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ARLAN HAMILTON

Finding and fueling the overlooked tech founders

MEGAN ROSE DICKEY: Tonight I’m chatting with Arlan Hamilton, founder and managing partner of venture capital firm Backstage Capital. Backstage Capital primarily invests in people of color and other underrepresented people in tech.

First I want to talk about some of the recent events of police brutality in this past week, as well as the role that tech can play in an upholding white supremacy, that maybe some people haven’t thought about or realized before. So what has the last week been like for you Arlan? ARLAN HAMILTON: It’s been a lot of things. Right now as we speak, I have helicopters whizzing by and distracting 38 THE COMMONWEALTH

me—police helicopters, because of protests right downstairs, which I’m very happy to support and proud of that are happening. It’s been a lot; I don’t think I’ve ever been reached out to by more people at once, including my wedding and the book coming out, which were two big days where it’s just been a lot of inbound and a lot of mostly positive and mostly good. But it’s a lot to have this point of point of view right now, because so many people are looking to me to speak on certain things or for an opinion about something— which I’m happy to give, as you probably probably know. [Laughter.]

The first thing that came to mind when you said that was just like an inundation of thoughts from other people, of noise, physically physical noise just because of all the protests, and of emotion. I still consider myself one of the luckiest people in this, because of the augmented privilege that I have procured for myself, I am not forced to be in any situation that I don’t want to be in at this moment. And I’m painfully aware of that. DICKEY: Yeah, absolutely. You mentioned that there’s a lot of like a lot of inbound, and I’ve definitely seen you commenting on some things via Twitter. But I’m curious, like what what are people in the tech community kind of coming to you with? Are they asking for advice?

“I would say 80 percent of [investors] are reaching out to get some sort of online co-sign so they don’t have to do anything else.”

VENTURE CAPITALIST

Arlan Hamilton wants to do for other overlooked entrepreneurs what she did for herself: make them a success. From the June 2, 2020, Inforum online program “Arlan Hamilton: About Damn Time.” Part of our Good Lit series, underwritten by the Bernard Osher Foundation. ARLAN HAMILTON, Founder, Backstage Capital; Author, It’s About Damn Time: How to Turn Being Underestimated into Your Greatest Advantage MEGAN ROSE DICKEY, Senior Reporter, TechCrunch—Moderator

HAMILTON: Well, it’s all sorts of people in the tech community. It’s white people and all others; it’s investors, it’s founders, it’s a lot of journalists. It’s a lot of stuff. The white investors and founders, mostly women—let’s just say the white investors and founders— when they’re coming to me privately, most of it is, “Did I get this copy correct?” “Am I being insensitive by saying this?” “Am I doing this [correctly]?” And I kind of, I answer some of them depending on our relationship. And some of them, I tell them, “You didn’t get this message right. I’m not the one that needs to dictate what you say. You need to do more homework and all of that that we’re used to as black women.

Image by Sarah Deragon

It’s a lot of that. And then it’s a lot of other white people who are just heartbroken, paralyzed, don’t know what to do in this situation, and they don’t want to offend and they just really want to be helpful and it’s crushing them. This is crushing them in a way that I find very sincere. A lot of founders reaching out just to say “What next” And a lot of investors—I would say 80 percent of them—are reaching out to get some sort of online co-sign so they don’t have to do anything else. I have a nonprofit and I do a lot of philanthropic work, but I don’t do it for them. I’m at work right now. I don’t have time for that.

And then 20 percent or so, I kind of know when I’m about to get based on their first sentence. The 20 percent that I find to be the most sincere and helpful is “I’m not going to get this right. I want do something. How about we start with my pocketbook? How about we start there, tell me where to put the money and then tell me what’s next? Can we we talk?” It’s the people who think that I owe them something, owe them my time or owe them some sort of masterclass, and those are the ones that are not getting the responses most likely. So there’s also a lot of inundation. You know, if you reached out to me earnestly and I haven’t reached back out, it could also be that I just haven’t gotten to it, because I’ve gotten thousands of messages. AUGUST/SEPTEMBER 2020 39

