Human Connection Drives Capital: Allison Byers on Relationships, Bias, and Startup Success

Speaker A: Hi everyone. Welcome to the Psychology of why People do what they Do. A podcast exploring the science and stories behind high cohesion, high performing teams. My name is Dr. Bobby Wegner. I'm a lecturer at Harvard in organizational psychology and the founder of Groups. In each episode we dive into the minds of industry experts to uncover what drives team and individual dynamics, tackle real world challenges together and share actionable insights to help teams feel and function their best. Thanks so much for joining and let's get started. Hi everyone. Welcome back to the Psychology of Work podcast. I am super, super excited to be here today. Today my guest is Alison Byers. She's a founder and CEO of Scrubius, which is really a relationship first platform working to build a capital system that includes the rest of us. Thank you, Alison. Alison co founded a med tech company out of MIT, raised nearly $10 million and brought brought an FDA registered product to the market and then watched an all male team that acquired it go on to raise 55 million. That experience sent her on a mission to dismantle the systemic barriers facing overlooked founders. She's an investor, she's a board member, she's co author of a landmark California venture capital law and the author of an amazing book, I see it in the like behind her of a book called Fundraising for the Rest of Us. So Alice, I'm just super psyched you're here today. Welcome to the Psychology of Work. And before we get started, just who are you? What's a bit about your story?

Speaker B: You know what, thank you for having me. Who are you? Such a, uh, big question.

Speaker A: I know. Welcome to this like a meeting with a psychologist, right?

Speaker B: Oh well, you gave a lot of my story of the powers why I do what I do now. But I'm so excited to be here and have this conversation. You and I know each other a bit and you know I have a fairly deep psychology background way back when and ah, absolutely love the, the topic and everything you talk about. And it's a lot of what I do. Bringing human psychology and behavior principles to understanding a space of extreme inequity which is innovation capital and access to innovation resources when the majority of founders identify as underrepresented in a space that impacts all of us humans. Ah, and I'm a mom and uh, all kinds of other things too. So excited for what we're going to talk about.

Speaker A: Awesome. Well, let's, let's get started. I know there's this like story or thing that was sort of an impetus for you, right? You like worked hard being a founder Brought this, you know, fda, um, registered product to market, which is really complicated in itself. And then watch this team that acquired it to really go on and raise a whole bunch of money. Right. So what did that moment actually teach you? What did you feel? What were you thinking? How did you respond? And then how did that shape your story, like going forward?

Speaker B: Yeah, so, I mean I went through that firsthand experience that a whole lot of founders do where you're a first time entrepreneur. And I didn't even think to research the space of investing or fundraising before I started doing it. I was just building this med device company, right. And trying to get it done. And as you've pointed out, we hit all the benchmarks that a company would be expected in our industry at our state, including, you know, peer reviewed publication and paying customers. We were in clinical trials, all the things. And so when I couldn't raise that next round, that series B round of funding, which is where we were, it was devastating to begin with. You know, at that time, this was a while ago now, I was flying around the country, I had two little kids at home. I was just doing everything I could and really physically burning myself out to obtain that capital to keep the company going and making the impact I knew that we could have. Uh, so that alone was pretty traumatic. And then when we did decide to sell the company, uh, in something called an asset sale, and the team that acquired us pretty quickly went on to raise a large sum of money, it told me, oh, well, this was a fundable opportunity. They did it. Why? How did I fail? Right? Like I internalized failure very deeply and said, oh, this was my fault. I can't believe that I, I can't believe I did that. And that's uh, what caused me to research. I first started researching the space just to understand what I did wrong. And then I very quickly came to understand an industry that has evolved to be extremely homogenous and the capital is also extremely concentrated. Where over 99% of venture capital investment dollars go to non women led teams. Right to the flip of the. Right now nationally 0.6% of dollars that go to women led teams. And we were two women leading the team. On my. While that is all the negative emotions, right, enraging, like unbelievable, all the things. It was actually very freeing for me because I let go, uh, of the internalization and said, oh, I didn't fail. I just had no idea what system I was operating in. And it's a system that does not allow the majority of entrepreneurs to operate. So I became Obsessed with building a different system which you know, as you said in the intro, I do through my company, I do through authorship, I do through policy advocacy, I do through my own investing. So it really powers everything I do now and created that redemptive arc of a story. Mm mhm.

