234. Breaking into VC; Excelling at Goldman Sachs; and the Origin of BLCK VC (Brian Hollins)

234. Breaking into VC; Excelling at Goldman Sachs; and the Origin of BLCK VC (Brian Hollins)
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Brian Hollins of BLCK VC joins Nick on a special Crisis Coverage installment to discuss Breaking into VC; Excelling at Goldman Sachs; and the Origin of BLCK VC. In this episode, we cover:

  • Background and path to venture?
  • What was the most surprising thing about venture that you only realized after working in it for awhile?
  • So you’ve got this great job in venture…  Why’d you decide to go back to HBS?
  • Tell us about the origin story of BLCK VC?
  • What are some of the specific activities and programs that BLCK VC is running?
  • On June 4th, BLCK VC held an event, โ€œWe Wonโ€™t Waitโ€, for people in venture to take action. What were the primary goals and outcomes of the event?
  • I want to talk a bit about your experience at Goldman… did you have an opportunity to invest in black and/or underrepresented founders?
  • What, if anything, did Goldman do to support black investors and founders?
  • It’s so hard breaking into this industry and orders-of-magnitude harder when you’re black —  how have diversity issues and racial profiling affected your professional journey?
  • Can you give us your take on the current social unrest and what path you want to see going forward?
  • Do you think we’ll see the systemic changes required this time or do you think progress will be limited?
  • Who are some investors, founders or people in the space you see paving the way and driving change?
  • What can white VCs do, specifically, to contribute to more better balance and stronger representation for black founders and investors?  What organizations do you care about?
  • What are sites or resources that our audience can visit to get more involved?
  • Aspen Fellowship…ย At New Stack we’re rolling out a fellowship program to train young, college students in VC… you’re back on a college campus… what are some ways that we can get our job description in front of more black, latin and underrepresented minority students?
    • Are there any national organizations or communities for college-aged, black students that are interested in tech?
  • 3 Data Points…
    • Let’s say you are approached to invest in an enterprise SaaS business.  The startup has $10M ARR, Growing 10% MoM and LTV:CAC is 4:1. Catch is you can only ask 3 questions (for 3 additional data points) to make your decision.
    • What 3 questions do you ask?

Guest Links:

Transcribed with AI

Intro 0:03
welcome to the podcast about investing in startups, where existing investors can learn how to get the best deal possible. And those that have never before invested in startups can learn the keys to success from the venture experts. Your host is Nick Moran. And this is the full ratchet.

Nick Moran 0:23
Brian Hollins joins us today from Cambridge, Massachusetts. Brian is currently an MBA student at Harvard Business School. And he’s also a founding board member of black VC, a community to connect, empower, engage and advance black venture investors. Prior to HBS, Brian spent six years across different roles at Goldman Sachs, most recently as a growth equity investor focused on enterprise software. Brian, it’s pleasure to have you on Welcome to the show.

Brian Hollins 0:50
A huge fan of the show and really appreciate you having me, of course,

Nick Moran 0:53
man. So tell us a bit about your background and your and your path to venture.

Brian Hollins 0:58
You started to allude to it you know, six years at Goldman certainly didn’t think I was going to be in venture when I started, I started in the private wealth management group, really trying to just learn more about public markets, capital allocation, asset allocation, just getting more familiar with finance in general. And after two years was, was fortunate enough to be tapped to help start a new group, alongside a managing director by the name of Yuki Matsumoto, and the name of that group was emerging entrepreneurs coverage. And the thesis was Goldman does a really good job for you when you’re ready to swallow a $50 million check, but doesn’t do much for the series A and Series B founder. And so our job was to really go out into the venture ecosystem and figure out ways that we can start to plug founders into Goldman’s resources a little bit earlier than when they traditionally got to meet Goldman. And after doing that, for two years, and really sort of learning the relationship side of venture capital, wanted to go get a little more of the technical chops. And so I joined our enterprise software, just called GS growth equity, which is the enterprise software growth equity arm of Goldman that sits in the Merchant banking division, where I got a little more of the practical growth equity skills, so sourcing and being in the data room and cold calling founders and kind of all the things that you’d imagine you’re doing in a traditional growth seat.

Nick Moran 2:15
Love it, love it, you know, I, I speak with a lot of young people with aspirations to get into venture and some kind of know what they’re getting into. And some don’t, I’m curious, what was most surprising for you, what was the most surprising thing about venture that you only realized after working in it for a couple of years?

Brian Hollins 2:33
Sure. I think you have to start with just the autonomy. It is a lonely business, and a lot of ways and I don’t, I don’t mean to, to scare anyone that’s getting into it. But you know, you really do have to be an independent thinker, you have to build your own thesis in your mind, you have to be ready to meet founders on your own, you have to be ready for you know, a flight to Utah to come up and be on a plane at 5am and get to the office at 830 and the founder be in a different state and have to fly back and explain that. I mean, there’s really sort of an independent, small business effect that I that I don’t think I was fully prepared for, you know, you see, you see all the all the fun kind of South by Southwest panels and, and all the fun things you get to do as a as a, as a Byron Dieter, or, you know, name your favorite Doug Leone, no VC. But I really do think that a tough thing in the early days is just getting used to not having a boss telling you what to do every day. And I think as you get over that curve, you really start to, to get into your own kind of thought process and your own self development around, you know, what are the things that helped me become a better investor from a day to day perspective. Because eventually, you know, when you’re taking board seats, you want to be an independent thinker, you want to bring a different point of view to the table than what some of the other points of views may already be for that founder, because that’s how you drive value of

Nick Moran 4:01
that. I’m adding that to our job description as we speak. So Brian, you know, you’ve got this great job in venture, right, you’re at Goldman, why? Why go back to HBS?

