Fireside Chat between Hayley Barna, Partner at First Round, and Abigail Hunter-Syed, Partner at LDV Capital

LDV Capital invests in people building businesses powered by visual technologies. We thrive on collaborating with deep tech teams leveraging computer vision, machine learning, and artificial intelligence to analyze visual data. We are the only venture capital firm with this thesis.

In 2014, we started LDV Vision Summit, an annual event for entrepreneurs, researchers, investors, media executives, and creators. The goal was to bring together our visual tech ecosystem and create a space to discuss what's happening today, and most importantly, what will happen tomorrow. Earlier this year, we hosted our 7th annual LDV Vision Summit virtually to welcome hundreds of attendees from all over the world. We had a stellar lineup of speakers who covered synthetic content creation, computational healthcare, sensors and chips, food and agriculture, logistics and manufacturing, and so much more!

We had the pleasure to host a fireside chat between Hayley Barna, Partner at First Round Capital, and Abigail Hunter-Syed, Former Partner at LDV Capital. They discussed Hayley’s experience as an entrepreneur – she co-founded Birchbox, a company known as an indisputable OG of the beauty subscription box phenomenon, and her insights on trends and investment opportunities in visual technologies. (Note: After five years with LDV Capital, Abby decided to leave LDV to take a corporate role with fewer responsibilities that will allow her to have more time to focus on her young kids during these crazy times.)

If you missed our Summit, this is your chance to watch this interview. You might also want to check out our 4-question interview with Hayley we published in the lead-up to the Summit.

Hayley Barna is a Partner at First Round Capital based in New York. Before joining First Round, she co-founded and scaled Birchbox, the leading beauty and grooming retailer seed-funded by First Round in 2010. Since joining First Round in 2016, Hayley has led investments across many industries and business models including healthcare (Alma, Thirty Madison), consumer (Clare, Studs), tech-enabled hardware (Mirror, Caper), and marketplaces (Anvyl, Crowd Justice) among others.

Hayley is passionate about increasing the diversity of the venture ecosystem. She is a member of the executive committee of All Raise, an organization committed to accelerating the success of female founders and funders.

This interview was edited for length and clarity.

Abby: I wanted to kick off our chat by talking about your investment focus at First Round and put out what stages and sectors that you're most interested in these days.

Hayley: First Round is a generalist seed-stage focused firm. We're focused primarily on the US. Seed stage is defined broadly these days – that's everything from a million-dollar pre-seed to these $7 million, we call them ‘mango seed rounds.’ We lead those and take an active role with our portfolio companies post-investment. I invest across different sectors but there are a few trends that I'm interested in these days - the future of local commerce, how small/medium businesses emerge post-pandemic, wellness, and the consumerization of healthcare.

Abby: Before you joined First Round, you were the Co-CEO at Birchbox. You took it from launch to over a million monthly subscribers and raised $70 million. Could you give us your “why” behind that?

Hayley: I love the question “why” because I ask that of a lot of founders when I'm hearing their pitches.

Abby: I may have checked that out in your bio.

Hayley: My original “why” for Birchbox was a personal pain point. I had trouble discovering the right products for me and opted out of high-end beauty. The ‘why’ shifted over time. It went from a personal pain point to Katia Beauchamp – my co-founder, and I developing what I thought was a beautiful business model that needed to exist. It was the concept that then became my "why". After we launched it, seeing the impact that we were having on our stakeholders, as well as consumers that were subscribing and the beauty brands that were finding us to be an effective channel for them to find new customers for their products, became my motivation.

Towards the end of my operating tenure, I was jumping out of bed in the morning because of the employees at Birchbox, and the faith that they had put in me. They were building their careers at Birchbox and I felt responsibility and a privilege. It evolved.

Abby: People are the core of everything that we do from an investing side of things, and they are the core to any company: how well they perform, and how they can grow. Going back to this idea about the business model, you found this idea of what is now known as consumer subscription kits. How did you land on this idea of boxing things up and sending it out to people as a subscription service?

Hayley: It's wild to me that now there's a market defined as consumer subscription kits because that wasn't the case when we came up with the idea for Birchbox in 2009, 11 years ago, and launched it in 2010. It was driven by us seeing that the beauty industry was having trouble getting online and consumers were being overwhelmed by choice. We designed the business model from the ground up with Jobs to Be Done. We were such business school students! We had taken Christensen's class on disruptive innovation thinking about supply-side innovation, demand-side innovation, and how to fix a problem. There was something in how we did it that was easily understood and effective, that inspired a lot of others to think about how else this could be applied. Whether it's for replenishment or discovery, it's fascinating to see the thousands of businesses that exist that have been inspired by the business model.