Speaker A: I mean you, I can't remember the model because I have to like dust off my um, the, you know, some of my old psychology books. But it's just really like you're talking about sort of identity formation and then internalized sexism basically. Right. So you had this experience and you're like what did I do wrong here? But, but, and then you owned it, uh, like you owned it as your like whatever wasn't working as something you were doing versus a systemic problem. But then you like got to this point where you start to realize like your sort of self awareness, identity awareness, all this stuff started to become clearer in some way and then it's way empowering and I imagine, you know, when you have the awareness, it's really disillusioning is. I don't even know if that's the right word but just like, oh uh, God, this is the state of the world, you know.

Speaker B: Yeah. I mean basically. Right. And, and yes, that was my experience as a female entrepreneur. If you look at the data, it's this. It's worse if you are a woman of color, if you're indigenous, if you're non binary or like veteran, pick, pick your demographic. Right. The um, the capital is extremely homogenous in where it goes regardless. But yeah, like you said, I just couldn't, I couldn't believe this was how capitalism was functioning. Right. Startups are the backbone in small business, the backbone of our economy. And it's what we all have in the world. It affects everything, our financial instruments, our consumer goods, our healthcare, everything. I just couldn't not do something to create a better world in, in that way that I saw that happening.

Speaker A: Mhm. And then you built, you know, I don't know, like how quickly Scrubius came along after all of this. But you really talk about building a relationship first platform. Right. So I can see it in my mind like the, you know, how you get from point A to point B. But do you want to tell us about that? What is what, what is that? Uh, you know, what does that look like? How is that different? This is a new way. What is that way?

Speaker B: Yeah, well, what I really came to understand through my experience and through. I did about a year and a half of research deciding, you know, deciding to do Another startup is like a crazy thing. We're all crazy people when we do startups. So I really like was like, I better research this and make sure this is what I want to do, that I think this is a right solution. So I did a lot of work in the middle, but what I came to realize is that relationships drive capital, right? And we are living now through a period of unprecedented education about entrepreneurship and how this is a career path. Every university and institution has some kind of entrepreneurship arm or center or education or accelerator, but almost all of them are still pushing toward this same model of going for venture capital funding. When cold pitches and quantity of outreach to investors and investor lists and all the things that we're taught, it is not how it works. And it's a disservice to everyone to not understand that first you have to build relationships and trust over time before you need anything. If you focus only on the transaction, it doesn't happen. And that's what so many entrepreneurs are taught. And there's no good vehicle to be able to form new connections and relationships. And if you take my experience, you know, that conversation had already happened. You don't raise $55 million that quickly from people you don't already know. And that's how it's working. So we have to build systems that allow a wider set of people to more efficiently connect and build that trust so we can transfer capital. But we can't keep fooling ourselves that it's going to happen through cold pitches and tons of outreach. Uh-huh.

Speaker A: Yeah. I mean, there's, you know, that's the way I see the world, too. Everything I do, we study relationships, right? So we found different ways to call it different things in groups. So we really dial in on cohesion, but it's really connection plus alignment. And then it's like, you know, really studying what are those factors of strong relationship, like, what's needed, what does it look like? How do you get there? We've, you know, we're in this incubator measuring this, right? Like, what are the factors? And then how do you measure? Through self report and observational data. But relationships drive everything because we're hardwired for connection. We're social by nature, and so we need relationships to survive. So we're just trying not to die, right? So relationships not die. And then, you know, when you think about it, what. What about that matters, right? We need belonging, because if we're not part of the group, like, we're vulnerable and we could die. And we want some kind of control. Because if we're not, if we don't have some kind of control, then the world is where it's, you know, risky.

