An Early Interview with Esusu's Founder
The groundbreaking company hits the Forbes Fintech 50; FIN got there first.
“Not Solving Homelessness Backwards”
James Ledbetter: Tell us a little bit about what Esusu is and how it is that you came to launch this company.
Abbey Wemimo: Esusu is a platform that works with large, multifamily owners and operators to do three things: number one, we help them predict which residents will pay rent on time next month. And for folks that can't pay rent, we offer them microloans paid directly to the landlord. For folks paying rent on time, we put their on-time rental data into the credit rating agencies and bureaus. You might ask why that is important personally. When my mother and I immigrated from Lagos, Nigeria, we didn't have a credit score. We walked into one of the biggest banks to borrow money in Minneapolis were turned away. And ended up borrowing money at over 400% interest rate from a payday lender. In addition to that, my mother pawned my father's ring. So really inspired by that experience, decided to found the company on three core principles: where you come from, the color of your skin, and in particular something like your credit score should never determine where you end up in the wealthiest nation on the surface of Earth.
It's so interesting this notion of immigrants not having established credit. I recently interviewed a woman with a very similar experience, except that she's from Korea and she couldn't get a credit card. And she has now launched a company called Tomocredit that helps people with no credit history get credit cards. So was it the case that paying your rent on time hadn't affected your credit score in the past? It seems like kind of an obvious thing, but when I think about Credit Karma and those sites, they're looking at my credit card usage. They're not asking me if I'm paying rent. I guess it's different if you have a mortgage. But if you're a renter, has that historically not helped your credit score?
Precisely—it hasn't. Where we sit in our society today, if you have a mortgage or some kind of debt obligation, that data is reported, and then they measure your ability to essentially pay back that debt obligation. Recent legislation, actually around 2013, allowed things like rental data to be included in people's score. So we've driven policy through execution, and you can now do it for large multifamily owners and operators—capture their rental payment deposits into the credit bureaus. And for folks that can't pay rent, give them a microloan, so we're not solving homelessness backwards as a society. Today our partners are 1.3 million rental units in 43 states.
Wow. That's bigger than I thought. I love that idea of not solving homelessness backwards, that's a very powerful way of putting it. If I'm a landlord, why would I want to use Esusu? Why don't I just get a check from my tenants, or a money order, or cash?
What we tell our landlords is: your residents are your most important assets. Just like in companies where people are your most important asset. If your residents are financially resilient, it gives you an opportunity to make sure cash flows are healthy. So why should you work with Esusu? Number one, if your residents cannot pay rent, we can predict that for you. They say you can’t fix what you can't measure, and it's better for you to know. We predict, and we also then offer a loan and pay directly to the landlord, which no one in the market does. So the residents stay and you, as a landlord, are making money, right? And drives ontime payments by 25% for the landlord. So you'd say a win-win for everyone involved, and as a society we're not dealing with a ton of homelessness.
How do you predict whether someone is going to be late with their rent payments? Is this because of data that you're capturing?
Exactly. Esusu is connected to 70% of the large property management platforms in the country, the 110 million people that rent in this country. When we capture that data and a whole bunch of other information, we're able to tell the real propensity of the residents to pay.
You launched the business before the COVID pandemic set in and the various lockdowns and high unemployment. How did COVID affect your business?
Prior to the COVID-19 crisis, we had a quarter million renters in roughly 25 States. With COVID, landlords and property managers understood the importance of figuring out their residents’ risk. We've grown over 600 percent, and that number continues to jump every day. We've said we're going to outperform in a down market because low- to medium-income people are on the fringe. As a society, we do not pay people enough. And then when we look at the disparities of the racial wealth gap, low- to medium-income people that have not been given a chance. COVID was a great opportunity to show some of these things, because we've been dealing with the symptom of the issues before, not the root causes. Residents love this because for the first time, this is not just the service to nickel and dime them. This is actually a service that helps them be more financially prosperous.
I talk to a lot of CEOs who are in this space, trying to use technology to serve the unbanked or underbanked segment of the population. Can you talk about this movement and your role in it?
As a company, what we stand for is essentially to leverage the power of data to bridge the racial wealth gap. Some people might ask, why do we have the average white family with 10 times as much wealth than the average black family? It goes back to what we've done as a nation during the ‘20s and ‘30s, when housing authorities essentially said black folks could not have mortgages backed by the full force of the government. What we are trying to do right now is leverage the power of data through our reporting capabilities, to better understand the risk profile of people that are traditionally left behind. I don't think my mother and I were horrible people. I don't think the banker that denied us in Minneapolis is a terrible person. You just don’t have a good way to understand the risk profile of low- and medium-income people that do not have a credit history. And that's where we play a quintessential role.
Earlier we heard the CEO of the Harris Poll give us all this fascinating data about inequality. One of the stats that popped out at me was 26% of black Americans said that they don't have access to mobile banking. This is exactly the population that you're trying to reach. So how do you bridge that gap if the very tools that are needed to make your product work aren't in the right hands?
It's a fantastic question. That's an infrastructure issue. How do we essentially get the hardware to folks who’ve predominantly been left behind to get access to them? There are a lot of platforms out there. There are a lot of companies trying to get things like even broadband access. We talk to partners about providing wi-fi access to Section 8 housing, to voucher housing. There’s a saying if you want to go fast, go alone. But if you want to go far, go together. That's the true essence of what we stand for. There is a role for government. There's a role for corporations. There's a role for all the startups we consider partners where it takes a coalition to essentially make this work.