Against The Herd with Allison Baum Gates

As we eavesdrop on an insightful conversation between Chris Herd, the pioneer of contemporary workplace trends, and Allison Baum Gates, the venture capitalist, and author with an uncanny knack for understanding generational differences, we uncover a wealth of knowledge about the ever-evolving world of work. Their conversation dances through a multitude of themes, echoing across the expensive digital workplace:

• Generational Interactions with Technology
• The Evolution of Communication Methods
• The Rise of Visually Engaging Platforms
• Advice for Future Entrepreneurs 

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Find The Transcript Here

Chris Herd:

Welcome to Against the Herd, the podcast where we dive deep into conversations with contrarian leaders and visionaries at the cutting edge of the future of work and living. In this episode, I'll be chatting with Allison Baum Gates.

Allison spent her entire career at the intersection of finance, technology, and the future of work. As a general partner, early-stage venture capital fund SemperVirens, Allison invests in technology transforming work, health, and financial wellness.

The fund is backed by an ecosystem of 1500 HR leaders, giving Allison unique insights in the needs and perspectives of industry-leading employers. She's also a contributing writer for Forbes, a guest lecturer at Columbia Business School and the University of California in Berkeley, and Haas Business School, as well.

Allison is also the author of Breaking into Venture, published by McGraw Hill. A no-holds-barred guide that provides real stories and tangible lessons about how powerful, profitable, and exclusive industry of venture capital works, especially for those who are not already part of the club. Please welcome Allison.

Allison Baum Gates:

Hi.

Chris Herd:

Hey, Allison. Good to see you.

Allison Baum Gates:

Good to see you.

Chris Herd:

How are you today?

Allison Baum Gates:

I am doing well today. My baby's on the mend, so hand put in mouth is falling by the wayside.

Chris Herd:

Well, I'm sorry you're dealing with that but I'm grateful to hear that things are improving.

Allison Baum Gates:

Definitely.

Chris Herd:

Well, I'm going to dive straight in. Maybe the best place to start is I got to know you a little bit actually a few years before the pandemic, or certainly know who you were a few years before the pandemic.

At that point, you were one of the few people in venture capital really interested in what I was interested in, which was the future of work and really how that pertained to where and how people worked.

Actually, a piece that I've got you to be thankful for, which led me on the path of building Firstbase, were the things that you were writing on Medium at the time around basically just all of that stuff. Maybe setting the scene, why were you so interested in the future of work, in general, and what drove you towards that?

Allison Baum Gates:

I started my career in a very traditional work environment. I was working on the trading floor at Goldman Sachs. Very old boys club culture, but also literally chained to my desk from the moment I got in at 5:00 AM until the moment I left at 5:00 PM, and then would have events and things in the evenings.

Over the course of my years doing that, I felt, personally, the challenge of being in that kind of environment mentally, physically, and productivity-wise in terms of how you think about evolving and innovation. It was just so incredibly unhealthy.

I left to join a venture-backed startup called General Assembly. There's a whole career pathways piece of that, but I started at one end of the spectrum. Then building General Assembly as a venture-backed startup that started to expand globally, I moved to Hong Kong and launched our business in Asia.

Then I started interacting with all these startup ecosystems all over the world. I saw how the startup way of working, which is more flexible, more productivity-focused, is not necessarily about being in the same physical space all the time. I saw it spreading like wildfire.

To me, that growth and that expansion in terms of working in a different way made me believe that if this way of working can reach the smaller cities in Indonesia, it isn't just Silicon Valley, it isn't just New York City, it isn't just me. But working partially remote globally and more flexibly is really where the future is headed.

That's when I started thinking about, well, what are some structures and frameworks, as people default to the old way of doing things because they know it works? It's like nobody gets fired for buying Microsoft kind of thing.

Chris Herd:

Right.

Allison Baum Gates:

That was what really tipped me off to starting to think about more global, distributed, flexible ways of working.

