“Together Talks” #130: The Fourth Effect - presented by KLS

Some Background on The Fourth Effect

Today's edition of "Together Talks" campaign, KLS had the opportunity to interview The Fourth Effect and Co-Founder, Katrin de Haen.

The Fourth Effect is an AI-powered, community driven networking and matchmaking site for startups ready to scale by leveraging and diversifying their advisors, board directors and investors. 

The Fourth Effect’s mission is to close the gender power, wealth, and funding gap by diversifying boardrooms and cap tables. It is the only board marketplace focused on early stage company board and board-adjacent opportunities, so women can effectively break into the board candidate pipeline. They are breaking the systemic barriers that contribute to the inequities in the startup ecosystem and company boardrooms.

The Fourth Effect online community and on-demand talent marketplace that has a Board Seat Exchange, Private Investment Club, Job Board and Membership Community. The Fourth Effect’s membership currently includes over 800 companies, 2,000+ board-ready women and 125+ angels, LPs and women-led funds.

When did the company begin?

Soft launched in May 2019.

Story of how it was created?

My Co-founder, Breen Sullivan, is the founder of The Fourth Effect and it was really her brainchild. Previously she was a general counsel at three different high-growth tech startups and often lead their board meetings. At each one she looked around the room and saw unfilled seats or all white men around the table which made her question - how do I get onto a board? How do I get a board seat? And how could we incentivize companies to actually build out their boards with diverse candidates?

She started asking her colleagues if they too would be interested in being on a board to which she got an overwhelming yes!  I, on the other hand, was previously a founder. Most recently I had invented a beauty product that I brought to market internationally. My company became pretty successful. We were featured on the Today Show, Good Morning America, and in many of the major magazines. We really had a fun, popular product. But unfortunately, with popularity come the knock-offs. They started flooding the market. Even though I had gone to a law firm to protect my IP, I just wasn't able to.They came fast and furious and were landing at my cost. I had to wind down that company but as I was doing that, I was thinking about what my next move would be. I really loved being a founder and I had learned so much.

A friend and general counsel then introduced me to Breen because she knew Breen was working on something interesting and that I might want to get involved. When I met Breen, I told her my story and she started giving me great advice. From the founder perspective, lightbulbs went off for me. If I had had somebody like her as an advisor, it would have really helped me with my company and saved me a ton of money.

Conversely, from her side, she realized the value she could bring to a founder, especially at an early-stage startup she could really help scale, and what that opportunity might offer her. She knew she could be invaluable to their success but this kind of opportunity would also help start her board career. She could include it on her resume and it would make her more appealing as a board candidate and she could earn equity along the way. Together we realized we are a marketplace and so we decided to build it.

Meaning behind the name?

Breen had the name picked out when I met her. It was originally The Fourth Floor. Fourth comes from when she hit her 40s and finally understood how the system is run and rigged. The Fourth Floor was a nod to that vantage point when you see how far you've come and how far there still is to go. Last year we rebranded to The Fourth Effect because we wanted to allude to the Butterfly Effect and capture the idea of creating these little ripples of diversity that will someday grow into a hurricane effect that will bring about equality in this innovation ecosystem and beyond.

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What separates your company from competition?

Our main goal is to break women into the board candidate pipeline. We are doing that by matching them to startups as advisors, directors and investors. We're really connecting the dots between investing and board seats. There are a lot of people and companies solving the problem in silos, connecting women to board seats and founders to investors but our focus is broader and bigger and we are taking a holistic approach by creating an ecosystem. We're giving women agency and opportunity to actively search for opportunities and build wealth.

Define the strengths of the company?

Board seats are exchanged through networking. Most people's networks are fairly insular which leads to everyone looking the same on boards. What we're doing is giving our community opportunities to start relationships early that we hope will grow as the companies grow. Relationships are built on a continuum. 

Startups might join us looking for a mentor sponsor, but once they have built a trusted relationship and the company grows, the relationship could grow into an advisory role or even a board director role. Women tend to save money and then become philanthropic, and then join non-profit boards. What we're hoping is that we are presenting them with an alternative where they can grow their career, earn equity and have impact.

What have been the biggest challenges?

Educating startup founders on the value of building out both their boards early, especially their advisory board. Initially we targeted seed stage startups but we soon met so many incredible founders who are really successful today because they did so, so we decided to open it up and invite all startups to join us. Then the challenge became, how to educate them and enticing them to join us so that they could find the right candidates. 

Startups are the lifeblood of our company and their board opportunities are what drive our marketplace. We need them but our resources would be invaluable to them.

