Thoughts On Backstage Capital News

"Issue": 004

My apologies for missing last week’s newsletter. As I sat down to write my thoughts on the recent Backstage Capital news, I found myself split. As I think many of us do on narratives we are forced to be part of. Due to the identities we cannot hide.

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The picture above is taken from Greenwood in the early 20th century. Greenwood was a historic freedom colony in Tulsa, Oklahoma. At the time it was amongst the most prominent concentrations of black businesses in the United States. Colloquially known as, “Black Wall Street”. In 1921 white residents massacred hundreds of black Americans, and destroyed the neighborhood.

Last weekend I went to see the new Jordan Peele movie, “Us”. And, as with many new works by prominent black creators over the past few years, was uniquely blown away. What stood out to me most, was the sense of identity at play. Something one of our favorite twitter friends @kyalbr points out in a recent thread. What Du Bois presents as “double consciousness”.

It is a peculiar sensation, this double consciousness, this sense of always looking at one's self through the eyes of others, of measuring one's soul by the tape of the world that looks on in amused contempt and pity. One ever feels his twoness, -- an American, a Negro; two souls, two thoughts two unreconciled strivings; two warring ideals in one dark body, whose dogged strength alone keeps it from being torn asunder.

- Du Bois

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The black narrative of exclusion from American wealth creation is not a conspiracy. Its ashes are mixed into the very soil of this nation. And there is no world, in which I want to root against a black woman pushing against the norm of capital institutions. And I can confidently say that I never rooted against Arlan, simply was privately aware of the trajectory of what I believe would be a very public failure. It’s one of those things you desperately wish to be wrong about, and then when proven correct, doesn’t feel vindicating.

Instead you feel irrational fears of what that means for you as a black founder. What ideas it allows to grow in the minds of others. And the constant struggle that is being black in America knowing that your narrative, will always have to pass through the distortion of whiteness.

I believe there is a dominant behavior when there are people we want to morally support, but are so clearly in disagreement with the execution of their goals. This turns into a lot of public cheering for the mission or silence, and then a lot of private doubt. This doubt is aired from Soho House to the DM’s, and it is a collective sigh of relief that you aren’t the only one that feels all is not well.

Efforts around diversity, often gets met with the low cost vocal agreement that stems from the shared moral belief that diversity is a net good for society. However, when it comes to true action on subjects of diversity, it changes to an overarching apathetic tone of charity. I think this is particularly true of capital being exercised, or individual minds being recognized for their talents. Thus calls forth the extremeness of “black excellence.” That you simply cannot be “just as good” but you have to be Serena & Tiger level better.

But what does this look like in a venture / startup environment. How do you take a bet on an early consumer company with little proof points and understanding it is a 10 year game or a potential fund with an investment thesis not widely shared? Who gets to decide this (those that have the ability to move capital) and who gets to benefit and have a chance to build a potential future (founders selected from that first group of capital movers). We know what the answer has been historically. But how, with such little data points, can we provide a showing of black excellence.

The first problem is. We shouldn’t have to perform anymore due to our race, than any other human does for the same opportunities. However, we also know that this isn’t the world we live in.

But what does it mean when Backstage holds the narrative attention for diversity in tech? What does it mean when we see virtually no public critique of how she has run the firm? And what does it mean when we see a lot of hand waving during a trying time at the firm, followed by layoffs, and what seems to be an implosion?

This brings up a point of, what my mother would call “loving you to hell.” Are we truly creating the space for critique that will save your soul, or aren’t we. And then we must ask why aren’t we.

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Even as I am this deep in writing this piece. I am in pain. I am in pain because I am keenly aware of multiple forces at play. But maybe this is where I’m a bit “contrarian”. I genuinely don’t believe in funds built around a diversity thesis. I think it has worked for one broad grouping, which is female founded companies. But even when we look at that, there is a streak that we face with all feminist movements which is the schism between who benefits. This disproportionately falls towards white women benefiting at a steady clip while women of color lag behind.

If you asked me what Arlan’s or Backstage’s views on technology, I could not tell you. I know that she believes the system is unfair. Sure, we can all see that. I know she believes underrepresented founders are overlooked. Sure, it is in the name. And she can beat this drum forever. But what she hasn’t beat, is operating excellence. And even with all the signs right in front of us, we chose not to push for better. In my opinion, out of fear of fracturing our own community. A sort of black protectionism that we see often with those of us that move into new spaces.

The first Backstage Capital fund was $5M. Assuming a general 2 & 20 structure, that leaves $100k for ops. Yet there was a staff of about 23 according to their team page. I understand that there were also side functions that generated revenue. But for your first fund ever, playing a game that has a 10 year horizon for the best results, how did those around her let this happen?

When it comes to VC deals, a young firm needs to show 3 things in my opinion.

  • Being able to get into competitive deals.

  • Being able to spot an execute on non obvious deals.

  • Being able to attract new deals organically.

The last point being the result of being able to execute on the first two. How do you hack this, probably how Niv did it with Shrug. He convinced founders to allow him to write financially insignificant checks into their companies. I don’t know what those conversations looked like, but the optics of his portfolio allow him validity for any consumer founder. And this compounds. What happens from here on out is another question.

My point is that Backstage could have built validity very quickly by getting small checks into successful underrepresented founded companies; building a clear technical thesis combined with trust through shared reputation. Instead, and this a small data point, all of the founders I speak to that are women/poc/lgbtq+ are severely against taking money from Backstage.

I hold my identity as a black man to be sacred. As I believe we all hold our identity in a naturally delicate manner. And to progress our narratives for what the future may hold, it has no choice but to be informed by our identity. It is the fountain in which our actions flow. But when the nature of what is built is simply an abstract narrative that capital needs to be allocated to the identity, and not the productive realization of what identity informs. This becomes dangerous.

I think, what will speak most powerfully to all of our missions to see a more equitable and diverse vc/startup environment will be the painstaking work of theorizing and building. Building while being a poc. Building while being a women. Building while being lgbtq+. And that not being the end of your personal definition.

So I look to Cadre, founded by Ryan Williams as a model of this. PlayVS founded by Delane Parnell. Glossier founded by Emily Weiss. Precursor VC founded by Charles Hudson. All of the women at Forerunner and Fcubed. And many more for this realization.

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I’ve been obsessed with Evan M. Cohen drawings lately. I think this one describes my current mental state. Like there’s 100 versions of me trying to maintain the core sense of self. All parts of my fractured self working together. Working out of a shared belief that at the center I truly am working towards something more.

I struggled writing this piece. But in the end I asked myself.

If not me, who? If not now, when? And if I claim to be one who believes we must produce thought at the edges of complex relationships like identity and capital institutions to equally participate in them, how could I stand to not publish this stream of thought.

The answer is I couldn’t. I had no choice but to write this. Even with the knowledge that I do not have all the answers. But I can start a better open discussion. And that too is power.

Thank you for reading this.