Every industry has its unwritten rules. It has its established networks and codes of conduct. As the industry grows, it disproportionately favors its members and those who resemble them. It makes it exceedingly difficult for outsiders to get in. The others are always kept outside the gates. 

Who are these others? People from marginalized and underprivileged backgrounds with no connections to the ones inside. People who don’t resemble the members of the industry, people with different stories and challenges. They’re doomed to be outside, surviving on the crumbs the industry occasionally throws at them. 

That is, until, a rank outsider decides not to knock on the doors anymore. That’s what happened to the world of venture capital when Arlan Hamilton created her own network and opened the doors to those who are otherwise denied entry.

From homeless to Backstage

Hamilton is the outsider among outsiders. She’s black, queer, and homeless. And she was sleeping at the San Francisco airport when the idea struck her. In 2015, the 38-year-old launched Backstage Capital, a venture capital firm for women, people of color, and those in the LGBTQ community.

She realized that these are the sections traditionally ignored by the investors and VC firms of Silicon Valley. Unless you’re white and male, Hamilton knew, it would be exceptionally difficult to get entry into the venture capital club. Backstage Capital was her answer to the problem.

Before she started her firm, Hamilton had to educate herself. She couldn’t buy the necessary books, so she spent hours at Barnes & Noble. There she read books on technology and investing and watched countless videos on YouTube and Vimeo to learn about the world she was planning to enter. 

She also wanted to be close to the action. So she spent time outside Houston and Austin and finally at Silicon Valley. What she learned was that women, people of color, and those belonging to the LGBTQ community received negligible interest and funding from investors and trendsetters in the tech world. 

Seeking to correct the wrongs, she sent hundreds of emails to VC firms, only to be repeatedly rejected. But she wasn’t deterred. She blogged about the injustice toward founders from marginalized communities. She wrote about how the system was created and institutionalized to prevent the disempowered from joining it. And the world started taking notice. 

One post in particular, “Dear White Venture Capitalists” took the venture capital industry head-on and criticized them for excluding deserving candidates from underrepresented communities. That went viral and caught the attention of both the media and entrepreneurs. 

To learn more about financial inclusion and empowerment, she attended a pilot program at Stanford University. It was a two-week workshop for training future investors. With her scholarship and some money raised through crowd-funding, she attended the workshop. After that, when resources ran out, she made the San Francisco airport her home and attended several conferences.

Finally, her efforts paid off. Susan Kimberline became the first investor and Backstage Capital officially entered the scene. Instead of sitting around for decades, waiting for someone to recognize those like her, Hamilton decided to do it herself.

Empowering and how

Hamilton couldn’t have predicted the success of Backstage Capital. The VC firm has so far invested in more than 180 companies that are led by those from underrepresented communities. The investments range from $25,000 to $100,000 and have been made in companies that create everything from short sports videos to bold bridal wear. 

In 2018, the company launched a $36 million fund specifically targeting black female entrepreneurs. The firm also established Backstage Accelerators, a three-month program to support and guide founders from marginalized communities. So far, the program has worked with entrepreneurs from Detroit, Los Angeles, Philadelphia, and London. 

Values above everything else

But it isn’t money that Hamilton is interested in. In fact, she was never comfortable with the concept of money. Her goal was never to earn it, but “tame it,” as she says. She wanted to empower others to generate wealth and uplift those communities. 

Her beliefs are shaped by two powerful women; her mother and Janet Jackson. At times having to work two jobs, Hamilton’s mother showed her the importance of perseverance and independence. From Jackson, she learned how a black woman could be creative, bold, and highly successful while being true to herself.

That’s also the overriding value for Hamilton. Despite the phenomenal growth of Backstage, she is careful not to make it another VC firm. That’s why, in 2016, she turned down a substantial investment offer from Peter Thiel. She doesn’t want to be part of the system that excluded people like her in the first place.

An important principle that she has instituted at Backstage – and encourages all her entrepreneurs to follow – is self-care. To Hamilton, individual well-being is more important than vanity metrics or the toxic macho culture of constant growth hacks and 70-hour weeks. 

She supports her founders when they face criticism and constantly encourages her employees to take time off. She also shares her challenges and hopes and frustrations with those who work with her. This encourages the employees to open up and share their ideas, concerns, and problems. 

Backstage Capital is an organization where she wants every employee to feel that they’re making an impact. Beyond the quarterly reports and valuations, she wants them to know that what they’re doing matters in the long term. 

Hamilton has come a long way from the days of sleeping on the floors of the San Francisco airport. She has been featured on the 2018 New Establishment List from Vanity and on the cover of Fast Company. She has shared her story on podcasts and at conferences. 

