Megan Holston-Alexander

Megan Holston-Alexander — A16Z

Wednesday, August 10, 2022

Megan Holston-Alexander leads A16Z’s Cultural Leadership Fund (CLF).  CLF connects the world’s greatest cultural leaders with the best new technology companies.

Megan tells us about getting black people onto cap tables, into tech and building generational wealth.

She tells us how A16Z has grown this network and her own journey into this role.

Megan Holston-Alexander is here on the pod today. Megan is a partner at A16Z where she leads the firm’s Cultural Leadership Fund, CLF. CLF connects the world’s greatest cultural leaders with the best new technology companies and Megan just announced CLF Fund III.

Megan got her MBA from Stanford GSB, and she’s from Alabama. Megan, why don’t you, uh, kick us off with the basics.

Absolutely. So cultural leadership fund is a strategic co-investment vehicle inside of Andreessen Horowitz. So we invest alongside the other funds at the firm , but the thing that makes us really fun and interesting and cool is that we do so with those two main missions in mind that you just mentioned, connecting the world’s greatest cultural leaders to the best in technology companies.

View More Transcript

And when we say greatest cultural leaders, we mean the best athletes, entertainers, musician. Sea level executives. Um, all of whom are excited about technology. They are interested, , in innovation and they wanna play a part in the things that are being built across this industry. Uh, and CLF gets to provide an on-ramp to that.

And then the second mission is getting more young African Americans into tech.

So, let me ask about both of those. So like when you make that on ramp, how does that process actually work? Like how does a startup who wants to have that connection? How do you actually facilitate that?

Totally. So it actually works both ways. so on the one hand you have, , startups that are working on a particular business, and sometimes there is a particular type of. Person or early investor or partner or board member that they want. , and they usually task us and they come to us and say like, gosh, you know, this is a.

Social business. And we really wanna tap into people who have like a lot of followers in this space, or we wanna find, you know, people who are in the health space who are really big on wellness, et cetera. And so we’ll go and kind of tap into our network and say, who do we know? that fits into that need.

And so on the one hand, it can come from the startup side. But on the other hand, you know, when people in our network are our ops, or people who are , kind of widely engaged with, CLF say, Hey, you know, I’m a. I don’t know, black executive and I’m looking to help companies that are doing these types of things, right.

When those types of companies come through the door, it’s easy for us to make those matches.

 it’s such a cool role congratulations on fund three.

I think I saw that you’ve now made 300 investments. How do you decide what companies to invest in?

Yeah, absolutely. So we actually do, , a auto allocation model, alongside, uh, several of the funds at the firm. So we don’t have to go through a process , of cherry picking and picking and choosing cuz we also don’t think that that’s, , kind of the best. Process for it. So it’s more of an auto allocation as opposed to, , selecting individual companies versus others.

 So when you are looking at making these connections, , who is a cultural leader? Like what does it mean to lead culture nowadays?

Uh, and the key there is nowadays, cause I think it can mean , so many different things. but for us, , the basis of the, concept in general, when we were thinking about it in 2018 is around, you know, so much of technology, particularly in consumer social spaces or in eCommerce, What was cool and interesting and what people wanted to do or wear or sing or, you know, a number of things usually came from black culture.

 And what we wanted to do is, transform that, , and convert , that cultural leadership quite frankly, into owner. Into these companies, because we thought it, you know, it’s really great that, , we’re on the front line of the greatest, you know, dancing trends, et cetera.

, but how do we get ownership into things that we’re quite frankly helping build, , in the background. Why is it that black people are cool?

That’s a hard question

to

answer

 I don’t know that I have that and it’s the, whatever my answer is. It probably won’t be good to include, but it really is. We’ve just got sauce. We’re just,

Uh, I kind of like that answer actually. So when a startup wants to engage with one of these cultural leaders, what is the nature of that request?

