Small Businesses as the Fabric of this Country

Teresa Chahine:

Welcome to Impact and Innovation. I'm Teresa Chahine and I'm inviting you inside my classroom at Yale School of Management as we grapple with questions on social entrepreneurship and impact.

Welcome back everyone. This is our bonus episode of the season. I'm here with Elizabeth Gore, founder and CEO of Hello Alice. Thank you so much for being here, Elizabeth, for our podcast and our panel yesterday on Entrepreneurial Women. I'm just so excited to spend this time with you.

Elizabeth Gore:

Oh, it's howdy. It is such a pleasure. I am so inspired by you, by the work and the students and the small business owners. I got to meet here in New Haven.

Teresa Chahine:

Yes, exactly. Yesterday, usually at panels we just have a bunch of students. And yesterday we had a good mix of students and just community members, many of whom were small businesses, and also the lab at Concor, which is a small business incubator and accelerator. And they were all kind of pointing to how they receive mentorship and support from each other, and that just exemplifies the beauty of small businesses.

Elizabeth Gore:

It does. And we got to go to Havenly, which is just an incredible catering business, training immigrant women to come into society. And so many of them have started their own businesses.

Teresa Chahine:

Exactly. It's like they're graduating social entrepreneurs. And then your co-panelists, Alicia Crutchfield, founder Bloom, will be all a podcast with her separately, but tell us more about Hello Alice and what you do and how it all started.

Elizabeth Gore:

Absolutely. So at Hello Alice, we are an AI platform that ensures equitable access to capital to small business owners. So we love Main Street. We're proud to serve 1.6 million small business owners to help them get funding. And then equally as important is to help them with their financial fitness. So ensuring their bookkeeping, their cashflow management, and their business planning around growth. So they use our business health score that is a pre underwriting tool to ensure that they are appointed through the correct decisions, products, and opportunities to grow their business. And the thing I'm most excited is we have a bit of a cult community. Our small business owners on Hello Alice love each other and they have, many of them have been on almost nine years now growing together. We went through COVID together, now we're going through tariffs together. So it's also almost an accidental community and we love advocating for them. We've been through thick and thin on different issues together. I'm headed to DC today for the Supreme Court argument around tariffs. So my co-founder, Carolyn Rodz and I have just found this so purposeful and we're obsessed with the power of small business for this country.

Teresa Chahine:

I love that. And yesterday you shared a really powerful statistic that in the US there was a poll and, It's better for you to tell it.

Elizabeth Gore:

Oh yeah, I can go on and on. So a Gallup, which is a top polling company, and then two other polls actually said, the most trusted entities in the United States are small business owners. Firefighters are right below, which we love too. But small business owners just have an extreme amount of love and trust and support in this country. And I think particularly after COVID, when we couldn't be with our small businesses, there was such an extreme understanding of your childcare center, your coffee shop, your laundromat, your accountant, your local grocer, and how critical they are. And the reason that inspires me is that that means in this country we trust and love each other because small business owners are your neighbors. It's just your neighbors, exactly. Your friends, they're your family members. They're also 99% of businesses in this country are small. They're the largest employers. So I think that realization and the trust we have in our communities and our business owners is quite a powerful statement. And it was also noted in a couple of opinion columns that it's also the last bastion of bipartisan is actually small business owners. I mean, we just went through an election the last 48 hours, and both sides are always touting how critical small businesses are. So it's the fabric of this country

Teresa Chahine:

And who invests in them. Because on this podcast in my class, we're always talking about venture capitalists and venture philanthropists and grant makers and people that invest in either nonprofits or innovation based startups that are going to scale, but we don't really talk about small businesses and your company helps them access capital. Where's this capital coming from?

Elizabeth Gore:

So we are venture backed, I'll just say as a company, so we can talk about that all day long. But small business owners generally the average small business owner needs around $10,000. Isn't that interesting? At any one time. Yeah. And so we are looking at loans or credit or lines of credit. Average 50,000 maximum generally is $250,000. And that goes a long way. The other thing that's critical is we love small business grants. We do about 60 million ourselves in small business grants for our business owners. But there are federal small business state economic development boards, there are philanthropists, there are corporations. We run small business grants for FedEx and DoorDash and Progressive and PayPal. And so I always encourage small business owners before you apply for anything first, get your financial fitness standard, but really look around for non-dilutive, non-interest running grants.

Teresa Chahine:

That's really smart. So an entrepreneur will go to your website, put in their information, get a financial health score, and then what happens? How do they then connect with capital?

