"When you get too comfortable, find a way to make yourself uncomfortable again and take on new challenges."
Emmanuel Smadja Tweet
Emmanuel Smadja is the Co-founder and CEO of MPOWER Financing, a mission-driven fintech company and the leading provider of global education loans that do not require a cosigner. Previously, he was 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.
Check out more interviews with entrepreneurs here.
WOULD YOU LIKE TO GET FEATURED?
All interviews are 100% FREE OF CHARGE
Table of Contents
Thank you for joining us today. Please introduce yourself to our readers. They want to know you, some of the background story to bring some context to your interview.
Emmanuel Smadja: I’m the CEO and co-founder of MPOWER Financing, a mission-driven organization that provides financial access to education for high-promise international and DACA students. My passion for social impact led me to leave management consulting eight years ago and co-found MPOWER. Twenty-two years ago, I was myself an international student, from France, studying in the U.S. I know firsthand the financial struggles that international students face. After working multiple on-campus jobs and receiving financial support from my family, I was able to graduate.
I was one of the lucky ones as many international students are either unable to secure, or have a very hard time securing, the funding they need. Based on my own experience, I knew that I needed to find a way to help international students find another option for funding outside of what currently existed. MPOWER has been around for almost eight years now and we are going strong; we just closed a funding round of $152.5 million three months ago to further invest in our growth. We are successful because we value our students; they are our biggest advocates.
You are a successful entrepreneur, so we’d like your viewpoint, do you believe entrepreneurs are born or made? Explain.
Emmanuel “Manu” Smadja: Entrepreneurship requires some dissatisfaction with the status quo, creativity to imagine how the world could be different, and a healthy amount of optimism and self-confidence about one’s capacity to make a difference. All of us have these traits to varying degrees (that’s the ‘born’ piece). We can then cultivate these traits over time as we acquire new skills, gain confidence, and practice creative thinking (that’s the ‘made’ piece). Now, what is further required is a ‘spark’ to light our entrepreneurial spirit and the right conditions to act on that spark. In my case, it was a student’s plea for financial support that ignited that spark and pushed me to leave a stable job in management consulting and fan my entrepreneurial flame instead. In that way, I’m an ‘accidental entrepreneur.’
I’m also very aware that being an entrepreneur, especially a VC/PE-backed one, is a huge privilege. Taking the entrepreneurial risk or leap not only requires the traits discussed above, and a spark to enable our passion, but also financial stability and a supportive network that enables us to take that risk. That’s an enormous privilege. Having a healthy amount of savings in 2014, not having dependents at the time, having access to Obamacare to protect me against potential financial downside in case of sickness or accident, and finally having a solid business school (INSEAD) and work (McKinsey, Capital One) network, really allowed me to get the guidance and funding I needed to start MPOWER. There are thousands of would-be entrepreneurs in the U.S., and around the world, who are much more talented than I am but unfortunately don’t have the same network and level of privilege, and therefore will never have the chance to be fully ‘made.’
If you were asked to describe yourself as an entrepreneur in a few words, what would you say?
Emmanuel Smadja: Stubborn, data-obsessed, and helplessly optimistic. I’m endlessly passionate and stubborn about the mission of MPOWER, which is to ultimately empower bright minds from around the world. An engineer at heart, I need data for every decision I make, and I spend a lot of my time thinking about data infrastructure, data access at the company, and analytical skills and training so everyone at MPOWER has that same ability and autonomy. My helpless optimism has helped MPOWER navigate the typical startup ups and downs and is at the core of our mission and culture. We believe in immigrants and are optimistic about their future; that’s ultimately what we invest in.
Tell us about what your company does and how did it change over the years?
Emmanuel Smadja: MPOWER Financing is a company that lives by its mission, which is to provide education financing to high-promise, international, and DACA students, as well as asylees and refugees. Many of the students that work with us have limited or no options with traditional lenders both here and in their home countries to fund their studies in the U.S. and Canada.
