Today I wanna talk about a company Hustle Fund invested in... and WHY we invested, even though other VCs passed.

Let's dive in.

The Company

The company I wanna tell you about is called The Cru. It's a virtual membership organization for professional women who have big goals.

The way it works: women join for an annual fee. They're placed in a cohort with other women. Each cohort has a group leader (another paying member). The group supports one another and helps hold each member accountable to her goals.

There are also events, mentorship, networking opportunities, etc.

This is the founder, Tiffany Dufu:

So, why did Hustle Fund invest in Tiffany?

(Remember - Hustle Fund evaluates companies based on 5 pillars: team, problem, solution, market, and traction.)

The Team

The thing you gotta know about Tiffany is that her life's mission is to lift up other women.

This wasn't just a passing interest.

• Tiffany had authored a book – which was praised by Melinda Gates, Sheryl Sandberg, Soledad O'Brien, Time Magazine, Business Insider, The NY Times, etc.
• She was on the Board of Girls Who Code
• She ran a non-profit called Levo that helps young women launch careers
• She was a founding team member of Lean In
• She's been featured in The New York Times, ESSENCE, O, The Oprah Magazine, and NPR
• She's presented at Fortune Magazine’s Most Powerful Women Summit, TEDWomen, and MAKERS

Basically... Tiffany knows how to sell, has a history of elevating women, and is surrounded by the most powerful women in the world.  

It's not uncommon for founders to lose interest in and passion for their business... especially when times get hard.

But since Tiffany was driven by her mission, Elizabeth knew Tiffany would stick with the company no matter what. And founder persistence when the going gets tough is a key trait of many successful businesses.

The Problem

The nut of the problem is that women have a LOT going on. They work high-pressure jobs, they run the household, they raise children, they care for their aging parents, they check in on their friends, etc etc.

(Of course, not all women do all these things, and certainly many men also do these things.)

It's incredibly hard to manage all of those things AND be successful at all of them. Or many of them. Or even a few of them.

In taking care of so many other people, women often de-prioritize their own goals, which makes them unhappy, resentful, and/or depressed.

The Solution

Tiffany believed one way to solve this problem was through community. She created The Cru to help her audience find support from other women in a similar situation.

She charges a membership fee of $499 per year. The user is matched with other users in a cohort, and cohort members hold each other accountable to their goals.

There's also an opportunity to layer other products on top, like events or investing.

The Traction

At the time Elizabeth heard Tiffany's pitch, The Cru was less than a year old.

There were 100 paying members, and another 800 on the waitlist. And the cost to become a member was $499 per year.

Tiffany had also developed partnerships with Disney and Morgan Stanley. She charged $1800/year to curate "crus" within those orgs.

And she had raised over $1m.

The Market

As a VC, Elizabeth needed reason to believe that this investment could yield a 100x return.

Tiffany's ideal user is any woman who works and has goals. She was starting with the U.S. market, but this could easily accommodate an international audience, since the program was all virtual.

So, let's do some rough math:

• the U.S. has roughly 300m people
• roughly 65% are between the ages of 25 and 64 (so 195m)
• roughly 50% are women (so around 97m)

Tiffany charges $499 per membership. Let's assume everything goes right and she wins 20% of the market share. 20m people paying $500 a year – that's a revenue opportunity of $10b.

The other reason Elizabeth believed in this market is because she saw her own female friends doing something similar to what Tiffany was doing with The Cru.

Her fellow GP Shiyan Koh was hosting professional dinners for her businessy friends. Her teammate Kera (das me) was doing the same thing.

Elizabeth saw the big "pie in the sky" market opportunity AND the "this is actually happening" reality and decided to take the bet.

Problems Tiffany Faced

As we know, VCs can always find a reason to say no. Let's look at some of their concerns:

Operations

In the early days, Tiffany did most of the operations herself. And it was almost all manual.

She processed applications, onboarded new members, curated cohorts, helped group leaders run their cohorts, processed payments, etc.

A lot of VCs were concerned that these ops would be hard to automate, and would distract Tiffany from scaling the biz.

*Her solution: it took some time but Tiffany did add tech to automate many of these processes. She's now focused on what she does best: selling the product.

Retention

Some VCs, even ones that ended up investing in The Cru, had questions around customer retention.

Would cohorts simply connect outside of The Cru when their annual membership expired? How would Tiffany combat this?

*Early investors believed that Cru members would see the power of The Cru's community and want to stay within that orbit. Many also believed that Tiffany could upsell members on other products that would make their membership even more valuable.

The Pandemic

In the beginning, Tiffany focused on a direct-to-consumer marketing strategy. This worked well... until the pandemic hit.

Women were inordinately overburdened. Combine that with inflation and rising costs – and Tiffany realized she needed a new strategy.

*Her solution: Go directly to businesses who want to support their staff. Tiffany is a superstar when it comes to in-person selling. She used this skillset to sell The Cru to enterprise companies.

Some VCs couldn't relate

Most investors tend to invest in companies that align with their own lived experiences... ie companies that solve problems they deeply understand. Or serve an audience they identify with.

Unfortunately many of the folks Tiffany pitched couldn't relate.

*Her solution: Find investors who align with her audience.

Tiffany recently opened up a crowdfunding campaign to allow her believers in this mission – either women who have benefited from The Cru and believe in its power, or those who want to support her vision – to become owners of the business.