#8 Manuel Schoenfeld: Managing a Multi-Million Dollar Company from the back of a Van
From Y Combinator to Sequoia in less than six months.
We had to pinch our arm after seeing a reply from Manuel’s sitting in our inbox. A simple, “happy to talk” was enough to send us to cloud nine, and instantly into a state of hyper-activeness. Never would we have imagined it was possible. Manuel is a genius, but one of the humblest persons we have ever talked to. The entire conversation felt like we had been catching up after a long day.
Manuel is currently the founder and CEO of PowerX, a company with the mission to solve climate change by helping households track water, electricity and gas usage using a unique hardware sensor. And oh boy, have they received funding and support from la crème de la crème including Sequoia, Y-Combinator, and Antler. It is safe to say that the wind is blowing in their sails.
Manuel experienced things most people can only dream of, such as travelling through Europe in an old van, teaching autistic children in China, battling a dangerous disease, and graduating from Harvard University.
But that is only one part of the story.
At Venture Insider, we strive to undress the ups-and-down, the late nights, the early mornings, the failures and the victories.
In a few words; we want to share the real stories.
This interview has been edited and condensed for clarity. Everything in Italic symbolizes the voice of the writer, aka, us at Venture Insider.
Introduce yourself — tell us a little bit about your journey?
It all began when I decided to move to China to work as a teacher for autistic children. It was one of the most challenging periods of my life. Every day, I witnessed the struggles of parents trying to raise their only child, an autistic child. These parents had spent their last savings, sold their belongings, and thoroughly knew their child would not be able to provide for their retirement.
My income was roughly $150 per month, but that did not stop me from backpacking across Asia after a year of work. I slept on cardboard on the floor and in shady hostels. It was magical but also strenuous. In the last days of my travels, I couldn’t shake off a heavy fever. With the help of friends, I managed to board a flight to Germany. My head was exploding. Two days after touchdown, I lost the ability to walk. I got diagnosed with meningitis (a brain disease) and immediately moved to intensive care. I stayed at the hospital for weeks — it felt like the most luxurious place I had been for in years. Doctors’ opinions on my recovery were divided, but I was warned to prepare for a life where my senses were impaired, and my head pain would come back in waves.
I missed most of the deadlines for applying to university. My brain was not there, and it was challenging to concentrate. I asked the University of Heidelberg whether I could join their Chinese Studies, and they took me in as a student — even after the deadline had long passed.
Learning was much harder than it used to be, but I refused to give up, and after one year, I applied to different business schools in Europe. I failed even simple entry tests, tests I had solved with ease just one year back. Finally, Rotterdam School of Management understood my particular situation and gave me a chance.
The only goal I had in mind during my three years in the Netherlands was to recover. I had a rigid day-plan of meditating, studying, an afternoon walk and sleep. Long story short, after three years, I graduated with the highest Grade Point Average (GPA) in the university’s history. The words of the dean at graduation still ring in my ear: “When we saw Manuel’s Grade Point Average we thought there had been a mistake. So we checked with the administrative department whether we had ever seen a GPA like this. The answer came back promptly. No, we have never seen a GPA like this before in the history of this university.” I stood there as if struck by lighting. Only then it dawned on me that I had probably recovered.
After graduation, I wanted to give back to society. I worked two years at a humanitarian aid organization, and while there, I realized how important it is to be well trained to help people on a grander scale. So I applied to Harvard University and received the McCloy Scholarship covering all my costs for the Master of Public Administration and International Development (MPA/ID), where I specialized in Data Science and Economics.
I had a great time at Harvard, and it was lovely to work around the globe for the likes of Morgan Stanley, the World Bank and McKinsey. I could learn how to solve problems in a structured way from colleagues who are among the global experts in their fields.
During my corporate years, I tasted many industries. Still, I fell in love with renewable energies after helping to develop a billion-dollar project for an oil and gas company in the Middle East. We were given a “carte blanche” to make their processes more sustainable, and we soon realized that it wasn’t the money or a lack of will that prevented a change. It was the absence of reliable and applicable renewable energy solutions. At the same time, news on climate change kept piling up. That’s when I realized I needed to be part of the solution. I wanted to actively contribute. More to come on that, trust us, you’re not ready for what’s coming!
