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Scaling Success

Scaling Success as a Black Founder – Scaling Success Podcast

Sean Cantwell
Volition

In his latest episode of Scaling Success, Sean Cantwell invites Don Charlton to give a first-hand perspective on what it’s like to be a black founder in the startup world.

Don is an entrepreneur, startup, evangelist, writer, and public speaker. He is currently the founder and CEO of Kommute, the first video messaging platform for businesses. Don also founded Jazz HR (formerly The Resumator) in 2009 and established the company as a venture-backed leader in SMB focused SAS recruiting, now serving over seven thousand members recruiting for over 100,000 jobs. Don is a graduate of Rochester Institute of Technology. He has been profiled in The New York Times. And Black Enterprise was a regional finalist for the Ernst and Young Entrepreneur of the Year. Competition and Business Insider named him as one of the 25 most influential African-Americans in technology.

SCALING SUCCESS EPISODE 03: PODCAST

Scaling success episode 03: VIDEO

Full Transcript

Sean Cantwell: Hi, I’m Sean Cantwell and this is the new Scaling Success podcast. We started Scaling Success to provide a space for entrepreneurs and business leaders to discuss the important topics that contribute to building a valuable and long lasting enterprise, and to juxtapose our view as investors with that of entrepreneurs, founders and CEOs who are on the front lines. Episodes are now on Spotify. Today, I am thrilled to welcome Don Charlton to the podcast. Don is an entrepreneur, startup evangelist, writer, and public speaker. He is currently the founder and CEO of Kommute, which we’re going to ask him about the first video messaging platform for businesses. Don also founded JazzHR, formerly the Resumater back in 2009 and established the company as a venture backed leader in SMB-focused SaaS recruiting. Now serving over 7,000 SMBs, recruiting for over 100,000 jobs. JazzHR is a widely adopted recruiting solution with a customer list that over time has included many big brand tech startups at the early stages of their development. The company was acquired earlier this year in what was a great outcome for shareholders, investors, employees and customers. So Don is in that small set of folks who have raised capital for multiple companies during the course of his entrepreneurial journey. Don is a graduate of Rochester Institute of Technology. He has been profiled in The New York Times and Black Enterprise, was a regional finalist for the Ernst and Young Entrepreneur of the Year Competition. And Business Insider named him as one of the 25 most influential African-Americans in technology. Don is a proud native son of southwestern Pennsylvania in Pittsburgh, PA, currently residing in Atlanta, Georgia. So, Don, welcome to the podcast.

Don Charlton: Hey Sean, how you doing, man?

Sean Cantwell: I’m doing great. It’s good to be with you, man. So I mentioned some of your career highlights, but there is so much more to the story. I think your personal journey is a particularly interesting and inspiring one. So I’m sure our listeners would love to hear a little bit more about your background and that path to becoming an entrepreneur.

Don Charlton: Got it. Thanks, Sean. It’s great to be on your podcast. As you know, we’re basically mirrors of each other. Both boys from rural Pennsylvania. You grew up in the southeast. I grew up in southwestern Pennsylvania. We called it “Pennsyltucky”. I was more West Virginian than I was Pennsylvanian. I’m 44, which means I had an entire childhood without the Internet and then coming from a small town when I went to RIT, I thought the Internet always existed and it was just something that was in the big city. So I started in southwestern Pennsylvania as a fine artist growing up. Rural; me, my mom and my sister, really poor. I used to joke that we had a kitchen table with three legs and we pushed in the corner to keep it up. Every once in a while it would slide down, all the food would slide into the middle. Got almost a full ride to RIT. But I went to school for graphic design, which became web design very quickly. When I graduated from college in ’99. I spent about ten years as a professional web designer. Whenever you’re doing web design work, you got your headphones on and you’re trying to find something to listen to. I became interested in TechCrunch and tech podcasts and I started hearing about these geeky kids out on the west coast who were using pretty much the same skills that I had to instead of building websites, building web apps.

Don Charlton: Whenever you go to school for design and you’re a designer, you don’t really know any 60 year old designers who are gainfully employed. I think they take us out back at like 55 and kill us, unless you own your own design firm. So that kind of economic anxiety had me thinking about how can I use… What I realized was a competitive advantage in the new economy, the Web, to perhaps be able to find some financial freedom. It’s really hard for me to explain to you why I got into recruiting, except for the fact that before people were using phrases like cloud, before people were using phrases like Web 3.0 or Web 2.0 or whatever, I kind of knew that small businesses were going to use the Web for more and more software to accomplish different aspects of their business. And I knew that recruiting for like a laggard. So I know we’re going to get into a little bit more details around the journey. But, yeah, a small kid from a small town. I think we actually invested in JazzHR. We actually bonded over that I think.

Sean Cantwell: We did I think that’s one of the first things we connected over. We met interestingly, for the first time close to the San Francisco airport airport, if you remember that. It was like a hotel bar near the San Francisco airport, but you started talking about the Steelers and I was talking about the Eagles. And we definitely connected and bonded over that. I think part of what’s so fun about my job and part of what I love about the venture space and just entrepreneurs in general is you come across people like yourself who had no advantages, really, relatively speaking, yet somehow navigated your way to kind of starting your own business and kind of, against all odds, starting to achieve success, which I just think as an investor is such an amazing quality and a character that generally is a leading indicator of folks that are going to go on to have success. So maybe just kind of diving into your background a little bit like did you know any entrepreneurs? Did you know any tech executives? I’m guessing the answer in southwestern PA was no. Like at what point maybe when you got tp RIT or maybe that first job after school, did you have any role models that you looked up to and kind of modeled yourself after? Or were you really kind of blazing your own trail?

