Morgan Stanley
  • Access & Opportunity Podcast
  • Sep 23, 2020

Deciding on Diversity—and the Bottom Line

Hosted by Carla Harris

Carla speaks with VC Miriam Rivera, founder of Ulu Ventures, and Ritu Narayan, co-founder of Zūm, a new kind of ride service for kids aimed at families and schools. They discuss their journeys and how a consistent model of decision-making can lead to better choices, help level the playing field, and increase entrepreneurial and business diversity.

On this episode of access and opportunity we welcome investor Miriam Rivera, co-founder and managing director of Ulu Ventures. From career attorney to investor, Miriam has committed to investing in early-stage technology companies and has made diversity an essential part of Ulu’s investment thesis. We also hear from Ritu Narayan, founder and CEO of Zūm, a company in Ulu’s portfolio that provides a new kind of ride service for children, serving thousands of schools in hundreds of school districts across the country. In this episode, Miriam and Ritu guide us through their journeys from corporate executive to investor to CEO, and explain why empathy is such a key component to the founder-investor relationship.

Episode Transcript

Ritu Narayan: My leadership style is excellent decision-making. You write down everything analytically as well as emotionally and get over it, and then make the best possible decision in the moment. In the moment, what is it that we need to do to put this venture or enterprise that so many people have been part of to give the best possible outcome?

Carla Harris: On this episode of access and opportunity we welcome investor Miriam Rivera, co-founder and managing director of Ulu Ventures. From career attorney to investor, Miriam has committed to investing in early stage technology companies and has made diversity an essential part of Ulu’s investment thesis. We will also hear from one of the founders in Ulu’s portfolio, Ritu Narayan, founder and CEO of Zum, a modern ride service for children serving thousands of schools in hundreds of school districts across the country. In this episode, Miriam and Ritu guide us through their journeys from corporate executive to investor to CEO and explain why empathy is such a key component to the founder / investor relationship.

Come on and join me for the ride. So how are you today, ladies?

Rivera: Great. It's wonderful to be here with you, Carla.

Narayan: I'm super excited to be with Carla and Miriam together.

Carla Harris: Well, thank you. So why don't we start with you, Miriam. Tell us a little bit about Ulu. How'd you get started? How did you come to focus on increasing diversity with women and folks of color? And I guess what I really want to understand is were you focused on making sure there were more women and people of color as founders who were funded or were you really focused on trying to change the landscape in technology and increase the diversity there? Because you're a lawyer by training. So how'd you get into this game?

Rivera: Well, actually what got me started thinking about diversity and its impact on higher returning companies, higher performing companies was my experience at Google, where I was vice president and deputy general counsel for the company. And we built one of the most diverse teams in the legal area in the entire United States. And I think it was because of that diversity that we were so high performing as a team. The thing that I think people don't realize is in the early days, Google was actually a relatively diverse company. If you look at the 13 original vice presidents, three of them were women, two of them were immigrants. The first general counsel was African American, the first CFO was Cuban American. So it had a highly diverse team. There were a lot of women that were actually in the next tier down within Google that were running a lot of the day to day functions within the departments.

Rivera: And I think that was actually part of why we were really successful is that we did have combinations of different races, different gender working together.

Harris: Okay. So what was it about that experience as general counsel that made you say, when I think about Miriam 2.0, she's going to be an investor. How did you come to start your venture firm?

Rivera: Well, when I left the deputy general counsel role that I had at Google, I thought I would just become a general counsel somewhere else, then I quickly realized that I'd already had what I think is the most exciting job that I could have had as legal.

Harris: I would agree with that, Miriam.

Rivera: It was a very fun time to be a part of that company. We grew from like 85 million to $10 billion in revenue and I worked on the first $14 billion worth of deals for the company. So it was a very fun time to be there. And when I left, I thought I wanted to be in a high impact role and didn't see other departments that I could have run as being as interesting as what I'd already done. So I started looking for how else will I use my skill sets? And venture capital was an area that I had both studied in school. I'd worked in a law firm where we worked with emerging companies and with venture capital firms, but I really wanted to focus on increasing diversity among founders. And I realized that going into a bigger firm was probably not the way that I would get the ability to do that so I started my own firm.

