TRANSCRIPT
Matt Voiceover
Welcome back to Sound-Up Governance. I've been trying to get today's guest on the show for months and we finally found the time to get together what a treat to chat with Soodeh Farokhi, Chief Product Officer for Nakisa, which is a software company in Montreal. Soodeh has been a founder in the VC world, a board member an advocate for equity, diversity and inclusion. She's got a PhD in computer science, and she's a rock star at everything she does. We talked about the awkward and sometimes inappropriate situations that founders and funders find themselves in. And through Soodeh, I learned some important lessons that are, or should be, applicable to anyone finding themselves under equipped or under confident on their journey to build and grow their companies. I don't always give space on this show for people to tell their stories. But Soodeh's is too interesting to skip.
Soodeh Farokhi
I'm an Iranian Canadian product executive based in Montreal, Canada, a working mom of two little ones, and a diversity and inclusion advocate. I'm a tech entrepreneur by heart. I built my first company when I was 27. And it was automating business processes as I was very passionate about. The reason that I came to Canada was actually I found an investor who was willing to put money on my idea. And I launched a company in 2016. AI video analytics software company that was actually considered to be Google Analytics, for physical space, leveraging security camera. So is the way that Google Analytics analyze the e commerce website, we were - in a GDPR compliant manner - we were analyzing anonymously behavior of people in any physical space, like retails or retail stores or shopping centers to understand the pattern for the shopping and if the advertisements, let's say in physical world working or not, right? I kind of built the company from from scratch, I actually had board experience in that company for three years as a as a board director. And then the rest of that three years I have the observer seat. I built a strategic partnership with big players in the market, kinda past the product market fit the stage, that is a very critical stage for a software startup. Kinda two years ago, I decided to step out from my own company, which was also very challenging, I would say, because it was like a, like a baby for me. I have built communities in the past as a as a diversity and inclusion advocate. I am the founder and former executive member of a community of women of MENA in technology at the Montreal chapter, we established that community and is a global community. So it just I enjoy being with people who share the same challenges, righr? And minorities that can, I know, brainstorm and address difficulties, and, and maybe, again, concerns and challenges altogether.
Matt
So I'm just really curious, because I don't think I'd heard about this, the women, MENA, like it. So tell me a little bit more specifically. So this is all women from Middle East, North Africa, in tech in Montreal?
Soodeh Farokhi
Exactly. So it's a global community. And it has different chapters in different places in the world. Originally, it started from Persian women in tech. So it was just Iranian people who are in tech. The founder is from California, she actually felt that there are so many female in tech from from Iran. And it's rightly so because I mean, I'm not bragging about that, because comes with the fact that is not very fortunate. Like in cultures like Middle East, you define the success in a different way. Your parents will call you a successful individual if either you are a doctor, or if you're an engineer. To survive in that economy and, and society to stay in a in a level that you have a good life. So you need to go to either of this path. So then there were a lot of women that go, girls that go to physics and math at high school, and then it led to engineering. So in my engineering school, we were like 70% girls actually, and the minority were male. But it's very different, you know, when I go, when I went to Vienna for my PhD, I think there were 60 people in a classroom for cloud computing discipline. That was my PhD. I was the only girl in that 60-person class. So it was like, oh, this is this is Europe. And it's like why it's very different from my own country, right? Because we were a majority. So that mean that they are a lot of female that you see out of Middle East - I think the same also goes to India as well - that they are all engineers and they are all in STEM. So when when you consider that population, you want to start building a community around them, because you're, you know, they are kind of changing that percentage of female in tech industry.
Matt Voiceover
Pretty amazing stuff, right? To further emphasize how much of an outlier Soodeh is we met a few years back pre COVID, in an offering of the Board Dynamics Program course that I teach for the Rotman School of Management and Institute of Corporate Directors. In itself, that's not all that special. What stood out was the fact that, let's be frank, startup founders just don't generally take formal courses on corporate governance in the first place, let alone young women of color. Before we get back to Soodeh's journey, one of the reasons why it took us so long to set up our interview was that she was a bit reluctant. And her reluctance ties in to some of the broader issues in the startup space.
