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In this episode of the Faith Driven Investor Podcast, Richard Cunningham and Luke Roush interview Jason Illian, the founder of Highmount Capital. 

They discuss Highmount’s recent investment in Dude Perfect, a popular content creation group known for their Youtube channel and live shows. 

Jason shares his background and the importance of family in his life. He also highlights the trust and influence that Dude Perfect has built with families and the potential for future growth and expansion. The conversation explores the business model of content creation and the impact that faith-driven investors can have on culture through their capital.

Episode Transcript

Richard Cunningham You’re listening to Faith Driven Investor, a podcast that highlights voices from a growing movement of Christ following investors who believe that God owns it all and cares deeply about the heart posture behind our stewardship. Thanks for listening. 

Hey everyone! All opinions expressed on this podcast, including the team and guests, are solely their opinions. Hosts and guests may maintain positions in the companies and securities discussed in this podcast is for informational purposes only, and should not be relied upon as specific investment advice for any individual or organization. Thanks for listening. 

Richard Cunningham Luke, we are not in a habit around here of power ranking, faith driven investor podcast guests. You know, the Lord has brought so many special people into the fold over the years of us getting to do this and just hearing their stories has been wild and overwhelming. Just to see God’s work across asset classes and different types of investments. But I will say, when we’re used to talking about public markets or stocks and bonds and real estate, what have you. It’s going to be really fun today to say we’re talking trick shots with our guy, Jason Ilion, who just made a significant investment into none other than dude perfect. And so Luke, how are you, man? What a joy we’re getting to do this today. 

Luke Roush I look forward to talking about every investment. But as you said, there’s certain ones that are created unequally in terms of their cool factor and their fun factor. And this is absolutely one of those for me and for you. 

Richard Cunningham Absolutely. And we’re both a bunch of, sports lovers, has been athletes. Luke played football at Duke. I played baseball at Baylor. Jason Elion, who’s with us, was a former TCU football player himself. He’s a two time successful tech founder, former managing director of Cook Disruptive Technologies, which is the multibillion dollar venture and growth arm of Cook Industries. And cook is the largest privately held company in the US. But he’s recently gone on to start high amount capital and kind of the, you know, flagship significant headline has been high amounts recent investment into dude perfect. So Jason alien from Wichita Kansas. Welcome to the Faith Driven Investor podcast man. Great to have you. 

Jason Illian Thanks, guys. Thanks for having me. And by the way, I am so glad you don’t have power rankings because like, dudes would be really high and I’d be really low on the power rankings. So like, it’s good that we’re not doing this and we’re letting the board guide us on how we do this. 

Richard Cunningham I love it. Well, folks, also, if you if you pick up any hostility in the pod today, it’s because I mentioned I’ve got the love for the Baylor Bears. Our actual most recent FBI podcast guest of guide Stone, Brandon Pizarro, is a Baylor bear. Luke’s son, Sam, who was a football player at Stanford, opens up the season against the TCU Horned Frogs, who are the biggest rival to the Baylor Bears. So if you’re picking up any hostility at all, it’s because we’re inviting Jason on to kind of hear the other side of the aisle today. 

Luke Roush Tag team Richard, for once, you and I are on the same side of the table here with respect to college loyalty. So, you know, man. 

Jason Illian That’s okay. And I’m willing to speak slower for my Baylor Bears that are listening. That’s okay. So we can help them all out. It’s so good. 

Richard Cunningham Well, Jason, maybe before we get into him, out in the in the background of him. Out and like, the the investment, dude. Perfect. Let’s hear a little bit about you and some of your backstory. The way the Lord’s worked in your life and your family, and kind of because I know it has key significance into why you’re up to what you’re up to today. 

Jason Illian Yeah, yeah. Well, thanks for having me on the show, guys. It’s good to see you again. You know, when we talk about what we’re up to, it always. For us, it always just starts with my family. I’m exceptionally blessed to have three incredible kids. Reign, who’s 16 and a sophomore quarterback. As we’re talking sports. He’s a quarterback this year. We’re excited to see him, be at the varsity level. My daughter sage is 14 and she’s playing volleyball and beach volleyball and had a lot of success the summer on the beach circuit, winning a few national tournaments. And then my youngest, who’s his name’s rogue, and we gave him the name rogue, as in set apart for the Lord. Right. And the man is exactly how we named him, right? Be careful how you name your children. But rogue is awesome, and he is one of these guys that just completely on on fire. And the way we we keep kind of these, these three Power Rangers, point in the same directions because I married up and I have in my coverage with, Alicia, who’s my wife, and we’ve been married now about 17 years. Absolutely love of my life. She’s incredible. She is, not only the mom and kind of the CEO of our household, but when she’s not doing that, she’s also done some speaking and writing. In the Christian space, her heart is really for women’s ministry. And so that’s kind of the beginning and really the foundation of all that we do. And, you know, one of the thing that’s really important to us and then, you know, we can hit on this later if you want as well. But I will say more that I’ve learned kind of being in my career in finance as an entrepreneur. I can tell you neither of those things go well if things don’t go well at home. Right. And as I’ve learned that many things in life in our culture would be in a much better position if dads would first and foremost focus on running their families. Right? And if we lead our families well, then we can leave our our jobs and our corporations and our entities as well. And I haven’t always done that perfectly. In fact, I don’t do it perfectly to date. If Alicia was on here, she could fill you in on that. But it is become more and more of a focus for my family specifically, is how do we lead our three kids well and our family? Because that’s really what’s creating the next legacy and culture of companies and things that we invest in and, and places we go as a country. 

Richard Cunningham And that’s good stuff. I love hearing that, and it’s evident hearing you talk about your children, just the passion and the heart you have for them. Love the sports background as well. So you can kind of hear this story crescendoing as it reaches the dude perfect aspect is that it sounds like Team Alien, similar to the. The Roush family has just a deep passion and love for sport. So maybe give us some of the the high mountain background and at the same time kind of the dude perfect. And how these two kind of came on a collision course. 

Jason Illian Yeah. So, as you mentioned, beginning, you know, I started off as an entrepreneur myself, started a couple software companies and sold them. And then in 2017 ish or so, Coke Industries asked me to come up and help them build their growth and venture arm. And so did that for about seven years. And, you know, the the real blessing of being a coach for that time is when you have nearly unlimited capital. You get in a lot of very cool meetings and you get a chance to learn a lot. Right? So we had the real privilege of building a pretty tremendous network of VCs, family offices, entrepreneurs, all sorts of incredible families and groups, mostly domestic, but some all over the world as well. And by the time I’d left Coke, I think we, you know, we’ve had roughly $3 billion or something that we put to work, ranging from smaller investments of kind of five to 10 million to 3, 4 or $500 million investments. And, my wife and I, at that time, it just felt led that God was taking to somewhere else. And so we kind of stepped out in faith and started high capital and did that with two other partners. One of them is a gentleman by name, Dave David Hawkins. And, David’s in New York City. He’s an elder Redeemer Church, but he also has a background as, kind of a classically trained investment banker and investor. And so he was an early investor in Alibaba and Airbnb and Open Door and some really well known companies that you would know. But he also just thinks from a biblical framework. Right. And so that’s how he put it together. And then the other gentleman that’s with us is Scott Flukey. And Scott is our CEO and general counsel. And, Scott was a coach for 25 years, was about to retire. His team was overseeing most of the transactions that happened at Coke Industries. And that says a lot because we did a lot of transactions there. And he just joined our team and said, hey, this is really where my heart is. And so that was the genesis of came out and I out. It’s been around is as a firm for about 18 months now. So going on two years and you know I can talk about you know, where we kind of play in the investment space. But the easiest way to say was like, we were really looking for high performance teams that are in the growth mode and early middle market private equity space, where we can come along not only as capital but as a true partner to invest in their firm, to come along and say and say besides capital and everybody’s money is green, how can we really help you grow? And we do that from putting frameworks and for us, you know, biblical frameworks in place of how do we think about growth and how do we think about, you know, aligned vision and values and complementary capabilities. And if you do those things and then you align incentives, you don’t guarantee success, but at least you help put these companies in position that they can be successful. And that’s really the heart of human capital. And, that’s really what we were doing when we ran into dude. Perfect. 

Luke Roush Maybe talk a little bit, Jason, if you wouldn’t mind. So that’s phenomenal background. And, you know, deals are a product of, circumstance, timing and, and in fit, maybe talk a little bit about how that deal came together. What got you excited about it? What? You know, where are you going? 

Jason Illian Yeah, yeah. You know, one of the things we talk about a lot of high amount is we think and frameworks and mental models, right. Of like, how do you do things so things aren’t equations. But they’re like frameworks. And we actually have a framework we think about on relationships too, because at the end of the day, we can all only have so many close friends. So we kind of have a framework that we think of, of like, you have your, you have your community, you have your network, and you have your ecosystem, and your community is like your top 20 or 25 people in your network or 25 in your community, that when they call you, you automatically pick up the phone. So, you know, Luke, as an example, you’re you’re in my community. Like, if you call me on something on a deal, I’m going to call you back that same day or text you right back, because I trust you’re not going to just be lobbing junk over that fence to me. Like I trust we built an up relationship, that I know that whatever you’re sending me, I need to spend time on. And so we built up this. There is certain relationships that we know that we trust right away. And then there’s a network of people that we’re getting to know that may be part of our community. And then there’s the ecosystem that’s everybody else that we’re still trying to get to know and spend time with. But we can’t all have 500 best friends, right? We just can’t do that. And so the dude perfect opportunity came through our community, right? We had somebody in our and that was close to us reach out and say, hey, the dude’s they’ve grown this tremendous business and would you mind talking to them? But they’re they’re going to raise some capital. And would you guys might talking them help them think through how they would do that? And frankly, we didn’t go into this thinking we were going to be the investor. We did came into this with kind of a, you know, give first mentality of like, how can we help these guys? We love what they’re about. We love what they’re doing. My kids love to be perfect. If nothing else, that’ll help my street cred. That night at dinner to say, hey, I talked to the dudes guys, right? And so like, hey, let’s just talk to them. And it was through that conversation that we begin to realize, wow, they have something really special here. And that kind of kicked off the dude perfect relationship. 

