Ep 22 – Dafina Toncheva, General Partner, USVP
♫ MUSIC ♫ This is the Pfeffer on Power: Accelerating Your Career podcast. I'm your host, Stanford Professor Jeffrey Pfeffer. Every other week, I try to bring on to this podcast an interesting person who I know who has really mastered power and influence in a profound way and done some incredible things. Today, we are very fortunate to be joined by Dafina Toncheva.
I met Dafina when she was a student in my class. I'm going to let her talk about her background herself in a minute. But Dafina has gone on to do some incredible things. She is now a partner at US Venture Partners. It is not news to anyone that the VC industry has not been traditionally welcoming to women. Dafina, of course, has succeeded in an industry which is a nontraditional industry. And in fact, the industry that she was in before she came back to business school was an industry software that was not always welcoming to women. So Dafina really gives us an opportunity to talk about how the principles of power
apply to women as well as men and how to use those principles of power to navigate an extraordinarily successful career for yourself. So first of all, Dafina, welcome to the Pfeffer on Power podcast. Thank you for having me over, Jeff. It’s a pleasure to be part of this podcast.
And let's begin by telling the story of where you're from, how you got to the US, and your career trajectory. As you can tell from my accent, I'm originally from Bulgaria. I was born in a communist country in a family of doctors. My teenage years were spent in a country that was trying to redefine itself into a democracy. And the time was defined by political, social, and economic
turmoil. Those were some very difficult years and ultimately led to my desire to look for opportunities abroad. That within itself was a radical idea since nobody in my family had ever traveled abroad. Nobody around us had ever left Bulgaria. As a reminder, Bulgaria was a communist country until 1989. I wanted to study in the US, but I had no idea how to apply. I didn't know anything about the schools there. I didn't know how to pay for it. This was during the time also when the internet hadn’t reached Bulgaria. And access
to information was very limited. With the help of the US Embassy and some nonprofit organizations, I was able to find out the relevant information. It was a years-long process. But in the end, I ended up approaching one hundred schools. I applied to fifty, requesting application fee waivers as well as financial assistance. I was lucky to get accepted into twelve schools. And that's how I ultimately ended up at Harvard. Dafina, I think your story about leaving Bulgaria and going to Harvard really illustrates an important point: you don't get what you don't ask for. If your aspiration is to get out
of Bulgaria… If your aspiration is to live a more privileged or more wealthy, or more comfortable life than your parents or maybe the people who live in your town, the only way you're going to get there is to take some risks and apply. And even if all fifty schools had turned you down, you would have been no worse off than had you not applied to any of them. And it turns out, of course, twelve admitted you. You went to Harvard. And the rest, as they say, is history.
Totally. The path between college and where I am today is a bit more straightforward. I studied computer science and applied math at Harvard. I worked as a teaching assistant during the academic year, and I always had a summer job. After graduating, I chose to work for Microsoft as a developer and later as a product manager. After four years at Microsoft, I decided to leave to pursue a business degree. My belief was that a business
degree would complement my undergraduate tech degree nicely. And also give me more options. So after four years in Seattle, I joined Stanford, where I met you and where I got my MBA. It was through Stanford also that I met my first employer — Venrock. That's how I got into venture. It was a serendipitous event. I wanted to be in technology. I wanted to join a startup. I was quite intrigued by entrepreneurship as well. During a class that I took on venture
capital and entrepreneurship, I was introduced to, at the time, the managing partner of Venrock, who became a mentor of mine. After the class ended, he approached me and made an offer. He suggested that I join the firm Venrock as an associate and work for him for two years. It was a two-year program without a path to a partner position. But what he promised in return was to teach me as much as he could, and as much as I could, about startups, investments, investing in startups, boards, running small companies, and everything that an early-stage investor needs to know to be successful. So the two years at Venrock were a very exciting time in my life and in my career. I joined in October 2008. And I believe that my first
day on the job was the day when Lehman Brothers announced bankruptcy. The stock market was down significantly that day. And my first thought was, “I'm so glad that I'm broke. I only have loans to pay back because everyone who has any savings and any money in the market today is having a really bad day.” After two years at Venrock, I left to join a seed-stage fund, Tugboat Ventures, where I spent a short amount of time. I joined USVP in 2012. And I have been here ever since.
