By: Ashley Byars
Welcome to the first part of our new blog series titled, Companies Standing Up. This series will highlight business leaders who are making a positive impact in their community by taking a stand on controversial social issues. More and more companies are putting purpose before profits and taking a leadership role to solve problems through social and political activism. A recent study by HBR found that, “Most companies did not see a sustained rise or drop in stock price following their CEO’s public statement. Among those that did, in most cases the price returned to its previous level within two months.” As a social impact agency, we are curious to know what drives a company to speak out about a particular issue. Do consumers expect them to take action? How do they communicate internally? Have they experienced any consequences associated with their opinion? Enough questions for now…let’s jump into some of the answers in our first interview with Kathryn Petralia, President and Co-Founder of Kabbage.
If you haven’t heard of Kabbage, it probably won’t be long before you do. Kabbage was founded in 2009 and is an automated lending platform for small businesses. Recently, Kabbage was named one of the eleven most valuable FinTech startups by Business Insider. Since its beginning, the company has raised $1.35 billion in investments and debt financing— making it the most well-funded startup in the state of Georgia. Kabbage currently has more than 100,000 clients, and has lent more than $3.5 billion to small and medium-sized businesses since it launched.
In a statement released a few short weeks after the shooting at Marjory Stoneman Douglas High School where seventeen people were killed, Kabbage did something a bit out of the ordinary from other Financial Technology (FinTech) companies. They released a response supporting students and committing to preventing more school shootings through donations, activism, and a call to their industry to get involved. You can read their full statement here.
We had the opportunity to sit down with Kabbage co-founder Kathryn Petralia, one of the few female founders in the mostly male-centric FinTech world, to learn more about Kabbage’s decision to speak out after this tragedy. Kathryn was recently named to The World’s 100 Most Powerful Women by Forbes. She created Kabbage to disrupt the finance industry by offering businesses an easier way to get lines of credit.
One of Kabbage’s core company principles is to “care deeply about one another and stay connected to the community.” How does Kabbage carry out this principle? “It started really because we wanted to work in an environment with people who we respect and on things we care about. Rob Frohwein, our CEO, and I still actually try to interview as many of our employees as we can to make sure there is a culture fit. A culture fit to us, means that the applicant cares about other people and that they are self-aware. That process is intended to put a filter on the people that join us. Also, every year we take our Atlanta office out to Camp Twin Lakes to participate in volunteering. We help them with whatever they need whether it is raking or cleaning we all jump in. These opportunities are important to us.”
Kabbage announced in early March that in addition to the ban on financing gun sellers, the executive team would support their employees walking out, and make a donation to the Marjory Stoneman Douglas Victims’ Fund. Has Kabbage experienced any backlash for this decision or, conversely, unexpected support for taking a stand against gun violence? “We haven’t experienced much of a negative backlash! We actually received a lot of support for the statement we made. And just to be clear our statement was not a political statement it was about health and safety. The purpose of our commitment to the walkout was to show solidarity and support to the students themselves because we care deeply. When our children are being murdered all the time, we can’t just keep doing nothing. What we did was pretty basic in that we decided to not fund businesses that sell bump stocks, semi-automatic weapons, or that sell guns to people under 21. To us this is better than doing nothing. We are also encouraging other people in the FinTech sector to speak out as well. Our motivation is that we would feel incredibly badly if this happens again and it turned out that person had purchased a weapon from one of the businesses that had borrowed money from us.”
Kabbage will donate $100,000 to a charity chosen by the students of Marjory Stoneman Douglas High School and match up to $250,000 in donations made by employees, customers, friends and family. The founders are personally donating $10,000 each. Do you plan to do any employee engagement or volunteer work along with your financial commitment in these areas to keep your efforts going? “We do plan to continue match those donations for a while. We also chose to support the students through an additional $100,000 company donation to their charity of choice and they decided for that to go to the Marjory Stoneman Douglas Victims’ GoFundMe giving page that was set up through the Broward County Public Schools District nonprofit. We will continue to talk about the ongoing impact of gun violence, especially as it pertains to the businesses we choose to fund at Kabbage. Unfortunately, we see this happening again and we hope to continue to come together as a community to be a voice for change.”