She has also written an autobiographical-plus-how-to book, that follows her life, from receiving food stamps to managing million-dollar investments. Arlan Hamilton’s life and mission can be summed up by the name of that book: “It’s About Damn Time: How to Turn Being Underestimated into Your Greatest Advantage.”

Forbes magazine recently released their annual billionaire line up, crowning twenty six year old Austin Russell as the youngest billionaire on the list this year. Russell is the CEO of Luminar Technologies, a company with the technologies for self-driving cars.

He became a billionaire practically overnight when Luminar Tech went public in 2020, with Forbes currently valuing him at $2.4 billion. Russell has the distinction of being the youngest billionaire on the list, along with the founders of Door Dash, and the crypto currency investor, Sam Bankman-Fried. So how exactly did he get here? 

At age seventeen, Russell launched Luminar hoping to use a technology called LIDAR sensors to improve self-driving cars. The sensors are installed inside of the vehicle and help detect movement and objects around it by sending short pulses of light. The technology is able map out any obstacles in its way. Although Elon Musk called LIDAR a “doomed” technology back in 2019, companies like Toyota and Volvo have been using it to create their versions of self automated vehicles. LIDAR technology is being used for short distance mapping in automated vehicles, but Luminar claims to have come out with a range of 250 meters (820 ft), a breakthrough in this type of technology. 

Back in 2012, Russell was attending Stanford when he received a grant of $100,000 from Peter Thiel. You might be wondering, how did he go from $100,000 to several billion in under ten years in the industry. According to Russell, his involvement with LIDAR technology was “already a project” at the time he received the grant. To Russell, everything starts with a desire to created, innovate and invent. In Russell’s case, he was just a student who was interested in optics. How was he able to learn from the entrepreneurs on the market to grow and scale his business? The value, says Russell, is in “the network”. 

When Luminar was first formed, LIDAR technology was much larger and far less accurate. A key step in making the technology and the company what it is today, according to Russell, was learning to build and optimize the technology, but also having a clear vision for how to build it. Luminar uses about 100.000 square feet of space for its facility, but final assembly is ultimately transferred to contract manufacturers.

As the company has scaled up, they have been able leverage resources for the more “commodity” aspect of the device itself. On the other hand, the automation, the formula and how to build it successfully, are all aspects that are kept in-house. It’s been the core of Lumina’s philosophy to build the strongest possible talent team as they scale up production. According to Russell, hiring the right people for the right roles has been tremendously important to his company’s success and growth.  

Bringing top talent into the company has been a definite focus for Austin Russell and perhaps the key to his success. He points out that as the company has scaled up, he has had to have a greater level of delegation, and a greater level of talent to continuously raise the bar for his company. Russell knew he had the best product, but how did he ensure its widespread adoption by the industry?

That came down to being able to establish strategic initiatives and drive them towards realization. It is very important to apply a business and financial mindset to the model, in order to see it grow and succeed, as well as remain a leader in the field of LIDAR technology. LIDAR is not the only technology Luminar is developing. but Russell notes that he has to watch himself closely when it comes to having too many parallel projects stack up. 

The goal, he says, is to create a software stack for a turn key solution to the automated vehicles issue. And that is exactly what he did at Luminar over the past 9 years. For him and his employees, it has always been “head down, focus on delivering, don’t let [anything] affect you” he explains. You want the first impression of the product to be really good, which is why Luminar spend the initial five years focusing on building the core technology and developing the product before thinking about moving to large scale production or integration. 

Luminar has a system with specifications that were previously thought to be impossible from a physics perspective, which is what helped the company gain interest for not only the technology, but the commercial side of it as well. It was something people had not seen executed so well before. While other companies chose to focus on ride-sharing or the robotaxi scenario, Luminex takes a more constrained approach.

Their goal is to make a product that could be deployed in the near future, that would be able to comply with the vehicle safety standards that are being developed for automated vehicles now. Russell wants you to be able to put your life in the hands of this type of technology, so he recognizes how much is at steak. This is why they took a different route than a lot of the other automation start ups and chose to focus on developing a full-stack solution for OEM’s, as opposed to trying to do “rogue development” with a robotaxi or a ride sharing company. 

LIDAR has historically been limited when it comes to the range performance, but now that the range has been extended to 250 meters, it has changed the way the industry thinks about automobile automation and what is possible. Despite the advances in technology, Russell is certain that it will take much longer than “a few years” for us to see fully automated vehicles on the roads.

Even with all the recent advancements in LIDAR technology, Russell himself is the first to admit that what he and his company are working on is “very hard” and is uncharted territory. No one has really figured out all the solutions to the many questions that vehicle automation poses, but with minds and leaders such as Austen Russell, it is possible that we may see vehicle automation become a reality in our lifetime.