Investing In Speed, Hustle & Meritocracy With Hustle Fund Co-Founder Elizabeth Yin

01/09/2018 10:01 am ET

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Elizabeth Yin grew up in the Bay Area in the late 90s, which was the period of time when the dot.com boom was occurring and by chance, she would get her first exposure to startups working with her high school best friend’s cousin during winter break. That cousin would turn out to be Zappos co-founder Tony Hsieh, and this would lead Elizabeth to working in tech, starting her own company, joining 500 Startups to lead the accelerator program, co-founding the Hustle Con and most recently, starting her own pre-seed fund Hustle Fund with her colleague at 500 Startups Eric Bahn.

Biggest thing she’s learned over the years? The importance of execution, speed and hustle—topics she would touch upon multiple times throughout our interview.

Hustle Fund Co-Founder Elizabeth Yin
Photo from Intercom's blogpost featuring Elizabeth
Hustle Fund Co-Founder Elizabeth Yin

Experimenting On Startups

Back in high school, Elizabeth had made a pact with her best friend Jennifer that they would one day start a company together. This didn’t happen for years but many years later, they decided that it was a good time to dive in. Elizabeth shared, “We mostly knew that we wanted to work together but we weren’t sure what exactly what that was. We ran all kinds of affiliate sites; we had a bridesmaid co-shopping sites and even weight loss products and we did other types of sites like online classes and tools for customer development; it was just a whole lot of different random projects.”

Elizabeth shared how most of her takeaways from that area revolved around the idea that affiliate marketing is hard and its important the spread when it comes to the customer acquisition cost, the customer life time value and the revenue you’re getting relative to how much you’re spending. She added, “How do you utilize your marketing strengths first and work backwards toward the problem you’re trying to solve. For me, I do well in marketing when there’s a good spread between the life time value of a customer and the cost of acquiring a customer and that ends up being a lot of high value products like B2B Software-as-a-Service (SaaS) products as opposed to where the life time value is really small like social sites and one time purchase sites and that’s how I kind of how think of marketing now because for some of these affiliate sites, you weren’t making that much money.”

Given this realization, Elizabeth and Jennifer would end up working on LaunchBit, an advertisement network and exchange for B2B companies which needed help with lead generation, where businesses were spending thousands of dollars to help them acquire new customers—a big enough spread for them to pursue the startup.

From LaunchBit To The World Of VC

After working on LaunchBit for a few years, Elizabeth would realize how tough the world of advertisements is and how everyone is really just competing and differentiating using price. She shared, “It’s a dog eat dog world. The path you’re on when you’re building an ad network is to either sell the company to a bigger ad network or to buy other networks to grow.” Elizabeth and her team would do the former, selling LaunchBit to a larger ad network for a modest exit.

She also touched upon the importance of really caring about the problem you’re going after, “Going back to solving problems important to you, not only is it important that the customer acquisition cost works out but that you find a problem that you really want to solve even during the dark days and me working on ad network wasn’t that fulfilling so we ended up selling.”

After selling the company, Elizabeth went back to 500 Startups to mentor companies and was in the mindset that she would use this time to brainstorm some problems she was interested in before jumping back into the startup grind. However, she would enjoy mentoring too much and eventually became a partner and ran the 500 accelerator. She added, “I realized there were so many problems in venture capital from the way we treat entrepreneurs to sexual harassment. Beyond that, there were other interesting innovative models that were coming up that was very different from how companies were traditionally funded; VCs were starting to do due diligence differently.”

The Birth Of Hustle Fund

These problems that Elizabeth would notice during her time at 500 would become the inspiration for the type of problems she started Hustle Fund to tackle. Specifically, Elizabeth noticed that there weren’t many institutional investors tackling the earliest stages of startups when founders had version 1 of their product and very little traction. She shared, “I would say that over a year and a half ago, no institutional investors would participate. It was either you bootstrap it or you find an angel. These days there are a couple more players that will consider ideas with very little traction.”