Chris Herd:

How has your thesis evolved? Early on, as I was encountering you, it was very clear where your beliefs were. Probably tied to the General Assembly thing, something else that's always been obvious to me about your deep care and passion for the space is really democratization of access to opportunity. How has that changed as the world's changed, as it evolved as COVID happened and it really accelerated this trend? What's interesting for you looking beyond where we are today?

Allison Baum Gates:

The short answer is no, it hasn't changed. In 2018, started putting a lot of work into articulating what did I believe the future of work would look like, and came up with my framework of the three Ds, which is the future of work is digital, distributed, and data driven.

The only thing that I've added is dynamic, and that's something I added during COVID just given... And it's true today, when you look at the number of significant disruptions that have occurred over the last several years, to how we work.

It's only changing faster and more frequently than ever before. I thought that warranted its own category. But the concept of working in a digital, distributed, data driven, and dynamic way, I've always believed that. COVID certainly accelerated it.

Chris Herd:

Sure.

Allison Baum Gates:

What has changed is my mindset. I do, as you mentioned, very mission driven, truly believe that this new way of working is better for all different types of people. If you think about why women drop out of the workforce, part of it is just this traditional structure.

If I were still going into an investment bank from 5:00 AM to 5:00 PM every day, that wouldn't work with my nine-month-old and it wouldn't be what I wanted for my life, either. There's certainly an element of that.

But what I've seen through my investments and also some of the social movements that have happened since 2020, I think about the future of work in a much more pragmatic way. There's what you believe should be, and then there's how actual buyers and customers make decisions. Tying where you think the world is going to what people are truly incentivized by today is a big shift in mindset for me, seeing how things have evolved.

Chris Herd:

I find that piece really, really interesting. Where I would jump off there, too, would be we are both guilty in a way of spending a lot of time speaking about the future of work. But when you peel back the curtain and you look behind it and the real rationale as to why your interest in this space, and this is certainly why I am, there's a deep family history to it, as well.

On my side, it was my dad owned and operated a business. He fell out with his business partner, and we basically spent the next eight to 10 years in struggle, strife, real economic struggle. For me, at that point, I'm a child and I started questioning the world where I'm like, how can my dad who's incredibly hardworking and talented, not get a great job?

You come to it from a slightly different angle, but maybe end up in the same place, which is disruption is coming whether people like it or not. Tech has largely been the biggest driver of that.

Allison Baum Gates:

Definitely. I grew up watching both my parents' jobs being replaced by technology. My dad was an architect, my mom was a graphic designer and observed how challenging that can be from both a financial and an emotional standpoint. That really impressed upon me, it's better to be on the side of the disrupting as opposed to disrupted.

That was a big reason why I wanted to write Breaking into Venture. Because even if you're not investing in startups, even if you're not planning to be a professional VC, even if you're not necessarily an entrepreneur who wants to raise capital from venture, the way that we think as venture investors is all about anticipating the ways in which the world is going to change over the next five or 10 years.

No matter where you are in your career, if you want to be able to navigate that change, you have to think about it proactively. While that's not, obviously, the title of the book, the book is called Breaking into Venture, but it's that mindset and that way of approaching the world around us that is valuable for anybody trying to navigate that disruption.

Chris Herd:

There are two parts I really, really enjoyed about the book. You laying out your own personal journey where you're like, well, I saw this disruption with my parents and their careers. I went to Harvard. I end up on Wall Street, and then I start to see the disruption happening there, as well.

How did I end up in this place? I found that question, really interesting. How did that shape your transition from Wall Street to General Assembly and then, obviously, laterally into venture?

Allison Baum Gates:

It was clear to me that even though I had been spending the last 20 years trying to avoid what happened to my parents' careers, it happened to me anyway. That highlighted what are the things you can control and what are the things you can't control?

It was clear I couldn't control necessarily, yeah, we'll wait till I'm president of the United States. But I can't control the way in which the world is moving necessarily. But I can shift my way of thinking and my approach to being part of that world.

First of all, the idea of joining a venture-backed startup that was benefiting from technology, but that was also solving a problem that I had. At General Assembly, we were training professionals and technology skills so that they could pursue work that they loved.