Harris: Yes. So let's talk about your journey in terms of raising capital. First of all, there are not a lot of women who are founders of VC firms, number one. Number two, they're not a lot of black women who are founders of VC firms. So did you sell fund, or did you have a few partners where you could do a club deal and put together your first fund, or did you have to go out there and raise capital and solicit folks? And what was that like?

Rivera: So initially, we did use our own capital. So Google was a very good place to be financially as well as professionally. And so I used some of my Google exit to start Ulu Ventures and start developing a track record and start developing a set of portfolio companies that I thought would exemplify the work that I wanted to do, which was to demonstrate that diverse teams would outperform financially. But because we started our own fund, we could take the time to develop our methodology for making our investment decisions and that track record. And once we felt comfortable that there really was a performance benefit from that diversity, we went to market and actually raised from institutional investors. Our first fund was closed in 2016 and that was a $66 million fund that actually exceeded our target of $50 million.

Harris: Wow. That is outstanding. Now, you've been known to have a data-driven process that you say reduces cognitive bias. So before we turn our conversation to how you and Ritu got together, let's talk about that. Why do you think your process reduces cognitive bias?

Rivera: Well, decision analysis is a framework that was developed at Stanford University and Harvard University in part to reduce miscommunication and bias in making complex decisions. Initially, it was used in the space race. We were trying to get into outer space. We had all these different teams working together and they had to be able to communicate and maximize the chance for example, that a rocket would land in the right place and that the astronauts could be recovered and brought to safety. So that process is something that grew into decision analysis and we're applying it in venture decision-making. One of the things that it does is make sure that you're concrete about what it is that you have as your criteria. It also makes it really clear that you're asking the same types of questions from all comers.

Rivera: And there's a lot of research now that is showing people ask different questions of women than they may ask of men when they're seeking investment, and also that people of color will receive fewer positive body signals in those interviews. And so what we're trying to do is both make the process more clear and the criteria the same for everyone, the same kinds of questions, the same way of evaluating a company. And because we try to have a diverse team, we think that we're also giving people hopefully very positive body signals as well.

Harris: Well, that's a signal in itself because the people that they see when they come into your office are diverse. That is a signal, I would argue, and a clear playbook for other VCs who are trying to figure out how they can increase their pipeline of companies that have been founded by women and multicultural entrepreneurs. It seems like that's a critical part of your playbook and you've been very intentional about that.

Rivera: And I think there's a real focus on developing empathy with companies, just like people in design thinking now talk about building an empathy for the customer and into the product. A lot of the traditional way of looking at an investment opportunity is like, how quickly can you get to a no and having somebody prove their idea. When we go into a meeting, I'm thinking, how can I be of service? How can I help this entrepreneur? The fact is 99% of the time, I'm going to say, no, but can I actually do something that adds value? Can I help that person? And can I help them understand that I've got to make a decision with a limited amount of time and information? That doesn't mean you won't be successful, I hope you will be success.

Harris: Yes. Well, I tell you, you're a woman after my own heart with the, how can I be of service to the person on the other side of the conversation with you? So Ritu, tell our listeners, what is Zum?

Narayan: So Zum is a children's transportation platform. We save schools money and saves families time by using technology. And it has been highly successful in the last four years. We started out as a direct to parent platform, serving parents directly. And very early on, we identified school transportation as being the very big part of the ecosystem. And it's very broken, 80 years old, antiquated system. And because of which parents end up having a lot of burden and feel like there is an issue. So, very early on, we started partnering with schools, and today we have over 4,000 schools, over 250 school districts on our platform. We have saved millions of dollars to school districts.

Narayan: So the possibility of what we can do, we are so excited about it and what we can bring to people in terms of providing superior experience to children and saving them time for the commute, so that they're ready to learn and be engaged in the classroom. And at the same time, providing full visibility to end to end to all stakeholders and providing accountability into the process, using technology.

Harris: So your customer is the school and not the parent? Talk to us about how it works.

Narayan: Yes. So now our customers, basically school districts, they sign the contract, transportation contract with Zum. And the different thing about Zum is, earlier, there was only one mode of transportation called school bus, which actually works for a large part of the problem. But the issue is that many times the school buses are very highly inefficient and they are under utilized. So it's a waste of an asset sitting on the platform.

