My chat with Cristina Cordova, Partner at First Round Capital

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Cristina is a Partner at First Round Capital. She was at Stripe for over 7 years. Before that, she worked at Pulse and Notion.

We talked about media, the SaaS productivity landscape, the early days at Stripe, hiring senior leaders, partnerships function, navigating the current downturn, lending, limiting beliefs, and more.

“I welcome returning to a time when it was clear that startups were a risk-seeking adventure and not a guarantee of future wealth,” Cristina told me about how she feels about the current environment of early-stage startups.

Media’s relationship with technology

Reflecting on her time at Pulse (now owned by Linkedin) working in the news aggregator landscape in 2012, she told me, “Every time I click a link to a news site that I subscribe to, I hit a paywall because I’m not logged in via an in-app browser. How is this still a problem over a decade later?”.

“Media tends to let technological changes happen to them rather than being a forcing function for change and adjusting more quickly,” she said. “I hope that changes, but it’s, unfortunately, a primary reason why it’s so easy for people to get their news outside traditional media companies these days.”

I agree; we saw this in both streaming and social media worlds.

Startups versus incumbents in productivity SaaS

During her stint at Notion, she worked on integrations, so I asked her about the biggest theme in SaaS: bundling versus unbundling.

She said, “The only way to compete with the world’s biggest bundlers is to ensure that your best-in-class software integrates seamlessly with your customers’ other (bundled and unbundled) software. If you don’t seamlessly integrate, the incumbent bundler will build a subpar competitive offering for free inside an existing paid bundle.”

That was her thesis behind investing in Merge, whose cofounder I have spoken to in the past.

Early days at Stripe

She was of the first 30 employees.

“What differentiated Stripe early was an incredible step up in product experience for developers. The company was a bet on developers becoming decision-makers about payments.”, she told me when asked about what’s understated about Stripe’s story.

She thinks the “Stripe rode the fintech wave” bit is overstated.

Being frugal: “In the early days, we emphasized treating Stripe’s money like our own and valued every basis point.”

Building boring infra: “Engineers at the company were moving flat files around and working with archaic banking technology to deliver a product that feels quite modern to our customers.”

The leadership styles of the Stripe cofounders

“John and Patrick are both highly strategic and in the weeds. They expect the same from other leaders in the company”, Cristina told me.

She believes that not understanding the intricacies of how the product works is unacceptable for a VP and is the toughest part of being a leader at Stripe.

On learning from others: “They’ve spent a lot of time with leaders at other generational companies, learned from them (how they built their infrastructure, how they did company-wide planning, etc.), and were particular about what characteristics they chose to emulate (and what not to emulate),” she told me. “They study failure with other businesses (not living up to the level of success they could have had) and try to determine how Stripe could avoid that same fate.”

On the extravagant perks culture: “They never wanted people to feel entitled and avoided office perks like yoga and gyms to ensure people wouldn’t feel like they had already made it.”

Hiring senior partnership leaders

Five years out of college, she found it difficult to hire more experienced leaders for the partnerships team in 2015-2018 who would report to her. She asked more senior executives to help her sell candidates when she wasn’t sure she could win them over.

On finding her edge: “Despite my lack of experience, I focused on what I was experienced in, which was Stripe. I was one of our most tenured employees and executed several critical partnerships for the company. This helped candidates understand that I was a safer bet than they might otherwise think”, she told me.

She would put together a spreadsheet showing candidates’ financial outcomes to show that if they believed in Stripe’s potential future, they’d have much to gain.

Executing the partnership function

It can get tricky to be a software or business person working with lawyers on a product.

I asked her what she thinks about having a productive relationship with lawyers.

She told me, “It’s the difference between working with a lawyer who says, “no” and, “let me research that, get some opinions, and I’ll get back to you to see how we might be able to get it done.” The right lawyers tend to tell the business leader the risks and whether or not they’re making a trapdoor decision. When hiring a person with the right risk tolerance, I tend not to have to do the balancing work, which saves us all a lot of time.”

