Shanna Tellerman is a two-time Founder and CEO. Her current company, Modsy, is a virtual home interior design service that provides 3D photorealistic renderings of the home space, where all items within the design are 100% shoppable and users can purchase all in one place. In this Growth Journeys podcast, Shanna traces her evolution from math-loving fine arts major to entrepreneur by way of 3D technology and venture investing at Google. Tina Hoang-To, Executive Vice President at TCV, also has both CEO and venture experience, so this lively conversation is filled with lessons of:
- Founding and leading businesses and raising capital
- Building and scaling high-performing teams
- Integrating technology and design
- Succeeding as a working parent
- Forging a successful partnership with investors
For all this and more, settle back and click play.
Tina Hoang-To: Welcome everyone to Growth Journeys, a podcast series from TCV focused on lessons from entrepreneurs and founders in the TCV ecosystem. I’m Tina Hoang-To, Executive Vice President at TCV, and I’m here with Shanna Tellerman, Founder and CEO of Modsy, a leading virtual home interior design service. Shanna and I met five years ago, when I was CEO of Wedding Spot and she was a partner at Google Ventures. Then we traded sides. I re-joined TCV as an investor last year and reconnected with Shanna. Fast forward a few weeks later…TCV led the Series C in Modsy and I joined the board. Shanna, looking forward to having you today to share your story. Welcome to Growth Journeys.
Shanna Tellerman: Thank you. Excited to be here.
Tina Hoang-To: Shanna, let’s start from the beginning. You have a pretty unique journey from having a fine arts major at Carnegie Mellon to venture capitalist to CEO of Modsy. What changed for you in those early years to put you on an entrepreneurial path?
Shanna Tellerman: I definitely did not have any original intention of going into venture capital or even technology. I was a big fan of both art and math and science, and I was always looking for the place where these two things intersected. And I tried a bunch of ways that felt kind of superficial to me until during my time at Carnegie Mellon, I took this class called Building Virtual Worlds, which was very early days virtual reality. Crazy headsets. Low resolution. And that class was, for me, the changing point in my life. I figured out that you can combine all of these things into 3D and graphics and consumer experiences and pave the way to new ideas working on this interdisciplinary team. And for me, it was like, “Check, check, check.” It hit every box. I had so much fun. And it veered me from going through this path of selling art in New York to “I am on a path to starting companies, founding businesses, and working in technology.”
Tina Hoang-To: So your first company was Sim Ops. Tell me the story behind that.
Shanna Tellerman: I was in Carnegie Mellon in graduate school and I was working on a technology that I just couldn’t imagine leaving behind and taking a job. And that technology was game technology that was being used to train emergency responders. And we were working with emergency responders all over the country and actually all over the globe. I had a professor who recommended, “Why don’t you start a business around this?” And I thought, “Sure. Why not? How hard is that?” And there I was, three months later, and he gave us a $10,000 loan and I had set up my very first business. And we were taking the technology out of the university and essentially using it to train emergency responders.
Tina Hoang-To: And what were some of the toughest challenges you faced as a young, first-time CEO with Sim Ops?
Shanna Tellerman: I think I faced almost every challenge that you can face as a first-time founder. I joke but it’s kind of serious that I made every mistake you can make from the way you structure the company to the way you divide up your equity. And the good news was that you can make a lot of mistakes as long as you recover very quickly and learn from them. And so I made all kinds of mistakes. The biggest challenge that I faced as a young entrepreneur I think was having no credibility. I had never worked. I had no experience. I had gone to graduate school. And I both had no credibility plus no experience to say, “This is how things should be done.” And so for me, I think – rightly so – investors who were looking at my business said, “It’s interesting technology, but are you the right person to lead this company?” And I came into work every day being like, “Am I right person to lead this company? I don’t know.” And over the years building out that confidence for myself but also for investors was probably the hardest part of the journey.
Tina Hoang-To: So selling your company is a big decision. How did you know M&A was the right path for Sim Ops and yourself at that moment in time when you did sell the company?