Yeah. So one of the sayings that we’ve been really leaning into for fund three is that, you know, the age of the disengaged celebrity investors over right. Very early on, , it was, okay. To just kind of lend your name to things right. To help kind of help things blow. It’s not just a name anymore. And so when we select our LPs and LPs come into the fund, it really is about people who are wanting to actually like get on the phone with the founder, right. And ask questions and have an interest in the space And so we try to be really selective in that way. We’d rather bring somebody into the fund who maybe. Writes a smaller check, but is more willing to engage and pick up the phone when a founder calls them versus somebody who’s just gonna write it. Any normous check and then, you know, the founders never hear from them.

Yeah.

What have you seen work or not work in these engagements?

Yep. I think, um, both sides try to do their due diligence early, right? , and so, you know, , when people get connected, through the CLF, I.

Always encourage them if, kind of in the crypto world, they say, , do your own research. Right. And that’s really, really important. And so you know, we really task our founders to say like, Hey, tell them exactly what it is that you need. Like , what are you gonna kind of require from them or expect from them as you all go through this journey in this process together.

And I think setting expectations early up front, um, has been a game changer for these types of relationships.

Do you play any role in trying to set expectations or just facilitate something deeper than just the introduction?

that’s a really good question. One of the things that our firm is known for is, is expertise and platform services, right? , we always kind of share with the, the world that our platform teams and our, network teams are. Way bigger than our investment team and that’s meaningful for us because we feel like the time that we spend after making the investment is, just as critical, if not more critical than making the actual investment.

And so, you know, as a CLF team grows, we do lean in on certain areas of expertise. So we have team members who, we’re former entertainment managers, right. So they understand how folks in the entertainment industry work.

that is their

 I see Derek around a lot.

He’s a mover and a shaker. Let me tell you, , he really is such a butterfly in that , he, , , kind of spreads, beauty and love all around in a lot of different circles. , so we’re glad to have him. , and we’ve also got, , Deb on our team who is a former athlete manager. And so she knows kind of the sports world and one how.

Relationships work and who you need to talk to if you wanna get to this person. and similarly, you know, Jeanine, who’s also on our team.

She’s our team generalist. , and the, the little joke I make is that when people ask me, what does ju Jude do on the team? The answer is yes, cause she does everything right.So I’m like, this would be a horrible interview. If I was questioning the premise of helping increase generational wealth for black people in our country. But like, maybe you can tell me why you see that as so important.

Ooh. So I think that that question has both a personal and a professional answer, and I can answer it from, you know, my personal perspective of why think that it’s important. Um, so getting into a little bit of my background, , I’m born and raised in Montgomery, Alabama, which is, you know, one of the hearts of the civil rights movement, right?

It is. You know, 30 minutes from where the Tuskegee airmen, , took flight it’s you know, where Martin Luther king had his church, it’s where Rosa parks refused to give a seat on the bus. And so this kind of concept of civil rights and equity has been in the water that I joined since I grew up as a child.

Right. So it’s something that will not, um, it will not leave me. , and, uh, even in 65 years, right? When you think about progress, when it comes to, income and wealth and generational things being passed down, there has to been much change And so for me, We have seen technology really in the last 20 years , become a source of wealth generation. And one of the clearest paths to wealth generation, right.

And so we wanna be sure that we’re tapping into that and getting people into this industry early, , one again, from an equity perspective, right? So those black dollars on the cap table, when someone, you know, Um, Liquidity event, right? So they go public or they get sold.

They get the value from that or into an early stage company as an employee because you get that early employee equity, which also can create ton of value in, you know, five to 10 years.

Yeah. Makes, makes good sense. So tell me about the talent network.

Yes. So the talent network, actually, this is my team. And I say, this is the real reason why

Ah,

we come to work every day it’s talent network, because, , When you have a firm like injuries and Horowitz that invest very heavily in seed in series a companies. We know that that’s the place where you wanna get in the door from a talent perspective.

Right. We know that that’s where the most value is created. , And so for us being sure that we bring more people into tech and I say, bringing them into tech, because I wanna make a distinction between like, yes, there are people that get to move around in tech, right?