Richard Cunningham That’s awesome. Yeah. Henry talks about often here. When Lecrae wrote the forward for faith driven entrepreneur and, you know, Henry Kissinger, of course, co-founder of Faith Driven Investor alongside Luke Sovereign’s capital alongside Luke, he said, having Lecrae right it up to street cred, through the roof. And so I can imagine rain, sage and rogue when you’re coming home talking about happenings at Dude Perfect, you’re like, all right, Dan, I’ll listen a little bit differently. 

Jason Illian Yeah. I mean, you don’t you don’t get that right when you talk about a sass company, right? I mean, the business side, they’re just kind of like phase. Yeah. They like hey, today we talked about dude perfect. And all of a sudden they’re like, did you meet the dude? How many dudes were on there? And at that point, like, I didn’t know the dudes as well as they did, right. But honestly, the the great part about that is it started to help us understand the type of, pull that the dudes really had with families and with kids across the country, and we can talk through all sorts of diligent stuff. But I would say the main thing that came out of all of our diligence is I have never seen a group that has built this much trust with families. Right. Usually you have, a lot of trust with a small group of people or you have, you know, a little trust of a large group of people. These. Guys have a lot of trust with a lot of people. And and it’s not just the kids, it’s the families too, because they’ve spent literally 15 years building it up. And so everybody can say, hey, this is an overnight success. But it really wasn’t right. These guys started taking trick shots at A&M. Never really thought this would become something. And as they tell their story, there were many years that they weren’t even doing this full time, right? They all had to quit their jobs. And you know, Tyler, who’s kind of the lead character at times, he’d tell you, like, I thought I was going to work in the lawn business, right. Like, and can you imagine seeing Tyler come in in your backyard, mowing your lawn when you see what he does on camera? And and so it wasn’t an overnight success at all. They spent this time building this up, and they had to make a lot of hard decisions, like quitting their jobs when there wasn’t enough money there for turning down the adult beverages who wanted to advertise because that’s not what they believed in. Right. And so all these steps along the way kind of brought them to a point that they thought, hey, we now need some partners alongside us to help us grow. 

Luke Roush I’ll tell you, as a TCU grad, it’s very magnanimous of you to build a bridge to, College Station. That’s really generous of you. 

Jason Illian Yeah, we all need to show grace. We all need to show grace wherever we can. Just like to the Baylor side. But listen, I mean, the great thing about what these guys did it. A&M, and these, these five guys in general. Right? All of them is they wholeheartedly care about people. I will tell you, like in the diligence process we go down a dude perfect headquarters in Frisco, Texas. And it’s not open to public. Right. It just says dude perfect on the building. But there’s not there’s not retail or anything there will be in our new headquarters, but there isn’t the current one. And people will literally stop to just wait to see if the dudes will come out. And we came there one day and there was a family that showed up there, and the dudes came out because they saw him on camera. They came out and were signing autographs and talking to them. This family was from Australia. They flew into the States to be in Florida. They were on their way to California, and the only reason they stopped in Dallas was to stop by Dude Perfect headquarters in hopes that somebody would come out and say hi. Like, I’m like, are you kidding me? Like, I would never stop with my whole family of six people and a totally different city to look at a building and hope that people come out right. But that just shows you how much this family has learned to trust the dudes and what they’re doing and what they’re building. And I think that goes far beyond trick shots. I mean, we can talk about it as trick shots, but it goes it goes far beyond that. When you when you start to build that kind of relationship and trust with the people that listen to you. 

Luke Roush Maybe some things, that as you’ve gotten to know their, operations from a business perspective, anything that, was surprising to you, I mean, obviously tons of trust with tons of people, I think. I love the way you said that, Jason, but what else? Just about actually the business model of what they have built. Love to get your insight on that as an investor. 

Jason Illian Yeah, there’s 2 or 3 things that were really interesting, outside of the numbers, and we can talk about that too. But one was they literally have built a very highly profitable business with the five guys and a business manager. Right. That’s about it. Like they have some other people filming and working behind the scenes, but they did not build this, you know, heavy front end executive team that was out selling. Almost everything that they done had become incoming. They were being very reactive, but because they had built so much trust and had taken the time to do that. Big brands, big sporting teams, you know, right after Scottie Scheffler wins the Masters two days later, where’s he go? He goes up to the perfect headquarters, right? Like like that’s normal. That’s not normal. Like you just won the Masters. And now he won a gold at the Olympics, right? But that’s the kind of trust that they built. So one, just building this with a really small team. And then the second piece, which I thought was really interesting, is when you talked to the dudes, they made some decisions really early on, to be all equally in this together. Right. So they all shared this, they all shared the same incentives, and they also put some boundaries around things we will do and things we won’t do. And so if you watch the Olympics this year, you saw that like, hey, Snoop Dogg was all over the Olympics, right? Which is interesting because Snoop, Snoop Dogg was a heavy rapper that was using every word that you would not want to share with your kids 15, 20 years ago. Right. He’s made a shift to this space, but the dude’s always started from this space one because they’re believers and Christians and said, hey, we want to have an influence in this space. And two, they said, we also want to just create content that the whole family can watch and feel good about and not just watch, but hopefully go do stuff like they just want people to put people in screens there, like put them in screens, but then will they go play in the backyard? Can we bring toys to them? Can we do things to get them to interact? And, I can tell you, because we just talked to Disney on this and some other large brands, but they’re all asking, how do you do this? Like these other brands are now asking, how do you do this? Well, because this next generation that grew up on phones like these guys, our kids are digital natives, right? Like if they can swipe through phones, by the time we can turn ours on, right, the dudes can talk to this audience really well, and other brands are trying to figure out how to do that. So they’ve they’ve made some early decisions, Luke, on building their business. And at the time it wasn’t even a business. It was just how do we have influence? Well, that have allowed them to now create the business aspects of that. And the business aspects are now like, how do we do videos and content? How do we do product, how do we do merch like it’s grown? But from day one it was like, what’s the core? And and who are we in that core? And they’ve stayed true to that pretty much every step of the way. 

Richard Cunningham That’s great. Yeah. My wife and I have been on a journey this summer, a little bit of kind of leaning into and almost like deconstructing you know some of those bigger kind of. What is that word I would look for, like existential type questions. And one of the things we’ve kind of gotten back to is like the identity piece. And we found Jamie Winship, who’s got this great book called Living Fearless. And Jamie talks about leaning into your identity. And, and there are some things about you, probably as a young kid that reign true now and today. And so for me, I love sports. I love to compete, I loved organized competition. And I think of the dudes. And Jason, you mentioned it earlier. Could you imagine Tyler mowing your backyard? Like I’m sure he would do it with incredible excellence with a smile on his face. But I think of their particular work as one where I’m like, I see guys stepping into their identity of who they are, like just authentic goofballs who love sports, who are dynamic, who are using it as a platform for Jesus. And they’re working out of kind of that true identity, if you will. And that authenticity as you’re talking about is catching on. So and so you’ve come in a time out, you’ve got this incredible amount of influence as candidly, a very large check that has come to the door, that’s helping shepherd the next generation of dude. Perfect. Where is this thing going? Like, what do you have envisioned for what is next? What does the team have envisioned for what’s next? And teased out a little bit, but kind of what what do you think it’s all going to look like in this next generation? 

Jason Illian Yeah. So like we said, the dude started with just the five guys. And really what it’s become is more of an ethos, right? It’s a dude perfect ethos. And when you even run into, you know, pro athletes, they’ll stop the dudes and say, like, my kids love you and we want to do this. And we have to all agree, even as dads, when you see the dude stick a rocket in a football and throw it, 300 yards are precise. Oh, I could do that. Like we were even drawn in that, like the fact that this is fun and it’s sports and it’s family oriented. Right. And so what’s happening is it’s starting to merge where you’re getting pro athletes want to participate in pro sports teams wanting to say, hey, we want to take the helmets off. Our guys and the dudes leaning into that and family’s leaning into that. And so it’s really becoming an ethos so that the next step is to say, hey guys, you built it to this point, and now there’s some really massive partners that want to partner with us. How do we take that to the next level, where we can do more content and bring on potentially even other dudes in other areas that can participate? And I often think of it almost like, a WWE model where, you know, it used to just be like, Hulk Hogan was the cool one, but over time you have all sorts of people that are participating, and I think that’s what Dude Perfect is becoming. It’s becoming an ethos that it doesn’t matter whether it’s football, basketball, cricket, beach volleyball or whatever, how do you make it fun and how do you get the family to participate? And that’s really where the dudes were saying, hey, we’re at a high level. How do we take this to a legacy level? And in all fairness, like we were not by far the largest investor at the table, there were 2 or 3 other very well known large private equity groups that had come in with massive checks to say, we want to help you do this. And we we couldn’t do that of our size. And we just brought a different model and said, hey, we’re not coming just with the most money. We’re coming with both a faith and a values orientation to help you. And if you guys want to do that, if you want to take more money, go with them. If you want to be aligned from a faith and value and still have the opportunity to create, you know, multi-billion dollar platform, then you can come with us. And I think it spoke a lot to me when they said, hey, we’re willing to turn down more money in our pockets today to go build something that we think is better for families long term. And that just helped me respect them. Even all the more. They say, hey, we can we can go do something special, and do that together. And so, it’s been a real pleasure to get to know these guys and their families. And if they weren’t dude perfect and you were just hanging out with them, you’d be like, these are the best neighbors ever. Because that’s the kind of guys they are, even when they’re not on camera. 

Luke Roush Well, so it’s sort of like the DC or the Marvel Universe. You’ve got the dude universe every time. Maybe that’s. 

Jason Illian Yeah, there’s an. 

Luke Roush Opportunity construct that. 

