Whether you have an idea for a product, or your business is in full swing- the way you fund your business objectives is always open for interpretation.
From bootstrapping, to crowdfunding, to taking that first check from a VC- we go over some of the ways to fund your business.
Later we are joined by Arlan Hamilton, Founder and Managing Partner of Backstage Capital, a venture capital firm dedicated to minimizing funding disparities in tech.
Arlan Hamilton 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 LGBT. Started from scratch in 2015, Backstage has now raised more than $12 million and invested in more than 150 startup companies led by underestimated founders. In 2018, they launched a four-city accelerator program in Los Angeles, Detroit, Philadelphia, and London. Arlan has been featured on the cover of Fast Company magazine as the first Black woman non-celebrity to do so, and is the author of “It’s About Damn Time” and host of the weekly podcast “Your First Million”. Arlan and her mother, Mrs. Earline Butler-Sims, announced their scholarship program which kicked-off with scholarships for Black students at Oxford University and HBCU Dillard University.
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- [08:36] Why we titled this episode what we titled it.
- [11:41] Bootstrap/self-funding
- [14:08] Raise funding from friends and family
- [17:54] SBA loan?
- [20:11] Commercial loans
- [22:00] Kickstarter
- [23:05] Republic.co
- [26:14] Take VC/PE money
- [28:08] Arlan's introduction
- [28:48] Let's learn more about Arlan Hamilton
- [29:35] Your First Million Podcast
- [31:41] What is Backstage Capital
- [35:57] Advice to merchants
- [38:32] When to delegate
- [43:14] Understanding your worth
- SBA Loans
- Backstage Capital
- It's About Damn Time
- Your First Million Podcast
Whether you have an idea for a product or your business is in full swing, the way you fund your business objectives is always open for interpretation. From bootstrapping, to crowdfunding to taking that first check from a VC, we go over some of the ways to fund your business. Later, we are joined by Arlan Hamilton, founder and managing partner of Backstage Capital, a venture capital firm dedicated to minimizing funding disparities in tech. Let's dig in. Welcome to Commerce Tea, a podcast to help you succeed on Shopify. I'm Rhian.
And I'm Kelly. Grab a mug and join us as we talk about all things commerce.
Hey, Kelly. How can merchants leverage customer data to drive more revenue and increase retention? How can they create personalized experiences customers love?
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It sounds great. Where can merchants go to learn more?
You can learn more, book a demo or try it free at join.octaneai.com/commercetea. Again, that's join.octaneai.com/commercetea. Good morning, Rhian.
Good morning, Kelly. How are you?
I am doing great. How are you?
I'm doing very, very well.
I have a question for you.
Did you watch the Super Bowl this weekend?
I'm not sure because we're recording this before it happens, but I know we're going to watch it. Here's why I'm really fascinated, and people are going to like it of course, a, I actually really like sports because my daughter plays sports. While it's a different sport, there's always something nice to see about camaraderie and teammates, blah, blah, blah, but also, I love to see how brands choose to market. I think it's interesting. Why are we putting X millions, if not billions of dollars, in this commercial and what brands are going to do it because last year I believe we saw some DTC. They went from small startup to huge acquisition-type companies. Then also, I believe Miley is performing at halftime.
I thought it was The Weeknd.
Is it? I think she's in it as well. It's The Weeknd plus Miley. I saw that she was jogging on, what is it called? What do you jog inside?
A treadmill while singing. I did a Millennial thing where I just read the headline that said, "Miley Jogging To Get Ready For ..."
Oh, see, I watched the TikTok of it.
Aren't you so cool?
I'm so young and fit.
We're actually starting a TikTok, Kelly.
By that, I mean we have to have the handle.
It does count. It does count. What about you?
We'll actually start making contents.
I've got some content ready. I've got my Octie from Octane AI which is a little robot doodad which is-
A robot doodad?
I was warned not to feed Octie after midnight by the Octane team, but they didn't tell me that when I got Octie, my robot. I'm concerned because maybe she fed on some electricity in my office because she was really naughty the next day. I am very concerned. I had some words with the Octane team. I was like, "You guys have to tell me this before."
It should come with a disclaimer.
It's like when you adopt a pet, there's like, "Feed the pet. Take care of the pet."
I know. It's okay though, but I'm a big fan and Octie is going to be one of our first TikToks, I decided.
Wonderful. I'm 100% for that.
What about you? Have you watched the Super Bowl? We're forgetting-
You will, have, was going to watch the Super Bowl or something like that. We'll be watching the Super Bowl. We're hosting a Super Bowl bar party tonight. It is going to be the two of us. We did not invite anybody.
