Rising Through Resilience: “Be persistent and determined, but also know when to pivot” with Steve Schnall CEO and Chairman of Quontic Bank
Be persistent and determined, but also know when to pivot. Your original plan may, in fact, not have been viable, so don’t be afraid to tweak, reinvent and reposition.
I had the pleasure of interviewing Steve Schnall. Steve is a serial entrepreneur and a seasoned leader of a myriad of successful ventures across a variety of industries. He currently serves as CEO and Chairman of Quontic Bank, the adaptive digital bank, which is federally chartered and community-focused, headquartered in New York City and does business in all 50 states. Quontic’s adaptive banking approach embraces the diversity of circumstances that exists in its customers lives, while providing innovative, adaptive banking services to elevate their customers’ financial strength. Schnall also serves as CEO/owner of Realmor Capital, a real estate investment and development firm focused on emerging NYC sub-markets. Prior to launching these ventures, Schnall was founder, CEO, President and Chairman of New York Mortgage Trust, Inc., which he grew from a startup to a publicly traded (NYSE) mortgage REIT and national mortgage banking company. Schnall also co-founded Restaurant.com during the early days of the dotcom boom and grew it to nearly $100 million in annual revenue at its peak. In 2018, Steven and Patrick Sells launched Nicabis Mining, a crytomining company, which mines Ethereum with customized rigs designed and assembled from global sources. Nicabis also provides consulting services to other enterprises interested in cryptomining. Schnall is a founding director of Urban Angels, a non-profit, which nourishes the homeless and serves more than 100,000 meals per year. His other philanthropic efforts include serving as a director of The Arthur Project, a non-profit which addresses, through youth mentoring, a chronic lack of opportunity, guidance, and feelings of self-worth needed to optimize their potential during the formative middle school years. Other volunteer activities include his membership in the Young President’s Organization, World President’s Organization and the New York League of Independent Bankers. Schnall grew up in Clearwater, Florida and received a bachelor’s degree in Accounting, cum laude, from the University of Florida in 1989. He currently resides in Tribeca, Manhattan with his wife and two sons.
Thank you so much for joining us! Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’?
I was raised by a single mom in Clearwater, FL who worked hard at an entry level corporate job and struggled to provide for her two sons. From an early age, I came to realize that beyond the bare necessities that my mom could provide, I’d have to fend for myself to get ahead no matter the obstacles in front of me. I worked two jobs to pay my way through college and graduated with a degree in Accounting from the University of Florida. Wanting to break away from my hometown childhood friends who all seemed to have a general lack of ambition or direction, I decided move to NYC directly after graduation. With a borrowed car pulling a U-Haul filled with all of my possessions, I drove to NY and got a job with Price Waterhouse. Bored and barely able to stay awake at work, being a career Accountant didn’t seem like a tolerable path for me (no offense to Accountants). I quit my job after 10 months to bootstrap a startup mortgage business with some new “friends” who recruited me to join them. I was about to experience the American dream in the big apple. Life was great and full of possibilities.
Can you share with us the most interesting story from your career? Can you tell us what lessons or ‘take aways’ you learned from that?
It was only after I quit my safe job to join my new partners in this startup that I was informed that I’d need to come up with my share of the startup capital. I proceeded to take maximum cash advances against all of my credit cards for this purpose (the cards that I so carefully managed to fill my budget gaps for food and other essentials). Handing over $15,000 in cash to my new partners (plus a promissory note for another $35,000), I was granted my equity stake in our new business. After one short year working tirelessly to build that new business, we were experiencing good success; so much so that my partners (my new best friends and only network in NYC) decided that one less partner equaled a larger piece of the pie for them — and so they unceremoniously threw me out, stealing my equity, my cash contribution, my share of the cash in the bank– and my dream. Given my blind trust in these dear friends, combined with a bit of naivete, my equity ownership remained undocumented and thus unprovable. I found myself broke with maxed out credit cards, student loans I couldn’t pay, and no job or source of income. I also had to face the reality that I was played and that my friends were in fact con artists who took advantage of me. At the ripe age of 24, I faced bankruptcy and no way to pay my rent or buy food — a circumstance hard to fathom, particularly for someone in the mortgage finance business who clearly understood the value of good credit. I was in a bad place.
Once I finished wallowing in my misfortune and my head cleared, I decided to start over. If I could build a viable company once in such a short time, I could do it again. I began to search for funding and soon found a generous soul who agreed to lend me $15,000 to pay some bills, buy food, and start my business over again. (I later discovered that he was a heroin dealer, but that’s a story for another chapter.) Without a budget for a lawyer, I typed up my incorporation documents and acquired the necessary state license. Within six months The New York Mortgage Company was born, and I was back in business — this time working from a tiny cramped NYC apartment in 1992 when I was 25.
