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How Arlan Hamilton convey Mark Cuban To Invest $6 Million to her Start-Up ?

 How Arlan Hamilton convey Mark Cuban To Invest $6 Million to her Start-Up ?


Arlan Hamilton spent her entire life in and out of homelessness, working low-wage jobs, being overlooked and underestimated. In 2015 she started an investment fund called Backstage Capital. Today it's worth over $20 million with investors 

like Mark Cuban, Marc Andreessen 

and Stewart Butterfield. 


There are three numbers to watch for in this story: $50,000, Arlan’s first outside investment, $6 million, the total value of her fund and 2, the percent of companies that receive investment from Backstage Capital. Here’s how Arlan Hamilton went from homeless to running her $20 million venture capital fund.


Image of Arlan Hamilton
Image of Arlan Hamilton | Image source :LinkedIn



I had been living at the san francisco

airport and she didn't know it

what do you mean living at the san

francisco airport i had been

sleeping at the san francisco

 airport why not

work at starbucks or something i'm just

like absolutely i can understand the

question but you have to understand this

is why there are homeless people

if you were lucky enough to have not

grown up poor you might have a hard time

understanding just how deeply it can

drag down

even the smartest most hardworking

individuals

the impact of poverty is at least

twofold there's the physical toll from

the struggle to make ends meet

the sheer energy it takes to eke out a

living is draining it's 

expensive to be poor

then there's the mental side of poverty

money becomes the source of 

worry and fear

its absence causes pain yet there's

never enough to alleviate that worry

but backstage capital founder arlen

hamilton has no time for that

going from homeless to that in five

years i'm very proud of that

there are three numbers to watch out for

in arlen's story 50

000 arlen's first outside

 investment six million

the total amount mark cuban has 

invested in backstage capital

and two the percentage of companies that

receive investment

from the fund here's how arlen hamilton

went from homeless

to running her own 20 million dollar

venture capital fund

for cnbc make it i'm nate skid this

is founder effect arlen was born in

jackson mississippi into a household

that was full of love but short on cash

she her mom and her little brother

alfred settled in dallas texas

the small family changed apartment six

times while she was in school

but her mom made sure that she stayed in

the same school district if nothing else

she made sure arlen's social and

academic life remained stable

so i never had to change schools and i

just really appreciate that more and

more as

an adult but it was a little chaotic

arlen says she was always one of the

smartest kids in class she enrolled in

honors classes

and got top marks but spent too much

time in the principal's office

i breezed through the academic part of

mostly mostly

everyone assumed i would go to college i

was voted most likely to succeed

a couple years in a row for half of my

senior year

we were bouncing around from hotel to

friends couches you know we moved back

to mississippi for a few weeks

where we where my mom was born to me the

idea of going to college

even if i got a scholarship i thought

about the living expenses and taking

away time from

helping my mom and finally being an

adult and maybe you know bringing in

more money

it just i couldn't see myself doing that

so to me it was very simple i wasn't

going to go to college even though i

wanted to i don't think um the kind of

fear

or at least the idea that money isn't a

given

and what that can do to you and like how

that can motivate you so i'm wondering

did was there anything within that

experience that still sticks with you

it stuck with me but not in the way that

i think people may

think um i used to hate money i used to

be so

afraid of it and also so just angered by

it because the lack of it was the thing

that was making my mom cry and the thing

that was making us

not you know not have certain things and

i would go to school and

certain clothes or have my hair a

certain way and people would make fun of

that and it just

i understood that that was because of

money and and nothing else

so i always said i'm going to be rich as

a child so i'm going to be

rich so i can just like i'll never be in

this position again

i'll be able to control things arlen's

first lesson in extracting yourself from

poverty came from an unlikely source

while working at pudgy brothers pizza in

dallas texas

i remember that dude it was rodney

it was a white male who went to my

school

i think we were the same age he might

have been a little older he would just

at the end of every

shift he would just pour his money onto

onto

in front of me you know to count it and

it was just like

10 times or even more of what i was

making for the same

hours and and he was running around of

course on his car and making these

deliveries

but what i remember about him was that

he was like stress free

and i was like running from the phones