Shanna Tellerman: Yeah. I mean, the moment of an exit is the moment of many, many, moments prior, right? And for me, the path of Sim Ops was a path of lots of learnings. I started out of graduate school. I didn’t plan to become an entrepreneur. And then we hit fundraising issues, technology and product fit challenges, me moving to the West Coast, and then the downturn. A massive recession hit, and we had to raise our Series A during that. And I probably pitched 60 to 70 investors and somehow did raise a Series A during this downturn when nobody else was getting funded. So there we were a year later and Autodesk had been a partner that we had been talking to for a long time, and they wanted to buy the company, and I was thinking about, “Do I go out and raise a Series B or do I take this path?” And for me, at that moment I was like, “I’m ready for the next chapter. And that was a very, very tough road. And this is a really great company to keep doing what we’re doing and to have it impact an even broader set of people.” So for me, that was the right moment but it was a tough choice.
Tina Hoang-To: You built Sim Ops and then you’re CEO of Modsy. In between, I’m sure you’ve built a lot of confidence in operations. Tell us a little bit about what you’ve learned along the way.
Shanna Tellerman: That’s a great question. I actually believe first that you learn the most by mistakes. So when you make a mistake and then you recover and you’re able to course-correct from that mistake, to me it’s the center of confidence, because now you’re not fearful when you’re making choices because you know that you’re going to make bad choices. But as long as you can quickly react and maneuver from those choices, you’re going to be okay. For me, that’s been one big piece at the center. The second most important part for me of building confidence has been learning to be really myself. I think that when you start a company especially if you’re really young and you don’t know what you’re doing you like to put on this pretense that, “I’m a manager. I’m a founder. I am somebody who can run a business.” And most people don’t feel that level of confidence. And ironically being completely transparent and vulnerable and sharing the things you do know and don’t know build a tremendous amount of trust with your employees and with your investors and with your partners. And you’re able to build on that confidence of “These are the things I actually do know. I know how to do them.” And then these ones I don’t and I’m okay with that. And people are going to give me feedback and I’m going to learn and I’m going to evolve. And then I get to be just myself.
Tina Hoang-To: What was your experience like once Sim Ops was acquired by Autodesk? How was that integration process? And I’m sure that’s a big transition to go from a really small team to such a large organization.
Shanna Tellerman: The experience for me going from acquisition to working at Autodesk was definitely a night-and-day difference. We were, at that point, a 12-person company and I went into Autodesk which was thousands of people, multiple offices, global company. I had never worked for a company and I had never had a manager before in my life. And so it was a transition at every single level of your work experience. There was nothing that was the same anymore. The experience for me though was amazing because, one, my first manager ever was actually an amazing manager, somebody I still turn to today for advice. And the company was just really full of incredibly intelligent, really humble people who were super-passionate about the same kinds of things I was passionate about — like 3D and graphics and this world of transformation into the cloud. And so the baseline of those things that were aligned between me and them made it this incredible adventure — many acquisitions don’t go that way. But for me, I felt like I just got to absorb and I got to learn and I got to work with great people. It was incredible.
So, Tina, I know you also went through the experience of an exit. I’m so curious. It was probably a totally different experience for you. What was it like? What were your lessons learned?
Tina Hoang-To: I think very similar to you. I think at every point in time as a founder when you’re thinking about fundraising, you’re also thinking about the strategic options, right? It’s a tough decision. When you build your company it’s sort of your baby. So letting that go I think was really hard for me. And very similar to you I thought “Hey, I’ve built this, this far. There’s a new chapter that might be better partnered with someone else.” And I think that was the right choice, and I still believe it’s the right choice.
Shanna Tellerman: So, Tina, I know that we also have the same common path that was a little unusual, a little untraditional. You went from selling cars in college to becoming a CEO and then back to being an investor. Tell me a little bit about how that path unfolded.
