Harvard in Tech Spotlight: Warren Hogarth, co-founder and CEO of Empower
I spoke with Warren Hogarth, co-founder and CEO of Empower, a high growth financial technology startup on a mission to improve the financial well-being of today’s generation.
Warren immigrated to the US from Australia. He was fortunate and grateful to be educated and financially savvy when he came to the US but even he was shocked by the complexity of the US financial system. He made decisions based on his best judgement but ended up making mistakes unintentionally that had downstream consequences for his financial wellness. For example, he thought that paying his own bills on time, from his savings, was good practice. As a result, he never got a credit card. When it came time for him to take out a loan to buy a car so he could drive to work, he learned that he couldn’t do it because he had no credit history or credit score. Fortunately, after tons of back and forth, he was able to get that loan through his Harvard Business School diploma, but the experience stuck with Warren.
Other financial experiences made Warren even more motivated to want something better. For example, he learned that credit score is in part based on the balance in your account on some arbitrary due date. If you always pay on time but need to spend a bit more on a legitimate purchase shortly before this arbitrary due date, your credit score goes down, which negatively impacts your ability to get a loan, your future borrowing rate, and more.
After exploring the space further, Warren learned that over 50% of people under the age of 40 aren’t financially literate. Two thirds of Americans live paycheck to paycheck. He realized there was a huge group of people he could build for and whose lives he could transform with a better banking solution.
Warren spent 8 years as a partner at Sequoia Capital. During his time there the firm made early investments in many fintechs such as Stripe, Square, SunRun and Nubank. He saw firsthand that there was tremendous opportunity in building API level infrastructure for the entire financial system. So, he decided to found Empower.
Warren shared his advice for building startups, establishing trust, and being a great board member.
Pick a great wave to surf. Choose a market with great momentum. If you build in a market with strong tailwinds, you have more leeway to experiment and to make mistakes. Creating a market is incredibly challenging and gives you a smaller margin of safety to explore and iterate.
Create optionality in your lifestyle. When looking for a co-founder, Warren found there were quite a few talented people he wanted to work with but many of them had set their life up in a way where they simply couldn’t make the leap to entrepreneurship. Their lifestyle and personal burn rates were too high to ever become a founder, which closed the door for them on joining Empower early on.
Be supportive in tough times. When asked what he’s learned about being a great board member, Warren shares that it’s important to push only when things are going well. When things are challenging, your role is to be there, to be non judgemental, and to be supportive.
Focus on the right questions, not the right answers. There’s a tendency to feel you can solve a problem immediately. But as a board member, the founders and team members in the room have almost always been thinking about the problem for much longer than you. So, the board member’s role is not to assume you know everything and come up with solutions but rather to ask great questions that help people see something they perhaps didn’t see before.
Focus on the most important thing. Board meetings can feel overwhelming with tons of topics to cover. Instead of trying to capture and respond to too much, focus on one main message you want to get across and one main area you can add value in.
Be clear about your priorities. Looking back on his time at Harvard Business School, Warren was glad he was clear from the outset about his goals. He knew he wanted to be an entrepreneur, and with this end goal in mind, he was able to say no to things without feeling any fear of missing out. He instead channeled all his time, energy, and attention into his main goal.
Leverage your position as a student. HBS was not only a great place to learn but a great position through which to reach out to anyone in the ecosystem. People are all quite busy, but most people are open and willing to speak with students who are genuinely interested in learning.
Listen. When asked for advice for his younger self, Warren shares that he would spend twice the amount of time listening as talking.
Remove judgement. When asked how he thinks about building trust with consumers in the fintech world, Warren highlights the importance of creating safe spaces where people feel they can share anything and not receive judgement. Treating people with respect and making them feel truly heard goes a long way.