#2 Arlan Hamilton: How to Break Into Tech and Build Wealth with Startup Investing

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This is a podcast episode titled, #2 Arlan Hamilton: How to Break Into Tech and Build Wealth with Startup Investing. The summary for this episode is: <p>Arlan is the Founder and Managing Partner of Backstage Capital, a venture capital firm dedicated to minimizing funding disparities in tech by investing in high-potential founders who are people of color, women, and/or LGBTQ. Backstage has raised tens of millions of dollars, invested in 200 startups led by underestimated founders, and has been featured in Forbes, Fortune, Wall Street Journal, CNN Money, Inc., Entrepreneur, and Quartz. Arlan also founded Runner, a talent operations startup that connects outstanding operations talent with inclusive companies. She also published It’s About Damn Time, her book detailing her journey from homelessness to venture capital. In today’s episode of Unvalley you’ll hear Arlan’s incredible story and learn some of her best strategies that have helped her succeed in venture capital, startups, and tech, despite enormous challenges.</p>
Warning: This transcript was created using AI and will contain several inaccuracies.

Because what I see is the opportunity is that let everybody else going and run to these places that they think are the mechas and and have their fun. But we can as Angel Investors and as as part of the tech ecosystem, we can we can live like kings and queens and our local areas and we can really catalyzed Innovation and be part of that that Foundation.

Welcome to on Valley the show for leaders who want to unlock their full potential and plug into the biggest opportunities in Tech in startups. Be on Silicon Valley, air host. Matt hunckler, CEO of powder keg. And I'm excited to share that today. We're talking to none other than Arlan Hamilton Arlen is the founder and managing partner of Backstage, capital of venture capital firm, dedicated to minimizing funding disparities in Tech, find best high potential, Founders for people of color women. And or lgbtq back seat does raised tens of millions of dollars invested in 200. Start up blood by underestimated, Founders and has been featured in Forbes, Fortune Wall, Street Journal, CNNMoney ink, entrepreneur and chords among many others are also. Founded higher Runner a talent operation startups, that next outstanding operations, Talent with inclusive companies. She also published, it's about damn time for book detailing or Journey from homelessness to venture capital.

Today's episode on Valley, you're going to hear Arland incredible story and learn some of her best strategies that have helped her succeed in venture-capital startups, and Tech, despite enormous challenges, and Aliens brought you by Powder Keg. The only private member Network focus on supporting tech companies, and L. In fast-growing communities, be on Silicon Valley recorded interview during a virtual event, who's to buy Powder Keg, and we're sharing it publicly for the first time just for you here, on the on Valley podcast. Let's dive in Ireland, thanks for being here today. Thanks for having your man, absolutely.

So excited to have this conversation. We do have the stage chat going on right now for this particular event. So say hello. Hello from Michael Scott in Indianapolis Indiana, I don't think that's the same one from Dunder Mifflin paper company but who knows Ireland? I'm so excited to talk to you because I'm a big fan of your book. I've been following you ever since we actually met in Nashville Tennessee at a conference call 3686 years ago. Yes and so moved by your work. It's very inspiring and I think you're just really tapping into so much untapped potential that we have here in the US and globally. Of course had your book at about damn time. Could you maybe tell us what this book means to you and what you want readers to know.

Sure, yeah, well, thanks again, everybody. And it's great to see a lot of familiar names and meet you all. It's about damn time. Which by the way, Will Smith think they bleach the dam and so it sounds like it's a much more racy book you do. The subtitle is how to turn being underestimated into your biggest asset manager to your greatest advantage and it's at the part Memoir horse. So it tells you kind of how the how I got from where I was just a few years ago which was pretty much Penny listened and had food insecurity is in at the same time, very curious and they had an exciting kind of life that I that I led to how I how I got here to the 160 companies, just really breaking into the Silicon Valley and & Beyond and then it's part Business book because it's very important.