Tina Hoang-To: Well, it’s a lot of lessons along the way. But since you mentioned my car selling days, one of the biggest things that I’ve learned throughout my career is that being good at sales is something that got me very far. And I think that’s important to everybody in their career. When I was CEO, I felt like every day I was playing a sales role. When recruiting talent, you’re selling your culture and your mission. And then when fundraising you’re selling the market opportunity and your growth trajectory. And now as an investor, I’m still not done pitching. I’m pitching myself as a board member. I’m pitching TCV’s brand, our domain expertise, and our track record. To bring it back to something that I think all the listeners can relate to, think about every annual review that you’ve had. You’re essentially pitching your impact to the team and your work product. So my biggest advice here is if you don’t feel like you’re good at selling, read some books. Go out there and do some online classes, because I think that’s definitely going to come in handy as you progress throughout your career.
So let’s talk about Modsy. What is Modsy for those listeners who are not familiar with the product?
Shanna Tellerman: So Modsy is an online interior design service where you get paired with a designer virtually, and then we use specialized visualization technology to basically reconstruct your room into a 3D model and design it so you can see how everything will look in your space and shop from real products, from real retailers. Everything integrated: You can check out and buy from Modsy.
Tina Hoang-To: How did you come up with the idea?
Shanna Tellerman: The story starts with myself. I am the Modsy customer. My husband and I moved into a home in San Francisco and we went through that process of, “It’s time to buy some furniture. It’s time to upgrade from our IKEA and hand-me-downs.” And we got stuck almost immediately. We were looking at an awkward space. And we had a sofa, but we couldn’t decide on the rug without deciding on the art. And we couldn’t decide on the layout of the space. And without being able to see what it would really look like and have design help to visualize and to come up with a plan we did nothing for a year-plus and our space was sad. And we came home to this kind of empty sad space. And for me, that led to this moment where I was looking at a catalog and I looked at it and I was like, “I wish I was having this experience looking at this beautiful image where everything is designed and looks great, and they’re all products I can really buy. I just wish it was in my own house.” And for me, that light bulb went off because I had this background in 3D and graphics and spent time at Autodesk. I knew what was coming and I knew that we could combine the ability to visualize your unique space, fully designed, with real furniture you could really buy, in a way that felt beautiful — like a catalog — but it was in your house. And we could combine that with the ability to have a designer at a very affordable rate, working with you to make the decisions. And that if I provided that to the average consumer who today has no access to design services without thousands and thousands of dollars, that we could open up a huge market opportunity.
So the moment I had that idea I couldn’t drop it. I went into work every day, and I was thinking about it, and prototyping it. And then fast forward a few months later, and I had left Google Ventures, where I was investing, and I was like, “I am starting Modsy.” And here we are, five years later.
Tina Hoang-To: I can attest to the value proposition since I was a customer of Modsy. You know this story, but you saved Nick and I’s life when we moved into our new place in San Francisco, and we went through the same thing. We tried out two interior designers. They came in, took a look at the space, gave us an estimate of three to four months before we can actually start buying furniture. And given I’m a very quick person to do everything, that just didn’t work for me. Like, what are going to do for four months without furniture in this wide-open space? So because of Modsy, we were actually able to buy all our furniture in three weeks and be able to settle into our new home.
Shanna Tellerman: It looks fantastic.
Tina Hoang-To: Thanks, Shanna. What is the technology behind Modsy and how’s it changed since you launched the company in 2015?
Shanna Tellerman: Technology is definitely at the center of Modsy. It’s at the center of the vision because the vision is about visualization and visualization technology powers that. So, there’s two parts to this. One is the photo-realistic 3D renderings. From day one, we knew we could enable that. But to enable that in a scalable and affordable way that would allow us to provide the service at a very low cost, we had to build our own proprietary tools and technology and we had to plug into a couple of systems that were all cloud-based so the whole thing could scale. And so that just took a lot of time. That one we had a pretty clear vision.
The second part of our technology is taking photos of somebody’s room and then reconstructing an accurate to-scale 3D model — ideally with as little measurements, or no measurements, as possible — and then coming out with that 3D model to be usable in the design process to be able to put the furniture in. And so it had to be accurate. It had to have floors and walls and windows. And then it had to be something that could render out photo-realistically. And nothing in the world existed to do that.