Speaker B: Yeah, well and that's such a like survival instinct. But also how we form our self identities and how we decide where trust is warranted is through familiarity and affiliations that we share. Right. This concept of in group bias and being familiar with your group and outside of your group is risky. And so when we think about capital providers, when it's a very homogenous group, which is what we're experiencing, it's over 90% of check writers are white men. Specifically the in group is condensed and small and so they're seeing almost everyone else as out group. And it's not malicious. Right. And most of the time it's not overt in a capacity. Sometimes it is, but most of the time it's not. It's our basic human principle. And so like with Scruvious, that's that is what we are using. We're leveraging that psychological principle of familiarity bias to take networks where you already have some affiliation and it's not along your demographics. Right. It's not along those things. But you help more people feel more familiar to each other and facilitate these low risk ways to interact. So it's not about the money right away. Yeah, that's how you start expanding that network and you form these connections that lead to access by using the trust already established through a familiarity connection. Mm mhm.

Speaker A: Yeah. It's reminding me when I was learning like how to build sort of groups. Right. Group therapy doesn't matter teams, it's same principles. Like to have a successful group there have to be some common denominators. So people have some kind of alignment and some clarity around like why we're in this group. Otherwise it's just like a smattering of people in a space. But it sounds like for you the common denominator at first is not the dollars or the capital. It's like other things, other demographics that allow you to actually build the relational capital to eventually make the common denominator the, you know, money part of it.

Speaker B: Potentially an affiliation. Right. Like we work with university groups, alumni groups. It could be a commonality that you share. Like um, one of the things that we ask people in our platform or video first, which is also because we're human interaction first. But one of the videos everybody has to record is a fun fact about themselves. Not that, not your business. Right? Not business. What's a fun fact about yourself? There are more connections that happen because of the fun facts that lead to capital transactions than the other than the other way around it. It is how we break through these biases by surfacing those connections from just human qualities. And it naturally leads into relationship building versus this more superficial and weighty, you know, focus on, on a money transaction. You can't get the human behind that. There's too much, there's too much guard up.

Speaker A: Mhm. Yeah. You're, you're making me think. It's like the same principles applied in different contexts. So like the teams that we work with, every meeting we start with a highlight or a low light. So it's like you can talk about work. So you want to give people freedom of choice to not feeling like they have to disclose something. Right. But, but allowing them and creating the space just sets the tone. They connect and then they're able to get into the business. Once that happens in a much more like deep and effective way. But most teams, most organizations, especially in the business context, especially in America, jump in like, let's just get down to business. But that doesn't actually, actually work for most people, you know?

Speaker B: No. And it's not how the big stuff gets done. That happens with friends, with people that you have these relationships with outside of the formal meeting, outside of the get done, um, get down to business. The, the real business happens in the other places, right?

Speaker A: Yeah. Uh, you know what I've learned in startup about sales too, right? And it's like we have all these tools and cold calling and being like, we gotta scale, we gotta do all this stuff. But we've realized like our biggest, best sales come from strong relationships. So using the same principles that you're really talking about for fundraising with potential partners. Right? Doing things to build stronger relationships, inviting people to things go, showing up, being curious. All the same principles, you know, you would use when you're trying to make a friend.

Speaker B: Yeah, exactly. And you know, it's so funny, Bobbi, when, when you see the light bulb go off with someone and when you facilitate those types of interactions, whether it's with partners or in fundraising or anything really in that business context, when you take the pressure away from I have to make a transaction happen.

Speaker A: Yeah.

Speaker B: People have so much more confidence, which is the thing that helps with transactions. Right. It's that opposite effect of like, oh, I don't have the pressure of getting a check today, I'm just getting to know someone. Well, now I can be myself and I can have all this confidence I wouldn't have if I had that additional Pressure. And it's so counterintuitive, particularly to entrepreneurs who do feel marginalized and have been marginalized. It's just not how. It's not your nature. Right. To do that. So we have to create the space that makes it natural for everybody involved.

Speaker A: Yeah. To have conversations like this. I remember when I was first getting into this like startup world. I'll tell you a longer story another time. But it was basically, you know, the short answer. My launch into entrepreneurship was, you know, I do a fair amount of public speaking. I was on NPR in Minnesota and an investor was listening. They were building out something and you know, it was basically kind of um, boutique Y, almost YMCA that these investors build out restaurants, they built casinos, they've done all these things. And we're going to build this kind of like bougie in a cool way. You know, space for parents to come to have drop in parenting support, healthy food, co working play space and like almost kind of like a cool gym type model for parents. Anyway, Covid hit so that one sideways. But uh, when I was launching into this, all of a sudden I'm flying out. I'm with all these sort of, you know, investor type people, having meetings of these people. And I'm a pretty, I would say confident self, you know, secure person, but stepping in a different domain when I was often the only woman in a new space. I'm very much a psychologist. Right. Like, but like how much of that, you know, I had to kind of figure out, calibrate how much of that I could totally share, how much I uh, you know, doing a lot of reading, a lot of learning, but really figuring out sort of how to not lose who I was but also be able to, you know, be professional and walk the walk and talk the talk while being honest and also portraying some sense of like I could figure this out or I knew what I was doing, you know, and it's really tricky.

