Driving Economic Empowerment and Financial Inclusion at Square

Who: Samantha Ku
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What: Chief Operating Officer at Square Financial Services 

Why: Samantha joined Square in 2015 as the first operations hire for Square Capital. A lot has come to pass since then and she has gone on to become the COO of Square Financial Services, after pioneering Square’s efforts to become a bank. What hasn’t changed? Samantha’s and Square’s commitment to economic empowerment and financial inclusion.

 
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We are incredibly excited to have Samantha Ku as our featured operator for this piece. She joined Square in 2015 as the first operations hire for Square Capital, Square’s lending product for sellers. Over the last seven years, Samantha has driven hypergrowth, spearheaded national and international expansion, and built out impressive functional teams across the organization—including Customer Success, Credit, Servicing/Collections, Independent Risk, and Strategy/Business Intelligence. Most recently, Samantha helped propel Square to be the first ever FinTech approved by the FDIC for an Industrial Loan Charter, and then launched its bank, Square Financial Services. This is all the more impressive when considering how much of this took place during the challenges of the COVID-19 pandemic.
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Samantha’s Path to Square & The Early Days of Square Capital

Samantha started her career as a banking analyst at Citi in NYC. From there, she moved to San Francisco and worked at First Republic Bank for two years. While at First Republic, she was recruited by Square to build Operations for Square Capital, which was an idea that originally came out of a hack week project that explored how they could use existing data to expand financial access to their sellers.

It was an evolution to get to the point where Square Capital is today—a proactive loan application experience that feels as simple as the click of a button. Before progressing to loans, they started off only offering merchant cash advances (MCAs), and over time slowly began widening their risk sandbox to find the right balance between mitigating risk and reducing customer friction. Applications went from being 100% reviewed by one person (Samantha) to having the majority of applications be streamlined with the help of automation.   

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The massive organization that is currently Square Capital had humble beginnings. Their first loan was to a hair salon that was installing a new styling station, and the Capital team actually physically drove to the salon to have the loan agreement signed. The team was small enough during those days that Samantha could directly email the sellers they worked with (something that doesn’t occur often today). For Samantha, it’s fun to look back on those early innings where she interfaced more directly with the individuals and businesses Square was supporting. 

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The Importance of Economic Empowerment

The commitment to economic empowerment and financial inclusion is a big part of why Samantha loves what she does and is so proud to work at Square. Samantha’s parents are immigrants who owned and operated a small business in Green Bay, Wisconsin. One thing that was always hard was money: how to manage it, how to smooth cash flow, and who to trust. Square¹ serves an underserved population, many of whom are not even recognized as small businesses² by traditional financial institutions. 

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They are taxicabs, hair stylists, bodegas, etc., and this segment’s access to business financial services is severely limited. Square's goal is to ensure businesses have easy access to the sophisticated tools and services that Samantha's parents didn't, making it easier for entrepreneurs of all sizes to participate and thrive in the economy. A great example of Square’s ability to reach the underserved is its lending program: 51% of Square Loans go to women-owned businesses, compared to the industry average of 17%; 32% go to sellers that identify as business owners of color, compared to the industry average of 27%³. 

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In Samantha’s seven years at Square, their north star has stayed true. Square’s response to the COVID-19 pandemic is testament to that dedication. The company facilitated roughly $1.5 billion in PPP loans to more than 80,000 businesses across all 50 states through both rounds of government intervention, making a material impact on small businesses. 

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Uplevelling: Becoming a Bank

Running a business is hard, and SMBs generally operate with thin margins. Square’s banking efforts are all in an attempt to better serve their needs. Their small business sellers do what they do best—running their businesses—while Square handles everything else. Square automates as much as possible so customers can easily get a loan offer matching their cash flow. From there, all they need to do is click a button and see the funds as soon as the next business day. 

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After working with a bank partner for many years, Square decided to apply to become a bank in order to increase speed for its customers and optimize for the long-term value of having its own banking license. They knew it would be a long road from application to approval—they were the first to do it in over fourteen years, and the first FinTech to receive an Industrial Loan Charter. Everything approved by the FDIC would set precedent for future applications to come. The application ended up taking over three years, but Samantha thinks they were successful because they had built the right foundation from day one and approached the process with a regulation-first mindset.

The team set operations standards as if they were a bank well before they actually decided to apply, including setting up the Three Lines of Defense model, having well-documented procedures, testing, results, etc. Even beyond that, they retroactively reviewed high severity incidents and regularly tested and monitored in partnership with their compliance team. They were transparent with partners and regulators about the safety and soundness of the business. They pushed where they needed to in order to stay innovative and true to their mission, but acted as partners the entire time. Foundation building will never be “complete” as they continue to enhance and improve, especially as the regulatory environment evolves and the macro environment shifts.

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Strategies Samantha Lives By

• Invest in People: Hire people with as much character as they have talent, and invest in their career growth even if it doesn’t directly benefit you, your team, or the company. Lead by example, including emphasizing personal and mental wellness. Create and maintain a culture of trust, transparency, and collaboration—and one that allows for divergent opinions. 
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• Trust & Empower: As COO, Samantha spends most of her time in the micro part of the business—how the ecosystem is working and how the team is feeling. It’s important to be able to trust that you’ve hired the right people to do the job, and then give them the space to actually do it. As a leader, Samantha doesn’t think she should be an expert in everything (or even most things) in scope. To optimize effectively, leaders need to empower individuals to take ownership.
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• Prioritize Ruthlessly: Time is the only asset you can’t get back, so be deliberate and purposeful with how you use it and who you spend it on. Use quantitative and qualitative data to inform a roadmap and identify trade-offs based on whether it adds to the strategic value. Say no when it doesn’t make sense, but, after you disagree, fully commit to the task at hand so that you progress. Be nimble and pivot easily. 
• Measure Twice, Cut Once: Use quantitative and qualitative data to identify the exposures, goals, and requirements for decisions and investments. Phase rollouts, and pragmatically establish signals and proof points, to define success. 

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Samantha’s Career Advice

It’s okay to not always be climbing. Samantha shared that throughout her career she always felt like she needed a big next step. She became a parent last year and for the first time, she wanted to slow down, be in her role, do it well, and be present. In her book, Radical Candor, Kim Scott discusses superstars (high performance with rapid growth) vs. rock stars (high performance with gradual growth). Samantha has always used this thought process in managing and supporting her own teams, but never for herself. Now, for the first time, she is cultivating her own career as a rock star for a while, and making time to celebrate victories, both big and small. 

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^{1. Square, Inc. (NYSE: SQ) rebranded to the name Block in December 2021.The name change to Block distinguishes the corporate entity from its businesses, or building blocks. The Square name has become synonymous with the company’s Seller business, which provides an integrated ecosystem of commerce solutions, business software, and banking services for sellers, and this move allows the Seller business to own the Square brand it was built for.}

^{2. To put this to scale, the IRS recognizes small businesses as having assets up to $10MM.}

^{3. Industry averages are according to SBA 7(a) Lending Statistics for Major Programs as of 2019. Square data comes from a 2021 internal analysis}