Abby: According to McKinsey, there's a ~$15 billion market now in the subscription box industry, and you were at the forefront of it. Was it hard to pitch investors on this new model? I'm assuming it's nothing that they had seen. Did it make sense to them?

Hayley: It was tough for us to pitch. First of all, because we had no idea what we were doing, we had a busted seed round before figuring it out, refining the pitch, becoming more confident in having those conversations and raising money from First Round in our seed round.

Secondly, we talked to some of the wrong investors. We thought, – “if someone's an angel investor or a seed investor they'll invest in our seed-stage company”, not realizing that we had to narrow in on people who weren't scared of a physical product or the fact that we were touching inventory. The right people to pitch also understood the massive opportunity in beauty as when I was pitching it, it's probably grown a lot, but a $40 billion global market. We were talking to people that were only investing in software or only thinking about enterprise SaaS.

We had to find the right people who understood the opportunity and were excited about how we were going after it.

The frustrating thing was the number of investors who agreed to meet us and took up our time evaluating it just because they were intrigued. It's too bad, but we were an oddity or a curiosity at the time because there weren't that many all-female teams raising venture capital.

Abby: Do you think that going out there not only with this new business model, but as an all-female team, has given you a unique lens when you're hearing pitches at the other side of the table now? Understanding that there were so many people who were wasting your time, do you try to do your best to make sure that you don't waste entrepreneurs' time? What do you bring to the table on those first meetings?

Hayley: I hope so. As investors, we all bring our life experiences as a unique lens to how we run our investment decision processes and what we look for in founders. I am more open-minded about where new ideas can come from and who they could come from because of my own experience. Katia, my co-founder, and I were outsiders to the beauty industry, we were first-time founders, and we figured it out. I seek out those types of founders, whether it's outsiders or people who might not be the standard archetype of a tech founder in the work that I do at First Round.

Abby: There is a lot of stigma around it in the venture space and I've seen two kinds of thinkers – the ones who are like, “well, we want somebody who has deep industry knowledge and connections. That's valuable when you're selling to a big enterprise”. Then you also get the people who are the disruptive thinker, somebody who comes from outside and brings an outsider's perspective and objective viewpoint. It's nice to see that you sit on that side of things where you're looking for that outside viewpoint.

Hayley: It's easier to be contrarian and believe that something that has never been done before can be done if you are coming from outside the industry, but there still needs to be an answer for “why you? What is your unique perspective?”.

Abby: In your First Round bio, you wrote that you never wanted to become a VC, and you still haven't changed your mind about it. What is it exactly that you have against venture as a whole?

Hayley: I wrote that five years ago so I stuck with it... It's the founders that are the heroes and doing the value creation in this ecosystem.

Venture is an enabling force, but it is the founders and the operators that are doing the hard work.

The Caper Cart (acquired by Instacart in October 2021)

Abby: After being a VC for a few years now, is it any different than you thought it would be?

Hayley: That hasn't changed. It's been reinforced. There were no huge surprises as I made the transition, but as much as being an operator helps me be a better investor, the jobs are so different. The way that I organize my days, the way that I add value, it's a different ball of wax. It takes a lot of adjustment.

Abby: Can you give me an example? What's one thing that you always did as a founder that you'd never do now as an investor?

Hayley: I measured everything obsessively on short feedback cycles and that's what I loved about running an e-commerce business. Test, measure, iterate, and experiment. What I love about working at First Round is we do have that mentality, but if you're lucky, you have this process quarterly.

I was laughed out of the room in my first few months at First Round when I said, “I'm going to create an activity dashboard with metrics”, and everyone said, “If you're going to be staring at that every day you're not going to be doing the most important work”, which is, the way that I define it for myself now is, add value, hopefully, in every interaction that you choose to have, whether it's with other investors or founders, it's a lot about where you choose to spend your time, or as one of my partners put it last week, “our business is all about inputs and outputs”. It's squishier.

Abby: When we were talking about my transitioning into the title of partner, the piece of advice that you offered was, “stay true to yourself, your values, and perspectives, and don’t take things too seriously”. Now thinking of everyone laughing at you about bringing these metrics to the table and instead of telling you to focus elsewhere, it's hard... because we often try to emulate those around us and adapt their styles, especially when you've got people like Josh Kopelman and Howard who are incredibly successful partners at First Round. What is something that you bring to the table that's differentiated from them, that allows you to keep it fun when you're evaluating companies and keep your personal touch on everything that you do?

