There's this stereotype about startup founders, I'm sure you've heard it before. Some young white dude who dropped out of college … talking about disrupting this, or uberizing that.

Well today’s founder is the complete and polar opposite.

Tiffany Dufu has spent her entire career helping other women excel at life. Especially women of color like herself. She wrote a book about it. She ran a nonprofit.

And now, she’s taking everything she learned from a lifetime of helping women, and turning it into a startup of her own.

But on the pitch today a question arises, can Tiffany’s mission be the money printing machine these investors are looking for.

From Gimlet, this is The Pitch. I’m Josh Muccio.

Today’s investors are:

I’m Jenny Fielding

Jenny is the director of Techstars NYC and a prolific angel investor. She’s backed over 130 startups so far.

I’m Elizabeth Yin

Elizabeth is a managing partner at Hustle Fund. And so far she has invested $30M in over 250 startups. One example, Nerdwallet.

I’m David Goldberg

David is a general partner at Corigin Ventures, where they’ve invested $38M in over 50 companies so far.

I’m Sheel Mohnot

Sheel has sold 3 startups for over $50 million dollars. Now he’s an angel investor and he’s backed several companies worth billions today.

I’m Charles Hudson

Charles started Precursor Ventures, where he’s invested $45 million in over 100 startups to date.

Alright, on with The Pitch™ ...

Tiffany: Good morning everyone! I am Tiffany Dufu. My life’s work is advancing women and girls. And that’s why I feel really lucky to be a founder and CEO of The Cru. How many have you ever had a goal that you fully intended to achieve, but you didn’t? Everybody? Okay. Well, I Have good news for you. It turns out that you’re not alone. It’s because sometimes this thing called life gets in the way. And this is particularly true for really busy working women who are often juggling the demands of their careers, of life. Now, how many of you know what the most powerful lever is that you could pull if you actually want to achieve a goal? Yes, Charles.

Charles: A support system.

Tiffany: Ah! It’s called The Cru. That was a very...

Sheel: The Cru!

[laughter]

Tiffany: Yes, yes. It’s accountability to other people.

Tiffany believes that all you really need is a little help from your friends. They give you encouragement, or just a reminder to say with it. That's been her experience her whole career. And she wanted to see if she could build a business around it. So, she made a video, and put it out into the world.

Tiffany from the video: “If you have people in your life who rely on you, but now, you need a group of people that you can rely on. I want you to go to www.findyourcru.com and welcome to The Cru.”





Tiffany: That's all we did. And that's how we generated hundreds of applications. We currently have 800 women on our waiting list. And I am here to invite one of you to participate in a 1 million pre-seed round that’s already oversubscribed. And I’m really happy to announce that.

Elizabeth: Congrats.

Sheel: Yeah.

Sheel: What do you get by being in The Cru?

Tiffany: Ah, so you get a badass group of women who are going to help you to achieve your goals. The way that The Cru works is you apply to become a member of The Cru, and our algorithm matches you with nine other women in your city. The ten of you then become a cru, and you collaborate to meet your life goals together both online and in person.

Elizabeth: How do you do the matching?

Tiffany: So we have two parts of the process. The first is a matchability screening. So we need to first determine is she matchable to begin with?

Jennifer: What does that mean, you’re matchable?

Tiffany: There are a couple of core questions that we're asking with the screening. One is, do the goals that she has and the barriers that she cites, are they within the scope of The Cru? Every once in a while someone will apply to The Cru and we’ll say, well, what are your goals? And she’ll say something like, well I need to find Mr or Mrs Right and fall in love and get married. And we would argue that, you know, there might be other places where you could go…

[laughter]

Tiffany: ... to achieve that. And then when it's time to actually do the matching, we're matching women who are the same level professionally in their lives. We’re really looking for peers, not mentors. And who have a really robust set of diverse factors going on. So women from different industries, women with different family configurations. And we look at race, ethnicity. But it's really important, one of the most highest values of The Cru for our members right now is I wouldn't have ever met a group of women like this if I had left it up to my social group or just my job or my career.

Before someone pays the $499 it takes to get into a cru for a year, first they go online and fill out their profile ... answer some questions about why they're there … and what goals they hope to achieve. Then Tiffany plays matchmaker, carefully curating each group of 10 women.

