Power, Narrative, and Influence: Van Jones and Promise CEO Phaedra Ellis-Lamkins

0:00Hey, everybody. This is Ben Kaznoka, co-founder and partner at Village Global Global, a network-driven venture firm. And this is our podcast, where we go deep on all things business and technology with world-leading experts.

0:21Hi, everyone. On behalf of Andoyne, Ben Kassnoka, Lindsay, Sam, and the rest of the Village Global team, welcome to Transformers. We're going to kick things off with our good friend and fellow villager, Phaedra Ellis-Lampkins, founder and CEO of Promise. Phaedra is scaling Promise at the intersection of government, technology, and financial health. And she's broken down institutional walls in order to build a category-defining company. Oh, thank you. We're also joined by her friend, Van Jones, who will help us understand how power in government and in politics is not only helpful, but its own competitive advantage.

1:08So let's get started. Phaedra. Yeah. Can you tell us a little bit about Promise and what it does? Yeah, absolutely. I do want to just say thank you to Village and Amrit and Ben and Anne and Sheila. I feel really lucky that Village was one of our, as we said, OG investors and continues to be, I don't think you can, oh, I'm supposed to be succinct. But kindness, I just want to say kindness is underrated. Kindness and support and the consistent kindness and support and ease from Village is such a gift. And so there's no stress. And I just think as a founder to have investors where you have no stress is such an incredible gift.

1:48And so happy to be here, but just really wanted to say thank you because it's like so lovely to just be like, oh, yeah, I'm going to spend time with Village. So Promise is a company focused, software company focused on how do you improve the experience of government? How do you make it more efficient? And we are really focused on basic needs for people. How do you get access to food, power, water, shelter? And so we basically run programs for mostly states so that people can get aid. And an example of that is where the state of Florida uses us is if you need emergency aid for electricity, we actually get your information because you've already applied for food stamps.

2:32We compare that against the data file of a energy company. And we send you a message that says you qualify for aid. Let us know if you don't want aid. If you apply in the state of California, where promise is not, you will go online on call. They will have windows that they take applications. You will have to come in. You will bring two, a copy of your income, a copy of your utility bill. They'll then put it into a Salesforce system. And you'll wait somewhere between six weeks to three months. Wow. And so it's just recognizing inherently that technology can make this better. That's incredible.

3:13Thank you. And that wasn't always what promise was. No. Tell us about your first idea and how you knew it was time for a left turn. Yeah. So we started focusing on the criminal justice system, went through Y Combinator, raised some capital. And then I was pretty successful. We made money right away. And then I just was in a meeting in Alabama and sitting with folks. And it was like, some of you may be too young to remember Dukes of Hazzard. But it was like, I was in a meeting was like boss hog. And he like leaned back and he was like, uh, uh, bragging about keeping someone in a jail for seven years on a pretrial arrest.

3:52And I just was like, oh, software at its best is about efficiency. And, uh, to be able to raise as much capital as we did to, to be a black woman, to have a good technology team and to use that to build efficiency for a system that was criminalizing poor black people just was not what I wanted to do. And so I just like, life is too short. So I walked out of the meeting. Thank God I had better skilled colleagues than myself. I just was like, and we just never went back. Wow. Yeah. And I mean, what was the initial customer discovery like process for the version of promise today? So one, we got lucky because of COVID.

4:35to what happened is we realized that most people end up in the criminal justice system because of fees and fines. You can't afford something. You can't afford a parking ticket. We'd been sitting in Oakland County, Michigan, and a judge mentioned that the people that were the highest risk for failure to appear were people on a suspended driver's license. And so we were like, okay, that doesn't make sense, that the people who are most likely to be high risk are people who really can't afford a ticket and they keep driving their kids to school. They keep going to work. And the system is not designed to be punitive.

5:09At the same time, Max had just started a company called Affirm. And so I was like, well, if you're rich or middle class, you can go get a Peloton. You get it and it's interest-free. But if you're poor and you can't afford a parking ticket and you need to go to work, you end up incarcerated. And so I just was like, the duality of that made me think, we should try to do that. And the good thing about being a founder is you have a sense of confidence sometimes. It does not make sense. We were talking about this. So I was like, I mean, if Max can do it, for sure we can do it. And so we just started offering people basically buy now, pay later for government.

5:47And we scraped the city of Oakland site without their permission and just started paying tickets. And then we're like, oh, people pay us back at a really high rate. And if you make it easy, people actually don't want to go to jail, which at the time seemed shocking to people. Shocking. So the customer has always been the end consumer as opposed to government in your eyes. It's a great, no, absolutely not. The person who's the end user is what gives me the passion to do the work. The government is who pays us. And so sometimes even internally, we have a tension because the team wants to measure success by how the individual end user uses it.

