clock menu more-arrow no yes

Filed under:

Menlo Smith: A man who will loan you the shirt off his back

Menlo Smith, co-founder of Mentors International
Menlo Smith, co-founder of Mentors International
Mentors International

It would have been so easy — not to mention so very much cheaper — to just write out a check.

But all his life he’d lived by the principle that a handout isn’t a hand up, so when the overtures for money came from the Philippines after he’d spent three years there as a mission president for the LDS Church, much as Menlo Smith’s heart wanted to say yes his head said no.

But the cries for help weighed on him. He’d seen firsthand the vise-grip poverty had on people in the Philippines, the way it kept them perpetually locked into their misfortune. One day when the St. Louis businessman was in Salt Lake City visiting with church authorities, he talked to Elder Dallin H. Oaks, a member of the Quorum of the Twelve and a former president at Brigham Young University, about the conundrum of extreme poverty in developing countries and what might be done about it.

Elder Oaks had a suggestion. Why not run it by BYU’s Marriott School of Management? There were people there who might be able to help.

Smith called Paul Thompson, then dean at the Marriott School, who put him in touch with Warner Woodworth, a professor specializing in organizational behavior, and Steven Mann, like Smith a successful businessman eager to participate in a worthwhile cause.

The plan the three came up with was a micro-credit approach: offer small, low-interest loans to fledgling Filipino businessmen (and women) and include as part of the deal, absolutely free of charge, a mentor who would help them manage their money. Theoretically, this would ensure three things:

They wouldn’t treat their loans like income, as so often happens.

They would instead learn to apply basic sound business principles so their businesses would grow, they would put more bread on the table, send their children to school, and break the cycle of perpetual impoverishment.

They would pay back what they borrowed.

Woodworth and BYU agreed to send grad students to the Philippines as loan officers/mentors while Smith and Mann agreed to fund the project.

The first micro loan was made in the Philippines in 1990. Since then, Mentors International — the stand-alone organization that grew out of that initial enterprise, with headquarters today in Draper and offices in five developing countries (and no further BYU affiliation) — has loaned over $60 million to help more than 3.3 million people grow their businesses and escape the clutches of poverty.

Know what the rate of return on those loans is?

Ninety-six percent.

As Menlo Smith would be the first to point out, he still hasn’t handed out a dime to anyone.

To understand how he became the great crusader against Third World poverty requires a trip back to a time when poverty was all Menlo Smith knew.

He was 2 years old in 1929 when the stock market crashed, erasing fortunes and dashing dreams overnight, among them J. Fish Smith’s hope of becoming a farming economist. J. Fish was Menlo’s father. Shortly after Menlo was born, he had resigned as superintendent of schools in St. David, Arizona, and gone back to college at Texas A&M, where he earned a master’s degree in agricultural economics. He and his wife Lillian and their five children — four daughters and Menlo — were plotting their bright future when the Great Depression rendered the job market for farm consultants, and most everything else, non-existent.

With nowhere else to go, they first moved in with Menlo’s grandparents on the family farm in Colorado. Then a cousin in Salt Lake City invited J. Fish to join him in a business venture, which brought the family to Utah. The cousins soon split up the business and went their separate ways, leaving J. Fish Smith with exactly one product to make and market to keep the wolves from the door: a sugary powdered drink mix called Frutola.

At the age of 9, Menlo went to work alongside his four sisters pouring Frutola powder into small paper packets — the company assembly line as it were. When he wasn’t doing that he was sweeping floors, stacking boxes, delivering product, whatever it took.

Over time, children became Frutola’s top consumers as they discovered that the drink mix made a tasty treat when they poured it in their palms and licked away. J. Fish changed the name to Lik-M-Aid and marketed the product as penny candy.

Lik-M-Aid’s popularity grew during and after the war years, to the point that Menlo, after graduating from the University of Utah — where he met his wife Mary Jean — was motivated to take the business national. While his father remained in Utah to run the Western distribution, he and Mary Jean moved to St. Louis in 1952 and started the Sunmark Company. There, in answer to complaints from moms that the candy was too messy, they developed Pixy Stix, a candy-in-a-straw version of Lik-M-Aid.

Next, Menlo and Mary Jean discovered that their next door neighbor happened to be the owner of Tums, the company that makes bite-sized acid indigestion tablets.

Menlo took his candy powder to the Tums factory to run it through the presses and see if it could also be made into bite-sized tablets.

It could. The latest greatest version of Lik-M-Aid was named SweeTARTS.

Soon enough, SweeTARTS and Pixy Stix were on candy shelves all over America.

Dozens of other product lines were added, including Tangy Taffy, Nerds, David’s Sunflower Seeds, and the Willy Wonka brands, until Sunmark, which at its height employed more than 1,300 people, was sold in the 1980s to the Nestle Company for more money than the Smiths of the Great Depression ever knew existed.

As he was becoming a titan of American commerce, Menlo Smith’s life doubled back on something his family had long ago left behind: The Church of Jesus Christ of Latter-day Saints.