You go, if you go to any any bookstore in Dior mainstream or any airport bookstore and you look in the business section, you see very very few black women on the covers of these magazines and books and you know somebody had inspired me and so I wanted to make sure that we were that this was on it was on currency which is random House's business and brand and nothing else. And then it's part time. Inspirational people, dancing music, self help stuff too, because I really did write it for, I wrote it for the reader. And I know that sounds so corny. But I did, I wrote it for me, 10 years ago and for the people that I get to meet around the country and around the world. I've been really fortunate to meet over the past five years or so many great moments in that book as soon as a lot of really hard challenges that you've overcome is there. One of those moments that stands out to you as maybe one of the lowest lows but one of the biggest breakthroughs,

I mean, when I think of the lowest lows, I first think about like, living at the airport which wasn't good and I don't recommend it and I don't reckon anybody think that that's, you know, where they need to be rock bottom, but it was like I was in San Francisco. So I would see, tech people I recognized from online walk past me and I was on the ground. And so that was that was definitely, you know, figuratively and literally bottom rock bottom and not knowing how long that would last. And so that's been a big part of what has made it possible for me to come to West and covid-19 Titanic, Montecristo Crystal, right? It's like I had, I kind of I've I've been where I didn't know how many more days I was going to have to mark on that wall. And so after I cried after I mourned, what was, what is happening with covid and still today, more in that I also understood. Okay.

I can probably make it through this because I know what I'm certain, she looks like. So that's that in itself is a breakthrough. And, and, and help this year, not be as hopeless as I think it could have been. And then, and then because I can feel that way I can, I can I can spread that as much as possible. Other times have been where a lot of people are counting on me for Capital and I had had it lined up. You don't know last 33 years, I'd lined had it lined up and something happened on, on the other end, where it fell through some way somehow under a lot of controlling and felt like, so many people work. We're not going to be just disappointed, cuz it wasn't about the vanity of it is more like they're counting on it for their own livelihood. And to know that I had to go back and say, hey didn't come through like we thought it would. But to, but to the point of making the book there, there been so many times where I had the door slammed in my face.

Only to find that the right around the corner, was a better room with a better opportunity of bigger window or whatever. Right. And so a lot of times that breakthrough doesn't happen on the same day that the that the Rock Bottom happens but it it's around the corner. And a lot of times I do things that you do when you run into those challenges you hit those rock-bottom moments to break through and keep going.

Yeah, I think I mean it's just taking a long time. It wasn't like I was really good at this the whole time but it's I am I just

I guess I just kind of it have an internal coach know that. I I just got to speak to. I also speak to the reality of the situation, and then the surrealness of a situation. So I think, being practical and realistic and also having a sense of humor about things has helped his self. Save my life multiple occasions. You say, save the day and so it's just like how surreal is this that you can go flirt with a lot of times when I have like really bad moments in this, I think I love you. May be able to relate to this. It'll be behind the scenes but in like online or something to look like things are going really well. And so it's almost like I can just sit back and feel like it's so funny that people that people that are like, I wish I had what you have. And then I have to say, well do you want the heartache to do? You want all of this that goes with it at this end? So just being kind of realistic has been helpful but it's always feet on the ground head in the clouds. It's always a healthy mixture of both.

I love that beat on the ground. Head in the clouds, you mention your internal coach. What kinds of things does your internal coach say to you, that keeps you going Wednesday, you're living at the airport or the funding doesn't come through. What would it entail coach say to you? That keeps you going well, these days with repetition and, and, and, and the algorithm being able to know, to, to, to recognize it is, it says there's going to be something else that was supposed to happen that this, this is why this didn't happen in an electrical can contend that that maybe Spirit spirituality for them that maybe something else for them. But for me, that's where it would. It would it comes from. And then it's also,

Look look what you done. Like look where you got yourself and really take stock of that. Cuz I don't spend every day. Thinking about that, I think about that very. Are you only use that for the fuel? I need to stand back up when I fallen. So I I say okay, you were able to do all this other stuff under the circumstances, and it's incredible. And let's go, let's use that. Let's keep going. It's also helpful to think about what people can't take away from you. When something like this happens, they can't take away. The accomplishments of the past, they can't take away your reputation, what? You've meant to people. They can't take away the impact of the Catalyst catalyze in that has been done. Like this is when things are really bad and I kept it, like, Drop the Bomb right at its I say, if I were to stop today,

I could still be proud and that if I need that, I'll go to that.

I love that that that sense of security and kind of being okay with how things are a lot of power from that. And I see a lot of people in the chat here who seem to be an enormous fans of yours. Not surprisingly. I've got a good question here from Brandy coats from New York City by way of the Midwest. She asks five years is a short time to go from living at SFO to where you are now, what got off the ground and what was the inflection point for your growth?

I was fueled by in this is going to go into the main question. I answer, I was fueled by the black and brown and women in lgbtq Founders that I was meeting at the meeting for years and knowing about, and I knew that backstage needed to exist for them because there was, it was undeniable and unquestionable at that point. So I was always buoyed by that at the end. So that kept me going. The turning point of the turning points are, there are few, but one of the turning points was was working very diligently. And then, you know, staying the course talking to the founders and then and then one day an angel investor named, Susan, Kimberly and put in the first capital, she gave me Capital. She said, use half of it to invest in somebody else and you have to invest in yourself in no uncertain terms. You know, and and and that really kicked things off and then I was able to like, slowly, but surely bring in one person. The next month.

