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In this takeover episode of The Will to Change, Denise Hamilton, Founder of WatchHerWork is joined by VC and Author Kathryn Finney. Kathryn discusses her book Build the Damn Thing: How to Start a Successful Business If You’re Not a Rich White Guy and the importance for founders to move beyond the idea phase of their business. Discover why you should seek “harsh feedback” about your business and the importance of being able to tolerate rejection. Discover the difference between a small business and a startup and what makes a business investable.
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Listen in now, or read on for the transcript of our conversation:
KATHRYN FINNEY: We need to get feedback from people for whom they, you don't have to be worry about running into you a Thanksgiving, or a holiday, and you be mad at them. You need to some real (laughing) feedback from people who don't care about you. Because y-you need to know whether or not this is something people want. You need to get some real, harsh feedback. And I think, sometimes many of us are afraid to get it out of heads and start to actualize it, because we're afraid that people w-what people are going to say. We have a fear of rejections, and we have a fear of people not wanting what it is that we're doing. But you cannot be an entrepreneur if you are afraid of rejection. That is a part of it. It's like, you know what people say about actors, "You're an actor, you're going to get rejected many, many, many, many, many, many, many, many times, so you better get used to that." And the same with entrepreneurship.
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RAY ARATA: Hi, I'm Ray Arata, founder of the Better Man Conference, and I've made it my life's work to engage and educate men as allies, and heartfelt, inclusive leaders. I'm really excited to be partnering with my friend and colleague, Jennifer Brown, and Jennifer Brown Consulting for this year's conference. Now, I want offer a trigger warning for my next three words, patriarchy, power, and privilege.
Now, these terms don't exactly have a great reputation, but what if we could somehow turn them into forces for good? Join us November 2nd, at the Better Man Conference, and use promo code better together 20, for a 20% discount of your registration. The details are in the show notes, we'll see you soon.
DOUG FORESTA: The will to change is hosted by Jennifer Brown. Jennifer is an award winning entrepreneur, dynamic speaker, best selling author, and leadership expert on how organizations must evolve their cultures towards a new, more inclusive workplace reality. She's a passionate inclusion and equity advocate commit to helping leaders foster healthier and therefore, more productive workplaces, ultimately driving innovation results. Informed by nearly two decades of consulting to Fortune 500 companies, she and her team advise top companies on building cultures of belonging in times of great upheaval and uncertainty. And now, on to the episode.
Hello, and welcome back to The Will to Change. This is Doug Foresta. This special takeover episode of The Will to Change feature Denise Hamilton interviewing Kathryn Finney. Denise is a nationally recognized diversity and inclusion leader, specializing in ally training. She is the founder and CEO of Watch Her Work, a digital learning platform for professional women. Kathryn Finney is the author of the book Build the Damn Thing: How to Start a Successful Business if You're Not a Rich White Guy. Uh, and in the conversation, they talk about what it takes to be entrepreneur, what BIPOC and female entrepreneurs need to consider when it comes to funding and investing, as well as some of the key ingredients of being a great founder. All this and more, and now, on to the conversation.
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DENISE HAMILTON: Kathryn Finney, I am so excited to be talking with you today. Um, you, I believe, are one of our superheroes.
KATHRYN FINNEY: Mm.
DENISE HAMILTON: And so I am thrilled and excited to talk to you about your incredible, incredible book. Welcome.
KATHRYN FINNEY: Thank you so much. I mean, it's, it is definitely an honor to be called a superhero from, like, a superhero. It's like Superman saying to what's another one, Aquaman? I don't know (laughing) [inaudible 00:03:29]... Obviously, I don't know my superheroes very well, but... or Superwoman saying to Batgirl that compliment. So thank you so much.
DENISE HAMILTON: Let's just jump right into it, because I have so many questions about you amazing book, um, Build the Damn Thing. First of all, it's the same name as your podcast-
KATHRYN FINNEY: Mm-hmm.
DENISE HAMILTON: ... where did the title come from? Give us an overview.
KATHRYN FINNEY: You know, it's what I say to founders. As a venture capitalist, who's, who's actively investing, um, in startups, I would have people come and pitch me, and they would give this like great, you know, one sentence, two sentence pitch. And then I would ask them, "Oh, okay, so show it to me, you know, on your phone, because you got it, you've got me captive, right?" And they was like, "Oh, no, I can't, because I'm, I'm afraid someone's going to take it from me," or, "Oh, I can't, because it's not perfect, yet. I don't want to show you." And it's like, as an investor, particularly in the startup space, where things are fast growth, h, fast, fast to scaling, um, I'm not looking at perfection. That's impossible. I'm looking at possibilities. And, and I can't see it if you don't build the damn thing.
Like, I can't see what the possibilities are, if it's just this idea that's out in the ether. And so I would just say to founders, "Just build the damn thing, please. So I can like (laughing) look at it. Get it out there. Get some feedback. Find out what people think about it." Um, and let-
DENISE HAMILTON: Yeah, it's really iterate in your head, right? You have to put it-
KATHRYN FINNEY: Yes.
DENISE HAMILTON: ... in the world, so you can repair it and tweak it and get feedback. And there is a temptation to just keep, keep brainstorming, keep ideating, and it's like-
KATHRYN FINNEY: Yeah.
DENISE HAMILTON: ... at some point you do have to actually put it into the world. So the, the title's amazing. The title's amazing, and it says exactly what it is. And it's just so chalked full of incredible suggestions and actually suggestions, which I think is really important, right? I don't necessarily want to be inspired and motivated-
KATHRYN FINNEY: Mm-hmm.
DENISE HAMILTON: ... I want you to tell me what I can actually do, and I think this book does that incredibly. So every superhero has an origin story-
KATHRYN FINNEY: Mm.
DENISE HAMILTON: ... can you tell us about your origin story, your family's decision to start a dry cleaning business, your roots in Minneapolis, like, the idea of what entrepreneurship has come to mean to you based on your roots?
