In 2018, two movements, Annenberg Foundation’s PledgeLA and AllRaise, both began with a similar mission: make Los Angeles the most diverse and inclusive tech hub in the country. This month, PledgeLA and AllRaise’s Los Angeles chapter (founded in 2019) joined forces to highlight two incredible women — a founder and a funder — making their mark on our tech economy and the world! In honor of Women’s History Month, we sat down with LA-based trailblazers Carmen Palafox and Jessica Chang to discuss their journeys, their success, and how they see the future for women in tech. Read on for inspiration for all innovators and tips on how to increase equity and inclusion in your organization!
We’re excited to speak to you both in honor of Women’s History Month! To start, could you share with us who you are and what inspires what you’re currently working on?
Carmen Palafox: My name is Carmen Palafox and among other things, I’m Founding Partner of 2045 Capital. 2045 Capital began because I’ve always had the thesis that diverse founding teams outperform. My first angel investment was in a company called Arcus which was acquired last year by MasterCard. I really connected with the problem they were trying to solve. They had an immigrant founder and the company was focused on cross-border transactions and sending money back home, which I watched my mom do all the time as an immigrant herself. This founder was trying to make sure critical needs were met (e.g. utility payments) and it just made so much sense to me. I said, Count me in! I’m investing! So from these experiences, I’ve started 2045 Capital.
2045 is a thesis-driven fund that’s backed by data that shows that diverse founding teams outperform. Through 2045, I invest where there’s an immigrant, female or underrepresented founder on the team and I focus on areas where I have made investments in the past: climate tech, fintech, and health tech.
Jessica Chang: I’m Jessica Chang I’m CEO and co-founder of WeeCare. I’m also a mom with two young kids. WeeCare was actually started because of my own personal issues when it came to finding childcare. I was an executive in a tech company at that time, and when I got pregnant, I couldn’t find childcare. And that really just started my journey of exploring why the childcare industry was so broken.
Long story short, I became a preschool owner-operator, because when I looked at every option available to me either it was waitlisted or was extremely expensive. What I learned was that not only are parents struggling to find affordable and convenient childcare that really helps them balance their work and life but also, on the other side of it, childcare providers a lot of times don’t make any money. A preschool teacher makes $20,000 a year, so why would they do one of the hardest jobs and get paid so little doing it? So when WeeCare first started we created a marketplace to really 1) pay childcare providers more money, 2) support them by helping them operate with ease, and 3) on the other side of the market, help families find childcare.
WeeCare has evolved a lot, especially since COVID. The pandemic was one of the hardest things that ever really happened to childcare all at once and almost decimated the childcare industry. Three million women left the workforce, mostly because of childcare. What we saw was that there was an opportunity for more to be involved in the workplace. in order to do that, employers were going to need help with child care., if you want me to go to work, help me with childcare. Employers have been helping families with healthcare, but childcare is just as critical — if parents don’t have childcare, they can’t go to work.
So WeeCare has become an employer-based childcare marketplace that focuses on solving childcare via the small childcare provider, who owns their own business. We empower them to stay in the industry, make more stead income, and find long-term solutions. We do that by getting employers involved. We empower organization to set up childcare benefits for their employees and, most importantly, we work with them to help pay for childcare.
Right now WeeCare has 37 employees and we have more than 10 open job postings out there. We’re really looking to continue to expand our team because there’s been a lot more momentum to solve the childcare crisis — so now’s the right time to continue to build the team!
Amazing! Talk to us about your personal journey into tech. How did you end up in the industry?
Carmen: I have over 20 years of experience in asset management. I was born and raised in San Diego, California so I’m a hardcore Southern Californian. I came to LA to attend USC and studied economics. My first job out of college was in Santa Monica at a firm called DFA – Dimensional Fund Advisors – pretty early on in the trajectory of this firm at the time. They were managing $75 billion in assets under management and when I left there were about $300 billion, so I started entry-level and ended as Vice President of investment operations responsible for many things, but primarily with launching funds, both domestically and internationally.
After graduating from Berkeley Haas from the executive MBA program, the Bay Area was really where I was immersed in the tech ecosystem and started learning about the private markets and venture capital. From there, I really wanted to be part of the LA venture tech ecosystem and be on the ground floor of its growth.
Jessica: I spent a lot of years in finance during the financial crisis but I think what really got me interested was when I went into private equity. As people were getting laid off in the recession, I helped a company figure out a great acquisition. But then, since there was no one left in the fund, I also became more of the company operator. And when I was integrating that, I felt like, Whoa, this is more like when I’m passionate about!
So I think what came from that experience was wanting to start my own business. I had more passion to be an operator than I had to for analyzing and figuring out why this company works and why it doesn’t work — I wanted to help solve the issues for the company. So what led me to become an entrepreneur was taking on that opportunity and seeing that I could do more. What if I started my own company and did it right from the beginning versus having to fix it later on?