Don Charlton: Yeah, you know, I remember the exact moment I said that I need to do something when I grow up to be successful. As I mentioned, we grew up in a small town called Masontown, PA. It’s about 2,000 people. The job that everybody wanted was to be a coal miner because coal mine meant pension, it even meant an in-ground pool. You could probably buy a house there for $40,000 or a $100,000 is probably a really nice house. Right. So in terms of ambition, the whole story of everything prior to 1995, the Apples of the world, the fact that AOL was that was getting off the ground, we weren’t aware of any of that stuff in our small town. I mean, we were still reading newspapers and no one had Internet yet in 1995 where I grew up. So I remember that moment, I was probably 15 was really hungry and I had 15 cents. And I remember I went through my mom’s purse, I looked under the refrigerator, I looked at the couch cushions and I couldn’t believe that all I needed was a dime in order to go buy a little Debbie snack cake at the corner store.

Don Charlton: I was like, how the hell can I not find a dime? It just made me so aware of where I was in the world. I remember at that exact moment I was looking up in the sky, the sun was beating down on me. I was hungry and I realized that I got to consciously think about how I’m going to become successful someday. Actually growing up when you’re from a small town where there aren’t a lot of really successful people, I mean, like we had a guy who started 84 lumber. He was a billionaire, but he was like a lumber company. The average guy was probably making $24,000 a year or something, right? I had a great guidance counselor who realized I was always the best artist growing up. If you would ask anybody in my graduating class who was the best artist, they’d say Don Charlton, right?

Sean Cantwell: No, actually wouldn’t they say “Nut”? Wasn’t your nickname “Nut”?

Don Charlton: Yeah, yeah.

Sean Cantwell: We’ll save that for another conversation.

Don Charlton: It was so ingrained my friends would knock on the door and say can Nut come outside to play. My mom would say his name’s Don. But he told me about graphic design which I had never heard of. But I said, OK, I trust you. He also told me a great piece of advice, get out of here to see more of the world. At that point, I lived an hour south of Pittsburgh and I had only been to Pittsburgh twice since then, at that point, rather. So I went to Rochester, New York. That summer I learned a lot about minimum wage because I was working at McDonald’s, but I was also trying to help my family. And I remember going off to college with $75 and I had a garbage bag with my clothes in it. We couldn’t afford anything at that point. And I went to RIT, I didn’t realize that campuses were open all night essentially. So I stayed in the Greyhound from like 4 a.m. to like 9 a.m. being intimidated by the 60 story buildings that I’d never been that close to big buildings before. I think from there, you mentioned one thing about not having advantages necessarily. I mean, I guess I didn’t have any external advantages, but I did have internal advantages that I was ten able to externalize like perseverance. I also think I was gifted with a very curious brain where one of the things with Resumator was early on without a co-founder I had to get a B plus or C in marketing, sales, customer support, engineering, all from scratch. I had some advantages with my brain, I guess, at that point. But in terms of like mentors and advisors and so forth, I didn’t really have any around business. I think I just was very fortunate to kind of have this North Star for success. I could figure out with what I do and what I could do, how could I find it.

Sean Cantwell: So there’s a stat that’s kind of gone around our industry the last couple of years that says African-American founders receive less than 1% of all venture funding. You have now raised money for two separate businesses. One of them recently had a terrific exit. I’m curious, like when you were starting the business, did you know those stats? Did that influence you in any way? I’m curious how long term you were thinking or were you really just kind of putting one foot in front of the other?

Don Charlton: I think one thing is that especially considering the broadness of your audience probably is I think it’s maybe it’s interesting to kind of explain the foundational brain of an African-American person. You kind of were born into the world and things happen when you start to realize there is this thing called race. There are people who don’t like you. I grew up in a hometown where people told my sister all black people steal, it’s a fact. Get out of my store. My next door neighbor called my mom the N-word and spit on our screen door. So very early on, you start to recognize there’s something going on with this and you quickly start to recognize that in any given situation when you start to interface with the world, you have to try to understand how that might interface with what you’re doing. Everything from like – and it sounds weird – but like everything from like walking down the street and someone’s walking toward you. I had a woman sick a dog on me before because I was jogging up behind her so that these things kind of get ingrained in you. So the point I’m trying to make is, is that you can also recognize that we live in a country where back in the day you and I couldn’t have stat in that restaurant together. So when you have this as a foundation of your understanding and you realize it’s in the past but I mean, we’re just hearing in the news about how there’s a lot of people in this country that are very concerned about the demographic changes and so forth. So we’re still in a world where somehow race is a bowl of gumbo in this. But you kind of know from the beginning of your life and career that you’re always gaming out how race plays a factor in anything you do. Sports is great because it’s the ultimate equalizer. That’s why sports has so many people of success and so forth. Anything that involves basically no one can actually put up an obstacle in front of you artificially is where you can see a lot of equality and so forth.

Don Charlton: When I went to school for graphic design, I mean. First of all, in my class, there were no black people in graphic design, right? I always tell white people, imagine if you went to Jamaica and you just stayed there. Everywhere you went, you were integrating the place. You’re starting to be conscious of different things. Right? So when I got out of school, I knew that there was one thing that was really, really beneficial, which my two bosses, it was a design from Agna Moira Smith. And what they did really well was they never made me feel like they were making decisions about how to work with me, where I had that sense that race was involved. That’s happened in my life sometimes, but it didn’t happen with them. And I think that them putting me in front of clients who, by the way, would read that Don Charlton was going to be there and guess they had a thousand yard handshake when they saw me because they were just surprised that a designer was named Don Charlton. I think at a very early age, I kind of recognized that one of my – everybody has different obstacles – one of my obstacles was not having any idea how race impacts me when I interface with somebody. And in the most benign way, a little bit of bias and in the worst way, overt prejudice or racism, not knowing that, but always being sensitive to it, you just kind of know that the best thing you can do is be the best, because if you can become undeniably hireable, just like I looked at my company as being undeniably fundable, like understanding where the bar is and just hitting it is the way I lived my life. So the short answer to your question is no. I wasn’t even thinking about how what percentage of African-Americans raised venture capital because, Sean, I knew it was low.