Brian Hollins 4:13
I’m still asking that question. No, you know, HBS. And I get to say this with with hindsight being 2020. But HBs is a phenomenal place, not just the community, and sort of what the school does for you, but the type of people and the caliber of people that you meet at that school. I went back with the idea being, you know, I really like growth equity, I think I’m probably going to do it for another, you know, 20 or 30 years. And so let me just expand my network as much as I can and try to learn about some of the other things that matter. But the reality is I got to school and it was, was really just impressed and also inspired by the caliber of people and the confidence they had in going out into Trying things. And when I say confidence and trying things, I mean, you know, not just starting businesses, but but not being afraid to sort of challenge the norms. Friends that worked at NASA or friends that worked at nonprofits or run the Obama administration, they really are kind of out doing things that matter. And I think it inspired me in a way that I, before school wasn’t prepared for. And hopefully now, you know, and starting to get the chops to want to do those things myself. Just recently, I’ll quickly shout out the Aspen Fellowship, which is a program I started to help black undergraduate students get internships that otherwise didn’t have anything as a result of COVID. And I think in the past, you know, I would have seen that as a really cool idea and something that needed to happen. But HBs really sparked the the entrepreneurial bug in me to take those things from PowerPoint idea or something you’re thinking about in the shower and really put it to action. And today, we’re in week three of the first cohort, we have 50 students matched with 50 advisors, we had almost 200 Students apply, and hopefully, you know, that will only continue to grow. And I definitely give a lot of that credit to HBS and bringing out that bug in me.

Nick Moran 6:16
Great, yeah, I’d love to talk more about the Aspen fellowship later. Quick sidenote, there’s a there’s a case study at Harvard about this product I founded many years ago. It was effectively it was Theranos, for the water industry, for municipal drinking water and had a lot of success with it. And the science worked well, thankfully, different the key distinction there with Theranos. But I’ll have to look up the name of that case, study and send it your way so that you can pick it apart and tell me everything. I love it. So Brian, is the is the plan to stay in venture? You know, are you are you going to be a venture capitalist coming out of HBS? Just focus maybe in different sectors or different stages? Or are you making a transition?

Brian Hollins 7:01
That’s a good question. Like I said, I think the entrepreneurial bug is now well and alive in me. And so I think over the next 1218 months, I’ll certainly probably iba and, and whiteboard a little bit more than I did in the past. You know, I think part of being an adventurer, again, I’ll add another another downside, because there’s just way too many upsides to be in venture. But another downside is, you become pretty cynical. You know, I think, especially in the growth stage, where we use unit economics and data to make decisions, you really do start to recognize when you look at 100 companies a month, that there’s a lot of bad businesses out there, and those businesses don’t get funded. And it becomes very difficult, not just to run, but to operate those businesses over a longer period of time. And so I think I say all that to just suggest that I wouldn’t leave venture just for anything, I think you really do not only need to be inspired by what you’re building, but it also needs to make sense, you know, you need to come from that problem. Or you need to come from that industry, and have a really good deep understanding of that business and that market, because reality is one of my favorite questions to ask founders is not only why now, but why you, you know, why? Why are you the right founder to fix this problem, this problem has existed for 510 15 years, you’re not the first person to think of it. And so so why are you the right person. And so I think that that will, that will be my hesitation, my whole life of ever starting anything is just that notion that I do think you need to be super focused, and super specialized and super thoughtful when you start something. But you know, until that time, I really do enjoy and get inspired by working with founders, I had the chance to be on some board observer seats while I was at Goldman, and the chance to work alongside people that are building companies and, and when you put capital in them, and they’re able to go, you know, put all of their ideas into action. It’s a really special experience. And I look forward to doing it more, regardless of whether I become an entrepreneur or not.

Nick Moran 9:07
Good. Well, you know, I want to talk about black VC a bit. And, you know, I feel like I’ve talked quite a bit about this over the years with a variety of folks. Frederick gross, of course. Richard Kirby, Peter boys, Micah Sam, who’s here in Chicago, great VC at m 25. But I’ve never heard the origin story. And I think you’re a founding board member of black VC, can you take us back to you know, when was it founded and what the mission is?