Jason Illian That’s right. Yeah. And it just like every just like every movie. Right. Like there’s one movie and then the other one builds off that movie and does the same thing. I think that’s where it’s going. And, you know, the more that we talk to people, we’re feeling that already from pro sports teams and now colleges because colleges are turning into semi-pro. Right. Like how do we take the helmets off those guys and gals? And I think you’re seeing it even in the international level as you watch the Olympics, like, how do you really highlight these athletes? And at the end of the day, we all know this because we’re all sports fans. It’s not just the athletes you get excited about. Like. You know when you there’s a difference between what Noah Noah Lyles just did and and Sydney McLaughlin. Right. Noah Lyles was out there pounding is just saying it’s all about me. Sidney when she won the first thing she’s like it’s all about the Lord. It’s a bigger story. And people are like, I’m drawn to that, right? And I think that’s what the dudes realize is, like, we have that opportunity to do that on a global scale. And so it’s to steal your very good, you know, comparison there, Luke, is like I think there’s chapters coming and I think we’re still in the early chapters. 

Luke Roush Yeah. Well, it makes a ton of sense. And what I’ve always appreciated about that platform is, generally, their content pushes people to engage, and not just kind of passively consume, but to go out in the backyard, go out the front yard and do stuff. Right. Go have adventure. And, you know, life is something to be lived, not observed, from a distance. And so particularly with their some of their earlier stuff, you know, these are things that can be replicated in a, in a backyard context, whereas, you know, if you were to compare and contrast, you know, another major influencer or content creator and Mr. Beast, a lot of what he does is, like, harder to kind of replicate. It’s more consumptive rather than, collaborative and co-creating together. And that’s what I’ve always really appreciated about the dude’s content is that it’s something that you can feel like as a kid, that you’re almost actually part of the co-creation process. 

Jason Illian Yeah. Well, I mean, I will tell you even later this year, you know, not to steal their thunder, but, you know, they’re launching, dude, perfect bounce houses and other outdoor stuff that families can participate in because they want them doing stuff together. Right. And so that’s different for Mr. Beast launching a chocolate bar just because I like chocolate. Well, okay, there’s nothing wrong with chocolate, but like, these guys are being very thoughtful about, hey, how do we get families to participate and play games and do stuff together, not only as a family, but as a community? And when you do stuff like that. Wow. Like what? What’s the endgame for that? I just think it keeps replicating itself, because none of us get tired of having community people around us. 

Richard Cunningham Jason I so I’ve got a a question here as you think about the future of dude perfect and kind of this Luke and I and John Coleman and others, you here on the FDI podcast, we use this terminology a lot of like faith driven investors getting in the game with their capital. And, you know, ironically you’ve got Dude Perfect with All About Games, which is a fun play on words there. But as you think about this downstream effect that we as investors can have on culture through our capital, there’s a very tangible example and representation here of what’s taking place in Dude Perfect. Do you see possibilities elsewhere across the marketplace? Like right now we’re talking content creation, getting children wholesome content we can trust that invites them in for something fun, but then sends them out to go be a part of the adventure as well. Do you see it elsewhere across the marketplace where there’s possibilities? 

Jason Illian Yeah, I do, I actually think it’s, I actually think there’s a huge opportunity that’s beginning to turn, and I think the dudes are just a piece of that. Right. And how big they decide to grow that is going to be based on their own vision and how the Lord blessed them and how hard they work to get there. But I think, I think the more that we’ve to not only talk to families, but just looked at data and see, like families are looking for opportunities to engage with their kids, not just in the week trip to Disney, but what can I do tonight? And what can I do this weekend? And what can I do with my neighbors? And and because the phone’s in a sense, we thought like they’d make our lives easier, they’ve kind of siloed us because we do a lot of stuff on our phones. They’re now looking for ways to better engage with one another. And so, the dudes have done a good job to think about, like, hey, when we do videos, how do we also get them to engage elsewhere? And, and I think that same thing, things happening and, you know, you can go to early or younger kids of like, how do we get them to engage. And then even, you know, college age kids and beyond of like, how do we get them to to to engage with one another not only with products, but, you know, real life experiences too. Right? And so I think there’s a huge open gap in this space. And when you see people like whether you like Mr. Beats content or not, one thing is, is he’s done a good job drawing people in to say like, hey, look what we’re doing. And while I think a lot of what he does is kind of like one off spectacles, I think the dudes have done a better job of creating a roadmap of like, this is the space we’re playing and we’re playing in sports and we’re playing with families, but I think there’s other ones and you could say whether it’s animated films or you could say sports or you could say music, I think they’re all starting to learn, like if we can help people engage with what we do versus just by one time, who knows what the upside is to that? And I can tell you a large private equity group, that’s what they’re looking for, right? They’re looking for the engagement aspect. Because it’s one thing to have a revenue line that continues to grow for three to 5 to 10 years. It’s another thing to see that thing split into five revenue, five revenue lines because of the high engagement that it has. 

Luke Roush Yep. Yeah. And that makes a ton of sense to me. As as you think about. So stepping back from kind of the dudes themselves and just thinking about content creation, distribution, engagement, extension of kind of the core product where you started in the new geographies or new adjacent spaces. How do you see the business model that feels very evolutionary right now, which oftentimes creates opportunities for investors because the, you know, status quo is less entrenched. How do you see that that business going well? 

Jason Illian So the old business model, right, was a lot of the top down. Hey, we’re going to go spend 150, $200 million and create this experience for this movie. And we hope they like it. Right. I think the new model is like field, the. 

Luke Roush Field of dreams. If we build it, they will come. 

Jason Illian Yes. If we build it, they will come. Right. And we’ve seen time and time again over the last decade that’s not actually worked a lot. There’s been a lot of failures in that spot. So now what’s happening is you’re seeing people that are building their own audiences from the ground up very authentically, and people are being drawn to that. And because they’re being drawn to that, that person, to that brand, then from there they can do all sorts of stuff. They can sell swimsuits or drinks or whatever, right? Whether you like Logan Paul or not, he sold a ton of prime right energy drink. Right. Which, by the way, I don’t like the taste of it at all. But it’s worked for him, right? And it’s because he built, you know, he built a personality for them, for himself, I think, or at least our, our thesis and belief is there’s a lot of that stuff that I think is kind of fringe and on the edge or adult if you do that kind of stuff in a family friendly way or faith based way, there is it’s a huge market and it’s thirsty for it. And we’re seeing families all the time saying, what else can we consume or do or experience in this space? And they’re just not been a lot of those types of things. So I know a lot of the things that sovereign is worked on in terms of movies and films and other things in that space and what we’re doing with Dude Perfect and other groups. There’s lots of other groups that are trying to do this, like we’re supportive of all of them. Like even if we don’t don’t even if we don’t financially benefit from that, if we can step in and help them and do something that’s going to help create something that is beneficial to families and has a positive impact and culture, and ultimately points to Jesus, that man we’re in. Tell us a little bit. 

Luke Roush Well, it’s like, Andy Crouch, his book on culture making. Jason, it’s much easier to build new culture than to try to reform something that is kind of not in alignment with what we see as as the world really needing. And what I love about, just the cost of production. Yeah. It’s what it’s where you started, which is, it’s like two dudes in, like, one production guy and a couple other camera folks, and that’s about it. And so, you know, self-publishing with Amazon and others has also changed and democratized the publishing industry, so that, you can create and distribute content. And it’s the merit is there, you can find ways to really build a crowd. It’s no longer, you know, an oligopoly where, you know, there’s a few folks that can effectively exclude everyone else from participation. It’s much more democratized now. And that’s certainly on full display in what the dudes have built over the last 15 years. So, yeah. 

Jason Illian And I think it’s going to continue. Right. Because now that we have these super powerful phones that were as powerful as large camera systems in the past, and now you’re going to have AI coming up where it’s going to even make, like, animation, being able to be done by the average person over time so they can create an animated film that used to cost hundreds of millions of dollars, you could do it literally from your at home in the future, right? So those things are going to democratize it even more. So then it comes down to what’s the story, what’s the focus? How are you really drawing people in? And if it’s just a one hit wonder, it may work from time to time, but that’s not something you can really invest and build around versus the ones that are really thinking about kind of a more platform or market place approach to it. 

Richard Cunningham All right, Jason, two fun rapid fire questions before we close with our big one. First is if you’re not one of dude Perfect’s already 60.3 million subscribers and you have somehow haven’t heard of these guys, and Jason Alien is showing his favorite video to someone to give a sense of who these guys are. Which video are you showing? 

Jason Illian Oh man, that’s probably a question for my kids, not for me. But I would say, you know, the one that just caught me recently was the one where they stuck a rocket and a football. Being an ex football guy. And I watched him throw it like 300 yards. I was thinking like, dude, I could so do that as they either throwing it or trying to catch it myself, right? I was like that. That was just a cool. Took me back to when I was 12 years old, being playing in the backyard thinking, man, that would be just the coolest thing to do. And just a credit to them about capturing the imagination of an old guy. Or old guys. As well as the kids of saying, hey, we can all do this. 

Richard Cunningham I love it, all right? Then the next one is, have you made the ask to be in a video, or do you think we’ll ever see you in a video? 

Jason Illian Let’s let’s hope that the dudes take this a better direction than asking somebody like me to be in a video. Maybe if they ask my kids or one of your kids, right, then they’re going the right direction. Listen, everybody wants to be in a dude perfect video, and I will tell you, they have stuff coming up with, like, Steph Curry and pro athletes. But one of the things they’re really talking about too is should we bring on some just big fans in certain videos on a go forward basis, like you’re part of a sweepstakes to get in the video. You do this, you help somebody, you get in a video and they’re thinking through like how they do more of that, which is really cool. Right. It’s kind of like saying, hey, the Olympics is coming up. We’re putting Luke in lane eight to just see how he does versus the other swimmers. That’s going to be awesome. And I think the way that I think about that is just so cool. And like, who doesn’t want to watch that or experience that? 

Richard Cunningham Luke Rash I don’t know how you are in a pool, man, but I’d love to see that. And it’s. 

Jason Illian Not pretty. 

Luke Roush It’s not pretty, I think. And, you know, I, I’ve entered one triathlon in my life, and I did call for the safety canoe about 200m into my swim. 

Jason Illian But that’s why the color commentary is all the better. Like, if you’re sinking when everybody else is swimming hard, it’s going to be awesome. 

Richard Cunningham Hey, I would put good money on you though, Luke. As a former DB on the foot race, I’d like to see an. 

Luke Roush That’s, I’m more terrestrial based. I know, I’m. 

Richard Cunningham Land mammal. 

Jason Illian We’ve already emerged. 