6:27But at the end of the day, governments pay us. And so we have to measure success by how well do we create an experience for government that's cheaper, more efficient, and runs better. Because some of our clients don't care about the end user. They do not. And they want less people to get aid. They actually like it being harder. And so for them, it's about efficiency and saving money. No kidding. Yeah. And how do you manage the duality of the idealism of mission-driven work and the reality of profit, you know, capitalism? Yeah, it's a great question. So one, it helps that I like money. And I would rather fly private than commercial.

7:10And so I realized that if I want to build generational wealth, which I think that we should do as women and people of color, is it means that I'm purposely using capitalism as a strategy for change. And so I want to win. And I also think that the challenge of a company that is mission driven, and for us, we don't take capital from social investors, social impact investors, because I wanted the company to be driven by venture capital returns. Like I purposely wanted people to be like, OK, you're not growing quickly enough. I didn't want to win in the battle of people were like, oh, it's kind of cool.

7:46You're doing good work. And so Katie and Jacob are here, two of my colleagues. And I think the thing that we think about is if your product is good and you believe it serves the mission, then you measure success by revenue. And so to the extent I think the more money we make, the more people we help. And so we have to run to revenue. And it excites me. And I like it. And I remind myself that we just did a Kansas. We just did a state of Kansas last week. and if we don't exist, like 7 ,000 people just got aid and if we don't exist, their lights get shut off. Yeah. And so every time we win a contract, every time we win something, we make it easier and more beautiful and in this moment, we should be making the case for democracy and making the case for public institutions and they're broken and they don't work and so revenue is the way to measure success in a company And I think we should push people.

8:52And I think it's a failure of mission-driven companies to see the mission. It's not really a company if the mission is met separate of revenue. Hear, hear. And speaking of broken public institutions that presumably take forever to make decisions. Yes. How have you learned to shorten the decision-making window for these states and local governments that might otherwise be impenetrable? Well, one, Godspeed to people who sell to local governments. Okay, fair enough. We started actually the criminal justice selling to counties. and what I realized is the cost of acquisition was too low for the dollar value and that basically you needed to get so many local governments to equal revenue whereas like we just signed another contract with the state of Florida today it's 1.6 million just to add to something else like so it's like and it takes the same amount of work and uh so I think the the thing I think about is um I I fundamentally believe we are making the government better like I I feel it and we are willing to do things that other people don't.

9:57And I think a lot of GovTech, you start almost as like a consultancy where you just say like, however to get in. So I was like the state of Kansas, they came to us and they're, the state of Washington is another example. They were like, they had a program for two years. They needed to get$160 million or 150. And they're like, we have to get it out in 90 days. And we're like, great, we'll get it out for you in 90 days. But we made$6 million, right? And so we get out something that we deeply believe in. We provide a high quality service to people who depend on those resources. We made good money.

10:25And so I do think that part of what we're good at is we meet people where they are in crisis and then we over deliver. And that's our sweet spot is crisis. So it sounds like the secret sauce, if you will, is finding the customer when they're ready to transact, not shortening a long customer cycle. Yeah, I definitely think we just signed the city of Atlanta, which is a smaller city, is a smaller jurisdiction, I think two weeks ago, is I do think that sometimes those things take a long time. Like there are some things that, like we started in the city of Atlanta when we first started, which is why it took three years, two years to close.

11:00And we didn't understand the crisis point. But I think for states, we definitely find people who uniquely need our services. And I will say we made a different decision as a company than traditional, I think a lot of software companies did. I came out of a company before that was kind of like in the Uber of everything where you just like we raised 20 million at seed. And so it was like it's so much money that you just grew. And so I purposely made a decision to build a company that we became profitable, that we had software margins. And so we only had two salespeople. We just hired our third and we our revenue was like one, five, 16, 34.

11:36We just kept like our revenue kept growing with two salespeople. And so now we have to scale the sales team and build the infrastructure and do that. But we can do it from a profitable company with high margins, which is just a different way to be able to build a company. Incredible. And speaking of most of our founders here are at the seed or even pre-seed stage, or many of them are. What advice, if you could take yourself back to the seed stage of promise, what advice do you remember receiving that you massively underrated? um that i massively underrated uh i think investors are really important and they're like someone said to think of them as like long-term relationships in the same way you would think about a spouse or something else because uh like when you if if you want to make a pivot like when i called people said i raised up we raised seven million i think it's c maybe three and then a couple weeks later it's a total of seven and you're like i think i'm gonna quit what i'm doing and I think I'm just going to give you your money back, which I thought was great.