Both AllRaise and PledgeLA are deeply invested in supporting the LA ecosystem to become a place where more women like you both can thrive. Why did you choose to do business in LA?
Jessica: When I first started as an entrepreneur, the LA ecosystem wasn’t really there yet. You always had to kind of go up to San Fransisco to raise funds or go up to SF to convince some engineer to move down to LA. But I think that has changed, and I see more people seeing that LA can help entrepreneurs because we’re a lot more diverse here. So when we had the choice of where to start WeeCare, we chose specifically Los Angeles.
Because LA is diverse, for us, it was like, “Well where can we really find out what childcare really is actually like and see what families are truly facing?” LA is diverse in terms of ethnicity, socio-economic status — you have those that are super wealthy and you have those that are very low income, and they crazy part is that they ca be right so close to one another. Also, LA is huge so if you want to impact many people at once – LA is the place to start.
Carmen: Like Jessica, LA has always been special to me because of its cultural diversity and its industry diversity. I believe that’s what makes it unique, in addition to the fact that it’s so massive and so complex. I mean there are 88 cities in LA County which I think surprises people.
LA has grown to be the third-largest tech hub in the United States. For a long time, LA wasn’t taken seriously –it felt undiscovered but now it feels like it’s growing and maturing. But LA’s ongoing challenge is around equity. I think we are all aware of the diversity of LA and how that could differentiate us as a market, and I think we all appreciate why it’s important. But I still feel like there’s more action that can be taken to really move the needle in a significant way.
Absolutely. Many aspiring founders and funders may read this and they want to know more about what it’s like to be where you are. To shed some light on your journey, what are some challenges you’re currently facing as a funder and a founder?
Carmen: So the challenge for me, back to the equity conversation, is that it’s not happening fast enough. We saw a lot of announcements come through, and again I think it’s this idea of people wanting to do the right thing, but there’s no forcing function. There’s no date that says this has to be done by this certain time. Without that forcing function, it makes it difficult to move the ball forward or move the needle.
I am optimistic that we will get there as a community. But as we continue to see success, I want to emphasize that we must figure out a way to accelerate progress. We’ve got to be more intentional about it and in most cases, it just requires the capital to move. So that means we can’t just leave it up to existing funders. We need to bring new participants to the table because in a lot of instances the existing LPs have reserved their allocation or don’t have the capacity to bring on new investors to make the change we need.
Jessica: As a founder, I think my biggest challenge right now is recruiting. As you can imagine, I think most companies are facing this where we’re just trying to find great people. Recruiting has been much harder now because the advantage is on the job applicant’s side, not the employer’s side anymore. The key for us has been going broader and finding people that want to solve a real problem.
The other challenge has been maintaining our core company culture because we actually decided as a company to go fully remote. We decide that because we are very family-oriented, you can get that hour or two back from having to travel to work so that you can spend more time with your family.
By going fully remote there are good outcomes for families, but you also have to attend to the impact on company culture. We’re asking ourselves, “What is our company identity now when you’ve got people all over the US? How do we effectively communicate?” We have to do that much more to keep the company feeling like the team that we are..
Overall, as a founder, the journey was always hard. I fall into two categories as a female and as a minority — and generally, entrepreneurs who are women of color just don’t get funded. Especially when we’re talking about childcare. Everyone knows childcare is one of the most important issues out there. But it’s one of the hardest problems to solve, and, to be honest, it’s not sexy. So, as a founder, it’s one of those things that we’re consistently having to educate people on. Our focus points are why childcare is important, how childcare affects families, workplaces, and communities, and the broader impacts are on society when people don’t have access to the childcare they need.
You’ve both discussed the beauty of LA’s diversity but also the long way we have to go towards representing that in tech. Some people feel like we’re heading towards some burnout in the public around efforts to diversify tech. Do you sense this? How do we re-ignite the conversation?
Carmen: I empathize — It is a very emotionally draining conversation to have because it requires self-reflection. It can be overwhelming, especially if you don’t fully understand what your role is in helping to push change or helping accelerate change.
I think we have to start thinking about it and messaging it so that we’re talking about maintaining our competitiveness. If LA is 70% people of color, how can you create a prosperous economy and a sustainable economy when 70% of the population sits on the sideline? The math just doesn’t work.
I think the demographics have been changing for a long time. I remember when I was called a “minority,” and then it switched to a person of color and then became a woman of color so you know it’s just like this constant evolution that’s a result of demographic change and we’re coming to a point where you know we shouldn’t be ignoring it anymore. So, while the conversations can be exhausting, equity is imperative for us to address, and address it with intention. The same way we address climate change for example. We say by 2050 we are going to be net-zero emissions. We’re not having that same conversation around inclusion and equity. When it comes to women’s equity, equity for women of color, or equity for people of color we’re just continuing as a nation to just chip away at our competitiveness by not addressing equity intentionally.
