244. The Non-Techie's Path to VC

If you're a non-technical founder or corporate innovator, you've likely heard the myth: venture capital is exclusively for bankers or coders.

Promise Phelon shatters this misconception completely.

In this episode, Promise shares how she used her experience as a non-technical founder to become a successful venture capitalist - without writing a single line of code or spending years in investment banking.

Listen to learn:

• Why business acumen and customer understanding are more valuable than technical skills
• How "product CEOs" often have advantages over purely technical founders
• Practical paths into venture capital for non-technical professionals
• Why more founders are specifically seeking investors with operational experience
• How to use your industry expertise to find investment opportunities others miss

If you're curious about a career in venture, this episode is for you.

Timestamps

00:00 Introduction

01:02 Harnessing Technology for Leadership

03:00 Journey from Operator to Investor

05:52 Debunking VC Myths 

09:13 Technical vs. Product CEOs

11:59 The Path to Venture Capital

14:52 Relationships in VC

18:07 Building a Unique Investment Perspective

20:58 The Ethics of Startup Experience for VC

23:52 Empowering Non-Technical Founders

26:46 The Value of Operator VCs

Learn more from Promise Phelon at the Growth Warrior YouTube channel.

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Transcript

Sophia Matveeva (00:00.575)
If you look at who the wealthiest people are in the world now, they are tied not to natural resources as much as they are tied to technology. Technology has driven revolutions since all of our, you, me, like we've been in the tech revolution for the last 30, 40, 50 years. And so I would say that the ability to know how to harness technology to create great outcomes is critical for every leader. Jamie Dimon has to understand that at JACE.

Right. You have to understand it in your business because technology is a way in which you scale a solution. If you think about it really simply is scaling a solution for lots of people. But do you have to be technical? I don't think so.

Welcome to the Tech for on Techies podcast. I'm your host, tech entrepreneur, executive coach at Chicago Booth MBA, Sophia Matilda. My aim here is to help you have a great career in the digital age. In a time when even your coffee shop has an app, you simply have to speak tech.

On this podcast, I share core technology concepts, help you relate them to business outcomes, and most importantly, share practical advice on what you can do to become a digital leader today. If you want to a great career in the digital age, this podcast is for you. Hello, smart people. How are you today? In this episode, you are going to hear from Promise Felon.

She is a venture capitalist who set up her own fund with an awesome name, Growth Warrior Capital, after leading and exiting companies as a non-technical founder. Given that many of you are non-technical innovators, either as founders of your own companies or at corporates, I thought that you would find her career path rather interesting and that in fact, some of you might want to follow it. And so in this episode, we cover how to start working in venture and we discuss some of the misconceptions that you might have.

Sophia Matveeva (02:00.972)
We also cover the difference between a technical founder and a product founder, which I found really interesting. And also we cover the skillset that you need to succeed as a venture capitalist investor. This was a super awesome conversation. I learned from it and I know you will too. But before we continue, I want to thank Sailor Crystal for leaving the show a lovely review on Apple. I don't know if that's your actual name or a pseudonym for Apple, but I hope that you're listening.

And I want you to know that I really appreciate you. So Sailor Crystal said, I learned so much from these short episodes and I love how Sophia always goes right to the heart of what she discusses without any hyper or fluff. Perfect for a busy professional. my God. Thank you so much. I love you. So if you liked this episode, everybody else, I hope that you have been inspired to leave this show a rating and a review too. So you also can make my day.

Okay. And now let's learn promise. Promise. You were a successful CEO of a company. You took that company to an exit and now you're a financier. So what happened? What went wrong? That's a great question. I had a couple of exits. I've had a number of them. I would say what went right. So early in my career, I got really lucky, Sophia. was

part of a company that went public that eventually got sold to Oracle for $8 billion. And so I saw the concept to scale to public markets to exit. And I knew early on that I wanted to be on the money side of the table. I just didn't know how I was going to get there. And so I would say operating businesses and then becoming an investor was what went right. And I think it's actually a pretty natural path, if you ask me.

I think so too, but I often come across people who think that venture capital is this kind of thing that basically you can't get into. you are, basically my audience in New York and London think that you need to be an investment banker to get into venture capital. My audience in on the West coast think that you need to be a developer to get into venture capital and you are neither and you were an operator. So I would really love to explore that.