KATHRYN FINNEY: I am genetically disposed to be an entrepreneur. It is in my genes. My great-grandparents, George and Florence Woods, had a restaurant and a grocery store in the Greenwood section of Tulsa that was destroyed and taken away from them. But, yet, um, and they were forced to move to Kansas, um, but in Kansas, you know, in the 1940s, sent all their kids to school, to college, which was unheard of for anyone, let alone an African American family.
And so I grew up with the sense of entrepreneurship and the possibilities. And my grandmother, who's their daughter, became an entrepreneur. She was a teacher first, and then became a seamstress. And so I grew up seeing her manage business. I see... I grew up seeing her negotiate. I, I grew up seeing her pricing, like, fabric, and going to the fabric store and finding the best deal and the coupons. My family's also genetically predisposed for coupons, too. Um-
DENISE HAMILTON: Same, same.
KATHRYN FINNEY: ... we are, we're from the Midwest, we love a good coupon. Even now, I don't care how much money I may or may not have, I will do a coupon. Um (laughing)-
DENISE HAMILTON: (laughing).
KATHRYN FINNEY: ... and so, so I grew up seeing her do this work and be a small business woman. And that had a big impact on me. Um, and my family transitioned to Minneapolis from Milwaukee, where I was born, my dad was a brewery worker, and the brewery shutdown and devastated the community of Milwaukee. It still hasn't quite come back 40 years later. And what has happened in Milwaukee was no different than what happened in Detroit, Gary, Cleveland, Toledo, Youngstown, like these, these places in sort of the industrial Midwest, where you had factory towns, where people could make great money without having a high school diploma. And when those factories left, it wasn't just the job that left, it was the sense of belonging and community. And it really devastated those towns.
And so, but my dad had this vision of himself that was quite extraordinary for a Black man born in the 1940s, and took a class, 1981, in the, you know, the hood of Milwaukee, Wisconsin. Some guy from IBM said, "I'm going to teach a group of displaced factory workers the foundational language of computing," which is C++. This was before coding schools. I mean, this was like 30 years before coding schools and stuff. And he fell in love. And it changed my family's life. Technology changed my family's life, in fundamental ways. And not just my immediate family or even my extended family, but also my community.
And so, my dad rose through the ranks, um, became an executive at Microsoft at a time when it really matter. And I was at Masters of Scale Conference talking about this, "You know my dad started working at Microsoft in 1991. And why that is particularly important is between the years of 1986 and 1996, Microsoft's stock increase a 100 fold, a 100X. And what they did during that time period was, instead of paying people really high salaries, they were very generous with stock options, in terms of bonuses. And as a result, by the year 2000. Microsoft had created over 10,000 millionaires, and whole bunch of thousandaires, like a whole bunch. And one of those millionaires was my father. And it was a result of this company sort of sharing the wealth."
And I often bring it up because I think it's an example of how everyone winning doesn't mean you lose. So Bill Gates is not less of a billionaire, by any stretch of the imagination. He didn't lose money by creating 10,000 millionaires. I mean, he's still one of the riches people in the world, and he created 10,000 millionaires. And h... And probably countless other people who are well into the thousands, damn near close to being a millionaire, right?
And so, you know, that had a profound impact, he changed my life and my family's life, like, with that sort of access to capital. And being a kid and growing up and seeing that was really profound, because I saw my parents take a risk. Um, we moved from Milwaukee to Minneapolis. It's only five hours away, but it's a completely different world, completely different world. And anyone from the Midwest knows exactly what I'm saying. It's a completely different world. Milwaukee's very blue collar, very factory based, you know, very beer drinking. My dad worked for a brewery. That was Milwaukee.
To Minneapolis, which was, you know, kind of wine and cheese and corporate and deeply Scandinavian. Milwaukee's deeply German. Very big difference between Germans and Scandinavians in terms of culture. And so we moved to this place where it was, like, exceptionally white. Like, it was just, everyone was white, everything was white. I mean, it was snow, we moved in December. It was, like, it was just crazy. And it was an adjustment.
But one of the things that came out of that, besides seeing my family take a risk and win, which was profound for me as a young Black kid, was also, it taught me t-t-to talk to pretty much anyone. And, um, anyone th-, who's hung out with me, Denise, you've hung out with me (laughing) at a conference knows, like, I can literally talk to anyone. There is like... I don't care who it is, I can ha-, I can find some way that we connect and some way that we can relate. And that comes from growing up in Minnesota.
DENISE HAMILTON: Such an important skill.
KATHRYN FINNEY: It is.
DENISE HAMILTON: It's such an underrated skill, the ability to navigate any environment. Whenever I work with, um, high school students or college students, um, I'm always challenging them, "Go to the gallery."
KATHRYN FINNEY: Mm-hmm.
DENISE HAMILTON: "Go to the store you think you can't afford. Go in and see how people move and how they interact and how they ask for help. And just, just absorb the-
KATHRYN FINNEY: Yep.
DENISE HAMILTON: ... difference. If you can learn to surf the wave of difference, th-the world is your oyster." It's just incredible. So you've been doing that for literally your whole life, right?
KATHRYN FINNEY: Yeah. I wouldn't have had date in high school, if I didn't. I would have been very lonely in high school, if I didn't.
DENISE HAMILTON: You would have been a lonely girl.
KATHRYN FINNEY: A very lonely girl. (laughing)
DENISE HAMILTON: So you taken this all throughout your career, and, um, I know you've seen a lot. You've seen so many, so many pitches, you've received pitches, but you've also seen a lot of pitches. Like, what has happened... Like, what made you write the book? Was there a catalytic event or situation that really made you say, "This, I got to write this stuff down"?
KATHRYN FINNEY: You know, it's really a culmination of just years of work and, also, being really frustrated with business books. I'm a big reader. I read, like, everything. I read, like, cereal boxes, like, you name it. I read the little... Like, on the airplane, I read the airplane magazine (laughing). L-l-like, I read everything. I read books.
DENISE HAMILTON: Not the airplane's magazine.
KATHRYN FINNEY: Right.
DENISE HAMILTON: Come on, Kathryn.
KATHRYN FINNEY: Fiction, non-fiction.
