Our very own Amy C. Waninger has the honor of chatting with Arlan Hamilton, founder and managing partner of Backstage Capital and author of “It’s About Damn Time,” which was released TODAY! Arlan went from homeless in three years to running Backstage Capital, a venture capital firm that solely invests in companies founded by women, people of color and LGBTQ entrepreneurs. She graciously shares a bit about why she started her fund and wrote her book, talks about what it is about under-estimated talent that she thinks makes them a great bet in business, and she tells us how she gets herself into the right mindset to walk in and own really intimidating rooms. Check the show notes to find out more about her book!
Interested in her new book? Check out ItsAboutDamnTime.com.
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Zach: What’s up, y’all? It’s Zach with Living Corporate, and listen. Really excited to bring the episode that we have for y’all today. For those of y’all who are in the know, when you talk about venture capital, when you talk about inclusion and equity within the venture capital space, you know who Arlan Hamilton is, okay? So I’m not gonna steal any of Amy C. Waninger’s thunder, but I just want to do, like, a quick thank you and shout-out to Arlan for being on Living Corporate, and really excited for y’all to check out the episode, because the next thing you hear, they’re gonna get right into it, so I just wanted to make sure I gave a little bit of context that you’re gonna be listening to Arlan Hamilton and her talking about her latest book as well as her company, Backstage Capital. ‘Til next time, y’all. Peace.
Amy: Arlan, thank you so much for joining me. How are you today?
Arlan: I’m doing pretty good. How about you?
Amy: I’m doing well. So we’re recording this kind of in the midst of all of this coronavirus craziness, and the episode will be released on your book launch day, on May 5th, and so if you can, just project forward to book launch. How are you feeling?
Arlan: Well, I’m probably feeling the same way I’m feeling today, which is just a few days prior, which is incredibly excited and honored that I have the opportunity to even have a book coming out and coming out on a publisher, and it’s just been a really great experience so far. I heard so many different stories from different authors of, like, how their experiences have gone in the past, from indie to published, and mine has just been really great.
Amy: That is fantastic. And the book is wonderful. I got to read an advance copy as part of your launch team. I enjoyed it so much. And a lot of the questions I normally ask in this series you’ve covered in your book, and so I want to make sure people go there, but one question I did want to ask you about is what has surprised you the most about the venture capital space? Now that you’re on the other side of it.
Arlan: I don’t know if it surprised me, but it’s been kind of reinforced that there’s just–money is a tool, you know? There’s no one who is more important than the next person. And yes, there are some people who have a little bit more power, a little bit more strategically have placed them in places with more authority, but really there’s an equality that I still believe in, and it drives me to do what I do, and it’s why I started my fund. It’s why I wrote the book “It’s About Damn Time,” because it felt like–one of the things was it was about damn time everybody realizes that we’re all on this spinning rock together and that just because you’re a venture capitalist doesn’t make you any better than the next person.
Amy: Definitely. And you talk about in your book the statistic that’s jarring to me, that while white men make up about 30% of the population in the country, they get about 90% of capital investment. And your fund is a step in the direction to kind of undo that math and to make the playing field a little bit more equitable. How is that going? Like, do you feel like you’re at the point where it’s starting to shift, or do you think that there’s opportunity for more people to come in and do what you’re doing and build this space a whole lot bigger?
Arlan: I think both. I think there has been absolute change in the last five years, four and a half years since I started Backstage Capital. It was a completely different playing field back then, and that was only a few years ago. So I absolutely see change. Obviously it’s not fast enough. It’s not enough. So there’s plenty of room for better change and for more change, and that’s where I’m excited about the future and about–one of the things in my book is about empowering other people to understand that they can join, you know? They can still join this technical revolution and all of that, because there’s just so much more left to do. There’s so many people who are doing it too. I don’t want to ever say that it’s only me. I mean, there are plenty of people who are black or brown [and?] women, who are investors, who are trying to change those statistics for the better. But yeah, I think if I hadn’t seen some change for the better I wouldn’t have been able to keep going, and so I’ve seen it. Most of it has come from individuals taking the reins and saying, “Look, I’m not going to wait for something to come save me. I’m going to put this into my own hands, and I’m going to start a company or continue a company that perhaps is bootstrapped or that has more revenue [and that?] employs people, and I’m not gonna only count on these few select guys who have a bunch of money.