Elizabeth Gore:

So we then put them through decision trees first before we even say you should apply for anything. We make sure that your books are in order, that you're using the right accounting services, even is your cybersecurity correct? How's your insurance if you do have employees payroll services, once all that is straight, we want to lower decline rates, then is it time to apply for capital? Generally folks apply for one of two reasons. They need to grow. So they need capital for growth or COVID or natural disasters or there's a problem. So they need to bail out of a problem. So we don't encourage capital if you don't need it. And so we really first say, do you need it? Why are your books in order? Then let's go. So once that's there, we have about 92 lenders on our site that we've approved as non predatory. They're equitable. They range from a huge bank to a local CDFI or credit Union. We also really believe, and this is for high growth entrepreneurs who are venture backed down the small business that you're really smart about credit. So using operational credit, we think of it day-to-day, just my credit card. But using credit in your business is a great way to track data. It's a great way to get cash back. It's a great way to get discounts. You just have to be very responsible and make sure you're paying that off.

Teresa Chahine:

Okay, so what I'm hearing is that it's basically like each entrepreneur gets a virtual agent that kind of coaches them through the process.

Elizabeth Gore:

So think of it as an AI advisor. So the reason I love it is when I started Hello Alice, so I majored in animal science. It's funny to be at Yale. I went Texas A&M, I didn't have a business degree, and then I had a whole career as a humanitarian. I was in the Peace Corps and then I was with the UN over 10 years. So when I went to start this business, I didn't have a finance background. I had never written a term sheet or a business plan. So I at the time reached out to advisors, people I knew in finance, people I knew who were accounting people I knew who were marketing. Now the ability to use AI agents in those capacities is amazing, particularly for women and people of color, US veterans, because we don't have those kinds of networks always. We don't have that kind of access. And so if you look at the deplorable rates of capital that are not going to these amazing entrepreneurs, a lot of times it's lack of access. I'm super fired up about AI getting more popular. We've been using it for a decade, but it's getting less expensive. It's getting better, especially with Agentic where honestly it's like a super advisor sitting next to you as you run your business.

Teresa Chahine:

And that can make or break a small business. Absolutely.

Teresa Chahine:

Yeah.

Elizabeth Gore:

The other thing is town poverty, I mean small business owners are so, I mean I look at the founder of Havenly, yesterday. She had so much going, she was seeing us, she was talking to the cooks. I saw her signing invoices, small business owners. I mean until they have over 20 employees, they're doing everything. They have no time. And so the ability to use AI and use Hello Wallace to save a business owner time, I think is just as important as access to capital.

Teresa Chahine:

Yeah, exactly.

Elizabeth Gore:

I mean, time is harder than capital. There's one person that can do a lot of this stuff.

Teresa Chahine:

They probably need time even more than they need money.

Elizabeth Gore:

Absolutely, absolutely. I mean, I met the founder of what's the amazing ice cream shop on Orange?

Teresa Chahine:

Elena’s On Orange

Elizabeth Gore:

Elena’s On Orange. We were talking yesterday. She wants to open a second space and only she can do that. So she has to find the ability to deploy either AI or hire other people to now run the first shop. And so I get really excited about, again, giving people time so they can do what only that founder can do with their unique talent.

Teresa Chahine:

And she just had a baby. Yeah, exactly. She's also really active and city politics and aging.

Elizabeth Gore:

I mean, I could go all day long. I mean I had two babies when I was building this business. I mean moms starting businesses, that's a whole different level of time and tears and it's a lot. But we need that support.

Teresa Chahine:

And the theme of yesterday's panel was what we can learn from entrepreneurial women and how they navigate the additional barriers that they face in entrepreneurship. So it's not that women are inherently different, but they do face additional barriers. And so the way the stories that they tell about how they navigate those barriers, I feel carries a lot of lessons for all of us. That's why Brian Walker, my co-author and I are writing this book about entrepreneurial women and we've divided it into three parts, spark, build, and thrive. The first one is about the idea. When you get the idea and you decide to go for it, that's already a mental hurdle that you have to cross that many people don't make. Brian shared that a lot of his students who are MBA students at Harvard Business School come up to him and they share an idea and they're like, someone should do this, but just not me.

So our first chapter is literally called Someone should do this and it should be Me. Did you have that kind of internal barrier when you first came up with your idea or even external barriers that influenced whether or not you were going to go for it?

