LISA: Hey, it's Lisa Chow, host of Startup. This is a rebroadcast from Season 2 of the show. That season, StartUp was following Dating Ring. A company that was different from other dating sites and apps because it used matchmakers, real people, to help its customers go out on dates. This is the third episode from that season, which I co-hosted with Alex Blumberg. And a quick warning -- it includes some explicit language.

So Dating Ring launched in 2013. Lauren Kay was the company’s CEO, and this was her second company. Her cofounder Emma Tessler on the other hand was new to entrepreneurship but loved matchmaking.

We’re picking up the story right after they finished Y-Combinator, YC for short. It’s one of the most prestigious startup accelerators in the country, and Dating Ring had finished with a bang. Nailing their pitch on stage in front of a roomful of investors. Emma was watching from the side as Lauren delivered that pitch.

LAUREN KAY: There is going to be a billion dollar company that provides on demand dates. And Dating Ring is going to be that company.

EMMA TESSLER: And Lauren killed it. Hearing the pitch was like looking up from all my work and like seeing this like beautiful thing that we'd built. I was like, “Oh this company sounds amazing.”

LISA: After the pitch, Emma and Lauren and their third co-founder Katie filed out of the auditorium to have a drink and mingle with investors. And this is a big moment. They had spent months preparing their pitch and now they were in this room schmoozing with some of the most powerful investors in Silicon Valley. It was a unique opportunity for a new start up like Dating Ring to come away with a lot of money. Emma ran into an investor she had met earlier in the day and they started talking.

EMMA: Somehow it came out that he was New York-based and he was like oh when we got back to New York we have to go out for drinks. And I remember thinking Usually when men say we have to go out for drinks it means it’s a date. But he's an investor and maybe people have investor meetings at bars over drinks and I'm sure if I was a man I would be like. Of course yeah we got to get drinks. So I was like yes totally like we should meet up for drinks. And he put his arm around me and and his arm landed on my boob. On my side boob. And it stayed there. He just sat there kind of like holding me and while he was holding me he's like you know what I'm going to invest in you girls 50K. I'll give you 50K to start and we will have a great relationship. And like this is going to be awesome. And like you and I can keep meeting up in New York since we're both in New York and we're like this will be great. And the whole time he's standing there with his hand there. I knew that I was definitely really uncomfortable. I was doing what I think a lot of women do which is convincing myself that it wasn't a big deal. I was like oh it was my side boob that's only side inappropriate. And I was like I don't know maybe it's not a big deal. Like maybe that's like a part of the body people touch accidentally a lot.

LISA: Emma didn't exactly know what to think but she knew she wanted to get away. She found her two co-founders who were standing in another part of the room.

EMMA: I went up to Lauren and Katie and I was like oh my God you'll never believe what happened. And it's interesting hearing because I told it to them and they were sending me to guy friends...and the men, our friends, were like, “What the fuck are you kidding me that's so unacceptable it's disgusting you can't take his money.” And I thought. “OK. But I don't know it's not that big of a deal.” And, of course, what a luxury that these guys have that they get to be horrified by it because it is horrifying. You shouldn't touch someone inappropriately and like dangle money in front of them you know that’s really fucked up. But it was amazing how long it took us to decide. I mean days we struggled with should we take his money should we not.

LISA: This wasn't just 50,000, right? This was their first 50,000. So on the one hand having money minutes off the YC stage would send a powerful message to other investors that you better get in on this opportunity fast. But on the other hand: yuck.

EMMA: And eventually we figured. $50,000 if we're going to be successful isn't going to make us. And if we get nothing else $50,000 isn’t going to save us. It's not worth it. So, we didn't take it.

ALEX: This was Dating Ring’s welcome to the world of fundraising. And in many ways things just got more complicated after that. There weren't any more handsy investors. But asking people for money can make you feel bad about yourself in so many different ways and it can raise questions you never thought you ask yourself.

LISA: Immediately after Y Combinator, Emma’s co-founder Lauren—like a lot of graduates of the program—made the pilgrimage to the heart of Silicon Valley. Her first meeting was with an investor named Ben Boyer. And after a few minutes of casual conversation he got right to the point.

LAUREN: He was like “You know I totally understand how it is being an entrepreneur I know you are going to so many meetings I just don't want to waste any more time. But I love to write a check.” He wrote a check for $25,000 after 15 minutes. And it was the best feeling ever. I mean it's so high and it's so addicting to be handed that kind of money and validated by someone who knows what they're doing.