Amy: You know, it’s interesting because right now–and I know that you just recently interviewed Mark Cuban and he said now’s a great time to start a business, ’cause when people panic you double down, and when people are comfortable, that’s when you should panic, right? What industries do you see right now in the midst of what we’re dealing with with coronavirus, what industries do you see picking up a lot of innovation right now?
Arlan: Well, of course the ones that are for the moment, right? So for instance companies that are selling products that are really helpful right now. We have products in our portfolio that when we first signed up them to our accelerator last year people laughed. They said, “Why do you have a toilet paper company in your portfolio? Aren’t you a venture capitalist?” But we saw that they were doing things in a more sustainable way. They were saving tons and tons, literally, of trees every year, and they were fun and they had a great marketing strategy, and today they can’t keep up with the demand, and they’re doing it in a way that’s more sustainable, which is really fantastic. So you have companies like that. We have a company in our portfolio also from the accelerator called Tambua Health that allows doctors to test for lung diseases using a smartphone. And of course last year we just thought, “This is really amazing, and we want to see what it can do,” and today now it’s of course going to be very helpful during the age of coronavirus. So I think, like, you’re seeing a lot of health tech companies that are gonna do well if they can revamp. You’re seeing companies that are manufacturing other things, that are now saying, “Let me manufacture some PPE,” some personal protective gear for health care workers and essential workers, but right now and in the future I think you’re gonna see a lot more education companies, things that are content-driven online, and then the infrastructure to make that easier for people to get to and to see it. And of course people are talking about “What’s the future of work going to look like?” And I don’t know if we know yet. I don’t know if the last four weeks or six weeks or three months can tell us what the future of work will look like. What we do know is that it will be different from what we came to be used to in the past.
Amy: Yes. I think that we’re seeing, you know, right now a lot of accessibility that was built–infrastructure for accessibility that was built for people from the disability community that is benefiting all of us now, and I am hopeful, to your point that the future that we’re building is more accessible by design and not by legislation.
Arlan: Absolutely, and there are so many people who can take that into their own hands today, and I hope that that happens too, because honestly, we can’t wait around for someone to make things right. We have to do things ourselves, and things are better–you know, they say, “Let me just do it myself.” You know, “If I want it done right, I’ll do it myself.” Let’s do that. I like that vibe, you know? Let’s do it ourselves.
Amy: You said in your book several times when you’re looking at founders you pattern match for grit. And I wanted to ask you, because, you know, knowing your background, that you started this fund when, you know, you didn’t really have a place to live. I mean, you were experiencing homelessness at the time. You know, grit is just all there for you. I mean, you have built something from nothing more times than I could count in the book, and I’m wondering, what is it about under-estimated talent you think that makes them gritty or that makes folks a better bet in business?