Elizabeth Gore:

Well, one thing I want to tell you about a T-shirt, I saw that really quick. I want to find at the MoMA. So with Modern Art, it said because it had a very famous Jackson Pollock and it was like, I could do that. And then at the bottom it said, but you didn't. So I feel so strongly about business owners. Why hasn't someone done that yet? Or that's such a brilliant idea, why hasn't that happened? I mean so many people have good ideas, but the execution of them is jumping out of a plane hoping you have a parachute and here we go. So for me, I guess it's the cowgirl in me, but I was almost said, balls out. Let's do this. Let's go. The barriers came when we had to go to systems that were not ready for a cowgirl and a Latina immigrant and to bring this company to get funding, to get advisors, to get even investors, even the technology side of it. So it

Teresa Chahine:

Was that build stage when you decided to implement

Elizabeth Gore:

It, the build that the barriers came up, build so hard. Yeah. Now here I do want to be clear on something. So my co-founder and I were definitely like, we're doing this, but this is indicative of women. We both were pregnant and had toddlers. You have to have healthcare. This whole, I'm building a billion dollar company sleeping in a basement my freshman year is great, but not common. So particularly for women or people who have elder care, childcare, they need insurance, they need to pay rent. I want to be really insightful and say calculated risk is fair. And so yes, we wanted to do it, but we had to figure out so much. So I kept my day job. Carolyn didn't have a job per se. We had to move in together and share babysitters because we were building in a lab in San Francisco.

Neither of us lived there. We used my paycheck to pay the rent, the babysitter and so on. Thankfully both our husbands had healthcare. But those are really tough decisions that people have to make. So the vast majority of women, and actually people of color who start companies have another job. So I just want to be clear on that. This whole jumping out of a plane and there is calculated for most people in America, and that is fair. So then when you do make that leap and you say, okay, now we're all going to quit our jobs, this is the next level of risk. And usually that's how much revenue do we have coming in the company? Can we pay our own personal bills? Women also tend to not pay themselves for a really long time. And then undervalued themselves, you ask about barriers, there are legitimate systemic real barriers that all small business owners and entrepreneurs face, and those are just community, life, physical, so on.

And so you take the next step. And then at the time what we were building was quite expensive with engineering and data trees. And so we did have to go out and do a raise. Now the vast majority of businesses will not pursue venture capital, nor should they, those who do. There's a lot of reasons to how to approach it, why you approach it, who you approach your references. But particularly for I think women, we get less than 2% a venture. So you can just see how tough that is already. So we got 200 plus nos and we're pretty smart women

Teresa Chahine:

. I feel like most people may have just stopped by then.

Elizabeth Gore:

Yes. Well, I think I shared yesterday we had all four kids in the car and we were switching down in Silicon Valley, Sandhill Road and somebody was crying I think for seven months, either me or Carolyn or one of the four kids during all this, but 200 nos. And then you finally get to a yes. And John cna, who was the head of Silicon Valley Bank Capital, just really believed in us and believed in our idea. And za that at Signia Venture, and you hear me, I'm saying male names because there weren't really a lot of female decision makers at the time. And then you clinging onto them and you do not let go and you ask them to open every door that you can't. And so these barriers, they still exist. Unfortunately, we've been advocating so long for venture for women to go up, not necessarily for hell Wells, but for our peers. And it did for a while and then it came back down again. So what kills me as a capitalist is when women get equal access to capital, they outperform their counterpart, their male counterparts. And I'm like, don't we all want to make fucking money here? That always, always been curious to me. But anyway,

Teresa Chahine:

Because you would think in this capitalistic world, people will want to make money and we'll want to invest in what will make the money. So if the data shows that women do outperform there, data, oh my gosh,

Elizabeth Gore:

So much data. There's so much data.

Elizabeth Gore:

Even the heads of a lot of these big traditional institutional VCs, they know that. And I do think there is good work getting fund managers and GMCPs on the other side of the table. So if I walk in and pitch a product that a male has never used, but a woman is sitting also in the room, there's just a different level of understanding and pattern recognition. People inherently fund or partner or sign off on things they understand that they see in themselves or they've seen success in. And that's just personal bias, whatever you want to say. So having more women and people of color sitting on the other side of the table, I think is almost as important as requiring men to see women pitches. So I think there's well-meaning people that are trying to change this, I'm in a hurry, I want to change it faster.