12:40I was like, oh, we can give our other money back plus a little. You guys did great, less than a year. And to have investors that were like, we believe in you, go in the woods. And I just think, like, find yourself. And I think for a lot of people, we don't grow up with those kinds of experiences where you can fail and then someone rewards you and tells you, just hold our capital. We believe in you. And I think founders who don't have that experience with investors, I think it's difficult. And so the thing I wish is we turned down terms that were better because we like people. And I just cannot tell you that the best economic terms are sometimes not the best economic terms.

13:18Finding people who see you, because I think it's even now, the government is like shutting down social services. People are scared. I was like, oh, this is gonna be so great, Doge. And then they're basically like, oh, screw DEI. I was like, I thought we were government efficiency. And so to those kind of moments, like we don't have, I don't manage our investors for any fear. I'm just like, oh, this is so great. We were supposed to do 40 this quarter. I think we did four or five. And I was like, oh, this is like a building time. We're going to now do M &A and we get to start figuring out all these other companies are going to die.

13:50We have a lot of capital in the bank. So it's like, there's no stress associated with managing an investor. It's about making the best decision for the company in the longterm and positioning us for growth. And so I was like, oh, this is perfect because we've been an execution challenge. We're growing more quickly than we can execute against. And so now I'm like, oh, this is our year to catch up. This is our code base. Can't be total shit. This is our, like, we're going to hire better engineers. We're going to build a sales team that works a little different. And so it becomes an opportunity instead of, like, stress or panic.

14:21And I see a lot of people who are just like, oh, I got to raise this environment. Oh, I got to do this. And we're just like, so we're going to do, you know, like planning about how to, you know. And so I just think the investor relationship is very much undervalued. And that's why I was saying to your guys' credit, we have not gone to the market ever. And we've raised$50 million, 30 of which still sits in the bank. And because I was like, I can't imagine having to deal with people who like, I walked, one of our investors was like, oh, we want you to raise more capital. And so like, go meet people.

14:54And I walk in and it's like three dudes golfing. and they're just like oh like and I walk in and I was just like if I had to work with these people like it would not be good and Ross gave me feedback because I was like he's like they said you're a jerk I was like yeah I'm sure I was.

15:11Phaedra uh about Van what's something you've learned from him over the years? Oh my god so much from Van um so Van is one of my dearest friends I could probably just cry just thinking about how much I love him uh the thing I think I've learned from Van is one is very few people have power and show emotion, especially as founders or people of color, women. And it was like the first time I'd ever seen someone like in a room cry. And we met when we were young and I was just like, oh my God, it's so weak. Like you need to like, you know, like buck up dude buck up is and there's real power in authenticity and in like leaning into that power and so I think the thing that I've learned from Van is that true power really comes from like your most authentic self like when you are just feeling yourself when you are showing that and I think so it's been a real gift because I'm more of a robot than he is and certainly don't engage with humans.

16:17And so he will be like... And maybe just transitioning back and ask the same question. What have you learned from Phaedra? Well, first, I'm just glad to be here.

16:32I'll say about Phaedra. Phaedra comes from a tough place. She's not a rich man's child.

16:45and a lot of people who grew up where she grew up are not even alive to tell the tale. And a lot of people underestimate kids from tough places, assume they're less than, and even if they're not less than, that assumption of less than gets in them. And holds them back. And somehow, she's been able to find a way to not only get out of desperate poverty, work with Prince, wow the biggest investors in Silicon Valley, build a unicorn billion-dollar company, help poor workers all this at the end of the day what she's trying to do she's trying to get back home to those people who don't have a dadgum thing and didn't have anybody to help them didn't have anybody to stand up for them and she's doing that she's actually doing that and some people have had a theory that if you gave a different kind of person a real shot, they might do a different kind of thing.

18:15That maybe it's not capitalism that's the problem, maybe it's just you just don't have enough people to get a chance to play the game.

18:24And nobody's playing this game better than Phaedra. Nobody's helping more people before they get out of bed than Phaedra. And she's just getting started. she's a little bitty baby caterpillar and here here very well put then we have founders gathered here today who are working on some big businesses and some ambitious visions and they're trying to sell the healthcare they're trying to sell into fintech they're trying to explain their crypto business to washington policymakers you are gifted in the art of narrative storytelling and communication, let's start with your advice to entrepreneurs on how to tell their story.

19:09How can they communicate the audacity of their vision, the audacity of the technology to a customer base or to a government base of people who may not be as steeped in Silicon Valley as we are? Well, first, you got to know who you are. I think that's a big part of the difference when you're dealing with political people. Political people are not the same as you guys. You guys are rational.

19:41Speak for yourself. You know, rational people. You know, you're efficient. You're talking to the other people you went to high school with who were very different than that. People who are emotional, people who are relational, And the most important thing you want to manage, and also people who don't know anything about technology at all. You could say AI, and you could say crypto, and you could say, tell me the difference between the two. And they would say, oh, look, a bunny. Like, they don't have literally any idea what you're talking about. And so you're trying to manage to be like the smartest person on the bleeding edge, the bleeding edge.