Over the course of the next 12 years, my company grew. By 2004, having never raised any additional outside capital, my startup was now 1,000 employees strong, had 65 branch offices in 25 states and was funding $4 billion in home loans annually. I saw an opportunity to innovate by vertically integrating the mortgage banking operation with a new mortgage REIT (real estate investment trust) I would form. This integration of mortgage lender with leveraged investment vehicle would serve to disintermediate the many middlemen between the lender and ultimate MBS (mortgage backed security) investor and would ultimately result in higher returns on equity, thus creating a compelling investment opportunity. Armed with this strategy, I was able to take my company public. I was now in my mid 30’s and was Chairman and CEO of a NYSE listed company. Ringing the opening bell was a lifetime highlight and felt light-years from where I grew up.
There were many lessons learned along the way. The low-hanging fruits are that I needed to be more discerning in who I trusted and always document important deals in writing. Also, trust is one thing, but I behaved impetuously. That said, my most important takeaway was that in this truly dog-eat-dog world, success cannot occur without absolute determination and unfading persistence. Absent any safety net, the only way to advance was to have a truly internalized confidence and belief that success was possible if I never quit or let anything stand in my way. A good business strategy helps, but you can always tell those who possess these traits from those who don’t.
What do you think makes your company stand out? Can you share a story?
With an eye on the state of the markets, a front row seat to the increasingly reckless lending practices industry-wide, and a simple view of the brewing housing bubble (the guy who cut my hair owned 6 houses all highly leveraged), I saw the writing on the wall. I knew early-on that this would end badly and so I made a difficult and contrarian decision to exit the market and sell the company in 2007, just ahead of the impending global credit crisis. From my vantage point, there were countless executives earning ungodly bonuses who had only upside to reap from perpetuating the unsafe conditions that have now been so well documented after the fact. For me, as the largest shareholder in this public company of my own creation, I had a vested interest in protecting myself and my shareholders, even if it was at the expense of missing some of the party or being wrong in my views of what was to come. While I thought I saved the day, the credit markets became worse than I ever fathomed and I suffered my second massive financial setback. But unlike the last one, I was largely unfazed and saw nothing but opportunity ahead.
Armed with lessons learned along the way, I identified a new opportunity in 2009 to step back into the credit markets — but this time as a bank (versus a mortgage finance company) whose goal was to fill some of the voids or underserved niches in the lending markets created in the wake of the global blow-up. I found that a small player in a massive market can succeed by carving out opportunities to serve the underbanked, the underdog, fellow entrepreneurs, immigrants, seniors and others neglected by the behemoth banks. With this philosophy now part of our DNA, my new bank, Quontic, has flourished by evolving into a truly adaptive digital bank which focuses on creating and deploying innovative mortgage and deposit products designed to empower our customers by adapting to their unique circumstances. We are one of fewer than 2% of all banks in the U.S. which is designated a CDFI (Community Development Financial Institution) by the U.S. Treasury due to our mission and success in lending to low-income consumers and in low-income neighborhoods.
For example, we have designed mortgage products which help immigrants and small business owners who lack traditional income documentation to obtain home loans when other banks refuse them. Also, given that we are a digital bank without an expensive branch network, we can pay our depositors interest rates which are amongst the highest in the nation and which are many times what the big banks pay.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
I regret that I never found a mentor to guide me. As a result, much of what I’ve accomplished was via gut and trial and error. Nonetheless, I would say resoundingly that my mom, despite her lack of financial resources, instilled in me, by her example, the values and work ethic that became the cornerstone of my success. I’m sure I was one of only a few 10 year olds in our apartment complex who cooked, sewed, cleaned the apartment, hustled part-time work washing cars, selling cinnamon toothpicks and homemade slingshots in school, etc. — and, yes, also played football, rode BMX, etc.
Ok thank you for all that. Now let’s shift to the main focus of this interview. We would like to explore and flesh out the trait of resilience. How would you define resilience? What do you believe are the characteristics or traits of resilient people?
To me, resilience is an innate desire to run enthusiastically towards problems, to truly enjoy the art of solving those problems and overcoming obstacles, and to understand that when things may blow up, breakthroughs occur. For example, when a customer has a complaint, some employees avoid that call or procrastinate in responding to that email, while others eagerly say, “I’ve got this. I’ll handle it.” Or when there is a major setback, instead of seeing disaster, the resilient intuitively know that when they solve the problem or overcome the obstacle, they’ll usually find themselves in a better place. I can’t count the number of times that I’ve looked back on something that went disastrously wrong and actually said, “I’m glad that happened because look what we accomplished in fixing it.”
When you think of resilience, which person comes to mind? Can you explain why you chose that person?
Though my father has been absent from this story, much like he was during my childhood, he epitomizes resilience, and I think I might have actually inherited that genetic trait from him. My dad was a serial entrepreneur who often had spectacular ideas, but who never achieved meaningful business or financial success. He was the king of the big idea (viable ones too) but for one reason or another he failed repeatedly. What was remarkable was that every time he came up with a new idea, he went for it so enthusiastically like he’d never failed before. He habitually swung for the bleachers, struck out, and got back up to bat without any sign of having ever been defeated. To me, that was his success — and the lesson he taught.
Has there ever been a time that someone told you something was impossible, but you did it anyway? Can you share the story with us?