So for us at Hello Alice, the flip is small business. And so how are we ensuring that the vast majority of business owners now are women, people of color, US veterans, people with disabilities, you have rural farmers, you've got folks who just haven't had the traditional access. But how do we ensure systems change? But also that we are encouraging funders, banks, large fintechs to dig deeper into communities to find those business plans. And the other thing I'll just say about AI and data I'm so excited about is I think it's going to catch up with this issue. So we can fight all day long about values and what we think is right, which I will continue to do, but I'm really excited about data proving all this. Correct. So it's hard to argue with that. So open banking, I don't know if y'all have looked at that.

I'm obsessed with it. So open banking, banking is a whole new concept where let's say I'm a small business owner. I have a t-shirt company in Houston and I'm a veteran who's been deployed. So my FIO score isn't great. I didn't build credit history, but now I'm back. I've been in business a year. I have great contracts, I pay my bills on time. I have good cashflow in the bank. Basically open banking is using AI and seeing the entire plane of this small business owner's records. So oh, he's never missed a payment on anything. He has four huge contracts with the Houston Astros coming in, so he's going to have cash coming in the bank and then he uses credit effectively. So for a small business loan, I'm not just looking at his FICO score or looking at the current P and L, I can look at all of that and be like, this is a great business person. I need to invest in them. So that's the generalization of open banking. But I am a huge fan of it because it allows great business owners who either don't have the access or they've not built up strong enough credit or revenue yet to prove that they warrant a great loan. And so now I have to put an asterisk that we got to make sure from a security standpoint, cyber data protection that we're looking at all that as well. But I was at Money 2020 the past week and open banking was just a huge topic everywhere and I got really excited about it.

Teresa Chahine:

Cool.

Elizabeth Gore:

Yeah,

Teresa Chahine:

I love this.

Elizabeth Gore:

I love you.

Teresa Chahine:

I don't even know what to ask you. There's so much I can ask you. But while you were speaking, I was actually, my mind was wandering a bit and I was remembering back to a course I took in grad school about Meta Leadership that I later went on to co-teach with my former professor. There were two of them and one of them, Barry Dorn was saying, there's all these complicated definitions of leadership and all these things, but to me a leader is just someone that people follow that you want to follow. And as you were speaking, I was like, I will follow you. I want to follow you. Tell me what to do.

Elizabeth Gore:

Shit kicking cowgirl, sitting at Yale just support you.

Teresa Chahine:

Yes. This is incredible.

Elizabeth Gore:

Thank you. I will say one of the funniest phone calls I've ever gotten was, well, two in my life, one was when I got my job at the UN, I'm not a diplomat, I didn't have a big private degree. I did speak Spanish, but no other languages. And I was like, you want this young blonde Texan to come into One Union Plaza? I remember laughing at that. The other one was, I have a show now called A Big idea on Yahoo Finance. Oh, cool. I

Teresa Chahine:

Oh cool, I hope our listeners will subscribe.

Elizabeth Gore:

Yes, I hope you do. Because it just tells the most beautiful inspiring story of business owners, their dirty unicorns, which is their biggest mistakes. We talk through their triumphs, but then they gave really good practical advice because learning from each other I think is the best. But anyways, they called me and they're like, Yahoo Finance, we want you to come host a show on Yahoo Finance. And I was like, no, I don't do finance. I'm not a finance major. I don't stocks and translation is a great show, but it's so not me. And they were like, no, it's a backhanded compliment. They're like, we really want someone who is of the people to talk about business. I was like, you mean you want a South Texas with pink hair coming in and using words like y'all? But no, it's been fun. I love the show.

We've been really proud to be picked Amazon's Pick for the top business show. And I really think it's because learning from folks who are in it that minute is the best. So we had the founder of Ways On, and Erie is so big on, he loves problems not solutions. So he talked about flipping the way you look at business planning. We had Leon Howard, who's Wall Street Trapper on, he has 2 million people that subscribe to learn about Wall Street. He learned that while he was in prison, taught himself, came out and has just blown away the ability for people to invest in the stock market.

Teresa Chahine:

That's so cool.

Elizabeth Gore:

We have Baked by Melissa, the best cupcakes on the planet. But these individuals come in and they talk about both the triumphs and hardships of small business. And again, it's just indicative of we started this conversation, they're the most trusted group in America and we all want to hear from them. So that's why the big idea is just so fun.