Couple months went by and it was, you know, but when I because I had been, so it had been. So like, I don't want to say rock, bottom over and over again, but it was just like so close to the Bone. I had no money.

Up to that point.

I was not about to ever be in that position again. So when I got, you know, the 25,000 to invest in someone else, already knew that was going to be, because I had been working with Founders for years. And I got the 25,000 to reinvest in myself. I didn't know. I didn't even go out for a fancy dinner or anything to celebrate. I just was, I literally, what I did was I was in the parking lot of a, of a, of a Mountain View Grocery Store where there had been using as my outdoor office. I went into, once I got that word, that was going to have the wire. I went into that store. I got the grocery store, Sushi and a cupcake and I celebrated by myself and then I got on a plane to Los Angeles where I knew I could kind of set up shop and that is how I kind of

Stepped into the immediate moment of we're in business and not the what do I do now? Because he was so pivotal to having this trajectory when you mention Justin Timberlake as that first investor that put money in clearly you raise so much more funding since then and helped next Sounders, just so much funding. It seems like a large portion of your career is dedicated to creating more access to Capital. Why is access to Capital so important, whether you're in Silicon Valley, or you're in Nashville, Tennessee,

Well, money isn't everything. I can tell you that someone who's never who hasn't had money in someone who's had money, but it isn't everything for sure. But when you're thinking about, when you're starting these companies, and when you're growing companies, your competition in, a lot of cases has has access to Capital. I have different points of view about where you get that capital. I don't think venture capital is the end-all. I think bootstrapping is incredibly effective and can be very lucrative for yourself holding onto Equity. I'm a big fan of it as how. I've lost my new company in the money side project has been bootstrapped when I have the option to raise Capital outside and, you know, it's, it's also historically. We've just we as under-represented. Founders have just dealt with so much left. We've done so much more with so much less. So, when I was getting started almost a decade ago, looking at these stats, I'm seeing that black women got .000 2% or something like that, Adventure capitalist

Got up a little bit, you know, two years ago 2018.

2018, I believe that $100 130 billion dollars in Venture Capital that was that was deployed and 250 million went to black women which is the equivalent of one round of funding for bird scooters.

So, you know, I can't, I can't have a serious conversation with it with a white investor saying know, why don't you just make do with what you have? And why don't you? It's almost like the Shonda Rhimes, you know? If you read The Hollywood Reporter Shonda Rhimes talks about how she Shonda Rhimes and she built ABC's Primetime as it is today, Grey's Anatomy, how to get away with murder accept and she was trying to get a ticket to Disneyland, which is Disney World, which is owned by a Disneyland. I think which is owned by Disney by ABC and Disney were owned by the same people and she couldn't get more than one pass. For some reason she called in say why can I get a pass and he said, don't you have enough is what was said to her don't have enough as in the millions of dollar contract. Was she makes a billion for them so no, the answer is no.

so that's part of it, too is part of it is

You know, so many Founders get to bill and it's not just a black or white thing. I, I recognize that 100% of multiple white Founders were like, where those checks were giving out cuz I tried, but it is true that we can all agree. I think we can. All agree that it is worse for black Founders. It is tougher for black Founders, and if it's tough for you, imagine what it's like if you were walking around in our, in our skin,

And there, it's just, you know, being on that level footing to say, what could be, what could be accomplished if they were given the same? We were given the same footing.

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What do you think is the biggest opportunity in Tech hubs outside of Silicon Valley in New York City?

Oh, I mean, just that the people, Innovation, that the perspective, I think that you do, I'm biased because I was born in Jackson, Mississippi, and I grew up in Dallas, Texas. And I think both are really interesting Dallas. It's just every time I go back, I can't believe how much it's grown. It was already a huge place but it is incredible. And I have a joint venture with Mark Cuban and so my family, most of my family like close family, still lives there. So I spent a lot of time. I expect it's been a lot of time there and growing that local ecosystem and then Jackson Jackson live in Jackson for just a little bit of time when I was a senior in high school and we were fortunately you know again homeless with it's been a pattern and I will stay with with family and I was as my senior year and I've been at the same school, all my life and Dallas it was very nice. Cool. And I went to Jackson to sign in and there was a fight in the hallway with a teacher.

