From food-stamp recipient to venture capitalist Arlan Hamilton is no stranger to pushing boundaries and defying other’s expectations.
As Founder and Managing Partner of the venture fund Backstage Capital, she is championing the unique value of what it means to be underestimated. Her fund invests in high-potential founders who are people of color, women, and/or LGBT.
Publications including Fast Company, Forbes, Inc., regularly feature Arlan for trailblazing a path for others to invest in underrepresented founders. Her story continues to make waves and is now being told first hand in her new book, It’s About Damn Time. The book shares the wisdom she picked up on her journey of building a venture capital fund from the ground up while homeless.
Her Agenda sat down with Arlan to discuss her remarkable journey to running her own venture fund, exceeding people’s expectations, the release of her new book, and the changing landscape of investment.
Her Agenda: Is there a moment in your career that you would say had the biggest impact on where you are today? If so, what was it and why did it influence you?
Arlan Hamilton: I don’t know if any one moment has had the biggest influence on me. There have been many, many moments. One that comes to mind immediately is the time I saw Janet Jackson in the front row at age 13, and it impacted my immediate situation and gave me a new outlook on life even as a 13-year-old. The experience did go on to influence the different moonshot ideas that I went after, including the one I’m working on right now.
Her Agenda: How would you describe your career path up until your decision to become a venture capitalist?
Arlan Hamilton: I wasn’t looking to become a VC. I became interested after learning about the disparities in the amount of capital and resources allocated between white men and everyone else, especially Black women. I took it upon myself to invite myself to the table and the room and try to do something about it. And so I wanted more resources and capital going into the hands of underrepresented founders and after years and years of research and development, I decided that venture would be the way to do it.
Her Agenda: I had the pleasure of meeting you at an AMA in New York back in 2017 and I remember being so intrigued by your use of underestimated in lieu of underrepresented. When did you make a choice to use this language and why?
Arlan Hamilton: It wasn’t my choice. I am very grateful we have amazing founders in our portfolio and in the summer of 2017, we had our two-year anniversary meetup with our founders at the time. KG Charles-Harris who is the founder of the company, Quarrio, in our portfolio stood up in a closed-door meeting and he asked, “Can we talk about what we are?” We started brainstorming and following his lead. It was his verbiage and he gifted it Backstage Capital. I was able to talk about this in my book.
Her Agenda: You have a background in the music industry and speak frequently about how your following of entertainment moguls piqued your interest in technology. How, if at all, does your background in the music and entertainment industry inform the way you invest?
Arlan Hamilton: I worked behind the scenes because I was on the touring side. It’s a very noble profession, but it is not fancy by any means, and you’re not rubbing elbows with the stars. In my position as a production coordinator, road manager, and then tour manager, all of those positions, all three of these positions, are all about people. They are about nurturing and dealing with tough love and, and all sorts of things. You handle the logistics of moving bodies, minds, and spirits of multiple people with multiple agendas. So you have different tiers of stakeholders really on a tour.
You are managing the main artist, of course, the money people behind the scenes and the engineers. There are people who do what is considered the grunt work as well as admin. In my position on tour, I had to learn quickly how to work with so many different types of people and also move them from city to city. Not any day was like the other, the only thing you could count on was that there was going to be something new to tackle. There are months and months of prep, and then 23 hours of really hard work leading up to 45 minutes to an hour of the most amazing kind of return on investment, the show.
Her Agenda: You released a book and launched a book tour that was followed by a global pandemic. How have you been able to navigate this windy road and what has been your biggest lesson?
Arlan Hamilton: In a 72 hour period at the top of March, I essentially watched a six-month book tour disappear. I watched six figures disappear from what was going to be the most lucrative year of my life in 2020 from speaking fees and other things that I had lined up. Then I saw the same thing happen to my company on our operation side. We lost all 80% of our operating income. All of that happened within 72 hours at the tail end of me recording the audio for this book in Austin. We didn’t know exactly what was going to happen, but we knew that it was going to be different and that I needed to get home immediately. I remember hanging up the phone with my team and looking at this nice hotel room that I was staying in Texas, where I had cut my teeth in the venture and the startup world and where I was from. I remember thinking, I have a book that is all about survival. It’s all about resilience. It’s all about adapting. I am the book. I tell the story, I am the story.
This is what I did for 35 years. I figured out chaos and crisis for 35 years. It was all incredibly disappointing and incredibly jolting. As I talk about in the book, I had to start kicking in my adaptability quotient. I had to start figuring that out. What I have learned is that I’m not hype. I always knew that I wasn’t but some people have accused me of being hype. They point out the fact that my stories are everywhere. They don’t understand the work that I do behind the scenes, and so it reinforces this notion. I don’t know many people who could adapt the way I did at the top of the year.
Her Agenda: In your book, It’s About Damn Time: How to Turn Being Underestimated Into Your Greatest Advantage, you discuss what it means to believe you can build something even when the odds are stacked against you. What is your hope for those who read your book?