Sophia Matveeva (04:27.154)
path with you. So first of all, why do you think there are these myths that you need to be an investment banker, which is a completely different job, or you need to be a developer to do venture capital? It's a great question. I want to talk about the skills that I accrued over that period of time, but I'll come back to that. So why are there misconceptions? There's probably one of two reasons. Those are the people who went into investment, investment banking. They became venture capitalists because they were

close to deals, are, a banker has like three main focuses. So number one, they have to understand on the buy side of the sell side, what matters to people and what has value, right? So buyers care about this, sellers care about that, and they have to be able to match those up. So that's one. Two, they have to be really good at relationships because they need to be able to navigate a sale. They need to be able to pitch and propose something. They need to be able to

match people who want the same things ultimately from a strategic perspective and be able to kind of sell that in. But the last thing that they have to be able to do is to understand businesses at a really deep fundamental financial level. And so that's what VCs need to be able to do. We have to understand markets, how to sell things, right? But also the fundamental and the economic and financial blocks of a business. And so

If you can get those three skills in anything that you do, those can be transferred into venture capital. Let's start with like the kind of mystical reasons why. Money is a relationship business. And a lot of folks in our country and our generation, whatever generation you're in, they don't prioritize relationships as much as bankers do. Because bankers, that's a deep part of their currency, who they know.

who trusts them, right? And how they're able to leverage what they know and who they know to make a transaction happen. And that's the money business. Like that is it in a nutshell. And so you look at the best money people, they're the best relationship people. And so I believe the reason why most folks look at venture capital as this mystical place is because it's a closed relationship system where people are whispering to each other and where trust is being traded.

Sophia Matveeva (06:51.929)
Right. And most of us don't know how to do that. Interesting. You know, so actually I used to work in a private equity firm before I did my MBA ages ago, basically, London private equity. was kind of all the things that you would imagine it to be. So, you know, good looking men in very fancy shirts, very large egos. I wouldn't say we were really close to the businesses. We were close to the spreadsheets. We had a lot of spreadsheets and those spreadsheets had a lot of cells.

But in terms and also we would kind of throw our weight around and tell people what to do, but without actually having to do it. And now that I am an operator and you I have had to fire people. have also, and sometimes actually more often than not, the ones I've had to fire are the people who are, wonderful, but I'm the one who made the wrong hire. that's two mistakes. so now that I am

on the operator side. And I think of being on the finance side. And I kind of think of, you know, how we used to say things with such confidence. I blush, you know, that's putting it politely. So now that you've gone into the finance side, knowing what it's like to do these really hard, everyday things as an operator, do think you're just going to be too nice?

Are you going to be too kind because you know how hard it is to run a company? I did not think you were going to go there. So let's put into context. Ultimately, everyone has a boss, right? And so the boss of the venture capital firm and the boss of the PE firm are essentially the same boss, they're a limited partner or an LP. So let's imagine that this retirement fund has billions of dollars and they're putting that money into diversified portfolios. So they've got real estate, they've got private

credit, they've got public markets, right? They've got all that. And then they have what they call the alts. And so PE and VC sort of sit within the alts. And like you were talking about private equity, those are the financial engineers. They're going into an existing business, right? And they're trying to find two things, efficiency and leverage. And so like you said, that lives in many cases in a spreadsheet. And what's so interesting about what you said is like,

Sophia Matveeva (09:13.339)
Private equity people are very good at atomizing a business. Like, okay, this is the revenue stream that's working. This is a revenue stream that's deprecated, or this is an opportunity in this market. So they're good at kind of looking at a business as like an engineer would, to your point. And they can say, hey, go fire this group of people or go lever this or go do that, because they're looking at it non-emotionally.

On the other hand, the person who's operating that business, to your point, has to actually go talk to that person and say, hey, you're not gonna get your next paycheck. So that's the hard part of operating. And as a venture capitalist, you have a similar relationship with the operator, but it's more intimate because it isn't as short term. Private equity will often exist within a company for three to five years. I have relationships that are just beginning that had been three to five years.

So we're in a company for seven to 10 because we're taking it from manifestation through exit. And so that could be five, seven, or in some cases, 12 years. And so our relationship with the company is longer. Does that make me nicer? No, because I had the same boss, the private equity person does, right? So I'm still looking for return and looking for alpha. And so I'm actually

more specific in the feedback that I give because I have the mind of the private equity person, which is how do we get efficiency, but I have the experience of an operator so I can say, hey, why are we spending so much on sales and marketing and not getting the return? And here's why I think that's the case. So long way of saying we all serve the same boss, which is the boss of getting great returns on capital.

we're just taking a slightly different approach to getting there. Interesting. And now let's cover this, the other misconceptions. So we covered the finance but around misconception. And now I'd love to cover the technology background misconception because the Silicon Valley tech pros, they are tech pros. So they are developers who have now started, you know, and recent Horowitz, for example, one of the most successful funds in the world. And so I do see where that misconception comes from.