There’s already, you know, great black PMs at places and marketing managers, et cetera. But how do we bring people who are outside of this industry, maybe they’re working in like, Sales somewhere, or maybe they’re doing, you know, some other thing, how do we bring them into this industry?

And so that’s what we spend a lot of time on reaching out to our kind of talent network and saying, Hey, if you wanna get into tech, the fact is you don’t have to be technically in tech. And I think a lot of people don’t understand that

So what tactics have you found that are useful to actually making that happen?

So, yes, we have our talent network and we actively kind of do introductions and events with our portfolio companies and the talent, , group. So for example, maybe we’ll bring in three portfolio companies and we’ll have a dinner. Um, with 20, , I don’t wanna call ’em candidates because it’s, it’s not trying to be a recruiting event. It’s not what we’re going for. , but we’ll have, you know, 20 folks out of our network. And, um, we’ll say, okay, this month we’re gonna focus on, designers, right?

So it’s like 20 black designers getting to meet with three companies where designers are in need And we really try to get it where. Even if there may not be a role right now, you have a person at this company now that you can reach out to if you’re ever interested in something that they have put out there.

So that’s one way, the other way is, we, , donate all of our management fee and carry to a set of nonprofits that are specifically focused on getting more young African Americans in.

And what that looks like for us, it could be, , organizations that are teaching people, how to codeWe are focusing on nonprofits that are helping be sure that blood posts don’t get left out in this crypto craze. How do we keep up? Right.

So there’s a number of things that we’re, doing on that end, from a donation perspective as well.

Yeah. , my journey in venture, I was actually at a nonprofit beforehand and I love.

Twins.

Pretty much, pretty much . Um, but I love the fact that you are supporting existing nonprofits because I think at a firm like Andreson you could go and build your own capabilities there,

Yep.

And I think that that’s really important. Something I appreciate as well because, , everybody doesn’t need to start a nonprofit.

Yeah.

Tell me a little bit more about the team at CLF and really like how CLF has grown

So, the team currently is, , You know myself and then Derek and Deb and Judeen, we’ve and the way that it’s grown, you know, in 2018, it was just Ben and Chris Lyons, , working on this idea. And so, you know, once we got to fund three and we saw that like, okay, we were onto something and it’s working, we really wanna try to scale it. This is truly like our first full year, probably starting last summer of just trying to, grow, , the team in the process.

It’s so far so good.

 do you think of yourself as a cultural leader? I mean, you’re running something called a cultural leadership fund.

Uh, yeah, the great question. I would say I’m a cultural leader in the, your mom supports you type way. Like, like, yes, you, you, or whatever you put your mind to cetera.

but I feel like, identifying cultural leaders is more my speed.

For example, have you ever the, with JLo.

 I haven’t seen it. I know of it.

Ooh

many. Okay. Weekend homework,

watch the wedding planner. So there’s this phrase that she says in the movie, and she says those who can’t do teach. And those who can’t wed plan meaning you can’t

do it. You can teach other people how to do it. , and so I feel, kind of aligned with that and that, , you know, maybe not creating the newest, coolest trends on my own, but really seeing kind of the folks who are making things move and shake and sway.

 Is really one of the superpowers I think of CLF.

I love that. My mom thinks I’m brilliant. how do you go about identifying who those cultural leaders are?Yep. Totally. , so two things, one, we keep our ears to the streets. and I keep quoting people, but it’s a Kanye west.

And he said, listen to the kids, listen to the young people, right? They’re the ones who are, , gonna tell you which song is cool before it blows up. , they’re the ones that are gonna make up, you know, whatever new dance, because they’re having a sleepover on a Friday night and they.

Board. Right. So we try to tap into kind of the younger generation, , and so , that is our main thing.

And you’ll,, you’ll be interested to find out that. Cultural leadership doesn’t necessarily mean like the biggest number of followers. It’s not, oh, you’ve got, you know, 10 million likes on whatever thing or retweets, et cetera. It’s truly about like, are you creating something that people are interested in and are moved by and are willing to kind of put into what they’re doing?