Arlan: They’re a great bet. We’re a great bet. I think if you are someone who is underrepresented and underestimated, it doesn’t seem weird or out there or strange to you to figure things out, to get yourself out of a bad situation, to get creative when you’re facing for instance, like, the rent is due and you’re like, “Okay, well, what can I do to make a couple extra hundred dollars that’s legal and that is, you know, a little bit–” So can I use this other talent that I have? But in the world of Silicon Valley, if you think about that same story, one of the biggest stories that ever came out of Silicon Valley–and I remember reading about when it when I was homeless and just starting out. I read about Airbnb, and I read about these three guys who had this amazing idea to put a blow-up bed on a floor and charge people for a conference to come in and have bed and breakfast. And on top of that, when they were looking for money and they didn’t have it, they created–because they were designers by trade–they created these cereal boxes that looked like Obama and John McCain, and they sold those, and they sold, like, $50,000 worth. And I remember reading that and people were losing their minds over how ingenious it was, how absolutely nothing–they had seen nothing like that, and I thought, “I’ve done that at least five times in a major way in the last 10 years of my adult life.” Like, I’ve at least done it five times in a major way so I could avoid bankruptcy, avoid being on the street, avoid all these things, and I just think we as women, people of color, LGBTQ, disabled, I think we all have to, on a day-to-day basis, have to figure out a survival mode for ourselves because we are faced with so many things, whether they be big things that are easy to point out or the papercuts that I talk about, which is you get a papercut, you don’t go around screaming about it, you know? But it hurts like hell. And it happens to you. It can happen to you and people don’t necessarily believe it, but it’s happening to you. It’s this oppression that’s given to us in papercuts, and so I just think because we’re already built to figure things out–I mean, it’s not like it’s a great thing. I’m not happy that we have been so put into these corners where we have to find our way out, but we have. So that manifests itself in some really great ways sometimes. Sometimes it’s negative. Sometimes we feel like we have to do things that are not okay, that are not legal, that are not moral, et cetera, et cetera, but more times than that, most of the time, you just see some really highly creative things. You ever met someone who gets in trouble a lot and you just say, “If they could just apply that to this other thing, they would save so much time and heartache, because they would probably be, like, the Hacker of the Year in Silicon Valley.” That’s how I feel about most people.
Amy: Yeah, that’s how I tell my kids. I’m like, “Use your powers for good. Stop getting into trouble.”
Arlan: Yeah, exactly.
Amy: So one of the things about grit that you note in your book, you talk about hustle culture and how pervasive it is, and I know you’ve made some decisions now that–and I don’t want to say that you’re on the other side because I know there are always more places that you want to go and, you know, you’re always wanting to take your work to the next level, but you’ve gotten to a place where you’re not as hungry maybe as you were, you know, early on, and you’re taking some time to evaluate your priorities and scale back some of your commitments and really focus on self-care, and I’m wondering, if you were talking to the you of the early days of Backstage Capital–which was only a few years ago–would you have the same advice of “Step back and, you know, let go of some of the hustle,” or would you tell 5-Years-Ago-Arlan “No, keep going.” You know, you don’t–
Arlan: Well, let me answer that. I don’t know if I can answer that question exactly because I don’t look at it that way. I do more today than I’ve ever done in my life when it comes to work, and that says a lot. What I tried to get across in the book and what I’ve tried to get across for the past year or so is that I’m not doing less, I’m working smarter. So I absolutely would tell the person five years ago and ten years ago to take better care of myself, for sure, and that’s what I’m doing, but when it comes to the stakes, when it comes to the responsibility, the pressure, what’s at stake here is the highest it’s ever been, so I just don’t know if I can answer that question as it was stated because I don’t feel like I have kind of pulled back. What I’ve done is recalibrated and repurposed, and I’ve said instead of me knowing exactly how much a stack of paper from Office Depot costs us, I am going to spend that extra 7 minutes that I would have taken to learn that to put into a phone call with one of our portfolios. Maybe it’s the 20th phone call of the week with a portfolio company, but it’s one more that I may be able to make a right introduction or think about stuff. And I spend a lot of time thinking and strategizing. I’ve been doing that from very early on. I think it’s important. I think it’s part of our jobs as leaders to take a breath and strategize. So on one hand I absolutely feel like I’m doing the most, especially with even more going on now and a smaller team now, unfortunately, because of the coronavirus, but on the other hand I’m always gonna advocate for taking good care of yourself and looking at it from a bird’s eye view and saying “What do I need to be doing, and what am I doing right now? And do they match?” And if they don’t match, something’s wrong. We have a mantra right now at my fund that I started just a few weeks ago when things got really scary. I said, “If it’s stressful, we’re doing it wrong,” and that–you think about it and that’s so simple, but that’s helped us, like, make a lot of decisions. “Wait, is this stressful? ‘Cause we have enough stress in our lives right now as a world and as a country. Are we gonna add stress that we don’t need to?” So it’s helped us to say no to certain phone calls and to a lot of responsibilities that we don’t need to have on our plate right now.
