Today we’re sharing another insightful presentation from our most recent Innovative Executives League Summit, where Desiree Vargas Wrigley, Chief Innovation Officer of P33 Chicago and Executive Director of TechRise by P33, delivered a lesson in stakeholder-centric design. Desiree overviews the challenges Chicago’s underrepresented tech founders face and the process of developing TechRise’s initiatives. Highlighting the impact of TechRise and P33, Desiree presents a galvanizing picture of Chicago-based innovation that utilizes local money to generate a cycle of loyalty, growth, and investment that leans into Chicago’s advantages.
In this episode, Desiree asks: “Who succeeds when you succeed?” As an enthusiastic believer in Chicago’s potential as an innovation hub, Desiree is also unafraid to point out its shortcomings, such as the lack of popularity in social ventures and lack of recycled capital. Demonstrating a stakeholder-centric design process with the case study of TechRise, Desiree shows how focusing on the key question of identifying all the stakeholders and all the solutions that benefit them drives success. She discusses sifting through bias for actual data and the extensive discovery process that went into developing the initiatives of TechRise. Desiree articulates how re-imagining pitch competitions (frequency, environment, etc.) has opened doors for founders by acknowledging the obstacles that women founders and founders of color often face. Desiree shares her interest in conscious capitalism and asks, “What else is possible?”
- (1:15) – P33 Chicago
- (3:42) – Thinking about success
- (4:53) – A foundation for providing support and resources
- (6:57) – Stakeholder-centric design in four steps
- (9:36) – Funding women and founders of color
- (12:49) – TechRise
- (15:20) – Identifying solutions
- (16:35) – Weekly pitching
- (19:12) – Looking at impact
- (21:16) – What else is possible?
About Our Guest
Desiree Vargas Wrigley is a serial entrepreneur with a track record of empowering women and people of color in the world of investing. Desiree is the Chief Innovation Officer of P33 Chicago and Executive Director of TechRise. She is a founding partner of The Josephine Collective and previously co-founded GiveForward. Desiree earned a bachelor’s degree in Latin American Studies from Yale University.
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Full Show Transcript
Patrick: Greetings, innovation enthusiasts and forward-looking leaders. I'm Patrick Emmons, your host for the Innovation and the Digital Enterprise podcast, your gateway to inspiring conversations with visionary trailblazers. Our mission is to illuminate the world of innovation within modern organizations.
And today, we're going to embark on a very special journey. As you know, each year we host an Innovative Executive League summit featuring a remarkable lineup of influential leaders who generously share their invaluable experiences, insights on innovation and leadership.
Today's episode, we're featuring Desiree Vargas Wrigley, the Chief Innovation Officer at P33 Chicago. Desiree participated in the summit in October, and she's a serial entrepreneur with a remarkable track record of empowering women and people of color in the world of investing. She's also the Executive Director of TechRise by P33 Chicago, and a founding partner of The Josephine Collective.
Her presentation revolves around stakeholder-centric design, a topic that aligns seamlessly with the driving force of innovation in the digital age. So let's dive into Desiree's captivating insights.
Desiree: Thank you all for having me. I probably should update my bio a little bit more to talk about the fact that the innovation role that I play at P33 is a new title to me and a new title to the organization, but I think one that represents the work that you all do too.
The P33, as a nonprofit, started in partnership with Penny Pritzker, the civic committee and our startup community, to think about how we can make Chicago more of an innovation hub and really try to regain the prowess that we had when we last hosted the World's Fair in 1933. So that's where the P33 comes from. It's Progress 33, not Pritzker 33 like some people think.
And there, the role that I play as Chief Innovation Officer is primarily thinking about how do we accelerate the flow of capital for the entire capital stack for our venture economy as it contributes to our innovation economy. That's the role that I play in terms of owning one of our pillars.
But the role that I play across the enterprise is helping our leaders think outside of the box in terms of what their educational background has led them to believe and think, and how do we actually include stakeholders from across the ecosystem whenever we are creating new solutions.