Tiffany: Once we do that, they get an email that says, we found your cru. If you want to join, click here, you’re going to pay the $499. And then we give them the date where they’re going to meet the other members of their cru.

Sheel: What are the goals that people are trying to reach?

Tiffany: Oh so many. I want to get a mentor this year. I want to ask for a promotion this year. I want to get 500 more Instagram followers this year. I want to spend more time with my kids. I need to lose 10 pounds. Two of the members needed to file for divorce this year. They run the gamut.

Jenny: I’ve just got a clarifying question. Is there a facilitator at all in each cru? Or is it all just peer mentorship?

Tiffany: We do have a role, we call them a cru guide. They are not a facilitator of The Cru, they’re more of a customer service representative. But we do have organizing principles of The Cru, we provide a framework and structure. But each cru is self-organizing.

Charles: What do you think is the balance between personal and professional development for the target cru member?

Tiffany: Right now it’s about 50/50. And the average age of an applicant was 39. So they are largely Gen X women. They’ve ... They’re very accomplished but they are now taking care of more people at home and more people at work, and they’ve kind of lost track of themselves.

Jenny: So what have you learned in those first early adopters?

Tiffany: Yeah. So if you look at the women who have made the most progress, those are the same ones who have attended all of their gatherings. They're the same ones who cite that I connected with a cru member in between. And that they've been engaging with them on some other messaging platform. So what happened was that when we introduced The Crus to one another, they all hopped on something. WhatsApp, Facebook, some of them are on Slack. And we didn't build messaging into the first platform, but we want to integrate that experience to make it more seamless for them. And to support them.

David: What are the barriers these days to get an individual to find another messaging app? Or to have another place to have different conversations with a different subset of people?

Tiffany: So, I mean, what you’re implying is the reason why I didn’t build messaging, okay. And Porter Bayne, our CTO, will say I told you so. When he first suggested that we build messaging, I said, that’s silly. I said, these women are really busy, Porter. They really don’t have time to be talking to one another constantly. I was totally wrong about that, David. The first thing that they wanted to do was talk to one another. Women want to communicate with each other. And I feel like for this platform specifically that we need to build it and that it’s going to be really important.

Sheel: I’m having a hard time thinking through other companies in a similar space. Like what else do you consider in your peer set of companies?

Elizabeth: Actually, Sheel, there are a lot of underground groups. But mostly at the high level where they charge, let’s say, $100,000 a year for an exec. And then there are like 1000 people in it and it’s secret and nobody’s heard of it. But I am kind of curious, what does that look like at the mid-tier for example.

Jenny: So I feel like right now is a really amazing moment for women. There’s a lot of organizations and groups and products being directed towards professional women, actually. And so at my women’s angel breakfast, I can think one of your investors, told us about your company. And we had a lively discussion. And are people part of multiple products, would you say? Or what’s your differentiation in this kind of excitingly crowded space right now?

Tiffany: Yeah. So as you can imagine, I don’t perceive half the population as being one tiny demographic. I think there’s lots of room for all of the players. There are three things that are happening right now that are fueling, I think, the success of The Cru. One of them is what you mentioned, this kind of rise in women’s consciousness and empowerment. The second, though, is this racial demographic shift in our country 52% of the women who applied to The Cru were women of color. And so one of the kind of aspects of The Cru that people really love and appreciate is the texture and the robustness of the diversity of The Cru. The third though is this backlash against social media. So I do see The Cru as, in a lot of ways, the future of social networking. One day you’ll be at a cocktail party and someone will say, how do you know this person? And they’ll say, well, she’s in my cru. And people will know what that is.

Sheel: Tiffany, where do you see this product or this company going in the next say five years? So right now you have 100 cru members. But where do you see this going?

Tiffany: So five years from now we’re at 200,000 members.

Sheel: Okay.

Tiffany: So that gets us to 100 million. But what’s happening is that companies are reaching out. we’re already starting to partner with companies who want to leverage The Cru to retain and advance the women that are in their ranks. So we’re doing two models. One of them is where we curate crus inside of a company. I’m really fascinated to see how that can potentially work. The other is a company essentially gifting a cru membership, almost like a gym membership. We’ve brought on Morgan Stanley and Disney as our founding partners. And we charge more for that experience. It’s $1800.

Sheel: Makes sense.

Elizabeth: And what are the terms of this raise?

Tiffany: It’s a one million raise. It’s a 4 million cap, 20% discount. And that’s post money. It’s a great deal.