Speaker B: Oh, it's so tricky. And especially when, you know, like what you said, not losing yourself when you're not yourself and you don't emanate authenticity of being. It's very difficult for anyone to form

Speaker A: a connection with you because people read you like something's not right there.

Speaker B: Exactly, exactly. And so you feel this desire to be like the crowd you're in. Right. So you're in group, but then you have that everyone can sense it, that you're. Something's off and you're not yourself. And you have to fight against that to maintain your identity, which is when all the good things happen. Um, but yeah, it's extremely difficult. And if there aren't spaces, uh, like this podcast, to talk about it transparently. I mean, this is a big reason why I read the book too, is so people understand that they are not alone in that experience because it's so isolating if you don't have another person who can relate to what, like the story that you just shared. How do you find those people when no one will talk about it publicly out of fear that they'll be even further ostracized?

Speaker A: Yeah, yeah. And I, it's like, so I'm, um, you know, I think of the enteric nervous system, right. So we have this part of our nervous system that's reading cues that sort of bypasses our cognitive way of thinking. So if we're not being ourselves, people are picking up on a vibe like that person's weird or something's off. I don't really know why, but I'm not into it. Right. So just know we all are hardwired with this type of nervous system, so we want to try to lean into authenticity, you know, And I always think of that as like, you know, when our thoughts, feelings, behaviors, and uh, you know, our thoughts, words, feelings and behaviors align. But the tricky thing is, and I'm just like thinking aloud with you in startup, before you have traction, before you have idea, you have an idea that's inherently different, you know, so you've got to be a little bit salesy, a little bit confident, a little. But how do you balance that, you know, uh, because like, I don't know, it's easier now because we actually have traction. So I can, you know, do that more confidently and I know what we're doing now, but rewind three years and it's like a really hard chord to strike.

Speaker B: Oh, it absolutely is. And look, I'm talking about all of this so many years late, like 16 years later from the. When I entered the world of entrepreneurship right after I was a consultant for a long time, which is also, you know, coming from a heavily male dominated field and, you know, being in that Persona, unfortunately, you really do have to live through experiencing these things before you understand that it does impact everybody. And you do have to do a lot of work to maintain yourself and your confidence and your understanding and progress your business in a space that is oftentimes almost always headwinds and working against you. So there's a need to have more transparent discussion and guidance and education that reflects the reality of entrepreneurs lived experience. Right. Which you and I are working toward. And a lot of other people. And there has to be an intentional seeking out of that information by entrepreneurs and the ability to see when you might be getting guidance from someone who does not understand or lived experience. And you need to go seek it out so that you can understand before it becomes too late. Right. Before you have what I had and that internalization of failure, that was actually a systemic issue. Mhm, mhm.

Speaker A: Yeah. It can be, I mean, really damaging. Uh, right. And you, you had the ability to see this, but that can be devastating to somebody's like identity, sense of self entirely.

Speaker B: Yeah, absolutely.

Speaker A: And there's parallels between sort of your focus and my focus. It's just different context. And this is pushback I get all the time. Right. So I'm teaching leaders how to use coaching to build strong relationship. If relationships drive outcomes. Right. Connection, cohesion, all that stuff drives pretty much all outcomes. Because we're social beings. You have to take the time to build some relationships. And industry is often not great at setting up systems for people to be able to do that. Leaders aren't trained in this type of thinking. They're trained in like, you know, skills based sort of curriculum. But leaders are always like, I don't have the time to sit with someone for 30 minutes and ask open ended questions. And I'm like, well it's, you can use it in micro minutes, like moment. So there is a front end loading that will pay dividends on the back end. And you don't have to do it in 30 minutes, you can do it in five minutes. You just kind of want to give that person all of your time in the service of building the relationship. So that's sort of like my context. I ask you. There's a pressure that entrepreneurs feel. That's time. So if we need cash or the company dies, I don't have time to go build a relationship with all these investors, you know. Or am I just building my company too soon? Or like how do you reconcile that? Runway versus relationship?