Narayan: On our platform, you can have any size of asset. Our technology will optimize and give them recommendation of how the right route should be structured and what kind of different format of assets can be on the platform. And when the routes have to be in the [inaudible 00:01:36], we make the transportation available, or the other vendors plugin into our platform, and end to end, essentially parents sign up, they have full visibility of where the child is. If they are onboarded the bus, if they offboarded the bus, all of that is there.

Narayan: And the schools are able to save tons of money because they don't have to deploy a school bus, even when there are only five children going on a route. So all the routes are very highly optimized for them. And now with the COVID-19 coming in, we are very, even more relevant because we are able to provide that flexibility.

Narayan: Now schools are talking about having double shifts to reduce the number of kids in one specific shift and in a normal environment, they would not be able to dynamically and very quickly adjust to this problem and create dynamic routes. It takes them months, but for us, within days, within hours, we will be able to provide them with how the route should be created and how the seating should be there in a vehicle, keeping social distancing in mind.

Harris: Yeah. So if they are not on the bus, you can effectively have a car, if you will, pick them up and make sure they get to the right place. And it's all through Zum, is that right?

Narayan: That's correct. It's a door to door transportation.

Harris: Okay.

Narayan: You'll know exactly when the child is picked up. They can provide special instructions. If the likes certain things, those instructions are there in terms of conversation. And because there is a very small pool of personalized driver for a child, there's actually a relationship. It's not like they are getting a different person every day. There's a relationship aspect for the children and their growth.

Harris: Oh. So I can have Ms. George every day or every time I need a car and not the bus. It's Ms. George that's going to pick me up.

Narayan: Mm-hmm (affirmative).

Harris: Oh, wow. Well, it's clearly a great company. And certainly one that I would say is tailor made for this time. So let's talk about how you met Ritu. How did that happen?

Rivera: So, I was at an event, Ritu's brother was present, [Vivek Garg 00:03:41] and he came up and spoke with me afterwards. And later on, he told me when he went home and talked to his sister, he said, "Ritu, I have found the person who's going to be your mentor. And I want you to meet her." And we got together that weekend and started talking about their business and really quickly realized that Ritu was really onto something that I thought was impactful, both in terms of getting children access to safe transportation to and from school and after school, as well as really having the potential to help women have a more level playing field at work. Because they're often the ones that are in charge of transportation, getting kids, after school activities, et cetera. And that can sometimes be a problem when you're trying to be the best that you can be at work too.

Harris: Was she fundraising when you met.

Rivera: The focus wasn't necessarily on fundraising when we met, because her brother really just thought that we needed to meet because I totally got the problem. I had literally been the parent who was the last one to pick up my kid or something came up at work and I'd get to the daycare center and be feeling like crap as a parent. And I really thought that this was a really interesting idea and that so many people would use it. But I also knew that a lot of people in venture capital might not get it because many of them are from a different generation where their wives did not work. And now we know, 70% of women with young children are working.

Rivera: And so this is the kind of thing that maybe another VC wouldn't necessarily relate to, but that I could totally see why it would be such a big market.

Harris: The reason why I asked you whether or not she was fundraising is so often, as you know, part of the issue with being able to get access to capital as a founder, any founder, is being able to be in the right relationship circles. So what I was trying to get at was whether or not you guys built a relationship first, without there being a conversation about fundraising, and then the relationship was there when she was ready to fundraise, or were you coming in as an investor who needed to sell herself? Because as I like to say to founders, all money is not created equal. All capital is not created equal. So you should be, despite how bad you might need it, you should be a little bit discriminating about the capital that you take. So I was trying to figure out what the dynamic was.

Rivera: Yeah. And she wasn't necessarily fundraising, but of course, as soon as I heard about this idea, I was thinking about investing.

Narayan: As Miriam rightly pointed out. My, my brother Vivek was, "This is it. I have found the best person. You've been looking for somebody and I've found them." How do you get such a person who works from their heart and emotions, is thinking about the social impact of the issues and at the same time, very rigorously analytical. Three degrees from Stanford and such accomplished, such a great combination.

Narayan: But I think Miriam, to remind you, we raised funds a few months after. We were raising funds with Stanford Angels and Entrepreneurs, and it's an amazing group. But there was no woman. When we pitched Miriam wasn't there in the room. And one of the person from there who has been also our advisor and investor ever since, he gave us insight that you have to meet Miriam.