Brian Hollins 9:36
Yeah, way, way back when I remember one of one of our first one of our first events, I mean, there couldn’t have been more than seven or eight people there. You know, it just like it’s so it’s so fun to think about how far we’ve come. And then in parentheses, I’ll say how you know how far we still have to go. But you know, black VC was started by said Me and Fred. And then obviously the the founding board as well, which is four or five of us. But it was started back in early 2018. Really, with just this, this thesis that it’s time to start helping black people get into venture, you know, it’s already hard enough to get in. And it’s even harder when you can look at an entire About Us page, and there’s not a single black person there to help champion you. And so we started the group with this principle of, you know, not just getting people into venture, but then also helping them scale up within the industry as well. So, you know, how do you move from analyst to associate to principal to partner? And then once your partner, you know, how do you start to use that check writing capacity and leverage that you have to actually make a difference. And that was really the origin story and origin idea. And I think over the last three years, what you’ve seen is really the the, just just the the understanding of what a grassroots effort can turn into, you know, black VC, in many ways, has taken a leadership role in the Black Lives Matter movement in terms of you know, how the venture community has responded, whether it’s TechCrunch, or PitchBook, or CrunchBase, or, you know, name your favorite podcast, black VC, he’s had a chance to sort of be at the table in a way that I don’t think we would have been had we not started this almost three years ago. And so it’s been a really fun ride. And like I said, I think we have a ton of room to go and a ton of room to grow. But there’s a lot of really cool initiatives that are in place, and that are finally starting to get the capital they deserve. And the right people around the table to help them grow. You know, I’ll just quickly point to some of the things that I’ve thought are pretty special happening within within the corporate sector, but, you know, Tristan Walker was appointed to the Shake Shack board. I think yesterday, two days ago, Marlin Nichols, to the Kauffman fellowship board, Michael Seibel to read it. I mean, this, you know, that’s, that’s action, you know, in my opinion, at least, that’s corporations proactively saying, you know, not only do we have a problem, but we’re going to admit it, and we’re going to do something about it. And I think what’s really cool is that in one year, two year, five years, 10 years, those corporations are going to start to realize that it wasn’t just a charity offering, it actually did make a fundamental positive impact on their business, and that those viewpoints, being around the tables that matter are really going to drive change in an effective way that’s going to help those companies grow. And I think that the more that we start to see those seeds, the more opportunity we have, for other businesses to learn from them and and see that impact really, really start to spread.

Nick Moran 12:50
Well, the data certainly suggests that diverse boards outperform or the companies with diverse boards outperform those that are not diverse. So I look forward to seeing that Israel, Brian, you know, on on June 4, you all at Black WLC, at Black VC held an event, you call it We won’t wait was for people in venture to take action. I was I was fortunate enough to attend. Frederick sent me an invite. Thank you for attending, of course, I mean, the the, the speeches were super moving. I mean, I couldn’t believe what I was hearing, you know, certain folks have been through to be quite honest. And it’s like my own little bubble. I’m a white male, VC and you, you try and keep an open mind. And you try to be appreciative of other people’s experiences, but you really don’t understand the depth and breadth of what, you know, others go through. So anyway, this is this is not about me. I like to hear what were the primary goals and more importantly, what were the outcomes of that event?

Brian Hollins 13:55
Yeah. Happy Juneteenth. I want to start there.

Nick Moran 13:59
Yeah. Today’s June,

Brian Hollins 14:00
I think it sure is. And I think today’s a very special day. And, you know, I also think it’s important just for some people that may be listening, I don’t even know what Juneteenth is other than, you know, their company, turning them free for a three day holiday. But the reality is, Juneteenth goes, you know, all the way back to 1968. And it was When word of freedom had officially got be, you know, what we think is that word of freedom had officially gotten to all slaves. Slaves had been free for almost two and a half years at that point. But the reality was, there were parts of Texas and parts of the Deep South, where we’re, you know, just a horse and buggy style just wasn’t getting all the way there. And frankly, even if it was getting there, it certainly wasn’t getting to the slaves. And a union army general by the name of Gordon Granger was sort of the last person to get deep and like I said, deep into the parts of the south and Make sure that all slaves were made aware of that. So I think it’s a really special day. And to sort of loop it back to your question, you know, I think the reality was we saw an opportunity with, we won’t wait to put people that came from entirely different points of view onto the same stage. Because the reality was, we had founders that were just starting businesses, we had founders that had raised almost $100 million. We had VCs that were two years into Vc. And we had VCs that were 15 years with five plus board seats. And I think, you know, you can attest to this, or anyone that was listening, what you realized was the stories all sort of intertwined. And all of those people had all faced very similar unfortunate experiences in the tech and venture communities. And I think the goal of that conversation was just to help people understand that, you know, I think, Bryan Stevenson of the Equal Justice Initiative, he actually came to HBS. But you can also just learn about the Equal Justice Initiative, through watching justice mercy, which is the movie that’s basically about his whole life. And he talks about this notion of proximity and being proximate. And I think back to that, we won’t wait opportunity and and that’s what it was about, for us was helping people become more proximate helping people, you know, helping white people, frankly, but but helping people that weren’t of color to understand that this wasn’t just happening in southeast DC or wasn’t just happening. In in, you know, the hood of Chicago, this was happening to people that worked at Bessemer. And were partners and went to Stanford and understand how to code I mean, it’s happening to the people that are at your companies. And I think for far too many people. It’s sort of this notion of ally ship, like, you just ignore it, because you think it’s not your problem. And you think it doesn’t impact any of the people that any of the black people that you know, but but the reality is it does. And that’s, I think, part of what that experience was about and to your second part around, you know, the outcomes. I think it’s about activism now, you know, I think we talked about it earlier in this segment, you know, the companies that are starting to step up and put people in places and, and raise funds. You know, that’s just the beginning. But, you know, the reality is, I think, especially in the tech and venture community, I’ll maybe give examples of specific assets in the venture community, you know, you shouldn’t just be having office hours, you should be actively listening, you know, you should be getting, I think Brad Feld does a good job explaining this through Feld thoughts and his newsletter, he talks about this idea of not burdening black people right now, you know, too many people are calling their to black friends that they know and saying, Hey, man, you know, what, what should I do? How am I supposed to help right now, and, and what they don’t realize is that creates burden, you know, it creates this idea that that person, it’s a request, you know, it’s this idea that, that I’m supposed to build a to do list for you, and that that’s gonna make you somehow just realize that you that you’re not a racist, like, that’s not that’s not what it’s about, you know, what you should be doing is you should be saying, what are the organizations and things that you really care about, and then I’m immediately going to, you know, not just put my time to listening to what they do, but put my dollars to action behind it, I’m going to double down, I’m going to leverage your position, because I know that if you care about those things that I should care about them as well. And I think that that’s a really cool position for people to start to take is, you know, stop asking people what to do and start actively listening and start finding ways to sort of support the things that already exist. Because at the end of the day, that’s what we need is more people that want to be proactive and instead of just reactively recognizing that since everyone else is doing it, I guess I better to