LISA: After that first check of $25,000 more money rolled in. An early investor in Uber threw in 50 grand. A few more angels came in as well. And before long they'd raised $450,000

ALEX: At this point Dating Ring was following the script perfectly. Conventional wisdom is that YC is a big stamp of approval. Investors behave with something of a herd mentality and so coming out of Y Combinator that can act in your favor. You get momentum and you can raise all the money you need... in the first couple of weeks. Here’s Lauren.

LAUREN: And so if you can just ride that wave, like, you can ride it to a million or more. But a week after demo day even if you're not on that wave anymore, you're just crashing and crashing and crashing and then you're done.

LISA: There is a moment when you're not sure if you're still on the wave or not. But pretty quickly Lauren realized she had slid off the back. In just a few weeks, everything was different. Her investor meetings changed dramatically.

LAUREN: Hi! how are you? Nice to meet you.

LISA: This is Emma and Lauren meeting an investor named Somak Chattopadhyay. And he's pretty emblematic of a classic off-the-wave pitch meeting. They start the same way as when you're on the wave. Friendly chit chat and small talk.

SOMAK: It’s hilarious, right? It basically says that’s it, surrender… Winter, you win...

LISA: But then after 15 minutes, instead of the classic on-the-wave move of taking out a checkbook...Somak started asking some tough questions.

SOMAK: I mean, what is like... are you tracking right now daily actives and monthly actives?

LAUREN: Umm, that is something that we should be looking at.

ALEX: That is just one thing that Somak wanted to know. He also asked about their technology; their future hires; how they plan to acquire users.

LISA: And these kinds of questions started happening all the time with lots of investors.

INVESTOR #1: When you're working out what's your average cost per match?

INVESTOR #2: What are you burning right now?

INVESTOR #3: Have you launched any type of user acquisition campaigns through Facebook?

INVESTOR #4: Can you explain what part of the matchmaking process is technology enabled?

INVESTOR #5: You know, is it scalable when you have 500 matchmakers?

INVESTOR #6: How many part-time matchmakers do you have?

INVESTOR #7: I mean do you see this as a business where there would be an exit?

LISA: And these off-the-wave meetings, they ended all the time in rejections. Soft rejections. It's not exactly a “no I don't want to invest in your company because of X Y and Z.” More like “I've got some concerns. Let me think about it.” Lauren heard these rejections all the time.

INVESTOR #8: It's not quite set up to be a mass kind of volume business.

INVESTOR #9: I think the valuation cap is high. Umm from I guess an angel smaller investment standpoint.

INVESTOR #10: So let me look at the deck. You could send it to me. But having said that if you’re making a list of A prospects, B prospects and C prospects. I should probably be on probably the C list.

ALEX: Lauren keeps a spreadsheet with the names of all the investors who said no. I've seen it. It's not pretty.

ALEX: Wow. So how many people are in this spreadsheet?

LAUREN: These are only people of like rejected me to my face.

LISA: The spreadsheet has about 50 names and it's littered with notes like quote “Said he'd invest 25 K and never signed the paperwork.” “Ugh. Giant waste of time, kept saying he'd invest and never did.” And “went back and forth finally said no he doesn't do dating.”

ALEX: And then there's this one. “Gave us the A pass.” That's a shorthand for a dodge. I heard all the time when I was pitching my own company, Gimlet Media, the producer of this podcast. You can hear all about it in Season 1 of Startup. And the A pass is when an investor says I'm not investing now but come back and talk to me when you're doing your Series A. Series A is what they call the next round of fundraising after you raise your first initial seed round. A lot of companies don't even get to a Series A, they fail before that. And so Lauren had the same feeling I did when I first heard that line.

LAUREN: It was like, “Wow, he thinks we're so great that we're going to raise an A. And he just like he is he's just we're just a little too early for him. But like yay!” And so I e-mailed YC I guess to just ask about that. And they're like “oh yeah that's the A pass that's that's the most common pass. You just got the A pass.” And then I got it many many more times not always as nicely.

LISA: And one of the more frustrating things to Lauren about all this rejection was that it felt sort of self-fulfilling. A lot of the stuff investors claimed to want to see was stuff that Lauren could only build if she had money. Take for example this exchange between Emma and Lauren and the investor Somak Chattopadhyay.

SOMAK: Who's overseeing marketing user acquisition analytics? Do you all own a piece of that or is there someone dedicated to that function?

