board calls, and doing everything you can to support founders. With some of the best investors that I've met and talked to, it seems like they have a deeper underlying reason why that keeps them going.
I think the first thing is, I really couldn't imagine a better job in the world. Rarely does a week go by when I don’t just feel incredibly lucky to be able to do this job. I come from a family where my parents were both working class and didn't go to university. They both have jobs, and I wouldn't say they completely hate them - my mom's a kindergarten teacher and my dad for worked at the airport doing ground control. They didn't hate their jobs, but they also didn't love them. Working was a necessity to get money and put food on the table. And so being able to not have the feeling of forcing myself to work and forcing myself to do something just for the sake of making money, but instead getting paid to do something I thoroughly and deeply enjoy and get to grow from every single week - I don't take that for granted a second. That, to me, is a huge driver behind why I love what I do, and why I do what I do, because I have experienced firsthand that for many people in the world, this is not the case.
I think the other bigger driving force, and I think that goes for all of us at La Famiglia, is just aiming for new creation. I think there is something deeply satisfying about trying to be part of the new growth of what can drive an economy and what can drive a society. I think, especially in Europe, we all have anxiety about falling behind. That could be in terms of the frontier of new technologies, like AI and quantum computing that are going to play a huge role going forward. That could be in terms of defense, which is now a big topic with the war in Ukraine, that could be in terms terms of the economy, and the social economy. That's the whole driving force behind that and that’s why I think it's great to live in Germany, it's great to live in Sweden, and it's great to live in France, where we have a great social system. I'm not saying it can't be improved, but on average there's less divisiveness and less inequality than in the US. I really believe in this concept, and I think it's something worth protecting, but to be able to do that in the future we have to still have a strong economy, and we can't risk falling behind other nations massively, because otherwise we just won't have any basis for being able to have a great social system and social protection. That is a huge driving force for me. I want to see my grandkids be able to enjoy the same freedoms, benefits, education, and the same options that I had as someone who didn't come from a super wealthy background, but who had all the options and funding available to get me where I am today. So, I would say both of those things are really big driving forces behind me getting out of bed every morning and not feeling like it's a huge drag, but to actually be looking forward to anything that's ahead.
Yeah, this job is a privilege. It's a massive privilege, and I think I share a lot of the same sentiments, and it’s also very impactful. I think another question that I want to touch on is both the similarities and differences between the US startup environment and the startup environment in Europe. I think you were also recently on a podcast unpacking the impact where the collision that's occurring today is. Could you help us better understand the on the ground environment in Berlin, and how US firms and European firms are operating or competing?
Yes, in a nutshell, I went into venture five years ago. Back then, US funds were very much a big part of what we were doing in Europe. They were a big part of our inspiration, and we were learning from them, because the industry there was just more mature than it was here in Europe. But I would say it was still playing a really small role, right? Like, just thinking about like how many US VCs were on the ground in Berlin or in Munich or wherever on a week-to-week basis, it was very, very few. Fast forward to now, there’s just a ton of US activity in Europe. Both in terms of just seeing them on the ground in Berlin - probably every second week or so it’s like, that person's here, and that person's here, and that person is hosting a dinner, and so on and so forth. But then obviously COVID happened and a lot of the barriers that existed in our head in terms of thinking about the US vs. Europe just came down because people can work from anywhere. You can come and check into a European company, just as much as you can into a US company. I think that was the unwinding that it took, and the acceleration of US presence here in Europe that happened afterwards. When it comes to whether it’s a competition or a collaboration I always say it's both. I think for me it really signifies the venture ecosystem as a whole, and that’s why I love it so much, it's like you get to be friends with your closest collaborators, but then also compete with them. Like, in the morning you're sitting on the same board, or working in the same company, and in the evening you're “fighting” against one another to win the term sheet for this company, or for another company. So, I always love to say it’s like when I did athletics when I was younger. When you're sprinting you always want to make sure that the person in the line next to you is the fastest person, because the faster the person that's running next to you, the more likely you are also going to be running really fast and break your own record. So, I see the venture ecosystem is very much that picture, the more funds - and they could be from the US, from Asia, they could be from anywhere - but the more funds that have access to an ecosystem, the more competition there's going to be. Overall, it just increases the quality, because it makes everyone step up their game, and so I think that's a really good thing for the ecosystem. Right now, there's a lot of skepticism in Europe as to the longevity of the US activity, especially on the growth side. We see a lot less activity, but I would say that just for the market as a whole, that also includes European funds. So, we’ll see about the persistence of growth capital from the US in Europe. I would love to see that being a continued force because I think that doesn’t mean that we shouldn't do more to strengthen our European growth capital base but, again, it just raises the bar and makes sure there's more competition to fight for the really good companies and support them accordingly.
I think to your point how I would summarize that is iron sharpens iron. I similarly played sports competitively as a kid, but what was your event? It sounds like you were a runner.
When I was younger, and I think in the US it’s called track and field, but you don't typically specialize. I was into jumping so I did the long jump, and high jump. I did hurdles, and I did running and sprinting. So those were the categories that I was specialized on until 16, which is when I stopped. Until then you don't really completely focus on one thing. Sorry, I'm not sure what the terminology was, I only ever learned this in German.
I know exactly what you're talking about, you nailed it. That's great context. I ran track up until high school and then I also stopped, but I was 100 and 200 meter, and I did triple and long jump, and the relays.
I love it. That's awesome. I did a lot of decathlons and 80 meter sprints. We don’t get to do the hundred meters until you're much older, but at that time I had already stopped.
