Foundr Magazine publishes in-depth interviews with the world’s greatest entrepreneurs. Our articles highlight key takeaways from each month’s cover feature. We talked with Suneera Madhani, founder and CEO of Stax payments, about how she turned a rejected pitch into a unicorn startup. To read more, subscribe to the magazine.
On a clear and comfortably warm afternoon in Orlando, Florida, Suneera Madhani and her team floated to a restaurant across from their downtown office. It was St. Patrick’s Day, and gleeful patrons filled the green-hued bar, but Madhani had something to celebrate besides the holiday.
Her business, Stax (formerly Fattmerchant), had just received a term sheet for $17 million. Just four years prior, in 2014, Madhani started the all-in-one payment platform using $50,000 in startup capital from friends and family. Madhani never thought that she, a woman with immigrant parents and minimal startup connections, could build a million-dollar business.
“It’s a very exciting time for a founder any time you receive anything tangible on paper,” Madhani says.
The next day, she brought the offer to her board and started pursuing the diligence process with the investor.
“Long story short, my gut was not clicking,” Madhani says.
But the board kept pushing to proceed until the investors adjusted their bid. When Madhani saw the offer, she was shocked.
“I said, ‘There’s no way I’m going to f***ing accept this.’”
Madhani’s intuition proved correct. Today, Stax has more than 300 employees and $100 million-plus in recurring software revenue, oversees $23 billion in payments, and was recognized by Forbes as one of the most innovative fintech companies.
Madhani knew Stax was worth more. Much more. We’re talking billions, not millions.
Before boardrooms and valuations, Madhani worked for a credit card company selling transaction machines out of the trunk of her Volkswagen Beetle.
Her parents immigrated to the United States from Pakistan, met in Chicago, married, then moved their young family to Dallas, Texas. It was through her family that Madhani learned the highs and lows of entrepreneurship.
“I come from this line of entrepreneurship out of necessity,” Madhani says. “In order for them to have their American dream, they had to start a business.”
Her family’s businesses ranged from fast food chains to a marketing agency, and Madhani spent her childhood helping after school and on weekends. Ironically, her parents’ vision of the American dream was to give Madhani and her brother an education—not to become entrepreneurs.
“I saw firsthand what it took to build a business, what it took for businesses to fail, the hardship, the good, the bad, the ugly, and everything in between.
“But all of that credit goes to my parents, ” Madhani says.
But credit isn’t just for her parents’ actions but for what they said at a fateful dinner that changed Madhani’s life.
‘Why Not You?’
In 2012, a rare snowstorm hit Texas while Madhani was visiting her parents in Dallas. Because she was stuck thousands of miles from her home in Orlando, she had her subscription boxes rerouted. She was obsessed with the early-adopter subscriptions like Birchbox and BarkBox in a time she describes as the “pre-subscription economy.”
“[Then] that light bulb went off, and I was like, ‘Holy s***, why isn’t there a flat subscription in payments?’”
Instead of going home on that trip, she ended up routing her ticket to Houston, the headquarters of the credit card company she worked for. She secured a meeting with the C-suite and worked on the presentation for a week while binging the first two seasons of Shark Tank to perfect her pitch.
“All I wanted was to see this success in my own company,” Madhani says. “[But] they laughed me out of the boardroom.”
Distraught and frustrated, Madhani returned to Dallas just in time for Friday’s family dinner. She explained the frustration of the meeting and why the idea of a subscription payment platform could work.
“My family looked at me and said, ‘Why not you?’”
It was the first time Madhani realized she could do it herself, but she immediately blurted out excuses—no development experience, no investors, no industry connections.
“My parents said, ‘What’s the worst that could happen? Give yourself six months and give it a go,’” Madhani says.
She quit her job and moved into her parents’ house. With $50,000 of startup capital raised from personal savings, friends, family, and her now-husband, she quickly spent half of the funding on compliance with credit card companies like Visa and Mastercard. She didn’t have leftover capital to hire employees or contract out work, so she leaned into what made her unique.
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“By not having capital, it actually forced me to think, ‘How am I going to do this differently in comparison to the industry?’”
In 2014, most credit card companies went to market through physical banking channels. Using her background in digital marketing, Madhani built a website, started writing blogs for SEO, and invested $500 in Google Ad Words.
“I encourage founders to leverage any white-label solutions that are already there to get an MVP off the ground,” Madhani says. For example, she partnered with a banking institution to white label a transaction software to test the hypothesis of a subscription-style model versus a percentage-style model.
“We took a bet on that thesis and built our technology to be a payments hub,” Madhani says. “We were able to build our platform with our customers.”
She discovered that instead of attracting customers like small business restaurants, they were reaching healthcare and professional services that needed an omnichannel platform for in-person and online payments.
“That was the thesis that brought us where we are today,” Madhani says.
Stax became the first subscription-based credit card processor to come to market with flat fees and unlimited credit card usage. Quickly, they were considered the Netflix of credit card processing. Within six months of her parents’ suggested timeline, she processed more than $5 million in payments.
The 3 Minds
The biggest lesson Madhani learned in her career happened when she met with her board following the first term sheet offer.
“It was a s***show of a board meeting,” Madhani says. The investors had reduced their initial $17 million offer to $12 million. “If you’re negotiating with one party, you’re negotiating with yourself.”
But the board still wanted to take the deal.
“I said, ‘You guys just invested in this business. What has changed in the last six weeks that you’re ready to take this minimal offer just incrementally more than you invested in?’”
Madhani didn’t back down. She relied on what she describes as her “three minds”—analytical, heart, and gut.
“I need all three to make the decisions, and when one isn’t feeling right, I have to trust that.”
Shortly following the rejection of the bid, she received another term sheet for $50 million. It was a private equity deal that bought out their initial investors—the boardroom naysayers—and exited them 18 times their investment.
“Your intuition is the most powerful tool you have, [so] use it and don’t discount it and listen to it,” Madhani says.
To date, Stax has raised $500 million in capital and is growing triple digits year-over-year. In March of 2022, Stax officially became a unicorn startup with a valuation of more than $1 billion.
How to Make Business Decisions
Below is how Madhani uses her “three minds” method for making decisions.
- Analytical: What do the numbers and trends show?
- Heart: What are your trusted advisors, team, and customers telling you?
- Gut: What do you feel down in your core that is the correct decision?
If one of the 3 minds is off, that means there is a problem. When all 3 are unified, you can trust your decision.