Climate change is one of the biggests threats we face as a human race, and if I really believed it was happening and I could contribute, I had to do something about it.
What motivated you to join the social sector?
This story is quite personal, but when I returned from China, I carried a lot of emotional baggage and was at the edge of giving up, sitting there passively and watching the years pass by.
When some of my friends went into the private sector, I thought I had little chance to get accepted into one of these companies. Also, I wanted to leave the world a better place than I found it, and believed joining the social sector was the best way to do so.
From there, you worked in the energy sector at top-firms, why such a transition?
There are three reasons. Number one, I realized that you can make the world a better place wherever you are and whatever you do. Especially in these top private firms, you can have a lot of impact at a young age. Number two, there are benefits of having big names attached to your resume. Whether we like it or not, the signalling effect of brand names makes your life easier in many ways. It brings a lot of credibility to the table. Number three, these firms are a fantastic training ground. They gave me the chance to work with people with a specific thought process, which is well-structured, and focused on solving problems.
How was it to work at “The Firm” — McKinsey?
I loved it. It is what you make of it, you create your way at “The Firm”. I had several colleagues that flew to Frankfurt every Monday morning working with clients in insurance and banking — and for many of them, this was great. My experience was completely different.
I spent most of my time travelling to every corner of the world, from a mine at 4,000 meters altitude in the Andes, to the unique white beaches of Papua New Guinea, the statues of the Easter Islands, the joyful Buenos Aires, and the oil-rich states of Qatar, Oman and Saudi Arabia. McKinsey provided me with a passport to the world, working on the most exciting projects with the sharpest minds, and I am very grateful for it.
Six months ago, you founded your own company PowerX, how did it all start? What was the trigger that made you start the company?
Mainly witnessing the lack of sustainable energy solutions for our client in the Middle East made me realize I had to do something. I think solving the climate crisis is one of the most important issues in the history of the human race, and great theorists and businessmen such as Stephen Hawking and Elon Musk have voiced their concerns about this crisis we are facing. Climate change is real, and I wanted to be part of the solution and help to solve this massive problem.
Last but not least, starting a company is a challenge in itself, I was intrigued by this challenge and by the impact it could have. Also, after having spent years in consulting where projects are usually timed in weeks, I wanted to see a baby grow over the years, from infancy to adulthood.
What stage are you currently in, and how do you get to the next one?
It is safe to say that we still have countless challenges in front of us. When people say that hardware is hard, they are right. We are building unique sensors to help households track water, electricity and gas usage. That means we need to spend a lot of time on research and development, on reliability and safety testing, and on optimizing our complex supply chain (the current epidemic is not helping). We came out of stealth mode a couple of weeks ago, and our website is still under development, but we have an incredible team of engineers that are working non-stop to get everything out as soon as possible.
To reach the next step, we need to do two things.
Number one, we need to ramp up marketing. We kept a very low-key profile in the last months while developing our solution, but that is changing as of now, and we have press-releases from top-journals ready to be published. No need to be so nice, Manuel, we knew we were famous, but this is too much.
Number two, we want to ramp up production of our hardware sensor to several thousand pieces a month. It is quite a challenge as we want to produce in a sustainable, reliable and — naturally — cheap way without presenting our IP on a silver platter. Insolvency of only one key supplier 10,000 miles around the world can ultimately erode all our dreams from one day to another, and put us in a challenging position. My role is to make sure this is not happening and keeping all the manufactures afloat.
How were you able to secure funding from such prestigious investors?
I think it is crucial to understand what investors are looking for. I compare it to a horse on the racetrack. In the earliest stage, investors invest in the jockey, meaning the person who is riding the horse. The horse is of course always necessary, as even the best jockey can’t win with an old horse. However, at the very beginning of the journey, it is possible to change the horse. For example, at Antler or Y-Combinator, two early-stage investors, a lot of companies pivot into something completely different than what they had planned initially.