Oh, like us two, party of three for us, party of two for you.
We're still doing pizza and beer. You know what? We recently purchased, and I'm kind of excited to try them, is we purchased a nonalcoholic beer from three different companies and I'm excited to see what it would taste like.
I'm excited for you. Let me know. My daughter drinks nonalcoholic beer too. It's called root beer.
I love root beer.
She also likes having pizza and beer, but it's gluten-free pizza and root beer.
That's so, so cute. I like that.
She's like, "Can I have pizza and beer?" I'm like, "Yes, you can. Here you go." Here we are, Super Bowl has happened, somebody wins. There's a bunch of their commercials.
Go teams. Maybe I'll have some snacks, who's to say. My husband did say, he asked me, "Can we air fry something today?"
With no specifications about what we're going to air fry. We're both doing Noom, so we're trying to make healthy choices.
Just stick a cheese stick in the air fryer and see what happen?
Yeah, I don't own an air fryer.
What can go wrong?
I'm curious what will happen.
Just put on some cheese sticks. I'll do it. I don't care. We'll see.
Please report back. You want content for our TikTok, I found it.
People are going to be like, "This is a mania. I can't believe this is happening."
I found my favorite TikTok account by the way. I don't remember their username, but it's a group of girls who sing covers of songs, but they intentionally sing the covers of songs terribly, like completely out of tune and they try to keep a straight face through it and they're taking ... It's so good. Because everyone's like ... Most of my TikTok is just people singing, so it's hilarious. I occasionally flip through and see just completely out of tune.
I love that. I really love that.
It is creative content. Speaking of content, FYI, everybody, we're on Clubhouse, which as is some of the world, but not all over the world. If you're listening, and you're like, "I want to be in the Commerce Tea Clubhouse Club," we actually have quite a few invites to give away.
Yes, we do. Please join us. If you're already on Clubhouse, you can look up our group. It's called Commerce Tea, our club.
I know, very conveniently named, I love it. We're considering doing some live episodes on there, but also recording, so we can publish them.
It will be very raw, though, compared to this. It won't just be-
It's okay, though. That's okay. I'm okay with that. I think we're going to be doing some slick live teardowns and stuff on there too because teardowns are a lot of fun.
Teardowns are a lot of fun, friendly ones, of course. If you're listening and you do need an invite, email us, we only have so many, but email us and we'll see what we can do and just promise us that you'll be kind when you get onto the platform. That's my role.
Exactly. The title of this episode is You Are A Blank. That's not me cursing and blocking out the curse. Why did you choose this title?
I chose this title because in Arlan Hamilton's book, It's About Damn Time: How To Turn Being Underestimated Into Your Greatest Advantage, in the introduction, there's this part where she's hyping herself up before she goes into a meeting. She tells herself over and over, "You are a venture capitalists. You are a venture capitalist. You are a venture capitalist," and there's something about that that really resonates with me as an entrepreneur because there's just moments where you're like, "No, you are the boss. You are the entrepreneur. You have a small business. You are a woman in tech. You are doing great. You know your stuff," that kind of positive self-talk, it's super important.
I don't appreciate you just reading our text conversation of everything you just said to me.
Kelly's like, "I feel very attacked right now, Rhian."
This is literally a personal attack.
Because so many of us work through imposter syndrome and I want all of us and anyone who's listening to take a second and say, "I am or you are a," and then the next thing has to be positive and factual. "I am the creator of great experiences," or, "I am the curator of great conversations," or whatever that thing is, either, "You are," or, "I am," just do it. Take the time. It's worth it. It works too.
It does work. I'm really big on the power pose.
Sometimes, I just need it and this is just the verbal power pose.
It is the verbal power pose. Also a lot of my friends will message me something that's very self-doubt-y and my response is always, "We're not doing imposter syndrome right now."
Speaking of text you send to me.
But it's important. It's like you need someone to be like, "We're not. Nope, nope. Stop."
"Not doing this. Yup."
"We're not doing this. We're not going down this hole." I'm not good enough because you are good enough and that's why I titled this episode that way. Kelly and I are kicking around other things like, "How to fund your Shopify business?" or, "How to get financing for your shop?" and I was like, "No."
"This is boring."
"This is boring." I opened the book and I was like, "You know what? This really resonated with me." I've read this book like three times now. That's really it.
Now, our backup title, how to fund your Shopify business. That's what we're talking about today before we do our interview with Arlan. Let's run through the different ways that you can fund your business because I feel like there are multiple ways that you can do this. There's no right or wrong way, but there is potentially the best path for you and for your business, just based on what your goals are.