Amy: It probably also helps with how you allocate the work within your team. I think a lot of leaders struggle with that, to realize that just because they find a task odious or draining, there may be somebody on their team that, you know, they live for that kind of work.
Arlan: Exactly, yeah, and it’s an art, not a science, and it’s something that I’m working on still, but I’ve gotten much better over time at delegating, and I think–you think as a leader you have to figure everything out and you have to be the smartest person, you have to lead your tribe into the fight. Hey, I mean, you’re not–Ursula Burns, who used to be the CEO of Xerox, the first black woman to be at a Fortune 500 as a CEO. Worked her way up from secretary, I believe. She told me in a phone call last year when I was really stressed out–she yelled at me. I mean, she was not doing tough love. It was just tough. She said, “If you are the only person that’s generating revenue for your whole team, you’ve effed it up. You are doing it wrong. Figure out a way that everybody pulls their own weight,” and “You are doing a bad job.” She said that to me. “You’re doing a bad job if you’re this stressed out. It’s not something to be excited about and proud of. You’re doing a bad job if you’re this stressed out.” So that just, like, slapped me around and I was like, “Wow, okay. On it.”
Amy: Yeah. That had to be hard to hear but very relieving at the same time.
Arlan: Both, yeah. I just took it because I love the source, you know? I look at the source when people are giving me advice. If it’s somebody who is anonymous online who’s cussing me out and saying I’m doing a terrible job, I just don’t give it any weight. If it’s someone like what I just described to you, I give it some weight and I say, “Okay, let me think about why she said that to me and why she gave me her time to say it.”
Amy: That’s very good advice. One of the points that you make in your book is that we all have the right to be in any room we want to be in, and that’s a very difficult thing for some of us to internalize because we’ve been told our whole lives, you know, “Sit down. Be quiet. Be nice. Don’t be pushy. Don’t be aggressive.” What’s something for you that fortifies you before you walk into some of these really intimidating–what would be intimidating for most of us–rooms, right? How do you get yourself into the right mindset to walk in and own that room?
Arlan: I do two things. One is I think about the people that, like, being successful in the room would positively affect. I make it more about them than me. Once I do that, that’s a really great way to walk into a room. The best way of ever–like, I have learned over almost 40 years–this is it, this is the secret right here… you have to be okay with the outcome that you don’t win the negotiation. So if you have something that you’re going in for that’s really, really something that you want really badly, if you tell yourself–and I do this all the time–if you say to yourself, “Okay, it’s okay if I don’t get this. It’s truly okay. I’ll have a backup plan. I’ll have some other thing I’ll do. It’s okay if they say no.” You’ve completely taken control of the situation. So you go in caring. You go in trying, but you also go in where their no doesn’t knock you to your knees, and there’s something about that in a negotiation where I’ve been able to talk to millionaires and billionaires and get what I want because what I want because I’m okay with “losing,” quote-unquote, the deal.
Amy: Fabulous. And if you can do that with the number of zeroes after the deals that you’re looking at, the rest of us can probably do it with the number of zeroes in the deals that we’re looking at, right? [laughs]
Arlan: Yeah, it’s powerful. It’s very powerful.
Amy: It is. Arlan Hamilton, author of “It’s About Damn Time” and venture capitalist and just Twitter queen, thank you so much. This interview will just be the highlight of my podcasting career. I have so enjoyed talking to you.
Arlan: Oh, thank you. Thank you so much. You’re very good at it, and I appreciate you, and I hope that your listeners will pick up the hard cover at ItsAboutDamnTime.com. You can pick up the audio, which I read, or the e-book. Whichever, whatever tickles your fancy. It’s all there.
Amy: Get them all, because you’re gonna want that audio-book in the car on the way to the negotiation, and you’re gonna want the hard cover by the bed so you can read from it at night and get it into your subconscious before you go to sleep, and you’re gonna want it on your Kindle too because that’s where you can highlight everything and go find your notes later.
Arlan: Well, there you go. You’re hired. [laughs]
Amy: All right, sounds good. [laughs] Thanks, Arlan, so much, and congratulations on your launch. This is huge.
Arlan: Thank you so much. Appreciate you.