- With 10 unicorn investments under her belt, CapitalG partner Laela Sturdy is on track to being one of the world's top investors.
- Sturdy has invested in household names like Stripe and Duolingo, who've said she's helped them with more than monetary value.
- As one of the few women in the VC industry, she's broken expectations of how a successful investor should look and act.
When Laela Sturdy visited Stanford for the first time, it wasn't to study at the famed university's business school. It was to beat Stanford at its own game — literally.
As the no. 16 seed in the annual NCAA tournament in 1998, the thought of Sturdy's Harvard team scoring a victory over no. 1 seeded Stanford on its home court was virtually unimaginable. But to everyone's surprise, Harvard won 71-67, making it the first time in the history of college basketball, both men's and women's, that a 16-seed defeated a 1-seed. It didn't happen again until 2018.
Today, that Harvard win is considered one of the biggest upsets in sports history.
More than 20 years later, as an investment partner at Alphabet's growth-stage investment arm, CapitalG, Sturdy is upsetting expectations of how one of the world's top investors should look and act.
Among her investments are 10 companies valued at more than $1 billion, including at least one of the most hotly anticipated public offerings of 2021. She led the firm's investment in UiPath, a company which makes software for automating office work. In Feb., it raised $750 million at a $35 billion valuation, and on Friday it revealed its filing to go public, showing over 80% annualized revenue growth, positive cash flow, and rapidly declining losses -- a perfect recipe for hot tech IPOs in recent years. She's also seen bursting valuations from portfolio companies such as Stripe, Duolingo, Gusto and Unqork, and co-led an investment in Credit Karma, which Intuit bought for $8.1 billion in December.
"Laela's the best-kept secret right now," CapitalG founder and general partner David Lawee told CNBC. "Now, all her investments are coming to fruition and she's just getting started."
Seeing the court
Unlike early-stage investors, who can place lots of small bets and hope that a few huge wins pay for the losers, growth stage investors have fewer chances and need more hits. Sturdy has thrived in that environment.
Sturdy's specialty is seeing opportunities before they're there, her peers said.
"'Seeing the court' as they say in basketball," Sturdy noted.
Sturdy's first investment in an enterprise-serving business was in Stripe. She co-led a 2016 funding round that valued the payments technology company just shy of $10 billion, which had some people scratching their heads at the time.
Fast forward to today, and the company recently raised a $600 million funding round at a $95 billion valuation, making it the most valuable U.S. start-up.
Sturdy also saw the trend of no- and low-code programming, which can make software development cheaper and easier, and is becoming hot among enterprise and app developers. A recent Gartner study found that 65% of all app development in 2024 will use low or no-code methods.
That interest led her to Unqork, which offers no-code products that "change the way software is written." Valued at $2 billion, the three-year old company had a choice of investors in its series B in 2019 and went with Sturdy to lead the investment, said CEO Gary Hoberman.
That's partly because Sturdy was able to see opportunities in industries that others hadn't, such as public sector clients.
"There were investors who try to fit into a pattern they've seen before, but Laela was really open to exploring and seeing how our platform could be in multiple industries," said Hoberman.
Hoberman says the company has now tripled revenue in each of the last three years.
"I love that in investing, you have to keep going back and forth between the details and this really big picture," Sturdy said.
Sturdy harkened back to her experience in basketball.
"I never liked plays in basketball," she said. "I was always the one who would go off script. I guess I liked to rely more on intuition."
But her familiarity with engineering culture also allows her to see whose talent can actually scale.
"If you really want to hire the people that should be running the business three years from now, you've got to convince them to get in three years before they really should," she says.
Sturdy also said that she asks company VPs what other job offers staff engineers are considering in order to gauge their talent quality. "I think it tells a lot," she said. "The strength of the engineering team at Stripe for example — the caliber at every level is just amazing."
Channeling the underdog
Despite her big wins, Sturdy doesn't plan on shedding her underdog status, she said. After all, she was somewhat of a big and surprising bet for Google.
Sturdy joined Google in 2007 in a strategy and marketing role, later moving into a sales role. Google had just bought YouTube and wondered how it would sell multiple products and evolve beyond a Search company. Then in 2010, Sturdy began leading Google's emerging businesses, overseeing the growth of new ads and commerce products like Adwords Express and Google Offers. She was tasked with hiring several hundred people in roughly six months, she said.
