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Optimism, Leadership and the Future of Small Business with Arlan Hamilton

Yeah, I'm Marlon Hamilton. I am the founder and managing partner of backstage capital. We are a venture fund that invests in the best, some brightest, overachieving, underrepresented and underestimated founders across the country. Over the past five years, I have raised and invested about $20 million 200 companies led by underestimated founders. I'm also the author of it's about damn time, which is a book that chronicles how I got here. All of the methods used in all of the ups and downs with a little humor. Hopefully along the way, I'm also the host of the weekly podcast, your first billion. The hardest part of the pandemic was early early on when we really just didn't know anything. It was really hard to tell how long this was going to last, how deep this is going to be, how difficult it was going to be. And I think all of us felt really out of our element um really quickly though, like most entrepreneurs tend to do, I personally had to kind of pull it together and figure it out, esp...

ecially for the dozens of portfolio companies that we were working with a backstage just to be an example and to just be someone that they could call on. So um, you know, learning that I was resilient and that the backstage team was able to figure things out even under these incredible circumstances I think was really wonderful to learn. It was tough though because on those early first few weeks and into the summer we had to let some people go. We went through around layoffs, uh, we were already running on fumes before this hit us. And so for operations wise, you know, we had to, we had to keep the boat steering and going in the right direction. So we did have to lose some very, very strong people, thankfully they've all gone on to do some amazing things. They still work with us and other capacities and here we are, we're here to talk about it, which I think it was the right decision to do. I think more than at any point in my career, show just how vulnerable we all are as entrepreneurs. Um, even someone like me who has been through so much already and works with people who have, um, it was, it was really evident and for a while, uh, we had to make some really tough decisions, decisions, I had to make some tough decisions alone and it felt like I was on an island and none of it was fair, Right. No, no one was, there was no, there was no situation where everyone was going to win. And um, what I did ultimately was something I learned previous to this and other tough situations, which was I forgave myself really quickly, I had to forgive myself and um and to understand that so many people were going through so much at the same time, we were all in the same boat and it was about either curling up into a ball and and letting it kind of wash over and happening or fighting back. And I chose to fight back and I don't know if there's a better, better option, you know, one option is not better than the other, um, but I did choose to fight, so I was definitely worried about how people were going to feed their families, and how people were going to be able to hope and have a future, and we just really didn't know what was going to happen, and um what helped me was just really putting other people first and thinking through that while of course, of course making sure that I was of sound mind and body because you can't lead if if you're, if you're bleeding right, you can't do it. Um, so I think that forgiveness part of it just saying like, is there anyone on this earth who knew exactly what to do during that time? Is there any entrepreneur who just got it perfectly right? I don't think so. I think we're all, we're forgetting it out. So just giving yourself a break, giving yourself room to have been wrong and celebrating and recognizing when you got it right and in those small victories, we have to look at those because we're waiting for this big victory, this big mountaintop moment, we may never get there. It's a lot of smaller incremental moments that are just so, so important for us to recognize because you're here right now, you're in it, you're trying, you're working, you're adding on value right in this moment and I think you should be lauded for them. I think the next five years especially are going to be just incredible. It's going to be incredible growth. I have a lot of optimism, I'm optimistic person, but I feel like we're going to come out of everything we've just gone through and there's going to be years of this rebuilding and innovation and through that, through what we've gone through, People have figured out or are figuring out that they can't rely on only one income, they can't rely on only one idea. They have to be creative all the time. Um And so what I'm looking forward, I'm thinking about investing because, You know, we we didn't, we might have lost a couple of people really important people during our layoffs, but we ended up investing in about 30 or 40 companies during that year period. So it only got stronger. Our our conviction in the underestimated founder only got stronger through the pandemic. And so what I'm looking for now, especially is that person and that team who can stay nimble, who can stay creative, who do not let the outside forces that we cannot control control them. And to be there. You know, let's allow that to be their demise. I'm looking for people who have their finger on the pulse, their ear to the ground of what are, what are we, what are people needing? What our services, products that people need, How can I make my personal service and product even better than it is