Luke Roush Out of the primordial soup. We now walk on land. That’s the reason why this happened. 

Jason Illian Yeah. Don’t worry. I’m not only a land mammal, I’m now a slow moving, large land mammal. Versus the other days where I used to be quick. So don’t feel bad. You’re not alone. That’s great. 

Richard Cunningham Well, Jason, this has been a ton of fun. And this is the question, man. We love to close with on every faith driven investor podcast. And that is what’s the Lord been teaching you in and through his Word lately? 

Jason Illian Yeah, it’s a great question. You know, I think the thing that you can teach me the most that now is in Proverbs, it says a man is tested by his praise. Starts beforehand like a, you know, a crucible for silver and, you know, a furnace for gold, that a man is tested by his praise. And I think that means that there’s a few things he’s working on. My heart. There is one. Not only what do I praise and where do I spend time spending like so if I’m spending all my time in work or around sports or whatever else my kids are going to think like work and sports is where their identity is tied. And if I look at my calendar and my checkbook, sometimes it’s way too tied to those things versus being tied to my identities in Christ, in Christ alone. And so that’s where I praise in the second piece is like, when I get praise, is it mine, or am I just redirecting it to the one who is kind enough to give me some encouragement? Right. And when I see athletes that pound their chests and say it’s all about me, that is too much of that could have been me as well, right? If not saved by Grace. And so just trying to teach even my three athletes in our house, or the small football teams we coach in the local area ones. And one of the things I love about the dudes too, right, is like they’re saying like, don’t point yourself. It’s not about you, right? It’s about the one who created you, is about the one who gives you grace. It’s about the one who died for your sins. And that is just a continually humbling, learning daily thing in our house that I’m learning. And, you know, the great thing about being married is you have a beautiful bride that is a giant mirror of reflection. And she is, you know, very gracious enough to tell me in kind ways when I fall flat on my face. And I do that plenty. But by grace alone. Right, I get a chance to get up and do it again. And that’s my biggest hope for my kids. And the thing that God’s teaching me is like when they go play, when I, I never hear about what’s on the scoreboard. And I honestly, the more I, the longer I live even about the scoreboard for high mount, I’m not I’m not measuring it by what the AUM is, right, or how many unicorns we have. I’m trying to measure it more by the influence and impact that we have. And what’s what next generation leaders are we creating and what hope are we instilling? And what joy are we living with if we do those things and we can control those things, those inputs and outputs will take care of themselves, and there will be days that we lose. It just happens, and God will teach us in those losses. In the days that we win, we’ll celebrate and point back to Jesus and we’ll do it all over again. 

Luke Roush That resonates with me in a big way, Jason. And, you know, one of my favorite quotes is that there are two things that define us our patients when we have nothing, and then our attitude when we have everything. And if I were to sort of recast that quote in the context of Scripture and what we know to be true because of who Jesus is, it’s do we trust in him when things are really difficult? And do we maintain humility and understand that all things come from him when good things are happening? And so I’m excited for the opportunity. You and your partners have to co-create and to build something beautiful that is redemptive force for good in broader society. Our scorecard, our scoreboard needs to look different than the rest of the world. And I love your articulation for the ways in which these kinds of investments have the opportunity to not just generate return, but also shape culture in ways that are really meaningful and draw people towards, the hope and truth and love that we experience every day through our faith. So thank you for being on with us. It’s been a joy and, super excited for what you’re going to build. 

Jason Illian Yeah. Thank you guys. 

Richard Cunningham Awesome. We’ll catch you next time everybody. 

We are grateful for the opportunity to serve this community and see listeners coming from more than 100 countries. Faith driven investing can be a lonely journey, but it doesn’t have to be. The best way to stay connected is to join a group study with other investors looking to get the same answers to questions you have, and find great community as they do so. There’s no cost, no catch in person or online. You can meet an hour a week with other peers from your backyard or the other side of the world. You can also stay connected by signing up for our monthly newsletter at Faith Driven investing.org. This podcast wouldn’t be possible without the help of many of our friends. Executive Producer Justin Foreman intro mixed in, arranged by Summer Driggs. Audio and editing by Richard Bali. Our theme song is Sweet Ever After by Ellie Holcomb. 

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In this episode of the Faith Driven Investor Podcast, Richard Cunningham, Andrew Behrman, and Chris Kim discuss the private equity world and the secondary market.

They explain that private markets offer unique benefits such as diversification and active involvement but also come with trade-offs like limited access and illiquidity.

The conversation focuses on the secondary market, which allows investors to offload their positions in private funds. They discuss the recent growth of the secondary market and its importance in providing liquidity in a time of lower distributions.

Episode Transcript

Richard Cunningham Welcome back, everyone, to another episode of the Faith Driven Investor podcast. A joy to have you with us for what will be a Tuesday, September 3rd marks on the markets edition of the Faith Driven Investor Podcast, releasing this episode one day later from our normal Monday cadence in celebration of Labor Day. And speaking of Labor Day, man, it is hard to believe there are only four months left in 2024. To our Northern Hemisphere friends, hope you have had a wonderful summer to everyone out there. Hope back to school and the beginning of a new semester and your rhythms is in a sweet spot for you and your loved ones. One final housekeeping item I want to make note of is we don’t have our mainstays, Luke Roush or John Coleman and the FTI Podcast Studio with us today. They’ve got a dense travel schedule going on, but not to worry because we’ve got an unbelievable amount of firepower with us in the studio for this March on the markets episode, and Andrew Behrman of Sovereigns Capital and Chris Kim of Argosy Strategic Partners. Gentlemen, welcome on to the podcast. Great to have you guys with us. 

Andrew Behrman Thanks, Richard. So exciting to be on. And, obviously you’ve been a fan listening to you guys from afar. So it’s really exciting to be, here with you and Chris. 

Chris Kim Yeah. Same here. I’m really honored to be here to appreciate it. 

Richard Cunningham Well, thank you guys for your time. I’m excited that the listeners are going to get to hear from you all. So normally, gentlemen, on the way, we do a mark’s in the markets episode, naturally, we kind of spend time looking at public markets or the economy at large and things like that. But both of you are private equity investors, and so we’re doing something a little bit different where we might get some of those macro thoughts here and there as they relate. But we’re going to spend the vast majority of our time looking at the private equity world and universe. But given this is each of your first time on the face of an investor podcast, that would get some background, an intro from each of you. So, Chris, maybe we start with you kind of what kind of work are you up to? A little bit of your background in story? 

Chris Kim Okay, so I have the privilege and honor leading Argosy Strategic Partners. I founded in 2019, and we are a division of RBC capital, and they are an asset manager based out of Wayne, Pennsylvania. I don’t even know where Wayne was when I started interacting with Argosy folks, but I do know king of them all. So I heard it was like right next to freshman. So I was like, okay, so I kind of understand where went that. But yeah, before that I spent some time at a secondaries firm, but definitely later on go into a little bit more what is secondaries and what it’s been to. You know, what we’re talking about with the private market. But outside of that I feel like every day is just either work or trying to, like, keep up with my two little kids. I have a four year old and almost two year old. And I think when I come to my desk. Man, I’m like, this is so much easier than at home. And I keep up with like, so bless my wife who is, you know, holding on the fort at home. But yeah, just going back to, you know, lady Irish street partner has been doing since 2019. We’ve got on our team to five now here in New York City. And hopefully we’re going to keep growing the team. So and then spending a lot of time very much indeed because I feel like that’s going to be the biggest component of our team going forward. And these are they absolutely fascinate me. So I don’t know if against any am I just like as much anything more than happy to talk about defenses, the indoor contact? I don’t know any out. 

Richard Cunningham So fantastic intro Chris. Thank you a lot to unpack there, but I love the shout out to the bride as I hope someday she’s listening to this and feels affirmed by your commentary on her work. Andrew. What about yourself, man? 

Andrew Behrman Yeah. Happy to. So I’m originally from central Georgia. I went up to undergrad at, Georgia Tech. So proud. Yellow jacket, big week, zero for the jacket since everybody tuned in. So we’re fortunately on top of the SEC this week because no one else has played other than their opponent Florida State. So taking screenshots now. So the last you go, I started off my career out of Georgia Tech and investment banking, actually at SunTrust right here in Atlanta, was working on what they call their acquisition finance desk at the time, really focused on underwriting some of these sponsored buyout deals from private equity firms. Didn’t know that I end up in private equity, but before my analyst years were done, ended up taking a role over at Invesco large global asset manager on their alternatives and institutional strategy team. And, you know, corporate strategy focused on things like fundraising, product development and M&A strategy for Invesco to grow their alternatives business. But while I was there, I had the opportunity to, meet and report into John Coleman and was only a few years later, I think, March of 2021. I like to think I was John’s first call. I might have been the sixth or seventh in actuality, but, I got the call about sovereign capital, learn the story, and was just so excited at the opportunity to join. So I came to the firm and helped us launch our Fund of funds complex back in the summer of 2021. And really, the focus for us is to find private capital investment managers that are part of the faith driven investor movement to invest behind and build a diversified portfolio for investors. So I’m out here now in Atlanta with my wife Ali and our son, Jordy James. We just moved back to Georgia. We’ve been on a kind of a hiatus, while I’ve been working at sovereigns. We’ve both managed to finish grad school, which has been a nice accomplishment. Between Barcelona, Spain and Wilmore, Kentucky, two very similar places, if you’re familiar with either of those. And it’s been an awesome journey. And, glad to be back here, at Home Base. 

Richard Cunningham There we go. Well, fantastic to have you both on. This is going to be a ton of fun. Great diversity of experience, as you can hear. And, Andrew, you mentioned that you are running the fund of funds complex at sovereigns. I think that’s an important place to start. Let’s do a little private equity 101. You’re investing in a number of other private markets fund managers. So maybe, you know, I think people here private equity and they have some natural assumptions of it takes $1 million to get into it, or high risk or just feels complicated, has something to do with funds, but maybe kind of level set and set the stage for us here because it’ll help Chris when he’s talking about what the secondaries market is. If you kind of define the private equity or private markets investing universe for us a little bit. 