Don Charlton: And there’s all sorts of things that people don’t think about.  that really hurt. I remember John Doar was on stage at TechCrunch whenever they were doing the TechCrunch-40 conferences. And he was talking about what he liked in the Google founders. And he mentioned they were at Stanford, they were geeky. And he actually had the audacity to say and they were white. I remember sitting there thinking, a lot of people don’t realize that impacts me. I think about when I sit across the table from a John Doar, how is he factoring that in? Is it a plus for them because I went to Stanford. Is it a negative for me or is it just neutral because I’m not? So you just become very aware of this type of things and you have to make a decision because they are going to be hurdles. You’re either going to allow them to be hurdles or you are going to allow them to be puzzle’s. And if you treat it like a puzzle, it’s just something you have to solve you’re going to be able to continually move forward in your career and so forth. So that’s kind of how I viewed it. I knew it was low. Of course it’s low.

Sean Cantwell: I mean, it’s interesting because we talk about how we bonded over our Pennsylvania connection. I mean, we knew each other for a few years before the topic of race really even came up in conversation. As we’ve gotten to know each other better over the years and more recently in the last couple of years, I think just through conversation, I’ve come to understand some things you experienced that I probably take for granted and never even thought about. While it’s uncomfortable to talk about race, I think it’s productive. You mentioned we have a broad audience, I think it’s helpful for people on two fronts. One, there’s the next wave of Don Charltons out there, and I think there are folks who can learn a lot from your experience. And then secondly, there are other folks that don’t know what it’s like to walk in your shoes. And I think it’s helpful to kind of understand some of those different perspectives. So thank you for sharing some of your real life experiences. One of the things I most admire about you, Don, is as I’ve gotten to know you over the years you take the responsibility of being an African-American founder very seriously.

Sean Cantwell: And I think because of that, you put even more pressure on yourself to be successful, to kind of become that mentor and that blueprint for future generations. So I thought it might be useful just to understand and walk through your journey sequentially in the process with Resumator, which eventually became JazzHR. And now you’re doing it all over again at Kommute. We talked about your path to RIT. We talked about having to kind of level up in different areas of the organization to become that kind of sole founder-CEO. Let’s just break the process of building the business into stages. You’ve framed it with that stage of becoming tech aware and became interested in tech. That decision to launch a business. Talk to us about that a little bit. We often would joke at board meetings about how you developed the original code at your kitchen table. I don’t know if that’s actually true, but I’d love to hear, in your words.

Don Charlton: It was a second bedroom, but yes. So I think the first thing is I think the preamble for all the things I’m going to go through is everybody has their own unique hurdles in terms of starting a tech company and so forth. I think one of the reasons why I took on my back trying to be a successful African-American tech founder was because I had no one really that was trying to be public that I was able to take a look at at the time to be able to understand the unique hurdles that an African-American would have trying to build a tech company. I think when you talked about the 1%, just imagine if you were going to be a white running back in the NFL and somebody told you that there hasn’t been a starting white running back in the NFL in the last five years or so and knowing there  was only one. So you have to make a decision, right? I guarantee you, there are 25 or 30 white guys in the country that could be starter running backs in the NFL. But what they’re fighting against is the peewee football head coach who allows the black kid to fumble the ball more often. And that’s just growth. What I feel is the pressure. If I fumble the ball, I’m going to get put… This is why we don’t have white running backs, right.

Sean Cantwell: To right guard,

Don Charlton: You’re a right guard. Exactly. So I always use that analogy to help people kind of understand the extreme hurdle you’re recognizing, you know that your journey as a tech entrepreneur when you’re black, most likely there are going to be times when you are pioneering something. There is going to be like Tope from Coulombe. He might have pioneered probably being one of the first African-American SaaS tech entrepreneurs to get a unicorn valuation. Right. Like, that’s a pioneering moment for him. We’re going to talk about the fact that you almost had to bootstrap his way to even get there. His talent at an early stage wasn’t recognized for quite a while until David Cummings invested in him. And my other friend, George Ozzie, he bootstrapped his company to almost $20 million in revenue. He couldn’t raise a dollar at all as well. So I think if I go back to my original tech awareness, I think as an African-American to be successful in tech you’re not going to get the credit for being naive. To me, I look at it as you have to first understand the laws of physics, of tech. Like the laws of physics are, you’ve got to build something that delivers value to customers.

Don Charlton: You have to gain traction. You have to network. You have to raise money. Then you kind of do the same cycle repeatedly. Right, with different stakes and different forms of measurement. But as an African-American tech founder, you have to recognize that when you read your TechCrunch articles and you see the person who raises a crazy valuation, I remember the one that really ticked me off was some kid from Harvard, I think raised $35 million for product called Klingel. I’m sitting there with $2 million in revenue and I can’t raise a dollar, which you recognize that’s whenever the laws of physics are suspended for certain people. Most entrepreneurs, white, black, Asian, whatever, the laws of physics apply to them. It’s just that as an African-American founder, you have to recognize it’s going to be very rare situation for the laws of physics get suspended. And you have that crazy story where you had a napkin. Because there’s people here in Atlanta who met Tope when he wrote on a whiteboard what he was going to do with Coulombe, not even a pitch.

Don Charlton: You’re not going to get those moments where somebody says, I just like the founder, I gave him money. So becoming tech aware is really kind of recognizing what is expected of you to be above and beyond the average entrepreneur. To me, as an African-American founder, you just have to know at the beginning the journey you’re going to be on and what both the measurements look like and recognize that you’re probably going to get credit for what you’ve done, not for what you could do in the future. That was something that very early on in my journey was very frustrating to me because I felt like I was ahead of the curve. I don’t want to jump ahead because I want to just kind of focus on being a tech aware. Tactically, what did I do to be tech aware? I listened to a lot of founders talk about how they built their company. I listen to the questions that they had. Whenever I heard somebody say when we raised a series A, I said, what is that?

Sean Cantwell: That’s like your curiosity coming through.

Don Charlton: Yeah, exactly. You have to be very curious. And I think a good litmus test for you is to be able to say here is the journey that a startup goes through and to be able to clearly articulate pre-seed, seed, accelerator program options or whatever else, valuations, pre-money, post-money. You almost have to become literate in it way beyond. because the same way I used to joke that a kid in New York City who says, let me “ax” you a question that’s going to be considered a potential slight to your intelligence if you’re an African-American kid and you say, let me “ax” you a question, but a kid in Boston, it’s just going to be considered an accent.

