#StartupsEverywhere profile: Heather Fleming, Co-Founder and Executive Director, Change Labs
This profile is part of #StartupsEverywhere, an ongoing series highlighting startup leaders in ecosystems across the country. This interview has been edited for length, content, and clarity.
Supporting the Growth and Development of Native Entrepreneurs
Located on the Navajo and Hopi reservations, Change Labs is a nonprofit organization working to foster small business development and increase economic opportunities for Native American entrepreneurs. We recently spoke with Heather Fleming, Change Labs’ Co-Founder and Executive Director, to learn more about the nonprofit’s work supporting Native entrepreneurs, some of the challenges that startups and small businesses face on the Navajo and Hopi reservations, and the steps that need to be taken to advance Native American founders.
What in your background made you interested in supporting Native entrepreneurs?
I’m half Navajo and my mom is from Teec Nos Pos, Arizona, so I grew up around the reservation. From an early age I had a sense of social injustice, because all of my family on the reservation had very different lives from my family off the reservation. My grandpa didn’t have electricity in his house and people didn’t have running water, and life was just hard for my family members on the reservation.
When I was in high school, I saw that my cousin—who became a civil engineer for the Indian Health Service—was building wells and doing something about the lack of water in homes on the reservation. I wanted to do that too. But in college I realized that civil engineering really wasn’t for me, and so I ended up in the field of product design, where I developed new products and services in marginalized communities. When I tried to find work or projects back on the reservation, I started to try and unpeel some of the reasons why 20 percent of families didn’t have electricity. I interviewed different stakeholders, and it became clear just how expensive it is to get electrical lines out into the middle of nowhere, and that families didn’t have enough money to pay their monthly bills once they were connected.
It was clear there weren’t enough jobs or economic opportunities on the reservation to afford services like water and electricity. So I thought if the lack of economic opportunities is the underlying cause, then why isn’t there enough economic opportunity? And that’s when I realized that something needed to be done.
Can you tell us more about Change Labs and the work you’re doing to help foster the creation of Native-founded startups?
When I looked at economic development policies for the tribe as a whole, it really was mostly investments in casinos; there was no investment at all in Native businesses. I met my Change Labs co-founder, Jessica Stago, and she helped clue me in on how difficult it is to start a business on Navajo land. So that’s why we started Change Labs. We wanted to see our government investing in small businesses and investing in infrastructure to support small business growth in our communities.
We conducted a study which showed starting a business on the reservation is as difficult as it is in most economically depressed nations—which is nearly impossible. This has to do with sovereignty and land access, and is why so many people operate businesses out of their homes, from flea markets, and from the roadsides. When we mapped the entrepreneurial ecosystem on Navajo, one of the biggest deficits we found is that there’s no retail space or workspace on the reservation. So we are creating co-working spaces, which is even more important since a lot of people don’t have Internet or landlines at home.
We also have a business incubator that is focused on developing a peer community. A lot of business owners or entrepreneurs feel very isolated. There are no words in Navajo for the concept of entrepreneur or business, and people who are engaged in business activity feel like it's another world and separate from our Native American identity. But Native people have been artisans and traders and sellers as long as we have existed. Unfortunately, there is a lot of negative connotation associated with the concepts of business and entrepreneurship, , so people who run businesses are always straddling a fine line where they have to almost ask for permission to start a business. Our incubator is trying to create new narratives and help people connect with their peers.
What are some of the barriers that Navajo entrepreneurs face when launching their businesses?
A lot of this has to do with policy. The Navajo Nation has a very caustic regulatory environment for business owners. It’s nearly impossible to access land to conduct business, and often you have to convert your home site lease to a business site lease. The government says that’s a one year process, but in reality, for businesses in our incubator that’s often been a multi-year process.
Land access problems create a huge invisibility issue with businesses on Navajo, because most people work from their home or from the flea market. Around six million people each year travel through our town on the way to the Grand Canyon, but you never see those people at our flea market, which is our center of entrepreneurship. Investment in infrastructure is needed to create economic zones in our community and ensure people have access to affordable workspaces.
There’s also no access to capital, and there’s no incentive to invest in a business here. Business owners here often lack collateral—they don’t even own the land that their homes are built on—so it’s hard for them to paint a picture of legitimacy in the eyes of traditional lenders. But there are a lot of issues with business growth that need to be fixed before we can get to the access to capital issues.