Student while I was sitting in that thing and I found out that as a senior, you had to share books with your classmates. You couldn't take them home, you have to see it cuz I didn't have the resources and so just know that type of poverty and resource lack of resources and Jackson is just before black people and should know today. That a friend of mine, Ashley cephus born and raised in Jackson. Mississippi went on to become a CEO of a company that was led by a black woman in Atlanta partpic soul to Amazon. She then went on to work at Amazon on some of their what they're working on their AI. She's now A Millionaire along with Yul who's the CEO? She went back and now she has a 25 million-dollar development in. Downtown Jackson, Mississippi for tech for to be a tech Hub is all opening in 2021.

And so, because what I see is the opportunity is that let everybody else going and run to these places that they think are the mecca is in and have their fun. But we can and as Angel Investors and as as part of the tech ecosystem, we can we can live like kings and queens and our local areas and we can really catalyzed Innovation and be part of the foundation to incredibly exciting and in our lifetimes will never reach all of the potential there and it's incredibly inspiring. I'm so glad you shared that story because I think it just perfectly illustrates the example of untapped potential attack outside of Silicon Valley. And I know you're doing a lot more with your recent projects to tap into more of that potential backstage crowd is platform that you've launched to give more Angel Investors more High. Net worth individuals more access.

To a broader range of startups that are in these hi-yo. High-density High opportunity areas like Jackson, Mississippi, but all over the world. Can you talk a little bit about backstage crowd and how that came about this crowd is our our new Syndicate? We just launched it. Officially this year, we lost it in June and have been able to put together 10 deals of accredited investors. 1.6 million dollar rate Dollars. Raised the first day we did it is 500000 and 2 weeks. And this was really a reaction to a lot that happened this summer. You know, that happened in May with George Floyd. And that happened after that, where we were still. I didn't want to study went backstage to now be someone's ticket to of an apology, you know? And so there was a lot of that type of money that was kind of looking at us the number to type of dangling, money of which we know we're supposed to do something, but now you have to jump through these other Hoops after and tell

That's why you are worthy. Even though we were the ones that they should be emulating, right? So I said enough of that, I'm not going to do that with institutional so if they want to invest in as I can come along and I can ask him they can we can talk about it. Like you do adults over. Going to play a game and so I said about the crowd there so many accredited and non-accredited have two tracks. We have both tracks, right, but there's so many accredited investors who don't even know. They are credited who don't even know they can invest in and private companies. There's something you do you make $200,000 or more or three hundred thousand with your spouse. There's other ways to look it up to there. So many investors. Who could put that put $1,000 into a company where we might put a hundred thousand in and then, you know, about 40 people put in 2500 average and we have a $200,000 deal for a company and there are the terms that we've negotiated and it makes it easier. So if you're familiar with like a jealous or anything like that, that's the same kind of eye but it's on our own platform. So that's backstage, krowd.com for a credit.

And non-accredited investors and you can just sign up when you sign up for it. You'll get an immediate email. That tells you a lot of next. You do not next. Episode tells you a lot of information to reference. There's a FAQ on the site itself and we've had a lot of fun with that and I think in January we were going to really crank things up and it's going to be very exciting. One of the things I keep hearing about and have heard about over the last decade, but it seems like more and more is in the Forefront of the consciousness of its 2nd Street. Is that owning equity in companies is how you can generate true wealth in the tech industry and you've already mentioned one with a Founder, generating wealth, by starting several companies. This new development project in Jackson, Mississippi dusters now because of platforms like backstage crowd generating true wealth by owning more than we have right now. You see the doordash? You see Airbnb?

You slack, you see all of that happening and you hear all the stories of I put in $5,000 and now it's worth all this. Now, that is very rare, first of all, venture is risky and I said that to everybody, but the reason most of the people sing today, 7 years later, 5 years later, I put in 5000, it's because they were part of some, sort of a little close group. They knew they went to college with this person. That I knew that person or whatever they got in and that's how they're able to do it. If they, if you do that enough, you diversify your portfolio on Tech enough, you can have, you know, some outside return return. If you're, if you're diligent and disciplined and you go through a lot of steps, but the problem had been in the past before there was an angel list and all those types of platforms where you couldn't get into the deals to begin with. So then it doesn't really matter, but if we'd actually crowd, we have all types of companies that we spent the last five years, really working with, and, you know, in the trenches with. And there are some of those companies again.