So I'm going to ask you two things about your career. And then we're going to talk about the use of power in your career. You told me once or told the class once your choice of USVP as a place to land was extraordinarily strategic and thoughtful as you thought about where you could have the most impact and where you could make the most difference. Could you describe why you're at USVP? I joined USVP ten years ago, and at that time, the firm was going through a number of transitions. They were going through a generational transition on the team. They were changing the strategy,
the fund size and also moving away from a set of LPs that had supported the firm for the prior ten years and towards more diversified long-term investors. All transitions are risky, but especially having several transitions at the same time increases the chance of failure. At the same time, I had offers from two other firms, both of them well-established funds that had raised money had well-established teams, and they were offering me to join in a role as a junior partner. So why did I join USVP in light of so many changes and higher risk? Well, first of all, at USVP, I believed in the early-stage strategy. I thought that that strategy sets up the firm for success over the long run, as early-stage venture returns beat all other returns over a 30-year period. I also liked the team. And just as importantly, I thought that the culture that they had built: one of transparency and collaboration and a high degree of trust and respect, would provide a really nurturing environment for me in which to thrive to develop as a young investor and succeed. Equally importantly,
I saw the changes that USVP was going through as a leadership opportunity. I believed that if I stepped up and participated in all these different processes the firm was going through, my effort will be recognized and rewarded. Also, remember that one of the transitions USVP was going through was a generational transition. And in order for that to be successful,
it was important for the firm that the junior partners that were part of that transition were also successful and were propped up and supported in their career development. So I guess, in a way, I saw my career success very closely aligned with USVP’s success. I didn't see that same alignment at the other firms that had given me job offers. There, the path to a senior partnership role was a lot more straightforward. I would have had to work for a few years in a supporting role, proving myself, making perhaps other more senior partners successful, and waiting until a spot would be free in the senior ranks. So I guess in that way, those firms were not nearly as vested in my career development as USVP was. So looking back at it, I think I chose USVP because I really liked the team
and the strategy and because I wanted to be part of a partnership that was really most willing to support me. I think that's a smart answer. And it's, I think, something that many people would not do. I mean, many people will pick the most prestigious organization. And you picked an
organization where you could be a venture capitalist making investments, but in a place that needed you comparatively more than you needed them. As opposed to going into some high-profile place, you went to a place where as you just said, your success and the firm's success were going to be very much more aligned. That's exactly right. You know, one of my mentors was a successful athlete, an NBA player
who turned investor. And he told me one day, when we were discussing my options, that the advice his coach gave him many, many years ago was to join the team that wanted him the most and needed him the most because that would be the team that would make him most successful. And I thought that venture partnerships, in some ways, mimic the same dynamic. So I chose the partnership, the team that I thought needed me the most, and because of that, would be most willing to support me and allow me to thrive and create the conditions for that. Yes. So I want to pursue now the next topic. As I mentioned, the venture industry, the investment industry in general, has not been necessarily welcoming to women. I mean, there's a relative dearth of women certainly in the whole field of investable assets, but certainly in VC, in the VC industry. With Ellen Pao and other things about, you know, charges
of sexism and the Draper Fisher Jurvetson thing and all, there's been a lot of issues around sexism and sexual harassment and women not being treated fairly. I think you have done an extraordinary job, not only in navigating your way to a position of enormous power; you're obviously a partner; you're actually one of the most senior and powerful partners at USVP. But beyond that, you've had to deal with a fair amount of this. And so, if you could share with the audience how you've navigated an environment that many people would not see as necessarily the most welcoming environment.
Yes, the industry has made quite a bit of progress. Lately, there are more women investors, more women CEOs, and founders. And the numbers keep increasing. I'm excited about that. And I like to think that I'm part of the solution. Early on in my career, I ran into the same
challenges that we hear other women in tech and in venture run into, the same bias and gender issues that we've talked about many times during your class as well. So could you give a story or a specific example or two of how you have stood up for yourself and how you've actually put into action one of the principles of 7 Rules of Power, which is to get out of your own way? If you will not advocate for yourself, no one else is going to advocate for you. If you don't think you're deserving, almost no one else is going to think you're deserving, either. So could you give a couple of examples of how that has manifested in your interactions? One, perhaps good example, comes from the early days of my venture job. When I was asked to take a board seat in a small company that company had recently recruited a CEO. So he
and I joined the company at the same time. The CEO requested a meeting and opened it up by complimenting me on my career success. He shared with me that he had two daughters and expressed interest in introducing his family to me because he believed that my story would inspire his girls to invest in their own academic performance and their own careers later on in life. I thought that was a really nice way to start a relationship. But then, immediately after that, the CEO asked me if I would consider stepping off the board and help him reassign the seat to a more senior partner from my firm. The reasons for that request, in his mind, were all about fit. I was a young female investor, and he didn't