Andrew Behrman Sure. So maybe I’ll start by just saying, you know, we’re fortunate in here to have a leadership team that helps us run the fund of funds complex. So it’s a great benefit to have John and Luke leading that strategy. Obviously, we have a team behind them now, obviously yourself, Richard, me and Jonathan, let’s quickly break down the private markets broadly. So if you look at the global asset management universe, right. Everything under the sun as far as asset management is concerned, you’d see there’s about $120 trillion under management broadly. Right. That’s what BCG is. Global report little US scoping down to the private markets. You’re really talking about a specific set of strategies that comes down to things like private equity and venture capital, private debt, real estate infrastructure and secondaries, which is somewhat of a mixed universe. Of all of the strategies that Chris will tell us more about and those strategies in kind of 2022, 2023, they represented about 14 to 15 trillion of that 120. Right? So meaningful, but still smaller in the grand scheme of, the asset management universe. So the big expectation there is that many investors, both institutional and retail, are expected to continue to allocate to these strategies for a number of reasons that we could get into. But by 2028, most estimates you would see out there would say that private markets are expected to be something between 20 to $25 trillion of total assets under management. So a lot of growth coming from that universe. Strategies. 

Richard Cunningham Great rundown. Yeah. I mean, the growth is significant. Momentum is significant. I like what you. Pointed out there about both institutional and retail investors kind of having their mind on the private markets. And Chris, that kind of slides over to you. So what is a secondary strategy and what is a strategic partners specifically up to as you think about kind of the private market universe, and where do you guys kind of carve out a corner in the market if you will? 

Chris Kim Yeah. So I guess to kind of go a little bit more into this whole private funds universe that I was talking about, that’s around 14 to 15 trillion as the latest report. I think covering a lot of the other assets. One thing that really differentiates private fund universe and, you know, it can be a little different depending on the strategy within the private fund universe. But most of it I would describe as illiquid in the sense like when an investor goes into private fund, they are making some level commitment in terms of dollars and time, and they’re going to lock up their capital with this manager and then managing to go out and execute their strategy. So if it’s like a traditional buyout, I can go probably do you know buyout companies if it’s infrastructure you’re going after infrastructure assets, real salaries etc.. But unlike stock market where you could probably sell most of the time, whenever you feel like you really aren’t in control, that you actually give up control of your capital to these fund managers, you trust them and I hope that they will deliver what they say now just returns that also to strategy and maybe other values that go behind there to go along with their strategy too. And with that illiquidity cost, I guess that was the genesis to secondary market. And it kind of started around in the 90s where, you know, private equity still was in traction, is gaining some momentum and some investors. A lot can happen in 10 to 15 years. So it’s just a typical timeline that your money is locked up in these funds seems really long 10 or 15 years. But within that 10 or 15 years you don’t wait till like the end. Is it like money back? You know, as they sell a company? These are paying distributions back to you as a limited partner. And the investor by a lot can happen, like I said, in ten, 15 years. So if you want to offload your position or your remaining value, you will have to access the secondary market. And generally as of today, the secondary market represents 1 to 2% of the overall private market. So if it’s the 14 or 15 point that actually number works. It’s like spot on to around 1%. The secondary market is on track to hit probably 140 billion plus in volume this year. So that tells you Jericho 1% and it’s grown quite significantly. I would say just a little context. In the early 20 tens, like 2014, the volume was around 40 billion. So it’s grown quite a bit. And to dive even a little bit more into secondary is just mainly three big buckets. One in the secondary world there’s the general trade of LP interest, which is kind of example we’ve been talking about. If you’re an investor and say so-called fund manager, you’re a limited partner, and if you’re also of interest, you’re selling your LP interest to someone like us, our strategic partners, which is what we do. We mainly focus on the lower end of the market because, like I said, like 140 billion, big number, higher average transaction size. It’s up to like 5 million. So we are like the real like lower middle market of the secondary universe because the average fund size in second is whereas a billion plus. It’s pretty pathetic in the secondary universe. And we feel we are here in the lower end of the market because it’s extremely underserved. Not many dedicated secondary buyers or a liquidy solution provider. So it’s a lower than market and just talked about the markets are going to keep growing the private markets. We believe also they can keep growing. And that means probably most likely the secondary volume will continue to grow as well. 

Andrew Behrman Yeah. And just to your point there, Chris, I mean, if you look back to 2015, in the private markets, the total AUM or something like 5 to $6 trillion, right? So in just over 6 or 7 years, the markets more than doubled. So obviously that growth and trajectory of overall assets under management there, you’d expect there will continue to be a need for liquidity beyond the current macro forces of kind of lower distributions coming to investors and needing a solution in the form of secondaries to get that liquidity. But you mentioned something important about kind of the private markets generally that’s kind of worth double clicking on. You know, in the private markets, they differ pretty substantially from the public markets by the form of unique benefits and unique trade offs that come to investors. Right. And so I’ll start with the benefits. You know, there generally private markets have less correlation to the overall public markets. Right. So people generally think, hey, if I can get access to some of these other asset classes, if there is a public market drawdown, there’s less chance that my private strategies will experience the same drawdown. And let’s put some figures of that, you know, the expected kind of correlation for private equity to the S&P 500, something like .43. Right. Whereas in venture capital the correlation to the S&P 500 is actually negative. It’s something like just negative 0.07. So it goes to show you that there’s a real diversification effect of being in these strategies. So that’s attractive to investors. There’s also, you know, the form of active involvement that you can have when you invest in a manager that has direct control of assets through actual full ownership. In the case of buyout, for example, board representation back there is often in venture capital to help influence decision making and also an opportunity to kind of partner closely with management teams right to drive value. So all of that translates many times to investors kind of saying like, hey, there’s an opportunity here in the private markets for higher returns potentially, and diversification of my overall book. But just as you mentioned, Chris, that comes with trade offs and the form of access is actually quite limited to some of these strategies. They have investment minimums many times that require relationships and regulatory considerations. And then you also have there’s no real time price in private markets like we see in the public markets. Right. Often you need to wait a whole nother quarter before your fund or your investment to strike a value. And with that comes the consideration that you may not actually be able to get out of that investment right away. There’s an illiquidity constraint in the overall private markets there. So worth mentioning that as it relates to secondaries. 

Richard Cunningham All right, Andrew, one of the things you said is that there’s benefits and trade offs of accessing or being exposed to the private markets. And I want to talk real quickly about the performance side of things. Public markets have been on this just historical bull run. And I think the temptation is to believe, well, then private markets must be just taking it in the teeth. We’ve heard about, you know, VCs kind of struggles or re correction from 2020 through 2022 highs maybe real quickly just provide kind of a snapshot for the moment in time where we are from a performance standpoint, publics versus privates and things like that. 

Andrew Behrman Yeah, absolutely. So if you look at kind of the back two years, you’d see exactly what you’ve just articulated, Richard, a not much positive movement, if anything, just this slightly positive movement in private equity, what we call net asset values or valuations, compared to something like a 15 to 20% markup and the public equities valuations. Right. And if you zoom out though for a bit and say, okay, let’s look at the back four and a half years, what you’d see is that private equity valuations have generally trended just about the same level of return as the Nasdaq and S&P 500. Right. So widening the timeline there matters. And then if you look at any rolling ten year period, the data would suggest that if we go back from literally this year all the way back to 2001, any rolling ten year period, there’s very few where private equity has underperformed that of public markets. Generally, it’s going to overperform or outperform over a ten year through the cycle type of strategy. And beyond that, it also matters a lot in private markets. It matters a lot who you pick. Right. And what I mean, there is that, manager dispersion is a real thing in private markets. It’s also true in public markets. But what you would see is if you looked at the public market. So U.S fund kind of global equities, if you looked at kind of the bottom quartile of returns versus the top quartile, what you’d see is that spread is something like 7 to 9%, right. So 200 basis points of performance. So you can get from being in a bottom quartile versus a top quartile manager. So that’s your manager selection window there. U.S core real estate similar story about a 6% bottom quartile performance 8% top quartile has over the past ten years. But then you go to private equity and some of these more private strategies. What you see is over the past ten years, the bottom quartile private equity performance is something like 2% and the top quartile is 23%. So imagine the level of outperformance that simply comes from picking the best managers. Now obviously that’s tough to do. It takes a lot of diligence, takes intensive resources. But considerable difference there. And similarly, in non-core real estate, for example, what’s often categorized as a private market strategy, bottom quartile -2%, top quartile 14%. So the kind of summary there is, you know, who you pick matters. And it creates an opportunity for outsized performance for manager selection. Right. And so that expertise of your underlying managers is going to matter. And then because of the level of active ownership that you can get from these private managers, you’re going to be able to ensure, ideally, that the values of the managers that you’re picking align with your own values, right? So you have a little bit more of an active role and who you’re picking as well in the private markets. 

Richard Cunningham Great commentary, Andrew, and I’m going to do my best to kind of summarize where we are at the moment, just kind of in terms of the conversation, if you can’t tell these guys are just a brain trust. It is fun to hear you guys riff on this. So you’ve got the private equity universe. And oftentimes, unless you are the one directly going to invest in underlying companies, startups or mature businesses, you’re going to partner with a fund manager, Mr. or Mrs. Investor, and your title as you partner with that fund manager is a limited partner. And you guys stop me if at any point I’m venturing off course here. Chris, you pointed out in Andrew your. Just talking about the illiquidity side of it, that oftentimes these agreements are 10 to 15 years of partnership. Now, the upside of that partnership is the opportunity for low correlation to the public markets. Andrew, as you were just talking about, or the historical outperformance that private markets have displayed in private equity, venture capital, private credit, what have you across those different types of asset classes? Now, one of the biggest things though, with that liquidity constraint, yes, is the desire for outperformance. But also you get seven eight years down the road and you might say, hey, I need to offload this position. It’s done well. It’s possibly matured. Maybe it hasn’t, but I can’t hold on for the rest of the remainder of this fund life. And it’d be great if someone wanted to buy my position from me. In the same way you would go out and liquidate stocks in a public exchange in the stock market that just does not exist in the private markets. And so that’s where secondaries have been introduced. And so I hope that kind of sets up a summary for where we are right now as we get into some of the commentary. Because Chris, secondaries are all the rage. It seems like as people are talking about, you’re giving me a head shake back and forth and your humility. But as people are talking about the private markets and, you know, honestly, the run that the public equities have been on, you know, the climbing interest rates, some of the macro conditions that private markets have been dealing with that have led to a little bit of a recent drag on performance. People are really talking about the secondaries market. So what are you seeing right now. Kind of give us some of the performance commentary or maybe just the overall thoughts on where things are currently. 