Narayan: Miriam is not here today, but she would instantly know about the problem and her fund has a right fit. So we went in, met with Clint and Miriam and as Miriam rightly pointed out, most of the questions before that were, I was always starting from deficit but because people were asking, how would you deal with the challenges? All the questions are trying to limit and not talk about the big opportunity, which is there. Every family has children. There are 55 million kids in the U.S. There are 20 billion trips happening per year, but nobody was focusing on that aspect of the magnitude of the problem, but more about what were the constraints? What would you do if you fail? What would you do if this happened?

Narayan: And that was a very different process. I can tell you firsthand Clint and Miriam, pretty much filled two white boards in a room, drawing a decision analysis and getting all the data and everything happened. But at the same time, that connection of Miriam as a very high profile executive going through it with her two daughters, it was almost like a panel story. Like my story, I used to pitch exactly that I have two kids and I'm executive at eBay, and this is what I'm facing. And Miriam was exactly a parallel universe at Google and in her life. So there was a deep connection at the problem level. And Miriam was the largest angel investor in the seed round. And she was the first woman investor.

Harris: So tell me, I want to hear more about the company, but while we're here, I want to talk a little bit about the differentiation and the process, in terms of your raising money before you met Miriam. So can you give our listeners a sense of some of the questions? You already started there, saying they were more focused on the problems and the competition and how you as a founder might react, but what were some of the other questions that you received? And the reason I want to go here is that all the research says that women and folks of color receive different types of questions than someone that does not have that demographic profile. So can you talk a little bit more about the differences in the questions, and what you think people might've been trying to get at? Because I am often amazed as I hear the questions, and so what would they try to figure out?

Narayan: They were questions about the risk in the factor. Like trust and safety was a big risk, or if one incident happened, what will you do? It could just tarnish the brand for the whole company. "What if there are two big players in the market?" Instead of talking about the opportunity of how unique the problem is, and you have to build something from grounds up, which is actually solving the needs of family, it's not like you have a car and a driver, and any car and a driver can suit the needs of a family; the needs a very different, like we had built trust and safety from [inaudible 00:18:55]. We had small pool of drivers. We had familiarity, we'd hire drivers only with childcare background. We went to extreme cases for vetting of the drivers. All the drivers were fingerprinted background check, but nobody would focus on that and the opportunity, but they would focus on all the things that could go wrong. And what happens in that scenario is- you feel yourself limited, and it's not your issue is the issue with the questions, because you're not sure if somebody would take a big bet on you. That's the key difference. And trying to point out is just the nature of the questions can put you in a very different bucket of your dreams, and what you're trying to do.

Harris: And frankly, it can put you in a different mindset in the moment while you're trying to pitch, if all that they're doing is focusing on the negatives and not on the magnitude of the opportunity. That is definitely unique. No question about it. Well, you referenced COVID-19, so let's talk a little bit about that. So it sounds like you're one of the companies that will actually benefit on the other side of this as we have a new norm. So talk to us a little bit about how you thought about it right off the bat? Because I would imagine you would have been thinking a little bit differently, right? You would have said, Oh my goodness, kids aren't going to school, they don't need transportation, what does that mean for us? So when you first realized that this was a real thing, and a serious thing, talk to us, Ritu, about how you started thinking about it, and then I'm going to come to you Miriam and said, how did you think about it? How did you think about the other companies in your portfolio? And how were you making decisions around capital allocation in that portfolio? So first you, Ritu.

Narayan: Yeah, so given that we work so closely with districts, we realized very early on that the schools are going to be closed. At that time, our estimate was they will be closed for two to three weeks, maybe til middle of April, and we did not estimate that this will be such a long closures. But at first reaction for me personally, the thing that was very shocking was it would seem very easy; okay, kids are in school and now they can have remote learning through internet, my two kids at home are having remote learning, but very quickly within a week, it became that it was a nightmare for school districts to provide remote learning to all the kids, because of the inequality of access. Kids not only don't have internet; they don't have physical infrastructure at home to study on a laptop. Maybe three kids are sharing the same laptop. They're having fight. They have a class at the same time. They don't have laptops. They don't have instructional material.