"To me, that became a fun business problem to solve," Sturdy said. "I got to do a lot of leadership roles I wasn't super qualified for but I was able to step into and work hard."
Sturdy caught the attention of David Lawee, a longtime Google veteran who was forming a growth stage investment arm known at the time as Google Capital — now CapitalG .
"I kind of made it a point to know who all the stars were inside of Google, and Laela's name came up a lot," Lawee said. "It came from people I trusted like Claire Johnson, Sheryl Sandberg — some of the most successful women in Silicon Valley over the last decade."
Lawee brought her on to the team despite lack of experience in investments.
"It was a relatively big bet, so you want to bet they're going to be at least as good as the other people at the firm," Lawee said. "The core bet at CapitalG was to build a more cultural, collaborative environment than other firms and Laela fit across all the dimensions."
People are often first drawn in by her personality, which Lawee called charismatic and disarming.
"You may get exposed to the EQ first but you'll also get exposed to the IQ," he said. "She's always someone that adds to a process and it keeps revealing itself the more you get to know her."
Her humility contrasts with the bravado so common among Silicon Valley investors, according to those who've worked with her.
"She doesn't say, 'this is what you should do — she says, 'let me show you what others have done," Hoberman said. "She'll actually let us explore and find our path."
Although Sturdy's peers think she could be more cocky given her track record, she knows better.
When she arrived at Harvard, Sturdy felt like an out-of-place Florida kid, she said. A daughter of immigrant parents, she kept her head down learning as much as she could, earning a degree in biochemistry -- and learning about about the cold weather in the northeast.
She recalled a friend at Harvard poking fun at her for wearing socks not typically suitable for the weather.
"I just remember looking around, going, 'I think some other people here might have been a little bit more prepped than me," Sturdy said. "But I don't spend that much time in that space — I just think, 'I'm gonna work my ass off.'"
She says one of the major reasons she's been able to find courage as an underdog is because of her experience coming out as lesbian before it was widely accepted in society. "I had to really dig deep in terms of balancing what I felt like was really my truth with a lot of noise," she said.
She's carried that underdog mentality into her transition from operator to investor, as well as in the investments she favors.
"One thing I have learned is in these massive market opportunities — don't underestimate them," Sturdy said. "It's sometimes harder to believe that a core business could grow 20 or 50X, you start to say 'oh, they can add on this and that's how it gets to the dreamland' when the reality is some of these markets are so big, the core business can grow rapidly, which is really exciting."
For example, language learning company Duolingo didn't exactly fit the profile for a competitive growth fund in 2015. The CapitalG team recognized Duolingo's popularity with customers and knew the co-founder from previous business dealings with Google, but weren't sure whether it made sense for a growth-stage firm to invest in a company that was still pre-revenue.
After agonizing over it, Sturdy made the call, Lawee said.
Sturdy approached Duolingo CEO Luis Von Ahn, convincing him to adopt a monetization model that would generate revenue without cramping his desire to keep language education accessible. "We were just going to keep raising capital," he said. "Laela showed us how making money could support more accessible features and reach more users."
Duolingo generated more than $180 million in revenue in 2020, according to reports.
The head and the heart
Sturdy also looks at whether companies are living up to their stated values. Peers describe Sturdy having as much heart as skill, which they call a rarity in the VC industry.
"I would say the value Laela has provided has been significantly higher than the money anyone's provided," Duolingo's Von Ahn said. "I can grab a drink with her and just be the most honest with her when I'm having an issue or if something's not working."
While Duolingo has grown its users roughly tenfold since Sturdy invested, the majority of its users are still learning for free — a feature he and Sturdy agreed was important.
"A lot of times investors don't think too much about that — they're just like 'I invest and you make me money and that's all great' whereas she really wants to get into the details and wants to know exactly how we're helping the world," Von Ahn said.
"I believe strongly that your business monetization model should never be at odds of other values-driven objectives," Sturdy said. "How does the monetization improve the satisfaction of everybody — employees and users?"
That focus on values is also a welcome quality for engineer-led companies like Stripe and Unqork.
"You don't really sell into developers, you win the hearts of developers and then developers tell their friends what infrastructure they like to use," Sturdy said. "You're not going to send some guy with a sales bag in there to try and sell it."
Sturdy's charisma also shows in her killer speeches to employees at all-hands meetings, according to founders.
"When she presents, she presents passionately about believing in our vision and she celebrates our success like a teammate," Hoberman said. "Employees feel that and they believe her."