Pam Kostka — A Conversation

Great. Hi, everyone. Welcome back to Cloudflare's birthday, 10th birthday celebration Fireside Chats and I'm so honored to have Pam Kostka here. Hi, Pam. Welcome. Hi, thank you so much for having me. It's great to be here and happy anniversary. Yeah, thank you. I've decided I'm just going to celebrate the birthday this week because it's one of those years where you got to celebrate your birthday because it's been a cloudy one. So thank you so much for being part of this and it's great to see you today. Everyone's really looking forward to this conversation, including myself. So welcome. Well, thank you for having me. Good. Well, so Pam, this week is all about reflecting the last 10 years since Cloudflare's 10 years old and the last 10 years, we're going to talk about the last 10 years and your career and some of those sorts of things. And then we're also going to look forward to the next 10 years, which I'm really looking forward to and hearing some of your predictions and thoughts. And so maybe we can start with where you're at today. Currently, you're the CEO of an organization called All Raise. Maybe you can start by just describing to the audience what All Raise is. Yeah. All Raise is a startup nonprofit. So our mission is to accelerate the success of female funders and founders to build a more prosperous and equitable future. And we really started as a grassroots campaign in the Me Too moment in Silicon Valley. Aileen Lee of Red Cowboy Ventures sent out an email to a variety of women in the industry with a call to action to say, looks like the time is now for change and that if we band together, we can make change. So from that, you know, kind of grassroots movement, we grew into, we gathered momentum and we fast forward to today, we're about two and a half years old. So a little bit far behind you. You're in our footsteps. You're in our footsteps. We're looking forward to celebrating our attempt, but we are a really large community that is looking to do two things, reshape the culture of tech and using our community as a platform or community of leaders, both in venture and the iconic founders who are on the table to really reshape the future of tech and develop what we call a new version of visionary, which is we proud ourselves of being visionary in tech. But today that really means it's true if you're a white male, but less true if you are a woman or a person of color. And then the second thing we're trying to do is to rewire the industry from the inside. We are a series of insiders. We know how the industry operates and that we believe gives us an advantage for understanding the structural changes that need to happen and how we can now seed a new flywheel in the industry where women and underrepresented individuals can also participate in the funding, founding, and scaling of the future of tech. So in a nutshell, where we are today. I love that. I love that vision. And I'm a huge fan of whatever, what you and Aileen are doing at All Raise. So I want you to be wildly successful because I want this new flywheel to go into effect. And so, you said your mission is to help accelerate the success of female founders and funders to investors, which I just love that mission statement. And so two and a half years in, how's it going so far? Yeah, well, we're still early. This problem's been around for hundreds of years in many ways. So we're still early on in the process, but we like to say we're a mile one or mile two into the marathon. But progress is looking positive in some areas and we're holding steady in others. So there's two, we do focus on founders and funders. And we like to say that because it's an ability for us to drive acceleration faster by having our hands on both dials. It's the antithesis of what you want as a startup though, because startup says focus, so we should pick one or the other. But we really need to have our hands on both of those dials. And so the first one is really from an investor perspective, what is the representation of women in the most senior positions within venture firms? And we think this is important because obviously when you have a more diverse group of individuals who are making the investment decisions and writing checks, you can attract a more diverse pool of investment candidates, attract, do better due diligence, and have better performance. And so from that perspective, when we started, women were at 9% representation in those senior ranks. They've now climbed up to 12%. So we are making steady progress forward and we have another eight years. We're trying to get that to 18%. When it comes to female founding, I would say we're making slower progress here. So we really look not just at overall founding, but we look at anybody who's a diverse founder. She doesn't need to be the CEO of a company. She just needs to be a founding member of the company. And that's important because we want her in the cap table with a major stake in the cap table. And for that, if you look at the early stages, so let's remove some of the noise that might be happening with later stage funding rounds and kind of the disproportionate weight that can be put there through one single funding. We started at 11%. We're kind of rounding up to 12%. So the progress there is slower. Obviously in the time of the pandemic and the recession, we are deeply concerned and at the same time, really optimistic. So deeply concerned that in times when there is high stress and great uncertainty and risk that people will revert to pattern recognition and muscle memory and only invest in people that they know, which unfortunately is going to look a lot or repeat entrepreneurs. It's going to look a lot like white men. And so we're a little bit concerned about that. The early numbers show that we probably aren't eroding as much as we thought, but we also look at the fact that there's a great opportunity. Silicon Valley goes through these boom, bust cycles. The tech industry has done these. We had the .com, we had the 2009 recession. And so we're also looking at this, out of this will be the next generation of Amazon's, Google's, Facebook's. And we're really optimistic that we have a chance to