CDC data shows that Native Americans have been disproportionately impacted by the coronavirus pandemic. What is Change Labs doing to support Native entrepreneurs during this difficult time, and what steps should federal policymakers take to better support Native-led businesses?
Very few of our businesses applied for Paycheck Protection Program (PPP) loans or Economic Injury Disaster Loans (EIDL). The problem that most of them run into, and we see this all the time in our business incubator, is that people don’t want to track their finances. The lingering stigma around success—if you’re too successful then you must have done something bad in your previous life—leads many to claim ignorance and avoid running a profit and loss report. Most of the people in our incubator instead measure success by whether or not they have enough money to buy groceries that week, or if they can help a community member or family members. If they can do those things, then that’s wealth.
The Navajo Nation has a relief grant from the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act that is offered to small business owners and artisans. We’ve been helping people with the application, but the challenge is always the same: people don’t keep receipts and they’re not tracking their income. When the CARES loans came up, people just weren’t in a position to capitalize on them because they didn’t have the financial records to prove that they’ve been in business.
What are some of the startup-related policy issues affecting Native founders that should receive more attention from policymakers? And what steps can lawmakers take to address these concerns?
A lot of our local laws are dictated by the Navajo Nation and our local chapters, and right now, there are no incentives to start a business. We have talked about tax cuts or tax breaks for entrepreneurs, where if you register your business with the Navajo Nation you don’t have to pay business taxes for the first three years or you get some sort of tax break.
Turning to the site leasing process, the fact it takes years to get through that process is totally unrealistic. And it costs a lot of money. Moreover, if you don’t already have electricity access it costs an average of $60,000 to have it connected. No sole proprietor or business owner living in rural Arizona is going to be able to afford that.
There is also the Navajo Business Opportunity Act, which gives priority to 100 percent Navajo-owned businesses to get both federal and tribal contracts. Unfortunately, it’s not enforced. No entity makes sure that tribal enterprises or contractors are abiding by those laws, so nobody does. That defeats the incentive to be certified as a Navajo-owned business.
Can you tell us a bit about Tuba City’s Opportunity Zone?
In Tuba City, the western side of town along main street has been designated as an Opportunity Zone. Unfortunately, this happens to be a major residential area with the only private land in town. Instead, the Opportunity Zone should be the eastern side of town, where there are businesses and the area is under the control of the Navajo Nation. Unfortunately, it feels like a missed opportunity.
We have a lot of vacant federal buildings in town, right on main street, that have been vacant since the late 1980s or early 1990s, when the Bureau of Indian Affairs’s tribal negotiations resulted in the Navajo taking over a lot of our own governmental control. BIA left many buildings empty. But tribal communities can’t access those buildings, because they’re still under BIA jurisdiction. They could be amazing retail spaces for local businesses if we could do something with them.
Our local congressman told us that most of the buildings are contaminated with asbestos, so Congress needs to first release funds to clean them up before they can be given back to the community. We’ve tried to petition for a release of federal funds, but it doesn’t seem like it’s a priority for anybody, especially with COVID going on right now. But that’s one thing I’d love to see done at the federal level.
What is your goal for Change Labs moving forward?
Our work is to shorten and reduce the time and money it takes one to become a business owner on Navajo, and also incentivize people to want to start businesses in the first place. We’d like to get to a point where a business can be created in the span of five days. Right now, it can be a multi-year process.
Navajo Nation is the largest tribal landmass in the U.S., roughly the size of West Virginia. It’s beautiful land and we get a lot of tourists, but trying to tackle the entire reservation at one time is a little like boiling the ocean. So we’re trying to figure out how we can do this work in Tuba City, and then create a model of what a prospering Native community looks like. If we can make that case here, then that’s the best way for our tribal council members to see what’s happening and then replicate it in other cities.
Tuba City is also unique in that we’re self-governed. So a lot of work still needs to be done to determine how tribal communities can adopt these self-governing models, and what that means for economic development within those communities. We’re trying to create an approach to show how tribal communities should be governed in ways that support local businesses.
All of the information in this profile was accurate at the date and time of publication.
Engine works to ensure that policymakers look for insight from the startup ecosystem when they are considering programs and legislation that affect entrepreneurs. Together, our voice is louder and more effective. Many of our lawmakers do not have first-hand experience with the country's thriving startup ecosystem, so it’s our job to amplify that perspective. To nominate a person, company, or organization to be featured in our #StartupsEverywhere series, email edward@engine.is.