Kelly, you and I actually fall into the first bucket of what we're talking about which is-
Yes, we do. KickStarter.
I want to start an agency. Please fund to me.
Everyone will be like, "Ah, how about later, post-revenue, please, post-profitability?" The first thing that we're going to talk about is bootstrapping/self-funding. I don't like the term bootstrapping because I feel like there's some toxic connotations that come along with it, but it's definitely what the industry that calls it.
Basically, just the general blanket term for, "You're not taking funding for your business and you're growing it without that external funding."
Period, although a lot of bootstrappers do use credit.
Your funding is just coming from the bank instead.
It's coming from a credit card or line of credit. That's another way to raise money is self-funding. Well, self-funding is when write a check from your personal bank account to your business bank account. That's one way of self-funding. We are not accountants nor can we give our financial advisors. This is not legal advice. We're just talking about this stuff, just as a disclaimer. Disclaimer.
I am not an expert. I am an expert on many things. This is not one of them.
I spent many years in banking, but I've been out of the game for a while. That's so some self-funding strategies, but-
I feel like this is a good place to start when you're testing an idea. When you're not going full into market necessarily to the point where you need to have an expensive supply chain or expensive fulfillment 3PL kind of situation. You're dipping your toes into the world of eCommerce and you're just getting started launching your store. However, of course, you might need funding again to purchase materials if you're selling products. Self-funding can definitely represent itself in different businesses. If you're already financially fortunate to be able to fund your own business by writing that check from your own bank to the business, it's obviously a very viable path to take.
It's a privilege path to take, but it is a viable path to take. It fuels the things that Kelly and I are going to speak about are actually what we called, well, I just wrote privileged thing.
Some of these things are just not on the table for everybody and it's important to recognize that this system isn't created for everyone to succeed in an equal pace. While we in a utopian world would like it to be, that's just not the case. It's important to say, if I'm like, "Oh, I'm going to raise friends and family round," spoilers, my experience may be very different than the next person who's raising your friends and family round. I've seen that actually where people are like to some founders, "Why don't you just raise friends and family round?" I'm like, "Well, because my friends and family don't have any money. How am I supposed to raise friends and family around if my family and friends don't have any money?" That's not always a viable thing. Not many people are just like, "Oh, let me just call my friend, Bob Bazillionaire and see if he wants to put some money behind the project."
[inaudible 00:14:56] same name, Bob Bazillionaire.
I went ahead and ordered that one next, being raising funding from friends and family because, again, it is an option if you do have that as an option, you do have the friends and family with financial backing to be able to support your business. Again, it is a very privileged thing.
It is a very ... My uncle actually calls this round the friends, families and fools round.
I like that. Before we move on, let's dig in a little bit deeper to friends and family because there's also a level of risk there by involving your friends and family in your business. I think you have a little bit more experience with this than I do by maybe participating in them or working with businesses who have done a friend of friends and family round. Any advice you can bestow upon our listeners?
Yeah, I've been a part of this from the angel investing side. I've been in a few friends and family rounds. Here's the deal when you're investing capital. This is not financial advice. It's like with anything. Do not invest more than you can lose. You have to go into ... It's not that I don't think that the ventures that I've helped fund are going to be successful. I do. I'm not just writing checks because they're my friends. No, I'm writing them because I think that they have a good business and it's viable, but at the same time, you can't just be writing checks that you can't afford. You have to just assume you're lighting that money on fire and be okay with it. You cannot expect a return.
Not only that, but it's also a very long-term game.
Very long-term game. I wrote a check. Actually, you send a wire. We always say writing checks, but really just send a wire. I send a wire last year. The sales cycle on this or the potential exit on this, this is like six, seven, eight years maybe, but you have to go into it knowing it. The other side of this is when you do give or you are one of the friends and family and this, you have to sit on your hands and sit back. It's not your business.
It's not your business.
You helped fund it ...
[crosstalk 00:17:23] distinction.
... but you are not a partner. You don't get an opinion. Like I said, the equivalent is I don't say it's lighting your money on fire, but you have to treat it like that, like, "Here's the money. Goodbye. I hope it has to return. I wish you great luck." You'll get investor updates, but besides that, you have no opinion unless they ask for specifically.
Trying to be overly involved is inappropriate.
It's also stressful. Don't do it.
For the founder, don't do it. Don't do it. That's my thoughts on friends and family round.
Those are some great thoughts. You added this next one while we were recording. Talk to me about taking an SBA loan.