DICKEY: It’s interesting. I’m sure I get not even a quarter of as many messages as you do, but I just noticed a lot more people reaching out in general and it’s just kind of me thinking Black people have been killed by the police for years, for centuries. What is it about this this time that is really making people want to reach out and maybe want to get more active? I don’t know what it is, but it just feels a little different. HAMILTON: I’ve I’ve thought about it. I kind of have a theory. It’s because most of us are stuck at either stuck at home or stuck somewhere for a long period of time. There is no delineation between “I am going to take the day off, cause I’m Black and I’m feeling trauma and I need to have a mental health day” or “Over the weekend. I protested and I’m coming back and letting you know” at your [work]place where 90 percent of the people here are white, it is, it’s like the world and the country has a front row seat to what Black people have to witness, take in and feel all the time. Before they were seeing some of it, but they were seeing it kind of protected by us, we were kind of blocking them from we’re shielding them from some of it. Now they’re seeing it, and they’re like, “He killed him! They killed him! Look what happened!” And we’re like, “Yeah, that’s what we’ve been saying.” And they’re like, “This is hurting me. I don’t like this feeling.” And we’re like, “Yeah, that’s what we’ve been saying.” And I think they’re able to experience it in a different way. It’s now it’s like a VR headset that the country is forced to be in because of COVID, and there is just in their face and at the same time, because we’re here and we’re not going back to work. I mean, we’re at work, but we’re not going into someplace— [A loud boom can be heard offscreen near Hamilton’s home.] Okay, I told you this might happen. I’ll be right back, okay? [Hamilton walks away from her computer screen.] DICKEY: Yeah, take your time. For those of you in the audience, Arlan told us ahead of this that there was an active protest around where she’s living. So she is just making sure that she’s safe and doesn’t need to go. So please just stay tuned and— HAMILTON: Man. Okay. I was able to hear you. What that was, I just saw a bunch of smoke and I’m on the 18th floor, so that’s what scared me. Um, but what that is is that there’s so many police helicopters, some of the protesters have been setting off fireworks and to make the helicopters get out of the way or whatever. They haven’t done it this

“Now they’re seeing it, and they’re like ‘He killed him! Look what happened!’ And we’re like, ‘Yeah, that’s what we’ve been saying.’”

“There are some people who are doing a great job at this, even though there is no perfect way of doing it.”

close before. That was too close for comfort. Like the conversation we’re having couldn’t be more real—but that’s what’s going on. DICKEY: On this topic of all the civic unrest and the police violence, how have you really felt about the tech community’s response? HAMILTON: It’s just a little hard, because you say the “tech community,” and that can mean so many things. To me, VCs [venture capital firms] are not necessarily part of the tech community. It’s just a separate thing to me.

The founders out there, I think are for the most part doing a good job. And then you have the allies and Black folks. . . .

I think there are some people who are doing a great job at this, even though there is no perfect way of doing it. And I think that there’s a disgusting silence from some people that just tells me everything I need to know. It’s funny, because a lot of the people who are being silent in an uncomfortable way were so vocal about [former New York City mayor Michael] Bloomberg specifically being a good candidate. DICKEY: To get more specific, when I said “the tech community,” I had a couple of things in mind—VCs specifically as well as [companies] like Facebook and Twitter. So maybe we can start with other VCs. What have you seen from them? Because I feel like I’ve heard some stuff around VCs saying “Okay, I’m going to spend like all of June, have a meeting with Black and brown founders.” And then that VC’s calendar just got booked immediately. HAMILTON: Good. I mean, I saw [investor] Jason Lemkin did that. I know Jason; I have nothing against him and I’ll tell him to his face I’m not going to throw a parade for that. I’m not going to hand him a cookie. Good—it’s better than nothing, and it’s absolutely better than ignoring us. You put your money where your mouth is. You treat us with respect. I love that. That’s fantastic. But I’m not going to sit around and start applauding when that should be the status quo. We’ve been saying that for forever.

So yeah, you see that and that’s, that’s like table stakes to me. Like I would expect nothing less than that. And anything less than that worries me.

