How innocent praise of a Latina VC snowballed into a controversy over charging founders for adviceView transcript
Edward Gonzales’ first time speaking publicly on Twitter Spaces ended up not going anything like he had planned. Earlier this month, he joined the online forum to talk about Latino founders struggling to raise funds from venture capitalists.
Gonzales, CEO of rent protection startup Paypadz, wanted to praise a VC he had spoken with, Lolita Taub, for her efforts to increase access for minority founders to investment. He mentioned that she offered an unusual and useful consulting service to new founders to help them get started. For a fee of a couple hundred dollars (less than the cost of a lawyer), she reviewed and provided advice on his pitch deck.
Unbeknownst to him at the time, other people on the call took his words completely differently, casting Taub as a villain who took advantage of minority founders. One listener tweeted: “Wow. Weaponizing access or pitch deck reviews to drive dollars is [mind-blowing emoji].”
The tweets touched off a viral controversy about pitch-deck consulting, whether VC’s add value to companies, and the general uphill battle minority founders face. Venture capital financing hit a record $621 billion globally in 2021, but most of it went to white men. Only about 1.2% went to Black-led startups and only about 2% went to Latino-led startups.
By the time Gonzales realized what had happened, the damage had been done. Taub was in the eye of a tweetstorm, and had decided to stop offering the pitch-deck consulting service. When Gonzales saw tweets and media coverage of the controversy “I just felt instantly sick,” he said.
In a rare move, Gonzales came forward to try to correct the record, posting a thread in which he described what went wrong and clarified what he had meant to convey during the Twitter Spaces. He also agreed to do an interview with The Business of Business to further explain his views, the difficulties of being a Latino founder, and what Paypadz is all about. Here is what he told us.
This interview has been condensed and edited for clarity.
The Twitter Spaces nightmare; Gonzales' journey; trouble for minority founders; what is Paypadz00:00:00
The Business of Business: Edward, can you talk about your startup and what you're trying to do with it?
Edward Gonzales: Essentially, we're trying to bridge the socioeconomic gap that really exists when it comes to obtaining capital or just paying rents in the event of an emergency, like what we saw kind of with Covid, in 2020, and everything that happened. I had a personal experience where I had to go to a bunch of payday loan centers at one time in order to gain capital just to pay my rent, and be able to not be evicted or not essentially be homeless.
So what we're trying to do with that is we're a membership-based platform. We don't charge interest, we don't check credit. We work directly with the landlord to make sure that the rent is actually paid. And we work with a renter to really allow them to take financial control of when they can pay their rent, and when they're able to empower themselves to do so versus the historic idea of, “If it's not by the the first or by the third, there’s a late fee, possibly eviction, and your whole life is uprooted.”
“I sometimes would hide my last name, and just put 'Edward G.,' and I would get a lot more responses than if I disclosed my full last name, “Gonzales.”
So that's what we're trying to do with Paypadz. And as a Latinx founder, I've bootstrapped this company 100%. And we're currently starting to talk to venture capital within mostly the Latinx community.
Tell me what happened with the issue on Twitter Spaces. It was kind of an interesting flap.
So I was able to jump on a Twitter Spaces, my first Twitter Spaces, you know. It was called “Latinx founders are having a hard time raising VC.” And that really stuck with me, because I have had the opportunity to speak with a few investors over the course of the timeline of Paypadz, which started in 2018, up to when we officially launched in December 2021. I noticed a pattern of just not being able to get access. I sometimes would hide my last name, and just put “Edward G.,” and I would get a lot more responses than if I disclosed my full last name, “Gonzales.”
So when I hopped on that call [Twitter Spaces] there was a lot of passion. There was a lot of frustration. And it was really great to see the community coming together to help and give knowledge and access to people like myself.
It was my first time speaking. I was very excited, passionate, and I was speaking about access. I was going into that there are only certain members of the community I’ve found that really provide true access, and one of them being Lolita. And I was trying to actually praise her because she has been one of the only beacons of light that have helped me find her investor matching tool, understand cap tables, you know, just get the knowledge that is so secretive out there.