Chris Kim Yeah, I guess secondary is kind of having a moment right now for the past one two years is definitely been. And I like I mentioned earlier, it’s been growing, but primarily due to the lack of M&A activity, IPO activity, especially if you have any exposure to the private markets, you’ve probably or self or organization already, now that this report is coming in, has gotten a lot lighter. And so because of that, that’s actually boosted the secondary, you know, along with the historic run that the public markets have been on. But the private markets have been quite a robust self, not just in way and also in M&A activity or IPO. So if you’re invested in these private funds, you probably knows, you know, for next span of years. The past 510 years have been a lot of money back to and kind of I would say a lot of private investors, the way they manage a portfolio is that they are rarely just invested in just one private fund. You know, they’re probably investing in a whole basket, a whole portfolio of private funds, and they’re like, oh, I’m getting all these distributions. And what they do is they are committing to the general partners next fun. And their hope is that as they get these distributions, they can use that for a following commitments to the next funds by assets issues. And it has lightened up. But they’ve already made these commitments. You know they find themselves in this a little awkward in balance. You know lower distributions. But the outflows are now greater. That’s one of the main reasons why secondary is just kind of having a own. 

Andrew Behrman Yeah. That’s like an extremely important distinction. Right, Chris of like performance in the private markets versus public markets, the way it’s recorded is actually quite different. If you’re invested in a stock and you see on paper that stock is now increased in value by 20%, chances are you could sell it pretty soon and get something around 20%. You know, depending on the day and where the markets are and private markets, you see a couple of different types of markings, right? You see all managers recording what’s called net asset value, which are what they expect. The fair value is of your investments at a point in time. And what you’re articulating is that there’s a difference between what value is recorded there on the paper and the actual cash that has been received by investors, what we call, DPI or distributions paid in. And so it’s, I think critical to understand and as you mentioned like secondary is having their moment is, you know, many times that distributions as a percentage of the nav net asset value, it kind of hovers around something like, I don’t know, 30%. Right. So people can kind of expect, you know, generally I’m going to start to recover some distributions and I can commit to new funds. What’s kind of occurred over the past two years since rates have increased, exit activity has declined. And what we’ve seen is that distribution as a percentage of net asset value has declined all the way to something like 10%, a figure not seen since the great financial crisis, when liquidity was also obviously hard to come by. And so maybe, say a little bit, Chris, about how does secondary step up as a solution and that environment. 

Chris Kim Yeah, that’s exactly what’s happening Andrew, thanks for that. Where one of the main reasons why we’re having our moment is that when distributions are going back down at ten, 15% a value, sometimes it breaks out when LPs are used to a 30% rate at distributions and it’s not happening. The secondary groups can come in and help fill that gap. And you’re basically taking the control away from the GP and back. As the LP is, is you’re always rely on the GP to send back the capital to you, right? And it helps boost that DPI number. And in today’s memo, it’s hard to even blame the GP, the high rates and just all the macro factors that are going on like GP’s, or are they just not happy with the prices that you get for their assets? They tell LPs, we got to wait longer. You know, it’s hard to sell our remaining assets. So us LP goes, well, yeah I could just sell my position on the secondary market. So that’s kind of like an interesting dynamic that’s happening where the secondary market kind of in some way empowers LPs to have this other outlet of accessing capital. And because of that, what’s happening there, there’s also a greater interest, I would say, in the last few years for fundraising for secondary funds. It’s probably no secret that fundraising has been pretty tough for most private funds strategies. All right. We use Pitchfork quite a bit, and I was looking at some of the pitch book numbers, and I noticed for their December 2023 figures for the last 12 months, they were all negative for all sectors private equity, venture capital, real estate that except secondary secondaries was up 65% in fundraising activity because people I guess LPs view secondary. So like this could be a moment where secondaries can come in and start buying up all these assets at probably an attractive price because something that I haven’t mentioned about secondaries because of this illiquidity factor, there’s also an illiquidity discount that comes into play. So when you’re buying a value in and you talked about the net asset value, and a lot of times you price off that. In the end, more times than not most secondary transactions occur at a discount. Like if you own a Microsoft stock is trading X dollars. If you want to sell it, you get it probably at that X dollars with that, maybe a little spread plus or minus at probably $0.05 or something. But on the secondary market, if your position is worth $1, it’s very rarely you probably can sell it for a dollar. You probably have to sell it at some level of discount. And there’s a lot of factors that go into that level down. 

Richard Cunningham Chris, this is fascinating. So now you’ve got me captivated by what are some of these underlying assets or positions that are selling. Is it you know, we’ve heard a lot in the news about Venture capital’s tough slog because valuations got so high in 2020 and 2021. So is it positions and interests and startup companies that are growing, or is it the buyout managers you guys were talking about earlier that, you know, buy control or the ownership entirely of a firm or a company? So I’m curious about what you’re seeing on the market, if you will, for secondaries managers like yourself to go in and acquire. 

Chris Kim Yeah. Earlier I mentioned like the secondary market is really divided into three big buckets and the first bucket being LP interest and debt cost. It’s around 50% of our activity. And now within that LP interest it’s primarily buyout. Buyout is the heavy. It’s always been the anchor of secondaries activity. Most funds generate quite well and they’re easy to trade. And then if you look at say in the venture world, probably the second largest within the secondary universe, it’s still the discounts are quite large on the venture side, and a lot of it has to do with usually, you know, most venture companies are on the younger side and not cash flow positive. A lot of times you’re pricing basically off the latest funding round versus a lot of buyout companies. They do a full valuation analysis with the like. There’s various ways to go about a comparables, DCF, things of that sort. But the venture assets a lot of times the companies like well the companies worth the 2021 series B that was raised in 2 or 3 years has elapsed. You know, not really much has happened to that company. You know, you even wonder, is the company even operational? You know, with all of these. 

Richard Cunningham It’s a long time in the life of a company. 

Chris Kim Yeah. Especially when a company that’s like only say like five years old. So the last two years, you know, you really want to know what’s been occurring. But it’s sometimes hard to get that information about the company unless you work there or something. And also, I think people are just worried that venture assets are very inflated the past 3 or 4 years, you know, their rates at astronomical valuations for multiple reasons. And with the high rates, it definitely doesn’t help as much. I think venture capital assets, you know, companies are trying to grow at really fast clips. I think interest rate checks anymore. That’s how I did a buyout in the venture. I think there’s definitely quite a bit of activity with credit funds. Right. It’s a pretty hot sector right now. Generally you know the risk perceive of credit funds slower. So a lot of secondary buyers like that kind of yield and they trade quite low real estate along with venture very difficult right now I think the spreads are to live. And when I talk about spread for both venture and real estate or just anything in secondaries, it’s just what the sellers are willing to sell an asset for. What a buyer’s willing to pay the gap is just still to versus buyers. It’s not too difficult for a buyer still to come to an agreement, and there’s still activity in the mentioned real estate, but it could be greater to spread narrow. But spreads are quite there. 

Andrew Behrman Yeah, I think I mean that’s a key piece right. Like on the discount, Chris, as you come as a buyer to buy a fund interest, it’s largely. Are they going to be related to? Well, what’s the strategy of the underlying assets. Right. Like how early stage is this company, how reliable is the underlying value that all of these assets are being marked at? I would assume and then there’s some function of beyond. I mean, you articulated all of that. Well, there are some certain types of companies where the valuation is probably a bit more reliable, like buyout for example. And then there’s also a component of timing, right. Well, for example, if I want to sell my house and I can wait 36 months, I’ll probably get a better price if I need to sell it tomorrow. Right. And so maybe just say a little bit about how does the speed of needing liquidity, because what comes to mind here is kind of the institutional versus retail seller. And I know you operate with both types of sellers. So maybe just say a little bit about, you know, how does that kind of speed of exit required relate to the discount that you might see? 

Chris Kim Yeah. Thank you for pointing that out, Andrew. It’s definitely one of the biggest factors when it comes to pricing. Even within the secondaries world, there’s different timelines that people work with. And my brain’s all over the place. I’m like, well, where do I start? I would say starting with like large and small sellers, they’re just different profiles, like most large sellers, like they’re probably large pension groups. They are large endowments, foundations and universities. And a lot of times they don’t make that decision on a whim. And they’re going off, let’s say, a $1 billion portfolio LP interest. You know, they probably planned it out many quarters in advance. And a lot of times they’re not doing it because they lack liquidity. It’s almost we call it a portfolio reallocation. They are just moving capital around. They have an X amount of dollars or percentage. Private markets know related some other portfolio or they want to deploy it somewhere else. Or they could be like a new CIO comes along for this university and they’re like, I need some money. So I could implement this strategy within the portfolio, the overall portfolio of the endowment for small sellers. You a lot of times they’re like high net worth. So are small family offices falling down. And then even liquid is, I would say, more than just a simple reshuffling of the capital. Maybe some of the sellers you dealt with were providing liquidity solution for them so they can meet their debt payment. Maybe the father passed away the family and the children. They want to figure out the capital that’s locked in these private funds that the father invested in and used for something else. They buy a house. So I would say a lot more real, like more relatable situations for small sellers. And that’s kind of like one of our main purposes to be that liquidity solution provider. And the timing does help with pricing because like stock market, the exchange rate, I don’t know what the seconds it takes. It’s probably like a millisecond to take a trade. And you go your broker, can you get it into cash flow shows up in your brokerage account, even though stock the fast as you could do a secondary trade for like a typical LP interest trade, it takes about a quarter, a full quarter as in like months. So it’s not a fast process. And for a seller that really needs cash, the last thing you want is that trade to fall through. And then they got to restart the process and it takes them another three months. So I think something that we’re really striving for our security to be very reliable. It’s dependable. That’s probably where a lot of folks on all sides want to work with sellers, want to work with us. Intermediaries want to work with us even though they’re large secondary buyers. You know, we’re hoping that they’ll recommend us because, you know, we’re dependable. We don’t try to trade deals. You know, I always like, tell our group that our word is gold. So even before a contract is out, like if we say we’re going to do it at this price or at this timing, you know, we’re going to do our best to, you know, stick to it. So there’s a little plug on us, I guess. 