As a serial entrepreneur myself, my two most significant ventures were both spawned at a time when those around me told me it was a bad idea or not possible. When I set out to start my own mortgage finance business at 25, after already having been knocked down hard once, and with virtually no money, everyone said that I was undercapitalized, lacked the necessary experience and network and that I should be responsible and go back to school or get a job. I knew in my bones that I could build something great and set out to do just that. Those same naysayers were the voices I heard in my head as I was ringing the opening bell at the NYSE.
And then again in in 2009, when I set out to purchase a rescue a tiny failed bank which had only $24 million in assets (and having never even worked at a bank), I met the CEO of Valley National Bank, a $26 billion bank, who told me resoundingly that it was impossible to survive in this market and that I’d never make any money. Instead of retreating, I was more motivated than ever. I had a plan and I knew that with determination and persistence, I could build a successful bank which served segments of the market neglected by his and other banks.
Did you have a time in your life where you had one of your greatest setbacks, but you bounced back from it stronger than ever? Can you share that story with us?
As described above, I lost everything at an early age, restarted from scratch and built several successful businesses thereafter.
Did you have any experiences growing up that have contributed to building your resiliency? Can you share a story?
When I was a kid, my mom worked full time to provide for me and my brother. This left me largely unsupervised during the day. I made a lot of bad decisions as a child, skipped a lot of school, had a handful of juvenile legal scuffles and was headed in the wrong direction. My parents didn’t go to college, but my mom beat into our heads that we had to get good grades and go to college. She knew that this would open doors that weren’t open to her and there seemed to be nothing more important to her. She was relentless in delivering this message — and it stuck. Despite a handful of juvenile delinquencies, I managed to keep up my good grades and get myself into a decent college, UF, where both my bad decisions and my good grades persisted. My senior year DWI arrest was the ultimate wake-up call. Given my prior juvenile missteps, I feared that the judge might not be sympathetic. If this DWI resulted in any time in jail at all, I’d miss exams and not graduate. I was scared to death that was self-sabotaging any chance I had of building a life for myself.
A decision was made. Be deliberate in my behavior, make better and more thoughtful decisions, exploit my own competencies and be relentless in pushing myself towards my goals whatever they may be. Basically, I had to find the discipline and resilience to overcome my own bad habits and move forward despite my having no idea what the future held.
Resilience is like a muscle that can be strengthened. In your opinion, what are 5 steps that someone can take to become more resilient? Please share a story or an example for each.
1. Have goals. Work to understand what drives or motivates you.
2. Own and embrace your weaknesses, your circumstances and your insecurities and understand that none of this defines what is possible for you. Every human has challenges, to varying degrees, but most great successes were achieved despite challenges and long odds.
3. Internalize success and failures the same. Don’t let setbacks set your mood or impact your enthusiasm. My wife once criticized me in saying, “Nothing ever bothers you!” — like that made me unhuman. It was hard for me to explain that I EXPECT problems. I EXPECT unforeseen obstacles and I EXPECT setbacks. I know that they are part of the process, part of life and part of what I will always need to deal with to grow. I explained that it takes great resilience and discipline to push through problems without breaking down or quitting and that I am proud that I’ve built this core capability. Now, when problems arise, as they always will, dealing with them is routine for me.
4. Learn to identify the upside in bad situations. The most resilient business people and leaders, in my experience, innately handle challenges and setbacks as opportunities. Innovation occurs when there are setbacks. Problems force new processes. Key resignations create openings to find great new talent. Product defects force better quality control. Bad customer reviews force better training and culture building. Financial losses force cost control and efficiency.
5. Be persistent and determined, but also know when to pivot. Your original plan may, in fact, not have been viable, so don’t be afraid to tweak, reinvent and reposition.
You are a person of great 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. 🙂
I have always gone out of my way to help people whenever asked. I enjoy giving advice or providing internships or jobs to young kids who show promise; and I never hesitate to tap my network to hook young people up with opportunities. While this is nice and productive and rewarding, it doesn’t cut to the heart of the income and opportunity disparities that plague this country. The people in my network likely need the least help demographically speaking. On the other hand, it is the most underprivileged kids who are being left behind and have the least opportunity. My eyes were opened to this when I met a fascinating young woman named Liz Murray. Liz was homeless as a teenager but found her way to Harvard largely as the result of a caring mentor who guided her and helped her see her own value and recognize her own potential. I now sit on the board of the non-profit co-founded by Liz called The Arthur Project (Arthur being Liz’s former childhood mentor). The Arthur Project’s mission is to provide the most at-risk middle school students with an unprecedented type of intervention through intensive mentoring.
In short, you or I may not cure cancer, save the whales, stop global warming, cure world hunger, etc, but our kids just might! The problem is that nearly one in five American kids live in poverty and will likely never break out of their current circumstances or get a chance to be part of the solution, so to speak. My prediction is that the kids we’re mentoring in The Arthur Project will, like Liz, be the most inclined to pay it forward and help other similarly situated underprivileged kids. This can help break the cycle. So as business leaders, let’s look in the least likely places lend a hand. Let’s be more deliberate in finding opportunities to mentor, assist, employ and provide opportunities to the most at-risk young people. It will make a difference.
Thank you for all of these great insights!
Rising Through Resilience: “Be persistent and determined, but also know when to pivot” with Steve… was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.