And so P33, it sounds like it's a foundation, it's not. The way that we operate is really more like a venture studio in the social sector, which means we do meaningful design work before we launch anything, lots of discovery. We bring in a variety of members of the community inside and outside of Illinois to think through solutions. And then we figure out who should lead those, how should we resource them, and what role should we play going on. Then we pilot these programs, sunset the ones that don't work, reinvest and resource the ones do.
And so today, I'm going to talk a little bit about how we came up with one of our most successful programs, which is called TechRise, which I do lead, and then also share a little bit about how this process contributes to some of the other work I've done in the past.
Part of this I did teach when I was at Kellogg in the new venture discovery course. So it's based on some of the things from that. And then of course, as you all will identify, there's lots here, just traditional design thinking and design process. So excited to get started.
And before we do though, just to put us in the right mindset, I want everyone to close their eyes for a second and think about three people who care about your professional success that are not your wives, husbands, children, parents. So, who in your orbit succeeds when you succeed? Ideally not your direct reports either. What's the ring of the onions that celebrate you, that benefit financially when you succeed? It could be your banker. It could be your dog walker. Get creative as you think about it.
So before we do anything at all in creativity when it comes to the work that we do in social impact, this is something that we always ask ourselves. We really try to let the circle of people and the radius get wider and wider and wider before we start to do any kind of planning or design.
And the reason for that is ... And actually, let me go into who I am a little bit more. So you have my bio, but there are a few things that are in here that I think people don't really understand or know about. So for example, GiveForward. That was one of the first crowdfunding platforms in the world.
And the reason that I started it was that I was at the Kauffman Foundation working on funding entrepreneurship programs and Hurricane Katrina hit. And I had this personal aha moment at the age of 25 that people should be able to give to people. And I know it's hard to go back into the internet and our minds that far, but the only thing available back then was blogs with PayPal buttons. So there was no other way for people to give to each other. There was no Kickstarter, no Indiegogo, no GoFundMe. And so it took me a while as a non-technical founder to build that company, but we ended up transacting $200 million, and it's now part of GoFundMe.
I look at some of the similarities across the career that I've had so far, what I recognize as a trait is that I tend to look for places where people feel isolated, and I like to solve problems around isolation. And so Pearachute, the kids' activity marketplace that I built, on the surface it's a marketplace for kids' activities, but really what it is it's helping lonely, mostly stay-at-home moms find community and affordable enrichment for their kids. And it's helping small business owners find their future customers and build out their businesses. So I try to solve problems in a way that brings in multiple stakeholders all at once, and that's really where we're going to go with this.
The most recent initiative, Josephine Collective, is an angel syndicate. But unlike traditional special purpose vehicles or anything you'd see on AngelList, we use a creative structure of bringing an LLC and then doing series and new shares for each investment that we make, which allows us to keep the fees really low, which allows women and people of color to come and invest at like $1,000 each deal without having to do any kind of Reg D filing like you would have to with crowdfunding.
So another part of this is thinking about where are the willingness to pay, where is the incentive from our stakeholders, and then what creative structures are out there that other people are using that we might employ differently for the solution that we have in front of us?
So stakeholder-centric design, I think is the term people use in different ways. But the way that I use it is really thinking about before we start the traditional design process, before we start discovery, asking ourselves who else benefits when we succeed at solving this problem? And doing a framework that we're going to walk through that is really simple and honestly easy to practice every single day. And the more you practice it, the faster it becomes. But it's about thinking through those concentric circles that exist around a problem and then identifying where the pain points are for each one before we start the discovery process.
And it does flip the design process a little bit because we're asking ourselves some questions about some preexisting thoughts that we have around the problems for each individual stakeholder, but we overcome them in the discovery process and then get to a better solution down the road.