Alright so the investors have a decent grasp on the fundamentals of this business. But now onto a bigger question … what’s to keep someone from signing up for The Cru, meeting their 9 crumates and then when a year goes by ... it’s time to pay $500 bucks again …. They just bail!

Sheel: If somebody is in a cru, so this is a cru of ten women, right. And they want, those ten women like each other, want to continue on, why would they pay again the next year?

Tiffany: part of the reason why they want to continue is one, all of their data and all of their engagement with one another is on, lives on our platform. The second is that the women are also very interested not just in the women who are in their cru, but the other members of the constellation. We call ourselves a constellation of women. So our hypothesis is that if The Cru is actually helping you to move your life forward, you'll want to renew your membership in The Cru. So we’ve got a group of women who are about ten months into their cru journey. We’ve already sent out a survey to ask them their propensity to renew. Half of them have responded. 73% of them say I want to renew my membership in The Cru.

David: Do you have a strategy to overcome that potentially in the future, where there's a barrier to getting a $500 fee up front? A freemium model, or any kind of trial or exposure to the platform?

Tiffany: So for the first year that you join The Cru, the $499 is actually important not just for our business purposes, but for the culture of The Cru. So when the women meet one another, one of the things that they say is, I'm really happy that everyone paid 499. Because that's the only way that we can deliver on the brand promise that we're matching you with a group of women that are committed Now in terms of renewals, I can see a future in which it's a monthly payment. We can be more flexible. But I think to start, everyone's got to pay that 499 up front.

Tiffany sees more positives than negatives in her $500 price tag. But it hasn’t even been a year, so we don’t know if people like it enough to justify another $500. Or they might just keep on meeting with their cru, but stop paying Tiffany.

And this is the giant gaping hole investors see in this business. We’ll see where they all land on the issue, after the break.

Welcome back. The investors big concern is whether or not members of the Cru will renew their membership after their first year. And after taking some time to think on it, they’re ready to decide. Here’s David.

David: This one was really tough for me. I think the mission is great, it’s timely. I echo everyone’s thoughts here. You are the right person. I do have some concerns, though. One is around pricing and retention. I think to really scale that could be difficult. I think there’s a good business here. My question is whether there’s a great huge multi 100 million dollar business here. And I do worry about competition. Maybe not direct competition, but everything from traditional offline groups to the new physical spaces to the more direct competitors, I think there’s a lot of alternatives here. And my concern is that you are delivering a ton of value on day one with the matching, but then it diminishes a bit post that, and I worry about some folks going off platform. So I’m going to pass.

Tiffany: Thank you.

Elizabeth: So I have a couple of thoughts, one on, from a mission perspective, I love what you’re doing and you are clearly the right person to be doing this. So I absolutely love that. I have a lot of friends who try to ad hoc put together crews, and so I think this is actually amazing and very needed. And then from a monetization aspect, I actually, I really love this, because you are getting people to pay to be in your audience. Most people have to, first be in an audience and then you try to monetize them. I think it’s great that you’re charging 499. And I can see so many ways you can upsell these people if you can retain them over the years. So I’m in for 25k.

Tiffany: Awesome. Thank you. She’s first.

[laughter]

Sheel: So for on my end, I agree with Elizabeth. It's an interesting, it's such an interesting space. One that I have not thought about at all. I think it's just so far off of from anything I've thought of So I wish you the best. It's just not a fit for me.

Tiffany: Thank you Sheel.

Charles: So I've liked the business since I first heard about it. I wish I'd been part of that first wave, but as you and I discussed, timing wasn't ideal. But would like to find a way to at least be a part of the crew, no pun intended but if there's room for us we'd love to find a way to maybe do something small like 10 or 15k out of the fund.

Tiffany: Thanks Charles.

Jennifer: I love how mission driven you are and you are the perfect person to be building this company, and that’s super important to me as an investor. I love that you're going after a different demographic. I think that women in that middle management stage of their careers and their life are actually not being served, and I think that’s a massive audience if you can capture it. So with that I’m in for 25k.