Arlan Hamilton: I hope that people read it and understand that it is not just a book. I hope they walk away from it saying, okay, that book was about Arlan, one person, but that they understand and feel deeply that it is also about them. That to me is a win and that has happened over and over again. I can’t wait for it to reach more and more people. I want people to come away asking [themselves] ‘how can I push barriers that are in front of me?’ I hope that there is a generation of executors and builders, and people who have wind under their sails because they’ve read this book.
Her Agenda: What advice would you give to an aspiring diverse fund manager? Is there something you know now that you wish you had known to start out?
Arlan Hamilton: Please know why you are doing it. A lot of people who are starting funds or want to figure out how to break into VC reach out to me. They use that terminology and I have like a 30-minute call with them, and by the end of it, we have figured out that VC is not even what they really want to do. I wanted to get resources and funding into the hands of underestimated founders. That is my North star. VC was the tool and the lane that I used to do it, and there will be other lanes, there are other lanes. When you really get into it, you have to understand what you are trying to accomplish. And it can be,’hey, I just want to be wealthy and I think this is a way to do it.’ Even if that is the case, it is going to take you like 15 or 20 years before having an outcome like that. It’s like being a doctor or a lawyer almost. You don’t start out with an amazing salary and writing checks everywhere. If you do it the way I did it, you certainly don’t.
I wanted to get resources and funding into the hands of underestimated founders. That is my North star.
I have put all of my savings into this and leveraged everything for Backstage. It will pay off for me in multiple ways over the next two decades, especially since I will have outsized returns in multiple lanes. I will have wealth, I’ll have all of that, but it took the last decade to build the foundation. There has to be an additional part to this; you want to affect policy, you want to affect change. Maybe you really want to advance sustainability. I started a course on this topic because it’s a lot.
Her Agenda: Back in 2014, you wrote a Medium article titled, “3 Things I Was Wrong About…” and stated, “So I wanted to apologize to my readers of color who almost never saw themselves represented in my blog and social media presence as the gorgeous, sexy, valuable, amazing goddesses you all are.” What would you say to someone who has evolved and is aiming to rectify mistakes made?
Arlan Hamilton: The fact of the matter is that every single person has done something that they regret and didn’t realize they were doing. I feel like there’s so much energy right now that’s being spent on arguing between people who are on the same side, which is important to the healing process. I understand that, but if there is no path to resolution or forgiveness at the very least then what are we fighting for? That energy could be spent somewhere else, like getting a different person into the office, into the White House, or fighting with racists. It’s a fine line and complex. I know that I don’t know everything. That’s kind of the point, none of us do. I practice a lot of self-reflection.
I believe in people. I wanted to demonstrate to a lot of people that apologizing is okay. People feel like if they apologize for something, then they are admitting that they are a horrible person. I respond, do you think I’m a horrible person? If the answer is no then consider what it would mean to apologize. The three things that I listed were really bad, but one, in particular, was just horrible and another was just cringe-worthy. I had to admit I was wrong because it was true. I hoped that people would find an ability to forgive me and find understanding. If they don’t, I can understand that as well, you know?
Her Agenda: In light of George Floyd and the movement for Black lives, we have seen a number of statements and actions in the tech ecosystem aiming to address the lack of diversity in teams and the allocation of resources within the sector. What is your hope for the VC and tech ecosystem over the next few years/what do you think needs to be done?
Arlan Hamilton: It has to happen. It has to happen or the institution itself will cease to exist in a lucrative way for the people who are enjoying it right now. Even though it’s only been a couple of weeks that this agitation has happened within the tech investing and startup world, more has been done in these two or so weeks than I have seen in nine years.
It is making people ask what do we do? Where do we go next? And where do we go next is you, you allocate 13% of your funds to Black people in the U.S. You can start a fund that is for underrepresented founders. Sure. Go for it. You don’t have to, though, if you’re Sequoia or Andreessen Horowitz.
You don’t have to have a fund that is the Black person’s fund for Sequoia, but you can say we’re changing policy and we don’t see enough deal flow [from Black founders]. [When I have conversations with firms, I usually say to them] you all have a management fee and you can hire people, right? That’s how your business model works. They’re like, yeah, well, who do we hire? And I start listing Black investors who are well known to entrepreneurs. [More often than not] they have no idea who I’m talking about. So that’s where [they can] start. [They can] hire qualified candidates, and offer them what [they] would offer anyone else of that caliber. Get them writing checks, and ask for their opinions and give them autonomous abilities. There literally are things that these people could do tomorrow if they really wanted to.
Her Agenda: What is on your lock screen?
Arlan Hamilton: I have a picture from a couple of years ago of my wife looking out onto the bridge in Brooklyn. It’s from the living room of one of our investors. They let us stay there for a few days while we were visiting. It was one of the most beautiful homes I’ve ever been to. The way she’s looking out is a reminder we’ll get here one day, this will be us.
[Editor’s note: This interview has been edited for length and clarity. Headshot photo credit: Sarah Deragon.]