So I know you guys know versions of this. There's lean, there's design. Most people in here engage in some version of this with their teams, or maybe they didn't put a framework around it until recently because it's been so popular. Most times when we work with founders, we really do get them to think about the discovery process in terms of their core users. And as I work with more startups, I now have thousands of startups in the pipeline for TechRise and have worked with hundreds over the years as a mentor with Techstars and also through the investments that I make personally.
And what I see repeatedly is that by the point of discovery, they've actually gotten too far in their build and they've often started building in the wrong direction. And so the more we can get our teammates and entrepreneurs and others to think through this process earlier, we can avoid a lot of expensive mistakes and a lot of money wasted and time wasted, and honestly, talent wasted.
So the four steps that I think about when I'm doing stakeholder-centric design is really of course defining the problem. So we'll go through an example in just a minute, but what at the core we're trying to solve. And then what do we believe to be true about this problem already? What do we need to disprove? What are our biases? And then thinking about how do we structure the discovery process so that we can avoid some of the biases that we're bringing into this or our team is bringing into it. I'm happy to share these after too, if anyone wants them.
And then the core work is really identifying the stakeholders and the assumptions and quantifying how much they care about the solution coming to life or a solution coming to life. And giving a point system to that so that we can direct our discovery process in the most efficient way possible. And then, yeah, that's basically it. It's a four step process. It's very easy.
Okay, so the TechRise case study, that is the one we're going to go into the most today. I can imagine you're going to have a ton of questions, but I hope this will be interactive and that you will stop me and ask questions along the way if you can.
So the backstory of how I got to P33 was that after the kids' activity startup, it wasn't really after it was COVID. COVID hit, and I was in the process of trying to sell the business to care.com. It was going to be a really nice outcome for me and my team, and our investors were going to get a nice multiple.
And needless to say, a world pandemic for a drop in a kids' activity marketplace is not exactly an ideal outcome for that business, for me, or for the investors. But while that business was on ice, I saw what happened with the murder of George Floyd and I had this personal aha that I, as a woman founder in Chicago who's built social ventures in a city where most people like to fund FinTech, SaaS, food delivery, the businesses that I built were really unpopular here for funding.
And it was incredibly hard for me to raise, but I was still able to raise $11 million from well-known funds outside of Chicago. I don't know how many people are involved in venture, but first round capital in Founder Collective in 2012 when I raised were the Harvard and Yale of early stage venture. And so I'd overcome a lot of the challenges of Chicago and gone outside.
And after George Floyd happened, I realized that I'd never paid attention to opening the door for other founders. I mean, I mentored them when I could and I invited them to things, but I wasn't paying attention to how many Latinos were in the room with me or how many of my peers in the Black community were there.
And so after George Floyd, I had this moment of maybe my ability to give back is on the venture side. I don't have any money. I'm not wealthy and I don't have an exit behind me, definitely don't have one now. So how else might I use these skills? And so P33 was thinking about the same thing and really thinking about how do we think about equity in terms of our venture ecosystem?
And so the question that we really anchored around was that this challenge that only 1.9% of venture funding nationally goes to founders of color. That's combined for Latinos and Black founders, which is an incredibly depressing number. The number is only 2.4 for women. So combined, we're looking at less than 4% of all venture. And it's not something that's better in Chicago than other cities, even though in Chicago we have 35% of our startups are started by women. So actually, we perform even worse.
And so when we asked ourselves this question, the reason I got hired actually is that Verizon already had a solution. They wanted to give money to P33, build a $500,000 pre-seed fund. They wanted to build LinkedIn for Black and Brown people, and they wanted to be recognized for it, which they should be because it was a noble effort.
But the problem is when you build a $500,000 pre-seed fund, you're writing 10 $50,000 checks behind closed doors. It doesn't move the needle. It's nowhere close to the $16 billion that Chicago did in funding last year. And so I said I would do it, but only if they let me come in and use this approach to find a solution that was more appropriate. And so fortunately they did.