My problem was my skillset from Harvard, my skillset from Goldman Sachs actually didn't really apply to the jobs that were available, so we were helping to fill that gap. Everybody's life is difficult in a different way, and I don't believe in comparative suffering.

Obviously, there are some people that are dealt a much more difficult lot in life, but it's hard for all of us. That's a human experience. If you can't make meaning of those challenges, then they get to be really suffocating.

For me, taking the challenge that I have and building a solution and being able to share that with other people made it all worth it in some ways. That was a big motivating factor for me at General Assembly.

Then once I got in-house at a startup, saw actually how powerful our venture investors were in terms of making decisions around our product, or go-to-market strategy, the people we hired, what we built when, what markets we went into.

Again, maybe I'm a control freak or something, I could dive into that with my therapist later. But I didn't want to be subject to these things happening to me as an operator. I wanted to be able to call the strategy of the direction. That helped me see that being a venture investor was the way to do that.

Chris Herd:

Building on that, there's maybe two other things I found really interesting in your view of the world, which are broadly universally applicable. In the book, you speak about building a career in a world that's, obviously, increasingly going to be struck by disruption is inevitable in a way. That's my read.

Some of the things that you lay out about how to think about where the world's going and, in a sense, predicting where the puck is heading, that feels really important in today's world. And to branch off and actually make that question rather than a statement. To pair this to the relationships that you have at Semper, you're in a really unique position in my mind where you're at the cutting edge of work with a number of different companies.

You get to spend it with early stage investments. You get to spend it with much bigger businesses that you guys obviously partner with. What are you seeing in regards to AI? How do you think that becomes the next disruptive piece, or does it? Is generative AI the next blockchain?

Allison Baum Gates:

I don't think, well, the jury's still out on blockchain, so I won't say that's necessarily dead. But I absolutely think that we are at a certain point. A lot of our team has been talking about AI being at this iPhone moment, where there is a whole new ecosystem and world of possibility that is unlocked by the capabilities that are becoming more available today.

It's interesting, when we think about investing in companies, startups, and the future of work, one of the things that's really cool about our network at SemperVirens is that we run this community of senior HR leaders at publicly traded companies.

These are folks like the CHRO of UPS, or the former CHRO of Visa, ADP, BNY Mellon, some of the biggest employers out there in the U.S. Not only big, but also influential in terms of setting the stage for how large employers should be thinking about their workforce and the way in which they're working.

I've always believed it's really important to bridge that gap. Because the way that we operate on a day-to-day basis as a startup, or a venture firm is actually fairly unique if you look at the number of people that work at those types of companies, versus at traditional small businesses or non venture-backed companies.

But what I'm seeing, as far as it goes with generative AI, is that startups who are smaller, more nimble, more unit economic focused and able to iterate and innovate more quickly are going to be and are in a position to benefit from AI in a way that large companies are going to take a very long time to catch up.

I'm always looking where are the spectrum of employers from the very early stage startups that only have one or two people, all the way to the Amazons of the world that employ millions of people? Where is the opportunity and, when it comes to AI, opportunities at the very early stage?

Chris Herd:

Well, why do you think that is? From where I'm sat, in theory, the more people you have, the more opportunity there is to utilize AI to make people more efficient. In my mind, I almost see AI as, in its perfect guise, a sat-nav to make people able to do more stuff more easily, more quickly, essentially. A traditional innovator's dilemma where the big companies are like, "We just have so many people, we can't make that transition." Or, "We're just too scared to start to embrace it."

Allison Baum Gates:

I think it's a combination of both. Again, this goes back to the beginning of our conversation around how do you think things should be and then how are people incentivized today? The reality is, for a very large workforce, figuring out how to, first of all, educate that workforce in AI.

We've been seeing, with a lot of our ecosystem, people are very, very afraid of it. Especially if you're in a role at a large company where maybe you think you aren't necessarily super efficient and nobody's looking, or you need security, or it's just new to you.

People are very, very afraid of it, both at an individual level and a leadership level. I also think at very large employers, you really can't get these things wrong like you can if you're a startup.