There was reconstruction technology as a concept and there are big cameras that do depth sensing that can measure and that can use laser scanners — but that doesn’t exist in the normal consumer’s pocket. So we were like, we need to take the normal phone in normal consumer’s pockets and we need to apply the things that are only possible in these really sophisticated cameras. And we had some guesses about how to do it, but nobody had ever done it. So fast forward to today. Several years of R&D and various approaches and a sort iterative approach to solving this problem one piece of the pipeline along the way, we now have patented technology. We have taken an approach that is unique to everybody in the world that is trying to solve this. We’re probably the furthest ahead. We’re about to release something even cooler in this space in the next couple of months. But it has been one of those things where you know what you’re trying to do at the end, but your R&D path uncovers new ways and new approaches continuously and along the way you have to adapt that plan.
Tina Hoang-To: I remember as I was using Modsy for the first time, the biggest value proposition for me is actually seeing things fit in my space. And that was very hard for us. I mean, I can walk around with a ruler and measure everything but being able to look at three different types of layouts for a sofa and how it’s arranged in the space and click a button to live-swap in each and every one of the sofas was just a tremendous value add for us. So thanks for building that.
Shanna Tellerman: Awesome.
Tina Hoang-To: So Modsy has been growing, raising the Series C, and nearly doubling its headcount in 2019. How have you navigated through the challenges of scaling a team so quickly?
Shanna Tellerman: It’s interesting. Not only are we scaling the team, we’ve also been transitioning the locations and roles of our team. So a lot has changed all in one year. I am not going to say this is easy. Any time you grow and you add a lot more people, your culture does change. But what I’m constantly telling our team is that the culture is what the people make it and that as we add new people, they both adopt pieces of our culture, and they bring new culture in. I’ve seen our culture, the core elements of our culture, where we lead with our heart and we believe in making magic for our customers and we believe in hard work — those have stayed. Those have always stayed true. But we’ve added all these new elements of our culture, like you can work anywhere, you can work remotely, you can work from home. We have a lot of customer-facing people who have a different view of the world and there’s a different set of things that they’re interested in when we give Monday morning updates, for example. So you need to adapt pieces of your business and pieces of your culture. You also need to hear the feedback from all the people who’ve joined. And simultaneously you constantly rethink the tools and the structures especially when things like the location of the people changes along the way.
Tina Hoang-To: Fundraising is often a big part of being CEO. I know that. If anybody tells you that fundraising is fun, they’re probably lying. What were you looking for when you were raising the Series C? And what was most important to you?
Shanna Tellerman: This one is easy. I was looking for Tina. In all seriousness, I really, really look for investors that are partners – true partners – and to be a true partner you have to be able to put yourselves in the shoes of each other once in a while. And I feel like my experience being on the investing side was helpful in that I can understand what an investor’s trying to get out of the relationship. I understand the dynamics of a partnership, I understand the growth rate, I understand the things that are exciting to an investor. Simultaneously as an entrepreneur it’s really, really helpful when your investor understands how hard it is to run a business, to build a business and that every day you’re in there and you’re slaving away and you’re making these hard decisions and hard choices and that there’s real work in that. And again, when you get those snapshots of a company once every couple of months it’s easy to not remember that there’s a lot of hard work that goes into it. And for me when I’ve ultimately talked to investors and had the opportunity to bring great people onto the board, it’s the people who just get it. They get that there’s a lot behind the scenes and that that’s always part of the conversation. And as we chatted, it was so clear that that was how you thought about the world and that’s always made it easy. It’s made the relationship easy.
Tina Hoang-To: I think on the flip side, one of the greatest things that you’ve given me is the opportunity to work with the team. Every time we’re launching new products, Sam, CTO, is sending me the test pilot launches, it gives me the opportunity to bring myself back to the days when I was an operator and launching new products. And that’s been really exciting to be a part of that journey with you.
Shanna Tellerman: Yeah. Actually, we feel that you have had a unique ability to put yourself in the shoes of our team and ask the questions or give the feedback in a way that feels like you are part of the team, not sort of passing by giving us side comments or sort of surface-level comments. It’s real feedback that we can really apply.