So the process that we took was this. So we started with our assumptions, what do we believe to be true? Why do we think that Black and Brown founders aren't getting the funding that they deserve? Is it because the quality is bad? That's something that VCs would tell me behind closed doors, but not out loud. Is it because they simply just aren't entering a venture at the same pace as their white male peers? Also, we've learned that's not true.
So what is it that's causing this? And if you go and talk to founders, it's victim mentality, I can't get in the door. I don't know the right people. When I get in the door, they won't invest in me because I don't look like them and I'm not from Winnetka or whatever. So there's these biases on all sides of this equation.
And what we really needed to do was figure out where are their truths. What's the actual data and facts and what is just their opinion and how do we need to create a solution that actually helps tackle some of their biases, because that's one of the challenges that we're going to face on all sides of this?
So we went through and we also looked at like, okay, who are the people that benefit when we solve this problem? And of course there's the founder side. Founders who get more money are able to go raise more money, build bigger businesses. The accelerators and incubators in our city want to be able to show representation. So 1871, MATTER, mHUB, they all have reasons to make this a better solution.
We knew that a lot of the banks had come out recently and said that they had programming and funding to support small businesses owned by Black and Brown people. But we also knew that the state was working on this and World Business Chicago was working on this, and millions of dollars actually had been poured into trying to make different versions of solutions help, but they were often just going after capital or after networking or knowledge.
And so basically what we got to was that the only thing that would work is if we created a solution that triangulated wins around access to capital, networks, and knowledge, and it had to have some sense of visibility and scale to the work.
So the discovery process was about 65 interviews with VCs. We interviewed founders who had raised, founders who had not raised, aspiring founders. We talked to VCs outside of Chicago. We talked to the old guard VCs and the emerging VCs. We talked to angel investors. And everything came back to one of these four challenges. And so we knew that a solution that we created had to touch all four of these things.
So then we got to the drawing board and it was like, let's go through, and this is the exercise that we do every single time. So we come up with solutions on the left-hand side and we have a list of stakeholders across the top, and we check the box on how many of these solutions will touch the different stakeholders that we have talked to and engage.
This is the first draft of it where we go through and just understand how. This happens over and over again. It's like an iterative process because then as we refine the idea, we continue to come up with ideas that allow it to be more meaningful, each stakeholder.
So after this process, we actually put a scoring thing to it too. We do 1 through 3, we could do 1 through 5, 1 through 10. But basically, based on the interviews we did and the discovery process we did, how valuable is this possible solution to this stakeholder? And often this is based on a willingness to pay and impact. So we do a blended score. Then we tally that up across the right and then the ideas that have the highest score, we then do discovery over again with those ideas and those stakeholders. So it's not fastest process, but it gets faster and faster the more that you do it.
So the result of that was that we created these weekly pitch competitions. And I don't know how many people know that much about the startup space, but usually if you're a part of the Northwestern or University of Chicago, it's like an annual big pitch competition. The winner gets maybe $250,000, runner up gets $100,000, no one else wins. It's a one-time thing, one and done. You don't get to compete again.
So it doesn't actually do a lot of the things that people want it to do. It has some visibility. It doesn't have that much scale. A lot of the decisions are made behind closed doors. And the networking that happens from the process is actually one directional, and so it doesn't create any kind of network effect usually. I don't mean to throw those under the bus, but as a one-time event, it's not as effective as it could be.
And then we looked at some of the other challenges that we had, which was a post-COVID world, which meant that a lot of people are hybrid. A lot of VCs aren't coming back into the city from their North Shore homes. So we can't do live and in-person pitch competitions.
So what else were some of our constraints when we looked at our stakeholders? When it came to us trying to bring more Black and Latino founders, where do most Black and Latino founders live in our city? They live in our South and West sides. They're not coming to 1871 for pitch competitions. They're working. Many of them are single moms or are underemployed in a way that they can't take off three hours to come to the city. So it was critical that we made this accessible.