Teresa Chahine:

And even as you're speaking to how you built, Hello Alice, you're already speaking to the third pillar that I shared earlier about Thrive, what success looks like to you and how you uplift others. And I think that that's the build and the Thrive. Go together with the Hello Alice plan, because you're doing this for small businesses and it's both through the direct services that you provide through the AI on your website and also through the knowledge building through your show, the advocacy. You're testifying in the Supreme Court tomorrow, or

Elizabeth Gore:

I am not testifying, but I am supporting. So a Yale alum. So to be very proud, Neil Katyal is at the Supreme Court today representing small business owners who have been significantly impacted by tariffs. And at Hello Alice, we are nonpartisan, but we advocate to the death for small businesses when we've got, I mean, we have a million a half of 'em. So we know when something's up and they tell us and the tariffs, tariffs coming through at the level and speed in erratic nature that they have just decimated so many small business owners.

I mean even so busy babies, a veteran owned company that gives mats for infants. They just go to these big contracts with Target and Walmart. They're veteran owned. They source goods from overseas, but then it's American made here. And she just was decimated by this. And I think a Brooklyn Tea, kind of the best tea shop all around New York City. They are just incredible entrepreneurs, same thing. And the folks that are in the Supreme Court today suing the administration, it's a fishing tackle store. It is, which I love fish. So it's a wine distributor, it's a pipe fitter, it's a toy maker, and they're from all over the country. And it's indicative of, you can't just make unilateral decisions that aren't community driven and really understand the consequences. So today it's called VOS versus Trump. And they're trying to understand if the president has unilateral ability under as very specific law, EEPA to call tariffs. Because generally that is a congressional mandate. And the reason why I like it going through Congress is you have to then my congressman look me in the eye in my district and say, is this the right thing to do or not? So they're actually not arguing the merit of tariffs today. They're arguing at the president has that ability. So Neil Katyal, who is a Yale alum and has defended multiple small business cases, is there to make this point. And we want to be there to support, not the lawyers, but the small business owners.

Teresa Chahine:

I love that. And you're also,

Elizabeth Gore:

We love the lawyers too.

Teresa Chahine:

Yeah. You shared that you're wearing the shirt on purpose because its Veterans Week. Tell me about it.

Elizabeth Gore:

Yeah, so Veterans Day coming up, my dad is my favorite veteran, Mike McKee. He was a flight medic during Vietnam, a US Air Force and turned small business owner entrepreneur. So a big part of Hello Alice is ensuring our US veterans and military spouses are able to start and grow their businesses. Veterans have unique challenges when they come home, particularly around financial ability. Again, very credit build and establishing wealth and connections and access. Yet they are highly trained, highly technical and exceptional leaders. And so making sure they have the funding and the access to grow their businesses and the military spouse is very different. These spouses are, their spouses are active duty. They have to move a lot. So how are we supporting business owners who maybe are all online, they're virtual, and how did they get supported through their businesses? So Happy Veterans Day. I'm on the board of Warriors and Quiet Waters. So we support post nine 11 combat US veterans and ensure that they have both the mental health and physical health to move forward. It's at Bozeman, Montana and big shout out to the men and women who lead that organization.

Teresa Chahine:

I love that. I promised my mentee, who you met yesterday, Sam, who's the founder of Calmware, that I would wear the sweatshirt that she gifted me. But then I got hot and was unable to wear it. But I will give her a shout out then we would've both been wearing symbolic shirt. There you go. But she has a manana embroidered on the sweatshirt and her whole company, it's a small business right out of New Haven, is about tactile patterns like how anxiety and ADHD and so many other things can be helped by just tracing your thumb on a pattern, doing simple breathing exercises. And she brings in multicultural things from India and from the Middle East that people use like worry beads and patterns. And she matches them with breathing exercises you can do tracing a triangle and so cool. Inhaling and exhaling.

And so without wearing the sweatshirt, I also want to give her a shout out and a big shout out to all the companies that you've mentioned and the board that you serve on and the businesses that came yesterday, bloom, who was on the panel and Ware. And Elena’s On Orange and the lab at Concord and all the others. And mostly to you for being here and for doing the work that you do through Hello Alice and beyond by generating knowledge through your show and advocating in the court and probably so many other things we didn't even get to today. So thank you, Elizabeth.

Elizabeth Gore:

Oh, thanks for having me. And I am so proud that Yale is stepping out on social innovation, impact entrepreneurship. I mean, that's been my whole life. And the fact that we're actually, I got to sit with a whole bunch of female students last night. The fact that this is actually taught now and I learned it in my forties, it is so exciting. So thanks for what you do.

Teresa Chahine:

Thank you.

I'm Teresa Chahine and you've been listening to Impact and Innovation. Subscribe to stay tuned and follow us at Teresa Chahine and SOM Ventures. Special thanks to the broadcast center at Yale School of Management.