And I was explaining that one of her points of access and parts of her business is she helps, or previously helped, founders review pitch decks, as well as does some consulting services if you’re coming in and you don’t know anything. So let’s, you know, you need to get a bank account, you need to get an EIN, you need to get just the structure of starting the startup and letting Latinx founders, like myself understand what’s going on. So I was attempting to praise her and say, “at least she provides access even though there’s a fee for time.” But that was access. And I just disclosed a bit more of my personal story and some vulnerable bits of how I succeeded in the startup and went from full time in 2020 and even started supporting myself doing odd jobs, working like Instacart and Lyft. Just things to allow me to be flexible, to do meetings and do other things without taking a salary and just keep bootstrapping until I can get that VC to say, “Hey, let’s put some fuel on the fire,” right?
In a few different articles, that was kind of twisted, it was saying “is it fair for this founder who is working these jobs” and kind of putting it in that light. I think one of the articles even said, “who possibly might not be able to afford his own rent,” they did put kind of a twist on it. And then [articles and tweets] really started an attack on Lolita and saying basically that she charges founders for other things like to get into the VC world, which really isn’t true. She is utilizing her time to consult and help these founders get to a bigger place.
“I looked at the timeline of the tweet and went back to Twitter Spaces and saw when that tweet was posted, and my heart sank into my stomach."
She’s put on her website and even reached out on Twitter and said “even if you can’t afford the fee, reach out to me, and let’s figure it out. I’ll still try to work with you and still try to help you.” I started noticing on Twitter a lot of backlash against Lolita, probably about three or four days after the Twitter Spaces. And I didn’t really understand what was happening. I was trying to Google it a little bit more and figure it out, and that’s when I started putting a few things together and reading some threads on Twitter, and the threads mentioned me by name, like “Did This guy really say Lolita is charging people to talk to her for VC help” or something. I looked at the timeline of the tweet and went back to Twitter Spaces and saw when that tweet was posted, and my heart sank into my stomach. I just felt instantly sick. I thought “Oh my God, they’re using the words that I said against me and they’re twisting it.” And this is my first time ever speaking.
So my anxiety was shot through the roof. I couldn’t sleep. I started, I went on Twitter to try to reach out to Lolita. I wasn’t able to direct message her. I went on LinkedIn. I wasn’t able to direct message her. So I just started googling [and found her email]. So I emailed her at like midnight and I said, “Lolita, I’m so sorry. All of this was taken out of context,” and really was just able to explain to her the truth. And I felt that I really wanted to let it be known how it was twisted. I felt that my voice was the one that had said the thing on Twitter Spaces. I wanted to use my voice to basically help her, because I felt it was a witch hunt. I felt people were just going after her in a way that was totally unfair and totally biased, based on just a little piece of information without really knowing the full story.
When I posted that thread on Twitter, Lolita did reach out to me, she reposted it as well. And she really thanked me for that integrity. But at the end of the day, even talking about it, I still get this kind of sick feeling to my stomach. But I'm glad that the truth is out there now. I was a little traumatized.
Looking back, what do you think? Why did people jump to that conclusion? Do you have any thoughts on what that hot button was?
I think it's more of a sensitive topic, any time you're talking about underrepresented communities and founders, especially about finances. I look at things from a value perspective, when going over legal for Paypadz, I had to hire a lawyer and consult with them. Their fees are way higher than Lolita’s. You kind of look at things from the perspective of what's good for my business, and what's a good investment for my business.
So, I think when people are talking about sensitive topics, like even, you know, pitch deck reviews or consultation fees, things like that, without knowing the full context, I think it can be something that can be twisted. We’re already on an emotional Twitter Spaces that's talking about Latinx people struggling, and then you know, the dimension of a fee for more access.
I understand how that can get twisted, but at the same time, it almost seemed like a personal vendetta, maybe against Lolita in some aspects, because it seemed like, every time there was a response, just like more fuel was added to the flame. I haven't ever seen that with other VCs, for example. I won't name anybody but I was recently in a call with an investor that was very almost racist. One of the questions was, “Oh, you know, you don't have an accent. Your last name is Gonzales, were you born here? Where were you born? What's your education? Where are your parents from,” and stuff like that. And you know, those conversations don't ever get blown up, like how they should and get the justice they deserve.
“I get emotional talking about it, because it's hard to see somebody that's helping the community be so torn down.”