It says, "SBA loan?" The reason it has a question mark is because I used to be a business banker and I know SBA loans can be difficult to get. I'm not saying that you should never get an SBA loan. I'm saying that there is a lot of work that comes with the underwriting process of an SBA loan. It's definitely a viable option for some folks. I would prefer taking SBA loan capital over VC money, frankly because then you're paying back a bank and you don't have investors, I don't want to say [inaudible 00:18:39], setting expectations for you.
I think it's worth ... For those who are unfamiliar with SBA loans, SBA is a small business administration, is a US government organization. They work with lending partners to provide loans to small businesses. What is the general size of these loans?
Well, they can get quite hefty.
It looks like you can get anywhere between 500 and 5.5 million.
That can go a range. It's a small range, but there are rules when you get an SBA loan about what you can do with a capital. We saw that with the emergency lending that happened.
Yeah, there was a lot of rules when you read the term sheet.
I applied and decided not to take it. In the end, they were offering me 150,000 and I said, "There are so many rules to follow."
So many rules.
They're just like, "This is not worth it." In terms of taking an SBA loan, they do have eligibility requirements as well. You have to be a for-profit business. You have to be doing business in the US. You have invested equity and you have to have exhausted your other financing options.
SBA loans are challenging, but if that is the path that you all go, I wish you nothing but the best. Relatively low interest rates.
That's one of the biggest perks of it is the fact that it has such a low interest rate and a long payoff or payback period as well.
Because there's also commercial loans which are small business loans that are not backed by the SBA. They can be very difficult to get, not impossible, but you have to be in business for X amount normally, X amount of time, Y amount of cashflow, Z credit score. It's this really complex underwriting method for commercial loans. It's better suited for someone frankly. Our business is seven years in. It's easier for someone seven years in to get a commercial loan than somebody just starting that significantly. It's an option. I'll just say that it is an option.
There are plenty of other like PayPal for example, offers a small business loan because they remind me every single time, I sign into my PayPal account that I [crosstalk 00:21:02].
Yes, they do. Would you like one?
Yeah. Exactly. "Would you like some money?" Actually, fun story, I post about this on Twitter, they had a rounding error on their website. I had about $3,400 in my PayPal account that I was withdrawing and it said, my money in, they accidentally multiplied it by 100. I had about $344,000 in there. It only let me withdraw $3,400, the actual balance, but all their reporting was off by literally 100. Developers know what that error was.
Decimal points are critical here, everybody.
Floats are tough to work with.
What's another form of raising capital? This is something that MVMT did which has now been acquired by Movado. That is a success story if I've ever heard one.
KickStarter, I think we've all become familiar with KickStarter and Indiegogo and the similar crowdfunding campaign websites over the years where there are people who you don't necessarily know who are funding your business, usually on smaller amounts that you're raising a certain amount of money, you're often showing some prototype that you're not actually ready to ship yet. When ship time actually comes here, you, of course, deliver on it, but quite often, yeah, as you mentioned, MVMT did KickStarter as well, right?
Yeah, they did.
Actually, I've worked with a number of clients who started on KickStarter and grew from KickStarter over to Shopify. It's a fun avenue for sure.
It is a fun avenue. It can be very, very successful. It can also not be successful. I feel like there's absolutely nothing in between like KickStarter. KickStarter, Indiegogo, what are some others are? That's the two prime ones. There are some KickStarting apps.
You're not usually funding a business through GoFundMe, so that's not a-
No, don't do that.
Let's not do that one. Before we go into VC, I think we're talking between KickStarter and taking VC money. It's investing in a company, usually again potentially, in smaller amounts. This is through Republic. I actually just started investing in certain companies on their last week.
I'm really excited about it. I would explain in more detail how it works, but I don't know yet. I just handed over my money and I'm hoping for the best.
I don't actually really understand how Republic.co works, but I'd be happy to try to get one of the venture partners to watch them explain it to us. We're like, "Explain to us how this works like we're five. Thank you. Next, " but it's great, because you don't have to be ... One thing I do know about Republic is you don't have to be an accredited investor to invest on that platform. That's awesome because, and Arlan talks a lot about this in general, I don't know if it's in her book or we even talk about it in our interview, but some of the accredited investor guidelines are outdated and silly and not just my opinion and a lot of people's opinion and Republic circumvents some of those. Legally, they circumvent some of those, so you can get a piece of the pie in some companies that are really rad.
One of the important things, that's the way that they're able to get around it is the amount you can invest is generally significantly lower than it would be if you were going through as an accredited investor or an angel investment. I think my limit is $2,700 per 12 months.
Who knows? Again not financial advice, one of those deals might 10, 20x. You don't know.