Tiffany: Wow. In order to prepare for this fundraising process, I binge listened to an entire season of The Pitch. And it’s part of the reason why I’m here and I feel like I have been really successful. I don’t know if you guys know the statistics but last year digitalundivided produced a report called ProjectDiane. And out of all the venture capital that was raised from 2009 until that year, only .006% of it went to black female founders. The fact that I’m standing you, here in front of you, as a black female founder that’s raised a million dollars, is actually pretty historic. And I just want to express gratitude to all of you, and I want to say if there are any other women out there trying to raise money that you can do it.

Sheel: Love it.

Elizabeth: Right on.

Sheel: I love it so much.

Tiffany: Thank you guys.

Elizabeth: Thanks Tiffany.

Tiffany takes off with commitments from 3 out of the 5 investors. As I stepped in the room to find out what exactly made this business so appealing, even Sheel, who didn’t invest, started gushing.

Sheel: She’s such a force of nature. She’s like a really, such an impressive person.

Jennifer: I kind of hope she doesn't raise more money. I hope she just raises this...

Sheel: That's kind of what I was feeling...

Elizabeth: I don't think she needs to.

Jennifer: That’s what I was...

Elizabeth: I could even see her crowdfunding the next round.

Sheel: She’ll have enough people in The Cru that could put money in.

Elizabeth: Right. Exactly. They could be her investors.

Sheel: But I agree with your concerns. The renewal thing is part of what scared me.

David: Yep. I think they need actually to raise money and go real deep into product and be really thoughtful about...

Sheel: I don’t know.

Elizabeth: I think this is a branding and community thing.

Jennifer: I do as well.

Sheel: I agree. I don’t know about product

Jennifer: I just feel like if she raises money, the investors are going to push her to like open a, you know, real estate. And I just feel like this could go. What I love about is the simplicity of actually not having a physical anything, right. Just a simple platform.

Josh: But then thinking about the exit strategy down the road. What does that look like for a business like this?

Charles: I guess I never worry about that honestly.

Jennifer: I don't either.

Charles: Like if it's a good business, you'll have lots of opportunities. Like it's more important to build a really good business that has the ability to remain independent until something else happens, than it is to... Every time I've tried to forecast, oh so and so company will pick this up, I'm wrong 100% of the time.

Sheel: I would say the reason I think about it is not because necessarily who is going to acquire it, but what is the exit multiple on this kind of business? And that's what I worry about here is that the exit multiple on this business is probably not very high.

Jenny: Well, I have the opposite...

Elizabeth: Actually I would have the opposite because you can upsell these women on so many things.

Jenny: Exactly. She gets to cashflow positive so quickly and she decides how she wants to run this business.

Elizabeth: It's also not about the membership fees. Like basically she uses the membership fees to pay for her customer acquisition and break even, then she's just amassing an audience that she can upsell all kinds of stuff to. That’s exactly what The Hustle does. I mean, she's very authentic and energetic. So I think even if she doesn't get it quite right initially, she will be able to find other people to beta test with and try some other things. That really is the bet.

Josh: You're betting on her.

Elizabeth: Betting on her. And the concept as well. This is a huge market. You know, For this group of women, women who make a lot of money, I mean that’s a demographic that lots of people are very interested in.

When we come back, why Tiffany thought the investments from Elizabeth, Jenny and Charles might not be such a great thing after all.

Welcome back … We caught up with Tiffany almost 5 months after her pitch. And she told us how she was feeling right after she walked out of the room.

Tiffany: I felt a tremendous sense of exhilaration. Just, Oh wow. You know, it's actually, it's actually happening, you know, three of them said yes. But to be honest, I also felt a little bit of sense of fear because I had some sense of Charles, but I didn't know Elizabeth. I didn't know Jenny. And so my first thought was, what have you done? You know, you haven't spent any time getting to know these people.

Josh: So then how did you figure out if you really wanted to take their money?

Tiffany: I did what I always do, I ask my crew, I ask my network. Yeah that’s the first thing I do. So I sent off emails to some of the other investors to say, Hey, do you know, have you ever heard of Jenny fielding? Do you know her? Do you know Elizabeth and I got back over a resounding yes, we know them. This is amazing.

Josh: So, did each of them follow through and actually invest?

Tiffany: Yes. And more. So Charles did come in at 10. Elizabeth came in at 25. Jenny came back to me and said, I want 50.

Josh: Awesome. Wow. So you got, ah, let me do the math there. That's like 80. That's 85K.

Tiffany: Yeah. So it took us over, you know, the goal was a million and we were at 1,060,000.

Josh: Are you glad you took their money?