DENISE HAMILTON: (laughing)
KATHRYN FINNEY: I'm just like, I love information. I'm always absorbing information. And would read these books, some of which I really enjoyed, but they were always missing the advice for people like myself, who I call builders in the book. People for whom, um, you know, we have to navigate differently. And so, these books were often written under the belief that we can move in the same way as other people can move. And I can't move in those, I know that.
DENISE HAMILTON: Right.
KATHRYN FINNEY: Um, you know, as one of my friends would say, "It is what it is." Like, I know that I have to, uh, move a little bit differently in order to accomplish my end goal. And so there was never any advice. For example, you know, I'm a mom. Um, I have a seven-year-old who likes to see me. How do I balance that with what (laughing) I need to do? Or the fact that I need help and oftentimes have to turn to my family, particularly, my mother, who comes and spends time with my son. My mother's not me, but she's a pretty darn good surrogate for me. Right? Like, she's as close to me as you're prob-, as you're going to get.
And for my son, that's amazing. For me, it's even more amazing, because I have this person who I know loves him, who's taking care of him. But I've never read a business book that talked about ways in which your family can help you, as an entrepreneur.
DENISE HAMILTON: Beyond the friends and family realm.
KATHRYN FINNEY: Behind the money. Because what happens if your family doesn't have money? What if you are the friend and family? I am the friend-
DENISE HAMILTON: You are indeed.
KATHRYN FINNEY: ... and the family.
DENISE HAMILTON: Kathryn, you and I are the friend and family.
KATHRYN FINNEY: We are the friend (laughs) and family. So I'm going to ask myself, because I mean, that's everybody else's. And so, how do you navigate that? Like, how do you navigate when Forbes writes that you've raised $10 million and you have a family member contact your mom asking if you can help them buy a refrigerator? Like, that doesn't happen to most, you know, 25-year-old white guys at Stanford. Like, they don't have family members, for the most part, calling and asking them to help, loan them some credit. Which I don't know how you loan somebody some credit, but, like, you know, those sort of things.
And how do you navigate it in a way where you can't just say, "No"?
DENISE HAMILTON: Yeah.
KATHRYN FINNEY: Right? Because your family is important. You need to be able to go to the cookout. That community and sense of belonging you get from being a part of your family is so important. Because you're navigating this space, where it's very clear and people that it clear to you that you don't belong. Um, and so, that you want to maintain those spaces in which you do. So you can't just be like, "I'm not giving you no money." You have to be savvy with it. And how do you, how do you work that?
Um, how do you communicate demands on your time, especially when you have children? And how do you bring them in? I mean, that's one of the things that I learned very early is, to let my son see what I do. And so he comes to speeches with me, and he's very well mannered. He takes notes. Um, sometimes, I'm not sure what the notes say, they're usually like little (laughing) drawings. And everyone's like, "Oh, my God, he's so well mannered." And I'm like, "Because he's been seeing this since birth. He's been seeing his mommy speak." And so, when I go away, it's not some black hole that I'm going into.
DENISE HAMILTON: Right.
KATHRYN FINNEY: He knows what I'm doing-
DENISE HAMILTON: Right.
KATHRYN FINNEY: ... because he's seen it himself. And so it's not like, "Oh, mommy's going..." And I, and he has no context in which to base what I'm doing. But I had never heard a book talk about that. Like, you know, let your kid see what you do, so that when you have to go away, they understand why.
DENISE HAMILTON: Yeah.
KATHRYN FINNEY: I mean, they have some context. Even at a young age, they get it. They get it, "Well, oh, okay, mommy's giving this speech. Okay." And I just tell him that, "Mommy's gone next week. I'm giving two speeches." What I'll often do is ask for, um, live feed link, especially if they have it, or I'll copy video, so that he can watch it, especially if he's home from school. Because he can see, again, see what mommy's doing. But all the business books I read never talked about that.
DENISE HAMILTON: Right.
KATHRYN FINNEY: Never gave us any tips like that. Um, when you're a woman, when you're a personal color and you're building this business, and the assumption is that you have people to help you. The assumption is that you have family who can write you a 50,000, 10,000, $5,000 check. Um, and it's, I've said to people, "If I take $5,000 from my family, they're going to want it back real soon. Real soon."
DENISE HAMILTON: Very, very, soon.
KATHRYN FINNEY: Very, very, very soon.
DENISE HAMILTON: And not want it back, need it back.
KATHRYN FINNEY: Need it back. Right? (laughing) Let's see. Like-
DENISE HAMILTON: I'm gonna need that back.
KATHRYN FINNEY: ... "I'm gonna be callin' you-
DENISE HAMILTON: I'm gonna need that back.
KATHRYN FINNEY: ... within a week of getting it.
DENISE HAMILTON: Yeah, exactly. And there... and I think there's like, it's, it's very hard, I'm so, I'm so grateful that you talk about this so much in your book, because it's very hard to see, like, the way your family is structured, almost mythologized.
KATHRYN FINNEY: Mm-hmm.
DENISE HAMILTON: Like, "What's wrong them. How come they can't help you with this and this?
KATHRYN FINNEY: Right?
DENISE HAMILTON: How come they don't have whatever?" Well, there's a lot of reasons that they don't have, that doesn't mean that they don't love me. That doesn't mean they don't want me to succeed and to achieve.
KATHRYN FINNEY: Yeah.
DENISE HAMILTON: And I love the way you talk so, so, so profoundly about the ways that your family can help.
KATHRYN FINNEY: Mm-hmm.
DENISE HAMILTON: The places they can inject and add value. And that this is, it's, it's more than money. And it better be, because, you know, we have to build, we have to use all the tools in the toolbox-
KATHRYN FINNEY: Yep. Yep.
DENISE HAMILTON: ... to, to do what we gotta do. So tell me, tell me this, all right, let's just get right to it. Let's-
KATHRYN FINNEY: Okay.
DENISE HAMILTON: Like the heart of it. When you think about starting a business, and you think about, you've got this idea, what are the first steps in identifying if it's viable? If it's significant? If it's worth your time? What do you think of as the first building blocks of that process?
KATHRYN FINNEY: Get it out of your head.
DENISE HAMILTON: Mm-hmm.