make a difference here and how we thoughtfully and intentionally fund companies and scale out those companies with DEI at their center. Of course, I have to say the place where we're probably abysmally failing as an industry, we like to use these industry metrics is when it comes to underrepresented funders and founders. Those numbers tend to be closer to zero in some cases than even single digit percentages, especially when you look at underrepresented women, the amount of funding going to them, the representation as investors, we have a lot more work to be done there and nobody should be satisfied with where we are on that front. Well, I am definitely a half glass full for a person. And so I thought the numbers were better than that. I feel like we're making progress, but you just kind of woke me up. Another reminder that now is not the time to sit idle, that there's still a lot of work to be done. So when you think about the funder making more progress in a relatively short period of time, I mean, going from nine to 12% in less than three years, I would say is actually quite good progress. Then when you look at female founders who were, you said it's kind of been a little bit more flat, 11 to 12% in the same time period. Why do you think the funders have moved faster? Have you ever done that analysis? We have lots of hypotheses about why that might be true. And we actually thought that the amount of funding would be different and move at a faster pace because just the hiring cycles and the nature of a fund is being 10 years that the venture side and the funder side would go slower. We do think that there were some great unicorns, you, Cloudflare, and people might've missed out on these opportunities. And they missed out because they went to their muscle memory or they couldn't fully understand or do the proper due diligence on an opportunity like Stitch Fix or the RealReal. And so we are, I think that accelerated people into saying, oh, if we're going to be competitive, if we are going to have access to the best opportunities moving forward, we really do need to change the number of people around the table. At the same time, 65% of firms still don't have a single female partner. So this is about where you are in your understanding. And we always say it's an adoption curve. And so those early mover firms are embracing the economic opportunity that's in front of them. And we're scratching our heads, why is this so hard on the female founder side? And we think there's still just a lot of unconscious bias that we have to pull down and break down. But we do think that women being at the firms is going to crack that open, not because we believe that women should only be investing in women, but because we think they just bring a diversity of perspective. And so men should be investing in women as well as women investing in women. No, but you said, so much of what you said resonated, especially the part about the pattern recognition. And I have two great co -founders, Matthew Lee, and I started Cloudflare together. And Matthew and I are still running the business. Lee, unfortunately, is very sick, so had to leave. But it's interesting. And we're not a consumer business. I mean, we build infrastructure for the Internet. We are super geeky and technical. And early on, I had this terrible experience where there was a very well-known venture fund with a lot of Caucasian older men. And they literally said to Matthew, women don't belong in infrastructure companies. So we like your idea, but we don't like seeing Michelle at the table. And I was like, that's 2010. I was like, in what world does that happen? But it's true. I think that some of these things do happen or definitely happen. And so only another reason why All Raise is so important to be a huge success. We need you to be a smashing success in the next decade. Because you said that you think the reason why the firms have gone into this is because they're kind of following the money. They are missing out on great opportunities like Stitch Fix and Rent the Runway. Those are great businesses, and they should be investing in those. So they're doing it for the economic reward. Well, the same with women who should want to start companies. There's a huge economic reward, too. And I want more people to follow the money on the founder's side, too, because there's a lot of financial upside and reward. Yeah, the numbers that I shared can be daunting, which is why I sometimes am hesitant to share them. But we do have to hold ourselves accountable. And I'm a big believer that what doesn't get measured doesn't get fixed. But I don't want that to stand as an obstacle for anybody to be incented to move forward and to do something. We have a great opportunity when we receive this flywheel that we're talking about, because that flywheel is working really good, and it's gathering steam and momentum for a very small segment of the population, the minority segment of the population. So when we receive that flywheel with underrepresented founders, underrepresented funders, women at the table, and we diversify that flywheel, we're also going to diversify the cap table, and we're going to create wealth. And that wealth will be get wealth. And that is why the flywheel is working so well today is because the wealth generation. So we did a study that showed there was something, I might get the numbers wrong, $355 billion worth of value created on the day of IPO in the last decade for the top 10 IPOs. So we just looked at the top 10 IPOs, $355 billion of that. 92% of that went to white men. So like we have a real, it's creating a real wealth disparity, and there is an opportunity to change that going forward. And the economics support changing it, we always like to say, this is making the pie bigger for everybody. That's the amazing thing about diversity, equity inclusion is we're not talking about reslicing the pie, so that those who have get less, we're talking about massively increasing the pie. It's $4.4 trillion worth of value that's waiting to be tapped when we choose to be more diverse, when we are more diverse. And so that's a lot of wealth generation that can be had. And then going out and solving