An Education in Following Your Dreams: Betsy Ziegler, CIO of Kellogg School of Management
When it comes to problem solving and strategy, Betsy Ziegler’s the one to talk to. With an undergraduate degree in Economics from Ohio State University, a MBA from Harvard, and 12 years at McKinsey under her belt, her brains and know-how are a force to be reckoned with. Finding a passion for the Social Sector and more specifically the higher education field, she’s now at Northwestern University’s Kellogg School of Management where she’s pioneering the role of Chief Innovation Officer. Fortuitously finding her way into the startup investing world, Betsy has been a FundersClub member since 2012, and holds a personal portfolio of over 25 companies.
What drew you to specialize in life insurance, technology, and financial institution operations during your time at McKinsey?
Before I worked at McKinsey and went to business school, I worked at GE where I ran health center operations. I had this existing interest in training and leading people inside an operating environment so, when I went to McKinsey, I wanted to do anything but that to get a broader set of exposure. After being there, I realized that was the work I was most excited by.
The insurance interest came about because of the nature of the McKinsey people working in that space, that I was excited to be working with, and the senior partners who became major mentors of mine. There are two kinds of partners at McKinsey:
The kind who wake up every day super excited to solve particular problems
Those that are excited with working with a certain group of people regardless of the problem.
I am the latter. So if the same group of people hadn’t been working on life insurance and were doing CPG (consumer product goods) or auto manufacturing or anything else, I would have been excited about that.
How did you find your way to the education field from McKinsey?
When the financial crisis (2008) hit I was serving all these insurance companies and financial institutions. They were of course dramatically impacted by the crisis, and so we had to stop working with them because they had bigger issues at hand. I took that as an opportunity to fill my plate with all things social sector.
I served my undergrad alma mater, Ohio State, for about 18 months; I did a bunch of work on economic development for the city of Columbus, I did work in the performing arts; work in micro insurance needs in Africa. That basket of work lit me up in a way that I wasn't expecting, applying certain problem solving approaches and having a big impact. It made me feel a lot different than the impact I was having saving a life insurance company money or selling more life insurance. Though important and the reason we were hired, it was not the same thing as figuring out strategically how to get 30 percent more students from Ohio State graduated.
It’s an order of magnitude difference. In these projects I had to figure out how to give more people work in the city of Columbus, how to save a dying performing arts company. That work coupled with the idea that I was getting to the point where I would be evaluated for Senior Director/Partner, I wasn't sure if I wanted that job because as you get more senior, you get pulled away from the core of the problem solving and the people. That is the part that I love, so I made the decision to leave.
What happened when you left?
When I left, the first thing I did was buy an around the world plane ticket and take off for about three to four months. I had it in my head that I wanted to do something that was very non traditional for a McKinsey Partner to do. You only leave once and I wanted it to mean something for me.
So I went on this trip with four ideas in my head to decide between:
1) To start my own company
2) Buy a company and fix it
3) Be a leader in the social sector with preference for higher ed.
4) (The backup option) to go to a new client.
I took the first two off my list around half way through the outback in Australia, and came back to the US excited to be focused on the social sector and higher ed.
I couldn't find anybody to be interested in me when looking. My resume was McKinsey partner and insurance, so I was striking out and also frankly I was enjoying my time not working. I was meeting lots of people and having a great time living a life that I imagine that some people have—having lunch with your friends every day, going to the gym, watching TV in the afternoon, it's just not a life I've ever had.
I got a big offer from a bank that gave me something to consider and all my McKinsey colleagues told me to take it— huge money, huge responsibility, etc. I turned that job down and went out to lunch with a friend to celebrate the decision and my friend was late for lunch. While I was waiting for her, I picked up the paper and on the cover was an article about the seven people to watch in Chicago in 2011 and one of those people was the new dean at The Kellogg School at Northwestern.
So while I was waiting for my friend to show up, I sent the new dean at Kellogg a cold call e-mail saying, "Listen, I'm a McKinsey Partner and I'm thinking about higher ed. Would you spend 30 minutes with me on the phone?” She responded immediately and we had lunch. Three days after I had lunch with her I started consulting for the school— three months later I got my job, which was to run everything that happened outside of the classroom and be the Dean of Students for the roughly 2,500 Kellogg graduate students.