Exactly. I still like being able to contribute even, so I've done ... I don't know. I guess I've invested, [inaudible 00:25:02]. I invested in two of the ... Are they campaigns?
I don't know-
I invested in two of the startups. How about we go that way?
Backstage Capital which raised a little over a million dollars in eight hours which-
Then the second one is Drink Monday which is my favorite nonalcoholic gin.
I totally missed the Backstage Capital raise. Well, I saw it announced. I was like, "I'll get to it later," and then by the time, I was getting to it, they'd hit their max. I was like, "Well, congratulations, teams." I'm so pumped for them no matter what. There's a few brands, so I look at them and I'm just like, "What you're doing is good work and I want to always contribute," but I didn't get to contribute, but so many people did and I'm just so excited for everyone who gets to be a part of that round. That's a great round.
There is a waitlist on it by the way if you want to try it.
I should put my name on the waitlist.
Again because of legal regulations in terms of how much they can raise the platform, they're aiming on hopefully being able to open the waitlist next month. I read a comment today about it.
I'm going to go do that then. I'm going to do that right after this. There's the last thing.
Yes and that is taking VC money.
Or PE which is private equity. VC is venture capital. PE is private equity. Neither Kelly or I have ever accepted these checks.
Nope. I can't really talk to you about what the experience is in raising this money or going this round or going this route. I've heard is it's very stressful.
That's what I have heard as well. I'm closer to the circle, but I'm not part of the circle. I'm like an LP somewhere. I do some angel investing, but besides that, I feel like I've got a grade level, like sixth grade level understanding of the VC-PE world and it's definitely something to potentially consider, but one thing is to not, I feel this way, because of what I do, I start comparing myself to other businesses in my vertical where I'm like, "Oh, well, they've got 100 employees and they've raised $30 million in this series A. Am I doing something wrong because I'm not doing the exact same thing."
If you're doing the thing and you're doing well with the thing, that doesn't necessarily mean you need to take VC. In fact, sometimes it means you definitely shouldn't take VC, but it's a big ... This is my imposter syndrome, every quarter, I'm like, "Am I doing this wrong? Are we doing this wrong? "
Literally every business owner ever, "Are you're doing this wrong?" Am I doing?"
"What am I doing?"
Maybe at some point, we'll have somebody on who did raise around for their business to talk through what that process was like.
That would be great.
Because I don't think it's a topic we've actually covered yet.
It is not a topic we've covered and there's definitely people to reach out to about it.
Added to the list. Now let's get into the interview.
Let's do it.
We're excited to introduce Arlan Hamilton. Arlan Hamilton is the founding 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 women, people of color and/or LGBTQIA+. Started from scratch in 2015, Backstage has now raised more than $12 million and invested in more than 150 startup companies led by underestimated founders.
Let's do the interview.
Let's begin. Today, we are joined by Arlan Hamilton. Thank you so much for being here today. We're big fans of your book and your work. Can you please tell us more about yourself?
Thank you for having me. Yes, I am Arlan Hamilton as you said. I'm the founder and managing partner of a venture capital firm called Backstage Capital. We are remote team, but I am based in Los Angeles. We invest in startup companies and those startup companies are led by underrepresented, underestimated founders. For us, that means women across the board, people of color, LGBTQ and other. We've invested in more than 150 companies now. It's been a very, very wild five-plus years.
That is awesome. We're definitely going to be digging in a little bit more to Backstage Capital. I'd also like to talk a little bit about your podcast, Your First Million. Can you tell us more about that?
Sure. My podcast started in the summer of 2019 and it was really based on me wanting to understand what it's like to either raise or generate your first million dollars or have your first million fans or however, downloads, however you measure it because I had spent 35 years of my life poor and then I started coming into money, I'm earning money, right? My life changed over just a very short amount of time. I wanted to debunk this myth of how money changes and fixes everything. I wanted to hear it from the people themselves who we may not feel comfortable asking those questions of, but I don't mind asking the question. I was like, "I'm going to advocate for the listener."
For instance, we've had a lot of tech people on, Ryan Hoover, and Justin Kan. We've also had Ellen Pompeo on who is the star of Grey's Anatomy. She makes 20 million a year in her role and she talked very candidly about both her role and time on the show and the money itself. I just love digging into those things, to find out what it's like, also find out what the common threads are. I think that that really help not only inspire people to, of course, pull together their own wealth and generational wealth, hopefully, but also to understand that money isn't everything and that there has to be other things along the way, so that they don't find that out once they're already there.