today, sort of hungry, uh, innovative people. Because if you get complacent, we know that you can just be run over and and and in these types of situations. So I'm looking for someone, especially as I get a little older here, I'm looking for someone who can help me live fuller. And so I say that if it takes me, if I think it would take me more than 10 years to figure out what you're doing and teach myself to do what you're doing in that industry and dominate it. Um you're very interesting to me because that helps me live vicariously through you. So you, in my opinion, you want to be going for something bold, you want to be going for something that is not the status quo and it's not the easiest to the quickest dollar Backstage capital. We invest in less than 2% of what we see. So we see a lot of great companies and we invest in one out of every 50 or so. You can always go to backstage capital.com and apply. We've always had that open application. There's no warm intro needed. That's very important. But I would say that my personal preference and what I try to get across to as many people as possible is venture capital can be great. It can be helpful. It can help you grow. Um, but it is not the end all and I think that, you know, the kind of the most impressive founders that I've seen are the ones who figure out how to bootstrap, how to stretch a dollar, how to hold on to their equity as long as they can. And maybe you're doing that strategically and maybe you'll, you'll add a couple of years by bootstrapping and then come back and you're worth more as a company and you can sell your equity for less. So you know, in my Academy and everything that I try to do. I try to make people understand that, Yes, my job is to invest in you. My job is to convince you to allow me to invest in you. But ultimately, I think the most, the most equity and control, which kind of equal the same thing, um, that you can have over your company for the longest is the best. And then when you're, when you have that, you're focused on the customer, you're focused on making the product or the service the best it can be, then you will attract investors if that's what you want and you will be able to have more control over how much you give away or how much you sell off. I think of, um, there are all kinds of ways you can raise money. You can earn money, generate money, I think of first and foremost, I love bootstrapping, I love just earning money off of the product. That's like the coolest thing to me. But I also have really in the last year, so gotten into crowdfunding for equity, backstage capital itself didn't really groundbreaking crowdfunding campaign in 2021 just the top of 2021 we raised $5 million from about 7000 people who are now stakeholders and backstage capitals Management Co. And so having that point of view, it's not normal to do that as a fun, but being able to do that helped us with our portfolio because we can now look at the portfolio and say there are some companies in the portfolio who had actually probably much more enjoy going to the crowd, They're going to venture capital. So you have that. Yes, there are grants, uh, you know, early on, I think pitch competitions are kind of overlooked. I know a couple of founders who are very successful, including one who sold her company to amazon, who just worked off of pitch competitions because no one would invest in her at the beginning. So she was very good at articulating what her product or her problem was and what the solution was. And she was able to build her prototype and then move on and hire a couple of people and they were able to build it out until they had angel investors based on pitch competitions alone. So it can be really interesting and it can be again, getting creative is the best thing you can do for your company is the best thing you can do as a leader of your company is get creative, take a pause, look around, see what else is out there. There's government assistance, There are grants, their pitch competitions, they're accelerators, there are bank loans, Yes, every once in a while somebody will get a bank loan. But there are a lot of other things to do and there are ways that you can generate income yourself. So if you have a company, imagine if you were to have uh, your to teach about that company rather than just have the company teach about the industry that you're in writing a book is one way, It's a long way, but it's an interesting way. Um, and then there's just so many other ways the pandemic being, being kind of isolated for sure for several months, more than a year actually, um, felt very lonely at times as an entrepreneur and even if you live in a house with roommates or you have your family with you that journey as an entrepreneur could have, could have been even more lonely because of the pandemic. So I definitely experienced that. And what helped me were a couple of things I already had valued network networks, you know, very high on the priority list as I talk about my book, it's about damn time. Um but I made sure to practice what I preach and to nurture those networks, you can't be everything to everyone. You can't answer every call. But what you can do is, you know, reach out to people, even when there's not something going on and there's no transaction involved, that's really important. And something my dad actually taught me when I was probably five or six years old. Uh he made it very clear that you don't just reach out to people when you need something, you reach out to them if you can. Um Other times just to see how they're doing. So that was one of the things I did. I would, like I said, you can't be everything every once. I couldn't do it for