Sean Cantwell: When I hear you describe that, I have a couple of reactions. One, I think it’s like your general kind of curiosity and perseverance, which you talked to earlier. I think there’s also a situational and social awareness that you had to understand the lay of the land and navigate it appropriately because you did and we’ll we’ll talk about it. But like you did pursue different accelerator programs in Pittsburgh, PA. By the way, I mean, there’s multiple limitations here. But you’re also in Pittsburgh, which is not Silicon Valley. Maybe talk through that because you’re at your kitchen table, or second bedroom, excuse me, you’re coding the product. You’re the jack of all trades. You’re marketing, your sales, your product, your engineering. You’re starting to scale the business. You’re getting revenue. You reach that natural point where you recognize perhaps some external capital would be helpful to really build this to a more meaningful scale. What do you do next?

Don Charlton: Well, remember when I was in Pittsburgh, I think I’ll back you up just a little bit to kind of talk about something. There is something important because, again, one thing I really want to focus on is the idea that this could be a really good podcast specifically for African-American founders is for any type of founder it’s true that why investors invest it shifts from being investing in you to investing in the business. Over the course of from friends and family money, which is the basic cash to going public. It shifts from really being about you as the 51% or more to being 51% or more of a business on that spectrum all the way through the funding lifecycle. But early stage when you’re an African-American, my thought process was this was. Knowing that I was probably trailblazing accelerated programs, in some cases, I knew that they were actively looking to try to have a diverse pool of people. Now, I didn’t view myself as like some diversity charity case because I knew I was awesome.

Sean Cantwell: Confidence. That’s another one of your traits, Don, that you didn’t mention. Confidence.

Don Charlton: But I knew that there was a fundamental focus on the fact that they weren’t going to have bias in the process. And I think that’s important. I think that’s why some of these programs that are out there right today that are targeting African-Americans, those didn’t really exist back in the day. Going through state or government funded programs at the time for me was important because I knew that I was going to get an equal shot because one of their mandates was probably want to show that we can put a diverse team together. I often make the joke about people harp on this thing called affirmative action. I like to say there’s another thing called re-affirmative action which is just reaffirming assumptions and so forth for people who always get access to resources. So I don’t care about that stuff, because I know that for every person who’s perhaps a diverse founder who gets a little bit of a leg up in an accelerated program, there’s some white guys getting a contract for road construction or whatever, because he’s got a network buddy. I don’t care, that’s his business. So doing that, it allowed me to be able to do a couple of things. We talked today about people having allies. Are you an ally for Black Lives Matter, with what’s been happening with Asian-Americans, with the LGBT community? I kind of knew early on that I needed allies, but I understood what they meant.

Don Charlton: One of the things I knew about you whenever we first met was – and this is a hard thing for people to understand – that African-Americans have a good sense for is a person’s natural comfort level with people that are from different backgrounds. You have you have a very natural background. You have a natural comfort level with that. You find people early on who feel the same way. Mine was a guy named Jim Jin who was at the Alpha Lab program at the Pittsburgh Accelerator. I met him at some coding meet up where I told him what I was working on. And I could tell that he was impressed by me. And I knew that he was accessible. So I knew that I needed an ally who had access to the resources who could become an advocate for me when I was in there pitching. I didn’t get in the first time at AlphaLab because I had a conflict of interest. I was going to content management system and I was working for a design the content management system. But Jim was a big ally where I knew because I built a personal relationship with him when I left for my second pitch, I knew he was going to be an advocate for me, most likely because he knew me better. So, one of the biggest challenges African-Americans have is that we’re under networked in terms of the people who have the levers and the connections to be able to help us start to build allies in order to be able to have people who vouch for us.

Don Charlton: And you know this concept, Sean, social proof. So social proof I knew very early on was really important for me to be able to have a somewhat unfair advantage in terms of being able to have people be my advocate. So giving an accelerator program really helped me then start to ask dumb questions. Sometimes you wonder if people by default assume you don’t know as much as you know or whatever. So sometimes people are afraid to ask dumb questions. I wasn’t afraid to ask dumb questions. What does series mean? What is that? Help me understand pre-money, post-money. Explain that again. I didn’t understand it. I knew, as I said before, the more I understood the way this world worked, the more that was not going to become a negative at a minimum that I didn’t understand that, especially because, like you said before, my joke is it was hard for me to say what challenge I had as an African-American raising capital because I was a first time founder in Pittsburgh, Pennsylvania, as a single founder. I said those three hurdles alone are going to make it hard for me to raise capital. But once I started to get some scale and I’ll stop here in a second, maybe we can talk about the next phase, is when I started to realize that there are some real hurdles that are hard to explain because I feel like I was actually building momentum that was on par, if not ahead of a lot of other companies that I saw.

Sean Cantwell: I think I want to go back to an earlier point you made, because I think it might be useful topic for our listeners. You drew the analogy of, hey, Sean, just get dropped off in Jamaica. I can just stay there and see what life in that experience would be like. It reminds me of a comment you made several years ago, probably over a drink. Sazerac, I believe, is your drink of choice, Don. And you said, Sean, imagine a scenario where you literally integrate every single room you enter. And it’s an interesting little thought exercise, because I know there have been points in time over the years where we’ve had a conversation. I be like, Don, that’s not a race issue. You’re seeing race in in different places than I’m seeing race. And I think that’s very normal when you’re in a situation where you are integrating literally every room. So I think it’s a very interesting thought exercise. My question for you is how often as a black founder of a tech venture funded company are you seeing and thinking about race while at the same time going about your day job of building a company?