That sounds exceptional. Money is so taboo, I feel like. I also think people are so afraid to ask questions, including questions about venture capital. I know I became an angel investor last year and I came into it, I was like, "What is happening? The words that are being used or confusing." Can you talk to us more about Backstage Capital, what exactly it means to raise if you are an entrepreneur?
Yeah. We are investing out of this vehicle. We have different verticals, but out of this vehicle for Backstage in startup companies, so tech startup companies like a Shopify, like Twitter or something like that, but at the earliest stages. When these companies have one person, five people, 10 people, that's when we usually meet them. It's usually post idea because people have ideas all the time, but have you ever had that idea that just nagged at you for so long, even over years and you couldn't shake it and you felt like, "I'm the person to do this, but I don't know why I'm supposed to do this."
When you go from that idea to actually executing on it and getting the LLC and forming the company and getting the website going and maybe even bringing other people along with you, that's when we usually find you and we want to make sure that the best ideas and the best teams are funded at a seed stage level. We like to invest alongside angel investors. I think angel investing is the future of things where somebody can put $1,000 into a company, whether that's through crowd equity funding on Republic.co or in other ways in our syndicate, our backstagecrowd.com.
It's not so much, there are just these few guys or these few firms in Silicon Valley who can write a venture capital check. I think it's more exciting that there are a lot of us can write a smaller check together. We like to be a catalyst. We can write checks from 25,000 to 100,000. We've written checks for 500,000 before and we'll write checks for millions, going forward, but we really to meet people early, so that they can have that competitive capital, that innovative capital, but not everybody needs outside funding, not everybody needs venture capital. We try to make that very clear too. We only invest in 2% of what we see.
I think personally only about 10% of companies can really use venture capital. The rest can be bootstrapped. I'm very excited about bootstrapping and I talk a lot about that on my academy. That's at arlanacademy.com. All types of information about how you can just make your customer the investor because they invested in the product and became your customer. There's all things that we like to dabble in, but the ultimate goal is to be a catalyst and to help where we can.
I love that you support bootstrap businesses a lot as well because both Rhian and I have our own businesses that are both bootstrapped too.
Awesome. That's awesome. You know how cool it is to own your companies and be able to do what you want. You have an idea on a Monday, and by Friday, you've implemented it. You have to ask 10 different people if you can do it. It's very exciting. It's how I treat my own companies.
It's really exciting. I think the struggle is that you often see most of the media attention going to the ones who just raised a large round ...
... and at least, there's so many bootstrap companies who are doing phenomenal work, really cool products, really cool services that just aren't getting the attention.
Yeah, that's right. You bring up a great point. I do this myself. I always post about the raises that our portfolio companies have, but I do try to talk about the revenue that was generated and the employment that is generated, but I think you're right. I think the moment that general press and tech press and startup land and entrepreneurial press starts having headlines that say, "This company bootstrapped to 500,000 in 2021," then you're going to see more and more people doing that. Maybe anybody listening to this and I'll try myself to be better at that and expressing that.
You're so awesome. I have your book in front of my face right now. I read it last year, and then, I reread it before ...
... this interview.
We have a couple things in common. One is we both slept in a tour van which-
The other thing is you and I have both sold merch from behind a merch table.
You can learn a lot in that position, right? For sure.
That's what I want to ask you about is in chapter 12 of your book, you talk about sitting at home, surrounded by boxes of shirts and I feel like our listeners could really relate to this. What were your biggest moments of just aha moments or just learnings you had when you were surrounded by boxes of merch?
Yeah, that would have been in my 20s. Mostly in my 20s actually was when I was selling my own merch. I've done merch for myself where it was something that I came up with and sold thousands of t-shirts and hoodies that way. I never made a great profit from it, which we talked about in the book but did that and had the experience. I mostly sold merch for the bands and the artists that I've tour managed and booked. The ones where I was surrounded by boxes, this is years of my life where I would put up a great shirt that really worked with the niche that I was working with and get a hundred orders overnight and I was so excited, but I was doing things ... I made a few mistakes, I talked about that in It's About Damn Time. Sorry. It's About Damn Time, I was going to say dot-com because I'm still used to saying that.
In the book, I say I definitely have had this problem for so many years, except for the last five of underselling and undercutting myself. I had a music magazine for instance and I sold that music magazine for $5. The magazine, if you saw it today, you would say, "This is a $15 beautiful, $20 magazine." It's something that comes out quarterly, it should be, but for me, I was thinking, "I want to have a lot of people see it and I want to make it really accessible." I didn't really understand that so much. With the t-shirts, I love doing it which is why I kept doing it, but sometimes, man, I would get overwhelmed and they would just be days in a row going to the post office.