Soodeh Farokhi
The first time that you invited me, very kindly, I kind of pushed back and said, "Matt, like I'm not a board person. I'm not." Like I it's like, if you want to put all the things that I have achieved, a board is like very thin part of it. And also, to be very honest, I started to read your, your mission on the Ground-Up Governance, and I loved it. I love the fact that you're looking at it really, from a different perspective, like, what would be the future of the governance, not what it is today. And in an unconventional way, how we want, right, the governance to be. And to me, unfortunately, it's like, considered to be like your retirement job, right? Like, whoever it is, is more experienced, not for you, you're pretty young, and you're like the rocking the governance, but usually, it's like, whoever that is a CEO or an executive, if you ask them. Okay, what do you want to do? Let's say, you know, what, if you get a time to retire, you're gonna go to some boards, and kind of it's like this is that is the typical type of probably people sitting at the table at the boardrooms, right? And that is all probably also the challenges that I faced, it was because of that very big gap between me as a, you know, a woman of color, minority person who has accent, young female, right, in the tech space, and also maybe my first kind of experience with a board. And actually, when I left my own company, I resigned from from the observer status that I had as well, because I say, well, even on the, as a board of director, I didn't have that much impact, let alone as an observer, why I should keep kind of going to those meetings, right?
Matt
You made a comment about your reluctance to, to have this conversation. And one of the things that you mentioned was, you you talked about the lack of, or your own perception that you have a lack of expertise, or, or experience in the governance space. I know this might sound like a bit of an obnoxious question, but what would expertise even look like in this space? And I mean, that sincerely. I'm not trying to be annoying. I just my own perception of this has really changed. And I don't have a lot of confidence anymore, that I know what an expert even is anymore. So like, what, what, what does that mean to you?
Soodeh Farokhi
Yeah, so let me tell you why I'm why I was I am or I was biased around that. So I incorporated my company in an incubator. And that incubator had a very smart businessman as the as the CEO, a founder with multiple exits and very successful. He was actually very against founders to be at the board. And, and the perception for that model not working was that when you are raising external money from VCs, they actually don't like to sit at the same table with the same level of kind of authority and control with a very young person. I mean, very young means like, the first time, the first time founder. The model on that, and that incubator was saying that you're gonna have observer seat and you're gonna report to report to that, but that board actually you, first of all, you have to hire a seasoned CEO. You can't be the CEO of your own company, either. And then you can't be the board director of your own company either. And because you haven't been in the board because you don't understand what is fiduciary duty. What are the kind of financial obligations that you need to monitor? What are the governance structures? Do you know the cap tables? Do you know this kind of terms in a term sheet? If you want to review them? Well, like, of course I don't! Of course I don't! Well, not right now. I didn't know at that time, right? And, and then kind of you doubt about it. And every year they incubated like 10 companies and nobody was like objecting. It was "of course, that's it. So we don't understand that this is not our side, this is not our level." And I was actually the one that was very much kind of against it. And I was saying, "Look isn't chicken and egg problem? This is, this is my own company for God's sake. And if I can be at the Board of my own company, then which board I can be part of it?" So then always, I will be the first time find the board member anywhere I want to go. And then because I was changing the model, it was not actually appealing to them.
Matt Voiceover
Just a quick pause here for emphasis, if you or anyone around you is one of those people who says to leaders, any of them really, but especially young ones, that there's a single right way to do corporate governance, you're basically the definition of the problem. And I think Soodeh very compellingly described the nonsense of the position that her former incubator took, as well as the negative impact on her and potentially her company, too. Back to her story.