Sophia Matveeva (11:32.733)
Now, in your experience, do you think it's necessary to have this tech expertise, this level of deep tech expertise to be a successful anti-capitalist? And this is why I love your show, because your show is empowering people who don't have that background to go out and build great careers. So I love that about your show. I love that about your perspective, because it's important. Not everyone wants to be an engineer.

It's a really nuanced question, right? to build, like technology has driven so much fundamental wealth in this world. we, if you look at, you know, who the wealthiest people are in the world now, they are tied not to natural resources as much as they are tied to technology. Technology has driven revolutions since all of our, I mean, you, me, like we've been in the tech revolution for the last, you know, 30, 40, 50 years. And so,

I would say that the ability to know how to harness technology to create great outcomes is critical for every leader. Jamie Dimon has to understand that at JACE, right? You have to understand it in your business because technology is a way in which you scale a solution. If you think about it really simply, it's scaling a solution for lots of people. But do you have to be technical? I don't think so. I believe we prefer at Growth Warrior Capital, we prefer

technical or product oriented CEOs. So a technical CEO is someone who says, I need to build a widget and so I'm going to build that widget. Product oriented CEO says, have the earned secrets of the person who's experiencing this pain point and I'm going to build a solution for that. And so it's a little bit different. The technical CEO can actually code, develop and build this thing.

The product CEO is much closer to the customer and understands the market and the ecosystem in which that problem exists and solution exists. So I like both. And if you look at our portfolio, we have technical CEOs who are building and we have product CEOs who are oriented towards a pain point and have earned secrets that very few people have. So I like both, but you don't have to be a developer to be a great CEO.

Sophia Matveeva (13:57.071)
Interesting. Let's talk more about this product CEO, because when we say non-technical founder, that, you know, I've been actually debating, somehow scrapping that term, but everybody uses it. So it's going to be quite hard. But I'm not a huge fan of it because it only focuses on what you're not. So, you know, it's what you're not, but maybe you're really, really good at other things. And that term just ignores all of that. And so a product CEO,

I just want to clarify. So that is a non-technical founder who really understands the problem, the customer. But what is it that they need to understand about product development, product management, working with developers? What's the depth of knowledge that they need to have to be accepted by you as a product CEO? Phenomenal. Best question I've heard. So I'm going to make a distinction. A founder and a CEO. Those are two different animals.

We interchangeably use those titles in our emails, but they're not the same thing. A founder is a firestarter. I've got this idea. I want to build this thing. I want it to exist in the world. I'm going to build it or I'm going to get people to build it. And they're so focused on how their efforts amplify and get them closer to an outcome. A CEO is a fiduciary. And that person thinks about how do I create value for all of my stakeholders, my team, my customers, my investors, my partners?

And so I want every founder that we work with to become a CEO and be able to go back and forth because sometimes you need both. But fundamentally, a CEO has to be able to really empathize with the customer, the market, understand the market dynamics, be able to find partners, be able to hire, understand how to delegate, be able to build a board. Like imagine there are CEOs out there.

that are leading boards of people twice their age and twice their experience. And so in my experience, the easier person to get there is often the product focused CEO because he or she is less in the code and they're more in the ecosystem and how that works. I've seen people migrate. I mean, I think Mark Zuckerberg is a really good example of someone who's made that jump, right? From technical founder to

Sophia Matveeva (16:20.323)
a very large scaled out CEO. But Brian Chesky from Airbnb has also done that. But he was a product oriented CEO who's built a massive business. So both can be successful. I believe it's easier for the product oriented one to be successful because they're less in the weeds of coding and they're more focused on the problem and the solution and the customer in the market.

Now thinking about this career path. So, you know, the career path of the startup founder, then CEO, who there are a few people like that listening to this episode. And they are thinking, okay, well, this VC thing, she's making it sound really interesting. I think I could do that. And so, so first of all, am I to assume that

A product CEO is actually going to have an easier path becoming a venture capitalist after they've finished their startup journey because of what you said, because of the ability to deal with boards, basically more people skills, perhaps having more talent or at least more appreciation of relationships. These are fascinating questions. So we're talking about the career path. And I think about this a lot, Sophia. think about

I was a founder, was a non-technical founder. And now I knew when I was operating companies that I wanted to move out of operating companies. So by the time I was, my last company exited, you know, had several hundred people, had a lot of board members, had investors, I had all these groups I was managing and thinking about. And then we exited.