Hayley: What I remind myself is that I was hired to join the team as a General Partner not to stamp out the same approach and same decision-making that First Round would have been doing if I wasn't in the room. To me, that means whether, in terms of approach or decision-making, we have pushed ourselves to be a little bit more structured and metric-driven than maybe if I wasn't around being like, “We should measure things, or always ask what's the definition of success here?”

It's amazing to be able to join a platform that Josh and Howard created and we get so much from that, but I had fresh eyes and was able to point things out along the way that has enabled us to evolve in, what I believe, is a good direction. That is true in terms of sectors and investments as well – I mean investments that we've made in fertility as a sector or a more recent investment in a piercing company serving Gen-Z kids. Maybe Howard would have been interested in that, but it comes from my interests and perspective as an individual.

I'm adding the best value when I push us a little bit beyond what we would have done otherwise.

Abby: The fertility sector is something that keeps coming up with us!

Hayley: Oh, yes! Applying computer vision to embryo selection is something that I have heard as well.

Abby: It's fascinating because all of the practitioners that we talk to keep calling it ‘the Wild West of healthcare’ at the moment.

Hayley: It's amazing because of regulatory changes ~10 years ago. What used to only be applied to infertility has now been shifted to proactive fertility. Women who are much earlier in their reproductive journey could be choosing to do egg freezing and family planning in a way that's different than the generation before us, or even women 10 years older than us. That market has grown amazingly. I'm hoping the financial structure also changes because it's still quite expensive.

Abby: Talking about some of the investments that you have made with First Round, a lot of these are powered by visual technology - Mirror, Caper, Squad, Papaya Payments, and so many more. Were there some critical points that these teams brought up when they spoke to you that led you to invest in them at such an early stage?

Hayley: I wouldn't have seen that theme of visual technology applying to many of the companies that I've invested in had you not pointed it out and it's interesting now to reflect on it. We invest early. We're often investing pre-revenue, sometimes even pre-product.

The biggest factor in our decision is the team, the founder, what they're able to convey about how they see the market, how they see it evolving, and the choices that they've made about the product thus far.

The reason that I say ‘thus far’ is because we expect it to evolve from the point that we're leading a seed round to the product coming to market, and of course it evolves. It's a team-driven decision.

With Brynn of Mirror reviewing her first prototype

Abby: That leads me to one of the questions that I had for you in terms of being in front of the big at-home fitness trend that's been accelerated because of the pandemic, with your investment in Mirror. It sold last year into Lululemon for $500 million. Mirror was one of the first cool fitness-specific video screens, but now it leverages cameras to do in-home personal training and coaches. When you first met Brynn Putnam, who's the CEO, and heard her pitch, what did you think, and how different was the pitch from what Mirror is today? How have they iterated?

Hayley: It is eerily similar...If you would define a mirror as a visual technology, that's maybe the first visual technology there was -- something that refracts light to show you your image, but no, the camera was part of the pitch from the beginning. There was always the idea that being an open platform for lots of different types of content, for the ability of one-to-one interaction, additional sensors besides the camera, heartbeat sensors, and et cetera. Brynn is such a product visionary!

The smart thing that she did (and I suggest this to hardware founders!) is she raised a lot of money before she got to market. We were part of a $5 million seed round. There were two more rounds before she even launched.

She was able to get us excited about investing that early, two years before she sold the first product because she built a pretty hacky, but effective prototype to help us understand what the consumer experience would be.

I went a few blocks away from my home to the fitness studio that she owns where she rigged a TV screen behind a mirror and had a non-dynamic video looping that would show what the interaction would be like, and helped it come to life. In the investment decision, we said, “if this is the magical experience that we believe it to be, this is going to be great” and she helped bring us along with that, as opposed to saying, “oh, trust us, it's going to be awesome. Wait two years. I'm going to build it soon”.

Abby: You often hear people say “hardware is hard”. Anything that you can do as a hardware entrepreneur to showcase the fact that you can get this working is always helpful.

Hayley: We almost didn't do it because of some scar tissue within the firm around other hardware investments that had taken too long, cost too much, or got to market too late without data and product.

Brynn was leveraging existing components. She wasn't trying to reinvent the wheel. She was trying to bring them together in a way that the whole piece was bigger than the sum of the parts.

Abby: Are there any other consumer trends that you're looking at these days that are impacted by visual technologies?

Hayley: When it comes to visual technologies, I'm continually surprised by the range of pitches and sectors where I see it being applied. Yesterday, there was a company that was using the camera to measure biofeedback, like putting your finger behind the camera and being able to get a pulse through that. There is an increasing application to shopping, a lot about the future of retail and local commerce too. Who knows if QR codes are going to change anything, but it is fascinating to see, at least in New York, how everyone has figured them out because that is how you read the menus at restaurants.