Tina Hoang-To: Shanna, you’re a CEO and founder but you’re also a mother. How has motherhood changed how you work and how you are as a leader?
Shanna Tellerman: So motherhood, for anybody who’s listening – as a mother or father, is hard work. There’s no question. It definitely started to divide my time. But I will say, it has been life-changing, game-changing. Not just for me personally, but for our business. The thing everybody says is true — which is, you get way more efficient with your time and you start canceling all those silly meetings and those lunches or dinners that didn’t really matter But for me, the best part of it was really I always have carried around the stress of my company. It doesn’t matter whether I’m going to dinner or a movie or on vacation, it’s a weight in life and I’m always thinking about it and nothing I could do would break me out of it. My first company, my second company, I could be in the most beautiful place in the world and I was still thinking about my new business. We were hiking in New Zealand and I’m thinking about my business. And I’m like, “This isn’t healthy,” but I can’t break out. But then I had a baby. And when I go home and see Skye it’s pure joy and the thoughts of our business melt away. And even if it’s only for a few minutes, there’s these few moments where I’m like, “This is actually more important than that.” And I never had that before, and it’s been transformative.
Tina Hoang-To: So I’ve been really fortunate to have great mentors in my career and I think this is a very important part of development as you progress. Who are some of the people in your life that have provided mentorship to you?
Shanna Tellerman: It’s such an important question. Definitely, I have had a series of mentors along the way from managers to advisors and people in my life, my husband. But for me actually even more fundamental to that was something I realized when I was an entrepreneur, but then realized more profoundly when I was an investor, was that there really wasn’t this same kind of network for women. And so I became really passionate about connecting women together who were founders, investors, and operators because that’s the ecosystem and just allowing us to build bridges and connections and relationships with no business purpose to start out — knowing that it would lead to great business results in the end. And so it started then when I was an investor and we started doing this annual trip to Park City and skiing, and it’s been just amazing to see this network grow and support each other. And all these women are people I know I can just get on the phone and I can ask a quick question. When I started my company they were my first calls — being like, “Will you invest in my seed round?” That is the network that ends up becoming such a powerful resource for me.
Tina Hoang-To: So we’re down to the last question which I think will be helpful for most listeners who are in your shoes. As a CEO and a former VC, what is one piece of advice for someone pitching to a VC firm that you wouldn’t have known if you hadn’t had that experience as a venture capitalist?
Shanna Tellerman: I get asked this question a lot. What did I take from being a VC and how do I apply it to being an entrepreneur? And especially in fundraising and pitching, what’s the secret sauce? For me, it’s actually my understanding that it is a partnership and that the partnership collectively makes a decision. So you might have a big champion who has brought you in and they’re super excited, and there might be a bunch of people at the table really excited. But there might also be some people who are not that excited about your business and that that is actually a pretty normal part of a partnership discussion after a pitch. And for me, that’s allowed me to take it way less personally — the pitch. It sounds funny but as an entrepreneur you feel like this is my baby, this is my company, people are giving me feedback they didn’t like me, they don’t like my business. But in reality, there’s this collection of people looking at your business with their collective history and experiences, and it is more common than not that some of the people sitting around that table have some concerns and have some reservations and bring it up. And then that discussion ensues, and it may be swayed one way or the other. And you are a minor part of that equation. At the end of the day, they’re making a collective partnership decision. And for me, that just took a lot of the emotion out of the fundraise.
Tina Hoang-To: That’s a great point. When I was going through a fundraising as well you get a lot of “no’s.” I think some people have biases towards certain industries or certain products, etc. But one of the greatest pieces of advice I was given was, it doesn’t matter how many “no’s” you get. You really only need one “yes.”
Shanna Tellerman: So true.
Tina Hoang-To: And I think that turned everything around for me, that it is okay to get turned down. Because if you look at the data and the stats, the chances are you’re probably not going to get a “yes” in your first try, so that’s really helpful advice.
Shanna Tellerman: Very true.
Tina Hoang-To: Shanna, these are really valuable lessons you’ve shared. Thank you so much for joining us on Growth Journeys, and thanks to all out there for listening.