making pizzas getting everything

prepared for him at first i was upset

and mad and kind of like this isn't fair

but then i'm like no you know what i'm

gonna do

i'm gonna study rodney

 i'm gonna study him

and take what i want from that what she

took away from rodney was that pay

isn't necessarily tied to how hard you

physically work

she labored twice as hard as he did but

didn't make half as much

rather it was the type of work that

mattered even though she knew full well

that a college degree offered her the

greatest chance to escape

intergenerational poverty

she didn't make it more than a few hours

at a community college 

before dropping out

i took some some courses at community

college which i

really liked um but again it was just

sort of like focus on work

just focus on getting some money so

we're not all broke all the time

and that's really what it was and people

were going off to all these different

cities and

kind of you know you were hearing about

people what they're up to and

i don't think i suffered too much during

that time of like fomo or anything but i

just felt like

it just to me there was no other option

this is when arlen began showing her

entrepreneurial spirit

so she talked her way into managing a

us-based concert tour

for a little known indie pop band from

norway called

golden boy she turned that into a string

of gigs putting on live concerts across

the u.s

how did you talk your way into that i

sent out a hundred messages

to tour managers and production managers

that i had individually researched and

they were all

you know individual messages uh over

like a two-month period

and i received 20 responses i received

three

in-person interviews and one led to

you know the kind of kickoff of working

on a larger stage

sure the pay was lousy in the nights

long but her job was exciting

at first she was enamored with the

artists but as time wore on

she began eavesdropping on their

management teams i would notice that

they were making investments in

a place called silicon valley and in

tech startups

and i started learning these like

hearing this jargon and hearing these

things but

not in public it would be these i'd walk

past the conversation or somebody would

be

flown in for something and i need to to

prepare their

their flight right and i'm like why why

is this

musician meeting with this

technical person just you know i was

trying to put the pieces together

almost uh the beginnings of erin

brockovich story or something i was just

like what's going on here

and then the more i learn the more i'm

like wait a second i

i know what this is i've seen airbnb

i've seen twitter i know

what they're talking about and that's

when i said well

i've always felt like an entrepreneur

i've always felt i've always started

something

i'll start my own tech company and

i knew that that would that would be my

path that's when i learned that

90 of funding goes to white men in this

country

and affluent white men arlene tried and

failed to get a tech company off the

ground

she was now in her early 30s and had

never earned more than

twenty thousand dollars a year but

during the process

she realized that to make real change

she needed to create an investment fund

of her own

how did you even begin to think about

investing

i couldn't be an angel investor because

i didn't have any money and i was in

fact broke and

homeless and for most of this and you

know it was just a whole thing

but i thought i could negotiate with

people

so i spent three and a half years trying

to raise any money for a fund because i

saw the people had

people had raised funds i can try to

raise a fund and i got no's

left and right hundreds and hundreds of

meetings no or

calls no but then in september of

2015 i got my first yes

from susan kimberlin who is an angel

investor in

san francisco who i met after going you

know one-way ticket

towards silicon valley and i had been

living at the san francisco airport and

she didn't know it

wait what do you mean living at the san

francisco airport i had been

sleeping at the san francisco airport

like on the outside like before the

ticketing because of the way

you know airports are and i would

roll up a pair of jeans and

it would be my pillow and i put my

suitcase and i had a lot

laptop so i could sign on to the wi-fi

but i put my suitcase in front of my

face

so that i wouldn't have to like have eye

contact with people as they're walking

by as i'm

laying on the on the ground you know on

this hard floor and

i would get up and you know freshen up a

little bit

and uh you know public restrooms

you know i mean why not work at

starbucks or something i'm just like

i've been working since i was 15. to

work at starbucks you have to have an

address

i applied to all kinds of places i i was

turned down by airbnb i was turned down

by kohl's i was turned down to work at

kohl's

in retail for i forgot what it was it

was minimum wage or whatever it was

and i was in my 30s and i'm like why

can't i do that and so it's one it's

it's absolutely i can understand the

question but you have to understand this

is why they are

homeless people it is very difficult to

