One year on from the launch of the Newton Venture Program, Lara Pawade sat down with Newton founder, Lisa Shu to discuss how the Newton Venture Program was created, about our mission, and how we do blind hiring.
I’d love to hear about your career journey to date up until creating the Newton Venture Program.
I started out in a very linear career. After my undergraduate education in psychology and economics, I basically went straight into a PhD program to pursue my doctorate in organisational behaviour. I decided in my early twenties that I was going to be a lifelong academic, and I pursued that track for 12 years – all the way to the level of tenure-track professor. I earned my doctorate in behavioural decision making, specialising in decision biases, which I still find super fascinating! But, as I progressed and I was approaching my tenure review, I found myself increasingly frustrated by the lack of impact that I could make within the academy. So all the research that I would publish, even when published in the most high-impact journals, would all disappear behind a paywall. It’s extremely frustrating to do applied social science research, but not see it achieve any impact in the real world.
During this time, I was teaching MBA and executive education students at the London Business School. Before that, I was teaching MBAs at the Kellogg School of Management. In the eight-year period that I was faculty at Kellogg and London Business School, I noticed a shift in what my MBA students deemed to be the most desirable jobs. When I first started teaching MBAs, their most desired jobs upon graduation were predictable: banking, consulting, or big corporates. By 2019, when I left my professorship at London Business School, it had dramatically shifted. People wanted to work in tech startups: the smaller, the better! And in the realm of finance, rather than traditional investment banking, people wanted to pursue venture capital with even more appetite for risk than private equity. So, it was a really interesting shift in mindset from my students.
Where you can make an impact has shifted over the decade since I started my academic career. People really saw venture capital (VC) as this specific corner of finance that could make a huge impact, both in terms of creating meaningful solutions that solve people’s problems and of impact on their own long-term financial well-being. It was surprising. I thought I was teaching my students but actually, they were teaching me!
What do you think were the main driving forces behind VC becoming more desirable?
Over the last decade, there’s been a great shift in the macroeconomy. We’re in the longest-running bull market in the public equity space. In the private equity space, the pace of tech advancement and the number of problems that have tech-enabled solutions has exploded. VCs always speak about the exponential curve and exponential progress. Most of the time, it’s unlikely that we can go on this exponential curve forever. But, I do believe that we are in the midst of a step function in technological advancement, not just in the development of new software and hardware, but also in life sciences, biotech, genomics etc. These seeds have been planted for a long time. For example, all the brilliant research that has been incubating in universities.
When you combine the seeds of innovation with this increasing pool of private and public capital, you supercharge innovation and actually create products that can create solutions for the problems that we have. It’s a very exciting time, but it’s also very tumultuous. With a lot of wins, there’s also a lot of failure! But that’s the story of innovation.
How did you end up starting the Newton Venture Program?
In my negotiation classes, I’ve always taught to never leave a job without having your next one lined up. You always need another option because having options gives you power. But, I didn’t take my own advice! I left my faculty position without the next role lined up. I really wanted to push myself to not compare with exactly what I had, which was a very stable, flexible, and esteemed position that I could inhabit indefinitely and where I grew to be too comfortable. So, I intentionally wanted to insert some discomfort to push me to explore options that I wouldn’t directly compare to being a university professor. My academia colleagues couldn’t imagine taking such a leap into the unknown and would ask me: “Are you already independently wealthy?” I would say: “No, I’m not, but I may be overconfident – and impatient too!”
In that uncomfortable space, I really pushed myself to think about the skills I had. I had behavioural science and teaching pedagogy skillsets and so I applied these where I could achieve the most impact. I began working with a few startups and this is how I discovered the venture ecosystem. I started out in an advisory capacity, helping them design nudges to promote behavioural change. For example, making their user acquisition process completely friction-free to capture the maximum customer yield, or working with an insurtech company to nudge their users to be more honest when they’re submitting a claim.
I was dabbling in this landscape of mostly Series B + companies who had the budget and bandwidth to think through issues such as: How do we optimise something that we already have? This led me to the VC ecosystem. The struggles all these companies had in common was that every 12-18 months, they were thinking about fundraising and how to convince the next batch of investors to invest in them and who best to partner with. That led me from the entrepreneurs’ side of the VC ecosystem to the investor side. When the job popped up in my Twitter feed from LocalGlobe to join as an entrepreneur in residence to incubate this idea, which later became the Newton Venture Program, I applied to the role as everyone else does – not knowing what it would grow into! In the beginning, Newton was just the seed of an idea: VCs need human capital development just like everyone else does, and it grew from there.