Nick Moran 19:17
Brian, it’s it’s so hard breaking into this industry at all. And I can only imagine orders of magnitude harder when you’re black or Latin or underrepresented. You know, how how did you break in and how has diverse how have diversity issues and racial profiling, you know, affected your professional journey?

Brian Hollins 19:43
Yeah, so you know, I’ll start by giving you the sort of two reasons why why I think that’s true, cuz because I actually think about it a lot as we tried to onboard more people into venture that are that are people of color. The first reason is black found Leaders and frankly, black young professionals in general just don’t have the same safety net that a lot of their white counterparts do. And entrepreneurship is inherently a risky business. And so regardless of whether you have a billion dollar idea, if your dad is worth a million dollars, or your dad is worth $100, that fundamentally, in my opinion, at least, that fundamentally changes your risk profile, and your ability or appetite to graduate from college and say, I’m not going to get a job for two years, because I really want to work on this, right? Like, there’s just a, there’s a massive, massive pool of people out there that just can’t do that, like that two years of work on this means that you’re going home, like, you’re not going to live in the valley, and then you lose all of the resources and you lose all the opportunities and you lose all of the serendipity. But if your dad’s worth a million bucks, like, who cares what you do for two years, because dad’s paying rent, like you’re fine. So so that that, to me has a massive part to do with it. And frankly, there’s, there’s structural issues, and, and tons of things that need to be addressed in order for that to fix. The second thing is, I just don’t think that people realize the role of a champion or the role of a mentor and helping people get into venture. And the reality is, as a Stanford graduate, I was very lucky to have those people. You know, I had, I had Alex Clayton, who’s now Ameritech, you know, he was he was still at Redpoint. At the time. You might read points and spark, and now he’s at meritech. He’s one of the best investors I’ve ever met. You know, he, he he vouched for me, you know, and he stepped up to the plate, when my resume was this little, you know, rinky dink thing with, with with a couple slaps on it. And people don’t realize that that has a a lot to do with you getting a crack in venture, the analyst role in venture is not hard. I don’t care who tells you it’s hard. Like, the analyst role in banking is hard. The analyst role in sales and trading, waking up at 3am is hard. The analysts role in venture is cushy. And so it’s not that it’s not the kids can’t do it. It’s just that it’s an incredibly competitive. And so the kids who have a network and the kids whose dad can call someone else’s dad are the ones who get the jobs. And the reality is black kids don’t have that. And so black VC is trying to be that in a lot of ways. But I think what’s really cool is, a lot of white people are starting to realize that they can be that and that they can create that change, and that they just fundamentally didn’t fully comprehend how much of a barrier that was that, you know, if they just take two mentors, mentees, or just help a few more kids get into venture that all of it added up will actually make a fundamental difference. And I think that that’s a really cool opportunity, too. So I wanted to point those two things out, because I think they’re important. But you know, back back to your question, I was the first black hire and 25 years in GIS growth, equity. And, yeah, you know, so I’ll talk about a couple of things. One is just the burden that that put on me. You know, I want to be completely honest about that. Because the reality is, if I screw that up, the kid behind me was just going to have a horrible time. Yep. And, you know, whatever diversity box I checked, is great. But, you know, I truly believe that I was hired into that role, because I was capable. And because the team thought I had the potential to be a top performer. And so I needed to go in and, and not just fill that for the team, but also fill it for the people that potentially came behind me, who might have thought that I got that role because I was black. And so I think that that, you know, can can either be a massive burden and barrier for people or it can be the chip on their shoulder that makes them better at their job. And so I would certainly say that I was in the ladder, and really focused on making that the chip on my shoulder and trying to do my best in that role. The second thing I would say is, what’s what can be very difficult is when you’re at events, and nobody looks like you, and you’re so new to an industry and you’re going through the same kind of nerves that everyone else that’s new is going through, it really does add considerable pressure. Because the reality is the venture ecosystem is all about network. And it’s all about relationship. And it’s all about proximity and really kind of getting to know somebody and feel like you’re you’re sort of inside of their bubble. And that’s just harder to do when you don’t look the same as them. And so I certainly struggled with that early in my career. But I again, I think as you get over those things and start to use them as your competitive advantage, it’s when you start to realize there’s other ways to approach them and Uh, I was lucky enough to, you know, I am lucky enough still but uh, Ryan nice from next play capital is is is a mentor of mine and someone I’ve looked up to my whole life. He’s the founder of next play capital, but he’s also a Super Bowl winner, you know. And so he’s been in a ton of locker rooms with incredible leaders, and frankly been around leaders his whole life is that as Ronnie Lott was, you know, very famous football player from the Niners. And so, Ryan just brings incredible leaders around and people that really think positively and bring out this, this sort of notion of positivity and the importance of it. And he had rustled oh my gosh, I’m forgetting his last name was Seattle Seahawks. Now, Russell Wilson, sorry. He had Russell Wilson, speak at his, you know, Investor Summit. And Russell has this infectious positivity, you know, you see it on the football field, but it’s totally different when you hear him kind of talk about it. And I think that, the reality is that that’s just a mindset I’ve really tried to own a lot more, in the last kind of six months in my life is really trying to see the positive things and trying to identify ways to really just say, you know, how can I take whatever scenario I’m in, or whatever cards or hand I was dealt, and just make the most of it. And that’s, you know, that’s true for, you know, bad days at HBS, or right before a big test or right before a tough conversation with somebody, I really do think that having this this sort of Slant or tilt towards positivity, it compounds and it might feel really small in the moment. But doing that over and over day after day, month after month, it really does start to lead to pretty positive change. And, you know, I think that that has a lot to do with with the voice and sort of sentiment that I take with me in venture, you know, it’s it’s never, it’s never going to be equal, probably not in my lifetime. But I think things are changing, I’m cautiously optimistic that things are getting better. I’m cautiously optimistic that black VC is going to help some people really change their life. I’m cautiously optimistic that, you know, boards are waking up and realizing we can’t just have six white guys around this table anymore. And so I think that that notion of positivity is really starting to resonate with me, and I’m hoping to act on it a little bit more going forward. It’s

