Social Impact Heroes: Why & How Emmanuel ‘Manu’ Smadja of MPOWER Financing Is Helping To Change Our World
It is also vital to lead by example. If I am asking my team to do something, I usually have done it myself multiple times. When “all hands-on deck” are required, the team needs to see its leaders on the front lines with them. My belief is that you do not ask someone else to do something that you would not do yourself.
As part of my series about “individuals and organizations making an important social impact”, I had the pleasure of interviewing Emmanuel (Manu) Smadja, MPOWER Financing Co-founder and CEO.
Manu is a former Engagement Manager at McKinsey & Company, where he focused on Global Financial Inclusion and U.S. mass-market banking. He has worked with top financial institutions in the U.S., Europe, and Africa. Prior to McKinsey he worked in marketing strategy and operations at CapitalOne and Vistaprint. Manu holds an M.B.A. from INSEAD, as well as an M.S. in Systems & Information Engineering and a B.S. in Computer Science from the University of Virginia.
Thank you so much for joining us in this interview series! Can you tell us a story about what brought you to this specific career path?
I often joke that I am an “accidental entrepreneur” in that I had never intended to become an entrepreneur but was driven to start a company due to a personal experience and a passion for social impact. Over twenty years ago, I was an international student in the U.S. from France who struggled financially through school. Ultimately, I was able to graduate by working five different on-campus jobs and getting significant help from my family. International students have an extremely hard time securing the financing needed for their education. After what I personally experienced, I helped finance my sister’s education when I entered the workforce. From that point, I knew I wanted to make a difference for other international students.
Fast forward to today and there are still limited financing options available for international students. The straw that broke camel’s back for me was when I learned that a student at my alma mater was about to drop out of school for financial reasons. I was on the partner track at McKinsey, yet I was drawn to help and reinvent the loan industry for underserved students. Almost eight years later, we are on a great trajectory and have helped secure financing for many hardworking international and DACA students.
Can you share the most interesting story that happened to you since you began leading your company or organization?
There is truly an endless number of stories but there’s one that’s particularly relevant today. Much like the way MPOWER was founded, we entered DACA student lending by accident. DACA students are incredibly talented but, similar to international students, they’re left out of traditional education lending. When we started lending, some students would submit copies of their international passports. Sometimes they even provided a U.S. social security number and had lived in the U.S. for 10 years. Yet these students had absolutely no access to federal loans nor private loans. We realized these students were actually DACA students, who were experiencing similar financing challenges to those of international students. In order to become more welcoming to DACA students, we created a specific customer pathway for them on our platform, updated our customer-facing materials, and lowered our rates so that DACA students could obtain education financing similar to that of domestic students. It’s important to note that we have never had a single default nor late payment from a DACA borrower. It is a testament to the discipline, resourcefulness, and integrity of this demographic.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
Admittedly, we’ve made some mistakes along the way, but they’ve always served as learning experiences for us. There is one that immediately jumps to mind. Before starting MPOWER, I had never raised money in my life. I was very much an operator with zero fundraising experience. With that being said, I met an angel investor in Virginia many years back, and my co-founder and I took a trip from DC to see him, which takes about an hour. We got to his office, and we had a promising conversation with him and at the end, he asked us one simple question: “Are you raising?” I immediately jumped in and said “no” about three times in a row, emphatically reiterating “not now.” I could see my co-founder steaming and, on our drive, back to DC he said to me, “Manu, when someone asks if you are raising, the answer is always ‘yes!” Our Uber driver started laughing hard as he realized what had just happened. He jumped into the conversation and counseled: Listen to your business partner man, he knows how it’s done!” It was then that I learned the fundraising ABCs: “Always be closing.” That transformative learning experience remains deeply anchored in my head. As an entrepreneur, you do not choose when the timing of key events happens. Whether funding is being offered or you win over a big client, you must always remain open to seize an opportunity at any given moment.
Can you describe how you or your organization is making a significant social impact?
