Carla Harris: We here at Access and Opportunity are hard at work on the next iteration of this show. There will be a lot that’s new, but the heart of the show will always be uplifting the voices and work of those pushing a path forward towards a more equitable future. But before that comes, we want to revisit a few past episodes that are particularly relevant today.
2024 has been a big year for passing the torch — at the Olympics, in politics, and even here at Morgan Stanley. With leaders in so many fields taking on new challenges, it’s a great time to talk about a foundational playbook point for Access & Opportunity: the power of mentorship.
In July of 2021, we heard from Maya Penn, a young entrepreneur of color who started a sustainable clothing shop called Maya’s Ideas. For Maya, mentorship came in the form of Phyllis Newhouse, the founder and CEO of ShoulderUp Ventures, a fund dedicated to supporting women entrepreneurs.
When I spoke with Phyllis three years ago, she was broadening financial equity as the first-ever Black-woman to lead a SPAC, an alternative to the traditional IPO process.
Fast-forward to today and the next generation is still faced with rapidly changing complexities, from an information gap that makes it hard for women and people of color to help fill tech’s talent shortages to the volatile effects of climate change. Fortunately, our guests have dedicated their careers to solving these problems.
Never has the need for the Mayas and Phyllises of the world been more urgent: women who have made it their business to be at the forefront of opportunity — and change.
Today, Maya’s shop is still running strong, and she continues to use her platform to advocate for solutions to the climate crisis. Phyllis continues her work through ShoulderUp.
Surrounding them, the ripple effect is at work as rising women leaders continue to reach back to lift-up the next generation of problem solvers and innovators who will shape the future of business and beyond. Take a listen.
Maya Penn: I was always someone who wanted to really build something myself from scratch.
Carla Harris: This is Maya Penn, who started her first company at just 8 years old. Today on Access and Opportunity, we’ll hear from Maya, and later, from her mentor, Phyllis Newhouse, and Isabelle Freidheim: two ladies who made headlines with their alternative to the traditional IPO process.
Isabelle Freidhiem: It started off really with, at its core, bringing women to the table of what is a true economic opportunity, which is really what has been lagging.
Phyllis Newhouse: Women tend to have founder-itis. We have this thing called founder-itis.
Carla Harris: Welcome to Access and Opportunity, I’m your host Carla Harris. And we’re telling the stories of individuals working to drive change within their communities. We want to provide our listeners with context about racial inequities and share tangible examples of how ideas around access and opportunity are being made real every day.
On today’s episode, we look at special purpose acquisition companies, or SPACs, which provide an alternative source of funding to growing businesses. I’ll speak with Phyllis Newhouse and Isabelle Freidheim, who created Athena Technology Acquisition Corp., the first SPAC led entirely by women. But first, we’ll hear from Phyllis’ mentee Maya Penn, the founder and CEO of Maya’s Ideas, about her business journey and the importance of reaching back to help others.
Maya: When I was four years old, my dad showed me how to take apart a computer and put it back together again.
Carla Harris: Maya has always been multi-talented and driven, like many Black female business owners, the fastest growing group of entrepreneurs in America. But Maya is also unique, most notably in how early she started.
Maya: I then built my first website when I was 10 years old in HTML. I coded it myself.
Carla Harris: Maya started her first business at only 8 years old, a fashion company called Maya’s Ideas.
Maya Penn: I really just took my passion for the natural world, for art and design and for entrepreneurship and combined those into starting my own business.
Maya: I wanted to really be able to help reshape the way that we do things, help reshape certain industries.
Carla Harris: Maya’s hook was slow fashion, the idea that ethical and environmentally conscious clothing manufacturing can result in longer lasting products that ultimately benefit everyone.
Maya Penn: I started at a time where sustainable fashion was not really a mainstream topic at the time, but there was still a pocket of consumers that wanted to shop sustainably, even through their wardrobe. And so I had to simultaneously, you know, introduce my company to those consumers and also educate consumers who were not even aware of the impacts the fashion industry had.
Carla Harris: As Maya’s business grew, she began looking for investors.
Maya Penn: So in terms of communicating with investors, that definitely was an evolution for me because I spent so much time focusing on how to communicate with the consumer base, then I basically had to completely shift my mindset to get into the mind of a VC, to get into the mind of an angel investor, to figure out, you know, really what they are looking for because, you know, they're not someone who's just trying to buy an end product. They're trying to invest in the creation of that impact and then eventually, you know, getting something out of it by, you know, being a partner with you.
Carla Harris: Finding the right partner is hard for a young entrepreneur, and even more so for a Black woman. As of December of 2020, only 93 Black women had secured $1 million or more in funding for their business.