Speaker B: Yeah, I mean it's perpetually difficult. Right. And like yes, we all have negative time, especially if we're entrepreneurs. I think you know, one, this is the need to uh, educate and create systems so founders understand the importance of building relationships before you get to the point where you are out of time or out of cash. Right. Like when you do not have time before the transaction. You did before, right? You absolutely did. And, and you needed to be building your relationships then. So how do we catch people earlier so they understand how this system works? That's one, two, uh, looking at the, uh, sources of capital in a broader landscape is also very important. So like, I don't have time to go build relationships with investors. Right. Well, inherent in that sentence is that you are only going to look to talk to people who outwardly identify as an investor. You have immediately narrowed to an extreme degree the scope of people that you believe will be helpful to you in open access. You do not know who's an investor. Right. If you're so narrowly focused on venture capital, that's one thing. Yes. Venture capitals are registered businesses, so you can find who they are. The world of private money, whether it's angel investors or family offices or there's a whole list of others. I go through all of the capital sources in my book. You don't know they're not registered businesses. That's private capital. So I really encourage people to think less about how do I get a list of investors and build a relationship. And I don't have time, I need their check today. Not how that world works either. But think more about who would totally get what I'm building and find me familiar in some capacity and how do I reach out to them with a message that will be meaningful to them to say, gosh, I'd love to tell you about what I'm building and get your take on this question. You are right away building a relationship. You have time for that. You don't know if that person's an investor. You don't know if they know an investor. You actually have no idea. Idea. So give everybody the benefit of the doubt that they can be helpful and that you can be helpful to them because trust builds through mutual help and interactions.

Speaker A: Mhm.

Speaker B: And I think you'll be surprised at how much time you do have and how little time it takes when you're more intentional about the connection between humans than the transaction of money. Mhm.

Speaker A: And I imagine like the same philosophy, how much faster it happens than when you need cash. You know, it's like we are actively fundraising, you know, but yeah, people have like a woman came out and she, you know, and she's like asked to invest, but like a friend who is getting into startup. And so it's like that wasn't expected really. And has become a huge advocate advisor, much more active in the startup. So she's like learning in this way, like it's just been really fun and so you just never know. Right. Or we've had a couple customers that I was not, you know, they, they had offered to invest and I would have never thought at that time to go to a customer, you know.

Speaker B: Yeah. There of, uh, customers can be great investors or you can use strategic capital partnerships and get non dilutive money that you book as revenue versus investment. There's so many ways to access capital if you get out of this lane that we're all taught and you know that the popular press picks up on the funding and that's such m an element today when it's not actually how most businesses are funded. We're just trained to think this way. And there's also this really powerful concept of the loose connection. So. Right. To have a relationship and to have trust. It doesn't mean you're having weekly hour long calls and you're sharing, you know, your heartfelt stories and uh, all of that. It's not what has to be true to have that sense of trust. Even if you take us, what do we mean, five years ago, maybe more. And we run into each other every so often, but we immediately had that sense of, oh, we're both really authentic smart people and we're both driven and we share that. Right. And we've helped each other over the years. Every so often we're a loose connection that's now led to this podcast and to really exchange of access to a lot of things for each other. People have so many more loose connections than they think that they have. And uh, it's just being back in touch, offering something small. It's a great way to build trust. It doesn't have to be the in depth, you know, hour long meetings.

Speaker A: Yeah. And showing up every once in a while. Right. Like the three ips. Things like that is just going with no expectation.

Speaker B: Yes.

Speaker A: You know, you're gonna go, you're gonna have a coffee. Your goal could be to just have three conversations with strangers, you know, and that's it. But that's where the goodness lives.

Speaker B: Yes. It's a, it's valuable time and that's where, you know, people, I think, misdirect how to value their time and what's worthwhile. And again, when it's just so focused on a transaction of something happening and not relationship building as work, we're led astray and we lose ourselves in the process.