Jessica: To be honest, I feel like there was almost a trend that occurred and people just jumped on it by putting out statements of support. But putting out a statement and maybe saying, For the next couple of hires, make sure they’re minorities or make sure they’re female, the that doesn’t change the overall culture of the company or the overall identity of the company..
That’s where I see a big difference — WeeCare never put out a statement that says we support diversity, equity, and inclusion (DEI). We don’t because our company culture is built on inclusion. We don’t want to put out a statement because it feels disingenuous but we also just generally believe in it and just do it naturally. Our investors asked us to share what our inclusion values were and as I was doing them, I realized we’re a majority female and majority people of color company.
I think DEI is even more important now, because of what COVID has done. The pandemic really separated our country into the “haves” and “have-nots.” For the haves, COVID was easy — I just went and took my family to Montana for six months, and then I did remote work, it was great. Meanwhile, for the have-nots, it’s a completely different story. It happens to be that those most affected by COVID were women, people of color, and low-income families. Now is a time when many people are suffering. So now is the right time to really think about how we incorporate more women and, how we incorporate more minorities into this space because it’s their issues that we’re trying to solve.
What advice do you have for companies trying to increase their support of women and women of color in the workplace? What can we be doing better? What’s a solution you’ve found?
Carmen: I’m frustrated most by bias. I think it should be like a required class in elementary or high school or somewhere along the way, like nobody ever taught me how to address this bias. I can sometimes tell when someone has a bias and so, for me, it’s like, Okay, get me off this call, because I know it’s not going to go anywhere. But bias frustrates me. Seeing people who still think women of color or women founders or founders of color just aren’t as profitable or that we don’t have the potential to return capital. Or just succeed in the same way that the founders they’re used to backing do.
As a small solution, I always try to show the faces of who the founders are, versus company logos because I want to change perception. Here is what a leading climate tech entrepreneur looks like. She’s Latina, she’s an immigrant, she’s over 50. I think we have to change the perception of what founders look like.
Jessica: Like many companies, certain teams in our company are skewed to one demographic. We’ve been trying really hard to find more diversity there and it’s been hard just because every single applicant comes in looking the same. As founders of the company, we’re clear that shouldn’t be the case.
To counteract this, what we try to do is really beef up our benefits to help attract what we want to look for. If we want to hire more women, more working parents, you got to enhance your childcare benefit program. You have to offer benefits that employees actually are going to use. We can’t preach to others to do it if we don’t do it ourselves.
To be honest, because we’re all trying to create more diverse teams, we’re all fighting for the same people now. What we’ve done is, because we have the flexibility of hiring remote, we can go farther and reach out to more people. We’re also getting more creative on outreach. More and more I’m not looking for someone that has a tech background. I’m looking for someone that might have an HR background or comes from a non-tech company. More than 30% of our team has been pulled from non-tech jobs to tech. We recently hired someone that’s based in Idaho that has six kids. We’re consistently asking, how do we get more people that childcare and caregiving really affect them personally.
In honor of Women’s History Month, what do you want people to know about female founders/funders? What strengths do you see you and your peers leveraging?
Carmen: The best-performing companies in my portfolio are led by female CEOs. That’s been my experience, and it may be that I’m exposed to more female founders. I speak at women in climate tech events or the Athena conference which is both for female founders and funders so I am in those circles. But, in my experience, I feel that women are very calculated and strategic. They’re capital efficient. They have high empathy. And they tend to really focus on creating inclusive cultures.
That’s not to say that men can’t do that or don’t do that, but I think that’s why it’s important to have gender diversity and ethnic diversity on a team because then you’ve got these qualities and traits from different founders that help you succeed.
Jessica: What really opened my eyes with WeeCare was how women have so much experience going through the ups and downs that naturally come with business, family, and managing life. I think generally women just know how to handle challenges and often say, “Don’t worry… I’ll take that on because I’ve seen it before, I dealt with it, and this is where I’m the strongest.” Across the board, I’ve seen women when times get tough know how to roll up their sleeves and say, “Okay, we got a cost cut. I can handle it.”
I think the other part is, we’re like the most amazing multi-taskers in the world. On a day-to-day basis we know how to handle when our kids are crying, the house has a plumbing issue, and there are multiple things happening with the business. We generally just know how to handle all of it at once.
I’ve seen if you look at CEOs of successful companies that are run by women, they’re generally more profitable. So I give that to you – there are not as many of us, but when there are, compared to our own male counterparts, we end up doing better.