And I knew that the next part of my personal journey was to take that experience and pour it into, into founders and CEOs. I knew that I didn't know that it was going to be as an investor. I sort of took my winnings and started like writing checks to as an angel. that birthed me into the venture world. But I would say that as a founder to the CEO, talked about the career path. You want to build a set of experiences that make you

Sophia Matveeva (18:38.353)
an attractive person for the limited partner to invest in. So imagine you're a limited partner. have billions in capital or hundreds of millions. Let's just tell people what limited partners are. So limited partners are basically the entities that invest in venture capital. So they could be pension funds, could be sovereign wealth funds, or they could be very rich people. Am I missing anybody? Exactly. They could be high net worth or ultra high net worth.

They could be family offices, which are essentially managing money for those high net worths. They could be endowments and foundations, so people who've left their wealth. Or they could be what we call institutions that are, like you said, endowment funds, retirement funds, pension plans, the Firemen Association of Texas, like they could be that. And so they have, their responsibility is to create a return for their constituents. And so,

they ultimately are trying to sort of risk reward, manage a pool of capital to create a return for their constituents. So they're gonna put money into stocks and ETFs and bonds and money markets and treasuries. They're gonna do all of that. And venture is an area where they can get outsized returns because of small company becomes massive thing, right? So a limited partner

is trying to find a differentiated path to alpha, alpha just being return on investment, right? And so when they look at you as an investor, what do you bring that is unique and different than anyone else? Do they give more money to you recent Horowitz or do they carve off capital to give to you? And so your capital, if you're an emerging manager, which is a new manager, new VC, your risk is going to be higher

right, because there lot of unknowns. But your return could also be higher because you're not a traditional VC firm. And so if you're thinking about becoming a venture capitalist, the first question to ask yourself is, can limited partners find the deals that I'm going to find and have the impact that I'm going to have as someone who's already in their portfolio? The limited partner wants differentiated investments and they want differentiated returns.

Sophia Matveeva (20:58.647)
So really, before you hang out your shingle as a VC, you've got to make sure you can answer those questions in the affirmative. Yes, I can deliver different opportunities to this LP and I can create better returns. so is the only path then basically somehow becoming a rich person and then investing as an angel and then that way starting a fund?

I mean, is that the only path? What if you're not becoming a person? not the end. mean, venture firms are very expensive to start because you need an investment track record and you need to spend a lot of money to get registered with the SEC. You've got to build this thing. You've got to hire a team. You've got to have a fund administrator. Like you've got to do audits. Like, and we're a mostly institutional firm. So there was a lot of capital required to sort of launch the firm.

But no, you can be a successful former operator or you could have worked at a VC firm and been an analyst or been an associate or been a principal. So that's one way. Or you could work at a corporate venture firm. So there are a lot of sort of different ways into this arena. OK. And so what about those non-technical people? Maybe they've got... I'm just thinking, OK, I'm thinking about somebody I literally know. They work at a very fancy law firm.

They kind of have some startup ideas, but they might not do them because basically it's quite hard. But they're also quite interested in kind of in this world of venture. They're definitely not technical. mean, they're a lawyer. Lawyers are technical in a different way. And so that person might then want to explore something in investment. So what would you say to a person like that?

Because, and actually I should caveat that, let's say that this person wants to get more into the operator VC bit, not go and work at a massive bank on corporate finance because that path is already open to that person. Phenomenal question. I'm going to give you an answer that's going to blow your mind. So in a world of AI, if we all think of our earned secret, right, you have it, I have it.

Sophia Matveeva (23:23.097)
as being something that is possibly horizontal or vertical, legal is a vertical, right? So that's a vertical within. That person could very easily go out and find AI driven opportunities that are relevant to law. So let's say that person came to me said, what should I do? would say, great, go find early stage or growth stage, legal oriented technology companies and invest in them, or go and spin up an SPV

a special purpose vehicle and get other people who think like you do other attorneys to invest in that company. SPVs require very little capital, if none, and you can also attach fees to that SPV and you can attach returns to it. So in that scenario, this person is taking what they know that no one else does, finding opportunities that are unique to their vertical skill set, finding people who might want to invest, even if it's $5,000 each.

rolling that into an investment vehicle and then investing at almost no cost. It's kind of go back to entrepreneurship essentials, which is find a problem that you actually genuinely understand, not that you've read about, but find a problem, really get to know that problem and then go about solving it. So if you're a lawyer, there are lots of problems that could be solved by AI. Get on with that.