There's so much that remains to be seen about how, what is the right business model for a lot of this innovation? Where can it go off the rails? What happens if it does? And all of that. Startups are in a position where they've got a lot less to lose by trying and failing, or trying and iterating.

Whereas, the leadership at some of these really large influential employers feel the weight and responsibility of getting it right. I think that's absolutely true. They need to get it right, also, and the consequences are much larger if they get it wrong. But that just creates different incentives and different timelines.

Chris Herd:

What are you seeing as the biggest opportunities that are just coming? AI has obviously only been here for a minute. Everyone, everyone. A lot of people at this point are relatively aware of ChatGTP and the functionality that can happen there.

The interesting things right now that are happening is overlays of that, but that's clearly not the only thing that's happening. What's exciting for you with respect to AI and then looking at that from a work, or future of work perspective?

Allison Baum Gates:

Well, I talk about this in the book, but there is basically two different types of investments. There's deep technology investments and there's innovative applications of technology. You certainly diligence those different types of investments differently. They grow and scale differently.

I am not a deep technology investor, so for the most part I'm not really looking at quantum computing or OpenAI, for example. Incredible, but not part of our universe of what we invest in, or where I have a competitive edge, frankly.

I do think a lot about how technology creates defensibility and scalability and all of that. I'm much more interested in the applications. Some of the applications I'm really interested in and excited about are how generative AI unlocks the ability to remove bias from evaluation processes or job descriptions.

The ability to automate compliance is another area we're really interested in. I also have always been looking at skills-based hiring platforms, and there's a bunch of reasons why they haven't taken off. But there's an opportunity there.

Personalized learning at scale, also really exciting. There's a lot of different applications, and whether or not those applications warrant a venture-backed business also remains to be seen. But I'm really excited about where it's going.

Chris Herd:

There's an interesting point you made there, which you're always talking about timing, which, again, you have some interesting views on in two ways. Timing, in regards to timing being everything. Like being early is as bad as being late. How have you thought about that as you've transitioned from being an operator to an investor, has that changed any?

Then the other side, from a time perspective, managing your time seems to be something you've spent a bunch of time at least thinking about if not optimizing. Increasingly, that's an important part of the modern career. Where you don't have a tangible output, you're not producing a thing. How you manage your time becomes everything. How do you think about those two things?

Allison Baum Gates:

Starting with timing, I intuitively understood this, but have seen it play out over the course of the investments I've made over the past 10 years. It's also been demonstrated in some studies that I talk about in the book. But timing is the number one factor in the success or failure of a business.

You have to have a lot of other things in order to properly take advantage of the right timing. But if you don't have that part right, if there isn't some sort of tailwind or catalyst for the adoption of a new technology, or a new way of doing things, then it's very hard to build a venture scale business on the back of it. For a while I found that very disillusioning, because there is this feeling that you can do everything that you possibly can and still fail-

Chris Herd:

Right.

Allison Baum Gates:

Because of factors that are outside of your control. But what I've learned, I'm not a surfer. I tried surfing just so I could do it because it was one of my greatest fears in life. But one of the things that struck me about being on the water and trying to catch a wave is you have to look very far out. You can start to see the signs of when a wave is coming your way, and then you have to have the motor skills in order to stand up and ride it, but you can see it coming.

Part of what I do in the book is share a framework for how we think about where you're likely to catch a wave in terms of good timing, and how to look for catalysts that might accelerate adoption of some sort of innovation. Things like demographic shifts. Are Millennials or Gen Zs starting to gain more purchasing power and where is the tipping point for that?

Things like cultural zeitgeist. If you look at mental health, for example, it was fairly niche and nobody was really talking about it. Then you started to see celebrities start speaking out about mental health. You had Oprah, and Prince Harry, and athletes all talking about the concept and that certainly helped push the adoption of mental health benefits, for example, in a way that didn't exist before.

There's policy shifts. We see that with pay transparency and legal ramifications of not having proper pay equity in place. These are all things that can lead to good timing, and it's really more about taking your best guess around what that might look like for yourself or for a business. If you don't look for it, then you're just going to end up getting smacked in the face by a wave, so definitely thinking a lot about that.