Speculative and I'll risky, but there are some of those companies who could go on to be those billion-dollar companies that were talking about and because we're able to negotiate, those terms can be part of those terms. So that we were celebrating in two years and five years. And ten years, we're not celebrating siloed ourselves and saying, look at that stage, was able to do, we're saying we all got a slice of this. And I think if you do that enough and you diversify your portfolio and and and have a strategy, which we talked about in the email that you get, I think you can work towards that and you can also use it as a training ground for more direct Investments. Do you do this to to get your feet wet and then start creating those those relationships for more? I personally have the seven income streams and one of them is this and you know that old man. It's just it's, it's about, you know, I think about the doordash drivers.

And I think people going to be doing more and more of this in the future but it's one thing to be a doordash driver and to celebrate, but I would, I would rather that door Dash driver were able to put $1,000 down when they first smell when they first got in and have that Equity. That's worth now. What 10 or 20? Absolutely. I love that. So much of what you've done is help decentralized. The start of centralization of wealth in Silicon Valley and gives more opportune to more people to share in the upside. It doesn't necessarily mean less funding in the valley. It is just so much untapped potential elsewhere and this kind of innovation is amazing. So thanks for doing that. They also, if you're if you're interested in joining The Syndicate to get more information, sign up at Backstage crowd if you're not or you just kind of want to learn more about backstage, go to Backstage capital.com and signed up to our newsletter. We're going to have a big announcement the first week of January that I want everybody to be a

how to make sure you don't miss awesome. That's really good call to action. What are you most excited about for 2021 in Tech?

What am I most excited about? I'm just excited about all the in the potential of the crowd I think that

There's nothing there. No rules to say that venture capitalist are supposed to have. All the fun are supposed to be in, even if you are a VC and you, you know, your your family should be part of this your, you know, the other people here Network should be part of it. This is all for all of us. We all have inherited this and so us getting all of us getting the piece of the pie to me A6, incredibly exciting using our expertise, our insides are our resources, are time our confidence, all of that and pouring that into other Founders and just watching that, you know, watching those seeds grow over the next two, three decades, incredibly exciting. To me, it gets shook me out of bed every day and there's a link on my Instagram profile that the link treely link that you could probably copy and paste and put in the check. That would be that would help everybody get to that Will Smith. Thank you, thanks for calling that out and I'm really excited about that.

Trinity, too, I think not just

Not just for the early-stage but people that are already in it, they've been doing it. Maybe they've been bootstrap. And now they're looking to raise some Capital, there's just so much untapped potential. And I really just want to say thank you again, for everything that you have done, which you can't even lift it all off in half an hour, but thanks for the work that you're doing. And thanks for being here today, Adam Valley, but I really appreciate it and have a great rest of your event here. Looks really awesome. Thanks Arlan.

That's it for today show. Thank you so much for listening or watching. If you're tuning in, on YouTube, for watching the video version of this podcast. Huge thanks, Arlan. Hamilton for sharing her story and insights, with on Valley Community. Make sure you check out her exclusive Academy arlan's, academy.com, and our land. As I mentioned previously also had a great podcast named your first million likes, Sophia amoruso and Mark Cuban is a binge-worthy show and definitely worth checking out at yfm podcast.com for links to Arling social profiles and the other people companies and resources mention of his episode head on over to target.com and check out our show notes for this episode. Thanks for tuning in to on Valley, the show for leaders who want to unlock the full potential and plug in the biggest opportunities in Tech in startups, be on Silicon Valley. On Valley is brought to you by Powder Keg. The only private member Network focus on supporting tech companies, and L. And fast-growing, can you need to be on?

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Arlan is the Founder and Managing Partner of Backstage Capital, a venture capital firm dedicated to minimizing funding disparities in tech by investing in high-potential founders who are people of color, women, and/or LGBTQ. Backstage has raised tens of millions of dollars, invested in 200 startups led by underestimated founders, and has been featured in Forbes, Fortune, Wall Street Journal, CNN Money, Inc., Entrepreneur, and Quartz. Arlan also founded Runner, a talent operations startup that connects outstanding operations talent with inclusive companies. She also published It’s About Damn Time, her book detailing her journey from homelessness to venture capital. In today’s episode of Unvalley you’ll hear Arlan’s incredible story and learn some of her best strategies that have helped her succeed in venture capital, startups, and tech, despite enormous challenges.

Today's Host

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Matt Hunckler

|CEO, Powderkeg
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Nate Spangle

|Head of Community, Powderkeg

Today's Guests

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Arlan Hamilton

|Founder + Managing Partner at Backstage Capital