Maya Penn: It really is reflective of the numbers around how, black women are very underfunded within the business world. That's a reality that I have lived. Despite how successful my company has been, it still has been very difficult to have the right kind of people come to you and want to invest in you. It's definitely the issue that I have personally faced, but I'm still, really looking into those alternative methods of funding and also seeking out funding from sources that really are interested in greening their portfolio, so to speak, that really want to focus in on diversifying the portfolio of of entrepreneurs and companies that they invest in, not just because it's the right thing to do, because it opens up so many different doors and opportunities as well.
Creating that financial equality is really crucial for a lot of my goals in terms of trying to give back to my community and being able to reach back and focus in on bridging those like those financial gaps and those financial divides.
Carla Harris: This is a thought shared by Maya’s mentor Phyllis, a pioneer in cybersecurity and the first Black female CEO of a SPAC. With over two decades of military service under her belt, Phyllis is no stranger to breaking barriers. She just wants other women to feel the same.
So, in 2017, she started a program called ShoulderUp with another boundary pusher: award-winning actress Viola Davis.
Part of that program includes mentoring, like Phyllis with Maya.
Maya Penn: Phyllis is someone who really does embody using the experience you have, the time, the talent you have to reach back and help other people and especially other young people that are coming up in that same space. There's an acronym that she speaks to which is called R.O.C.. And so basically the R is resources. The O is opportunity. The C is connections. You have to continue to shape that upcoming generation of that industry.
Maya Penn: For me, the true definition of success is not only reaching your own goals, but reaching back and helping others to achieve their goals and, you know, really embodying that mentality that we really spoke to, you know, reaching back and, you know, using your experience, your expertise and your knowledge to help make an impact on those journeys because it is so worth it to do that.
Carla Harris: When businesses like Maya’s need investors, they have a range of options, but even with options, women and business owners of color often have trouble securing partners. Phyllis Newhouse and her partner Isabelle Freidheim are combatting this problem by creating Athena, the first SPAC with an entirely female board of directors.
I sat down with them to see how they plan to chart their course since launching in March of 2021.
Carla Harris: Phyllis, first, I want to congratulate you on becoming the first Black female CEO of a SPAC. So before I go further, what does that mean to you?
Phyllis Newhouse: Well, you know, Carla, when we -- Isabelle and I -- first got together, we did the research and realized there have been no women of color to lead SPACs. You know there weren’t really a lot of women in SPACs that were women of color. And so then we also found out that there had only been 21 women to ever take companies public on any exchange, and there had never been a woman of color to do it. And so for me, it was not just about changing the game, but it was more about changing the industry and not being the only and the last one to do it. As our VP Kamala Harris said, “I won’t be the last,” -- that’s how we really felt. To me, it was a deep responsibility to do this right and to have a successful SPAC because we wanted more women of color to enter the space.
Carla Harris: OK, so now, Isabelle, you got your start at Lehman Brothers and then Invesco’s private equity fund in London. So how did that foundation in raising institutional capital influence your path and then in that with telling us exactly what a SPAC is? Because before we go forward on this conversation, I want to make sure that our listeners are with us, that we level the playing field so that everybody understands what a SPAC really is.
Isabelle Freidheim: So thank you, Carla. My background in the financial industry led me to see that there was an opportunity among business founders that we knew and companies that were willing to go public but choose a slightly different path, is what led me to assemble this. But why women specifically? It started off really with, at its core, bringing women to the table of what is a true economic opportunity, which is really what has been lagging. You look in the 80s, the leveraged buyouts and then the high yield boom in the 90s and hedge funds and tech founding of companies, venture capital, I can tell you, I'm in the industry and there are very few women that found companies, still to this day, only three percent of the venture capital goes to women, even less so to women of color. And I didn't want to see history repeat itself. And I wanted to create an opportunity for women to come early on in the process at the table of what is a new financial product and one that we'll probably see has some staying power. To answer your question, what is a SPAC? It's a vehicle that will raise funds to take a company public that is an alternative to an IPO. And there are a few reasons why an entrepreneur who has founded a company may want to take his or her company public through a SPAC. One is that it's a much, much faster process. So you can get it done in a matter of a couple of months as opposed to seven months to a year, as long as it can take to make an IPO happen.
Carla Harris: Now, you both have started companies. So let's talk a little bit about your experience on what I'm going to call the traditional paths of financing, i.e., you already alluded to it, Isabelle, around raising those VC dollars or raising private funding. So talk a little bit about your experience. We'll start with you Phyllis, as you were getting Extreme Solutions started.