Nick Moran 27:33
great. I mean, it’s it’s a mindset characteristic that we look for in the entrepreneurs that we invest in. And absolutely, you know, you mentioned June Juneteenth, I mean, this happens to be the date that we’re recording this episode, and we gave a term sheet to two founders, Wednesday, I think. And they waited to sign it until today. They happen to be black founders. But yeah, we were great. I mean, it was, it was really cool. And we love we got to sign this morning. And, you know, there’s

Brian Hollins 28:03
like, we have a, an absolute whack job in an office, and I’m not afraid to say that, but the reality is, this is gonna be a national holiday soon. And I think we’re gonna look, we’re gonna look back and, and we’re gonna stop just using, you know, Black History Month as as a time of reflection. And I think, you know, the, the, I’m not sure that sharpness is the right word. But you know, just just this idea that it’s really just one day, I think, helps a lot, because, like anything, and I’ll go back to Brad Feld, again, because I think he’s just incredible. But, you know, he talks about this notion of, you know, the human attention span being so short. And at times like this, you know, happen, happen, you know, actually quite frequently, but it’s, it’s unfortunate, because the human attention span just doesn’t let them last, because we just kind of move on, and you can use black lives matter. Or you can use the fact that, you know, Florida is about to become an epicenter for COVID. And we’re gonna see a massive wave too, because, you know, all of a sudden, everyone thinks they can go to Shake Shack and the beach and not even bring a mask with them. And it’s just like, when did everyone forget that we’re in a global pandemic, and that 3000 people, you know, are dying a day. And so, I think that that’s really what’s cool is there’s an opportunity for this day to become this, this sort of singular moment where we all really do try to stop and reflect and think you know, okay, I remember Juneteenth last year was a very, very positive inspirational time. What have I done in the last 12 months? You know, have I actually done some of the things that I said I was going to do and I don’t think you have to be black or white for that to be true. I think I think he can be anything and and you should be working on yourself and you shouldn’t worry about what your buddies are doing. You shouldn’t worry about you know how Black Lives Matters doing. You shouldn’t worry about who our president is. Because I can tell you, you know, when I was getting the calls from my white friends around what they could do, you know, other than telling them that they were the burden. I really you know, I told them, You know, I had one KPI for them. And I hate using KPI is sort of nerdy tech guy, but you’re, we’re on, we’re on a nerdy tech podcast, so I’m allowed to use it. But

Nick Moran 30:23
it might you call it nerdy Brian.

Brian Hollins 30:27
I love your podcast. But my one KPI is what do you do the next time you’re in a room with all white people and something racist is set. And our ability to start to get wins in those scenarios is far more important to me than the number of people on the Golden Gate Bridge holding signs. Because the reality is that Golden Gate Bridge thing is only going to happen once in a blue moon. But the racist comment in an all white room is happening right now is happening in five minutes from now it’s happening in an hour from now. And so how do we start to build true ally ship that to me is Ally ship it’s, Hey, dude, that’s not okay to say I don’t even care if there’s black people here. Like, I know that that’s not okay. I, I knew that wasn’t okay, a month ago. And I also knew it wasn’t okay, three years ago. But, you know, I understand this movement a little bit more. Now. I’ve been actively listening over the last month. And I’m telling you as an ally, that’s not okay anymore. And that, to me, is sort of an important inflection point that I think our country sort of needs to go through, in order for people to start to really see change where it matters.