And that’s often much smaller creators.

 And how did you become the cultural leader champion or like, what was your path, Megan?

Yeah, it’s, it’s funny because I’m, and I’m sure everybody says this. I never thought I was gonna be here. But, , for me, I believe it to be so very, very deeply again, being from Alabama, I don’t know how many VCs are from Alabama. So. I had gone to GSB and, , I went for something completely different. So as I mentioned, I used to work in nonprofit and I specifically helped professional athletes figure out how to give away their money. Right. Cause everybody wants to start a nonprofit.

And it was my job to say either like, yes, you are positioned well to start a nonprofit or like, no, actually you’re just in your Rippy contract. Year you’re gonna have to fundraise. I don’t think that’s the path you wanna go, and I went to business school to work my way up in that field. So sports, philanthropy, , and I said, I was gonna be like, kind of philanthropy for the NFL. That’s my goal And I got there and just got completely distracted by finance.

It was, um, caught me completely off guard. And what happened was I was, , in a class. , I lived off campus. I lived in San Jose. I was driving up to, Stanford every day and I decided I didn’t wanna be in traffic anymore. So in selecting my classes, I was like, I’m gonna pick whatever class is not at like eight, nine or 10, And there was a venture class, with Eric Schmidt, sort of in the afternoon or later in the morning, I don’t remember the exact time, but I was like, Whatever this is, I’m gonna sign up cuz it’s at a good time and just got obsessed. Like I was crazy about it. , and one day after class, Eric and I took a walk, just a short walk and he told me two things. and the first one was, I really think you should try a venture. You’re doing really, really great in the class. And I told him. Black people don’t do venture.

Don’t try to get me caught up. in something that I can’t do. And after a while I was like, wait a minute. Like if Eric Schmidt’s telling you, you should try something, maybe you should try it. , and so I started kinda just doing a ton of internships, really just running up and down sand hill road, , and was able to turn it into a full time role after school.

And I’ve kind of been doing it ever since. personal question. Do you think about like where your confidence comes from? , like you said, there aren’t many VCs from Alabama. There are not many black VCs period. Um, I don’t know. Of course, if you feel confident, but you project a lot of confidence.

Oh, my gosh. Well, I’m glad to hear that. A lot of therapy girl, um, you know, I would say confidence comes, I think, in learning and growing. And I feel just as confident saying, I don’t know something as I do when I do know something I’m very much. I know what I know. And I don’t know what, I don’t know. I learned the hard way, that when I don’t ask for help or I try to seem like I know and just do whatever it ends up failing me and I end up with a real stupid.

And so, actually a funny story, I’ll share it super quick. When I was in business school, I took accounting People were like, oh, it’s just, you know, addition and subtraction. No, it’s not. It’s absolutely not addition and subtraction. It was awful. I was so bad at accounting and I was just always stayed in my professor’s office, like

every day.

And then in class raising my hand, asking questions that I thought were dumb, cuz I was like, I’m not gonna fail outta business school.

I’m not gonna get on probation.

I’m just gonna look stupid and do what I gotta do. And at the End of the quarter, you take your final, right? And there’s like one question where this professor asks, which student like aided the most in your learning in the classroom.

Come to find out every, like almost everybody put my name down. Cause they were like, Megan’s not scared to ask questions that I wanted to ask or questions

that seem simple. Like she just puts herself out there and I was like, look at me being, you know, originally anxious about it. And I don’t wanna look like a weirdo.

And then I’m dumb in front of all these people who have whatever backgrounds and I did it anyway and they ended up saying that it helped them. And so I would say my confidence comes from knowing that everybody’s just not that smart.

Michelle Obama said that too. She’s like, I’ve been at some of the, in the rooms with like some of the most powerful people in the world.

and she said, gosh, you’re leaving a country. You know?

 I just know that I’m just as smart as the next person and I shouldn’t doubt myself

that’s really good. I heard melody, Hobson say something pretty similar.

