In today’s digital economy where data is king, a woman with bad credit is treated almost like a pariah. Unequal pay is not the worst thing to happen to women, bad credit is. Sixty percent of men say they won’t date a woman with a bad credit score, she cannot get an apartment on her own, she may be denied jobs for which she is qualified, she cannot get a credit card, a low interest loan, a car or get investment for a business. Basically, she’s screwed.
I descended into the world of bad credit after I couldn’t raise additional investment for my startup StyleTrek. My team and I worked so hard to launch the business, raise money, acquire customers, and scale. We provided an ecommerce platform for emerging designers who were crowdsourced. Of the 25 designers on StyleTrek many were people of color and coming from countries like South Africa, Brazil, Mexico, Korea and Indonesia. In addition to the ecommerce platform, we were also producing content marketing and promoting them via social media and YouTube so that customers would be familiar with who they were.
Unequal pay is not the worst thing to happen to women, bad credit is.
While raising funding for our A round, to conserve cash and avoid firing employees, I cut my salary to less than half of what I was making. For someone who had consistently good credit since age 21 and a six figure salary for the previous 12 years, the pay cut was brutal. I had thought I would have access to the funds in my joint bank account with my husband of two years. We agreed I would pay for our expenses in New York and he should put his earnings into a bank account so we can save money for a house. Instead of sticking with me through thick and thin, he decided to bail on me and move back to Europe. The impact was beyond disastrous. I had no fallback and did not come from a wealthy family. I was alone. I could no longer afford our 2-bedroom apartment in the Upper East Side or our Mercedes SUV. I could not sustain our standard of living and had to seriously cut back. To pay office rent and maintain a facade of business as usual, I skipped credit card payments, car payments, rent, and private school payments. The breaking point for me was when my son who was in 4th grade came home and said, “Mommy, is something wrong? We had exams today and they took me and my desk into the hallway while everyone got to take their tests.” I was behind on his school payments and had no idea his school would be so heartless to do something like this. I fell apart.
…women’s incomes decrease by at least 20% after a divorce while men’s increase more than 30%. The poverty rate for women after divorce is 27%.
The stress of a failing business and and marriage took its toll on me. On the exterior I tried to keep myself put together even though I was a wreck on the inside. I still wore the Cartier watch and Harry Winston ring gifted by my ex to project stability and a sense of normalcy with friends and family. I was not my best and strongest self. A defeated CEO whose husband just left her and faced with firing employees who were mostly her friends may not have been the best person to gain the trust and confidence of potential investors. Despite growing StyleTrek’s sales 35% month over month, I kept receiving no after no until I finally gave up and shut down the company.
I’m not alone. Equal Pay and the Glass Ceiling are not the only problems facing women in business. For entrepreneurs, it’s taking money out of your own pocket including mortgaging homes and taking high interest loans to keep businesses afloat. Additionally, women’s incomes decrease by at least 20% after a divorce while men’s increase more than 30%. The poverty rate for women after divorce is 27%. I have friends whose husbands hide their income and bank accounts so they cannot get access to them in a divorce. When men decide not to cover the basic costs of raising their children, it is the women with primary custody who sacrifice to provide for their children. And when your priority is to feed, clothe your children, and keep a roof over your heads, yes, a credit card or utility bill may get skipped leading to bad credit. Women who apply for jobs typically have 20 points lower credit than their male counterparts. For those of us rebounding from failed startups, accepting defeat and working our way towards gainful employment is not easy.
What could I have done differently? In hindsight, I realized I made many mistakes and I should have and could have done the following:
- Lowered the burn rate of my company sooner — fire employees to lessen the burden on me financially.
- Pivoted and found another revenue stream. We were only receiving a revenue share from the designers on StyleTrek. An upfront fee to cover onramp and marketing costs or monthly maintenance fee could have reduced our burn.
- Requested and demanded that my husband cover 1/2 our costs and maintained tabs on our joint savings account. I never received access to the money in it. My husband moved the account.
- Sublet some of the empty desks in my office to reduce our rent.
- Cut health benefits for my 12 employees, including maternity leave for my CFO to conserve cash which my investors asked me to do.
- Asked for help and advice from friends who were VCs or Entrepreneurs. I never informed anyone what I was going through. Maintaining the facade of a successful CEO kept me from seeking help and getting it.
- Chosen angel investors more selectively. I had an angel investor who kept putting me down, discouraging me and made the whole process very difficult. He prevented me from getting a bridge loan from WTI for which we were approved. Until this day, I don’t understand why he seemingly wanted us to crash and burn even though he invested $400,000 in the company.
- Tried to sell the company and preserve value. In the previous year, when we first launched, Amazon tried to recruit me with a high 6 figure salary. I should have sold the company in an acquihire (acquisition hire) and worked for Amazon and bring along employees instead of firing them.
- Been less optimistic and have prepared for the worst. I should have taken my son out of private school sooner, gotten rid of the SUV and other extraneous expenses before even launching StyleTrek.
- Been more communicative with creditors. Perhaps they could have given me a break and helped alleviate stress and pressure.
The advantage to young startup entrepreneurs vs people like me who are older with children is that they can couch surf and sleep in their cars while trying to launch a company. Clearly I could not and did not do that. In many cases, investors have fixed salaries in mind when investing in entrepreneurs. Unfortunately those of us with previous experience are often required to take salaries equal to those right out of school. This makes it extremely difficult for those with dependents and fixed costs to adjust to a much lower salaried lifestyle. While there are many who aspire to become entrepreneurs based on the seemingly glamour and ease of what is portrayed in people’s instagram accounts, the reality is that entrepreneurship is enormously stressful, emotionally and physically demanding, and takes a huge toll on one’s bank account and credit rating. Why I mentor and advise entrepreneurs — so that they won’t have to go through my mistakes and have a clearer path to success.
While there are many who aspire to become entrepreneurs based on the seemingly glamour and ease of what is portrayed in people’s instagram accounts, the reality is that entrepreneurship is enormously stressful, emotionally and physically demanding, and takes a huge toll on one’s bank account and credit rating.
My relationships and network have been crucial to my financial and emotional recovery. I joined Summit Series (as well as HEYMAMA!) in the midst of my annus horribilis and many friends whom I’ve met through Summit have given me support and encouragement. Fortunately, many investors see failure as a plus and not a negative and have supported and invested in my subsequent startups. When I couldn’t get an apartment without a cosigner, a friend from Summit offered to be my guarantor. At my bottom, friends offered me a bed at their Montauk home for cheap and the distance from New York and beauty of the beaches allowed me to distance myself from my past, space to contemplate and time to get stronger. I started doing yoga religiously to get balanced. Without the SUV, I biked everywhere and became healthier. Miraculously, I was provided a ticket and a camp to Burning Man which opened up my mind and got me out of my funk. Through my network, I was able to get consulting jobs, pay bills and keep me and my son afloat. Today, I actually feel that if I ever fell off a building, I’m confident my network and safety net will be there to catch me. Moving my son to public school was not so bad. He’s grown, made new friends and did not miss his friends from his private school. And me? I’ve learned, I’ve grown, I’ve moved on, I’ve thrived.
Cecilia Pagkalinawan is a serial entrepreneur and has launched 3 venture backed companies. She also served as head of ECommerce and digital marketing for Burberry, Frette and La Perla. Cecilia is working to launch her 4th startup BRWN, a storytelling platform for and by people of color.
This article first appeared on medium.com.