Nick Moran 31:45
Yeah, that’s a really good scenario. We recently covered some controversial topics about some racism and venture on the show here. And it was just funny, kind of to see LPs and audience members that contacted me with a pat on the back and like, you know, promoting and then the ones that said, you shouldn’t have covered that on the show. It’s okay. Well, well, you’ve clearly self identified, you know, who’s who here

Brian Hollins 32:17
knows that? I mean, I think, sorry, I didn’t didn’t mean to cut you off. But I think back to, you know, I don’t even think it was two, three weeks ago, but you had the, you had the diverse founders on that had the Tom Austin incident. You know, I listened to that episode. And I’m like, Holy shit, like, this is this is, this is the best example ever, you know, this is a dude, who, if you look at his, you know, resume looks, looks fine, you know, looks like he’s a nice solid dude. And, and he’s buttoned up, and there’s no way he would be racist. And he walks down into a gym, and tells, you know, three perfectly fine tenants who use the gym all the time, that they’re not allowed to be in there, and that he’s going to call the cops just because they don’t look like him. Yep, you know, and the reality is, we’re lucky to have that video footage, because most of the time, we don’t have that. And that happens all the time. And getting that video footage is just helping people that don’t get that or have never gone through that, to understand it a little bit better, they’ll they’ll never fully understand it, you know, they’ll never understand what it’s like for me to, to be at Goldman in a suit, you know, sit at a board meeting help somebody raise $30 million, and then put on a hoodie and be walking to my basketball game at a Olympic club. And, you know, have somebody crossed the street because they don’t want to walk by me. Yep. You know, like, you just you fundamentally can’t recreate that as a white person. So it’s not your job to fully understand what that is, but, but that video of Tom Austen helps you empathize. And it helps you be like, Why Why would somebody do that? How could somebody do that? And the reality is, a lot of people do that. And so the again, I go back to this notion of being proximate, and starting to sort of try to put your shoes, put yourself in the shoes of people that have to go through those things. Because when you do that, then you start to understand what why maybe they don’t have this success and all the other places because that burden is exhausting. And it makes it really difficult to succeed in other ways.

Nick Moran 34:27
Yeah, I heard a bunch of those stories at the We won’t wait event that you guys held on June 4, and one that really took hold of me was Elliot Robinson’s of Bessemer. I mean, still, even, even at this stage, with all the success and everything he’s had, and I’m not going to tell his story that’s for him, but it’s just, it’s almost unfathomable, what, you know, what he has to be aware of, and what he has to deal with. Yeah, and it’s unfortunate but um, You know, you mentioned Brad, and you mentioned kind of short term memories. Do you think we’re gonna see the type of systemic changes that are required this time around? Or do you think this is, you know, some window dressing some hot air and that, you know, Juneteenth won’t be a national holiday, and we won’t get the sort of judicial reform that’s required? Yeah.

Brian Hollins 35:25
I think again, I’ll go back to the point I made around just the positivity, I think that it’s starting to run through my DNA, a little bit more than it ever has before. I’m cautiously optimistic that, that this is an inflection point, you know, we talk about inflection points in businesses, and what that can do for for growth and sort of untapped potential. You know, I would argue, there’s a newfound understanding, appreciation, respect, you know, whatever you want to call it. For the struggle of black people in this country. Black people in this country have known about their struggle for a very long time. But but the Karen’s and and the Tim’s, right, are, are having to face it for the first time. And I think that what’s really cool is, you know, in the past, those people certainly were on the bridge, right, I keep going back to the bridge, because I, I was on the Golden Gate Bridge for what was, you know, easily one of the most inspiring, you know, protests of my life, I’ve never been a part of something like that ever. That’s 5000 people, we block traffic both ways. The cars were honking both ways, enjoying it with us. I mean, it was it was a very special moment. But, you know, there’s an Asian girl to my right, there’s a white guy, to my left, there’s a black kid behind me. I mean, it was a very powerful moment. And I think what what I’m starting to sense and it what makes me hopeful is there’s there’s a newfound anger. It’s not just, you know, I’m here to support them, because I’m not racist, it’s, I’m pissed off that things aren’t changing, and I’m kind of tired of it with them. And that, to me, is what allows change to happen. You know, I’ll go back to the, to the, to the example I gave earlier about sort of board positions starting to happen. But you know, if you look at Alexis Ohanian, you know, giving up his seat at Reddit, like, Alexis Ohanian doesn’t have to give up his seat at Reddit, he can, he can bring in an independent board seat, and there’s like, okay, good Reddit, check the box, we have a black guy now, like, let’s keep, you know, go back to business. But Alexis gave up his seat, like he gave, he gave up his seat in a business that he has built, you know, spent his entire life building. So that to me is like, that’s, that’s, that’s coming out of anger that’s coming out of saying enough is enough. And we need to start doing things. And, you know, I don’t care if it’s 2 million from Andreessen or 100, from Softbank, like, if you’re on the same side of the highways, me and your foots down on the gas, like, I’m all about it. And I have a cautious optimism that regardless of what lane you’re driving in, right now, as long as we keep moving all in the same direction, that this change is going to happen at the local level. And it’s going to happen at the state level, and it’s going to happen at the national level.

Nick Moran 38:21
So Brian, I’m not going to ask you what what VCs can do, because I don’t want to make a request. But I am going to ask you, you know, what organizations do you really care about and support that we should be looking at?