KATHRYN FINNEY: That's the very first thing. Get it out of your head and put it on to something. Which technically is your first minimal viable product, your first, MVP. And the MVP is simply the simplest thing you can do to convey your idea to someone, for your business. So it doesn't mean spending 50K to build out a fully flex website, where you have no idea whether or no somebody wants your product. It can simply be drawing the idea on a napkin. Um, it could be going to Squarespace and paying $16 and doing a quick landing page for it, just to collect, you know, information. It could be, um, a clay model that you do out of Play-doh or something. I mean, it does not need to be, nor should it be anything that costs significant amount of money. And what I mean by significant amount, it should not cost over a $100 for you to put this together.
And, and get feedback from re like, not from al people. And you need to get feedback from people who don't care about you. Like, not from your parents-
DENISE HAMILTON: You mean not your mom?
KATHRYN FINNEY: ... your family-
DENISE HAMILTON: You shouldn't-
KATHRYN FINNEY: No.
DENISE HAMILTON: ... ask your mom if it's cool?
KATHRYN FINNEY: No. You need to get feedback from people for whom they're, you don't have to be worry about running into you at Thanksgiving or a holiday, and you be mad at them. You need some real (laughing) feedback from people who don't care about you. Um, because y-you need to know whether or not this is something people want. You need to get some real, harsh feedback. And I think, sometimes many of us are afraid to get it out of our heads and start to actualize it, because we're afraid that people w-what people are going to say. We have a fear of rejection, and we have a fear of people not wanting what it is that we're doing. But you cannot be an entrepreneur if you are afraid of rejection. That is a part of it. It's like, you know what people say about actors, "You're an actor, you're going to get rejected many, many, many, many, many, many, many, many times, so you better get used to that."
And the same with entrepreneurship, you cannot control what other people say or do and how they react to your product. You can't. It doesn't matter. But what you can do is take what they say and you can control how you respond. And the way that you respond to it is by taking that information and tweaking your product, and then putting it back out there and getting more information. And tweaking it, until finally you get to a place where this product is a good product. It's called the Build-Measure-Learn Feedback Loop, and it was popularized by a guy name Eric Ries, who had a book on startups, that's a really excellent book for anybody who's getting started in this space, and just want to know that sort of process of getting feedback at the beginning.
Um, and it can be hard, because nobody wants to hear your, their baby is ugly. Right? No one wants to hear, "You know, all babies are cute, but your baby's, you know, not so great." You don't want to hear that. That's hard to hear. I recognize that. But it is part of being an entrepreneur. Because you need to get to a place where someone will pay a premium for you, for what it is you're producing. Meaning, the premium being, in real simplistic terms, the cost of what it, the raw goods and labor and things that cost to actually make it, plus a profit for yourself.
DENISE HAMILTON: Right.
KATHRYN FINNEY: Real basic. Um, and depending on what industry you're in, there's different terms for it. But really basically, all business need to do that. If you're product cannot command that price, then you have a hobby. It's not a business.
DENISE HAMILTON: (laughing) Shots fired. It's a hobby, not a business.
KATHRYN FINNEY: It's a hobby.
DENISE HAMILTON: A clear indistinction.
KATHRYN FINNEY: Yeah. And it's okay to have hobbies.
DENISE HAMILTON: Mm-hmm.
KATHRYN FINNEY: Like, you know, I bake, um, I like to pottery, none of which are good enough to sell. And so (laughing) but I give 'em to people, and it's a hobby. Now, if I was to try to turn it into a business, I would have to really work on my craft and perfect the product and get feedback constantly from people, to get it to a point in which they're going to be willing and interested in purchasing it, at a price-
DENISE HAMILTON: Right.
KATHRYN FINNEY: ... the premium. Not at the c-, not at the price that it takes for me to make it.
DENISE HAMILTON: Right.
KATHRYN FINNEY: Right? Because then that's-
DENISE HAMILTON: Cost plus.
KATHRYN FINNEY: Cost plus. Right? Because then I'm just breaking even, and that's a hobby, and I can't, um, build a business, I can't grow. There's no return for me. Um, I'm just basically getting my costs covered, and that's not a business. And I often find with a lot of business owners, they don't understand that. Surprisingly enough. Getting your costs covered is not a business. You, you... it's not. Um, and it's really hard for people to hear that.
Another thing, too, I often hear is people getting startup and small businesses confused. They're not the same thing. A startup is a form of small business. Um, it is a form of small business. But a small business isn't a form of startup. What I mean by that is small businesses are businesses that are more contained, and not necessarily looking to scale rapidly. These are businesses that are more focused on legacy, more focused on serving a community. So you might have your local bakery. Your local baker may not want to have 10,000 bakeries. They may not want to sell their goods online. They may just want to be able to craft and serve the community in which they're in. And it's a very, very important part of our world.
Startups, on the other had, is a bakery that says, "You know what? I want to be what Golden belly," right, which does all the... you know? "I want to be online and I want to scale to 10 cities. I want to ship my cakes all around the world. I want to h-, ship 10,000 cakes this year and then next year, my goal is a 100,000." Right? Startups move quickly and fast, and they're temporary. And this is something I see a lot of founders, particularly builders, you know, people of color, women not understand. Is that startups are temporary businesses, technically.
Meaning, they're created to sell, or what we call in venture exit. Um, and exit means, a positive event in which your company either gets bought through merger and acquisition, like a bigger company comes in and say, "Hey, I want to buy you. I think you're awesome." Or you list yourself on the stock exchange in an initial public offering or IPO. That's what startups are shooting for. That's how people like myself, investors like myself get our money back, is through those sort of events.
So when a, a founder comes to me and they're like, "I'm building this. This is going to be $10 million in 10 years." I'm like, "Oh, that's not investible." And what I often find is like investors then don't say why. And so one of the things that I try to do is really educate why that isn't of interest to venture. Why, why that wouldn't be, makes sense for me to back. And we, I've gotten even like, met with people and gotten on and had like a little white pad and did the math for them. For them to see why it's not good for someone like me. How I won't get a return. And then, once you do that, everyone's like, "Aha, I get it."