ALEX: Somak is asking about marketing. Who's going to be doing it for Dating Ring. And Lauren explains that there's a person she's planning to bring on board, a friend of hers from college. And this leads to a somewhat revealing misunderstanding.

SOMAK: She's looking at your data like your usage data and doing analytics, like doing statistical analysis stuff like that or...

LAUREN: Yea, she probably will be. Umm, I’m not fully sure. I mean she could probably do anything.

SUMAK: Right now what is she going to be doing?

EMMA: She’s starting next week.

LAUREN: Yea, yea…

EMMA: ...which is why our answers are so vague.

SUMAK: I’m sorry….

LAUREN & EMMA: No, no, no…

LAUREN: That’s been me on that side so far.

LISA: This director of marketing—Dating Ring was not able to bring her on board because they didn't have enough money. The Dating Ring founders had hoped to raise $1 million. $1 million would buy them a couple of engineers to help build out the technology. Some matchmakers and a marketing person to help them acquire new users. And they had raised less than half that.

ALEX: Before they slid off the wave. And what made all this worse was that the shift was so sudden and seemingly so arbitrary. In those first couple of days of fundraising investors had barely asked any questions at all. They just wrote the checks. But then after everything flipped there were no checks just lots of hard questions and often Lauren couldn't even get to a meeting. She got rejected before the meeting even happened, over email. For Lauren it was hard not to wonder why.

LAUREN: It feels like. You're in high school. And everyone's talking about you behind your back because all the investors talk and you don't know why anyone is saying no. And you don't know what they think of you. And why they don't like you. And you just start thinking all of the worst things about why it might be. I must be doing this wrong, I'm not confident enough or I'm not good at pitching my company. And then you start thinking "no one's ever going to like us or give us money."

ALEX: All this rejection— I know from personal experience—it can send you into this downward spiral. Pitching after all is all about confidence. And the more I would doubt myself or my idea or my pitching skills, the less confident I would appear and the more desperate. Investors like people everywhere can smell desperation. ‘

LISA: But amidst all those anxieties that all startup founders feel, Lauren had a question that was more specific to her. A thought she had dismissed up until then. The thought...am I getting all this rejection because my idea sucks or could it have something to do with the fact that I'm a woman. And once that question gets in your head it's very hard to ignore. Coming up we ponder that question and discover how risky just pondering that question can feel. That’s after these words from our sponsors.

BREAK

Welcome back to StartUp. I'm Alex Blumberg. And I'm Lisa Chow. And let's start the second half of this show with this.

LAUREN: I have struggled with writing this blog post for months. Unless I have an absolutely perfect indefensible business—which I do not—I'm easily written off as someone blaming my failures on my gender.

LISA: This is Lauren reading a blog post she wrote after weeks of unsuccessful fundraising.

LAUREN: One investor took me to lunch said he wasn't interested in investing and wanted to test the product out by going on a date with me. Another investor introduced me to a group of fellow investors as the beautiful CEO who has two other beautiful co-founders. Another investor met with my CTO, held off on investing, and then asked one of our matchmakers if he could be set up with our CTO or someone like her.

LISA: For months Lauren had been struggling with this question—Am I failing to raise money because I'm a woman?—but what prompted her to write about her feelings was an app that was making news all over Silicon Valley. It was called Secret and it had essentially become a Silicon Valley gossip site. People posted anonymously on all sorts of things. How much money companies were making; who had hooked up with whom. And there were a lot of threads about fundraising specifically women and fundraising.

Alex: And there were comments. Pretty ugly comments. Comments like these: “What are appropriate ways for a single high-powered VC CEO guy to transition a genuine professional meeting into a potential future date.” That had 20 likes. Here's another one. “Women are 3D printers of people.” We didn't get what that meant at first but he's saying basically having a baby is like 3D printing a human. Women are baby machines. That one had 456 likes. And then there's this one, which to read I have to use the F-word. Get ready. “I'm a male founder and if most investors were women, I would definitely be fucking them to raise money.” That one had 18 likes.

LAUREN: People were writing in like some of the nastiest shit and that was when I was like “Oh this is real. People think this.”

LISA: Lauren told me she struggled with how to write the post in part because blatant sexism wasn't the worst of it. A lot of the sexism was harder to pin down.

ALEX: There was this idea called pattern matching—it comes from computer science. But the way people use it in this context, is this way: When investors look at successful founders they see a pattern. Most of them are men of a certain type, from a certain background.