Narayan: And the bigger problem is, the schools are also an infrastructure that provides them the healthy meals during the day, and that's how the kids are nourished. And suddenly that complete infrastructure overnight got wiped out. And actually I called Miriam and we discuss this, we're aware that these are the different options, and what could we do, and turned out from Miriam's personal experience also, we were leaning towards that direction. Immediately our reaction was: how can we help now? And we started working with foundations and school districts to reroute our network of drivers and the infrastructure to deliver meals.

Harris: Oh wow.

Narayan: And special materials too. So instead of taking the kids from home to school, and school to home, we started doing the other way; taking the materials and the meals from school to the home. That turned out to be a very successful format in the interim, because it was really helping the school district. The food was available, the foundations are donating food, but the delivery was a big issue.

Narayan: Then as the things cooled down, then we started thinking about how would this change our world? Essentially, what would that mean? And now actually we are very actively working with districts, "What does back to school look like to you?" And interesting thing is that unanimous agreement among districts is that the school infrastructure and the physical infrastructure is very critical to the development of the kids. That is the place where equality shows up, everywhere. It doesn't matter from where you come, you have the same resources, same playground, same meal, same things, and that's a very critical resource, so districts cannot wait to come back. And we are also actually working very hard to support them as they come back to us.

Harris: Yeah, off top of my head without even thinking through it, it sounds like it would mean more capital for you, because you would need a bigger fleet and more drivers is that fair?

Narayan: We actually use the existing infrastructure of other vendors, but what that would mean is much more technology development from our perspective, and much more faster development, to be able to support the entire infrastructure, and use them more efficiently. Our goal would be without adding more buses, how can you use the existing infrastructure more efficiently?

Harris: And you still want to keep the same claim with respect to the quality of your drivers and everybody being child-friendly, et cetera, et cetera. So that's why I said, growing your fleet or infrastructure is going to be important

Narayan: And Carla, I have to comment that that was a very opportunity-oriented question that I really liked. Instead of asking me about, "So what is the constraint you would be facing in this new environment?" I love that.

Harris: I don't know. It must be my gender, my demographic, I don't know maybe?

Rivera: But I think you see both how is trying to reduce the stress on the schools and the parents.

Harris: Absolutely.

Rivera: And she's being of service in the community. In addition to building a much more capital efficient business, because she doesn't want to be owning big fleets of yellow buses; she wants to just operate this existing infrastructure using technology way more capital efficiently.

Harris: Absolutely. So Miriam, tell us a little bit about how you felt when you realized that this was a real thing. And how did you start thinking through your portfolio and capital allocation?

Rivera: So that's a pretty big question. So we have a large portfolio construction. We have about 72 active companies in [inaudible 00:24:56]. And with COVID, one of the things that happened is, obviously some companies were very dramatically impacted. This is the first time in a hundred plus years that schools have closed to the extent that they have. And so, we had different ed tech portfolio companies that we were talking to, and some of them were at zero revenue. And so it's been a big triage experience to understand how can we help them. Some of them actually do have to cut staff during a time when they have no revenue. Some of them have to make the decision of, are they eligible to apply for the PPP, and there's a lot of complications that went along with that for startup companies, because certain rules would have them affiliate the employee base of their investors and their other portfolio companies.

Rivera: So we were looking at very complex issues on behalf of our companies, and trying to advise them how to think about the Paycheck Protection Program, and the pluses and minuses of applying for it. We were also making decisions as a large number of our companies, about 21 companies in less than two months initiated new fundraising campaigns. And we had to make decisions about all of those, and we, again used our decision to dialysis and hurdle rate process to make those decisions and try to quickly get capital into the hands of companies that needed it the most. And that we felt still had a lot of the upside possibility of companies like Zum. And then, we were basically also providing some level of just emotional support. You know, this is one of the hardest things you ever have to do as a manager is lay people off or furlough people. You know, sometimes, like we had a company that was in the middle of fundraising, some of them had investors renege, and they had to restart their processes. Some of them had a company that was for sale and guess what? They didn't get what they would have liked given the changing circumstances, and so we're literally on the phone sometimes just crying with some of our entrepreneurs because they're going through a lot of hardship too.

