STACEY ABRAMS HAS a knack for turning failures into successes. After conceding in a tight 2018 gubernatorial race in Georgia, the 47-year-old entrepreneur, lawyer, writer, and former legislator turned her attention to fighting the state’s restrictive voting laws — and ended up helping her party win the presidency and the Senate two years later. As an entrepreneur, Abrams and her serial co-founder, Lara Hodgson, started and shuttered two businesses before landing on the fast-growing fintech company, called Now, that they’ve been building since 2010.
Now addresses one of the biggest pain points Abrams and Hodgson have experienced in their own entrepreneurial journey — one that will ring a loud bell for any founder of a cash-strapped startup who’s had to stare down the impossible choice between paying invoices on time and keeping operations humming. After growing largely by word of mouth for its first decade, Now recently landed a $9.5 million Series A investment aimed at taking the platform national. It’s too early for Abrams to declare success, but failure isn’t even on the table.
How did you decide to become a startup founder?
- 1 How did you decide to become a startup founder?
- 2 What skills have you developed in your political career that have helped you in your entrepreneurship?
- 3 In your experience, what are some of the benefits and drawbacks to having a co-founder, versus going at it alone?
- 4 You had to fold your first startup, Nourish, a line of formula-ready baby bottles pre-filled with purified water, not for any lack of orders but because you didn’t have the financing you needed to fill those orders. How did you think about moving forward after that?
- 5 In your 2018 TED Talk, you said, “Finances are often a reason we don’t let ourselves dream.” How did you allow yourself to dream during your period of financial struggle?
- 6 How were you ultimately able to see the opportunity to start Now, which offers a service to pay off the invoices of small businesses for a 2.5 percent fee?
- 7 How does Now address the kind of institutionalized biases against minorities that have been shown over and over again to exist in the established banking and credit systems?
- 8 Now is based in Atlanta, not Silicon Valley. How has that helped or hindered the company?
- 9 What does success look like for this company?
I was a reluctant entrepreneur. I have a wide range of interests, and I love learning new things. But I also enjoy the mechanics of running businesses. What has kept me in entrepreneurship is that it lets me multitask as a job.
What skills have you developed in your political career that have helped you in your entrepreneurship?
I became an entrepreneur and a political leader at the exact same time, so I would say they’re mutually reinforcing. Whether you are trying to pass a bill, win an election, or start a company, clarity is incredibly important. Taking the time to write out the steps of how you’re going to get it done and understanding the obstacles and the opportunities are skills I’ve had to foster and hone in both spaces.
In your experience, what are some of the benefits and drawbacks to having a co-founder, versus going at it alone?
I appreciate the independence that comes with starting a company yourself, but I advise people to start with a partner. You are always going to have blind spots, and having a business partner gives you an interest in identifying your blind spots before others see them. It is an extraordinary way to learn new skills. I didn’t go to business school, but Lara and I tease each other that I have a bootleg MBA and she’s got a bootleg law degree. The negative of having a co-founder is that you have to balance your ego with your ambition — but in the end I have always found that I’m better at what I do when I have smart, thoughtful people doing it with me.
You had to fold your first startup, Nourish, a line of formula-ready baby bottles pre-filled with purified water, not for any lack of orders but because you didn’t have the financing you needed to fill those orders. How did you think about moving forward after that?
We’ve been taught that failure is this negative word for us to recoil from. But the issue isn’t whether you succeed or fail. When Nourish failed, we failed because we grew to death. So we didn’t let that moment define our capacity for success, and we didn’t let it dictate what we were going to do next. Instead of rehashing what we could have done differently had we been born millionaires, or if we had taken this or that opportunity, we thought, “OK, what we did we learn from this?” We simply learned that our business model did not work.
A big business can carry $150,000 of unpaid invoices. For a small business, that’s drowning.
In your 2018 TED Talk, you said, “Finances are often a reason we don’t let ourselves dream.” How did you allow yourself to dream during your period of financial struggle?
Lots of practice. You know, when you grow up with economic poverty, you have a great deal of opportunity to figure out that, while money is absolutely a real impediment, it is not always insurmountable. I watched my family surmount it. And so one thing we did with Nourish is that Lara and I never quit our other jobs. We kept our other company, Insomnia Consulting, going while we were building Nourish, and for me that was essential. I was solely responsible for my economic success, and that meant that I had to have these other sources of income while we were waiting for Nourish to become profitable.
How were you ultimately able to see the opportunity to start Now, which offers a service to pay off the invoices of small businesses for a 2.5 percent fee?
We realized there was a pain point for small businesses that sold to one another that wasn’t being addressed by the capital markets and wasn’t being discussed in the conversations we heard about business. We looked at what failed for us and decided to fix what we saw that was broken.
How does Now address the kind of institutionalized biases against minorities that have been shown over and over again to exist in the established banking and credit systems?
Traditional capital solutions often discount the structural challenges for minority-owned businesses. Loans require banking relationships, yet Black and brown communities are the most likely not to have local access to banks. Businesses need capital to grow, but gaining access to capital does not have to mean giving up equity or accepting predatory loan terms. Now relies on the business’s actual performance and does not use personal credit to determine eligibility. We use a business score that can quickly be established. If a company does not yet have a score, we advise them on how to establish a score. If their score falls below our threshold, we advise them on how to remedy it. Now solves the loan/equity conundrum because ours is a payment acceleration system that enables a business to get paid immediately in a way that feels like accepting a credit card payment. This is much more accessible to marginalized founders than loans and financing.
Now is based in Atlanta, not Silicon Valley. How has that helped or hindered the company?
Atlanta is critical, in part because the fintech hub is actually Georgia, not Silicon Valley. The third person who helped found the business with us, John Hayes, was our banker when we were going through a factoring process that almost worked and then fell apart. He came to us and said, “Look, here’s what happened with you,” and we all brainstormed together and created the concept for Now. It happened because we were in Georgia, surrounded by people and companies trying to innovate around this problem. It is incredibly important to me to be able to say that we are building a fintech company here, in my home.
What does success look like for this company?
Right now, the financial system is not designed for small businesses to succeed. We’re seen as miniature versions of big businesses. And that’s not how small business works. A big business can carry $150,000 worth of unpaid invoices because they can access all the credit they want. For a small business, that’s drowning. Our goal is to step into that gap, because currently, the capital markets either expect you to borrow the money you need or to sell off part of your business to get the money you need. If Now is successful, we change the way small businesses are treated by a system that sees them as beggars at the table, not income generators that deserve their own system of capital.
From the October 2021 issue of Inc. Magazine