Soodeh Farokhi
So I was very high performing in terms of an entrepreneur, but I was also very much kind of shaking that model. Because if I get that, then there are a lot of other founders that might question that for them, right? So I had to give up a big portion of my stock option. And I traded with a board seat for two years. And then that maternity leave and then I kind of lost it because I was off for six months, I was connected, but it will I wasn't kind of have that much of leverage at that time. So I'm saying that the perception was that there are a lot of things, especially at the startup level, I would say around the more financial part of the company. I know it now. But I didn't know at that time. The better way to engage and kind of sit on the other side is that if I were that person, I would say "yes, you don't know it, but come here, so that I teach you." Because that's such an important piece, "come to the board, and I will mentor you on the fact that yes, these are the gaps, go and read that right?" We are building a company, that's not an easy job to do. But learning to sit at the table in a board seat is a is a very hard and difficult thing to learn? No! So it's just to me, it's just that feeling of what is that position? Like, What is this board seat for? Who is this kind who needs to sit at this seat? That are certain age, certain criteria, I mean, mainly men, unfortunately. But now it's kind of getting a little bit better. But that kind of age, I would say age difference was a big thing. And I had issues with other board members just for the fact that I'm a young female. And it's very unfortunate, right? But that's, that's happening. So you want diversity. But if you don't let the person to talk, I had notes before the board board meeting is like, "Soodeh, don't mention those yourself. Like, if you want to mention this, like, kind of tell me about that." And like, Yes, we had such conversations before some board meetings, right? Because I we knew that perception of perception of some of our board members around young, especially female in the board.
Matt
Okay, so you've you've described what's kind of a fascinating situation, you've described what you wished had been different. Maybe I'll ask you a slightly different question. And even if you feel like you've covered this already, I think the perspective change will be helpful for me at least. Because there's a lot of other people who will find themselves sitting in the position where you were. If you I mean, what, what do you wish you had done? Or what advice do you wish you could give your former self who's being given this these conditions? Like what do you wish you'd done differently? Or said differently? Or whatever? Maybe everything went exactly as it should?
Soodeh Farokhi
Yeah, that's a very good question. So I would educate myself much more from the first. So I will I actually gonna repeat my path, I will fight for that board seat, because that was an experience for me that I could probably never have it on any other company. Right? So my only advice for founders is actually educate yourself and and leverage the mentors that you have, maybe not directly from the other board members. Maybe you can't get it but if you have advisors and mentors, leverage them not just for how to just build the company. No, how to be a good board member as well. And also how to report to the board of course, but like as a board, like long term vision is one of the very key areas of the board. Usually founders also consider that, okay, you know, we know this area much better than our board members, why we should discuss it? We just update them, right? No, if you bring the right people, first of all bring right people at the table. In my view, money is expensive if you bring people who are not the right fit with your company, right? And then you give them board seats because they invest in your company, and this is probably a given. They sit at that table, and the damage that they make to your own to your company is actually very long term damage. The company might not recover, because they have their own agenda, right, they put some certain money, and they want to maybe make you 10 times a year at certain period of time, because their fund has this period that they need to operate, right? So there are a lot of kind of behind the scenes criteria that you don't see. And then they come with different agenda, they sit at the table. And then they discuss things that you feel that is like, "what, where'd this come from?" But then they are pushing you towards a certain situation, either an exit, or they want you to raise more money, because they have extra money that they need to kind of give up to a company. So to me, first of all, I think one of the very good advice I got from my advisor was that understand the venture deals. Because if you are a startup that you don't want to go to the bootstrap path, you have to raise money. And you really need to understand their game. So educate yourself initially for startups, I would say it just maybe all around a lot around the initial raise that you have pre-seed, seed, series A, etc. Try to find mentors, and try to find you know, such courses so that you understand from a very neutral person. It's very important that your mentor is neutral. Because also it's a very, the network of board is not that huge, right? Board members talk to each other. So if you are a certain company in Montreal, Canada, they know each other, so you can't go and find a mentor, that might be biased. So try to find them very neutral mentor to mentor you on, on how to be a good CEO, serving a board or being in a board, etc. And try to learn and other things that I would tell myself is that listen well to the comments. Accept feedback that are constructive, because as a founder, you're usually you're very stubborn. And I think that is that is fine. Because you need to be stubborn around your vision, and then you pivot and then you need to be stubborn around the second one, right? But we had four pivots, or 3-4 pivots on the path of my company for the for the kind of six years that I was there. And every time, especially the early, early stage, when they are the board or other investors were telling us that the market is limited, or we are ahead of the market in terms of tech, or different, like very long term feedback. I was not hearing them out. And then we're kind of hitting the wall. Of course, listen to all the feedback, you don't need to react to all of them. But be fair. And and you know, accept the ones that are fair feedback. Honestly, a very important advice is that pick various strong independent board members that are truly independent. I think independent board members can bring the level of the board composition to really defendable, because again, everybody else has an agenda. They are coming, they have a skin in the game big time. And they are just optimizing their path. And while there might be some exceptions, I'm not talking about those, but the majority is like the business is crucial. But then you bring independent board members to kind of change that dynamic, and bring that operational conversation into a strategic conversation. So if I return back, I would actually pick very right independent board members. I didn't pick them. I picked the board members that the other VCs were recommending, which was a very wrong, very wrong composition, right?