Tiffany: I'm so happy. I'm so happy.

Tiffany is happy because, Charles, Jenny and Elizabeth have added more than just money to the business. Elizabeth dove into the marketing strategy. Charles introduced her to another Cru, the other founders in his portfolio. And Jenny actually suggested a change to the business that Tiffany loves.. to use her existing Cru’s to screen the next round of applicants instead of Tiffany having to do it all herself.

Josh: All right. So you did say in your pitch that you had binged a bunch of episodes of, of this show before you started fundraising, and you credited this show as one of the things that led to your successful fundraise. So I'm really curious after binging the show, like what, what did you learn?

Tiffany: So I have to be honest, I was really shocked and listening to so many episodes that whether or not someone liked you mattered so much, you know, it's like you listened to episode after episode in which afterward somebody says, you know, I really like her, I really liked him. And you're like, wow, this is a very subjective process. Like I'm used to being in like very formal organizations where, you know, like you could get sued for like suggesting that just because you like someone, you know, you could invest in them. So I thought, wow, okay. So basically I got to make these people like me. This is really, this is kind of a storyteller's game here.

Josh: It is a storytellers game.

Tiffany: Yeah, yeah. It really is. So really the secret I think is trying to create an experience and environment in the room where you can get people to say what you need to hear and not just what you want to hear.

Josh: You getting the investors to say what, you want them to say?

Tiffany: What you as the founder need to hear and not what you want to hear. So you have to create a scenario, In which they actually believe that them being honest with you and them giving you honest feedback and advice that you're gonna do something meaningful with it, that you're actually inviting it, that you want it and you're not going to have some emotional explosion, you know, or response to it. That's gonna make them regret that they gave it to you.

Josh: So it’s about creating, I think what you were saying is like creating an environment where like you're open to their feedback and they know it.

Tiffany: And they know it.

Josh: You know, I'm, I, I, I'm just realizing right now that I don't think that we've ever had three people commit in the room and then all three of them follow through after the fact. Like that doesn’t happen.

Tiffany: It's very rare. I can tell you from listening to a lot of episodes,

Josh: like, good never happens. Well, like how do you like, but you pulled it off.

Tiffany: Yes. But we have some people in the world have to pull off a lot of things. I mean, I can't remember on the show if I mentioned this statistic from Digital Undivided, but since 2009

Josh: mhmm You did. Point zero zero 6%. Of all venture funding.

Tiffany: Yeah Yeah. So this is all this is about defying the odds, uh, and about understanding that we're not defining those odds by ourselves. There's a lot of people, you know, holding us up and there are a lot of people who quite frankly in my case, have already paid the price for my success.

Josh: Paid the price for your success. What do you mean?

Tiffany: Yes. Oh, I just come from, I'm very clear about my heritage. Uh, I'm African American. Um, there are many people who already worked so hard and were never compensated and, and, and I am their hope, like I am their wildest imagination. And so, you know, my success has already been paid for with their blood and with their sweat and, and with the flesh that flew off their backs. Josh, you know, I'm here for a reason, uh, and so I'm really proud of where I am. I'm really proud of the sacrifices that people have made in order for me to be here. And I don't take it lightly.

Josh: No. And none of us should. I just got chills there. Oh my gosh. Do you feel lucky?

Tiffany: I feel blessed for sure. For Sure.

You know sometimes the VC world sucks. And then other times it doesn’t suck at all. In this case, everything worked out!

But the way Tiffany talks about it seems less a game of chance and more like destiny.

Hey thank you so much for listening. We’ll be taking a break during the holidays but we will be back with a bang, in the new year. Our first episode will drop on Wednesday, January 8th. So mark your calendars. It’s gearing up to be a fun one. Okay, see you in 2020.

The Pitch is hosted by me, Josh Muccio. Produced by Kareem Maddox and Heather Rogers. We are edited by Sara Sarasohn and Blythe Terrell.

Theme music by The Muse Maker. Original compositions from Breakmaster Cylinder, Peter Leonard, The Muse Maker and Bienart. We are mixed by Enoch Kim.

Lisa Muccio planned the recording of this pitch.

And here’s a quick disclaimer, no offer to invest is being made to or solicited from the listening audience on today’s show.

You can follow The Pitch on Spotify and listen for free, or find new episodes wherever you listen.

Thank you so much for listening. See you in the new year.















