This Is Working for Me: Foundation Capital's Joanne Chen, ’14
The second-ever woman to be general partner at Foundation Capital discusses the challenges of startup investing, the promise of A.I., and speaking out against racism.
- June 25, 2021
- Venture Capital
Joanne Chen, ’14, is general partner at Foundation Capital, a venture capital firm based in Palo Alto, California. Chen invests exclusively in nascent companies that solve a problem with better or cheaper technology. Startup investing is high risk. “Fewer than 1 out of 10 startups become full-fledged companies,” Chen said. “It takes a certain conviction to invest knowing you’re likely to fail.” But hitting one or two makes the gamble worthwhile. She pointed to Tubi, an ad-sponsored streaming service based in San Francisco that’s free to users, which blossomed during the pandemic, earning Chen’s firm about $100 million.
Chen is the only child of Chinese immigrants whose father immigrated to Montreal in pursuit of higher education. She grew up in Montreal, Ottawa, and in Raleigh, North Carolina. She is the second-ever woman to be general partner at Foundation Capital. The first was the firm’s late cofounder, Kathryn Gould, ’78, who once cautioned Chen about a career in venture capital, warning her that those doors opened more easily for men. Chen laughed off the counsel: in her experience, all industries are dominated by men. It just meant another challenge to overcome.
I came to Booth for a new geography. I’d lived and worked on the coasts, and the city of Chicago was my first choice for business school. I liked the culture at Booth. People valued knowledge, learning, academics, entrepreneurship. I had worked as an engineer, a bank analyst, and cofounder of a gaming startup, but I wanted to try investing. I had a knowledge gap, and business school was the bridge. It was a reset for my career. Most valuable for me was group-based learning: negotiations, role-playing, anything in which other students participated. We weren’t just using a textbook.
At Booth, my goal was to gain real-life experience as an investor. I took the Private Equity/Venture Capital Lab and worked with Hyde Park Angels, which gave me hands-on experience. Professor Ira Weiss has been instrumental in my success. I took professor Steve Kaplan’s famous class, Entrepreneurial Finance and Private Equity, which has proved really useful—he also introduced me to Kathryn Gould. I wish I’d taken Corporate Governance, because I now sit on a lot of boards. Data Mining was another really helpful course because I was introduced to concepts around machine learning.
A.I. is in its infancy. How do we use data and who has access to this technology? These questions are important to talk about, and I’ve used my role as an investor to articulate A.I.’s problems and power. A.I. does what we tell it to do. It’s completely obedient to us, learning from data it’s given. But what if the data is bad or biased? I’m lucky to have a platform where I can articulate the things I care about and take a stance—giving me the chance to speak at events such as TedxMarin. I’m hopeful about A.I.’s applications. It can be used to recognize early-onset Alzheimer’s with data from one’s handwriting. It can be used by companies to recruit quickly and widely. Used without malice, it can improve lives and the workplace.
My interest in finance came out of my own startup. In undergrad, a few friends and I combined our interests in gaming and education and created the earliest apps for mobile and tablets that taught math through games. Our apps did well because there wasn’t much competition. Later, though, we had to produce a lot of apps to compete, and it began to feel like we were producing volume instead of quality. That made me think: Do I bet on this one company? Or do I use finance to help lots of other companies?
“I’m lucky to have a platform where I can articulate the things I care about and take a stance.”
I use the “Booth Way” every day because investing is fact-based analysis. I have to be able to make decisions quickly. Even so, there are tons of stumbles in investing. I’ve passed on companies that have become successful, because it’s easier to point out the negatives. Think about the earliest pitch for Airbnb. You’d host strangers at your house? Sometimes it’s hard to imagine the future, and we’re only human: we want the support of people inside and outside of the firm.
Foundation has 10 partners. I made a conscious choice to join a small firm. There’s an ease of getting things done, an efficiency. I’m where I am today because general partner Ashu Garg mentored me. I’ve always been lucky: wherever I’ve landed, I’ve had one significant mentor who wanted me to succeed and helped me get there. I pay it forward by spending time with Booth students, doing a lab with professor Ira Weiss, hiring interns, advising them.
With the slaying of Asian women in Atlanta, I could no longer be silent about racism. On Twitter, I recounted a childhood where I never spoke Chinese in public. I made myself “fit in” to American culture at tailgate parties and football games. (I still don’t understand football.) I realized I’d done a spectacular job pretending Asian racism doesn’t exist, even though I’d been teased and heckled, “But where are you really from?” Racism against Asian Americans is real. Violence against Asian Americans is real. Don’t be silent. I can’t and won’t be any longer.
If I’m staying up for hours on end, I’m probably reading fiction. It’s a guilty pleasure. I read nonfiction in small doses. I’m currently fascinated by a recommendation from the Booth Book Club: The Righteous Mind: Why Good People Are Divided by Politics and Religion (2012) by Jonathan Haidt. It talks about moral construct and how that predicts political affiliations and decision-making. Through the lens of morality, the book helped me put into context why liberals and conservatives feel so strongly about things during this tumultuous period.
I love spending time in nature. It relaxes me. During the pandemic, when we were working from home, my husband, James Hardiman, ’14, and I spent a month in Hawaii. We worked the whole time, but it was a change of scenery. He’s also a venture capitalist, but in a different sector. He invests in deep tech, in huge markets with a lot of risk, things such as gene sequencing and new batteries. A lot of people talk about moving out of San Francisco, but we’re still here and we’ll be here for a while. It’s thick with entrepreneurs.