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Hard Choices

Russell Simmons on Building the Prepaid RushCard

About eight years ago, we’d been thinking about doing prepaid phone cards. Then I had an “aha” moment: Why wouldn’t a prepaid card work for other things? If you don’t have a card, you can’t rent a car, you can’t buy stuff on the Internet. You’re locked out of the American dream. That led us to create RushCard.

I took the idea to American Express; I showed it to everyone. No one understood it. I almost gave the idea away because building out a whole business seemed like a burden. I ended up being partners with David Rosenberg, who owns billions of dollars of debt with Unifund [his collection agency]. His company reaches people who need this service, but it was hard to get them to convert. There were no synergies with that business. None. So we had to market to everyone.

We thought a lot about fees. They had to be low enough to help people—and still keep us in business. It took time to figure it out since there were no role models. Ours has a ceiling of about $10 a month. There’s nothing hidden—and it’s cheaper than what you’d pay at a check cashing place. Services for the poor cost more: A free bank account ain’t free if you don’t keep a certain balance. We save people millions of dollars. I don’t care what anybody’s investigation says: We’re happy with how we set up the fees. [The Florida Attorney General’s Office is investigating RushCard, along with other prepaid cards.]

Once something works, others get in. The first one who stabbed me was [former Wal-Mart CEO] Lee Scott. When he showed me their prepaid card, my first reaction was, “Oh my God, they’ll put me out of business.” It turns out Wal-Mart can scale, but they’re not better. I can compete with them. American Express comes out with a free card: well, guess what? It costs $4.95 to load it. Do it twice, that’s $10.

This is about empowerment. I’ve never built a company just for profit in my life. I’m not a vegan who promotes meat. Once I get into something, I never quit. You’ve got to stay on your hustle until it’s done.—As told to Diane Brady

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