Phyllis: Well Carla, my background. So we need to talk about busting up the SPAC boy club, one way to do it is to bring someone like in my background, I didn't come out of private equity. I didn't come out of VC world, didn't come out of investment banking. I came straight out of the US Army. Twenty two years running a cyber espionage command out of the Pentagon, started a company from scratch from startup, grew the company to over half a billion, never took in private equity, no capital partners at all to this day. And then now running the SPAC with Isabelle. So, totally not the traditional route of what you see out here as a SPAC. I get asked this question all the time. Well, what led you to do a SPAC when you didn't take your company through a SPAC? There were very strategic reasons. I can tell you now from this side, it would be very difficult for those SPAC pursuers to come to me in the way that I was before, because now I understand more on the other side of SPACs.
Carla Harris: Do tell, Phyllis, do tell. So what was it about their approach to you that made you say, "well, shoot, I might as well do this myself?” And what is it now that you are careful not to do when you’re thinking about being on the other side of that coin?
Phyllis: Well, Carla, I would tell you one of the things that was a turnoff, I would say to me when most SPACs were pursuing is that they had no one at the table that had the level of expertise to understand the business. And so we talked to so many SPACs and said, “What do you understand about cyber?” -- “Well, we really don't know a lot about cyber, but…”, you know, so that was a big problem because, you know, you're going to think you're going to market with someone and they don't understand your business, don't understand growth, don't understand really the obstacles and roadblocks that cyber companies have as well. And so for me, it was a dial it back moment and say dial it back, understand what these SPACs were really about. What better way to do it that to go find a partner like Isabelle, OK, [laughs] who, we coached, we coached each other along the way and it really brought value to understanding what a SPAC could mean on the next iteration of where Extreme Solutions goes.
Carla Harris: Well, I'll tell you what's an interesting playbook point. And that is that one could argue that for some people, the SPACs were clearly a financial play to find companies that looked like they were high growth companies to put into this vehicle, called a SPAC, and offer it out there to investors. But for you, as the entrepreneur who was looking for a great partner, somebody to invest and expand your business, that vehicle wasn't necessarily the right way because they didn't even understand the business. So it's important for entrepreneurs to understand that all dollars are not created equal. There's a dollar, and there's a dollar, and there's a dollar that has a multiplier effect. So be careful when you're raising money or when you're thinking about vehicles like this, because they may not be with partners that can actually markedly advance and grow your business. And I would say that that's also an interesting implication for investors that those who are sponsoring this SPAC, you should do your own due diligence to make sure that they really understand the industry and the business and that they can be value added to the businesses that they're going to acquire. Is that a fair way to articulate that playbook point?
Phyllis: One hundred percent and I'm sure Isabelle will share with you on the back end of this. When we went to SPACs, I mean, target companies to talk to them, why they received us so well. And it was all about the strategy we put together from the beginning.
Carla Harris: So Isabelle, you have a point on that point?
Isabelle Freidheim: Yeah, it was indeed, the concept was very well received and it was frankly refreshing because, to get back to your original question on how alternative financing, the experience that I've had myself with raising capital both as a venture fund and as an entrepreneur. But it's such a cliche. But there have been so many times when I've been the woman in the room with a male partner at the table, and even though I was running the company, people would ask questions to my male partner and I would speak, present to the entire company and every question was directed to my male partner. It's just so true. And that was frustrating. But also what's frustrating is looking at the stats. So there's been a lot of progress that has been made for women, obviously, and for minorities. But people are very quick to put a woman on a board and it's great, but it's not enough because it doesn't unlock a true economic opportunity and a position of empowerment where you can use the playbook that you just described and continue to be a leading figure in that new product. So this is really what we look to create here. We had a hidden agenda where it wasn't just about the financial opportunity, which is a good one, but it was about bringing more women, flooding the market with women. And we have a large group, probably unnecessarily large. But I just got so excited about bringing more and more women. And I'm really hoping that this will have ripple effects and that, you know, our group will then all become second timers because they will have had a successful SPAC behind them and that will hopefully generate more opportunities for women.
Phyllis Newhouse: Yeah. And you know what, Carla? I also think that if you look at a lot of the women-led businesses in the US, and I know this because when I look at most of the women today are saying, tell me what a SPAC is and they're looking at this as an alternative to the traditional way of going public. And I would tell you that there are more women that I am talking to that are running sizable businesses that could go public, just as large as my business, and I would tell you that I think you're going to see more women led businesses go public as a result of this.
Carla Harris: Go public in general? The regular way?
Phyllis Newhouse: absolutely.
Carla Harris: What do you think? The impediment was before, Phyllis, because it's not like there's a lack of information on what an IPO is or what the process looks like.