other societal problems with that kind of wealth democratization. So there's a lot, there's a lot of value in doing this. But we understand the industry is also a capital industry. And there are the preponderance, the tsunami, I like to say the tsunami of evidence is that diverse teams, not just female founders, but diverse teams outperform homogenous teams. And so like, build that into your company. If you're a smart CEO, you are going to be building diversity into your company, because it's going to help you, it's going to help you build a better product, it's going to help you address a bigger market, it's going to generate bigger financial returns for your organization. That's exactly right. And it's a better place to work, more fun place to work, too. Yeah, you're right. All the research says that 100%, 100%. And so, okay, so you're so passionate. And you said, you see this flywheel and this great vision. So when you talk to people about All Raise, is it, do people get it? And they understand it's a win, win, win? Or are there still people you have to convince that this is a good idea? People are on the spectrum, everybody's in a different place in their learning curve. And so I really do look at it like, I grew up in the Jeffrey Moore crossing the chasm era. And so I look at the early adopters, the mainstream adopters and the laggard adopters, and I kind of like, cut right down the middle and say, our, our emphasis is has to be in the early stage and the early adopters. And that's where we leverage our community a lot, who are the people who are leaning in and understand the value and that the winnings are going to go to those individuals. And again, this is a capitalist driven industry, it's about making money, the people who make those moves are going to make more money. And that is naturally going to start pulling people whether they're wherever they are in their educational spectrum, into taking that same action, both as investors and the firms and how firms are being created, as well as the founders themselves and how they're building up their their organizations. And so no, everybody's not there at the table. And there's, you know, we'll have conversations everywhere and meet people exactly where they are and give them tools and assistance to help move them forward. And there are some people you have a conversation with, and you say, okay, like, well, let's let this just play out and see where this is, again, in an economically driven environment. Is your company going to be the one that's succeeding? And the dominant, you know, top one or two in the industry? Or is it going to fall by the wayside as a result? Wow, wow. Well, that's, you're a better person than I am, Pam, that you're so eloquent about people where they are, because it's just like, this is so obvious, you need to get on the train and be part of the change. But that's probably the more realistic. You got to meet people, you got to meet people where they are and create space for learning, is what I always say. Like, we always want to make sure that some people are just waking up to it, and you're welcome to the table, and you're welcome to the tent. Good, good. Okay. So, I mean, you must get this asked all the time, but I'm going to ask, you know, does LRAs have kind of some points of view around a couple things that would make more women get involved on the funding side and more women involved in the founder side? Are there some, like, the one, two, three, the checklist of things? Like, we just did this, we'd make so much more progress. Is it as simple as that? Or is it a little bit more complicated? It's not as simple as that. If it was, we would have already done it, right? I think it's a multifaceted problem, right? It's like any kind of social good is going to take multiple avenues. But we do like to say that there are some very common things that people can do. And so, one of the very common things is be intentional about expanding your networks, right? So, get out there. If you're, get out there and meet a Black investor. Get out there and meet a Black founder. Get out there and meet a woman, a female founder. Get out there and be intentional. Don't sit in your chair. They're not going to come to you. We have this, somebody gave me a beautiful analogy once and said, you know, it's like fishing in the forest. There are plenty of fish. They're over there in the lake. So, if you're fishing in the forest and you're shocked and surprised to find that there's no fish on your hook, well, get yourself over to the lake. And you're going to have to get up out of your chair and walk over, especially if your company or your firm doesn't look diverse. It's not welcoming to somebody. And so, you have to be intentional about expanding your network and expanding your network to do something. So, if you're an investor, who are these women or Black investors, Latinx investors that you can engage with to actually do business, to share deal flow with, to do things with. And that will widen the aperture of what you get access to, which is the name of the game. And similarly, you'll be able to attract better talent. And if you're just starting up a company, build it into your DEI framework. Don't get past that five, fifth or sixth higher without being intentional, which leads me to the second thing, which is, and I said it before, what gets measured gets fixed. It doesn't matter if I'm going to go run a marathon, I have to have a training schedule. I have to know that I am and hold myself accountable to doing the work. Otherwise, I'm not going to finish the marathon. And so, you're not going to get there if you just think you'll make, you'll do it. You need to treat it like OKRs. You need to make it a strategic imperative. You need to tie executive compensation to it. Do what you need to do in order to keep the focus and make sure that there are, that is appropriately resourced. And so, those are kind of the two things that we always say, like, do that. The third thing I always say is, for the person who's sitting there saying, I'm not the CEO of the company, I'm not a partner at the firm, what do I do? There's all kinds of things that you can do on a daily