everybody on my, on my list. But I would reach out to people just kind of randomly and just see how they were doing. And that actually helped me a lot because then I could feel connected to people. It lifted their spirits, which of course we lift my own. Um and then in general, like as a, as a practice, these are the moments where you are. It's kind of like rubber meets the road you are um in situations where if you can be helpful to people again, not transactional lee, but just thinking about long term thinking if you can be helpful, this is when people need your help the most. So um just really pulling from your resources doesn't have to mean money, but it can mean time. It can mean insights. It can mean yes, I'll take that call. Yes, I'll do that podcast. Yes. So meet with your friend and talk to them. Look through things. Um find thinking about ways that you can make it easier for your customer to uh to talk to each other and to talk to you. Um actually helps on the bottom line at the end of the day. So what I did early on that I think has been so helpful all these years later, is that even when I was broke, even when I had no money, didn't even know if I was going to have dinner that day. I was meeting people either in person or online and I was researching and I was connecting those are the two things that were like the biggest biggest takeaways I've always was learning about people. And then I was using those learnings to connect them. How can I be helpful to this person? How can I match people? How can I bring value to people? I don't tend to look at trends, I don't keep up with what other people are thinking trend wise, but I do have some instincts that have served me well over the years. I tend to be able to see slightly around corners every once in a while. And what I understand is, you know, of course they're going to be so many people with opinions about what types of companies are going to be interesting and what things are going to grow really fast. What I'm really excited about and for you this is gonna be great news is that I think they're going to be what I'm calling these mini empire. So am I and I, so M A N. Y. M I N. I empires, um they're going to be, it's no longer going to be the cool thing to try to become the billionaire. It's going to be more about everybody having a chance at six and seven figures so that they can take care of their families, so they don't have to worry about one life altering situation, just crumbling everything, things like that. And because of that, um I think you'll have a lot more millionaires over over the next five years, that's why I'm very bullish in the next five years. And I think you have a lot of people who built that wealth Based on the individual things that they do. So you may have 10 person teams and smaller as rather than major, major companies, of course are going to still be companies that try to rise out of this, that are going to be huge juggernauts and and that's not a problem. But I think there is much, much more room on the playing field today for the solo and for the duo's out there who want to work on niche things, who want to work on things that are not the unicorns. It's so exciting to me because if you imagine millions of people trying to become one billion, you know, one billionaire or you imagine 1000 millionaires for everyone billionaire. To me, that is much more exciting. So whatever you're working on, think of it like that, reframe it to what is an amount of money that I could make every year in profit, where I could just take care of my family, have no worries, have savings and still enjoy life and I could do it without all of these outside forces coming in. And then things start to get really fun forward looking for anyone who identifies as a person of color as a woman, L. G. B. T. Q, et cetera, who have, who are the people that we invest in the backstage, who have spent the last decade of my life championing and working for. Um, what I would say is, is just, you know, keep doing what you're doing because you're doing a great job, honey. You're talking a really good job and the world is catching up. The country is catching up. Um, we're not going to change everybody's mind and heart, but I think we've figured out that it's it's not about everybody else. It's about you, it's about us, right? It's about us. It's about damn time, which is what I call my book, that, but it's about us getting what is actually rightfully ours, Each one of us has just as much, we are just as much an air, uh, to this country as the next person. And so the time for asking for permission, the time for asking for a seat at the table. The time for being demure. Certainly the time for imposter syndrome. All of that is over. It's done. We've been there. It's an artifact at this point. We are now going full on, we are going to enjoy our lives. We are going to give back. We are going to impact. We are underestimated. We are not down and out in any form of fashion. Uh, we are no one's charity case and we're about to show that. And I think we've already started. So I'm very, very, very excited about it. I know that the group of people I'm talking about which is in the millions, millions, tens of millions of people by the way, and it's the majority of the country, they're gonna make me very wealthy and you all are going to be so successful. So I'm just very thrilled about that. I know that it's difficult, I know that being in the room sometimes being the only in the room figuratively or literally is not easy, but it's about damn time. It's our time. Thank you so much for listening Arlen Hamilton, You can find me at backstage capital dot com and can't wait to see you there.