Phyllis Newhouse: I could tell you what my problem. You know, women tend to have founder-itis. We you know, we have this thing called founder-itis. It's like like I'm going to hold on to this baby until it dies. You know, I'm not going anywhere. And we don't look at those alternatives because no one's talking to us about them. You know, sometimes that could be a lack of advisors about public markets. I mean, just there's a lot of things. If I look at my WPO chapters, we’ve had conversations about this recently -- how is it that you can get to five billion in revenue and have never considered going public? And I would tell you that there are more women now today talking about SPACs and the alternatives then there's ever been.
Carla Harris: And how did how did you two meet?
Isabelle Freidheim: We met through the WPO for which Phyllis is a board member.
Carla Harris: For our listeners who might not be familiar, the WPO is the Women’s Presidents Organization, a group that connects women with multi-million dollar businesses.
Phyllis Newhouse: When Isabelle and I started talking about: how do we form this team and how do we bring women in and who are those women? And, you know, and I can tell you through the power of the networks that we all have, the moment that you begin to leverage those networks is where you get real change. That's where the real change happens.
Carla Harris: Yeah, there's power in relationships. And I tell people all the time that you have this valuable tool that's already in your tool chest. Just call a network, call relationships, but you failed to leverage them. They're no good if you don't activate them. But so often, especially as women and people of color, we're worried about reaching out and asking for help because we're afraid either that somebody will think we don't know that which we should know or we are afraid that they'll turn us down. And those aren’t good reasons not to activate your network. Not at all. So you did use, I'm not going to call it the old girls network because I don't use ‘old’ in the same sentence that I'm speaking. So the seasoned girls network, sounds like you leveraged it.
Phyllis Newhouse: Yeah, we did. And if you look at the dynamic board that we put together, Carla, Isabelle and I was talking about this one day and it was just funny. It's almost like when you're finished and everything is complete and you sit back and you talk about what we were able to do. And Isabelle said to me, she said, “Wow, look at this amazing board we put together. You know, you have the first Black woman billionaire to take a couple to a billion, first woman to ever sell her company for two billion, the first woman of a president of a university, first woman to be at the SCC,” and so we looked at that board and the advisors of the spans across industry, from private equity to investment banking to institutional investors to founders to operators, turnaround CEOs, you name it. That's what we brought on the team. And that is why I think when we entered the market, we was a force to be reckoned with.
Carla Harris: What you guys have done and what you ring. That bell was a very proud moment for many of us that that are out here. No question. I have one personal question to ask you, Phyllis. What did your time in the military teach you about leading such an entity?
Phyllis Newhouse: Anybody that knows me know that I live my life based off the value card I was given. And whatever that value card is, you know it. You play it and you play to win. And I remember being in the military working for some work for so many generals before and leaving the Pentagon. And I just remember knowing that value card today that I left and that value card, I always say, “If you had to play poker with some of the most skillful players in the world sitting at the table, what card would you throw out?” The moment that you throw that card out it is game over. Well, I know what that card is. My card is leadership. No one will out lead me. And because of that, that secondary card becomes a negotiator. You're going to need that on the team. And Isabelle and I talked about this. We all have power. We all have value cards. If we look at all of our team members in the SPAC, not one of us brought the same value card to the table. And that's one thing that the military taught me, is play your value card to the best of your ability, but play that card, the card that, you know, will accomplish the mission and that, you know, will win the game. And so for me, that's why I didn't really worry about, Carla, that I didn't come off Wall Street. That's why I didn't worry about, did I come out of the investment banking? That's why I didn't worry about, because I knew that if you if you put a team around you and you put people together and everybody has that value card, you have a winning team anyway. All you have to do is just lead the team.
Carla Harris: And what's one big misconception about SPACs that we could dispel right here, right now?
Isabelle Freidheim: I think there's been this concept of, you know, SPACs going through this filtration process, if you will, where the quality of the sponsors has been somewhat questionable and by quality, I mean, I think what's on the table is the execution capabilities, the ability to assess the company and its future performance and its growth potential. So I think that is what we expect to see now when the SPAC market is a lot of that will eventually go away and it will probably be more branded type of SPACs that will remain in the long term.
Carla Harris: Phyllis, anything that you would add to what you would say to an entrepreneur who is getting approached by a SPAC that they should think about?
Phyllis: One thing I'd say to entrepreneurs, do your homework on what public readiness is you have to do that because a lot of them even now, as I look at what we're going through, when you get to the due diligence phase, when you get to all the external partners, there's going to be really picking your company apart. A lot of folks have not done that first assessment and say, you know, are we ready for the public in the public market? So I say, do your homework.