You do have a lot of people stepping up. [Foundry Group venture capitalists] Brad Feld and Seth Levine got in touch with me very quickly.

Let me also say this: I want to make [clear] that I’m not some sort of godfather,

you know; it’s not like you need to have talked to me for me to think that you are okay with the Black community in tech. Backstage’s doors are open to investors who want to be introduced to founders, whether we’ve invested in them or not to want, who want to be introduced to other investors of color and Black investors, whether we are associated with them or not. Whether we get the carrier, not. That’s why we’re doing this. I can only go by my experience and what I’ve heard and what people are willing to tell me. But there are a great deal of people who are doing what I think is right. And then there are some who are just painfully silent or just . . . awkward. [Laughter.] DICKEY: Well, I can relate to being an awkward, but HAMILTON: That’s why they wrote Awkward Black Girl for both of us. DICKEY: Yeah. That’s true.

You mentioned that there are some investors doing good in these times. What does that look like right now? Like what would you say is like the best thing an investor could really do right now? HAMILTON: An investor who is not black? DICKEY: Yeah, yeah. An investor who’s not black. HAMILTON: I chose my words very carefully in the Tech Crunch article that I was just quoted in today, because I want it to be sure that people understood I was not saying we’re going through a national crisis, therefore you need to like write checks to us to make us feel better and to make yourselves feel better. I said you need to invest in Black founders, not every Black founder. And you need to keep your thesis and you need to keep whatever your standards have been. But that has always been some sort of barrier. Like we will not lower our standards to let women in—as John Doerr said, we will not do this, that, and the other; you don’t have to lower your standards. In fact, some of these Black founders are going to be lowering their standards to have a conversation with you. Okay? So the best thing that an investor can do is do their job, especially if you’re investing other people’s money.

If you are a venture capitalist, and yes, you may have 1, 2 percent in, but you’re investing other people’s money—maybe you have 50 percent in [and] other people’s money, it’s your job to look at these founders. You’ve been able to hide in the shadows and not do your job, because the boss hasn’t been walking around, ’cause your boss is in a different [place]. It’s not set up that way. But right now everybody’s watching. And there’s no tears for you. If you can’t find the pipeline, sure we’ll help you reach out. How many times did we have to say it and how many ways do we have to say it for you to understand we’re here? It’s not like we don’t exist. Could you have imagined that we don’t exist—is that what’s been happening? So when someone like Sequoia [Capital] that has billions and billions of dollars under management, and I’m sure they’ve invested in a Black founder—they would have to, I think with these odds, and they probably invested in a founder that I’ve invested in.

So I’m speaking for myself here when I say they’re like, “We will do better and we will strive to blah, blah, blah, blah, blah.” When I have reached out to them multiple times and offered my services in multiple ways and handed them the dossiers of multiple investors who are Black.

I know you were trying to get me to a positive place of “What can we do?” But I don’t know if you noticed, but I’m fed up. I was fed up when I was started, but I had this idea that the more work that I did, the more light that I put on founders, the better it will get. And the numbers are staying the same. And it’s taken like a national tragedy to get people to tweet something. “I’ll talk to black founders. I’ll talk to you now. Send me your best.” No, you go find them! Don’t have me send you your basket. Find them! DICKEY: I do want to want to bring up your tweet from the other day that was directed toward Silicon Valley investors. You said, “Haven’t Silicon Valley investors figured out that I have all the receipts and don’t care about decorum? You can’t jump out of the taxi at the end of the inclusion marathon and act like you’ve been running in it the whole time. I see you, bruvs.” HAMILTON: Yeah. That’s actually a term of endearment for me. I was trying to get them at the end. DICKEY: So back to the tweet. You mentioned that that was actually geared toward Sequoia. HAMILTON: It was inspired by the Sequoia tweet that I saw from them. It was not only about them, but I commented with a tweet to Sequoia where they said something on the long lines of a very innocent tweet of like “We have to do our best to make sure that there is inclusivity in our portfolio” or something to that effect. I’m just looking at that like, “Wow, you literally just did the

“It’s not like we don’t exist. Could you have imagined that we don’t exist—is that what’s been happening?”