Over the past eight years, we have worked with thousands of students from over 100 countries. What started as an idea has, with hard work and dedication, morphed into something beyond my wildest imagination. Today, we are using our proprietary algorithm to change the face of how credit is administered. We know that there are better ways to determine creditworthiness than FICO scores, which are often unavailable for international students. Our algorithm determines eligibility through several factors including future earning potential. The students we help are our investments and they are paying dividends to the global economy.
Thank you for all that. Now for the main focus of this interview. With close to 11.000 new businesses registered daily in the US, what must an entrepreneur assume when starting a business?
Emmanuel Smadja: Assume that your business will go through rough times, and potentially fail, so protect your downside i.e., have savings, maintain your professional network, and – contrary to popular guidance – I’d say don’t max out your credit cards. Assume that it will take 7-10 years to get anywhere. This may be the longest job you’ll ever hold (it certainly is for me). Jeff Bezos just stepped down as CEO of Amazon this year, 27 years after starting the company from his garage! Manage your health, lifestyle, and goals accordingly.
Finally assume that you’ll need twice the amount of funding and the number of people you currently have in mind. Then double that number again. Disclaimer: my perspective and guidance here are from a vantage point as the founder of a venture-backed company, but there are many other perfectly great business models out there where no outside funding is needed and some of the above guidance is less applicable e.g., small businesses/franchises, services businesses, or tech businesses opting for a different growth trajectory.
Did you make any wrong assumptions before starting a business that you ended up paying dearly for?
Emmanuel Smadja: We all make mistakes along the way, especially as we go out on our own with an idea and a few believers. One of my biggest ones was not accepting seed money early on when I was asked if I was raising capital. It turned out to be a) one of the funniest moments of my life with my co-founder and b) the biggest lesson I learned about running a business: you need money, and you take it when it is offered! My co-founder and I, at least once a year, have a good laugh about that person I was seven years ago!
If you could go back in time to when you first started your business, what advice would you give yourself and why? Explain.
Emmanuel Smadja: I would say never underestimate the ability of life to catch you by surprise. Even if your business is great and life seems like it is going along like a well-orchestrated song, events come up. Who would have ever predicted the COVID-19 pandemic? My advice is to expect the unexpected. When you get too comfortable, find a way to make yourself uncomfortable again and take on new challenges. That will prepare you for when life happens and it is not just a drill.
What is the worst advice you received regarding running a business and what lesson would you like others to learn from your experience?
Emmanuel Smadja: “Quit.” We heard that when we were first starting: “No one has cracked the international student lending space; you should focus on another problem.” Last year, amid the pandemic and immigration uncertainty, several people advised us to shut down despite our very healthy business results and the strong fundamentals of our market. People are generally very well-intentioned so when some of them say ‘quit’, they’re projecting their fear of failure or risk-reward appetite.
What they’re truly saying is: “I’d be afraid of failure if I were in your shoes, or I don’t have the appetite for that kind of risk, or I don’t fully see the reward.” If we had followed that guidance, we wouldn’t have created a highly lucrative business that empowers thousands of students every year to go to Harvard, Stanford, the University of Toronto, and 350+ other universities. We wouldn’t have raised $152.5 million recently. We wouldn’t be on our way to becoming a unicorn that employs hundreds of talented people in the international student lending space. Side note: a fellow entrepreneur once advised “don’t be a unicorn, be a cockroach. A unicorn is a flamboyant fictional animal. A cockroach is real and resilient; it can go in a microwave and still survive”; I loved that guidance!
In your opinion, how has COVID-19 changed what entrepreneurs should assume before starting a business? What hasn’t changed?
Emmanuel Smadja: As I mentioned above, the magnitude of the COVID-19 pandemic is not something anyone could have predicted. When starting a new business, always assume that a challenge is around the corner that you will have to combat. Find new and innovative ways to handle disruption as you may find better solutions. Think of the ability to work remotely as a professional and learn remotely as a student. Before COVID-19, many companies – and certainly schools – would not have enabled that feature for the sheer amount of people that had to be away from their physical places of work and studies. Yet here we are making it work. The need for good ideas has not changed and the quality expected – whether remote or in-person – is no different. I think that, if anything, expectations for quality have been elevated.