Brian Hollins 38:34
It’s a good question that, you know, I, I think maybe what I’ll do, and instead of pointing out all the all the ones that I like, is just help people who maybe don’t have ones yet. Because I think the reality is, sometimes it can be hard when your Instagram has 35,000 organizations that you’ve never even heard of, and everyone’s saying donate to all of them. I think that that can that can be tough. And so what I would say is, you know, going, going back to the point I made earlier around, you know, talk to the people that are already in your life that may be facing this and ask them what they are doing. You know, ask them what organizations they support, ask them where your dollars would actually make a difference and double down on their efforts. Because the reality is, you know, black people can’t be the only ones funding black organizations we need. We need Googles and Facebooks and the PMs and the Googles and the Facebook’s to also be helping out and so, you know, whether it’s the George Floyd foundation or the Black Lives Matter movement, or you know, your local bailbonds for protesters, like that doesn’t really matter to me as much as you just feeling like you have an active part in that because I think I think a little bit you know, again, I’ll go back to my my nerdy SAS side, like, how do you turn that into a recurring dollar? You know, how do you make someone not just send 25 bucks this And then forget about it. How do you make them spend 25 this time and 50 in two months, and then they go, and when when we’re allowed out of the house again, they go and volunteer and use their time. And now they just understand it a lot more. How do you create that? And I think the answer is, you get super proximate, you get super local, you get super, you get down to the friend level, and you talk to the people that are already in your life that have been in your life for five years, and you ask them what they’re doing. And I think that that’s a really good place for people to start, is black

Nick Moran 40:33
VC, a nonprofit that can be donated to

Brian Hollins 40:37
black VC is a nonprofit that can be donated to It sure is. And that’s, that is new, you know, be like I said, we’ve been able to step up in the last call it month or so, to really turn that that type of stuff on and I’d say it’s less about, you know, individual dollars and more about corporate dollars, because our Again, our goal is to really start to help people get into these these large funds and put them in seats where they can start to make change. So getting, you know, 100k, from a Salesforce or a Facebook or a Google like we need to be able to, you know, not only take those dollars in but then also redeploy them into our community and start to actually put them to work. So So Black VC is certainly something that that people can, can start to donate and help to, and, you know, shout out general at Black vc.com. You know, feel free to shoot an email, if you have ideas on ways your organization can get involved with black VC and help us out because we certainly would appreciate your support.

Nick Moran 41:35
Good, good. You know, a huge part of this is how to get more young black people into venture and into tech, and startups. It sounds like you’re working on that specifically with the Aspen fellowship. And I know here at new stack, we’re rolling out a fellowship program to train young college students in VC. Love it. Yeah. And I know you’re back on a college campus. So I figured out take the time right now, you know, what are some of the ways that we can get our job description in front of more black and Latin X and underrepresented minority students to get you know, more applications and and get more young, hungry talent?

Brian Hollins 42:18
Yeah, it’s a good question. You know, I think a lot about this. Because, you know, I think I think you’ve mentioned, you’ve talked to Richard Kirby, and some of the people that have been talking about this for a long time. But there’s, there’s not, there’s not a black employment database out there. Like Nielsen, Nielsen doesn’t have like, great data on like, the total number of black VCs or the total number of black PMS. And the reality is, it’s just like, it’s something that we need to work on as a community, we need to just have better transparency around where people are, where they want to go, et cetera, et cetera. So, you know, I’ll shout out black PC, certainly as a place that’s trying to unlock some of that. I’ll also shout out Kobe Fuller’s. It’s called the valence network, which is, you know, effectively a black LinkedIn, trying to build this sense of community. And, but but at a deeper level, so you know, not just like, Hey, I saw that you work in tech. So we should connect. It’s like, no, hey, I saw you’re a full stack engineer, but you really liked doing front end. And I saw that you also tried to focus on consumer. And so Kobe has built out this incredible platform to allow people in the black community to connect on a much deeper level, and help each other in in, in their growth. And so, you know, I think there’s 5000 plus people in that network, and a lot of them are in college or working on an MBA or just out of college and would be great for your program. So I think I think those are two great organizations. But, you know, also just just getting on campuses, I think, you know, to the extent that you have ambassadors or people that you can reach out to, I’ll tell you, as I built Aspen, the Aspen fellowship, you know, part of it was, I had to get all the students to apply. And I was fortunate enough to have over 200 Kids apply for 50 spots. But the way that I got that was I reached out to all my buddies HBs and I asked them to run it back through their black community newsletters at whatever, undergrad school they went to. And so that was sort of my call it affiliate marketing or whatever you want, but I sort of ran a little, a little back channel that allowed me to reach a lot more people a lot quicker. So hopefully, that’s helpful.

Nick Moran 44:32
Yeah. Are you aware of a national organization or a national community for college aged black students that are interested in tech?