Don't sit there, you know, reading TechCrunch thinking, okay, I don't know what this is, but I'm going to learn on the job. It's like, well, entrepreneurship and investing are hard enough if you've never done any of them. So if you're trying to also learn a completely new problem, completely new sector, which is going to be overwhelming. So promise, there is a terrible rumor that I have heard and I'm, you you don't have to comment on it, but I'm just curious what you think. So I've heard that there are MBA graduates who

basically really want to get into venture. And so they literally start startups, you know, kind of not really caring whether the startup goes anywhere. But like I've heard that this is a thing from reputable sources. And then their aim is to do this startup for a couple of years. So it looks legit. But then the aim is to basically become a venture capitalist because now they've had operating experience. Have you heard of things like this, you know, this outrageous thing and

Sophia Matveeva (25:48.544)
whether you have or not, what do you think of this? Would it work? Sure, a lot of things could work. But if you think about it... completely unethical, I think. Especially if you're raising people's money, it's unethical. If you're just doing it for yourself to get the experience, I think that's kind of a different thing. I don't love shortcuts. I'm a person who believes in go get the reps. And I say that to my portfolio companies, like go raise money, go fail on it, go do it 50 times.

Sophia, as a woman and a person of color, I've had to talk to a lot of investors and gotten a lot of nos. And it's such a great experience because I have so many reps in doing it that you could wake me out of my sleep and I could give the pitch for it two companies ago or any one of my portfolio because I've done it so many times. Let's talk about the ugly secret adventure that no one talks about. Here it is. Capital is everywhere.

And so founders get to choose from whom they want to take money. So when you hang on a shingle as an operator led VC, the real talk of that is you're telling the LP, people are going to trust me, entrepreneurs are going to want to work with me because of this experience. Sophia, we have some portfolio companies that literally only want to work with operator VCs.

I mean, that's what I tell all of my students who actually do form companies. I say that if you're going to raise money from anybody, like when you have this choice, avoid the bankers. And I'm sorry, bankers who are listening to this, but you guys are just, you need to learn some operator stuff. Okay. Now I'm bad reviews, but that's okay. I'm willing to die. Well, not die, but get bad reviews for this course. You have that conviction. have that conviction. And I would agree. I would agree. So.

It changes everything. So I have a couple of operator BCs I love working with. We come to decisions faster. We get on the same page faster. Like imagine when I make an introduction, I made an introduction this morning to one of my portfolio companies who's going to take part of its engineering team offshore. I was able to make an introduction to someone that I've worked with who does that. I've worked with this person multiple times. So I'm not just like LinkedIn with this person.

Sophia Matveeva (28:14.512)
I can say this is their strength. These are the areas I've leveraged them. This is what they know. This is how they work. So I can give this to my portfolio company in a way that a person who's simply commercial just can't. And so there's no way to shortcut that. That comes from being in the arena and doing the job. And so I love operator VCs. I love them because we just have a different set of experiences. We've led every team inside of an organization.

And that makes us more empathetic, but also more surgical in the guidance and the advice and the connections that we can make. We've done it. I mean, I agree. think there's absolutely no other professional experience in the world such as running a company. I, somebody who's running a bakery chain probably has more in common with somebody who's running a tech company and a law firm.

than even people just in their fields who don't have that the buck stops with you experience because that experience is sometimes exhilarating, but often absolutely terrifying. It's terrifying, yeah. Well, thank you so much. I loved talking to you, but what I have also been loving is your LinkedIn feed because there are videos of you saying clever things and short snippets. I believe there's also YouTube channel.

Is that correct? Yes, we have a YouTube channel and you can link anyone there. I'd love for them to see it. Like my goal in this world is to work with the most dangerous founders. And so I think you're a dangerous founder. It's a person that has earned secrets, works hard, is efficient, but you don't expect to be aggressive and winning and focused and capable. so whoever's listening to this, if that fits them,

and they're building something in enterprise AI, reach out to us. We'd love to hear from you. Awesome. Well, thank you so much. And I'm going to go and be dangerous now. Have a great day. Cheers. Bye bye.