Andrew Behrman Yeah. Well it’s important, right. Because as the private markets grow, generally retail investors are going to increasingly enter. And that can be a good thing right to have exposure to that in your portfolio. But what I hear you saying a bit is, you know, all investors need to be considerate of what’s my total asset allocation, what’s my risk tolerance, what are my liquidity needs going to be. And generally, institutions are going to be in a situation where they have a longer time horizon. They can be a bit more patient. And so that’s just a key consideration for, you know, retail and high net worth investors as this market continues to grow and become part of their asset allocation. 

Chris Kim Yeah. And one of the thing I would add is generally large institutions like I mean I know they might have their own version of it, but they don’t really have like life events that smaller like high net worth come across and that can shake up the plan. But I would say institutions generally have like they have a big shake up. Something happens to them, something big event. Usually I would say they’re they have such a long term plan that any kind of whether it out versus the smaller sellers. 

Richard Cunningham Or key articulation from a rapidly growing and honestly just exciting development in the private markets guys. So thank you. All right. Brace yourself. This is going to feel like a hard pivot. But I think it’s key on a marks in the markets episode. Just to kind of make sure we’re as faith driven investors orienting ourselves around everything we’re seeing from a headline standpoint and all that’s going on. And so the general question I want for you guys is. What is top of mind for you right now in your work? And as you’re, you know, faithfully going about being an excellent investor in light of, hey, we’ve got an election in the next 60 to 90 days. There is talk of an imminent rate cut coming here in September, maybe 50 basis point, 75 basis points. Public markets have been on a historic run. Is there going to be a continuation of that soft landing, hard landing? Where are we going to end up the inflation situation with kind of the balancing act of the fed in their rate cuts. You know, as you do your work and as I’m in a faith driven investor, you’re listening to this podcast, what are those things kind of top of mind. How can we, as you know, the people of the cross kind of keep that redemptive mindset in the midst of all of these ever changing and ever active headlines? And so I’ll kind of give you that grab bag to both of you and let you comment where you wish. And then we’ll close with our final question that we love to ask after that, Chris, go ahead. 

Chris Kim Oh, that was a lot I want to try and digest right now. I think the Lord’s just been constantly reminding me with, I don’t want to necessarily call it noise, but everything is happening out in the world. Never forget to steward what he’s given me. Well, like as in like, I don’t consider myself the likeliest of like, leaders. But I think given this opportunity, this group, you know, I got two little kids now and yeah, I was even having a dinner with someone last night, and we’re just talking about what it takes to just become wise. It just seems such a lost thing. My wife always says, and I say, she’s the wise one in our family. I gotta learn from her. You know, the world doesn’t need more smart people. She always reminds me of that. And yeah, it just comes with, like, just understanding how little we really know and how little we actually have in our control. I think ultimately just an added bit more on him. But sometimes it gets lost like it gets up in there, like you listed all these factors that go going and it just conflict is raising my work here and now I’m trying to build a team and think about how to build a culture and everything. But yeah, sometimes my mind just gets to ahead of everything too fast and I just go slow down just for life. And I forget the really important stuff. I would say not to try and see the things you do are important. I don’t even know if that really just any things you just brought up, but that’s something that’s been really like on my heart lately. 

Andrew Behrman Yeah, I think it’s an important consideration, Chris, of like, just like we were talking about investment horizons of different institutions. I mean, as private capital investors, we’re fortunate and blessed to have the benefit of thinking through the cycle as it relates to investments right over multi year periods. So our capital is able to be a bit more patient than you may see at times in the public markets where things are driven by a quarter to quarter performance, we have a little bit more ability to say no. We want to have an active influence for the long term. And I think as believers, you know, we have we have the ultimate eternal mindset, right? Like we know where the end is headed. Right? And so we can be really grateful and rest assured in that making our plans right as we should, and diversifying, having a strong asset allocation but relying on, you know, it’s the Lord’s timing, it’s his will be done. And we know what the salvation story is and what the redemption of creation is in. 

Richard Cunningham Looks like man, that’s good from both you guys. I mean, I think the general answer I got there was, Richard, tune out the noise. There’s a lot of headlines and it’s just not worth getting lost in them. 

Andrew Behrman Look, there’s going to be changing dynamics, right? I mean a lowering interest rate environment. Maybe some M&A activity does pick up. You start to see some of those distributions, Chris, that haven’t been as present in the markets. 

Chris Kim I would just add like to address some of the actual topics. I just start with the rates and everything. Like at least amongst the secondary investors, there is a strong opinion that we do believe M&A activity will open up starting in the second half, if not first half of next year, with the expectation of rates absent of any major macro geopolitical event. That goes on and it’s reflecting the secondary price. Secondly, pricing has been increasing overall and deployments been also increasing too. So when you have positive things going on, generally, it does indicate that there is an anticipation and expectation that net asset value should in the coming quarter. In the coming years, distributions are going to pre. So this slow historic ten plus percent. There’s an institution debt that’s going to rise as well. And so with those things secondary investors are trying to load up on assets. As they’re acquiring assets they’re only yielding 10 to 15% you know in distribution. So we’ve been seeing a lot on our side. And one thing that’s kind of nice about us, and I think Andrew’s probably in the same situation. Like we are essentially a funnel. You know, we actually have hundreds of positions. So we feel a notice if we actually talk to the GP’s, we talk to all of these private firms and hear what they’re seeing in the market, and they’re getting a lot more activity with their portfolio companies, but they’re perceived to be performing a little better. Do you say they’re actually getting more inbound interest, maybe to be acquired or do some kind of strategic X, Y, and Z with it? So definitely activity is picking up in some sectors more so than others, I would say, by having good run things. Ventures, though, seems to be lining a little bit, but it’s like picking up two and depends where you operate that you’re right. It’s been, I think, very strong play, especially with the hiring. So people look elsewhere for access to capital. 

Andrew Behrman Yeah, I think there’s comfort in diversification I think and that’s probably true for any investor to say like, let me build an asset allocation that’s going to be in many ways all weather, so that when tough times do come in the short term, I’m prepared and can keep that long term mindset in mind. I mean, I think as a fund investor on the private equity side, I think we constantly are thinking about, hey, what’s our top down view of secular trends that are going to continue to occur throughout the cycle? Right. And then secondly, how do we pick great managers with expertise that can navigate those cycles? Well, and I think if you’re able to do those two things, you know, in a diversified way, you should be able to perform well. 

Richard Cunningham Two words, gentlemen, great summaries. And this is the question we love to ask at the close of every FDI podcast is, what’s the Lord been teaching you in and through His Word lately? Andrew, we’ll start with you. Chris. We’ll close with you. 

Andrew Behrman Yeah, well, it seems like it’s been a theme here, but, probably just the theme of patience and having a long term mindset. You know, I’ve got a 16 month old now. I continue to build the team here at sovereigns. And, you know, I’ve been reading about the patriarchs and the Old Testament, you know, and often when the patriarchs made decisions without seeking the Lord’s guidance first or in haste, things didn’t turn out so well. And so, I’m generally reminded, you know, to have patience, to be thinking with a long term view in mind. And it’s easy, I think, to get kind of gung ho about how to steward capital. Well, right now, and I’m reminded that, you know, that’s a multi-year exercise. And I’m also called the steward in my family, my community, and be an active believer in, active in my calling. 

Richard Cunningham You know, one of the things we love to talk about in the faith driven landscape and that is faithfulness over willfulness. I really appreciate that, Chris. What about yourself? 

Chris Kim Yeah, I think kind I touch upon that earlier about just wisdom. I think just as a father of two kids now and trying to lead this group too many times, I still find myself not boasting in the Lord, and he keeps bringing me back to first Corinthians that the only thing that’s worth trusting is in the Lord. So I think that’s been heavy on my heart and keep me grounded. If I lose sight of that, that it’s actually like, I know the podcast variety, the backgrounds, you know, where we’re at. But, you know, I’m in New York City and if there’s anything that need some humbling, it’s probably the city, you know? So I think it’s very easy to get caught up with all the activity that’s happening around you. And it’s just wonderful to have to work to just constantly remind what it all comes out to. But I’m called to do so. Try not to take any credit. I got a question. That’s awesome. 

Richard Cunningham Well, Chris Kim, our strategic partners, Andrew Berman, Sovereign Capital, what a joy to have you guys on friends. This has been another edition of marks on the markets with Faith Driven Investor. We will catch you next time. Thanks so much for tuning in. 

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In this episode of the Faith Driven Investor Podcast, join Justin Forman as he honors the life and legacy of Richard Garnett, a faith-driven entrepreneur and actor who recently passed away after a courageous decade-long battle with cancer.

This poignant episode features a powerful teaching from Richard himself, focusing on investing in what truly matters. As we reflect on Richard’s recent passing, his message takes on new depth and urgency. Tune in for an inspiring exploration of intentional living, generosity, and the art of cherishing each moment.

Episode Transcript

Justin Forman Welcome back to the Faith Driven Entrepreneur and Faith Driven Investor podcast. It is a gift to be with you guys today. There are some days more than others that we just look around and appreciate and have perspective of making the most out of every moment and not taking for granted anything that we have in front of us. And this is one of those days. About a week ago, a friend forwarded a story of Richard Garnett, and it was a talk that he had given some time ago. But we got a chance to watch it and listen to how is it a professional actor of 15 years and TV and film and theater? He went on to be a feature of an entrepreneur and a faith driven investor and thinking intentionally about how to be generous with his time, how to be generous with the things that he was stewarding. And man, there are times when you can hear theory, you can hear idea. And then there’s times when you hear people’s story. And when you hear people’s story in light of the moment and what they’re battling and battling health and sickness and the journey that Richard was on, that somehow those pictures become that much more real and that much more vivid. And last week, Richard went home to be with Jesus after battling cancer for the past ten years. And there are a few messages that I think I’ve heard in the last year or the last ten years that are as powerful as this. So we wanted to share this with you. We’re grateful for our friends, McClellan Foundation and others that captured this and wanted to share this with the movement so that it might be an inspiration and encouragement and a challenge to us all. Let’s listen. 