Harris: Yeah. What have you told them about leadership in this time? Because many of the entrepreneurs that are in your portfolio are young. They haven't seen the cycles that we've seen after having a 20 plus year career, and like you say, they have to now be faced with these tough people decisions when they really haven't been trained as people leaders, if you will. So what are you telling them are the most important things that they can do? And Ritu, how have you thought about that as a leader? So Miriam, you first.

Rivera: Some of the things that we try to tell people is, as a leader, one of your jobs is to actually prepare for the worst and hope for the best. And so, you're trying to make sure that the long run of your company, you still can actually pursue the opportunity you set out to pursue. And that means that you've got to make the best stewardship of your financial resources, but you also can't be shortsighted. You need to be thinking about your talent and how you're going to keep access to your most talented people because even though there may be a down-market and there's a lot of unemployment, the best people are hard to replace in any business and very costly to do replacements. So we try to help them balance those interests in terms of keeping the right folks and really building a foundation for the long-term success.

Harris: Yes, absolutely. And Ritu, what about you? What leadership playbook points would you give us? How have you thought about yourself as a leader during this period or changed anything about your leadership style?

Narayan: With six months of revenue being lost pretty much, we had to rethink how best to make use of this crisis that we have and turn it into an opportunity. And I really like, Miriam, your hashtag where you say, "Lead boldly." You have to make bold and decisive decisions. You can think a lot about what are your options. And we have made some amazing decisions, to the point where people would have thought that we would be the most impacted company by school closures, to people actually commending us and saying you are one of the top portfolio companies in terms of how you have come out of this crisis and shown that you are the only good news in the portfolio. You are one of the very few good news in the portfolio. But it does actually to very directly ask from my leadership style is excellent decision-making. You write down everything analytically as well as emotionally, and get over it and then make the best possible decision in the moment. In the moment, what is it that we need to do to put this venture or enterprise that so many people have been part of to get the best possible outcome? Because even the employees who are no longer there, you are basically answerable to them. They have devoted time to your venture. You're answerable to your investors, your customers, everybody, all the stakeholders. So again, I like Miriam's hashtag, lead boldly.

Harris: I do too. So Miriam, you have another disciple. I'll be using that one, you'll see.

Rivera: Well, I think you've led the way, Carla. You've actually been doing that for a very long time.

Harris: Just a little bit, just a little bit. Well ladies, this has been phenomenal, a phenomenal conversation, and I can't wait until our listeners have a chance to get exposed to this conversation. We have a tradition on Access and Opportunity where we do a lightning round. It's just a bunch of fun questions where you answer whatever comes to your mind first, and it's an opportunity for our listeners to get to know you a little bit more personally. Are you ready?

Rivera: Great.

Harris: Okay. Miriam, I'll start with you. Reading a book or binge watching television?

Rivera: A book.

Harris: Okay. Office or working from home?

Rivera: Office. I hate the laundry. It's there waiting to be done.

Harris: I hear you. Coffee or tea?

Rivera: Coffee.

Harris: Email or phone call?

Rivera: Actually like phone.

Harris: Okay. One word to describe your legacy?

Rivera: Fairness.

Harris: Fairness. Okay. All right. Excellent. Okay, Ritu. Reading a book or binge watching television?

Narayan: Book, definitely.

Harris: Okay. Office or working from home?

Narayan: Working from home. I'm totally converted.

Harris: Okay. Okay. Coffee or tea?

Narayan: Tea.

Harris: Email or phone call?

Narayan: I like email, asynchronous communication. I like that.

Harris: Okay. One word to describe your legacy or you can use two?

Narayan: I am stealing from Miriam, lead boldly.

Harris: Yes. All right. Well ladies, stay safe and stay well, and Ritu, I'm going to be real excited to see what's happening with Zoom because I think as you have defined it, you do have a new opportunity that you would not have been exposed to had it not been for this pandemic. And thank you, thank you, thank you for this conversation on Access and Opportunity.

Narayan: Thank you.

Rivera: Thank you, Carla.

Harris: Thank you all for joining us for this episode of Access and Opportunity. In our next episode, we'll be joined by investor, Soraya Darabi, founder and general partner at Trail Mix Ventures, and entrepreneur, Sarah Sheehan, the co-founder and COO of Bravely. You won't want to miss it. Please remember to share your thoughts and feedback with us at I can't wait to hear from you.

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