Saul Klein and Robin Klein (Founders of LocalGlobe and Latitude funds) had long been searching for a solution to invest in the development and upskilling of their own teams. It’s a simple idea: everyone needs learning and development to progress in their career. The scale of most VC firms is so small that they’re unable to provide an in-house solution. In early 2019, there were very few training and development programs for VCs. There was a premier program, which existed for twenty-five years and involved up to eight flights out to the Bay Area. So, there were a lot of barriers to entry to access this training. At the same time that Saul was speaking to various stakeholders in the UK ecosystem Julian Birkinshaw, dean of executive education at London Business School and now a Newton board member, had submitted a proposal to UK Research and Innovation (UKRI) to develop a program to train venture capitalists. So it’s two parallel streams, one at London Business School and one at LocalGlobe, that were trying to develop a solution for upskilling investors in VC. They met in the summer of 2019 and decided to hire for that role, which I applied for.
So what is the Newton Venture Program?
Newton Venture Program is a human capital development solution for the VC ecosystem. We upskill and train the next generation of VC investors. By 2030, our vision is that 50% of investors will be from typically overlooked backgrounds, including women, non-binary people, Black, Asian, and other minority ethnic groups. We are passionate about disrupting the current landscape. From the very top, VCs hold the decision-making power of which companies to back and that determines which problems in society get solved. We think it’s unacceptable that VCs are not representative of the populations that they serve.
Do you think that there is a particular type of person that excels in VC?
In all industries, not VC alone, ‘like attracts like.’ Sociologists call this homophily – meaning, birds of a feather flock together – and it’s common across all primate species. So, when we’re not intentional, we tend to surround ourselves with ‘like’ and we also attract ‘like’. If we’re not deliberate about representation in VC and deliberate about representing the communities that we want venture capitalists to serve, we will continue to see more homophily. Newton is designed on the principles of what we would like the venture capital ecosystem to look like. We’d like it to be representative, diverse, inclusive, a place where people from all backgrounds can feel that they belong and that they can thrive in the long term. So, Newton exists to provide that opportunity.
How can people get involved if they’re interested?
We run two programs: VC Fundamentals, an online program, and VC Fellowship, an in-person program at London Business School.
VC Fundamentals supports the entry, onboarding, and development of early-career venture investors. All backgrounds and experiences are encouraged to apply.
Our VC Fellowship supports current venture investors looking to advance their careers, new general partners (GPs) investing in their first fund cycle, experienced entrepreneurs and operators, and deep subject matter experts. The format is three modules, with each module taking place over three days, spread out over a six month fellowship at London Business School.
For both programs, our application process is conducted through Applied – recruitment software that enables blind recruitment by design. This is intentional to deliberately guardrail against our own judgment and decision-making biases. We all possess some blind spots and biases, and Applied eliminates our ability to fall back on those biases.
Blind recruitment is still widely debated. As someone who has used blind recruitment, what advice would you have to anyone considering the blind hiring route?
The most important thing we learned is: what you put in is what you get out. It’s not just the blind recruitment that will enable you to have this amazing, talented and diverse cohort. You need to attract people from all the groups that you want to be represented in your cohort. So, I think that was one of the biggest learnings: the push is on the front end to attract people who don’t necessarily see themselves in VC, because – guess what? – VC doesn’t currently represent them! So one of our uphill battles was to change what’s in the VC shop window. We neede to expand people’s mindset that venture capital can, should, and wants to include them. So it’s really the attraction stage that was a major learning for us.
Do you think in the future everyone will shift to blind recruitment?
Perhaps in the far future. I think our training data is not rich or inclusive enough to be able to predict with great accuracy who will succeed and thrive in different roles. My hope is that we can move to a more objective assessment. But right now, the machine learning and AI algorithms still tend to amplify human decision-making biases rather than remove them.
What has been your biggest learning from setting up a not for profit and do you have any advice for other social impact founders?
When thinking about social enterprises, my biggest learning is that you need to focus on the collective much more than you can focus on the individual company. We intentionally set Newton up as a not for profit because its mission is to benefit the collective rather than the individual company and its stakeholders.
It’s more difficult to think about how you benefit a collective because there are so many more stakeholders in the ecosystem. But, the good news is that you can recruit a lot of stakeholders who have the same interests – to build a more robust, more diverse, more inclusive venture ecosystem that serves all and to help you achieve your mission. The trade-off is greater complexity for greater impact. But if you’re willing to make that trade-off, it’s incredibly rewarding to build it.
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