And so the solution was, okay, it needs to be virtual. We need to be able to find these founders. So we need to have a really strong strategy for outreach and partnership. We need to make sure that there's funding for these competitions. And originally, we thought we'll just do four year. That's more than anyone else is doing. It's a lot of work. The vetting process is difficult. And then we just asked ourselves what would it look like if we did this every single week?
And so we just started asking the question, what could the impact be? We ran the numbers. We ran how we would be able to involve not just one bank but multiple banks. How can we get philanthropic partners involved? What do they care about? Turns out most family foundations care about place-based work and small business support. So how might we up-skill small businesses to think about being tech entrepreneurs?
And we built what on the surface looks like these weekly pitch competitions. But in reality what it is it's actually this cohesive strategy around recruiting, training, bringing visibility, bringing capital, and then followup support. And we do it with one and a half people at P33. We put two and a half million dollars to work, and those founders have raised $70 million in follow-on funding in two years. And the reason that we're able to do it is because we activate a lot of resources within the city.
So before every founder takes the stage, they do a pitch framework session with me that is, it's a hybrid of what I taught at Kellogg, plus Art of the Start, plus a book called Pitch Anything. And it's really about how do you get your idea into four minutes that you can use anywhere in the world. You can use it at a cocktail party. You can use it in front of a presentation like this. You can do it over the phone.
And they have two sessions with me. They're not one-on-one, of course, it's one to many. We record it for the people who can't participate. But the quality of the pitches that come through TechRise are superior to many that you'd see even on Shark Tank. I was on Shark Tank, by the way. So maybe that's another reason why I was good at training for this.
But for many founders, it's the first time they've been forced to answer a lot of the questions around what are their indicators or product market fit, how are they going to bring this to life? What is the competitive landscape? How big is this market opportunity? And so this forcing function of getting them to be organized about their ideas before they ever share them with the world allows us to bring better quality relationships when we do mentor matching, which is another component of this.
So we realized that one of the things that happens in networks and mentorship programs is that someone who is in an industry for many, many years meets someone who's brand new and entering an industry and they know all the reasons why this startup can't work. They know a lot of the gotchas or the startup is so, so far behind where their level of expertise is because they've been in the career for so long that it's just a misalignment of mentorship.
What's better is actually more proximate founders, people who've been in the trenches two years ago, three years ago, who can open up network introductions and who can potentially help them think through some of the problems that they'll face, not necessarily in the building of their business, but also on how they're going to structure their fundraise and things like that.
Admittedly, this work has opened my eyes to what else is possible. This is a small amount of money, limited resources, and it's had this impact. And I think I should have one more slide, which shows you just the overall that we had about $11 million in total funding for BIPOC founders in 2019, and last year it was close to 60 million. And so we were able to 5X a part of it.
And when we look at how some of the other markets are performing compared to Chicago, so LA is one of the fastest growing venture ecosystems in the world. We talked to people there to figure out what's happening, why is it happening? And it's a product of a couple of things.
One is big exits where the early investors were local and got the benefit of that and got addicted to the win. So they wanted to go and reinvest it and feel that again. They're either reinvesting in spin-out teams or some of them are starting their own companies or they're actually going full into venture or super angel status.
We have so few of those in Chicago. So I will say our big wins did not recycle capital. In the last decade, Chicago failed to invest in 80% of its unicorns before the series A. That cost people like you all in the room, who are probably accredited investors and didn't get an opportunity to invest, a couple billion dollars that could have been turned into new businesses, new wealth creation.
And we can't quantify how much more these companies would accelerate if they had access to capital sooner in the stack. So one of the things that we know to be true about the capital stack is that you can't bootstrap your way to a series B company. It's just not possible unless you inherited this business and it's growing for generations, but there aren't a lot of those anymore.
So when we think about how do we turn Chicago into a financially vibrant city where people are coming and building big businesses over time, we have to have a picture that allows companies to do that in 7 to 10 years, it can't be 27 years. And so we're thinking about this really from growth hacking and funnel mechanics.