go from

no address you're sleeping on the floor

to then

have any kind of way to work for two

to three weeks before you get your first

paycheck

you go in you know is there's a hygiene

issue

there's all sorts of things that kind of

leave you kind of stunted

in 2020 over 580 000 people experienced

homelessness in the united states on a

single night

that was up nearly 13 000 individuals

from 2019

but it was at an event for venture

capitalists that she realized the power

of her idea

that there was untapped potential in

founders of color

the more race came up as a topic of

discussion the more uncomfortable the

room got

as they leaned back arlen leaned in they

were

uneasy there was no you know i was like

the only other black person in there

in the audience and they shifted and

they got like got real weird

and i'm like that's weird like i just

listened to all these white dudes talk

about money making money

investing diligence all that they're

talking about the exact same thing

there was a person on that panel who had

like a 10 million dollar per year

company that he built from nothing

there was another person that panel who

had invested 100 million or more

they weren't talking about anything that

was that should be

foreign or considered alien right

the reaction from the crowd didn't sit

well with arlen

so while squatting at the san francisco

international airport

she penned a blog post titled dear white

venture capitalists

if you're reading this it's almost too

late it was a combination of drake's

album

his mixtape and dear white people the

movie that had just come out

dear white venture capitalist and so i

wrote this blog post and

overnight uh it just went crazy and and

i got

incredible amount of inbound from it

arlen began forming the basis of her

pitch

underestimated black and brown founders

were finding incredible success while

suffering from a severe lack of under

investment

what if they were properly funded do you

remember the date

you got your first investment

September 15th 2015. what was your pitch

90 percent of venture funding goes to

white men in a country where they make

up one-third of the

of the demographics so you'd have to

believe that

they're somehow smarter better faster

than anyone else including any woman

to believe that that is fair also

because it is proven multiple times

multiple studies and

practicality that diversity breeds

more is more lucrative and also it's

just

you know you have a better chance of

reaching and reaching

a larger audience and on top of all of

that

the the underestimated or at the time

underrepresented founders that i knew

were doing so much with so little

i could compare and say like this this

person didn't have any outside funding

but they somehow

got their product made well this same

type of company

had two million dollars and they have

fewer customers

right i could show those types of

examples so if they're doing so much

with so little what happens when we give

them more

and it was just it was just simple as

that and then to say

you know in a few years and this is 2012

through 15 i'm saying in a few years

the world of tech is going to look more

like the country

do you want to be hit by the wave or

riding the wave

arlen didn't want to be seen as some sob

story asking for a pity donation

she hid the fact that she was homeless

not because she was ashamed

because she knew if she was going to be

successful she needed to be seen as

worthy

not a donation didn't want her to know

that part of things i wanted her to

invest in me because she

wanted to and believed in my thesis and

um it kind of was

sort of slow and and and then i said to

her

early September i said i'm going to go

have a meeting with this organism this

company

if i can negotiate x deal with this

company

having no experience here or whatever

will you invest in me once and for all

and she said if you can make that deal

happen yeah i'll do that

so i go into that company i strike up a

deal with them that's not

monetary it's more like you know you

were able to negotiate something kind of

cool

yeah and i let her know and within 24

hours

she sent me a text and she said i'm in

um

i saw i saw that text

and i just kind of i remember exactly

the corner i was in because it was by an

acai place that i used to

treat myself to and i had any kind of

like if i had seven dollars i was going

there

um and i just kind of did like a little

dance you know it's like whoa

okay and then i just

i buttoned up i kind of got my ducks in

a row

and i got a fly to los angeles and

i promise i mean i didn't celebrate i i

just was

ready what did you do with the money and

how much was it can i ask

originally it was 25 000 because it was

supposed to be like because we were

making 25 i was gonna make 25 000

investments which is kind of an angel

size considered

so she originally gave me that but then

she said you know

you need to have like an office and a

kind of prop yourself up so she gave me

25 000 to make my first investment and

25 000 to set up shop

the effectiveness of arlen's pitch

created a snowball effect

susan's money helped get arlen off the