With consumers, it comes back to how a product or a technology makes you feel or the value that it delivers - visual technologies have a great potential to save you time. We see that with Papaya, the payments company in our portfolio, you snap a picture of your parking ticket or your doctor's bill and they will pay it for you and save time. Amazing what that thing in your pocket can do for you.

Abby: Our most precious commodity.

Hayley: In terms of making you feel good, visual technologies have the opportunity to do that too. Whether it's this biofeedback company that helps you regulate how you're breathing or some of what you're seeing with filters and how you present yourself to the world. I mean, don't we all feel good after seeing that?

Abby: I almost came in as a cat and said, “I am not a cat. I am human”.

Hayley: Didn't that video make us all feel good?

Abby: Oh my gosh, it was such a great comic relief! Talking about the pandemic and how it has affected consumers... There have been such divergent results. Some of your investments have been in the hardest hit spaces, but they're still flourishing because they were strategically positioned. One of the investments that I was looking at was Madison Reed, which you invested in as an angel or sat on independently. It took off over the past year because nobody wants to go into salons. Collective Retreats in the travel industry, which has taken such a huge hit, but since it's all about the outdoors and outdoor experiences, it hasn't had such an awful hit as most of the traditional hotels and resorts. I'm assuming that you didn't forecast that a global pandemic was coming, but in retrospect, what do you think is one of the things that made them resilient during these tough times?

Hayley: I don't think that was foresight that a global pandemic was coming at all. With those companies, again, I'm going to circle back to the founder. Amy at Madison Reed has built an amazing omnichannel experience including visual technology in terms of color matching the right dye for your hair.

Abby: I was making myself blonde when I was researching this.

Hayley: She invested a lot in building an omnichannel foundation. When all salons closed down, their dot com business was able to grow astronomically. As people are ready to go back to salons, she has a growing salon business as well. She's also working with wholesalers like Ulta. Being where the consumer needs you to be and not being tied into any single channel, is what positioned her well there.

The Collective Retreats investment was partly driven by my interest in health and wellness. I know it's weird to connect hospitality to health, but when I invested in 2017, I saw consumers needed to detox from digital and reconnect with nature.

The pandemic made a lot of things more acute that were already there underneath the surface.

Abby: For sure. Is there a way in which this pandemic is going to impact how you evaluate teams that come across your doorstep from here forward?

Hayley: I don't know if it's the pandemic specifically, but the last year has shown me how founders need to show up for their teams more broadly than just running the business. CEOs have had to support their teams through a lot of personal and emotional stuff in 2020, whether it's adjusting to a pandemic or homeschooling your kids.

What was it like for CEOs to be leading as the capital was being stormed, the obligation to make political statements, and to be clear about their values when it comes to things like diversity, equity and inclusion?

That was always part of what I looked for in a good leader, but the last year has taught me it's even more important for us to be doing our founder references and thinking about the value system of founders in addition to their capitalistic product choices as well.

Abby: If you had to give a piece of advice to a first-time entrepreneur who is starting out building their business under these circumstances, what advice would you give them?

Hayley: Assuming that I'm talking to early-stage founders, I would encourage them, based on my own experience where I built a business out of a recession, that times like this, where there's a lot of re-sorting of behavior and re-sorting of how people are spending their time, whether it's businesses or individuals, it's an amazing time to be building. It's a chance for upstarts and startups to gain ground compared to incumbents.

Abby: One of the questions that I always like to ask other investors is what is the most difficult situation that you've been in over your past years at First Round?

Hayley: At my core, I’m a problem solver. I love to take a difficult situation, break it down, and work with a team to figure out a solution, but most of my time now is meeting with founders who are looking for money, where their problem is that they need money and I can't solve that problem for them. That's a difficult situation that I put myself in with this role and I don't like saying ‘no’ 99% of the time like we are obligated to do. That's something that I have to live with.

Abby: If you had to pick one visual technology that you are most excited about coming to fruition over the next 20 years, which one would it be?

Hayley: I think about what computer vision can do and the cameras that are in our pockets. It's already come to fruition, but I'm just excited to see new applications of it.

Abby: Hayley, thank you so much for joining me today. It has been a pleasure chatting about all of the amazing things that you're doing at First Round and your experience going from founder to funder. I look forward to continuing the conversation!

Hayley: Thank you, Abby.

Hope you enjoyed this interview as much as we did.

LDV Blog