Jenny Lefcourt on Dropping Out of Stanford Before It Was Cool (Part 1)

Jenny Lefcourt is currently a partner at Freestyle Capital, a venture capital (VC) company with $216 million in funds and investments in over 89 companies to date. She graduated from the University of Pennsylvania Wharton School of Business in 1991 and started working for a big company in New York City before becoming “disillusioned with corporate life.” After a year of backpacking around the world, she moved to Palo Alto and have since been “hooked on the Valley way — combine big ideas, smart people, hard work, and a little bit of luck and great things will ensue.” Her adventures include dropping out of Stanford to co-found her first company, WeddingChannel.com, a gift-registry aggregator; starting another named Bella Pictures; and attending the Circus Center in San Francisco for contortionism.

Stories worth noting:

Accounting to Entrepreneurship

You started off in accounting and you mentioned it wasn't enough. Why did you choose to go into accounting and then how you made the shift to entrepreneurship?

From being a Wharton undergrad and having a concentration in accounting to coming from a family of CPAs (Certified Public Accountants), it felt like a very responsible path to go down, a failsafe I could fall back on. All the firms come to campus and give you offers — it's so easy. So I followed the path of least resistance. I remember actually crying before I started, saying, "Why did I do this? I know this is not what I want to do." But here I was.

It was not the job for me. I wish I could tell you that I learned so much, that it was amazing. In the first few years as an auditor, you're not supposed to think. The general consensus is “what we did last year is what we do this year.”

I worked two years to the day, quit, and went off to backpack around the world with a friend with no idea what I wanted to do. I just knew I had to close that door because life's too short.

When I returned to the states, my boyfriend — now husband — was at Stanford. I went to their career center and — this is pre-Internet — looked through every binder of jobs. I took down jobs in nonprofits, teaching — you name it. I had no idea what to do, but the job descriptions in Silicon Valley sounded so fun, so I applied to work at a software company as a junior marketer. I remember at the interview, I was having conversations with some of the smartest people I had ever met, but they were all wearing shorts and T-shirts and I was blown away.

I really loved that job. It was a meritocracy. The more you were willing to do, the more they were willing to give you. It was the first time that I had experienced how I want to work. I did that for three years, then went to the Stanford Graduate Business School in 1997. While studying there, I worked on a business plan for WeddingChannel, more as a way to learn about venture capital and entrepreneurship than actually being that serious about our business. But as we worked more and more on it, we got very serious about it, believed in it, and once we got a term sheet from Kleiner Perkins at the end of our first year, I decided to drop out of business school and pursue that. Editor’s note: A term sheet is a legal document denoting the financial agreements between the venture capital firm and the startup. Kleiner Perkins Caufield & Byers (KPCB) is a leading venture capital company.

That must have been quite a leap of faith to drop out of Stanford to pursue that! Was there a specific moment in which you actually knew WeddingChannel was a winner?

The moment we got a term sheet and got funding, there was no question. People say, "God that must have been so hard," and I know it sounds unbelievable — but it just wasn't that hard.

I went to business school to have doors open. They just opened up early. My co-founder and I sat there asking ourselves, “So should we?” and we're both like, “Yeah.” It was a no-brainer for us.

I remember going to the Dean — this is before people regularly dropped out of business school — and we explained, "Hey, we would love to pursue this. Now there's a chance it won't work out, and if it doesn't, we would love to come back.” And he said, “If you want to come back, it's because you failed, and we don't want failures here.” We're like, “Well, that wraps it up!” They have changed the policy since, as they realized too much is going on in the world and the dot-com era called upon too many people, so they got a lot more flexible. But since we were first, they were not prepared for that. I still have a great relationship with Stanford: I love that school, I speak there, I give there. It's all good.

That's surprising to hear “we don’t want failures here” was Stanford’s attitude back then in 1997. Now, failure seems to be encouraged in the Valley.

Yeah, it's a very different world that we're in now. He had said to us, "Listen, if it’s that good of a business, it'll still be here in a year [once you graduate]," and we're like, "No, it won't." Here's an opportunity that we think is a perfect application for purchasing on the Internet. It won't be here in a year — someone will take it. This was a new phenomenon back then. Now, you don’t have the luxury of time.

So comparing your time as a founder during the dot-com era vs as a venture capitalist now, what do you think has changed in how people approach entrepreneurship?

Now, everyone wants to be an entrepreneur. It's the hip thing to do, but it's really not for everyone. The media glamorizes it, but it's hard as hell. It's lonely, it's grueling, it takes a lot out of you. The people who did it back in the day really had a vision and really couldn't carry on without it coming to fruition or at least trying.

Now people are saying, "Oh, I really want to start something," and then they try to come up with ideas. Since there’s a lot of smart people going down that path and so much capital available, you end up with a lot more noise. You get a lot of businesses that maybe shouldn't be funded because they're not meant to be big businesses or there are five other people doing the same thing. But people will fund them because there's so much capital.

Jenny Lefcourt has served as a startup pitch judge at TechCrunch Disrupt since 2016.

Adding Value in Tech

You started off in business and then founded an internet startup. At Penn, I can't even tell you the number of students who have asked, "I only know business. What does the tech world really see in me?" They have this fear that they aren’t valued as much or that they can't do much there. Did you have that fear going in and what were the biggest challenges you had to face?

The biggest challenges were what we were doing strategically. For example, Amazon.com had just gone public then and was doing really well. At the time, they were only selling books online and it makes sense that people would buy a book online because you know exactly what you're buying. There's no mystery because you don't need to touch and feel it. We asked ourselves what else has those attributes and decided wedding gifts are perfect. If you put a vase on your on your registry and it's the right price point for me, I don't need to touch and feel it. You already picked it out and I just need to buy it for you.

Thoroughly understanding the customer, and understanding how the market should work was essential. The biggest challenge is getting the retailers to see our vision and work with a startup. They were giving us their incredible brands like Neiman Marcus and Crate and Barrel, all to create this new experience. The tech is obviously something that has to be created but it wasn't rocket science. We brought on a third co-founder who heads tech and had a giant tech team because back in the day, you had to build everything from scratch. I don't mean to say tech didn't matter.

But it really was the business model, the partnerships we created, and the experience we provided for the brides and grooms and their gift buyers that was going to make or break this business, not the technology that enabled it.

Do you recommend that non-technical people still learn that technical side?

Obviously that's a bonus. No matter what you're building, tech is going to be a big part of it. Even if you're not the one coding it or in charge of your engineers, understanding it is going to be positive. Do I think you must be technical in order to be successful? No, I do not. But I think then you have to be able to find someone that you know and trust who shares the same values, same leadership so that they can create the technology that supports the business that you're creating.

Stay tuned for Part 2: Women in Venture Capital!

Editor's note: I first met Jenny on the Wharton San Francisco trip in January in which she told us her story, along with several other alums. Not only had she thrived in the male-dominated entrepreneurship scene, she is currently tackling the venture capital industry as part of the eight percent of VC partners that are women. I met her again at a Wharton Entrepreneurship lunch and learn in which we talked about how female entrepreneurs only get two percent of all VC funding and personal advice she had for students. I’m proud to call her a strong role-model of mine and hope her story can inspire many more students to keep hustling despite societal pressures.