Like you said, many people can relate, whether you're selling merch as your main product or as a promotion for your product. Now what I've learned is have other people do that for you.
That's actually a good question. Having other people do that for you is a really big step in anybody's business because that means you officially bought at least one person on. Speaking from experience from working with a lot of businesses going from zero to one, when do you see is the best time to do that? Is there usually a certain tipping point that you see for the companies you work with?
It's going to be different for everybody and depending on what the industry is, what kind of resources you have, what kind of personality you have. I tend to, these days, think about things as like, "What is my time worth and what is my talent worth?" If something is going to cost more for me to do it, then it would ... Because taking away from me, being able to do the other thing, that's when I have to bring somebody else in who is better at it than I am at this other thing, who is better at it. For instance, scheduling, and this is not exactly the best example, but scheduling is what came first. If I'm doing all my scheduling and I have this crazy schedule and it's taking me three hours a day to schedule and that means that those three hours can't be used with me in six meetings, having six negotiations that could turn out to two deals, that's a waste of my time. It also hurts the company, right?
If I can say, "I'm not going to be stingy, I'm not going to hold on to every penny that I ever made. I'm going to pay someone else to help me schedule these three hours who likes doing that, who is good at that, free up my time, I then make more money and I have more of the upside to share, to spend and to keep." Those types of things, if I'm not great at spreadsheets, there's a two options and I've done both. I think both worked, right? One option is if you're not great at something, then you do spend a lot of time learning about it, so that you can become really proficient in it and you save money and you keep going, but if you don't like it, it's not a matter of, "I'm not good at. I'm going to learn," that's great. I love on online education. That's what I live for, but if you don't like it and it's a burden to you, why not find someone who adores it, pay them to do it and then free yourself up to do the thing that you love, because the thing that you love most likely is the thing that you're really good at.
That thing, it brings people towards you. It creates a gravity for you. It creates opportunity for you. That's just how I think about everything. I have to constantly talk to myself about that and say, "Wait a second, what's not working here? Why do I feel exhausted today? Why do I feel stressed today? Can I find a place where someone who loves spreadsheets or loves creating slide decks or loves the operations part of taking all of this product, getting it to the post office or getting it to Amazon or whoever or Shopify? How can I make things easier on myself so that I am better for this company?"
Rhian has been hounding me on that one was me. Rhian mentors me and my agency and there are a lot of tasks that I'm still doing that I should not be doing.
I think sometimes we do that because either we want to save money that we feel like we don't have or we feel bad and we're like, "Wait, we're the boss. We're the CEO. We're the founder. We're supposed to know more and do more and be more, right?" It's the opposite in my opinion. I think your leaders are supposed to be really good at knowing what they can't do right now and knowing what needs to be delegated and really creating opportunity for people who really do enjoy those things. That's a way of thinking about it. That's not so, "Oh, I feel guilty," because it's more like, "It's an abundance mindset. I'm going to create these opportunities for other people who like to do this thing."
I honestly needed to hear that so much right now because it's something I too ... It's like one of those, I tell people, "Hey, you should hire out for that," but I'm over here swamped with work wondering why I'm swamped with work. I want to touch back on something you said and you've said and alluded to it several times in our interview and that's about your worth and understanding your worth. How?
How? How to understand your worth in general or your work worth? What do you mean?
I mean I meet so many women who consistently undercut themselves when they're consulting. They undercut. They're like, "I'm only worth X," and then there's a person over here, a dude most the time, saying, "No, I'm $300 an hour," and then my friend's making 30. You know what I mean?
Yeah, exactly. I told you, I used to sell this beautiful coffee table-like book for the exact amount it costs for me to make it, right? That's under selling myself. There's many reasons and there's a lot of layers to that. Today, it's like I'm totally overcompensating completely and I'm happy about it. I'll give you an example. It may not answer the question completely, but it's a great example from the book, It's About Damn Time , it's about my speaking fee. I used to have incredibly bad stage fright up until I was 36, so March of 2017 and I still had it for several months after that, but I, for many reasons, decided to try it. I then became a speaker, and for the first six months, I spoke for free. I did that on purpose because I was just bringing more light to my company.
Then at one point, the speaking started to overwhelm timewise and bandwidth-wise. I said to myself, I had at this moment, I said, "Okay, I have to start saying no to more people. In order to say no to more people for speaking, I need to then add a rate." Everybody is going to think it's too early for me to charge for my speaking. Everybody's going to have an opinion about that. I do not care, because ultimately, I actually am trying to stop people from asking me. I said, "I'm going to say that my rate is $5,000." That's a crazy number. Oh, my god, No one's going to say yes to that, so then I won't get asked and I can go back to work. Then every once in a while, maybe somebody will say yes one day, right?