Don Charlton: Well, I think what’s interesting is there’s a larger looming thing. I always like to say to people this: one of two things are true, because if you ask the average African-American, is there a problem with race in this country, almost all of them will say yes. So one of two things is true, either an entire group of individuals are completely brainwashed. Which, by the way, in itself is a little bit racist. But we’re told our whole lives, we don’t have a good sense of our own life experience or there’s something there. I think sometimes, there’s a famous photograph of these these black girls integrating a school in I think it was Arkansas. And there’s people yelling at those girls walking into the school. I tell people all the time that it’s easy for us to look at that picture and say that was history. But as an African-American, what you see is a potential future manager, a potential future politician or potential future leader, a potential future school teacher. They didn’t just scream at that black girl and then go about their lives being this advocate of equal opportunity. I think sometimes people don’t recognize that the long tail of bias at best and pure racism at worst.

Don Charlton: And we always use the word racism. Which when you just call everything racist t makes it really easy for people to ignore their biases. I like this little thought exercise for anybody out there listening and so forth, the easiest way to kind of understand your baseline if you’re a guy and you got a daughter, the easiest way to understand your baseline feelings about race is if I said, would you let a black guy date your daughter? You don’t have to answer the question. But that’s a good way to kind of get a baseline understanding of how you feel about it. So I think you don’t always think about it, but I’ve had a dog siced on me before. I would assume if you were a white kid who grew up in a black school or like lived near a black neighborhood and black kids beat you up, you might be a little bit racist. You might be a little bit biased, right? I mean in my professional career, I’ve had things said to me that I don’t think would be said to me by other people. So I think it’s one of those things where it’s not that you think about it all the time, it’s more like a vigilance.

Sean Cantwell: So how about, Don, we talked about one of your goals is you want to be able to have a future, up and coming African-American tech entrepreneur asking you for advice. You want to be able to point to this podcast, given all of that, you very easily could have been like, it’s too hard. But you didn’t. You persevered and you fought through it. Maybe talk through that, how you managed that.

Don Charlton: But I think what it is, is that I would actually argue that all African-Americans are already naturally trained to do it. You just happen to be talking to somebody who was able to push through more and more and more. Some of that stuff has nothing to do with my pushing through race. I also just happen to be hard charging and so forth, whatever else. I think just in general, I would say I think most African-Americans kind of recognize that that’s one of the hurdles they have to go through. It’s just that you can recognize that there’s a hurdle, but you can also run up against hurdles that are just impossible to jump over. In that mix, I like to tell people all the time who would want to spend their life believing that race was impacting them their entire life, for everything. That would be a terrible existence. But you can’t help the fact. That’s a person who ascended to be the president of the United States. So I think it’s one of those things where I think people who aren’t African-American think that there is some note taker in our brain for every conversation that is analyzing it from a racial perspective. But that’s not the case. I know that if I interview a white guy who’s never had a black boss before, either he’s going to not think about it at all or he’s going to think about it to some degree because he’s never done it before. I’m going to use the engagement with that person to be able to figure out where they might lie. And we actually call this the third eye because we deal with it.

 

Sean Cantwell: There is a name for this? I’m learning some things.

Don Charlton: The third eye. So it’s from a standpoint of investors that I want to work with, people that I want to hire. Just recognizing that if the number of times I’ve just been upset that I’ve been called aggressive, like it’s all these things, I think everybody kind of experiences it. So I think the simple summary is it’s not about not thinking about race. Because you don’t spend a lot of time thinking about it. It’s about recognizing that you don’t know how it might impact you. You’re not going to convince me that it doesn’t impact us because I would say this, tell me why 10 years ago, only 1% of venture capital went to African-Americans and that’s true today. Because I meet a lot of African-American founders who try to start companies. Maybe not enough to get that to 20%, but it hasn’t budged. So there’s something there. We as African-Americans have to decide how much time we want to spend thinking about it. I didn’t spend a lot of time thinking about it, except when I was in the middle of trying to do something. Like imagine walking into a venture capital firm and you are pretty sure they have never invested in an African-American founder before. So you know if they invest in you – if they don’t invest  it’s because they’re racist – you don’t think that. No. But you recognize on the positive side, it’s still them thinking I’m a venture capitalist. I recognized Sean when I met you that you might make one or two bets a year. You’re going to be tons of founders.

Sean Cantwell: Mm hmm. Probably 100 for every 1 investment we make.

Don Charlton: Exactly right. So even when I met you, I knew that. You don’t have a lot of data points of African-Americans have built really big businesses. Now, I would argue that you give us $10 to build a rocket ship and somebody else, $10 billion, you’re not going to see a lot of rocket ships coming out of African-Americans. I always say, let’s talk about what this will create. It’s not about capital burn. But I know that no matter what your biases are, and your biases could just be data driven about demographics, it could be no bias, I have no clue. I don’t know. But I do recognize that. What I also like was you didn’t even think about the fact that you were doing something that was kind of pioneering. I bet you you are rare, you might be in the 1% of venture capitalists who have chosen an African-American startup to invest in. You ever think about that? Of course, you don’t think about it because just by happenstance you’re invested in me.

Sean Cantwell: I think what’s interesting I mean, it goes back to an earlier point. Part of what I love about this job is the idea of investing in hungry, scrappy people that are creating opportunity and building something despite a massive limitation of available resources. I can remember in business school, there was professor who defined entrepreneurship, I think as the pursuit of opportunity with no regard for available resources. Basically meaning like, I’m going to go do this and I’m going to figure it out as I go. Part of what I love about this country is the idea of the American dream. The American dream should be available to all people and there should be equality of opportunity to all people. I think part of what excites me about you sharing your story is kind of creating that blueprint that the opportunity is there and you got to know how to get it. You’ve got to be hungry. You got to be scrappy. You got to fight against the odds. But like, hey, there’s Don Charlton, like he did it. So maybe I can do it.