LAUREN: Do you look and sound like Mark Zuckerberg? When you're talking with someone you're looking for a pattern and you're comparing them to other successful people you’ve invested in. And you're an investor, you don't have to invest, it's not a charity. You’ve got a few minutes to make the decision and your gut says no without you necessarily realizing why.

LISA: Lauren thought, “It's not that it actually hurts to be a woman in fundraising but that it helps to be a man.”

ALEX: And there is data that something like this is going on. In one study for example men and women delivered the identical pitch to a group of investors. The men were 40 percent more likely to receive funding. Another study showed that 85 percent of venture-backed companies do not have a single woman on the executive team. And less than three percent of venture backed companies have a woman CEO. Three percent.

LISA: And yet I talked to lots and lots of women and although they agreed, “Yeah there's a sexism problem in Silicon Valley.” They were pretty divided on what to do about it. Some felt like Lauren. We should try and point it out. Call attention to it share experiences. But others felt like “No, just let it go.” Dwelling on it, talking about it, even acknowledging the differences you face as a woman isn't really going to get you anywhere. And worse: it can backfire. In fact, one of the women I talked to in this camp, the opposite of Lauren camp, was Lauren's co-founder, Emma. She remembers Lauren's blog post.

EMMA: Yeah, I remember reading it and I was concerned about it -- it reading like an excuse. You know. Even though a lot of these instances are like clearly sexist. Right. And even though they're true. I don't think the reason we didn't raise is because we're women. Right. Like I 100% don't think that. And if it is because we're women, there is nothing we can do about it so it's not a helpful critique. You know and there doesn't seem to be any point for us to leave a meeting and sit around and feel sorry for ourselves because “Ugh, we're women and nobody takes us seriously.” Like there is a lot that we could do better. And so I want to focus on that.

ALEX: But even Emma wasn't immune to the complicated emotional responses to being a woman in Silicon Valley. For example, a site called Gutsy Broads had put out a call for essays from women about a time that they did something gutsy. Lauren went to Emma and said you know we turned down that money from that guy the handsy investor— that was gutsy—why don't you write about that? Emma hesitated at first, but eventually she did. She read a section to the other Lisa... Lisa Pollock.

EMMA: It was a big decision to make and I couldn't stop questioning whether I was exaggerating what happened or being too sensitive. My co-founders immediately assured me that wasn't the case and though we could not take the money. They said it was ridiculously inappropriate that our relationship with him would only get worse and that we should hold out for better investors to partner with. And so the next day I sat down and wrote the investor an email. I told him that while we appreciated the offer, we were being very strategic about which investors to partner with. It felt pretty gutsy at the time, but since time has passed I couldn't be more confident about the decision.

LISA POLLOCK: Why did you just laugh?

EMMA: Well, because I am not so confident about the decision. I’m gonna cry. Sorry.

LISA POLLOCK: I’m sorry.

EMMA: No, it’s fine. I feel really stupid about it. I feel really -- really embarrassed for not taking the money, like maybe I made too big a deal of it and maybe it wasn't an issue or maybe like this is just how the world works then I'm like being a baby about it. And I feel that. But but intellectually I know like if you told me that that happened to you I would be like, "What the fuck. Like we have to tell everyone he's a creep like, you did the right thing." You know like I know what I would say to my friends if they told me that story.

LISA: For Emma. sharing her story with the world was scary. What would happen next. What would the reaction be. Emma had also posted her article to an influential tech site in Silicon Valley called Hacker News

EMMA:...and it got 720 comments all of which I read. You know they were mostly they were mostly really good. Mostly people being like “This is really brave of you to put your name on this. This guy's disgusting. There were a lot of people who who were criticizing me for not having done more. They said you have to name him. This isn't this is cowardly. You have to name him you have to protect other women from him. Why didn't you tell him why you didn't take the money. What all you did was like turn down $50000.” Also a number of people who were like “$50000 that's not a lot of money.” I was like, “ugh, fucking Silicon Valley. Yes it is.” And then there were people who said well he probably didn't know he was touching her side boob. That's a really easy mistake to make. I'm sure I hug people and accidentally leave my hand somewhere and like I'm sure he didn't know and like that's ridiculous and He didn't really do anything wrong. Although to be fair there were much fewer of those. And then there were a lot of commenters who immediately you know sort of responded and said, “like are you kidding me. Like fuck you if you ever touched a breast because you know when you're touching one.” That made me feel better.

