20VC Why Fundraising Is Like Dating and How to Play The Game Successfully & How To Increase The Flexibility of Your Burn When Growth is Ambiguous with Rachel Blumenthal, Founder & CEO @ Rockets of Awesome



In a candid interview on the 20 minutes VC, Harry Stebbings converses with Rachel Blumenthal, founder and CEO of Rockets of Awesome. Blumenthal, who previously founded the fashion jewelry brand Rachel Lee and worked at Yves Saint Laurent, shares her journey through entrepreneurship, emphasizing the challenges and strategies of fundraising akin to dating, the importance of capital efficiency, and the value of having investors with operational experience. She also discusses the nuances of being a female founder in a male-dominated industry, advocating for more female representation among entrepreneurs and investors to drive innovation in overlooked sectors. Blumenthal's vision for Rockets of Awesome is to become the leading choice for children's apparel by addressing the needs of both parents and kids.

Summary Notes

Introduction to Rockets of Awesome and Rachel Blumenthal

  • Rockets of Awesome is a startup reinventing how parents shop for kids' clothes.
  • Rachel Blumenthal is the founder and CEO, having raised over $19 million in VC funding.
  • Prior to Rockets of Awesome, Rachel founded the fashion jewelry brand Rachel Lee.
  • Rachel Lee scaled to over 300 stores globally and was featured as one of Oprah's favorite things.
  • Rachel began her career at Yves Saint Laurent in the publicity department.
  • A thank you was given to Rachel Jewelry at Daily Harvest for the introduction.

"I'm thrilled to welcome Rachel Blumenthal, founder and CEO of Rockets of Awesome, the startup that's reinventing the way parents shop for their kids' clothes."

This quote introduces Rachel Blumenthal and her company, emphasizing the innovative approach to shopping for children's apparel.

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These quotes highlight the services provided by Freshbooks and Terminal.io, respectively, emphasizing their ease of use and the value they provide to businesses.

Hi Five Conferencing Platform

  • Hi Five offers an all-in-one conferencing solution that fosters business collaboration.
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  • Hi Five is trusted by companies in over 100 countries.

"Hi five simplifies business collaboration with a conferencing platform that builds connected cultures."

This quote describes the core benefit of Hi Five's conferencing platform, focusing on its ability to simplify and enhance business collaboration.

Rachel Blumenthal's Entrepreneurial Journey

  • Rachel launched her first business at 23 with no professional skills but a strong vision.
  • Her early career was characterized by learning and building a business independently.
  • Rachel's businesses align with the stages of her career.
  • She built a sustainable business model without initial knowledge of raising funds.

"I launched my first business when I was 23, and I had no idea what I was doing."

This quote captures Rachel's entrepreneurial spirit and her willingness to start a business at a young age despite lacking experience.

Transition from Jewelry to Parenting Industry

  • Rachel transitioned from her jewelry business, Rachel Lee, after feeling the need for new challenges.
  • She was inspired by her husband's business, Warby Parker, and the tech industry.
  • Rachel's next venture was Cricket Circle, a content business aimed at helping new parents.

"We were in 500 retailers worldwide... And I licensed that brand probably about seven years ago, really, because I felt like I wasn't learning anymore."

This quote explains Rachel's decision to move on from her successful jewelry brand in pursuit of further personal and professional growth.

Founding of Rockets of Awesome

  • Cricket Circle's insights led to the pivot towards Rockets of Awesome.
  • The pivot was influenced by the realization that the ongoing challenge for parents was managing their kids' rapidly changing apparel needs.

"It was really at that point that we decided to pivot the brand, to be more representative of a brand that could span a greater lifetime with the kids and the parents being our customers and serve them for all of their apparel needs."

This quote signifies the strategic decision to pivot from Cricket Circle to Rockets of Awesome, focusing on a long-term relationship with customers through meeting their children's clothing needs.## Fundraising and Dating

  • Fundraising is likened to dating, where creating a sense of challenge and desirability is key.
  • Investors are more attracted to deals that seem in demand and less available.
  • Entrepreneurs should build relationships with potential investors while maintaining an aura of unavailability.
  • The "game" involves strategic communication and leveraging one's network to create buzz around the deal.

"When I realized that you had to play the game with investors, it became sort of this aha moment for me."

This quote emphasizes the strategic aspect of fundraising, likening it to a "game" where entrepreneurs must engage investors' interest through calculated availability and perceived competition.

"Nobody wants something that they can easily get."

This quote illustrates the psychology behind desirability, suggesting that exclusivity and difficulty in access increase an item's or deal's attractiveness, which applies to fundraising.