But it's a very big different between a startup. Um, it's also impacts the type of money you look for, in terms of helping you scale. So for small business, loans work very, very well. Um, for many reasons, one, they're kind of like a fixed time period in which you usually pay off the loan. The interest rates are usually fixed. Um, if you have a small business, particularly, a brick and mortar, you usually have some sort of assets, maybe, equipment, maybe the store itself that you can use as collateral, um, in order to get the loan. And loans are often given very locally, by your local banks or your credit unions or your CDFIs. And so they can be very, very, very, um, lucrative and good. And you won't have the pressure that you would with an angel or a venture investor or needing to scale.
Because if I give you my money, if I invest in you, I need you to scale. I need you to scale quickly. I need you to come in with that that, "I'm scaling this. I'm going to be in 50 cities by the end of the this year." And so if you have that sort of business that's scaling and growing rapidly, so rapidly and it has infinite possibilities, that's when venture and other forms of sort of investment can be very, very interesting.
Um, also, for small businesses too, there's other forms like crowd equity now, which I'm a really big fan of, that small businesses can use. Which is basically using, um, crowd equity platforms, you know the GoFundMes, the Kickstarters of the world to raise money for your business, in exchange for equity in your business. Um, it can be a great way to reach a lot of people, um, and get a lot of investors and people involved with your company.
DENISE HAMILTON: Love it. Love it. Love it. Love it. Um, and I think there's tension there. I'm so glad that you're educating people, because people get very angry, because they feel like, "Okay, all this money is circulating and I, I want a chance at the pie." And it feels like they, because they're kind of focusing their energies in the wrong spaces for, for the funding for their business. And then, also, you know, it's okay to have a business that's going to make $5 million. That is okay.
KATHRYN FINNEY: It is very okay. (laughing)
DENISE HAMILTON: That is okay. These are two different beasts and they're both beasts.
KATHRYN FINNEY: Yeah.
DENISE HAMILTON: But they're, they have different characteristics, and more people need to talk about that, so people don't feel, um, like they're, they're, they're cheated in whatever space they're in. Like, they're-
KATHRYN FINNEY: Yeah.
DENISE HAMILTON: ... seeing what they opportunities are.
KATHRYN FINNEY: Well, it's like, 'cause there's just so much marketing behind startups, as a word, that people get kind of enamored with it. And, and I say to founders, "Look, you know, my family had a small business. We had a number of small businesses. One, we owned some dry cleaners in Minneapolis that failed spectacularly." Like the business (laughing), we had no business creating dry cleaning. We had like no idea what we were doing. Um, but, but those sort of businesses provide much needed services to communities. And, and so I think there's a tendency for us to not support and acknowledge small businesses. I see it a lot in the tech space, where it's almost like a turning a nose up.
DENISE HAMILTON: Mm-hmm.
KATHRYN FINNEY: Because it's not, you know, rapidly scalable or built upon a technological platform. But I'm like, "You would be hard-pressed if there was no grocery store-
DENISE HAMILTON: Right.
KATHRYN FINNEY: ... in your neighborhood-
DENISE HAMILTON: Right.
KATHRYN FINNEY: ... or a convenience store or the gas station, if you don't have Tesla. Or these sort of places where you need, you need those small businesses, um, in order to survive. Your favorite bakery, um, butcher shops are becoming popular again, which has been really great. You know, all these sort of things that help make our lives, enrich our lives, you would be really upset if those small businesses didn't exist anymore. And so they become incredibly important."
DENISE HAMILTON: Love it. Love it. So I think that kind of leads to my next question. Um, there's a lot of self-analysis that you've got to do, right? To know, what am I doing here? Am... Is this a small business? Is it a lifestyle business? Is this a, a true startup? Is this... Does this have potential for an exit? Like, you've got to ask yourself a ton of questions. Um, why is it important for entrepreneurs to perform this kind of self, self-assessment of what their core values are? And, you know, follow that to be able to define what constitutes a violation of these core values?
KATHRYN FINNEY: We have all worked for leaders who did not have core values. Like, we've all worked for people who didn't have a foundation by which to make decisions. And we've all suffered as a result (laughing) of having to work with these folks. There's nothing worse than working for a leader who does not understand who they are, and who has no north star. And you're expected to follow them. And they don't know where they're going. And they have nothing that guides their decision making. So there's nothing for you to believe in terms of that they're going to actually make a solid decision. And you're expected to follow that person.
And so think about that as a CEO. You're asking to people to follow you. Even if you only have a two person job, or even a one person, and you're trying to get partners and clients, you're asking people to believe in you and follow you. And how can someone believe in following you if you don't know what it is you're doing? If you don't know where you're going?
And so setting up your core values, like who you are and what you believe in, becomes crucial to being a successful business person. It is the reason why, you know, knock on wood, that I've been a public person for almost 20 years. And you would be hard-pressed to find anything negative about me online. And I've been out there for a really, really, really long time. And mostly that's because even when I'm in the wrong, my core values tell me, "Be human." That's the number one core value. It's like, be human. See the humanity in myself and see the humanity in other people.
And so, when I'm wrong, because I'm a human being, I can say, "You know what? You're probably right. Maybe I was a bitch to you that day. Maybe I was. I don't, I don't know, but, uh, if you felt I was, maybe I was. I can I tell you I'm not that way all the time, but I'm sorry if I was that way that day. You know, we all have our moments. Um, and so I ask for your grace." I actually said that to someone, "I ask for your grace in that moment. Because I don't know where my mindset could have been. And it might not have been in a good place. And I'm a human being, and that happens from time to time."
DENISE HAMILTON: Oh, what would the world be like if more leaders did that? They just-
KATHRYN FINNEY: And the person-
DENISE HAMILTON: ... know-
KATHRYN FINNEY: ... I mean, she was like, could, she was shocked. Like, she-
DENISE HAMILTON: Yeah.
KATHRYN FINNEY: ... literally didn't... because she was expecting this fight. And sort of me being like, "No, I wasn't." I'm like, "Maybe I was." Like (laughing) "I don't know.