20:27That's for later. on the front end, it's how do people feel? How are you making people feel about you? I was talking to Paige about this earlier. You know, Maya Angelou says, no one will ever remember what you said. They will never forget how you made them feel. So you come in all smart, saying a bunch of stuff, but it's not the smart, it's the heart. and you get a chance to actually let that part of yourself show when you're dealing with the government. Now you might be, you're talking to your VC, like they may not want to hear any of that stuff, but you have a different gear when you talk to people in government.

21:13And so I also think I want to acknowledge you guys in a way that I can tell you don't acknowledge yourselves.

21:30You are very important to me personally because of what you're trying to do. You are trying to do something very, very difficult. You are taking extraordinary risk to do it. And many of you are doing it for reasons that are embarrassingly noble. I have a three-year-old daughter. Here's how I see you guys. A three-year-old daughter. She's going to grow up in a different human civilization than the one I grew up in. Okay? Different human civilization because of technology. Her first crush, three, four, five years from now, is probably not going to be a rock star or a hip-hop artist. It's probably going to be an AI.

22:28Her first crush is probably going to be an AI, different human civilization. When she's 28, 30, 32, when she wants to have grandchildren for me, children for herself, she might open up a laptop or deal with a holographic interface and design my grandchildren with biotech tools. It's a different human civilization. 80, 90, 100 plus years from now when she dies, she may be buried on the moon or Mars because by then we'll be a fully space-faring civilization. That's a different human civilization. Here's the question. Will this new human civilization be human and will it be civilized? Will it be human and will it be civilized?

23:17that will not be determined by people in Congress. It's going to be determined by people around the circle. You are not just co-founders of a company. You're co-founders of the next human civilization. And what you do matters. The choices that you make matters. Your courage matters. Your integrity matters. And the fact that it's difficult is a part of the process. And it takes incredible people like you to give my daughter the world that she deserves. And I'm here because I deeply, deeply respect what you're trying to do. Well, and thank you for that. And that's itself stirring and inspiring. So I really appreciate that.

23:58Just going back, man, to the opening comment about narrative to government policymakers, you know, we often tell founders, you need to have sort of a different pitch when you're talking to a prospective employee, when you're talking to a prospective investor, when you're talking to the mass media, when you're, so we need to have multiple pitches in our head at any one time and you have to customize your message to the audience. Let's suppose the audience are people in Washington who are trying to understand healthcare, climate, tech, fintech, crypto. What does this group need to know to be effective with that audience?

24:33Even that don't work, what you just said, because it's more about the relationship, right? If you're coming in there thinking, what do I need to tell you so you can understand something, you're already in the wrong gear. Because first of all, they're not going to understand what you're saying anyway. You can't dumb it down? Sure, sure. But people can tell if you're dumbing it down. People want to belong to something. that's what you got to understand they want to be a part of something that's meaningful to them they want to feel like they're solving a problem they want to feel like they've got a friend and an ally and getting something important done and that establishing that is really important and that's more relational um and so it's you remember what Phaedra DeLue just said it she says look she's trying to solve this but she's talking to the person they have some other problem She's coming in.

25:33She's, I'm going to be a friend to you, Governor. I'm going to be a friend to you. I'm going to help you get this done. And when you are, look, I've worked in the White House. You know, a lot of people come and they've talked to you and they're trying to get you to do stuff. And it's very clear they've got an agenda. They're trying to move you. Somebody told them, first say this and this, say that. They're running their little script on you. and nobody's stupid. Everybody can tell what's going on. And if you can drop into your actual purpose and calling, why you built this company, the problem you're trying to solve, the people who you're concerned about, the outcomes you're trying to avoid, that person suddenly as a government guy, now you're talking my language.

26:29nobody cares how much you know until they know how much you care i'm going to tell you that in government nobody cares how much you know until they know much you care if they believe you are really going to eat broken glass to solve this problem then the doors start to open up and so i think it's very very important that people think about that one and um yeah it is interesting just to rip on that for a sec one of the i think i strongly agree on the build a relationship point i do think in like enterprise sales or these long sales processes some of founders will take that approach to an extreme almost say hey let's let's just get to know each other where are you from and the busy customer on the other side it's not like come on just get i know you have there's an ask it's a product you're trying to sell and so i think there is some balance between transactional and relation exactly and in that sweet spot is the true authenticity yeah the true authenticity is i want you to buy my shit right okay that's that's what i want okay i'm not hiding the ball yeah but it's not so much the what what what but the deep why yeah i want you to buy my shit because it's going to help this grandmama it's going to save this mayor it's going to like if you can get there sooner rather than later yeah now you've got a connection to somebody that your mission aligned.