Leveraging Networks and Playing "The Game"

  • Not immediately responding to emails and scheduling meetings further in the future can create an impression of high demand.
  • Entrepreneurs can leverage their networks to have others talk about their deal, increasing its perceived desirability.
  • The approach to fundraising should include both direct communication and indirect hype through one's network.

"So I think it's as much how you act as leveraging your network to be able to act on your behalf."

This quote highlights the importance of not just personal actions but also utilizing one's network to create an advantageous position in fundraising.

Runway and Fundraising Strategy

  • Conventional advice is to raise money when it's not needed, but this is often difficult in practice.
  • Entrepreneurs set thresholds for performance to justify raising the next round of funding.
  • The ideal Runway is often cited as 18 months, but business variables can necessitate adjustments.
  • Having contingency plans (Plan B and Plan C) and being ready to course-correct is crucial.

"You're setting thresholds for which you have to hit certain goals to then really deserve or have proven out a thesis to raise the next round of funding."

This quote discusses the milestones entrepreneurs set to demonstrate to investors that they are ready for additional funding.

"The best that you can do is always have a plan b and a plan c and always be really comfortable course correcting along the way."

The quote underscores the importance of adaptability and having backup plans when executing a fundraising strategy.

Capital Efficiency and Operational Flexibility

  • Capital efficiency becomes more challenging as a business scales and overhead costs increase.
  • Hiring strategies, such as using contractors or part-time talent, can provide flexibility in uncertain growth periods.
  • Choosing flexible office solutions like Notel can prevent long-term commitments that may not align with future needs.

"We're always looking at what are the levers that we can pull that will give us flexibility in pulling back on spend if we don't see the growth that we're anticipating."

This quote speaks to the proactive measures taken to maintain capital efficiency by having flexible cost structures in place.

The Value of Investors as Former Operators

  • Investors with operational experience have empathy for founders and understand the challenges of running a business.
  • They appreciate the necessity of prioritization and are less likely to overwhelm founders with demands.
  • While non-operator investors offer pattern recognition, operator investors bring practical understanding and sensitivity.

"An investor that was an operator, I say first and foremost, really understands how hard it is to be a founder, how hard it is to be an operating team."

This quote highlights the empathy and understanding that operator investors have for the entrepreneurial experience, which can be valuable in the investor-founder relationship.## Pattern Recognition in VC Investment

  • VCs often use pattern recognition to evaluate businesses, which can be beneficial for identifying successful indicators.
  • However, pattern recognition can lead to overgeneralization and not be applicable to unique aspects of a specific business.
  • There's a contrast between jargon-filled advice from VCs and the on-the-ground, tactical advice that former operators can provide.

"And I think that that can be an advantage in that there is recognition of those patterns that can be attributable to different businesses. At the same time, there can be the negative instinct of pattern recognition where they sort of lump you in with every other business that may or may not be applicable to yours."

The quote highlights the double-edged sword of pattern recognition in venture capital, where it can both identify common success factors and incorrectly generalize across different business models.

Investor Engagement and Value Addition

  • Investors have multiple demands and may not always be deeply connected with each portfolio company.
  • Deep understanding of a business's nuances, drivers, customer psychographics can enable investors to provide substantial value.
  • Investors should spend time with the business and choose specific areas where they can be most helpful.
  • Passionate investors who understand the market dynamics and are interested in the business category can be particularly valuable.

"But I would say that the investors that take the time to really understand the business that they're invested in, to really understand the nuances of that business, the drivers of that business, and not just on paper, but really the customer, and how that customer and the psychograph of the customer impacts those levers, that's when you get an investor that can really add value."

This quote underscores the importance of investors taking the time to deeply understand the businesses they invest in, beyond just the financials, to truly contribute to the company's growth.

New York Funding Ecosystem

  • There is a perception of a lack of conviction among investors in the New York funding environment.
  • The funding environment may exhibit follower behavior, with investors looking to join popular deals rather than leading with conviction.
  • Finding investors with a deep passion for the business's industry is crucial for meaningful partnerships.

"I mean, I think it probably goes back again to why I would equate fundraising to dating, in that I often find that there's generally not much conviction across the board and that there's a lot of follower type behavior where everybody wants to get in on a deal, a business, an opportunity that everybody else wants to be in on."

The quote compares fundraising to dating, emphasizing the lack of individual conviction and the prevalence of follower mentality among investors, which can be challenging for startups seeking committed partners.