Speaker A: Yeah, yeah. We had a really funny early marketing person, you know, at our company and she was the best. She was incredible. And she, she would always use like this sort of sales like relationship build, like, like a dating metaphor to be like, listen, if you want to get married or you want to hop in bed with somebody, you've got you can't just ask them to, you know, take their pants off. You've got to like, go on a couple days. And it really actually resonated. Right. I was like, okay, I get that you're at. You can't just ask someone to give you something. Right. That you, you want to better, like sort of put a left effort in. And their same model, it's the same thing over and over and over again in different contexts. You're focused on fundraising. I'm focused on outcomes in companies. You know, she was focused on sales and marketing. But it's the same build to trust, to be able to like, eventually do a behavior which is the, uh, transaction or exchange of dollars in some way. Yeah, right.

Speaker B: Yeah. We're. We work in human industries. Right. Like humans are making the decisions.

Speaker A: We're.

Speaker B: For now, hopefully forever.

Speaker A: Yeah.

Speaker B: You can't, you can't bypass human psychology. We are so influential and we are so social as beings. We have to use that to our advantage by understanding the needs we all have. And if we pretend that's not how business gets done, then that's what we're doing. We're pretending and we're not going to see the outcomes.

Speaker A: We're working.

Speaker B: Working for.

Speaker A: Absolutely. Well, I know we're just about at time, but I. What. What have I not asked you? Like, you have your book. That is, where can people get this? You know, anything you want to share in that. How can I support you in like all the amazingness that you're doing?

Speaker B: I appreciate it. Yes. My book is available everywhere. You can go on Amazon or your store of choice and look fundraising for the rest of us. And I really wrote it to be. It is a. It is a large book. It is a comprehensive guide. But, you know, the tagline is how to build your pitch, navigate bias, and raise capital on your terms. And it is that every. Throughout the book, everything points out the psychological principles driving what we see happening and how we can understand it, identify it, name it, and react to it in a way that benefits us and, and keeps us sane. And so the more. The more founders that know about it, the better. You know, I wrote the book on the side of building my own startup and doing everything I do. So I'm not that author out there on a book tour and hyping it everywhere. And I'm really. Word, uh, of mouth has been a fantastic channel. So I hope everyone listening checks it out and tells somebody else about it.

Speaker A: Amazing. And then I should get you. We do these panels in, in my classes, you know, we're talking earlier about like classes I teach, but one class I teach is motivation, what drives human behavior. So I should totally have you come join a panel to really. Because you're really talking about the behavior which is investing, but the relational build to get there, which is what I teach. Right. And then teach them the like coaching skills, which is that the how of building the relationship.

Speaker B: Uh, yeah, completely. How do you build relationships in spaces where you are uncomfortable?

Speaker A: A little bit of a script that, uh, part of it is actually very learnable. You know, look for shared goals, ask a couple open ended questions like when you break it down to conversations, you know, so we could have a fun conversation about that.

Speaker B: And a lot of reframing. There's a lot of tactical tips in the book and everything I do on um, Scrubius platform and, and I'm sure you do a lot of this too is the reframing of a situation. So you turn a negative into a positive proactively, which is a great way to establish positive connections without being placed in a defensive position.

Speaker A: Yeah. Like taking control of the conversation through question asking and like reframing. Right?

Speaker B: Yeah. And reframing to yourself too. Right. Even when I went through that traumatic experience at my last company, I reframed it. Right. I said, oh, okay, so now I understand a system. Well, I can change a system. Right. Like, uh, it wasn't. I reframed the entire experience to one where I had agency when I spent a long time thinking I didn't have it.

Speaker A: Exactly. Yeah. The cognitive restructuring piece of it. There's so much power in that, you know, and thinking about it differently. Well, you're just awesome, Allison. I appreciate you spending, you know, so much time with me today and just sharing and I like just doing awesome work and just happy to be sort of, uh, you know, friend along the side watching and then like rooting for you.

Speaker B: Well, likewise.

Speaker A: Yeah. Good. All right, we'll talk soon.

Speaker B: All right. Thank you for having me on.