Now what are you up to at Northwestern?
A few weeks ago I moved over to a new role that never was before, to be the Chief Innovation Officer at Kellogg. I get to take all this cool stuff I'm doing in my hobby life of investing, mentoring, and advising startups, and combine that with my passion of having a point of view on the future of higher ed. and a really graduate business education. I'm still in the midst of transitioning but the first three or four weeks have been great.
This has been a long answer but it's not an easy question to answer in short form since it's a pretty big right turn—it wasn't a predictable change. Not many people would have said "Oh yeah, I can really see you doing this!" It was totally random but as a result, it's been a fun story to tell because other people can see themselves in the story, even our students. They think about "I don't know what I want to be," and I say it doesn't matter, you can change lots of times and that's a good thing.
Moving into your new role as Chief Innovation Officer, how do you pair your new role with a startup innovation mindset?
For me there's a huge thing, that I have support from the Dean to be really entrepreneurial in terms of experimentation, by figuring out quickly what problem we're trying to solve.
My big concern with this new job is that everyone gets distracted by the next new shiny thing, but it's a bad thing, as you have to deliver impact. It's very much an entrepreneurial mindset. We've already launched three or four pilots, but have to continue to ask questions
How do we think about what the next set of pilots are?
What do they look like?
How do we test and learn?
And if we're going to fail, fail fast. Not to be stereotypical startup, it's less about true failure and more about “this part worked and this part didn't work.” We take what’s good from that and build on, then that matters and that's a big piece of it.
There's another big key, that’s data driven decision making and how to better use data to better support students inside and outside the classroom to make decisions for school. We have 9 different programs, so that’s an ongoing theme that I've owned since I started at Kellogg.
I also look at if this program still matches what the market is expecting from it, or if it is not. If not, deciding what do we do and how we get from where we are to where we need to be.
in so doing all of that, I’m spending more with people who are thinking fast, who are trying things. It's less about collecting a whole bunch of startups to be connected to Kellogg as a potential partnership. It’s where we develop partnerships with people outside the walls of the school, and more about a mentality and really spending time with those types of folk, problem solving with those types of folks, which helps me to think differently about problem solving inside of Kellogg. I'm lucky that I have a faculty and a dean who are supportive of what I'm doing and supportive of me individually.
How did you find your way into startup investment?
The first investment I ever made was in Trunk Club— the male version of Stitch Fix, sort of, though more higher end. I met the CEO because his Chief of Staff was a guy who was on one of my teams at McKinsey and he called me. In my time in-between roles, this former colleague said "You should just meet Brian and hear what's going on" and I was like “Well OK, I'm not really doing anything so I'll have lunch." So, I wrote him a check.
I never the had time to even consider something that wasn't exactly in the purview of what I was focusing on for my clients at McKinsey. So Trunk Club was sort of this fun experiment on the internet, that I thought “I'll put money down on this and see what happens” with no expectation of anything positive happening. I got excited about that investment—I didn't play an advisory role, any mentor role, I tried to be helpful but it wasn't formal.
The next investment I made was on the FundersClub platform, which was what really ignited this idea of having access to deal flow, specifically getting curated deal flow. Virool and Soldsie were the first two I made on the FundersClub platform and then I sort of was like, now I have three investments, so I'm sort of a quote on quote investor, but still not having had an advisory role on anything.
I graduated business school in 1998 and so everyone I knew left their jobs in 1999 and went west; or were already west and quit their jobs and joined a startup. I didn't have any understanding of that, why they wanted to do that, I didn't get it at all. I had a couple of opportunities while at McKinsey to leave and go join a startup and thought that's really insane, I like my job why would I do that—I didn't get it.
At the five year reunion, most people are on job three and I was on job one, at the ten year reunion most people were on job five and I was on job one, that was "OK" with me because that was an active choice. It was a choice I was making routinely every six months.
The 1998 wave went through, then the there was the crash, then the next wave went through and then the crash, though that wave was less prominent. Now, this wave, I feel that I get to be a participant in it in a different way than many of my colleagues because I'm not working at a startup, investing makes me feel like I'm part of the ecosystem. Now with the volume I have, I'm starting to develop more of a reputation, and I don't mean reputation in an ego perspective, a reputation for the things I miss about McKinsey: the coaching of people and clients, the client service part of it. Now I’m getting to do that by supporting startups that are more local, they are startups who are either Kellogg grads or Chicago based, where I can play a more active role.