Don Charlton: Yeah, exactly. And I think to jump back, we talked about different stages. I talked about like getting into an accelerator. The next stage, and I think it’s really important that African-Americans should understand is that in my opinion, the only way to be successful in a startup is to persevere long enough so that you do have your moment where the laws of start-up physics bend, they break. Like you’re actually defying the laws of start-up physics. Because you’re destined to fail. But amazing things happen. Some things that I think for other groups of people that seem benign are actually bending the laws of physics for African-American tech founders. I had my moment when I met Paige Craig. So I was trying to raise venture capital in Pittsburgh, which admittedly was hard for anybody. But I had built a fast, relatively fast growing tech company right at that point that I thought was undeniably fundable. And I had this guy reach out to me out of nowhere in an email. And I had this moment that I felt literally most people would assume only non-black founders experience. But I had mine. And it was Paige Craig who was, again, a person who really at their core is a person who views the world as a meritocracy, looks at the business. He was using the product and he liked it. And I had this moment that I didn’t know existed. I had a phone call with him and in an hour he told me he was going to commit $100,000 to my business and then open up his network to me. So that conversation with him was the only reason why you and I connected. I had this moment that seemed so unrealistic. This person who out of nowhere, who had never met me in person, knew me for an hour, and then basically invested in me. That’s an atypical story for an African-American founder. I was able to connect with something like that.

Sean Cantwell: That’s that moment when hard work meets luck. Like you had some luck. Yeah, it only happened because you were working really freaking hard.

Don Charlton: Exactly. But I think the challenge, though, I think is that we run the risk of basically relegating my story to be I just worked really harder than maybe some other folks do. One thing I will say is this and for a very long time, I have struggled to – I wanted to not say this, but I’m a little different, like I’m technical. I went to school for design so I could also design my interface. So one of my biggest reasons why I was able to be successful was because I didn’t run into hurdles where if you can’t raise $100,000, you can’t hire a developer. So I taught myself to code. The amount of things that I built up in myself are atypical of most founders because what I said to myself was again, as an African, I knew if I can’t code, if I can’t market, if I can’t sell, I got to find somebody to do those things. I don’t feel like trying to convince somebody to come work for me for free because I don’t blame somebody who has never seen an African-American build a successful tech company. They might hedge and wonder, like, is this going to be the guy. Whatever spectrum I think of it, just a weird curiosity all the way to I don’t really know if he can do it. I don’t have time to figure out the spectrum. So I went way above and beyond what I think a founder should have to do in order to just completely remove the need for another person.

Sean Cantwell: It’s interesting. You just didn’t want to rely on anyone else, maybe because you didn’t want to or because you felt like you didn’t have the luxury to rely on anyone else. Because of that, you became the the one man band, Swiss Army knife, plug in whatever analogy you want.

Don Charlton: And what’s interesting is that became a negative against me. Like I thought for a second that I had built myself up to be able to build a company. And we were doing like $1 million in revenue or something. But it actually became a detractor because people always thought that I wanted to do everything when the reality is the fact that I did everything is the reason why we were even having the conversation. The problem we have is we don’t have as many African-American in computer science. The ones that do, like one of the things the African American community is this idea that you can go work in a large company. Having your cousin or your son work for Facebook, Google, right. That’s a feeling of success in the African-American community. To convince somebody who works in one of those companies to leave that great job, which you already feel like it’s hard to get to come work for the Resumater which loses money every day and hasn’t raised a million dollars. You just start to realize those hurdles are going to be just way too difficult. So I wasn’t even trying to recruit African-American founders. I just said I’m just going to be slowed down by the fact that I can’t recruit someone else. Now, you can make an argument that I copped out on just doing the hard task, which is finding someone to believe in you. Probably. But at that time, I was just figuring out my own algorithm for success and doing it all myself, which I thought was going to be considered to be exceptional, actually turned into a liability for folks because there was a misconception that I wanted to do everything when the reality was no. When you have $150,000 in the bank, it’s hard to hire somebody who you have to pay.

Sean Cantwell: Yeah, I mean, it’s interesting, you’re talking a little bit in some ways, just the evolution of a founder and the role you play. I think every founder, to a degree, maybe there’s a co-founder where it’s one or two people wearing multiple hats that does not scale forever. And you enter this new zone in the business where you’ve got to build a team. You got to let go of some responsibilities along the way. So I’m curious, I mentioned at the outset that JazzHr had a great outcome. You’re now running Kommute. You’re on to your next thing. I’m curious, as you look back on JazzHr, what are kind of your big takeaways and lessons learned that you would package and turn into advice to an up and coming entrepreneur?

Don Charlton: One thing I would say fundamentally is find investors who not only believe in you, but they’re willing to give you a shot where you’re not feeling like you have immediately gotten investors who are basically hedging whether or not you can do the job. I would even argue that what I’ve learned through you folks is that they won’t even see the fact that they’re trailblazing, they just won’t. Maybe because our world is a little bit more focused on it. But you guys didn’t even think about that stuff. And I’ll never be able to explain to you that you can get a sense as an African-American when other people do it. You just can’t. So I think that’s the first thing. I think another thing is to just recognize that you have to really understand what growth looks like for whatever stage you’re raising capital for. It just has to be seen. Look for me to be able to raise a check from you, what group dynamics you need to see, what team dynamics do you need to see and just keep getting answers to that question so you form sort of this amalgamation of what success looks like for the next stage of growth. The unfortunate fact is for African-Americans, you have to hit it. You’ve got to get on that path.

Don Charlton: Like the idea that you have a conversation with someone and they just throw you a million dollar check, it’s going to be based on what you accomplish, not based on what you can do. And if it does, then just remember that you’ve done a unicorn thing for African-Americans in tech. So I think that if I were to give a couple quick summaries, I would say that those are some things that are really important to kind of think about. I also think another thing is that you need to have really good social proof. And these are like these are things that like I say them because I know that people are going to say that’s not true or whatever else. No. I think that the more Africans you can have for your acumen as a founder, the easier it’s going to be to be able to recruit talent, because you’re going to be in a situation like for example, my first chief technology officer was Andy Fraley, and I knew that one of the reasons why Andy Fraley came to work for me was because I think he was very interested in the novel idea of an African-American founder. He actually had said that to me. He was passionate about it. So I think in some ways part of your narrative which I would say just from a team perspective, but I think today and with our society, you could also make it part of your fundraising perspective is you kind of want people who either in the forefront or the back of the mind like the idea of pioneering and being part of something bigger than them.