DENISE HAMILTON: It's the standard thing to do.
KATHRYN FINNEY: I could have been."
DENISE HAMILTON: "I don't know, maybe. Possible."
KATHRYN FINNEY: It's possible.
DENISE HAMILTON: So, it's possible. It's possible.
KATHRYN FINNEY: You know.
DENISE HAMILTON: So, so, you have, you know, created this idea and you put out your little MVP, your, your, your first big step. You've assessed yourself, and you've figured out, like, what are your values? And what you care about. What are the lies? There are so many lies, bald-faced lies that, um, are thrown at entrepreneurs all the time. What are, what are the things we need to avoid doing at this kind of fledgling stage of start of a business?
KATHRYN FINNEY: I mean, a big one, es-especially in the tech space that you need to know how to code, and that's just simply not true anymore. There's so many low-code and no code solutions, where you can build apps, you can build business, from Squarespaces of the world to the Wixes of the world to even WordPress and other forms. Like, you don't, you don't need to be a coder anymore to build a tech company. That's like one of the big ones.
I think also that you need to have gone to one of these big university, like a Stanford or a Harvard or MIT in order to be successful, and that's also not true. Um, if you look at some of the biggest names actually didn't got to those companies, or those schools. Steve Jobs went to a community college and to Reed College in, in Oregon, like a very tiny school. Jack Dorsey, the founder of Twitter and Square, went to, as what he likes to call the other MIT, which is, um, Missouri Technological Institute (laughing), I'm like, the other MIT, Institute of Technology. Like, you know, so these big name people who have created these massive companies, didn't go to the Yales and the Harvards of the world. Um, and so that is such a big myth as well.
Another one is that this thing that you need to like protect your idea, that someone's going to steal your idea. And I hear that a lot, particularly from founders of color, and I say them, "You, your idea is important, but it's, it doesn't matter, if you can't execute it. Execution is everything." Which is why I say, "Get it outta your head and get it in paper and start to execute and start to build it." It doesn't matter that you have a great idea, you, if you don't do it, it, it means nothing. That's great, it was a great idea in your head.
I always tell this story of how when I first started my first company, the Budget Fahionista, which was all about, you know, budget shopping and stuff. And I would always have people come up, "Oh, I have that idea." "Oh, I'm a budget shopper." "I'm this." I said, "Yeah, but, but I turned it into a company. It's great that you had that idea too, but I did it."
DENISE HAMILTON: I can see you face when somebody, "Yeah, you had that idea, but I did it." (laughing)
KATHRYN FINNEY: "I did it. I did it. You thought about it, while you thinking, I was doing. And I was able to create this company." And so I really encourage ent-entrepreneurs to not focus on that. Please, do not focus on someone's going to steal my idea. Focus on executing it. If someone could take what you were doing and build it and you couldn't, that's on you (laughing) n-not on them. You know? I know there's a whole bunch of historical reasons why, particularly in communities of color, we're so afraid of someone stealing from us, because it's been historically like that. People have stolen ideas from us.
But, again, it doesn't matter, if you don't execute. It doesn't matter. Like, you have to build it and get it in the market. And people have to be walling, willing to pay for it.
DENISE HAMILTON: Yeah, that's the hardest thing is to just trust, right? An-and it is-
KATHRYN FINNEY: Yeah.
DENISE HAMILTON: ... a big step to say, like, "I, I'm going to build this. I'm going to build this as fast as I can. And I'm going to talk about, so that people associate with me."
KATHRYN FINNEY: Yeah.
DENISE HAMILTON: That's-
KATHRYN FINNEY: Yeah.
DENISE HAMILTON: ... that's the way to hold on to your idea. Um, I love it. I love it. There, there are so many lies, so many, um, um, belief systems that if you can't put 'em down, you're not going to be able to pick the opportunity.
KATHRYN FINNEY: No.
DENISE HAMILTON: You're not going to be able to move forward.
KATHRYN FINNEY: No. And even venture, I think, venture has become, venture capital has become this, like, sort of mystical, like, you know, and some of the lies are, like, around, like, what's investible.
DENISE HAMILTON: Mm-hmm.
KATHRYN FINNEY: And it ki-, and it's this belief that only white guys are investible, right? Because that's who you see overwhelmingly getting venture dollars. Um, and part of that's structural. Like, it was, the venture capital world was created to fund white men-
DENISE HAMILTON: Yeah.
KATHRYN FINNEY: ... in the 1940s and '50s, post World War II, where we were starting to have these rapid technological advances that needed different type of capital. When software started to come, a-and emerge, you needed a different type of capital that wasn't based on physical goods that you could touch, right? Because software, you can't really touch software. It's coding. And so when you need to scale rapidly and fund these ventures, that's where it kind of really started in the modern form.
The interesting part though, if you go further back in venture capital, is that the original venture capital structure, started with the whaling industry in the 1800s.
DENISE HAMILTON: Hmm.
KATHRYN FINNEY: Which was, you would have these group of people fund this limited venture, a whaling-
DENISE HAMILTON: Right.
KATHRYN FINNEY: ... a whaling expedition, only last, I don't know, two, three months. And so you would have people you would go to and say, "Look, it's really high risk. Here's... I need you to invest, and for that, I'm going to give you a large percentage of whatever we haul in. Like, and it's going to be just for this venture. You're funding this one trip out for three months. And at the end of those three months, I'm going to give you your money back."
Now, the interesting part of that is that the people who were really involved in whaling, which was very dangerous and many people didn't want to be a part of it, were actually African American, former enslaved folks. Who were... So, so it's irony that venture started funding expeditions that were staffed by former ensl-enslaved folks. Um, and that the descendants of former enslaved folks cannot even get venture. I mean, it's just like they... it's just a very, uh, interesting situation.
But when you learn that and you understand how venture capital works, that it has to be high growth, it has to be fast moving, if you understand that venture capitalist are really gamblers-
DENISE HAMILTON: Yeah.