What is a common myth about entrepreneurship that aspiring entrepreneurs and would-be business owners believe in? What advice would you give them?
Emmanuel Smadja: The common myth is that once you start your venture, you have more free time and the ability to manage your time as you wish. My joke about that is, “Being an entrepreneur allows you to choose which 16 hours of the day you want to work”. Most times, and especially at the beginning, the idea and passion are greater than the resources you have at hand, whether funding or people. Hence, you must work with a lean team and budget to make big things a reality. I would say, as I mentioned earlier, patience is key. In time, good ideas become solid businesses that can scale. You cannot rush a fine wine and you cannot rush the natural course a business must take to mature.
What traits, qualities, and assumptions do you believe are most important to have before starting a business?
Emmanuel Smadja: A healthy combination of patience (I keep reiterating this because it is so vital!), resilience, and optimism. You also need the ability to ‘sell’ or rather ‘inspire.’ You’ll need to sell the story and vision to potential cofounders, future employees, suppliers, certainly to customers, and, not the least, to investors. If you have a family that depends on you, you’ll also need to sell them too as you’ll require their support when you’re pulling long hours away from home and your paycheck is slimmer than you might have had in prior large company roles. You’re the chief sales officer from end to end!
How can aspiring leaders prepare themselves for the future challenges of entrepreneurship? Are there any books, websites, or even movies to learn from?
Emmanuel Smadja: As an entrepreneur, you’re always learning and feeling that your knowledge is insufficient or inadequate, so reading as much as possible – and reading daily – helps! I’ve enjoyed the books “The Hard Thing About Hard Things” and “What You Do Is Who You Are: How to Create Your Business Culture” by Ben Horowitz. I also love my CEO coach Tom Mohr’s online (and free!) book called “People Design”, which narrates the full founding to exit journey of a fictional tech company. It certainly resonated! I listen to podcasts like Gimlet’s ‘Startup’ or Wil Schroter and Ryan Rutan’s “Startup Therapy”, which I find helpful.
It’s very comforting and reaffirming to know that all entrepreneurs face very similar challenges that are normal parts of the journey. Beyond readings, I’d recommend finding advisors and CEO peers that you can confide in and who can help guide you. It can be lonely as an entrepreneur without a support system. And while movies are great, entrepreneurs are writing their scripts – remember that! Don’t assume that the way it happens for one person is the way it will happen for you too!
You have shared quite a bit of your wisdom and our readers thank you for your generosity but would also love to know: If you could choose any job other than being an entrepreneur, what would it be?
Emmanuel Smadja: I’m passionate about social issues, more so than any job. The job is the conduit through which I tackle an issue. Arguably, being an entrepreneur is also like working five different jobs. With that said, I’d probably continue working in a different capacity in the fields of financial inclusion, educational access, immigration rights, or social equality more broadly. I’m ultimately passionate about empowering marginalized communities and what we can learn as human beings when we step away from the mainstream and truly listen to people at the margin. By that same vein, I’m passionate about tackling homelessness.
Thank you so much for your time, I believe I speak for all of our readers when I say that this has been incredibly insightful. We do have one more question: If you could add anyone to Mount Rushmore, but not a politician, who would it be; why?
Emmanuel Smadja: Mount Rushmore severely lacks diversity in recognizing those who helped build this country. It would be good to honor one of the Native American leaders who promoted peace and unity with the settlers. Alternatively, an African American leader, perhaps a female leader, to recognize that the U.S. economy was built on the back (literally) of an entire displaced and enslaved population.
Jed Morley, VIP Contributor to ValiantCEO and the host of this interview would like to thank Emmanuel Smadja for taking the time to do this interview and share his knowledge and experience with our readers.
If you would like to get in touch with Emmanuel Smadja or his company, you can do it through his – Linkedin Page
Disclaimer: The ValiantCEO Community welcomes voices from many spheres on our open platform. We publish pieces as written by outside contributors with a wide range of opinions, which don’t necessarily reflect our own. Community stories are not commissioned by our editorial team and must meet our guidelines prior to being published.