Don Charlton: You want to find allies who like the new ideas. I think Paige likes the fact that he invested in an African-American man who had a nine figure exit. I think Andy does, too. That’s not why they invested. But I think that they kind of get a kick out of it. I think that we’re at a stage in society where if you can find investors who recognize that the bar is always going to be high, but I’m proactively curious about the idea that I can be an investor. And as I said before, I don’t think you even think about the fact that you’ve probably done something that 1% the venture capitalists have ever done. There’s some people I think also think about that proactively. As an African-American founder, if you want to accelerate your success, you want to find advocates for the fact that success in tech can be diverse, even if you’re the one recognizing that that person is subconsciously invested in your story and who you are versus maybe somebody who just looks at the numbers of your business. And obviously, at this point, we were big enough that you were thinking about.

Sean Cantwell: Yeah, I mean, I think at the time where we came to know each other, your business spoke for itself. Just oh, by the way, Don happens to be African-American. So what?

Don Charlton: I think the challenge is I think the further along you go, I found the more it becomes a meritocracy. I really do believe I actually believe in the meritocracy of tech. But I question if an African-American girl with dreadlocks can stand up at a pitch competition and say she’s going to go $100 million business and be taken as seriously as somebody who just happens to be a software engineer at Google. I question that because I think that there’s access to the very early capital and social connections to be able. To get started, and I think my success, least for the fact that, I didn’t overcome obstacles in my opinion, I just made it really hard to not invest in my company, given good terms and so forth for the investors. And that was one thing I also thought about, too, is that I don’t, as an African-American founder, get discouraged, because if you’re an African-American founder, you talk to, let’s say a white lawyer and you ask him, what valuations are you seeing in on post-money sales? He  might say something like, oh, man, I’m seeing stuff as high as seven to nine pre-money or whatever. And then if you go on, you’re not getting seven to nine, you start to wonder whether or not you’re dealing with bias or whatever else.

Don Charlton: But what you don’t recognize is the lawyer because he’s a nice guy, is just telling you what he’s seen. He’s not thinking about the fact that those are deals of the laws of physics kind of get shifted a little bit. And for us as African-Americans, it’s a little bit harder for us to get those opportunities. A five to six pre-money is pretty good on a safe round, depending on how much you’re raising, too. I think like having those kind of understandings of the world, I think that’s one of things that we struggle with and why I think perhaps we get a little more frustrated raising capital because we’re not really told that. We think that the the startup world is this land of milk and honey where if you build it, people will invest and there’s lofty valuations and everybody sees it no matter what you look like. But we don’t recognize like. Yeah, but in the end, if you’re a female, if you’re African-American, whatever else you got to just treat it like a really a real business. Don’t think you’re going to get favors and the laws of physics are going to break or bend for you. And eventually they will. And you’ll get to the point that the meritocracy starts to kick in.

Sean Cantwell: Yep. I think is good. And I think having conversations like this while at times uncomfortable, I know I shared with you like as a white guy, sometimes it’s uncomfortable to talk about race because there’s no way I can understand your life experience. And as a result, I’m bound to make ignorant comments or insensitive comments or not fully appreciate what the black experience is in America. But I think having conversations like this are a step in the right direction. I think you laying out your life experiences and how your curiosity led you to kind of uncover opportunity in different ways, again, lays the groundwork for others to hopefully follow in your wake. And you’re right, like in the last couple of years, I think the conversation is ratcheting up in volume and there are more opportunities and there are more conscious efforts to invest in underrepresented groups, whether it be women entrepreneurs, underrepresented minorities, et cetera. But I think these conversations are necessary to help level the playing field and educate people on different experiences.

Don Charlton: One thing I would love to ask venture capitalists is this, just you tell me why it’s 1%? What needs to change in order for it to be 2%?

Sean Cantwell: You know what’s interesting, Don? I think in the last couple of years as some of those stats have been surfaced, I have had conversations with other folks in the industry and they might ask the question or they might make the observation, I’ve been doing this a long time and in 15 years, I’ve probably met, pick a big number, 5000 entrepreneurs, 3500 entrepreneurs, whatever the number is, people often say, I think I have only met five black tech entrepreneurs, which is so interesting. So then you ask the question, well, why is that? Is it because that path and the opportunities are not laid out to create the success or are the doors not open. And I think the answer is somewhere in between.

Don Charlton: I think it’s on both sides. I think that African-Americans are rapidly gaining the experience. There was the geeky white boy world that was able to very early on, the Stanfords and the Harvards of the world, there was like sort of like this lineage of the geeky white boy and Asian boy world of talking about tech, interest in computer science. So there’s definitely a head start in terms of building that ecosystem and that social ecosystem. I think African-Americans are, like you mentioned, I was on the list of 25 African-Americans in technology. What was scary at the time was I wasn’t impressed by being on the list because I was like, why do I know most of the people on here? That’s how small the network was at the time. The best way to answer that question is to say this, look at how many companies are in Google for startups. If you want to put in the show I can actually send you a list of many African-American tech companies. They’ve actually compiled a list of African-American tech companies.

Don Charlton: I think the reason is on one hand, I think that, just to give you an example, like in Pittsburgh, I was a very successful tech company by most people’s measurement. So a lot of the founders in Pittsburgh would reach out to me for advice on how to raise capital. True story. So I’m talking to a guy who’s it was mentioning that he was trying to figure out how to raise some capital and he’s trying to close out his round. And I’m giving him advice. The next day he called me up and he said that he had a conversation, I think with Sam Altman or something. Had dinner with them. Dinner! And he raised a million dollars. Why? Because his social network was able to get him in the room with Sam Altman. His social network was able to introduce him to the fact that Y Combinator existed, TechStars and so forth. I think that we’re only at the first five years of African-Americans really becoming conscious of like these foundational connections into the social network of tech to be able to start to work their way into situations where they’re giving introductions to these people.