You also called on the broader FinTech and business community to join you in “protecting our children from unnecessary harm and championing their voice for change.” Have other companies in your sector joined you? “It really isn’t a topic that we discuss much in the Financial and tech world, but it should be. Honestly, until you get to be the size of a Google or Amazon, being focused on anything outside of making your company succeed is a luxury. It is not the first thing that companies talk about at our stage, and certainly not at the startup phase, because they don’t have time! Your responsibility when you are starting out is to your employees, your customers, and your investors. Until you are able to grow your company, there just isn’t the time to invest outside of that mission.
However, there is an organization in our industry called the Center for Financial Services Innovation and they spend a lot of time training and investing in Americans who are underserved by the banks. They try to help make the industry more inclusive. Also, there are really great venture capital firms that invest in companies doing well by doing good such as Kiva; but it’s not part of the mainstream yet- even though it probably should be. However, at Kabbage it is something we are talking about and would like to get more involved in bringing awareness to this topic.
Also, I think [a company taking a stand] depends on how a social issue can impact that company. We, along with many other companies based in Georgia, could have been negatively impacted by the Bathroom Bill a few years ago. It would have caused a major loss in investments for us. This is what it comes down to for businesses speaking out because we do not want to have political associations, but if it impacts our bottom line we have to speak out. We also would not want to be known as the business that loaned money to the company whose weapons were used in a mass murder. It’s really not political for us, it’s more about protecting our business and also protecting the children in our communities. We don’t want to alienate our employees and we reach out frequently to make sure everyone feels comfortable. One thing that helps is that we do a weekly town hall and we use that as a forum to communicate with our employees, which has worked really well for us.”
What are the challenges to being a leader and a woman in an industry that is predominately male? “I’d love to tell a story from a few years ago. When we were raising money a few years ago in Silicon Valley one day we were meeting with a venture firm and we got to about our fifteen to twentieth meeting until there was another woman in the room, a woman who wasn’t bringing me water, but who was an actual venture partner. I hadn’t realized until that moment how there were no women participating in the process up until that meeting. I don’t tend to be the first person to observe gender. However, I am so thankful to all the women who had to take it on the chin before me, so that I don’t have to be more cognizant of it. Yes, there are challenges, and my husband helps me a lot, but I also realize that I have it so much easier than the generations that came before me.”
Tell us more about Kabbage Kares and your work with local Atlanta organizations such as the Boys and Girls Clubs, Camp Twin Lakes, and the Atlanta Food Bank. “We work with so many organizations in various ways. One time we went to Paws Atlanta and built kennels for the animals. Many of our volunteer opportunities focus on helping children, especially children with disabilities. Each of our offices in San Francisco and New York also volunteer in their local communities and we really encourage our employees to get involved in meaningful ways.
One event that Kabbage employees really like is the Chattahoochee River Cleanup. I think it’s because they enjoy giving back and being outside at the same time. Similarly, we have also volunteered at the Atlanta Botanical gardens. Our program is opportunistic and driven by employees. We really listen to our team members and that is actually how we heard about the Chattahoochee River Cleanup. The overall Kabbage Kares program is run by a manager who helps to coordinate all the activities in Atlanta. Plus, from a business perspective, not only is it good for our employees to be out in the communities doing good work and getting to know one other, but it also is mutually beneficial for Kabbage.”
Do you have any favorite Atlanta companies or nonprofits you admire here? “I am a sucker for any organization that supports pets or children. I am on the board of a music festival that supports children and Rob, our CEO, is on the board of Camp Twin lakes, which how we initially started volunteering with them as a company. My husband and I are also passionate about helping our local homeless shelters and supporting homeless issues here in Atlanta, especially since the shutdown of the Peachtree Pines Shelter, which has left many people in the city without a place to stay.
Finally, from your perspective, what is the biggest challenge facing companies today when getting involved with corporate philanthropy and volunteering efforts? What is your advice for other companies who want to get involved or start a program like Kabbage Kares? “You just have to do it and it has to be part of your company’s mission. You can’t let anything else get in the way and I will give you an example of that. A few years ago, there was a firm considering an investment in Kabbage. They brought ten people from their Asia office to Atlanta for a week. One of those days we had planned to take the entire company out to Camp Twin Lakes. We could have decided to cancel our activity, but instead we invited their team to join us on that volunteer excursion. It was cold and rainy, but we bought them the clothes they needed and we all went out there together. We don’t make excuses when we make a commitment, we just go out and participate. They ended up offering to invest in us and I think it made them like Kabbage more because of that unwavering commitment.”
Thank you for your insights, Kathryn!
Let us know- what businesses that are taking a stand do you want to hear from? Leave us a comment and they may be included in our next part of our series, Companies Standing Up.