MPOWER is a public benefit corporation, and we are very much driven by our mission. We were founded to provide a solution for a fundamental social challenge. We are making an impact on the lives of many students. In fact, 85% of the students that we finance would not be able to pursue an education in North America without our loans. We’re also the sole student lender in the U.S. to finance DACA students without a cosigner. We work with the top 350 universities throughout the U.S. and Canada. The way we underwrite considers the student’s education and career options post-graduation, which marks a departure from the traditional lending approach that is based purely on credit history and collateral.
Notably, our mission does not end with a loan. We want to be sure that we create a pathway to success for our students. Many of the students we finance can secure jobs upon graduation that pay 3–10X more than they had prior to the degree. By working with us, students are also put on a path to becoming prime borrowers within a short amount of time. It is all about access — access to education and access to financial services. We are also helping to put the architecture in place for a more geographically and culturally diverse workforce. We are especially proud to see female borrowers complete their North American degrees and launch into successful careers. Indeed, many women in emerging markets are left out of education financing, and their families are more hesitant to financially contribute to their education due to the social pressure for women to get married or follow more traditional and local education routes.
We are thrilled to be building a talented workforce of hardworking people who have so much to offer. These students are largely unrecognized by society, but we work hard to give visibility to their full contributions and future potential. Distinctly, 80% of our students come from emerging markets, from Sub-Saharan Africa to S. Asia to Latin America.
Furthermore, North American universities see us as a financial lifeline. Without MPOWER, there would be fewer international students on university campuses and these full-paying international students are critical to the financial viability of today’s university system. Without international students, many of the tuition discounts or scholarships offered to American students would need to be cut back. More broadly, international students contribute nearly $61 billion to the North American economy every year, in the form of spending, creating jobs and other economic development impact. The CEOs of Tesla, Microsoft, and Google are all ex-international students.
Interacting with people all over the world also enriches the educational experience that domestic students get. In the workplace, having international viewpoints is a way to solve more global challenges, which we’ve had our share of with the pandemic, global warming, or cyberattacks. International students help to create bridges between the U.S. and other countries. They are vital to our economy and our future.
Can you tell us a story about a particular individual who was impacted or helped by your cause?
We’ve had the honor to serve so many amazing students that it’s difficult to choose just one. It is overwhelming but incredibly satisfying to see your mission come to fruition. Our Women in STEM scholarship program, which is featured on our website, provides examples of several amazing women who have gone the distance to reach their goals. It’s wonderful to see the difference our students are making in the world — from finding cures to cancer to helping children overcome speech challenges. I cannot choose just one example as each student is a testament to the fact that we all have the ability to make a positive impact.
Are there three things the community/society/politicians can do to help you address the root of the problem you are trying to solve?
On a policy level, in the U.S., we could start by being significantly more welcoming to skilled immigrants. Canada is fighting to attract the best talent into their country while the U.S. is still in need of a massive immigration overhaul. The U.S. economy is extremely desperate for top talent, especially in STEM fields, so we need to pave clearer paths to attract this talent. In addition, immigrants contribute to many of our industries — from health services to financial services and technology — that we also need better policies to keep immigrants here and offer them viable and fast paths to citizenship. As a side note, it took me 20 years to get a green card and I had it easy relative to many others. We have a long way to go. I believe that friendlier immigration laws, such as those implemented in Canada provide a great example.
Lastly, one of the top concerns of international students is safety. Due to prominent gun violence and attacks on ethnic minorities, the U.S. is perceived externally as unsafe for international students. For university leaders and mayors of college towns, it’s paramount to ensure the campus is safe and welcoming to students of different racial, ethnic, and religious backgrounds.
How do you define “Leadership”? Can you explain what you mean or give an example?
Leadership is a tough word to define, and it’s thrown around a lot, especially in business school. To answer this question, perhaps I can define what leader I aspire to be. First, I seek to be a servant leader, empowering people at the core of our business. I also want to be an innovative and courageous leader. For example, innovation often drives a leader to create an entirely new product or serve an untapped market, even if there are obstacles in the way.
Next, and this is perhaps the hardest, I seek to never be shy about making difficult and unpopular decisions. For instance, this might mean parting ways with employees who are important to the day-to-day business but do not embody or believe in the company culture.
Finally, it is also vital to lead by example. If I am asking my team to do something, I usually have done it myself multiple times. When “all hands-on deck” are required, the team needs to see its leaders on the front lines with them. My belief is that you do not ask someone else to do something that you would not do yourself.
