Intro
In this episode of the “Master of Scale” podcast, host Reid Hoffman interviews Mitch Kapor and Dr. Freada Kapor Klein, the founders of Kapor Capital. They discuss Kapor Capital’s unique approach to measuring success, the importance of diversity and inclusion in company culture, and the impact of their investments on underserved communities.
Main Takeaways
Funding Startups with Social Impact
- Kapor Capital only funds startups with a social impact mission.
Measuring Success with “Distance Traveled”
- Kapor Capital uses a unique metric called “distance traveled” to measure a founder’s success.
- “Distance traveled” takes into account where a founder started from to get where they are now.
- Kapor Capital uses the unconventional metric of “distance traveled” to consider a founder’s potential and likelihood of success.
Founder’s Commitment and Mission Freedom’s Investment Strategy
- Kapor Capital looks for founders who are committed, know their sector, and have a plan.
- Mission Freedom’s investment strategy at Kapor Capital looks for founders who have had to run faster than their competition due to being on the outside track.
Bitwise Industries: Tech Education and Inclusive Workforce
- Bitwise Industries was founded by Irma Olguin Jr. and Jake Soberal, who both experienced the transformative power of a tech education.
- Bitwise offers paid apprenticeships to those traditionally shut out of tech, like veterans, unhoused people, undocumented people, and the formerly incarcerated.
- Bitwise provides support for apprentices’ daily life obstacles, such as childcare, transportation, and food insecurity.
- Bitwise’s mission is to uplift the workforce and revitalize underestimated cities, starting with their hometown of Fresno.
- Bitwise’s success can be seen in the fact that 30% of new home buyers in Fresno are bitwise employees or trained at bitwise.
Building Diverse and Inclusive Workplaces
- Kapor Capital helps companies formulate a strategy to meet their diversity and culture benchmarks, including implementing an internship program, bootcamp-like program, and partnering with boot camps.
- The Founders’ commitment helped Kapor Capital companies set their benchmarks and meet them, and not meeting those benchmarks had consequences.
- Kapor Capital helped portfolio companies build teams that look like their customers.
Impact Reports and Wall Street Recognition
- Kapor Capital released a comprehensive impact report in 2019 that showed financial performance since committing to social impact criteria.
- The report excluded two high-performing investments to show a narrower data set and commitment to impact focus.
- The report showed that Kapor Capital was a top quartile venture fund with 3x TVPI and 29% IRR, built with a diverse founder base.
- The report captured the attention of influential voices on Wall Street and turned conventional wisdom on its head.
- Kapor Capital released another impact report in 2022 that continued the success stories of portfolio companies through the turmoil of 2020.
Leadership Succession and Continued Impact
- Founders Mitch and Frida stepped back from day-to-day leadership in 2022.
- Kapor Capital is now led by Brian Dixon and Ulyly, O’Know-Vac Pory.
- The succession was thoughtful and raised a $126 million fund, one of the largest black-led funds.
- The founders still support diverse and mission-oriented companies.
- Mitch and Frida have not stepped back from sharing their theory of impact and diversity in investing.
Summary
Kapor Capital’s Unique Approach to Success Measurement
Kapor Capital stands out by only funding startups with a social impact mission. They use a unique metric called “distance traveled” to measure a founder’s success, taking into account their starting point. This unconventional metric helps them identify founders with potential and a commitment to making a difference. Mission Freedom’s investment strategy focuses on founders who have overcome obstacles and are dedicated to their sector.
Bitwise Industries: Tech Education and Inclusive Workforce
Bitwise Industries, founded by Irma Olguin Jr. and Jake Soberal, provides paid apprenticeships to underrepresented individuals in the tech industry. They offer support for daily life obstacles and aim to uplift the workforce in underestimated cities. Their success is evident in the significant number of bitwise employees becoming homeowners in Fresno. Bitwise’s human-centered metrics for building companies contribute to their achievements.
Building Diverse and Inclusive Workplaces
Kapor Capital helps portfolio companies set and meet diversity and culture benchmarks. They assist in formulating strategies, implementing internship programs, bootcamp-like programs, and partnering with boot camps. The commitment to building teams that resemble their customers ensures inclusivity and a deeper understanding of the market.
Impact Reports and Wall Street Recognition
Kapor Capital’s comprehensive impact reports showcase their financial performance and commitment to social impact criteria. These reports have attracted attention from influential voices on Wall Street, challenging conventional wisdom. The recognition of their success with a diverse founder base highlights the importance of investing in companies with a mission.
Leadership Succession and Continued Impact
The thoughtful succession at Kapor Capital, led by Brian Dixon and Ulyly, O’Know-Vac Pory, has resulted in a $126 million fund, one of the largest black-led funds. Mitch and Frida continue to advocate for diversity and mission-oriented companies, emphasizing the significance of making a positive impact in the investing ecosystem.
Conclusion
Kapor Capital’s approach to funding startups with a social impact mission, measuring success with “distance traveled,” and building diverse and inclusive workplaces has proven successful. Their impact reports and recognition from Wall Street demonstrate the importance of investing in companies that prioritize social impact. The leadership succession ensures the continuation of Kapor Capital’s mission to support diverse and mission-oriented companies. By prioritizing both financial success and positive societal change, Kapor Capital is changing the landscape of investing.