The second problem Elizabeth set out to solve was on this idea of meritocracy and funding the best entrepreneurs no matter their background or pedigree. She shared, “There are a lot of VCs that would invest in pedigree to de-risk but that doesn’t always lower the risk. I think the best quality of a lot of entrepreneurs is speed of execution. I’ve seen so many pedigree teams that can’t execute quickly for a variety of reasons and on the flipside, there are teams with no pedigrees who can.”

In order to measure speed of execution, Elizabeth asks a lot of questions about how the founders are executing, the customer acquisition methods they’re using, and the timeline of how they’ve accomplished certain milestones.

Elizabeth talking about tech inclusion
Wells Lucas Santo
Elizabeth talking about tech inclusion

Her First Hustle Fund Investment

One of Elizabeth’s very first investments at the Hustle Fund was this company called Thank You Kindly, which was really early but had a founder Ebere Anosike that blew Elizabeth away with her answers and speed of execution. Elizabeth shared, “I don’t think I’ve met another entrepreneur who is as fast as she is in the thousands I’ve met and specifically she’s very concise with her answers and gets right down to the point. It also helps that she came from a sales background so she knows how to dive in and talk to customers so maybe there’s a learning curve with other entrepreneurs and we understand that.”

Thank You Kindly’s founder Ebere Anosike had found this problem in the personalized corporate gifting space in the high value amounts because corporations usually don’t’ have time to find the right gift yet if you get a personalized gift, you can get a lot more business. By combining technology and operations, the startup is able to find people the right gift by learning about your personality through social media and online presence.

Elizabeth added, “She was hitting the ground running immediately when this started out as a side project, she was already doing 10k in bookings in the first weeks just by calling up very large companies, and she taught herself enough light weight programming to pull together the first version of the product which was quite manual back then. She actually just started this year. and she’s made more progress on this than companies I’ve seen around for 2 years because she cranks. Not that she just cranks but what I’ve seen in other entrepreneurs is even when you’re working hard, it is very hard to focus on that top priority thing because you’re working on so many other things at the same time and there are 20 different things in 20 different directions. But she is really good at prioritizing that one thing and doing that really fast and really well.”

Mental Frameworks

These days as an investor, Elizabeth really tries to guard her time carefully in order for her to talk to as many founders as possible. Specifically, she avoids task switching and uses as many tools to try to remove as much admin work.

When it comes to meetings, Elizabeth has also taken a unique approach, which has helped her level the playing field for a lot of entrepreneurs: she has her first passes and conversations with entrepreneurs via email. She shared, “I’m doing a lot of first passes via email and is very helpful to entrepreneurs because I get to see more entrepreneurs and its very objective. I’m looking at your writing, can you think clearly and concisely? I’m not looking for grammar but I’m looking to understand how they think; this is much more favorable for people who can’t think on their feet, and lastly the unconscious bias part, I don’t look at your background, I just look at how you think and write.”

Advice To Early Pre-seed Founders

Finally, in terms of advice to pre-seed founders, Elizabeth shares how when she looks at her portfolio, she tends to favor entrepreneurs who try to de-risk the number one risk at that time for most people, and for most people, that one thing is the customer acquisition cost.

She added, “Do customer development or presales as much as possible even if you don’t have a product. A lot of the entrepreneurs I’ve seen have a nuanced understanding of their customers and that’s’ the different between first time and second time entrepreneurs. Every experienced entrepreneur I’ve seen thinks about that before diving into ideas.

You can learn more about the Hustle Fund here.

Don’t be afraid to reach out to Elizabeth and Eric if you’re working on an early stage startup!
Hustle Fund
Don’t be afraid to reach out to Elizabeth and Eric if you’re working on an early stage startup!

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About the Author: David is a senior at Penn studying Cognitive Science and Computer Science, originally from the Philippines. At Penn, he’s heavily involved in the startup scene as an investment partner at Dorm Room Fund. Currently, he’s working on SkillStackers, the easiest way to scale work using a virtual workforce. Previously, he started a nonprofit organization called YouthHack which has gone on to scale to do programs in over 8 countries in the last 3 years. David enjoys meeting new people and sharing the stories of exceptional entrepreneurs!

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