Brian Hollins 44:43
I’m not it’s probably gonna get me in trouble with someone somewhere that I’m forgetting to call out their organization. But you know, I think I’m trying to think of some of the, you know, there’s, there’s blabbity and there’s Black Enterprise As in there’s, you know, a variety of different groups that, that try to build a little bit more of that community. But again, the reality is that we I don’t think we’ve done a great job of, of helping you find, you know, very quickly all the, you know, black undergrads who would want to take a VC job. And maybe the answer is that it shouldn’t be built that way. I sometimes struggle with that as well. It’s like, Monique Woodard from she’s a 500. Startups said this really well. She says, you know, it’s not time for us to build another separate water fountain, you know, I don’t think the goal of Black Lives Matter should be that all of a sudden, you know, we put one roll in every VC that’s just for a black kid. Like, I don’t think that that’s that helpful, I think what we need to do is, you know, not just the black community, but everyone needs to start equipping the young people that have the potential to be in those seats, to just be better equipped when they get to the interview, and better equipped to perform when they get on the job. And so it’s sort of this young professional training that I think needs to happen, because I would rather see those kids win those seats, regardless of the color of their skin. I think that that’s a much more empowering process than saying, hey, you know, here comes the 2021 black kid, and then and then he’s gonna, you know, wash through in a year, and then we’re gonna get another one. I would, I would agree with some people that we need some semblance of that, because the reality is we just have have for a long time not even had a crack at any of those seats. But But I don’t think long term that that’s the answer, I think long term, the answer is a better education curve, better facilitation of training and resources to people before they get to those seats, better mentorship and championing of those people so that when they do get the opportunity, and they’re the final three people that they have the same number of white GPS, vouching for them as the other two candidates, I think that those are some of the more sustainable features.

Nick Moran 47:12
Very good. Well, you know, I’d love to finish up with back to the investor side, right investment related question, we asked this question three data points. At the end of the episode, I’m gonna give you a hypothetical. And this is not how investment works, but too bad. You’re stuck with it. So let’s say your approach to invest in an enterprise SAS business, and the startup has, so your growth equity investor and startup has 10 million of ARR, it’s growing 10%, month over month, month over month. And let’s say LTV to CAC is four to one. The catch here is that you can only ask three questions for three specific data points to make your decision. With three questions do you ask?

Brian Hollins 47:58
I love it. Gosh, I want to know so much about the team I wanted to.

Nick Moran 48:07
But let’s you only get three, Brian. Yeah,

Brian Hollins 48:09
no, I know. And I’m gonna use I’m gonna use data points because I you know, I can’t just come on your podcast, and I’ll only talk about Black Lives Matter, you know, I am also an investor. Right, but So, I’m gonna start with net dollar retention. You know, I think seeing sort of increased growth and cohorts over time of the existing user base is extremely important in a SaaS business, especially around kind of 10 million in ARR. I think I want to see you so you’re gonna give me LTV to CAC, I’d love to see your magic number. So for anyone that doesn’t know magic numbers, it’s sort of new revenue over you know, prior quarters sales and marketing spend. So, you know, for every dollar that I spend on growing my business through sales and marketing, you know, what dollar from a grocery, I guess you could gross it as well. So what from a gross margin perspective, what comes in the door, so kind of anything above one is really strong. So I think you can get some, some decent ideas from that type of data point. If you’re gonna give me CAC, and you’re gonna give me LTV. I don’t need too much more on churn. Sorry, I’m sorry, I’m thinking out loud. But I think this is, this is what I would do if I only if I only got three data points. I think the last thing that I’d probably try to get is gross margin. That just teaches me a lot about the efficiency of the business like I need to understand, you know, is this true SAS or the or, you know, do you have a bunch of guys in a back room somewhere, just just kind of hacking this together? Because that’s obviously going to flow through your cogs and I’m going to figure out at least on a group A pro Staller perspective, you know whether or not this is going to trade it seven to 10 times or more like two to five times when we start to comp it. So I think those are my three, I probably can get a pretty good sniff test on on whether I care about the business. It sounds like it’s growing. Well, it sounds like it checks the sort of LTV to CAC bucket, but I think those three would be pretty helpful. And

Nick Moran 50:24
the magic number was above one, but what what are the kind of the ranges on net dollar retention and gross margin that you would like to see?

Brian Hollins 50:35
I mean, I, you know, anything over 120 is like best in class, right? If I mean, if you if you have sort of 125% 130% net dollar retention, that’s super strong. You know, being above 100 Is is important. You know, I would argue that just that in itself is helpful. Again, if I’m only getting three data points, I’m probably just using them to weed out a lot of people as opposed to making the $30 million investment decision. But I think that that’s a really helpful way to just kind of understand upgrades, downgrades, churn, you know, all of all of the things that are happening within your cohorts, which, which really helps me better understand the business. And, you know, I’ll quickly if you don’t mind, since I’m a fellow podcaster, I’ll quickly shout out the road on traveled which is the podcast that I built, because I’ve had the chance to learn from some incredible investors and, you know, I would argue some of the unit economics that I care a lot of a lot more about now have come out of just some, some incredible conversations from from being on your side of the table. So I appreciate being on this side. It’s been a ton of fun.

Nick Moran 51:42
Check out the road and traveled he is Brian Hollins founding partner of black VC, Bryan, this was a huge pleasure. I think you’ve shoot in your in your, you know, early career, you’ve been more successful than I think a lot of folks dreaming about. And I think you probably have just an incredible future ahead of you. So you know, thanks so much for joining us for telling us more about Black VC and your thoughts on everything that’s going on. And you know, best of luck with HBS.

Brian Hollins 52:12
Thanks for having me, Nick.

Speaker 3 52:19
That will wrap up today’s episode. Thanks for joining us here on the show. And if you’d like to get involved further, you can join our investment group for free on AngelList. Head over to angel.co and search for new stack ventures. There you can back the syndicate to see our deal flow. See how we choose startups to invest in and read our thesis on investment in each startup we choose. As always show notes and links for the interview are at full ratchet.net And until next time, remember to over prepare, choose carefully and invest confidently thanks for joining us.