The church figured prominently in his heritage. His great-grandfather, Jesse Nathanial Smith, was first cousin to Joseph Smith, the founder of Mormonism. Jesse Smith was a boy when the Latter-day Saints were run out of Illinois and he ran with them. He later, at the bidding of Brigham Young, helped found and settle the communities of Parowan in southern Utah and Snowflake in northern Arizona.

But for whatever reason, Jesse’s grandson Joseph Fish Smith, born and raised in Snowflake when his grandfather was still alive, drifted from activity in the LDS Church, to the point that when his son Menlo came along, the family had no association with the church whatsoever.

Growing up in Utah, surrounded by Mormons — many of whom he could plainly see were less than perfect — only strengthened Menlo’s biases against the church.

But in St. Louis, he had a change of heart. The social unrest of the 1960s prompted in him a spiritual revival and he went about looking for a church to satisfy his spiritual needs.

Long search story short: the one he found was the one his dad had left.

In 1972, at the age of 45, he was baptized into The Church of Jesus Christ of Latter-day Saints.

By 1982 the church called him to serve as president of the Philippines Baguio Mission.

It was there that he found himself immersed in some of the most profound poverty on Earth.

Many people in the Philippines don’t live day to day, they live meal to meal. Beggars are ubiquitous. Cardboard refrigerator boxes double as houses.

There wasn’t much Menlo could do about secular problems while he was guiding the mission, but after his three years were over, he desperately wanted to do something to help alleviate the suffocating poverty he had seen.

But what? And how? Everything he knew about making ends meet — from watching his father manage the family business during the Great Depression, from running a business himself with more than a thousand employees — taught him that assets can only be properly managed when there is accountability involved.

Giving aid and money without accountability would change nothing.

As well as anyone, Menlo’s son, Drew, knows his dad’s mindset.

Drew was 13 years old when a friend let him ride his new Honda mini-bike.

“I thought it was the coolest thing on the planet,” he remembers. “I went to my dad and told him how bad we needed one. He said there wouldn’t be any motorcycles in this house. He knew someone who had been in a serious motorcycle accident and he wanted no part of one.”

Drew was undeterred.

“I went to work to show him how much I wanted that mini-bike. I pulled out the lawnmower and mowed lawns in the neighborhood. I got a job as a busboy. I opened a savings account.”

After a year and a half he had saved $235 and talked his dad into going with him to the dealer to price the bikes. The price tag was $275 but by the time they were walking out of the store “he had the guys down to $254,” recalls Drew. “I remember thinking, ‘You can negotiate for this stuff?’”

With taxes, Drew was still $35 short, but a few days later his dad drove home, tossed him the car keys, and said there was something for him in the trunk. When he opened it, there was his Honda mini-bike.

“But I was still on the hook for the 35 dollars. My dad drew up a contract that set down all the rules, I couldn’t ride it on the road, I couldn’t ride after dark, and all that. And I had to make $2 a week payments until it was paid off. If I didn’t do that I couldn’t drive.”

Years later, from the vantage point of adulthood, Drew says, “It was the best life lesson I ever had. I learned about hard work, saving, discipline, negotiating, loan agreements, accountability. All those important life skills.”

He also learned that his father wasn’t as intractable as he thought.

“I let him ride the mini-bike,” he says. “And he said, ‘Oh, this is pretty fun!’ and that began a friendship in life of riding motorcycles together that has lasted for 35 years. We worked up to dirt bikes and street bikes and then some Honda Gold Wings that we rode all over the country.”

Drew watched his father apply the same principles he used with the mini-bike to Mentors International.

“After my dad’s mission he seriously studied the issue of poverty,” says Drew, a successful businessman and humanitarian in his own right who has served for many years on the Mentors International board. “He looked at all the aid that is typically handed out, in housing, water, medical care, transportation, or whatever, and what he figured out is that when you economically empower someone they solve all those issues on their own. When you provide people the mechanism to stand on their own feet they take care of themselves.”

On Friday, Oct. 10, at the downtown Marriott Hotel in Salt Lake City, the man who gave the world SweeTARTS and Mentors International was the guest of honor.

It was not Menlo Smith’s idea.

“Last thing he’d want is the spotlight,” says Mark Petersen, president and CEO of Mentors International. “We had to talk him into it.”

The occasion was the Annual Gala, Mentors International’s yearly fundraising banquet. They went all out this year to celebrate the nonprofit entering its 25th year of doing business.

“We really want the man who started the organization to talk about why he started it and what he feels the impact has been over the last 25 years,” says Petersen. “And we want to honor him. That’s so important to us. Here’s a man whose only goal was to do something that would make a real difference in people’s lives, to find a way to help people help themselves. Because of his efforts there are so many people who have risen above their circumstances. I know people who have been with our organization for 5, 10, 15 years and more who are still receiving loans and still growing their businesses and helping their family members finish their education and find good jobs themselves — all because Menlo made his decision.”

A decision, Petersen notes, unerringly based on “Menlo’s strong belief that a free exchange doesn’t benefit anyone.”

He could have helped a few, for a few minutes. But he had other ideas.

The millions Menlo Smith has touched have no inkling how lucky they are that he didn’t just hand them money when he was first asked, and walk away.