Like, you know, if you’re confusing me. I’m reasonably smart. And like, it probably means that

. For sure.

Okay. So here’s the fun fact that, that you do have out there on the internet?

Um, , you are a pageant girl, were you not

There was a time many. Yes. Yes. There

Can you please share a little bit about that and really I’m interested in what you learned from that experience.

Whew, that life is a pageant. Okay. Um, literally everything you do like, you know, when you go to work, it’s pageantry and when you’re hanging out and you’re at the club, it’s pageantry, right. You put on this cute dress and you wanna look cute for everybody. And you’re like, you projecting this thing.

And so I, really learned, um, one, you really do make a ton of friends.

Like people want you to think it’s. All just Cady in the background and people are like hiding your lipstick and like, , cutting your dress up in the background. And it’s not like that. So you make a lot of friends, but also like it’s really good competition.

 some of the gals that I, did pageants with are still some of my very best friends. And so , I feel like , the two biggest things that I, I would say I learned our, , That you can make really, really great friends in competitive situations.

 And that’s probably like a life learning. and I would also say that I learned that like, again, like life is a pageant. Like there are these moments, there’s backstage moments in life where you’re just relaxing and hanging out.

And then there’s moments where you gotta put on your face. You gotta go out there and you gotta kill it. For the people who are in charge. And so I think I probably take that

with me on a daily basis

I love it. And just to like set the stage when I said pageantry, like I, I meant like you were Ms. Black, Texas. that’s big time. And like, I did always think it was fake, you know, when someone else wins and then the like number two person gives them a hug.

with me on a daily basis. Mm-hmm mm-hmm it hurts. Yeah. It, it does. It sucks. Um, but afterwards, like that’s like the heat of any emotion, right. When you know, promotion or your sister. , gets the award at school. Right. Or whatever it is like that happens all the time.

But, , I think if you can manage your emotions, you also understand that like the next week you’re like, oh my gosh. But the night before we were laying in bed talking all night, cuz you gotta share a room with somebody or I don’t know, she gave me her muffin that morning or whatever reason why you had really great moments with that person far exceed.

Particular about my pain. It, it hurts. I’m not gonna lie to

. Oh, that’s great. It’s interesting to hear about the backstage. What happens? Any other stories also of like, you’ve got these big name LPs. Um, you’ve got the weekend. You’ve got Stacy brown FPO. You’ve got all these great leaders. I

don’t, do you have any great stories from any of them?

Like just knock it outta the park with your portfolio or otherwise?

That’s so funny that you, you say that because I actually have a story of making a mistake. That’s kind of hilarious. I can’t tell you who it’s with. , but one of the things, when I first got into venture was like getting a really good example of like VC math down P right? Because you always wanna be able to explain to.

A company or to NLP a new person coming in, whatever you want to be able to explain to them how the math works, right. If you raise this amount of funds and then you three exit, you get this percentage and we keep this percentage, you do that whole thing. And so I used to have my example, like down to a T you could, I could read it off in my sleep and I hadn’t done it for a while.

And, um, I get on the phone with this LP and he’s like, I’m really nervous about getting into venture because I think a lot of people just try to like get over on folks and like, they don’t actually know what they’re doing and they just say things that don’t make sense, et cetera.

And I was like, Nope, totally understand. Like, You know, that’s the world that we live in, et cetera, et cetera. And so then he asked me, well, tell me, like, , how do the numbers work? Like if I invest this much and blah, blah, blah, blah. And I was like, totally. And I try to like go back to this, um, example in my mind.

And like, I couldn’t remember it. And I was like, so if you do something, something, something some anyway, I had. Turned into his worst fear of like somebody who could not pull it together. And we had a really, really good laugh out of it. I, got it together in the end. , and we kind of just, laughed about it.