Reflect on a goal you set and how it made you feel to accomplish it?

In 2022, our goal was to partner with a big corporate enterprise and we did it. We got our first fellowship program up and running with a big bank. It was incredible because the Fellowship underwrote 50 BIPOC led startups and 120 candidate women to join us. It was a big program but what felt even better was the ROI we were able to show our partner. Their President showcased the success on LinkedIn and that was incredible validation. And then hearing from the founders the successes they experienced brought us so much joy.

Goals for upcoming year + Next phase of the company?

We're focused on growth and because it is an ecosystem with a marketplace, we need to grow all sides at the same time. We are fundraising and hope to close the round this Fall. Investment will allow us to make key hires and make even more improvements to our product.

Resources for companies?

I would really recommend going to your local governments. Each state has different acronyms for their programs, but we partner with these programs. The various agencies always tell us they are there to help, they want to help. I don't think enough founders understand or know about these resources. Founders can call them and tell them what their business is and what they're looking to do and somebody is there to help them.

They will share all the available resources within that state or city and those might include space, grants, funding or accelerators. These resources could be game changing for startups.

How have you grown as a leader?

It is definitely not an easy path. If anyone ever says it’s easy, I’m sure they are lying. But it’s never boring and sometimes it’s absolutely thrilling. The highs are really high but the lows can feel endless. You have to believe in what you’re doing. One of the reasons why I was ok closing down my last company was because my heart really wasn’t in it anymore. I was what they call a “Mercenary” founder. But now at The Fourth Effect, I am very much a “Missionary” founder as I care deeply about the mission and it drives me everyday.

What do you need to work on as a leader?

For my own professional and personal growth I really need to work on my public speaking. I've never enjoyed it. I've never been great at it. I really have to push myself all the time. We're getting asked more and more to do speaking appearances and thankfully my co-founder is amazing at it. But I can't put all that burden on her all the time. I know there is a lot of value to having us both out there speaking about our company. It isn't easy, but I have to continue to push myself and get better.

What aspect of entrepreneurship do you appreciate the most?

I love ideating, problem solving and networking. I specifically love what we’re building with The Fourth Effect, because I get to meet new entrepreneurs every day. It's so exciting. The companies they are building are mind blowing and I want to help them all.

It's also particularly inspiring to work with underrepresented founders who are at such a disadvantage. We want to make sure they have the network and support to be successful. 

Share a mistake and what you learned from that experience?

I learned an important lesson from one of my bosses at an early job in my career. He made sure that we all knew that everybody makes mistakes and it’s not about punishing that person but learning from those mistakes. He made us feel comfortable about going to him when we did make a mistake. I want our team to feel the same way. I don't want a culture of blame.

When was the first moment you felt like you could breathe?

When we tested out our thesis with a very rudimentary, stagnant  marketplace. There was no functionality. It was purely a list which was hard to use because you couldn’t search or filter.  We just asked our community -  if you'd like a board seat, send us your bio and headshot. And if you're a startup and you're interested in meeting advisors, give us your company information.

We were flooded! That was the validation we needed to go ahead. And soon thereafter, we started getting emails from people praising it and giving us feedback. That early validation showed us we were on the right track and just had to see it through

Was there a moment where you doubted the fate of your company?

Let's just say building a digital platform when you're not technical people is extremely hard. There were quite a few times when we started to doubt that we could actually do it. We've used three different platforms, and our most current one is AI-powered. It's a sensational platform but it's been extremely challenging. We've had to learn along the way but we have!

Do you have a moment that brings you the most joy?

I was thinking about this question and I think my answer is - every time I go out to events and meet people who tell me how The Fourth Effect has helped them. Sometimes I feel like a celebrity because they’re finding me to tell me their stories. It really makes me feel like, wow, I am accomplishing what I want. People are getting what we want them to get out of the experience. It truly brings me so much joy because what we’re working on is working.

If you had a magic wand what would you change about your industry?

I would point the wand at investors and ask them why, if the data shows that companies are more profitable with diverse boards and leadership, then why are they not asking their funds or portfolio companies to bring on more diverse talent. Their returns would be higher. Their investments would do better. We can try to push companies to diversify but it would be much more effective coming from the investors.

Piece of Advice?

I would tell everyone to talk to as many people as possible and ask lots of questions. You never know what you can learn from somebody and everyone has something to offer. Some of the most magical moments happen through unexpected connections.

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In Closing

KLS wants to thank The Fourth Effect and Co-Founder, Katrin de Haen for today's "Together Talks" feature. Follow along for their journey with their social handles below!

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