basis. You, too, can expand your network and make sure that you're building a diverse network from the ground up. Spend some time listening twice as much as you speak. Do all of these things that, you know, if you see a microaggression, address it. If you are hiring somebody in your department, you may not be the hiring manager, make sure you're bringing some diverse individuals to, you know, making sure that you get a diverse slate of candidates. And so, there's something that everybody can be doing. There's no one who can say, well, I just have to wait and see. Nobody has to wait and see. Everybody can be doing something. That's good. I love that. Those are pretty, I mean, those are very actionable. I think we can all get behind that. And, you know, Stuart Butterfield was, I spoke with him this morning, that's how I started my day. You're my middle of my day, and then I have a great interview at the end of today. And one of the things he said was about being intentional. Like, he really made that point of, like, you got to be intentional about it. And if you, using your forest and lake analogy, he's like, if you have a bunch of seeds planted, more likely you're going to grow a different diverse forest versus just the same sort of folks. So, if you bring in an early, it has compounding effects over time too, which is great. It's a great example of how it's done, right? Yeah, right. Exactly. I mean, he's been such a huge champion, which is amazing. Okay. So, right now you're the CEO of this amazing organization, All Raise, that we are all now rooting for your huge smashing success. We want you to be the huge success story of the next decade, Pam. But before this, you were an operator at so many growth companies, startups, B2B companies, consumer companies. And as you think back now, what are some things in hindsight that you're like, oh, I'm so glad I did that. I would absolutely do that again if I went back to an operating role. And what are some things maybe with time you're like, actually, I would do that differently? Any reflections as you think back to your operating role? Yeah. I do try not to, I look in the rear view mirror to inform myself, but not too much. You know, everybody's always like, oh, I wish I hadn't gone to that company. There are some companies, you know, there are some massive successes. There's some IPOs in there. There's lots of great M&A. There's also some crash and burns, which is part and parcel of the experience of being a startup. The odds are against you. And from those, I learned the most. And it really did help me be better in the situations where I could succeed because I've suddenly understood this is not hard. What we're doing right here is not hard. Like that other thing was really hard when my business evaporated overnight or, you know, Apple rolled over and crushed me or whatever happened. That was super hard. This is a manageable, navigable environment. So I don't really spend a lot of time wishing I hadn't done something. I do think the things that I wish I had done more of was take more chances. I had a very planned career. By 30, I was going to be a VP. By 40, I was going to be a CEO. And there was a great intentionality and drive towards making that happen and just declaring that and then charting the path to make it so. I do think that there were times when I might have missed out on opportunities to just expand myself. And so when there was somebody who pulled me back and said, I know you've never run a sales organization before. I want you to run this organization. And then said, like, I believe you. You can do it. And then I just did it. Those were the really expansive opportunities I had. So in going back, I'd give myself more of those chances to be, no, I'm up the product management route. That's where I'm going to stay. Like, no, diversifying myself and giving myself the opportunity to diversify myself was one of the best things that I could have done more of. That's amazing. I love that there are people who do that, but that these allies UK say, you should take this opportunity. You'd be really good at it. It's like, we need more people like that in the workforce because it, it can make huge impacts in people's lives. It can be game changers. And, you know, that's surround yourself with people who are your mentors and your advocates and are creating these opportunities for you. And they can pull you out of the weed. Sometimes, sometimes you're too close to your own career and you need somebody to kind of pull you back and give you some advice. Right. You're too, you're too focused on executing on your excellent plan. That might even be better, Pam. Yeah. There's another, there's another path. There's not just a singular path. There are multiple paths to get to the same destination. That's true. One of the things that I've kind of reflected on through my career is like life is a collection of experiences and it's the same sort of idea where now I'm like, actually you want to collect a lot of experiences. That's actually a lot where a lot of the ahas and the richness, and you learn a lot and you expand yourself and you never quite go back to the same shape after. And I feel like that's where you really feel like you make progress. So yeah. I call it living on my edges, right? I always like to live on my edge and get myself into a comfortable zone and think like, okay, I'm right. I don't think I can take on more. And then I learned, actually my edge is way farther over there. I just didn't know it. So I was too tight. And I think that's what some advisors can do for you is to show you that your actual zone of comfort is way further out than you actually think it is. I love that. I love that. All right, good. Okay. So any last question about the past, and we're going to talk about the future, which we've already talked a little bit about, but you know, again, you've been in technology for so long. Again, you've seen so much. Is there anything that's surprised you about the Internet the last 10 years that you can share with the audience? I guess the speed, like I thought, I can date myself now. I was here in the .com era and we pride ourselves on like red-eye flights before, you