I give lots of credit to the randomness of the Trunk Club thing because my interest would have died otherwise. As well, I wouldn't have expanded if it weren't for finding FundersClub, quite early on in 2012, right when they came out of Y Combinator, as I used them as my early platform to start to get comfortable and start putting bets down. Now I have four or five different sources of deal flow of which FundersClub is one.
How do you pick the companies to invest in and to mentor?
Well, it depends quite a bit on how they get presented to me. So, for the ones that I curate the deal flow, 100% of it is that I have to believe in the problem they are solving, and I have to believe the problem is a real problem. I don't have anything in my portfolio that is terribly entertainment oriented—no dating, no restaurant, no alcohol kind of things. That's just me, obviously they have lots of value, they're just problems that I don't think need more attention, again, that's a very personal view.
If I believe in the problem then it's 100 percent about the person because I'm making decisions at such an early stage that I have no idea if their solution is going to matter or not. I mean everything I've done, even in my own deal flow, is pre the company seeing revenue, except for Trunk Club, which had a little bit of revenue. I'm 100 percent betting on the person. I'm betting that person is going to be open to coaching or feedback whether it's from me or somebody else, that that person is going to run through every wall possible. I’m betting that they’re going to hammer through all the obstacles, and that's a person that you can tell the passion for the particular problem, a person that can expect to hire great people to form their team. When I'm creating my own deal flow, that's what I do.
For FundersClub or other online platforms, I don't have any idea about what the founders are like because I don't have access to them, nor do I expect to, but that is a very different feeling. In these cases I expect to have a better sense that the companies have done something already. Since these are early stage companies, I expect that they have something proven in order to get their investment process on the platform. Then, what I do is trust that the Investment Committee and FundersClub Panel at FundersClub are making a good choice, which I have no reason to believe that they are not because they invest in the game themselves. I'm happy to pay the carry because the carry gives me confidence that they care as much about the outcome as I do.
What is your favorite place to go visit when you travel?
I like to be able to tell stories of doing things that other people don't do. A year before I left McKinsey I wrote a list of 40 things I wanted to do before I turned 40. On there was things like: be a seat filler at a celebrity awards show, meet certain famous people, go to certain film and intellectual festivals.
The reason I answer the question this way is I love London, I love New York, basically I can fall in love with any place that I get to visit, of which I've been to 75 or so countries. But what I really like is being able to talk about an experience that not everyone has done.
There's this long list of random things that I did, like when I went hiking in the arctic circle with reindeer. I think the reason that I get excited about these is because at McKinsey your life is McKinsey. I loved working at McKinsey, I'm very proud of my time there, but I was living in a little box since there were only certain things I could talk about. I used this list as a way to get myself out of my box to make sure that I felt that I was an interesting person.
I have a strong belief that you have to plan to live an interesting life, so I don't have places that I go back to over and over again except for my second home in Wisconsin. What I want to do is find what the next cool place that I will get to go and tell a bunch of stories about. It doesn't have to be fancy but I want it to feel a little unusual, I want to make someone else ask the question "Why would you ever consider doing that?" or "Were you scared or did you meet interesting people?" Questions that spark a conversation as a result.
I have a young child now and I've written my 50 by 50 list and traveling with him is very prominent on it. When he's ready to carry his own bag and will be able to roll without the need for diapers, we are going to keep following through. I couldn't tell you my favorite place because I'm not sure if I have one.
Is there anyone that you look up to or who's influenced who you are today?
Lots of people, there are several people who I've worked with who have shaped my ethic and approach to how to treat people, how you think about building a diverse inclusive, safe environment, and how you continue to push yourself to ever be better. There are a bunch of people I could list under that umbrella.
I lost my dad when I was quite young, so I would say my mom for the perseverance. She’s taught me to lead an honest life and be authentic in terms of who I am, and that effort counts more than anything else. I can talk a long time about the people I'm grateful for, I sent a number of notes over Thanksgiving for something that they've done this year to help me be a better leader, a better parent, a better friend, a better whatever.
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