But when you see a female Latina, founder trying to raise the community, and I don’t know her own finances, or how she pays her team or how any of that, but I imagine anything she makes goes back to the community. So, it's frustrating, even to me, and I get emotional talking about it, because it's hard to see somebody that's helping the community be so torn down. And one of the things that I told her was, “even with this, please don't stop what you're doing for the community. Because there's nobody else really out there, like you doing what you're doing. We need people to help empower the community.”
Right. And can you clarify, so Lolita is not charging for reviewing pitch decks now?
I believe so. Right. No.
Can you give some idea of what she was charging before?
I believe it was a couple hundred dollars. I remember I had to pay a lawyer almost $400, $500 or $600 dollars an hour. So you know, even with VCs and startups, there are incubators where you have to pay to present. I think that’s more where we should be looking, for that pay-to-play, versus actually giving mentoring, advice, and consultative advice that’s hard to access.
Tell me a little bit more about yourself. Are you a first time founder and explain more about how you got into doing this?
Yeah, so I am a first time founder. My family is originally from the San Joaquin Valley in between Fresno and Bakersfield, California. It’s a big agricultural community. I am a third-generation Mexican American. I've been able to see my grandparents pick fruit and my grandfather would take me out and pick oranges and say, “If you don't want to do this one day, get an education and work hard.” And he was, he was a businessman himself, he had rentals. And I was always inspired by that.
So I always wanted to get into business. I've been able to bootstrap this company, and to take it to where it is now. That's a little bit of my backstory, and why I want to take Paypadz, and really evolve it into something bigger. We’re also going to be launching a renter's insurance pretty soon, and also a Spanish version of our app as well to help create that really inclusive community. We’ll be launching that next quarter as well.
And what did you do for work before you decided to found Paypadz?
When I first moved to L.A., I was selling cars for a few years. And then I got started with a company called Rently, which is a prop tech startup that did self touring. So it was an amazing company. I was able to work my way up from a salesperson up to head of new product sales. So I was able to work with the product team and the client success team and very closely with the CEO to really launch new products. They had launched a product that really helped renters find apartments, based on their credit score without having to put in so many applications and spending so much money. So that really gave me the industry knowledge that I needed to build a startup and see how a startup can be built from, you know, bare minimum to a multimillion dollar company. So I was really fortunate to have that.
And tell me more about how Paypadz works?
Yeah, so Paypadz is very simple. We have an app on the Android or App Store, you sign up, you pay $24.99. We verify all of your information. So we verify your income, we verify your landlord, we verify your rent payment history. Once that's verified, you're able to utilize Rent Protection. So if at any point, you need help paying your rent, we'll pay the landlord directly. And then you set the dates for your payment over the course of two or three months, that works best for you.
“We really want to create an environment to promote financial stability [at Paypadz]...There's no credit, there's no interest, it's just a flat $24.99."
So you're not having to be in a trap or choose, “do I pay my landlord? Or do I pay Paypadz back?” Right? We really want to create an environment to promote financial stability. So once you pay us back, you're free to use us again. If you don’t ever want to use us you can just cancel your membership. There's no credit, there's no interest, it's just a flat $24.99. And we're really looking to create a new kind of industry where even if you maybe don't want to use us because you're having a tough time in life. It's also cheaper than maybe a credit card advance. We’ve seen different demographics from people in San Francisco and New York with high paying salaries that they really like the convenience of the service to people that, you know, their tire blew out or their radiator failed, you know, life happens, right? So they just need that little bit of extra time to catch up essentially.
Does the amount you charge vary depending on the amount of the rent payment?
So the way that we're doing it right now, based on our current company model, until we can get more growth we're paying up to $2,500. We've seen that across different property management companies that we've partnered with that seems to be a good tear for rent right now.
And are you just in California now?
We started in California, and we actually launched nationwide. So now we're working with, we're partnering with property management companies, to push this to the renters, but we're still working with renters directly. You know, being the renter, they're the ones that make the financial decisions, and they're the ones that truly hold the power.
Can you give me some idea of how big you guys are now?
We have about 300 users right now. And we're growing pretty fast. We have partnered with five property management companies. And we're growing that sector as well. We're looking to have 1,000 users by the end of March.
Who's who's underwriting you?
Right now, we're working with Plaid, and we're working with Stripe, and they have a service called Stripe Capital, as well. That way we're bootstrapped every month, and our overhead is low. We’re able to really take that community of funds, and utilize that as our reserve and our way to help renters pay rent.