So, competition is integral to the venture environment, it is integral for VCs, it’s integral for founders. I think something that's not as talked about as much, especially for people who are entering into venture is how to develop your ability to win deals. Without giving away your secret sauce how would you help new people entering into venture better understand the winning component of this job?
I think the first thing I would always say is that it's a team effort. This is something that's super important to us at La Famiglia, because we've seen other venture funds go awry on this front. At the end of the day, if I source a deal, and I think I'm not the best person to win this deal because, maybe let’s say it’s building in the design collaboration space. Someone else on the team is the best person to win it. Or if it's some other company and Jeanette is the best person to win this. I would loop her in. I'd make sure that from the early days, as soon as I realized this is a really strong founder, that this is really interesting company and I see a relatively high likelihood of this going over the line; I'll just make sure that we win this as a team. It’s never about Judith winning it, or someone else winning it. We really, really, really try to instill this in every single team member because we think that makes for the most successful outcomes for us as a firm at the end of the day. There's this great sentence and I'm not sure if it's from a historic Greek expert, but it’s like you have to admit that you don't know to get to a place where you learn. Admitting that you're not always going to be the best person, no matter how good you are, to win any given deal is the only way that you can grow and learn. So that's the first thing I would say. Then the other thing I would say is I do see an early first mover premium. That's not going to guarantee that you win a deal, but if you have conviction and you drive the process quite quickly - and I‘m not saying don't do diligence, that should always be part of it, but if you’ve let a founder know that you really think what they're doing is interesting, and you’re the first one to then get to conviction and not that 11th term sheet to come in that's driven by FOMO after you've had one call, and barely gotten to know a founder, then there's something that speaks to that. Lastly, there is just something to be said for tenacity. I think just showing a founder all the different ways in which you could be the best partner for them and really listening to them. A mistake that I made when starting a venture was opening the whole book of “Here are all the things that we could support you with,” without really listening to the one or two things that the founders need most. I’ve become a lot more attentive at really listening. Being like, “Okay what's going to move the needle for you?” It might be that one hire, or it might be that one customer, it might be that one…whatever. And then just getting super creative. I mean at the end of the day, let’s admit it, we’re all really talented salespeople. Just being really creative about finding that one introduction or about finding that one hire and just going out of your way. And not thinking so much about the process, but really thinking about it from an outcome perspective and just hustling and hacking your way there. Which works sometimes, but at the end of the day, we're not magicians. Sometimes there might be roadblocks that even the most creative hustling soul will not be able to overcome. But by just really being tenacious, and giving it your best, I think those things taken together will allow you to win better over time.
You gotta hustle and you got to innovate in this job every day. But I love that call out. Everyone in VC, whether they realize it or not, is a really talented salesperson. We sell money for a living and we try and wrap strategic direction and advice around it, which is pretty funny to me. My last question for you would be, what is your advice for anyone who is aspiring to break into VC? I think you gave a lot of great context and advice in general, and what it takes to win, and what the entrepreneurial environment is like in Berlin, but for someone new, whether they're in Europe reading this, or in the US and reading this, how would you advise them on trying to get in?
Different recipes will work at different venture funds. At the end of the day, I think you've said it really nicely. This is such a people driven industry and it's also not a huge industry. It's grown a lot but it's still tiny in terms of the number of people working in venture, especially in Europe. So, I think just try and find a way to get a sense of the people behind venture firms and be really tenacious. I saw this really great Twitter thread, I think it was from Lola at Hummingbird. She got rejected for the position that she wanted at Hummingbird and then she got super, super tenacious and just wrote these super long messages of like, “What would it take for me to get a chance at getting this job?” And just didn't let it go. Again, this might not always work, but I found it so inspiring because it takes such guts to step away from your ego and step away from like licking your wounds after getting rejected and just say, “No, I’m not going to take no for an answer. What does it take? What do I need to do? What do I need to do to convince you that I’m the right person?” It's typically easier if you have a sense of the personality that's across the table, and then you’re better able to play to whatever complimentary things you might be able to offer that the team that you're looking to join does not already have.
And then I think the last thing is just to be genuinely curious about this market. I still find that for some of the positions that we've hired for analyst, or associate, there's still a fair bunch of people that you come across that I think just see ventures as a shiny thing to put on their CVs because it's all the rage right now. Rather than merely being drawn to the founders and to the things that are happening in this space. If I ask you some questions about why do you want to work in this job, or tell me about a company that really interests you, or tell me about your thoughts about this technology, or whatever it might be, I think it's fairly easy to understand if people just see this as a step towards something else, or if they really, really give a damn, and they've read about the space, they're really thoughtful, and they're able to admit the things that they don't know, but I think that's just a really fine line. And I do think many people kind of spot this quite quickly. So I'd say only do it if you really want to do it, and then kind of show that you care by just doing the work.
Do the job of venture before you get into venture. It sounds like going back to your days of meeting Jeanette, in the early days of La Famiglia. It sounds like that's exactly what you were doing as well as when you were at Facebook.
Yeah, 100%. If you put it like that it's actually true, and I didn't even have the ambition to become a venture capitalist. I just really wanted to help founders because their customer acquisition cost was horrible. It's horrible for companies to operate so inefficiently.
There's gotta be a better way. And here you are five years later and an inspiration across both continents. Judith, this was awesome, such a pleasure to be able to share your story and your learnings. Thank you.
Great, awesome Dez. Thank you so much for bringing me on All Things Venture.