Matt Voiceover
OMG. It's so fun to listen to a founder reflect with such clarity on her experiences to the point where she can spontaneously generate some really actionable advice for those following in her footsteps. And it's true that founders are often more vulnerable than most to being guided along a path that works against their own interests, or at least to buying into a set of beliefs and values around governance without realizing that they have the power to choose their own adventure instead. Before we wrap up with Soodeh, I wanted to hear more about her work as a community builder and how that serves her in her roles.
Soodeh Farokhi
I think I owe always believe that you need to surround yourself with people who, first of all are much better than you at so many aspects that so that you can kinda learn from them. And also the ones that cheer for your success. I think that that's also an important piece. Because they are the one giving you positive energy, they are the one empowering you, they are the one giving you confidence in the challenges that you have. Right? So any any new area I go, for instance, right now in my role as a CPO, I try to find people, majority maybe women, because they might have the same challenges as me, and then I understand, "okay, how do you do this?" Like kinda trying to share journeys and stories and learn from each other. I think it's very similar to the governance as well, right? So how many companies do we have in Canada, and then each company, how many board seats they have maybe up to 10. Like, if it goes to the, you know, big, big part of it, right? And then some of the majority of that can be the management and then some VCs, etc, then it comes with maybe a few seats per company that is for, let's say, independent board members, right? So yes, it's a very competing market, and then you compete with all other ones. And then you have now here, you need to see if you are inclusive, you have an inclusive culture or not right? Then that is the reason that I would say, I'd like to build that community of minorities around governance, to to hear their story. The challenges, but then how they overcome it. What was the reasons that they could be a very successful board member? But it's very rare. It's like finding those people is not easy on its own. So to me, that is an empowerment, networking, connection, sharing challenges and learning from each other. And that 2-3 steps on the ladder that nobody is kind of taking your hands, you can have a community who are empowering you and you are empowering them. So you learn from each other. One other area that on that community, I'm also envisioning to see, they come with expertise that... so, me as a let's say product executive, I have certain expertise in a b2b product space. There needs to be those expertise in the board as well. Because if you just rely on your management and executive to have maybe the best product strategy and vision, and then you have very generic board composition, that they are all mainly CFO, CEO types, right? Maybe sales driven mainly and one optimize the financial number. Then who gonna kind of challenge the product strategy and vision for the company, if you're building a product company? So I wish I had board members that I could brainstorm with them on the product vision, and product strategy. And then we were avoiding the pitfalls, right? So I'm right now I'm not serving that many boards, but I'm serving as advisory, in advisory board of a lot of startups. And I love to share all my experience, including that board, whoever I advise, the first thing is that do you have a board? Make sure that who you actually ask to sit at that table, right?
Matt Voicoever
It's so rare to find people in the startup space who think about governance as anything more than a necessary bureaucratic, evil thrust on them by their funders. And sure, maybe Soodeh kind of started there. But before long, she became what she is: someone willing not only to see the flaws in the conventional system, but also to see opportunities for entrepreneurs to use governance as something that empowers them instead of just being a burden. I'm so glad Soodeh finally joined me on Sound-Up Governance, and also grateful that you're here to listen. As always, shoot me an email or voice memo to soundup@groundupgovernance.com if you want to connect whether you're an entrepreneur, a director, a funder, or some other variety of nerdy governance person. Until next time.
Sound-Up Governance (ep.40) - Governance advice for entrepreneurs from someone who's been through it (feat. Soodeh Farokhi)