So TechRise is top of the funnel equity, bring more people of color into the top of the funnel so that when they do get funding, we have a better chance of one day seeing women and people of color leading series B, series C and unicorn companies. But if we put 700 companies, which is the active pipeline right now, into the top of the funnel, and there is no seed to series A journey for them, they will all die on the vine and we will have wasted all this money and all this time.
So right now, I focus on how do we layer into the capital stack. At the same time, what we're doing, and hopefully you all will join us for this if you didn't this year, but we have TechChicago Week. And part of that is a capital summit where we're thinking about growth stage and beyond.
So what role does P33 have in this, what role does ThinkChicago have, what role does World Business Chicago have in trying to bring bigger firms here to spend more time with our founders who are getting to growth stage? Because what has happened historically is that once founders raise their series B, they leave because there's no incentive here for them to stay. It's a tax issue, it's a crime issue, of course, it's a weather issue. But the bigger problem is that there's almost no loyalty to our city because no one really helped them build.
So if you're one of the 80% of the unicorns that didn't get funding here, why on earth would you reinvest if there's no one here to invest with you and you don't have a belief? And so what we're thinking about is how do we create a virtuous cycle where the money, it's local, whether it's regional or Chicago or Illinois, and it's funding these startups? These startups are scaling with as much local capital as we can, and then external capital where it needs to be.
And how do we get those companies to a more meaningful IPO? Because actually, our percentage, when we compare our IPO values to GDP to every other major city in the US, we're like number 10. Because even when our companies do get there, they're just not getting to a scale that they should be. So it's a great question.
One of the opportunities, I think, is the fact that we have 4,000 Chicago/Illinoisans who have over $30 million in net worth that aren't participating in the asset class locally. They might be invested through their investment managers in Sequoia or Benchmark or one of the big firms outside of Chicago, but they're not funding here. And when we think about how do we put our assets to work in a way that drives economic development, it's not purely altruism, it's not nonprofit. It is investing locally as much as you possibly can.
So we have a bunch of new firms that are launching here in Chicago. They are not going to be able to get to the scale that they need if they can't raise their first funds. And we have almost no LPs here that are willing to anchor emerging fund managers. So part of what I'm doing in this next stage of stakeholder-centric design is thinking about who benefits when we succeed at creating a thriving venture ecosystem.
And part of the answer is actually external VCs. They want to be able to put money to work in the industries where we are uniquely positioned. In Illinois, quantum and beyond silicon are going to be two big themes for us over the next two decades if we continue to have the researchers here and the investments here. Life sciences and biotech continue to be a huge opportunity for us. Supply chain and logistics, especially as it pertains to climate tech and sustainability, huge advantage that we have here. Consumer and CPG is a huge advantage here that we under-invest in.
And so as we think about where should we be placing bets, you all hopefully can be placing bets by investing with your own assets, but also thinking about the contracts that you're writing. Who are you working with? How often are you thinking locally about the startups that you can? Because you can hire from them. You can acquihire them. Think about them as part of your value chain and the stakeholder impact that you can have.
A lot of this is truly rooted also in conscious capitalism. I don't know if anyone here is a believer, but basically the idea is going beyond shareholder value and thinking about how you create value for stakeholders around you. And historically that's been your community, your employees, and your shareholders. But as you think more broadly, it includes of course your customers, but also who's serving your customers and how they benefit when your customers either save money or make more money. So just encourage you to think about that too as you're going through this.
Patrick: Desiree is a fantastic leader, and her presentation was nothing short of inspiring. Her exploration of stakeholder-centric design underscores the critical importance of putting the end users and stakeholders at the center of your innovation strategies. It's a reminder that in the pursuit of innovation, the human element should never be overlooked.
Stay tuned for more engaging discussions on Innovation and the Digital Enterprise in our upcoming episodes. To stay connected with the Innovative Executives League and explore future events and thought leaders, visit our LinkedIn page or check out our website at www.dragonspears.com/podcast. You can also find us on Apple Podcasts, Spotify, or wherever you get your podcasts.