KATHRYN FINNEY: That's what I say to people, and I've seen that, once I say that, a light, like, switch goes off in the heads of founders. Because I think, you know, particularly African Americans, we tend to invest very conservatively. So we think everyone's being conservative like us, that it has to be perfect and stuff. I said, "No, they want to bet on some wild idea, because money is infinite to them, and it keeps-
DENISE HAMILTON: Right.
KATHRYN FINNEY: ... flowing. And because they need this big reward in order to justify all the other ones that are not going to be a big reward. When you pitch to 'em in a very little, small, little space, that's not going to get them excited. These are gamblers, they want the big pot. They want the jackpot. They don't want the-
DENISE HAMILTON: Not penny slots. They don't want penny slots.
KATHRYN FINNEY: No, they're not playing the penny slots. They're-
DENISE HAMILTON: (laughing)
KATHRYN FINNEY: ... not playing that. Like, they're playing, you know, the, the, the blackjack table, they're playing poker. Like, that's what they want. They want the big idea and the big pot. They don't want the penny slots. And that's very hard for us to understand, because we come from resource poor communities, as builders, where we don't have unlimited access to capital, especially, like, you know, venture investors. So there's this constant friction. A Black founder comes in that's amazing, and I've seen this even with our own portfolio, where you have, particularly with Black women founders, we're pragmatic, we're like the most pragmatic people the entire world.
DENISE HAMILTON: Careful, humble.
KATHRYN FINNEY: Careful.
DENISE HAMILTON: We don't want to be hyperbolic. We don't want to-
KATHRYN FINNEY: No.
DENISE HAMILTON: ... overst-... The guys are like, "It's going to make $20 billion next Wednesday.
KATHRYN FINNEY: They'll say, "It'll make a..." It was actually a founder who we invested in quite significantly, went to go pitch for her Series A, which she later did raise... which is the series right after your seed. So it's like your third round, technically, of funding, and your first, real institutional money. Right?
And so she comes in and she pitches, and I get feedback from the other VC, who I know really well, was that she came in and she was spe-, pitching way too small. She was like saying, "A 100 million," and he's like, "No, I need it to be a billion. I needed her to say that. And it's like kept trying to get her to say that," because he was a brutha. "And she wouldn't. And she was not moving." And he was in front of other people. He's like, "But you know the opportunity really is much higher, right?" And she's like, "No, 100 million."
So I talked to her afterwards. And she said, "A 100 million is what I guarantee, know we can reach."
DENISE HAMILTON: Hmm.
KATHRYN FINNEY: It's like, "I know that for a fact." And I was said, "Yes-
DENISE HAMILTON: Because for her, it's an integrity issue, right?
KATHRYN FINNEY: It's an integrity issue.
DENISE HAMILTON: You don't overstate. You don't overpromise.
KATHRYN FINNEY: You don't overstate.
DENISE HAMILTON: You keep your word. Yeah.
KATHRYN FINNEY: Right? You don't... We're taught, "You don't talk about it, you be about it." Right? Like, you d-... you know that sort of thing. And I had to explain to her that these people are gamblers.
DENISE HAMILTON: Right.
KATHRYN FINNEY: What you just told them was a penny slot. You told them a small, small bag. And they're not interested in that. They want the biggest bag possible." And I said, "You come up with the biggest number that you can say without laughing. And like, and say that number. And say it," and actually I told her, "get in the mirror and say that number until you don't feel uncomfortable anymore. Every day. Tape it onto your mirror in your bathroom and you say it 10 times, until you get comfortable saying it."
But it was kind of like, "Well, I know I can do this." I even find myself, like, I" know I can raise this. I know I can do this." And not shooting for the big stars, because we haven't rewarding, in, by doing that. Um, we don't come from communities in which there's an abundance of financial, um, wealth that we can sort of be that way and lose and still be okay and come back.
DENISE HAMILTON: And, and I mean, even beyond that, like, the consequences for overpromising-
KATHRYN FINNEY: Oh, gosh.
DENISE HAMILTON: ... and not delivering-
KATHRYN FINNEY: Yes.
DENISE HAMILTON: ... are dire. Right? So-
KATHRYN FINNEY: Dire.
DENISE HAMILTON: ... it's doesn't co... like, whenever I talk to, um, to folks about venture and startup community, I was like, "We don't ever talk about how many white guys fail.
KATHRYN FINNEY: Oh, and there's so many of them.
DENISE HAMILTON: We never talk..."
KATHRYN FINNEY: And it's so interesting, because people will talk about pattern recognition in VC-
DENISE HAMILTON: Yeah.
KATHRYN FINNEY: ... like, "I invested in a white in a hoodie," and they will actually say, there is quotes from top investors who say, "I am a sucker for a Mark Zuckerberg lookalike in hoodies." They actually said that publicly. And, and, you know, and they say, "The pattern fits that that's who wins." Right? Also, the pattern fits that that's who overwhelming loses too.
DENISE HAMILTON: Right.
KATHRYN FINNEY: Right? And so you're focusing on the positive, but because they're gamblers, they only focused on the wins, they don't focus-
DENISE HAMILTON: Right.
KATHRYN FINNEY: ... on the losses.
DENISE HAMILTON: Right.
KATHRYN FINNEY: And so for us, since there's hasn't been a sizeable exit of a startup lead by... with except Compass, Compass was like probably one of the first, but there, and maybe the only at this point. And there are some that are gearing up, but until, you know, really recently, in 2020, Black folks were not getting investment from VC, so we couldn't even create a different pattern.
DENISE HAMILTON: Right.
KATHRYN FINNEY: To be perfectly honest, venture capitalists do not know what makes a successful Black startup founder. They don't even really know what makes a successful woman startup founder. And it's not-
DENISE HAMILTON: Well, well that actually takes me to, to our next question, and, and, uh, it's the biggest one. What makes as great founder? Tell us Kathryn, give us the key ingredients.
KATHRYN FINNEY: You know, I think what makes a good founder and a gr-great founder is someone who clearly understand the problem they're solving, and has domain experience to build a solution to it. Um, meaning, they know how to build to solve the problem. Not just theoretically, but actually put things together to solve it.