Separately, about time management and just time in general, part of what technology is doing for our world is removing friction. In a world of no friction, then resources become infinite. They go from being scarce to being infinite. Information is infinite. Opportunities are infinite. Transactions can be infinite. All this happens when you remove friction.

But the one thing that will never ever be infinite, at least for our little pea brains, is time. How we allocate that scarce resource is one of the most important choices we make on a daily basis.

I spend a lot of time thinking about where should you, because time is so scarce, it's not really like you're spending time. It's like you're investing time. Even if you're not necessarily working at a company, or not necessarily giving a founder money, you can still invest your time and build that relationship. That can pay off a lot in the long term.

Chris Herd:

Going back to the point you made up front, you guys have really great relationships with some of the leading HR people all around the world. You shared a really interesting study with me yesterday on, it was specifically on Gen Z and Millennials and how they consider online experiences. Generational differences that you're starting to see and, more broadly, are interested in.

Allison Baum Gates:

It's so interesting to see these different generations interacting in the workplace. For a lot of leadership, which is, now I can't remember what, is it Gen X? Gen X comes before Millennials? Gen X or boomers?

Chris Herd:

Yes.

Allison Baum Gates:

In any case, they grew up without technology as we know it today. One of the things I think is so interesting about being a Millennial is that I remember a time before technology, but I've had it in my career. So I can see both sides of how it works, and what it's like to have it and not have it.

Gen Z and younger Millennials have always had technology. They've always had smartphones, and they've engaged in a really organic way with digital experiences. When we have this conversation about where are we going to work and how are we going to work, a lot of older generations forget that your brain develops when you're young. Gen Z, basically, their brains have developed with technology.

There's a really interesting study about how Gen Z actually sees digital experiences as very normal replacements for in-person experiences, and they find them to be equally meaningful. So when we talk about how we're going to work in the future, that's not something that can be ignored. That's important to think about.

Chris Herd:

The natural assumption I have is that whoever the predominant communication form was when you were a child becomes the form of communication you're most comfortable with when you're a professional. If you go back to boomers, they were used to in-person relationships.

When you get to Millennials, we grew up with AOL Messenger or MSN Messenger, which probably explains why Slack feels like the same thing, but that is the next thing. I haven't used much else. Is it Snap with arrow messaging? I don't know.

Allison Baum Gates:

There was a theory when Snap was coming about, which led to the rise of platforms like Loom, is that younger generations engage with visual content in a more native way. And that recording video or speaking is easier and faster. I don't know if I still believe that. It seemed so obvious at that time but we'll see what's next.

Chris Herd:

Well, final question. It's going back to something you brought up, which is when you're out on the waves and you're looking for where the next waves are going to come from, what advice would you give to people who want to build something and they don't have the idea yet? Where would you tell them to fish?

Allison Baum Gates:

I think that you always have to fish in your own pond first. When we're doing diligence on a company, everybody talks about the importance of the team. But one of the biggest things we look for is not necessarily product market fit, but something called founder market fit.

Which is do you have experience with the problem that you're solving and is that experience unique to you, or is it something that is actually a really big market? I meet so many folks that are thinking intellectually and philosophically about all these things.

But unless you've felt it and you've experienced it and you've overcome it, I don't think it's necessarily possible to build something that's truly authentic and scalable. It has to be personal. That's where I recommend starting.

Then you can start to connect the dots and see, well, am I the only one? Or is this actually something that a lot of people are going to have to deal with? But it's that going deep on yourself, and then figuring out how you can make it wider over time.

Chris Herd:

This is a question I've had from a lot of friends who are like, "Oh, you've built a business. How should we do it?" I'm like, "Literally, start any business. Then the first problem you find that you feel personal affinity to, that should probably be it."

Allison Baum Gates:

Yeah. You got to just get out there and start trying stuff.

Chris Herd:

Awesome. Well-

Allison Baum Gates:

I agree with that.

Chris Herd:

It's been great, Allison. I appreciate you taking the time to speak to us, and good luck with the book.