When you get a bit further, the horse becomes more critical. You need to ask questions like: is this company building a pen with a different color, or something cool that will change how we think? Let’s use Airbnb as an example. They figured out that there was a massive unused potential: empty rooms and they created a whole marketplace around it. That’s what investors want to see.
At the last stage, investors focus more on the racetrack, meaning if the company is operating in a billion-dollar market.
Naturally, all three things, jokey, horse and racetrack are essential at every stage of the company, but the focus of investors tends to shift a bit while you race along.
Regarding the jokey, there are several traits many entrepreneurs have in common. One of them is persistence. The other day we met with the founders of Airbnb, and they told us how they started and closed Airbnb several times because the idea didn’t get off the ground. Funnily enough, they were so unsure about their Airbnb idea that they applied to Y Combinator with a different one, breakfast cereals called Obama O’s and Cap’n McCain’s.
It was around the financial crisis, and Y Combinator said: This is the type of entrepreneurs we are looking for. Entrepreneurs that can adapt and survive — even during a financial crisis — selling political cereals. A bit like cockroaches that can survive a nuke. Investors like to see an attitude of persistence against the odds.
Where in the world will we see Manuel in five years?
I want to create the next climate change unicorn. It is not about the valuation per se, but about making a dent in the fight against climate change.
If you could change one thing in your journey, something you now have regret for, what would it be?
I failed countless times, but that is life. I think a big life lesson is to learn to embrace one’s mistakes — it is part of what makes us humans. The key is to fail fast, enjoy the journey and recover from it. Sure, I have regrets, but it would be very regretful not to have regrets.
What would you suggest the “20 years old you”? Launch a business? Join a start-up?
Being 20 years old doesn’t come back, and life is short. Therefore, live your life to the fullest, and do what fulfils you. If building a company is what makes you wake up in the morning, do it. You don’t have to prove yourself to anyone; it is your life. That being said, be smart about it. Sometimes, to be able to follow your heart requires many years of tears and sweat, and you have to pass many valleys before you reach the mountain top.
Do you have an inspiring figure?
I am particularly fascinated by people who did what they believed in, thereby nearly coincidentally changing the world. An Albert Einstein, not particularly great at university but pondering for decades what would happen if you run next to a light wave. I am inspired by people who have a dream and dare to follow it.
I love to read books on quantum physics. It just blows my mind, shattering whatever I think the reality is. And if — as humans — we don’t know what reality is, well, then you can be and do anything, right? I would start with the titles, “Beyond Weird” and “Einstein, Quantum Physics and the Theory of Everything”.
The one Billion Dollar Question, how to get into Y-Combinator?
First, figure out whether you want to give away 7% of your company. Let’s assume that is the case. Then have a good match between what you build and who you are. For instance, if you worked your whole life in the oil and gas industry, it might not be the safest bet to create a Barbie doll company. In short, you should have a good reason why you are doing what you are doing.
If you get invited to the interview, get ready to be grilled for 10 minutes. You will become a well-done steak in no time. The key here is to stay calm and to know your company and your market. No one expects you to have all the answers, but you should enjoy entrepreneurship and know your market. Also, remember YC is made up of people — they also put their pants on one leg at a time. At the end of the day, it is a company like any other, managed by humans who make mistakes.
Last but not least, if you don’t get in, there is nothing lost. Apply again or build a company in another way. Cockroaches can survive even nuclear strikes.
Our Main takeaways
- Don’t get intimidated by successful people. We are all human beings. Yes, Manuel went to Harvard. Yes, he worked at McKinsey. Yes, he closed Sequoia. Yes, he got into YC. But he also likes to go hiking, and just spent the summer in his 25-year-old van on the Croatian coast.
- Everything is achievable if persistent enough. Having the mindset of never giving up is what it takes.
- Keep a fresh spirit. Live your life to the fullest, and do whatever your heart is telling you to do.
Inspiring story Manuel, thank you very much.
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