know, I remember before COVID, we were just taking red-eye flights and it was go, go, go, go, go. And the speed at which execution has continued, it's always been, hey, you're in a venture capital backed startup that there's a compressed period of time in which to execute. But the speed at which the technology is now enabling us to execute, to test and refine, all of that is so much faster now and far less art and a lot more science. Those are two things that have like just stood out to me in the journey. As we go forward, I think that there's just an interesting time now around leadership that, you know, as we find where's tech, where's the tech lash coming from, what is the society in which we operate, so we can talk about that next. But looking backwards, it's really just this, the speed at which it's happening. And then, you know, the bundling together of we are not, we are no longer separate, like business to business versus consumer, they're closer than they ever were before. I still think they're separate and discreet, but this kind of consumerization trend, and the overlap that we have, where we now use the same kind of growth metrics on both sides of the fence, slightly different, but is kind of a merging of technology as well. Yeah, no, that's the speed piece is just until you really are in it, you don't realize like it's just the pace at which you're building things and pushing work working on projects is a very good one. Okay, so looking ahead, I'd love to hear your comment about what you think the opportunities are. So interesting to hear this, you kind of gave us a hit around, I'd love to hear more about, you know, where do you think the opportunities are, maybe the challenges that lie ahead, and we have about four minutes left. So okay. Well, clearly, given what I do all day, I think one of the big opportunities is DEI, we can see some blockbuster growth coming from this and the way that we build our products, and hopefully maybe even head off some of the issues that we've had as we've, ooh, the unintended consequence of building out something, and heading that off a little bit more proactively, because we have diversity around the table. So I'm really excited to see, and to see the types of companies that we will birth that really play to a much wider variety of the population that's served by technology. I think that's one massive opportunity. The other one, I just think is leadership. And it's going to be interesting to see there is millennials, there's Gen Z coming up, they care a lot more about mission-based organizations. So whether you choose to be a nonprofit, or whether you are for profit with social impact, I do think this is going to stretch leadership, that there's no longer a bifurcation between like work life and personal life, that all of this comes together. It's going to get increasingly challenging, but it's also an opportunity for founders and leaders and executives and boards to be very thoughtful about how they're building out their companies, and that employees are going to put a lot of upward pressure on that leadership. We see some of that playing out in the press right now. It's going to get increasingly challenging. Yes, yes, yes. I think a live debate from some of these tech leaders, that's one of, especially the coin, Brian Armstrong's Coinbase, which has such strong opinions around, I keep wanting to set up a debate, a debate on Cloudflare TV. So maybe next week, I was like, yeah, Dick Costello, Paul Graham. I mean, these people are legends in the tech industry, vehemently disagree with each other. It's like, you got to give them a chance. You got to give them a chance. I think this is an interesting inflection point. It'll be interesting to see where this type of leadership goes and what happens to companies and how, not just in tech, generally, but I think, but especially in tech, where we have a very vocal employee base. And I keep, like, I love these ideas of companies that have really amazing technology, right, deliver a ton of value, have great businesses, and make a positive impact in the world. Like those, I mean, that, if you get more of those, that's like, that's- We used to think those were mutually exclusive sometimes. I don't believe that they're mutually exclusive going forward. I think everybody with intentionality, it is, again, a muscle that we have to build up, just like as a DEI muscle, we have to build up how to be a mission-oriented, how to do good, and to not make this something that the stock market penalizes. Because historically, like, yeah, when our stock is good, we can be a good social actor. When our stock is bad, we have to dial down resources and not be a good social actor. I think that's going to get blown up in the coming 10 years, and I'm interested to see how that plays out. And we're, like I said, we're just at that inflection point now. You could have a very interesting debate right now as we go through this inflection point. Definitely. I think it's magical when it happens, and I hope, like you said, more people find it. Okay, so we're down to the last, like, 45 seconds. Any thing that worries for the next 10 years that you want to bring up? Algorithms. We're going to code in the bias. We don't, you know, the algorithm is only as good as the people who are building the algorithm. We are human, we are fallible, and we are not always diverse in how we're building that out. And so if algorithms are going to start increasingly driving our technology, we have to be very cautious about how we're building those. Well, let's leave it there, Pam. This was amazing. I am leaving so energized and uplifted and invigorated. Thank you so much for everything you're doing for women, underrepresented minorities. Again, we all want you to be a huge success, and I speak on behalf of everyone listening that if any of us can be helpful, you let us know because we want to come join the community. We're open. We're open for all. You're a member at our table. We appreciate your voice, and we welcome everybody to come be part of the All Raise momentum and movement. Awesome. Thanks so much, everyone. Thanks for joining. Thank you, Pam. Have a great day. Thank you.