think that I would fit well with the rest of his board, comprised of very experienced older men. Somewhere along the way, he also chuckled and said that my looks could be a distraction too. I wasn't really insulted by the comments. I just thought that it was really poor judgment to start a relationship with a major investor and a board member in that way. I told the CEO that I would not be willing to step off the board, that his feedback wasn't really actionable because there was nothing I could do about my gender, my experience, or my age. But what I could promise him is that I would work really hard and to the best of my abilities meet my obligations as a board member. I also promised that I
would check in with him frequently to discuss the board dynamics and make sure that it was all going according to his satisfaction. So our relationship had a rocky start, one would say. Meanwhile, I volunteered myself for all activities related to the company where a board member's involvement was needed. I was part of exec search committees, comp committees, audit committees, operating plan reviews, all-hands meetings, and anything else that was required from the board. Because I was up for any task, including the most tedious ones, the rest of the board let me take the leadership role. And I saw a lot of support
from my core board members. The support was so resounding that after three or four months, I was nominated, then elected to be chairman of the board. About a year later, not surprisingly to me at least, the CEO and the board decided to part ways. The company wasn't meeting its business goals and was missing its plan. And everyone decided it was in the best interest
of the business if we looked for a different leader. We ended up selling the business several months later. And while that happened ten years ago, I'm still very good friends with all the other board members. I stay in touch with them and meet them regularly. And so, despite the CEO's concerns, I was able to develop the kind of constructive professional relationship with each of the board members that he doubted I could. That's a wonderful story. And the other thing that I remember you telling me is that one of your contributions at USVP, and one of the reasons why you took the job and one of the reasons why you have as much power as you have there, is that oftentimes investors get focused on the investment process, on putting the money to work, and that you in fact, have played a relatively large role in bringing the new money in and dealing with the limited partners not just worrying about the companies in which you invest in. Is that
a fair statement? Yes, absolutely. I think as we built the firm, and I'm really proud of where the firm is today, I think we're in a place of thriving, not just surviving. In that process, over the last ten years, what I learned is that managing the relationship with those who give us money is just as important, if not more important, than the investments we make with the money that we're given. The belief that it's all about the results is somewhat the first because the results come after a really long time, ten years on average for early-stage venture. And number two, because stories of success can be told in many different ways. You know, the famous thing in venture, and I'm sure in other industries, is that successes have many parents, and failures are usually orphans. Well, that's true for investments as well. So how one manages the narrative of the firm, and the narrative of your own
path, of your own career, of your own success with those that are in a position of power, relative to us, in our case, our own LPs, our investors, is incredibly important, perhaps even more important than the investments we make with their money. You’ve come to my class many times. You were a star student in the class. I want to end our discussion today by asking you to tell us what lessons you have taken from the class that you have put into practice as you have navigated your career in the venture capital industry, as an investor, as a person of influence, and as a board member. Well, first of all, I'm so grateful I took your class, and the learnings are many, but maybe here, I'll focus on three of them that served me well and I think are really important. First of all, one of the lessons that I think you teach all of us so well is to believe in yourself and to believe that you deserve the things you want and that you're worth it. I think you are the one who said that we all need to advocate for ourselves and
be our biggest cheerleaders. And I think that's hard because most of us have a critical voice inside that points out our deficiencies, tells us how we're underperforming, tells us that we can and should be doing better. And what I've learned over the years is that both of those things can coexist. I think that the critical voice inside can still be there, but at the same time, reminding yourself that your success, your well-being is your top priority and your sole responsibility goes a long way in helping you be your own biggest cheerleader. The second thing that I always think about when I revisit the class and the learnings is to not take things personally, to have a thick skin. What most people tell you is usually a reflection of who they are and not on you. So allowing others to influence
the way you think about yourself or how you feel about yourself gives others enormous power. And because of that, I think you have to choose really wisely, who you let in, because only a few people deserve that to have that power over you. I think, for the most part, just developing the ability to not care as much. And remember, again, that you're your biggest advocate, and the need to support yourself is most important. And lastly, I
think what has really worked well for me was surrounding myself with people who were supporters and interested in seeing me succeed. I think the world as a whole is hostile. And finding a group of supporters is really important, at least was very important to me, in bringing the best out in me and helping me believe in myself. I have been very lucky to pick bosses that I've learned from and who have wanted to see me rise to the top. I've made
a few mistakes, and I've tried to correct them as quickly as possible. I think we all need a support network to propel us. And having a manager to be part of that network and bringing the best out in you is a recipe for long-term success.
Dafina, I really like how you've used the concepts from the class in a very strategic and thoughtful way to manage your career and to think about how to do things that have made you successful. This has been the Pfeffer on Power podcast. I'm Jeffrey Pfeffer, your host today. We've been joined by Dafina Toncheva, talking about her career in the venture capital industry and how she came from a small town in Bulgaria to now being a major figure in Silicon Valley. If you enjoyed this podcast, please subscribe. We are available on all of the major platforms, such as Spotify and Apple. You can also find us at PfefferOnPower.com. That's P F E F F E R., And we will be with you in another couple of weeks with another
episode of the Pfeffer on Power podcast. Dafina, again thank you so much for spending time with us and being so candid and so insightful about your career. Thank you so much, Jeff. ♫ MUSIC ♫