Gender Dynamics in Entrepreneurship

  • There's a significant difference in how male and female founders are questioned by investors, with a focus on opportunity for men and risk for women.
  • Female entrepreneurs, especially mothers, face stereotypes and are often not taken as seriously as their male counterparts.
  • It's important for female entrepreneurs to challenge these stereotypes and assert their ability to balance work and personal life.
  • Personal conviction and a disregard for gender barriers can help women succeed in male-dominated industries.

"I get into that. Personally, I think that there's statistically significant data in research that will tell you that when male founders are meeting with investors, whether they're male or female investors, they are asked the question of what is the greatest opportunity that you have ahead of you? And women entrepreneurs are asked what is the greatest risk?"

The quote addresses the different perspectives investors take when questioning male versus female entrepreneurs, with a tendency to focus on opportunities for men and risks for women, which can set a biased tone from the outset.

Response to Gender Stereotypes

  • Female entrepreneurs are often questioned about their commitment and ability to balance entrepreneurship with motherhood.
  • Turning the question back on the questioner can highlight the inappropriateness of such inquiries.
  • Having a personal belief in one's abilities, regardless of gender, is key to overcoming stereotypes and succeeding in a male-dominated field.

"And so when I'm asked, well, how do you balance it? I look them dead in the eye and I say, exactly the way my husband does."

This quote reflects the speaker's approach to confronting gender bias by equating her ability to balance work and family life with that of her husband, challenging the assumption that her role as a mother should impact her professional capabilities.## Impostor Syndrome and Confidence

  • Many successful individuals experience impostor syndrome, feeling they are not good enough.
  • Success is often attributed to those who can project confidence, regardless of whether it is genuine or feigned.
  • The "fake it till you make it" approach can enable individuals to achieve things they never imagined possible.

"The reality is that we all have impostor syndrome, right? We all think that we're not good enough or we're not there yet, but the ones that succeed are the ones that fake it."

This quote emphasizes that even successful people feel inadequate at times, but overcoming these feelings with a confident facade can lead to success.

The Role of Female Investors and Entrepreneurs

  • There is a need for more female investors and entrepreneurs to drive innovation in certain categories.
  • Female-driven innovation is essential in areas traditionally overlooked by male counterparts, such as women's health products.
  • Both investors and entrepreneurs have a responsibility to support women in these roles to ensure diverse innovation.

"What I realize is that there are categories that will never be innovative if we don't have female entrepreneurs and female investors."

Rachel Blumenthal points out the importance of female representation in entrepreneurship and investment for innovation in certain product categories, like women's health.

Reading Habits and Information Consumption

  • Rachel Blumenthal, as a busy mom and entrepreneur, does not have time for traditional reading.
  • She consumes information through her iPhone, including news links, Twitter, and various publications.
  • Her reading choices reflect the need for quick, accessible information in a fast-paced lifestyle.

"So anything on my iPhone is what I read, whether it is news links and Twitter or sort of the deliveries of the best publications that come into my inbox every morning."

This quote explains Rachel Blumenthal's approach to staying informed and her preference for digital media due to her busy schedule.

Crisis Management

  • Rachel thrives in high-pressure situations and focuses on finding solutions.
  • She avoids dwelling on what went wrong and instead prioritizes resolving the issue at hand.
  • Reflecting on the cause of the problem comes after a solution has been implemented.

"I kind of just go into crisis mode and it's all about the solution."

Rachel Blumenthal describes her method of dealing with emergencies by immediately shifting into problem-solving mode.

Business Pivots and Decision Making

  • Pivoting from Cricket Circle to Rockets of Awesome was a significant change.
  • Business decisions can be influenced by the needs of stakeholders, such as employees and investors.
  • Leaders may need to prioritize opportunities that serve the greater good over personal preferences.

"Probably pivoting the business from cricket circle to rockets of awesome was a tremendous inflection point for me."

Rachel Blumenthal reflects on a pivotal moment in her career that required making a strategic decision for the benefit of her business and stakeholders.

Vision for Rockets of Awesome

  • The goal is to become the leading brand in children's apparel.
  • Understanding the needs and psychology of both parents and children is crucial.
  • The brand aims to cater to the unique demands of its dual customer base.

"We are going to be the number one place that both parents and kids want to shop."

Rachel Blumenthal outlines her ambition for Rockets of Awesome to dominate the children's apparel market by appealing to both parents and children.

Entrepreneurship and Work-Life Balance

  • Entrepreneurs, especially those with families, face challenges in balancing work and personal life.
  • The digital age offers alternative methods for staying informed and educated.
  • Balancing these demands requires flexibility and the ability to prioritize effectively.

"I'm a mom and I'm running a company and I do not have time to read books is my answer to you."

The quote reveals Rachel Blumenthal's practical approach to managing her time and responsibilities as both a parent and a business leader.

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