ARLAN HAMILTON

MEGAN ROSE DICKEY

“Black people have been killed by the police for years. What is it about this time that is really making people want to reach out and maybe want to get more active?”

“Something feels different about this. It’s like we’re this close to burning it all down and starting over, and we don’t want to get there.”

“Venture capital is going to be disrupted. This heyday for them—those days are gonna be over.”

bare minimum. Didn’t you? You just did the bare minimum.” I don’t care that there may be one or two scouts who are black. I don’t care. This is not enough when you have billions and billions under management. It would have been fine if you hadn’t tried to get your brownie points, your cookies with your parade by tweeting about that or responding to someone.

So I just said, “Stop playing. And if that’s the case, respond to me.” How often, how many years have you been talking to Sequoia? I also said that [Sequoia Capital partner] Alfred Lin has seemed to be the only person who cares from Sequoia—man; I use my words purposefully. I said the only man, because yes, there are some junior people who are women who have reached out over the years, but it has to be at the top. The partners are the ones who make the decisions, the partners, the people who have the GPs [general partners] and the LPs [limited partners] make the real decisions. But their LPs are our health companies and things like that. So it has to come down to the GPs for me. DICKEY: Since you mentioned limited partners—question from the audience: How can I invest as an LP in Backstage Capital? I’m assuming you aren’t seeking other investors, so who else is operating with a similar focus on underrepresented founders? HAMILTON: The last two of our funds have been listed as general solicitation funds, which is rare for funds. That’s the reason I can answer this question in this forum, and it’s the reason that I can talk about it in press. You can reach out to me at arlan@ backstagecapital.com; in the subject, say “LP inquiry” or however you want to put it. And I’d be happy to take a look. It’s as simple as that. You can go to backstage capital.com and take a look at our portfolio and, and use the contact form there.

What was the other question? DICKEY: Assuming you aren’t seeking other investors, who else is operating with a similar focus on underrepresented founders? HAMILTON: I don’t think that’s what they are saying, but the, the answer is you can reach out to me and I’d be happy to take a look at what you have in mind. DICKEY: I wanted to circle back. You were mentioning that other VCs are talking about wanting to now, in light of these events invest more in Black and brown founders. It all just feels familiar, I suppose. I wonder like how, how we can actually make sure that people actually take real action and like lasting action, as opposed to just kind of saying, “Oh, well, in this moment when I’m stuck at [home]and don’t really have anything else going on, I’m gonna tweet about talking to more Black founders and I’m gonna maybe take a meeting.” But then like six months from now, it’s like, “Okay, where’s the check?” And I guess that’s maybe a note for myself to follow up with all these people. HAMILTON: Well, yeah. And as a journalist, you have a really great position, because you can ask those questions, you can hold them accountable.

Something feels different about this. It feels a lot the same and that’s why I’m fed up, but it also feels a little different, and it feels different because of what I talked about earlier that the whole thing feels different. It’s almost like we’re this close to burning it all down and starting over, and we don’t want to get there. So I think people are like, “Okay, we really should listen.”

When it comes to accountability, a lot of founders are finding the way on their own. I just had an entire class earlier today; I have a course, so I have live talks about it. All we talked about was bootstrapping in the way of a MailChimp or something. MailChimp—$600 million a year, no venture capital. And many other examples of that. Venture capital is going to be disrupted in a way, no matter what. This sort of heyday for them where they have that $200 million to $2 billion fund and just eat off of the management fee and do whatever they want and have meetings at strip clubs and pretend this and this and that; pay somebody $30,000 a year to make their optics look good—whatever; those days are gonna be over. And it’s going to be people who are really walking the walk who are going to survive that.

I just feel like your LPs are watching, because they now have to be held accountable. [Even before COVID] I’d already gotten started [seeing] where the LPs, the people who are representing LPs, reaching out and saying, “I guess we need to start looking your way, looking at funds like yours. What do we do?”