Carla Harris: Yeah, well, that was one of the things I almost brought up when you were speaking earlier, Phyllis, about why more women hadn't gone public and they didn't know about it and now they're thinking about SPACs. I would argue that even those who might have been approached because your argument was that some of them had never heard about it, had not been approached. I think that there was certainly a little bit of a bias in the marketplace in that advisers who might have been approaching women led businesses would talk about the stringent requirements, if you will, of being a public company. The fact that there is disclosure, there's certain rules and regulations that you must adhere by, the market is unforgiving and only it judges you quarter by quarter. Therefore, someone who had owned a private company for a long period of time might have easily been deterred because you sort of said, wait, suppose I want to make this investment. I don't want market telling me that they can't wait two years for this investment to pay off. I think it's a good investment and I'm going to do this to grow my company. And so there might have been a feeling that you had less flexibility in the eye of the public market as a public company than you did as a private company. So I think there might have been a little bit of fear, if you will, around that, too, if my read was correct.
Phyllis Newhouse: Yeah, that's one of the symptoms of founder-itis.
Carla Harris: Yeah, OK. That was under the umbrella of what you call ‘founder-itis’.
Phyllis Newhouse: That was, that's one of the symptoms.
Carla Harris: I'll take that. I'm going to take that. Well, ladies, we've come to that point in the conversation where we we have our tradition of Access and Opportunity is called a lightning round. And this is where our listeners get an opportunity to know a little bit more of you about as women. And so we asked a few questions that are more personal in nature than they are in business. And I ask for the first thing that comes to mind. And I'm going to start with you, Isabelle, if that's OK.
Isabelle Freidheim: OK.
Carla Harris: City or countryside,
Isabelle Freidheim: I am new to the countryside and to country life, and I am now sold.
Carla Harris: OK. All righty. Winter or summer?
Isabelle Freidheim: Winter
Carla Harris: Coffee or tea?
Phyllis Newhouse: [laughs] I’m going to laugh at that one.
Isabelle Freidheim: Well, it depends on the morning.
Carla Harris: Oh I thought you were laughing because she takes the coffee like I do - in the vein.
Phyllis Newhouse: She does. [laughs]
Carla Harris: OK. If you had a talk show, who would you want to be your first guest?
Isabelle Freidheim: Christine Lagarde. I'm a huge fan.
Carla Harris: OK, one word to describe your legacy.
Isabelle Freidheim: Empowerment of women.
Carla Harris: All righty. Phyllis, city or countryside?
Phyllis Newhouse: City.
Carla Harris: Winter or summer.
Phyllis Newhouse: Summer
Carla Harris: Coffee or tea.
Phyllis Newhouse: Tea
Carla Harris: Telephone or text.
Phyllis: Telephone
Carla Harris: OK, if you had a talk show, who would you want to be your first guest?
Phyllis Newhouse: Michelle Obama.
Carla Harris: OK, one word to describe your legacy.
Phyllis Newhouse: Inspirational.
Carla Harris: All right, well, Phyllis, Isabelle, thank you so much for taking the time to speak to us today. Thank you. Thank you, ladies.
Phyllis Newhouse: Thank you, Carla, it's been fun.
Isabelle Freidheim: Thank you.
Carla Harris: What a privilege it was to bring together these three strong voices today! Each of these ladies is charting the course for others by creating the first-ever women-led SPAC and becoming a CEO at just 8 years old. You know, they’re setting the tone for the rest of the industry -- if you’re not going to give me the opportunity to be in this space, I’ll make that opportunity for myself.
And how do you do that? Well, you activate the relationships that you do have. You don’t shy away from asking for help. And trust me, I know that doesn’t come easy. Type-A personalities -- the one deficit that they do have is around asking for help. But nobody, nobody, can do it on their own. You will need other relationships in order to maximize your success in whatever endeavor you are pursuing. The bar for excellence is set so high for people like me and you to prove ourselves.
You know, I just loved Phyllis’s phrase, ‘founder-itis’. When we pour ourselves into something, we want to be with it to the very end. Founder-itis is real. But, people like Phyllis, Isabelle and Maya are showing, through action and advocacy work, that it is possible to engage in the traditional and non-traditional paths of investment to grow your business beyond what you might be able to do alone.
I want to thank Maya Penn, Phyllis Newhouse and Isabelle Freidheim for joining me on this episode of Access & Opportunity.
What did you learn today from Maya, Isabelle and Phyllis? Send us your thoughts at carlapod@morganstanley.com. We would love to hear from you. Subscribe to Access & Opportunity on Apple Podcasts or wherever you listen. Thanks for coming along.