LISA POLLOCK: Did you feel glad you've spoken out?

EMMA: Yea, I did feel glad because there were a couple people who said like, “My wife experiences this in Silicon Valley” or “my wife experienced this in med school” or “you know my girlfriend tells me about this all the time but like I didn't know what happened to so many other people.” And and then a few women saying like, “Yes, I have such a similar story.” In fact, a lot of women e-mailing and saying almost the same thing happened to me. That made me feel like I did the right thing.

ALEX: Meanwhile Lauren, the one who pushed Emma to write about her feelings, never published her own post—the one she'd read earlier about whether sexism affected their fundraising. Over the months that she'd been thinking about that post her attitude had started shifting and then she had this epiphany at an event for women in tech called the Female Founders Conference which was put on by Y Combinator.

DANIELLE MORRILL: Wow, this is awesome. There are so many women in the audience and I am so happy to be here with you.

LISA: This is Danielle Morill, the co-founder of Mattermark, a company that provides information about startups for investors. And she was one of a bunch of women founders and executives at this conference offering tips and support and encouragement for the audience.

DANIELLE: And if you don't get an offer. Just keep assuming you're going to get an offer. Like, kind of stay a little bit entitled. I mean we got nos way more then we got yeses. 80 percent of the time. We just kept thinking—yep, well the next one could be a yes. Just keep going.

LISA: Not all that was encouraging to Lauren. Some of their experiences were quite different from hers.

DANIELLE: I kind of love fundraising.

FOUNDER #1: We have raised one point seventy five million dollars to date.

FOUNDER #2: 3.1 million.

FOUNDER #3: ...more than six million dollars.

ALEX: But mostly it was women on stage sharing stories of their struggles; their setbacks; sharing tips and hacks for how to sequence investor meetings; how to prepare for a pitch. And then there was one piece of advice that really stuck out for Lauren. It was sort of pivotal for her, actually.

MARAN NELSON: Hi I'm Maran. I am the CEO of Clara Labs.

ALEX: This is Maran Nelson whose company came out of Y Combinator in the class right after Dating Ring.

MARAN: Just to make sure that I say this. I think it's probably the most important thing I've learned about fundraising. Like all these other strategies and like hacks to X or Y or secondary entirely to just really fundamentally believing in what you were doing. Like knowing that it is good. You have to know that what you were doing is good in that it needs to exist in the world. Because if you know that, then you are already setting yourself apart, because very few people actually know that what they're doing is great.

LAUREN: And she said that and I was like, “Oh wow what great advice.” But shit. I don't have a great product and you probably do. And then I was like sitting there googling Clara Labs and I was like so cool. Artificial intelligence. But I was like you're right about that confidence. But I couldn't fake that. I didn't have a great product that everyone was raving about. And I was like fuck, you know that that also was a big part a big hurdle for us with fundraising. Our product wasn't at the stage that we really believed in it.

ALEX: Dating Ring still didn’t have a product that worked well. They still weren't growing. They were burning through money. Lauren knew all that. But hearing Maran talk, it brought it all into clearer focus. And it made her realize something: It's true. The deck is stacked against women. But it's also true: women with great companies, they can still succeed.

LISA: So that was what Lauren decided to focus on. Making her company great.

LISA: Thanks for listening to this rebroadcast from Season 2 of StartUp. To hear the rest of the episodes about Dating Ring, go to our feed in Apple Podcasts or check out the show at the Gimlet Media website, Gimlet Media dot com slash startup. And be sure to listen to next week’s episode, when we’ll go back to the Dating Ring founders and see where things stand now.

EMMA: I feel like really self-conscious of vocal fry all of the sudden because I haven’t been taped in like two years. And I’m like “Oh shit, I forgot how get my voice to like do the thing that makes it sound not annoying.”

LISA: That’s Emma, whose voice … for the record ... never annoyed me. She’ll be back on the show next week. And so will her co-founder, Lauren.

LISA: This episode of StartUp was reported, edited and produced by Lisa Pollack, Kaitlin Roberts, and me, with help from Caitlin Kenney and Phia Bennin.

Mark Phillips wrote and performed our theme song. Build Buildings wrote and performed our special ad music. The Rev. John DeLore mixed the episode. Season Two of startup featured original music written and performed by John DeLore and his band Hot moms dot gov.

I’m Lisa Chow. See you next week.