Um, I think good founders are very curious. They want to know what their customers think. They want feedback from people. I think in general those who are most successful in life are incredibly curious. I've had opportunity to spend some time with Bill Gates, you know, the richest dude in the world, one of the richest dudes in the world, he reads, like, everything. Like, every type of book about stuff that Bill Gates doesn't even care about, like, about sneakers and stuff. I don't even know if Bill Gates even owns a pair of sneakers. But, like, he reads (laughing) books about, like, you know, these sort of big things. He's very curious.
You know, Elon Musk, too, is very, very curious. Everyone I know who is successful are like absorbers of information. They're constantly reading. They're constantly learning. They're constantly curious. And the best founders are those who are curious, who are curious about people, who are curious about things, curious about ways to make their product better.
Um, they're also people who have a real sense of who they are and their core values. Like, what is it that I stand for and I care about? Um, which allows them to understand where to put their time and where not to put their time. And, and that's really important, particularly when you reach a certain level of success as a builder, you're going to get a lot of people asking for your time.
One of my biggest jobs of myself and my team is like managing my time. Because the request of my time are, like, incredible. And, you know, I have, I have a kid, right? So, and his requests always take precedent. And so, and sometimes there is conflict. Like tomorrow I have a conflict.
DENISE HAMILTON: And sometimes they're cool... And sometimes they're really cool conflicts. Like, you've-
KATHRYN FINNEY: Yes.
DENISE HAMILTON: Especially if you are a successful Black woman in this space or a person of color, a woman you're a unicorn yourself, and everybody-
KATHRYN FINNEY: I'm very much a unicorn.
DENISE HAMILTON: ... wants you to be on this panel and to-
KATHRYN FINNEY: Mm-hmm.
DENISE HAMILTON: ... that thing. And sometimes they're so exciting. And so the discipline to say, "No, I have to focus my attention on this over here-
KATHRYN FINNEY: Yep.
DENISE HAMILTON: ... right now."
KATHRYN FINNEY: Yep.
DENISE HAMILTON: I mean, you just... I-it can't be overstated. Like, you just have to have that balance. And so there's one more, the last question I get to squeeze in under the, under the buzzer with our time together. So after you've identified what you want to build, where the right place is to build it, in terms of like funding, are you venture? Or are you a small business? Or are you a startup? Once you figure out, like, who you are and, and what the characteristic you need to thrive in this space, who helps you? How do you get this personal board of directors? How do you amass a team... because your family of origin may have no one that has the capacity to really advise you on this journey? How do you go about the process of building out your squad?
KATHRYN FINNEY: And so we all know corporate advisory boards, which are there for the best of the corporation. Your personal advisory board is team you, there for the best of you. And so those people don't necessarily have to be business mentors, and I actually suggest maybe they shouldn't be. Um, because you need people who care about you as a human being, and not so much the business, which is important, but, you know, people who are going to make sure you're holding your core values.
And so there's a couple of different roles that you can have. One, I have the enforcer, and mine, which is my mother, who helps, you know, work with more challenging family members, who, who I can't say no to. But she, you know, can say no, because she's a 75-year-old Black grandma and nobody's going to yell at her.
I have the comedian, which is my son. You know, it's very hard for me to be mad at a portfolio company not reaching its metrics, when you have a seven-year-old singing to me about toilet people. Um, it just puts everything in perspective, right? And it's like-
DENISE HAMILTON: It's all this clarity.
KATHRYN FINNEY: ... funny, and it takes you out of... right. Right. Like, takes me out of that head space and helps me to see what really matters. Um, and so having those people are really super important. You need somebody who can tell you the truth about yourself, when you... and that you can hear, because there's a lot of people who will criticize you, but you can't hear it, because you know they're not coming from a place of love. So finding that person who can put up a mirror to you and say, "You know what? You're not living your highest and best self." But, uh, that person often happens to be the person who often tells you when you are too.
DENISE HAMILTON: Yeah.
KATHRYN FINNEY: Um, and, and so, and you need that, someone to tell you the truth. It can be very, very difficult. And so all of those and more I talk about in the book. But it becomes very important to have those people around you. It helps make this journey of entrepreneurship a little bit easier.
DENISE HAMILTON: I could talk to you all day long. Um, you're so wise, and you've done' this at a level that few of us have, quite frankly, done it at, and seen it. And I just appreciate so much your willingness to kind of just capture it and write it down, not hide the bag, but share the bag, and spread it out.
KATHRYN FINNEY: Thank you.
DENISE HAMILTON: So that others that really learn and, and, um, take advantage of it. And, um, we just scratched the surface today. Um, if anyone is listening, I don't even have to say it, go get the book. Go get the book, and really read the book. Get you some Post-Its. You know, dern, dogear the pages.
KATHRYN FINNEY: Yes.
DENISE HAMILTON: And when you're done, have a plan. Right. There are some books that you read and they're inspirational, but, you know, you lis-
KATHRYN FINNEY: Yeah.
DENISE HAMILTON: ... you watched a great story, you read a great story about a great person. This is a great story about a great person, who's giving you practical, actionable steps to get to the place that we all want to get to, which is, um, success. And so many of the tips, they're about venture, but so much of it applies to small business owners, appl-... It's just about the courage to build.
KATHRYN FINNEY: Yeah.
DENISE HAMILTON: So thank you so much for sharing with us. And, um, thank you for being you, and sowing into our communities in the way that you do, um. You make us better and we're so glad you're here.
KATHRYN FINNEY: Thank you so much. I so appreciate you.
--
JENNIFER BROWN: Hi, this is Jennifer. Did you know that we offer a full transcript of every podcast episode on my website, over at jenniferbrownspeaks.com? You can also subscribe so that you get notified every time a new episode goes live. Head over there now to read my latest thoughts on diversity, inclusion, and the future of work. And discover how we can all be champions of change by bring our collective voices together and standing up for ourselves and each other.
DOUG FORESTA: You've been listening to the Will to Change, uncovering true stories of diversity and inclusion, with Jennifer Brown. If you've enjoyed the episode, please subscribe to the podcast on iTunes. To learn more about Jennifer Brown, visit jenniferbrownspeaks.com. Thank you for listening, and we'll be back next time with a new episode.
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