What are your “5 things I wish someone told me when I first started” and why. Please share a story or example for each.
The first thing I learned, and wish I’d been told, is that the cofounder relationship is almost like a marriage, in that you must be aligned on core values, in addition to sharing a similar vision for the company. To find the right cofounder for you, you should ask and answer a series of difficult questions, such as “How do you treat people you hire or let go? What is a fair way to compensate employees for their work? How should you be compensated? How do you balance your personal and professional life? What would trigger you to leave the company?”
Another realization I had years at MPOWER, is that, as the co-founder, you are the chief storyteller. You hold the keys to the founding of the company, and you must be willing to showcase and articulate your vision around your products and services. The story must resonate with multiple audiences, including your staff, investors, peers, and the media. It is your job to preserve the company narrative, broadcast it and build on it as the company grows.
The third lesson is more of a warning: unlike what is often commonly portrayed in the media it takes a great amount of time, energy, and resources to build a successful company. Companies take seven years on average from the first round of funding to getting acquired. An IPO takes a full decade. As a result, it’s important that money only be a secondary motivation (if one at all) for starting a venture, as even a generous paycheck is unlikely to sustain a founder through the long journey. To me, having a clear social purpose was paramount to sustaining my interest in building MPOWER and growing personally with the company. As I enter seven-and-a-half years into the journey, MPOWER is by far the longest job, and most interesting job, I’ve had!
A fourth lesson is one that’s commonly told but worth reiterating anyway: in funding rounds, optimize for getting good, mission-aligned, investors. Don’t optimize for valuation. Dedicated, mission-aligned investors will support you to build your company and deliver on your vision. They’ll bring in other investors in future rounds and will reup themselves. Meanwhile, if you focus on valuation, you’ll potentially lose out on these great partners and make it increasingly more difficult for your future self to have a successful fundraiser at the next round.
My final lesson is about building diversity and talent in a company. A lot of startups see the value in having a diverse organization and are well-intentioned. But those intentions often come too late. Leaders often start by founding a company with a buddy or two, then hiring the next batch of employees from their direct network. As a result, they find themselves a year or two in with a dozen “bro-ey” employees and a ping-pong table. To build diversity across gender, race, age, religion, academic experience, or socioeconomic background, you need to start with your cofounders and the first employee. From the very beginning you need to bring on board employees who’ll help augment your culture.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
The global education movement is one that will inspire cooperation, innovation, and positive change. Education builds bridges and can offer solutions to a lot of the cross-border and geopolitical challenges we are facing today. The pandemic doesn’t care which country you’re from and neither does climate change. International education can be a connector between countries, building the international mindset required to solve the challenges of the 21st century. At MPOWER’s we’re working to build bridges between North America and the rest of the world, yet more needs to be done at a macro level to encourage cross-border education. My call to arms would be for governments, corporations, non-profits, and entrepreneurs to foster more cross-border educational opportunities and eliminate barriers to education.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“If you get tired, learn to rest and not to quit.” -Banksy
This definitely rings true in the startup world! Last year was emotionally and physically exhausting for everyone. For startups, the up-and-down waves grew higher and sank even lower. We navigated through these turbulent times by never losing optimism and by clearing our heads when we did.
Is there a person in the world, or in the US with whom you would like to have a private breakfast or lunch with, and why? He or she might just see this, especially if we tag them. 🙂
There are two people: one contemporary and one historical. The first is George Soros, a true global citizen and cross-border champion, who built a fortune in Finance and made it his mission in life to support socioeconomic mobility, promote higher education, protect democracy by giving a voice to underrepresented groups and help refugees and other marginalized groups.
The second is Benjamin Thompson (also known as Count Rumford), who was a prolific scientist, social innovator, and global citizen of the late 18th century. His scientific findings on thermodynamics helped him create more efficient public soup kitchens where he employed and fed the homeless. His findings helped improve heating technology more broadly, from more efficient chimneys to warmer clothing. He applied his scientific mind to solve social and economic challenges for the leaders of several countries, from the United Kingdom to Germany and France.
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This was very meaningful, thank you so much. We wish you only continued success on your great work!
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