Sean Cantwell: It’s funny, Don, you might not even remember this. I think I was in the airport with you one time. I can’t remember what airport. We ran into Chris Bosh, you remember that? The NBA player? I think it was like an engineering major undergrad. He went to Georgia Tech if I’m remembering this correctly, before he went pro and I remember you went up to him in the airport. And I think he’s like, hey, who’s this guy, why is he approaching me? You went up to him. And you’re like, because I think Chris was outspoken about STEM education. You just wanted to express your gratitude to him for talking about that and encouraging youth to pursue opportunities in STEM. And I think one of the things that I’m really excited about with kind of JazzHR being a good outcome and you being the founder, I think your megaphone has gotten louder.

Don Charlton: I think that’s really important, actually, because there are other African-American tech founders who have had exits, but they’re I don’t know if I would say reclusive, I’m just saying they’re harder to find. And I think that another thing is there’s actually a decent number of African-American tech companies right now that are actively being operated but haven’t had their full exit yet. And I think one of the things that I think other groups have benefited from is it’s just kind of nice to hear the story of somebody who is exited, that you can emulate. Like if you’re a white kid and you’re entering Y Combinator, that’s just what white kids do. They get in Y Combinator. They go to a tech company.

Sean Cantwell: Not all white kids. But, yeah.

Don Charlton: The point I’m making is that you don’t get a chance to. Often I feel like I have a very rare perspective on having been an African-American founder who’s gotten all the way through it.

Sean Cantwell: Now you’re doing it again.

Don Charlton: So I do feel a responsibility to let people see the fact that there is an endpoint for this. The reason why I can say Sam Altman, and you know who Sam Altman is it’s because he has been successful. And I think the more African-American tech entrepreneurs we have seen their start and their end point and then they’re able to come back in and be a beacon for the community. I think that that ecosystem, I’d love to be part of the beginning of that ecosystem, because I actually think that is one of the things that leads to growth. Like I can introduce you to an African-American founder now if they have gotten over the hurdles of what I think is a good investment for you. I don’t think there’s enough of us yet that are that I’ve gotten the full circle to be able to actively just keep on funneling more people up to the series C of volition capital.

Sean Cantwell: I think your story is a super impressive and inspirational one, and I know you’re going to have a huge impact. You’ve already had a huge impact. Before I let you go, I alluded to the fact that you are doing it all over again. I know you’ve made mention that Kommute’s going to be even bigger. So I want to give you an opportunity to kind of tell our listeners about Kommute, what you’re working on and the goal, the goal for the business and what you’re hoping to accomplish the second time around.

Don Charlton: I’ll try to keep this very brief. So Kommute is a video messaging platform. Think of that as a recorded voice and video messages for the workplace. The problem that we’re trying to solve is especially in a remote work world. I started this company before COVID, you’re spending a lot of time in short meetings or writing long emails because you’re not able to kind of have this hallway conversations, Face-To-Face conversations. You’re not able to like have a conversation after the meeting to say a line. So a voice/video messaging platform enables people to be able to asynchronously send communications using the power of your voice and the ease of just speaking or if it’s something that’s visual, being able to share your screen and record your screen. The magic is we all know how to record a video on our phone, whatever, but try to get it up on the Internet so you can share with anybody, especially if you don’t have their phone number. So the magic of ours is you record a video you can add text to it and you can even integrate things like your calendar if you’re maybe you’re in sales and you want someone to schedule a meeting. And as soon as you click save that link is already live on the Internet for you to be able to save, email to anyone, posting on a Slack channel, you name it.

Don Charlton: So obviously long term, I believe companies that go to meetings like WebEx and Zoom they’re the voice and video stack is going to include not just the synchronous tools that they have for voice and video communication, but also asynchronous. And I feel like we want to be one of the seminal platforms that really kind of popularizes what I think is a new form of communication, which is recorded video and voice in the workplace. For all the founders out there we raised a we raised a small safe round. We’ve gotten our first enterprise customer. And we’re going to continue to use our proceeds to be able to get some traction where we can garner a true seed round. Or if we’re just really growing fast, maybe we can skip that round and go right to a series A. See how I said that? Sean understands what I’m saying when I say that it’s really important for you to learn that even if it’s your first company, because you’ll sound like you know you’re talking about.

Sean Cantwell: All right. So check it out. Kommute.com. Kommute. Don, you’re the man. Thank you so much for taking the time to chat with me and give our listeners the opportunity to hear a little bit about your background and your entrepreneurial journey, which is a successful one. Now I’m really excited to watch what you can accomplish here and not only in round two, but also even outside of work, because I know you can have a big impact and I know you will. So, Don, thank you.

Don Charlton: Thank you. I want to say thank you, because as anyone listening is can tell, me continually saying like you’re not really realizing how much of a pioneer you are is one of the great, humble things about you that I really appreciate and the fact that you backed me and the fact that – it’s hard for me to explain to you just how special that makes you in my life, considering the challenges that you face as an African-American entrepreneur – is it’s just something that one of these days, maybe it’ll all come together just to see how just being the 1%, be the one that advocates for more meetings of African-American tech founders, be the one that kind of like even if you’re not investing, helping them understand how to basically level up so that the next time they want to invest. Just anything we can do to be able to do that. Because we all want to bring shareholder value. We all want to be able to ring this bell. This is the new industrial revolution, quite frankly. And the more people that look like me that get involved in it, the more value that we create for everybody, no matter what they look like. So, again, I just want to say from the bottom of my heart, I really appreciate you asking me if I could go to a shitty diner near the SFO airport.

Sean Cantwell: Yeah, well, hey man, the feeling is mutual. You know that. And as we have discussed now in this post COVID world, we’re going to get together and have a little celebration for all that was accomplished at JazzHr and also just to catch up. So Don, as always, great to catch up with you and look forward to hopefully seeing you in person here in the not too distant future.

Don Charlton: All right, Sean, thanks a lot.

Sean Cantwell: Alright. Take care.

 

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