I say that. Somebody then, right after, a big company comes to me and says, "Can you speak at this event? Usually it's about D&I and I said, "I can speak at the event. This is my rate." They came back and said, literally they're like, "Oh, no. There's no way we can pay that." A huge company, multibillion dollar company said, "No way, there's no way we can pay you that. We're not going to do that." I said, "Okay, maybe next time." I do believe they thought that when they said that, I would be so shaken by it and I would be like, "Oh, it's okay. I'll do it." I didn't because I didn't want to.
The second time somebody came to me and same thing and I said, "Okay, this is my rate." They said, "No," really, really fast. The second time, I was starting to get a complex a little bit. I was like, "Oh, well, you don't have to say no that fast, right?" Then about a month or so later, these all happened throughout the summer, into the summer, midsummer, end of summer, a major company comes to me and they say, "We would like to have you speak, fly you in, we could do that." I said, "Okay, well, here's my rate," and I just didn't think anything of it because they're going to say no. They came back to me and they said, "Oh, actually, we had put aside twice this amount for the budget for you. Of course, that doesn't include your travel and accommodation, of course, for you and one person."
I just like, "Okay," and I wrote back to them. I was like, "Oh, yes, of course, darling. Of course, yes. Exactly. I wouldn't have it any other way." From that moment on, my rate then became 10,000, okay? I did not do a 5,000, right? Since then, my rate has gone up to 50,000. It keeps going up when I have milestones. I do not care one bit if anybody has a problem with that. I don't care if anybody thinks that I think too much of myself because I know what goes into, you're not paying for the hour, you're not paying for the day, you're paying for 40 years. If you don't want me there, don't invite me there. That's what you can take for yourself. You're not paying $300 an hour for your hour. They're paying $300 an hour for you, being the only version of you that exists in this world and all of the years that it took to get you to this point.
I thank you so much for that.
That was awesome.
[inaudible 00:47:09] my speaking rate of 2,000, I'm like, "Okay, at least I'm going up to five the next time."
Whatever makes sense to you, whatever. It's like, "What could I be doing? If I were doing something else, what kind of money could I be making in that day or the three-day prep that it takes? If I could make $600 that day, by working on this thing for my company, I got to charge them 2,000 because that's three days total." That's how you have to think about it. Don't think about it in the real world terms. None of this makes sense. Does it make sense for an actor to get $20 million a year for any of this? No, it's just numbers. It's about market. It's about supply and demand. There's nothing more in demand than a person who ... There's only one version of it and that's every person on the Earth, so here we go.
Thank you so much for being here today.
We appreciate your time. Thank you so much for being here. We really appreciate your time and, everybody, I cannot recommend It's About Damn Time more. Arlan, thank you so much.
It will be in our show notes. All the links will be in the show notes. Arlan, thank you, thank you so much.
Thank you so much. I really appreciate it. I'll see everybody at itsaboutdamntime.com and backstagecapital.com because we're having a great time over there too.
That was one of my favorite interviews ever.
You all, I'm going to be really honest with you. That was a dream interview for me. I'm super excited that we got to do it. I was just trying to hold myself together the whole time. I love it. We're going to do some store shoutouts and we're going to actually do them all from the Backstage Capital portfolio. Kelly, you go first.
I chose Jewelbots as my shout out this time and their Craft Kits for budding engineers, young aspiring builders and I absolutely just love this whole concept of it because this is something I never had as a kid. I feel like both my sister and I would have loved having these science kits growing up, besides super cute and these products are awesome. That's mine. What is yours?
Mine is Wildfang, so wildfang.com. I've actually been a big fan of this brand for a long time. They keep targeting me on all my socials to buy a coverall, and as I stare at this website, I'm like, "Yes, today is definitely the day." The aesthetic on this is great. It's easy to navigate. The products are awesome. I couldn't recommend this brand more. I've been a fan for a long time. Definitely, everybody go check it out. Also, I love the diversity with their models which is super important to me. I want to see what clothes look like on people who are built like me which is something we talk about a lot anyways.
They do it. They do it.
Wonderful. All right, that's it for this week. Thank you so much for tuning in and thanks again to our sponsors for supporting this episode. We have a YouTube channel and I say this every single week, but I swear we will get back to posting more YouTube videos.
How about this week? I'm feeling, "This week feels like a good week."
All right, let's do it this week. Let's do it this week. I will wash my hair for the occasion.
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