But I think one of my biggest learnings is that like, It’s okay to make mistakes. One of the things that we try to do is like, hold ourselves to a standard. Like you can’t mess up, like it’s gonna ruin my life. Like nobody’s ever going to listen to me or respect me, or, or whatever the case may be. , and it’s usually like, not that important, right?

What about with cancel culture? I mean, some people deserve it, but I’m curious if you think it’s , I don’t think one, it works on like famous people.

Right. Somebody gets canceled for a few months and then they’re like back in the saddle.

Right. I think the world is just too big and there’s too many people, especially from a celebrity perspective, , that support them.

on the other hand, I think it has far deeper repercussions for like the average person. Right. So when you see somebody on a video at. I don’t know, at a coffee shop or at a restaurant and they’re behaving terribly and they get canceled. Right. Cause then they lose their job and then

So I think it can be tougher on like the average person than a celebrity. I think it’s just more of a, like a nuisance. Um, right. Uh, they’re talking about me in the media today, but again, in six months, it, kind of just goes away. I generally believe in like second chances and honestly, probably third chances.

Hmm, I do too. One more question. You’re an active blogger.

Active is a questionable term, many.

Um, I probably, I, I, it, it comes and goes

You have a new baby.

I do a new little,

Well, congratulations.

a little new little juicy thing. He’s

Oh, um, well, but a lot of people with new babies, aren’t, aren’t as actively writing as they are previously. Um,

Would you share something you’ve written about or let’s point people to the blog, black girl adventure.

Totally. Okay. So I wrote a piece, I guess, if it was mid last year, late, last year it’s called how coffee cups, , can. help create equity or something like that. I don’t remember the exact title, but it’s about supplier diversity and it’s something that we don’t think about a lot.

Right. We think of, , you know, diversity from an employer employee standpoint, right? Diversifying the team. We think about it from diversifying cap tables. We think about it in a number of different ways that supplier diversity is not something that’s brought up. , I think on a regular basis, but essentially it’s about like as a company and as a corporation, how are you managing like your vendor?

Contracts,

right. Who supplies your coffee cups? Who’s putting in your carpet, where are you getting your desks your gardening services, right. Are you thinking about, am I having a diverse slate of vendors also coming into my company every day to, to do work or provide us with like goods?

Oftentimes it’s like, oh, well, I worked with, you know, this company before, so we’re just gonna use them again. And there is no active process around, , getting different types of folks in the door. And so it’s really just a call to action.

, to make that decision and help, you know, provide, , equal opportunities , for diverse vendors.

Hmm, we are almost at time, but I know you want us to talk a little bit more about the nonprofit grants you’re making. So let’s sneak that in.Yeah, absolutely. The nonprofit program has evolved a ton since we first got started with fund one, , we selected 11 nonprofits that received the support. So our management fee caring. For the life of the fund, meaning for eight to 10 years, they’re gonna get every single dollar of management fee that we get.

In addition to all of the carry on the back end.

What we started to realize though, as we went into fund two and three, is that by committing all of that capital up front. We weren’t really able to, , be flexible and adjust to the market as it was also evolving. Right? So crypto wasn’t as huge of a thing back then as it is now. And there’s a lot of nonprofits that are popping up , that are helping, , more black folks get into crypto.

Uh, , we learn that gaming is growing, um, more than it ever has before. And there’s organizations that are trying to. Put in, , gaming lounges of HBCUs, et cetera. And so if we kept that same fund one model through fund two and fund three, we weren’t gonna be able to support these new emerging organizations.

And so we kept our ecosystem partners, which we consider kind of really long term, , partnerships, but also wanted to kind of create a pool of capital for emerging nonprofits, right? which are smaller kind of spot donations to help them reach a specific business goal.

That’s great. Well, Megan, you’re really thoughtful about this. I could talk to you for hours, but, um, it sounds like an amazing job. Congratulations.

I enjoy it. I feel lucky. I don’t know , who decided to push me on up there, but I’m, excited that they did.

That’s fantastic. Well, thanks so much for coming on the pod and telling me about it.

Absolutely. Thank you for having me. This has been great.