What makes the job unpleasant: “I hate point-by-point negotiating and tend to find it leads to the most miserable negotiations. You need to look at a partnership holistically, clarify what you care about most, and be willing to make concessions to get it”, she said. “The real work begins after the negotiation is over. You want to leave your partner energized and ready to make what was negotiated a reality.”

The dearth of software: “I don’t think a company building a CRM for partnerships makes much sense, given the market would be far too small. We’re probably stuck between a spreadsheet and Salesforce for tracking partnerships.”

Small companies often frame a big new customer as landing a “partnership.” She agrees the word is casually used and thinks it is fine to do that to drum up external awareness.

How she defines the function: “A partnership is when two companies integrate their products or go-to-market strategies.”

Working with early-stage startups as a VC

I got asked for her takes on topics de jour.

On the downturn: “It requires more rigor to be a startup in 2022, and I welcome returning to a time when it was clear that startups were a risk-seeking adventure and not a guarantee of future wealth”, she said.

On hiring: “Before the more recent layoffs, founders often wanted to pay talent far too much to land early-stage hires–so much so that it would put their runway at risk. This was fine at a time when the capital was abundant. I’m working with founders to be as frugal as possible with cash and focus their efforts on candidates willing to take more equity."

On being frugal: “At the seed stage, you’re raising enough money for 18-24 months of runway, and with the current outlook, additional capital may not be there at the end of that period. It’s not a message that always resonates (I hear a lot of “when do you think times will be better?”), but it’s the message that founders need to hear now.”

Lending business

She led business teams working on lending at Stripe.

Low-interest rates made it easy to scale lending, but the cost of capital and the payback rates of less credit-worthy customers have changed.

I asked her about the common pitfalls.

On messaging: “You have to ensure your customers know what they’re getting and why it’s most advantageous to get it from you compared to a traditional bank or incumbent,” she said.

On data: “You need access to critical data that makes assessing a given customer’s creditworthiness easier. If you don’t, it’s difficult to see what your advantage is compared to any other institution that relies on data provided by the customer.”

On economics: “It’s easy to lend money. It’s far harder to get it back. It can take a long time to determine your loss rates and how they break down by industry, customer size, business model, etc. You need time to determine the costs of servicing the loans and whether your business model can sustain those costs.”

Business model vibe shift in fintech

“I’d love to see more built-in fintech infrastructure with B2B software margins”, Cristina told me.

She thinks more investors are now aware of what kind of scale needs to be achieved for an interchange model to be venture-backable.

She’s bearish on the dominant business model in fintech.

On the interchange model: “The vast majority of businesses I encounter with an interchange model have no idea what their unique customer acquisition play is and are, therefore, not backable, in my opinion. It might seem old-fashioned, but I’d love to see more products customers are willing to pay for.”

Infra is improving, but that’s not sufficient to make a viable product.

She agrees, “It’s quite easy to pick an issuing partner and launch a card program these days, but what’s difficult is driving adoption and usage.”

Limiting beliefs and career advice

For those who haven’t hit their startup rocketship: “You always want to join a startup that would have been successful without you. Don’t blame a startup failure on yourself”, she said. “Move on and hop on the next (hopefully) rocketship.”

For people like herself: “What worked for you at [insert very successful startup here] worked at that company, in that specific industry, at that point in time. It will often not work at another company, in another industry, at another point in time.”

What bothers her about the online zeitgeist

“People who publicly hate San Francisco but made the vast majority of their wealth in the city and did very little to give back or attempt to improve it.”

She participated in the crowdsourced “SF is back” roundup piece I did recently.

“People who care about tax breaks above all else – to the point that they’re willing to support MAGA election deniers vocally.”

“The countless takedowns of female entrepreneurs for things like poor company culture while men slide by unscathed with things like fraud.”

Touché.

How to get archived instantly in her inbox

“Start an email with “Dear Sir,” she told me.

Secureframe helps companies achieve fast SOC 2, ISO 27001, PCI, HIPAA, NIST, and GDPR compliance.

Click here to chat with their team. Mention “Sar” during your demo to get 20% off your first year of Secureframe. Promotion available through December 31st, 2022.

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