I’m like, “Okay, well, you are five years too late, but let’s go.” So there’s no way that LPs aren’t paying attention, right? Most of them are paying attention right now. So I think journalists can do a really great job of holding feet to the fire. I think LPs who are investing in other funds—like if you’re

investing in $100 million dollar fund or $250 million fund, you have so much power. Don’t let anybody tell you you don’t have power with your $500,000 commitment, because if you get together with other LPs and you say, “Look, I want to do this. I think you do have a great track record, but I don’t see this diversity.” It doesn’t make sense to me. Can you have a mandate that says, I want my money put a certain place? You know a percentage? And it really doesn’t have to be all at once. either. It just needs to be market change. It needs to be noticeable.

If 0.2 percent of venture capital goes to Black women, [in] 2019 $130 billion deployed—not raised, but I believe deployed. Of that $260 million or so went to all Black women in venture and that was the same amount of money that Bird, the e-scooter received in their last round of funding. You want to add insult to injury again? You want to keep this up, or do you want to see [Foregepoint Capital founder] Don Dixon go out and get another million dollars from the crowd, bypass you altogether, have whatever exits he’s going to have. Those are going to add up. I know it doesn’t sound like much right now. It’s gonna add up. DICKEY: I would imagine that a lot of people tuned in right now are pretty familiar with, with your story of how you got into Silicon Valley, but in the event that they’re not— HAMILTON: Everybody else. [Laughter.] Yes. Megan, what would you like me to talk about? Yes, it was the San Francisco airport. Yes, it really was food stamps. DICKEY: I guess I’m wondering, why tech? You were in the music industry before, but what really attracted you to tech and what made you want to be part of an industry that you already knew was pretty problematic and that had major diversity and inclusion issues? HAMILTON: I wasn’t coming into tech itself to disrupt anything, except for the dating market. Originally, I used to have a website called your Daily Lesbian Moment. And for five or so years, I had 50,000 people who would come and read it every month. And in that time I match-made for like dozens and dozens and dozens of couples and hundreds of friendships and all of that through comments and through eventually a series of specific matchmaking. We called it Juliet and Juliet. And when I was on the road in music, I just said, “Oh, the Silicon Valley thing, like what’s Ashton Kutcher always talking about, okay, let me look at

“It really doesn’t have to be all at once. It just needs to be market change. It needs to be noticeable.”

that. What’s Ellen [Degeneres] always talking about? Okay, let me look at that.” It was originally, “I want to start Juliet and Juliet as a tech company that has one real genuine match made per day.” So it’s not about the quantity. It’s about very beautiful content and it’s one match made every day, so I can say I had 365 weddings or something like that.

And it was in the research for that [that led to my VC career]—because I have to research things, I probably could have been a journalist. I like to research and delve into things and we’ll ask questions and why, why, why? And it was in the research for that, where I said, “Okay, I better know about fundraising, because I’m about to go and ask people to put money into this on top of the work that I’m going to do. That’s when I came across Kathryn Finney’s Diane Project. I came across two or three articles, and way, way down at the bottom it said we have a diversity problem.

My first band that I worked with was five people on the road with me, a Norwegian pop punk band that I spent months with at a time; my wife is white. I have no problem with white people at the surface. That’s not what that was. It was like, these statistics [on diversity] are out of control. Are you kidding me? What can I do? Because I felt I could hack my way into raising [financing] for myself. I knew I could, because I had done so much that was so wacky and off the side. I knew I could, to what end? Okay, I get my million dollars or whatever; I have this company; it’s working. Do I get to raise again? Now I’m going to be talking to people at a later stage, or they’re not going to be looking at me.

And on top of that, more important, where’s the competition going to be? I’m not going to see the people that I roll with. I’m not going to see women. I’m not going to see people of color here, queer people here, because they’re not getting any kind of second look. It was almost like I was going to sign up for a sports team that I wasn’t excited to win the match. I couldn’t see myself reflected at all, getting too far.

The whole point of that is that I felt like that needed to be figured out before going in on my own. Wall Street or our public markets were going to be too late to make any difference in my opinion. I didn’t have any money of my own. So I said, Let me take this around and see if anybody gets this.