streets but her contacts proved to be

much more valuable

a cool thing happened like in early 2016

where

stuart butterfield from slack got in

touch with me on twitter

dm and i had never met him or talked to

him and i still to this day do not know

how he found out about me maybe it's

just seeing the blog or something you

said hey can i invest in your company

and i'm like am i in your fun and like

uh let me check my calendar

yes you can and this was when he had

paper wealth you know he didn't hadn't

cashed out or anything so he was it was

more of an angel investment

but being able to put his name on there

when i

when i reached out to mark Andersen or

actually mark Andersen reached out to

me

and then i reached back with a question

about investing

he was able to see stuart butterfield

and then i would text someone you know

who i had met along the way and say hey

can you get in touch with this person

and

put in a good word and it was just like

all this

forward motion of not not taking a day

for granted

just continually using that momentum

perhaps her biggest win came in 2019 at

the south by southwest conference in

austin texas

when she shared the stage with mark

cuban so he was super cool i thought he

was really you know we're both i'm i'm

from dallas and

my brother my younger brother rook loves

the mavericks he loves cuban

and i watched shark tank for 10 years as

if i'm a

fifth or sixth panelist yelling at the

screen

yeah i just thought he was cool and i

was interested to see how he would be

behind the scenes and he was just

really chill for a billionaire you know

what i mean he was just like

nobody was around and he was just doing

his thing i asked him you know if he

would invest in the fund he said no i

don't like

investing in funds because i i love talk

working with founders that's where i get

my thrill so i said okay

and then about a month after that there

was a press piece

that had incorrectly you know or their

opinion had said that i had failed quote

unquote and raising

my fund because it wasn't raised yet

it was very odd it was very odd and a

lot of people were up were upset about

it because of the way it was phrased it

was very

and a lot of people's opinion including

mine biased

but it it really caused a lot of trauma

to have that and he got in touch with me

that same day mark even got in touch

with me that same day

and he said i'm sending you a million

dollars invest however you want

you didn't fail anything and he gave me

some great terms he gave me higher

uh upside than i've got on any other

fund

his decision i had autonomous uh

investing ability

and then on top of that last year after

george floyd was murdered on television

um he reached out and he said i want to

do 5 million more

i'm looking from your perspective though

which is like altruism is great

and you definitely want to do good but

like you got to make money too

right like like so i'm wondering how do

you think through that like what's your

strategy or philosophy

on um who who to get who to invest in

and who not

what's altruistic versus what's a real

business case i'll say it like this

uh through other things like my

publishing

through speaking through all sorts of

you know academy stuff that i have

i have money right personal money

 and through that

i have uh about half a million dollars

into scholarships

right now and that's you know going from

homeless to that in five years i'm very

proud of that

so when i want to do things that are

altruistic when i want to do things that

are

philanthropic i do them but backstage

capital

is for-profit and sharky what do you

mean sharky

i mean we invest in two percent of what

we see you know we are

we are not here for the heartwarming

side of this we are very complimentary

to founders

we're very aligned with founders

and we have some of the like the most

friendly terms

when it comes to deals that we strike

because we don't want

to get in their way right we're not

making investments based on the color of

your skin we're making

investments based on what we believe

will

make us money back for our for ourselves

and for our stakeholders

what's your advice to founders well my

advice is ultimately is like to remain

yourself

because if you heard anything in my

story the one through line is that i

just kind of stayed myself the whole

time

any time i could tell you anytime i

tried to stray from that or i thought

oh i better i better button up or i

better do this other thing because i

have to conform

it went wrong it did not help it made

the situation worse

and so it takes longer to get where

you're going and it's

more difficult to get where you're going

when you're being yourself but once you

get there you you're much happier

because you're there as yourself and not

in a costume.



conclusion


   $50,000, Arlan’s first outside investment, $6 million, the total value of her fund and 2, the percent  of companies that receive investment from Backstage Capital. Here’s how Arlan Hamilton went from homeless to running her $20 million venture capital fund.



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