Richard Garnett I’m Richard, and I’m dying. And I thought I’d tell you my story. I work in financial services, and one of my favorite clients, their headquarters is in Brussels. And if you go into the men’s toilets in their offices in Brussels, in front of each men’s urinal is a sheet of A4. It’s laminated for obvious reasons, and it has on it what’s called their lessons from the Loo. It’s basically all the deals that went south where they’ve lost 20, 30, 40, 50 million and the lessons that they’ve learned. So what I’d love to share with you is my lessons from the loo of life when it comes to money. I became a Christian when I was 16. For the first half of my life, first 20 years, God called me to be a professional actor. That didn’t involve making a lot of money. You’ll be surprised to know. I was taught to give the first 10% to the church and the other 90%. You can do with what you want. Actually, we couldn’t afford orange juice. We couldn’t afford biscuits. Didn’t amount to much. And then in the late 90s, I was in Japan doing some Shakespeare. I’ve been away from home for five months and our third daughter was born. And I cried out to God for a way to earn a living that didn’t involve living out of a suitcase.

And he very graciously answered my prayer. I was a long story cut short by the chairman of one of the largest companies in the world that I never heard of to kind of help him do his speeches and do his communication. And that started the journey of what we and my team do for the last 25 years. Basically, we help people persuade other people to give them hundreds of millions of pounds. And the challenge of that is I will find myself earning in half a day or a day what I had been earning in a week, two weeks, a month as an actor. What did I do with that? Well, 10% went to the local church. The rest of it, I’d been told, was mine to do with what I wanted. So what did I do? I looked around my church. I looked around my town where I live. I without even thinking about it, I inflated my lifestyle. What had been holidays in the UK became holidays abroad. What was wool became cashmere. The kids went to private school. We moved out every five years because we could open up and up the property ladder. And after a while, I felt a deep disquiet that that was the right thing to do.

And. You know, Jesus tells the story about the farmer who has excess at the end of the year and builds barns. Can you remember the word that Jesus uses to describe that farmer The fool? I was that fool. I came to the conclusion that I was a living embodiment of foolishness. Now, Jesus had some advice, actually, kind of at the back end of that story, he says, Be rich towards God. But what did that actually look like? So I started to do some research. And what I found staggered me. If you take evangelical Christians in the world, 20% of them reside in the West. Let’s call it North America, Europe, the UK, and 80% reside in the rest of the world. So you’ve got the wealthy church and the poor church, the wealthy church, evangelical Christians in the in the West. Guess every year what proportion of our income we give away. 2.5%. I came to the somewhat shocking conclusion that I was one of the greediest generations of evangelical Christians ever to inhabit planet Earth. We give out 2.5% to our local churches. On the whole, they spend roughly statistically 50% on buildings, 25% on the staff team, 10% on missions. Some of that goes abroad. Net what does that mean? That means for every hundred pounds that God gives to evangelical Christians in the West, 25 PE goes outside the West. One quarter of 1%. And this didn’t strike me as fair. So what was my responsibility to that? I didn’t consider myself wealthy. I basically drove a Ford Mondeo estate. I had clients who earned 100 million a year. They were wealthy. I wasn’t. And I did the research.

Guess how much you have to earn to be in the top 1% of the wealthiest people on the planet. 30,000 pounds a year. I was earning more than 30,000 pounds a year. I was at the top of God’s financial pyramid. If God wanted to fund His work around the world, I’d be the first person that he came to. So what did I do? I opened a stewardship account. We upped our giving percentage. And then the question was, Well, who do we give to? So at the time, my local church was raising 4 million for a building refurbishment program. And I can remember saying to my vicar, I’m not sure if God had 4 million spare. He’d invested in that. Now, leaving aside the extraordinary hypocrisy of me saying that having moved from a perfectly fine four bedroom house to the five bedroom house, that was my do wrapper. Leaving aside that hypocrisy, I still thought that was the right thing to say. So we did support our local church, but also we determined that most of it would go overseas because that’s where the huge opportunity for the gospel is and that’s where the massive needs are. So where? So my clients are very smart investors and one of their principles are invest in great people doing great things. So that’s what I prayed for. Great people doing great things. There was a girl in our church. She’d just come back from a gap year. She was 18 years old. She went to Romania and in her gap year she found five and seven year olds sleeping off the streets. So she started an orphanage in her gap year. She wanted money. There was money in our pot and our stewardship pot. We supported her. Then my business partner took me to Uganda to an orphanage. I didn’t want to go to Africa, frankly. The idea horrified me. But he dragged me there. He bribed me to go there. And what I found astonished me. I found couples had moved into the African bush at the height of the Aids crisis. Christian couples and they built a house and the house had three rooms. In the first room they put seven beds for the seven orphaned girls they adopted. In the second room, they put another seven beds for the seven orphaned boys they adopted. In the third room is where they lived. And I suddenly had this epiphany. I’m not part of some irrelevant subculture of Christians in the UK. Believe in weird stuff. I’m part of a global network of inspirational, extraordinary people doing amazing things, and they could do with my help. And I had enough money in the pot to help them. I can remember taking my daughter there and we went on holiday to one of Uganda’s national parks. It’s beautiful. And when I was on holiday, I suddenly thought, I wonder if these kids have been on holiday in their own country. And I said to Sam, how much would it cost to actually take these 80 kids in their parents community of 150 people on holiday, Probably the only holiday of their life to one of their own national parks. And he gave me the number. Do you know what the number was? It was less than we would spend on a bog standard two week holiday in Europe for a family. There was money in the pot. Jesus said something really interesting about money. He says where your treasure is, then will your heart be? When I invested in that holiday, it gave me such joy. Such joy, and it still does to this day. And the more I invested in this kingdom, the more joy I got. More than the joy of a new house, a foreign holiday, whatever it might be. And then somebody said, Why don’t you meet a man called Eric in Paris? We’ll meet at the bistro. Never a hard thing to do to have a meeting in a Parisian bistro. I went there and I said, Eric, what are you doing? He said, This was the beginning of the 2000s. I want to use the Internet to convert the French. Good luck with that. How are you doing that? This was the beginning of the Internet, by the way. So my corporate clients were using the Internet, but I hadn’t met a Christian who was doing it. He said, I’m converting the gospel into like a seven minute YouTube video called The Father’s Love Letter. And then strategically using Google AdWords to draw people to watch it. And when they watch it, they can click on a link if they want to become a Christian. I went, That’s smart. So what are you finding in terms of conversion rates? He said for every 100 people who watch it, four people say they want to become a Christian. I went, That’s extraordinary. And what’s your vision? He said, Well, I want to translate it into the other major languages. There are 30 of them English, Spanish, Farsi, Japanese, Chinese, etc., etc. But how much would that cost? He gave me a number. There was money in my pocket for it. And I’ll tell you, I came out of that meeting and I’ll tell you how I felt. Imagine it’s about 20, 30 years ago. You’re in Harvard. Next door to you is a strange man called Mark Zuckerberg. And he wanders in one day and he said, I’m going to start this thing. I’ve got a weird name for it, Facebook, but I need some cash. And if you give me some cash, I’ll give you shares in the business. If you knew then what you know now, what would you sell in order to get shares? Be the first investor in Facebook. I would sell everything and wander around in underpants for a year. I’d persuade my parents to sell their home to cash in their chips. That’s what I felt like. My my mindspace moved from. What’s the minimum percentage I can get away with before God? And what is the most I can get for a turtle treasure? Here’s what I think God pays us. And this is chocolate money. Can you see this? It’s what you consume at Christmas. All the money we have this side of happiness. Chocolate money. We can consume it all when we invest it globally in what he’s doing locally, regionally, nationally. Internationally. It becomes eternal treasure. And suddenly I was thinking, why should I spend 20 grand on a car when I can buy a bill banger for five and invest 15 for eternity? Long story short, I’ll take you to 2005. Our marriage collapsed. I was feeling awful. What was my first response to that? I’ll buy myself a holiday home that will make me feel better. I like to say I like golf. I get somewhere there. And then a friend rang me up and said, Don’t be stupid, Richard. You’re self-medicating your pain. There are better things to do with the money and the work. There’s a devotional I love called God Calling two Old Ladies by 100 years ago, Anonymous. When they prayed, Jesus spoke to them. And they write down. They wrote down what he said. And every January the 5th, I’d read this is what Jesus said to them about money. Don’t be afraid of poverty. Let money flow freely. I will let it flow in. But you must let it flow out. I never send money to stagnate only to those who pass it on. Keep nothing for yourself. Hoard nothing. Only have what you need and use. This is my law of discipleship. I wanted to be brave. I wanted to be brave. I wanted to be like that. I wanted to live without a safety net. So I stopped paying into my pension fund and I set my lifestyle. And then I determined to give whatever the excess was away to invest it in the kingdom. I wanted to do that, but it was terrifying. Every January, I’d feel the enemy say to me, Richard, because I’m self-employed, at the beginning of the year, my diary is empty. Every genre, I’d feel the enemy say to me, you know, this is the year you get found out. You know, there’s the year that nobody’s going to ring you. And I felt Jesus saying to me, Will you give me until Christmas, Richard? If you’re on a park bench at Christmas, we can have a conversation. For 15 years. I was filling that park bench and I’ve got 15 of these paper diaries in my bedroom to prove that you cannot give God that God meets your needs in every conceivable way. And that for me was really, really exciting to be part of that journey. And then I’ll take you to 2014. Christmas Eve. I’m in a hospital in Watford and a young man who looks like he’s about 16 is actually a doctor, comes and kneels down and looks up into my eyes. That’s never a good sign, is it? And he says, You’ve got cancer. We think you got cancer. On January the 5th, I was with an oncologist and they confirmed it. My cancer was mesothelioma. It comes from asbestos. They reckon it comes from asbestos in old theaters, actually, and it’s incurable. And they said you’ve got about a year, 18 months to live. At that point, my son, who was in the meeting, had his laptop over and he said, Dad, I found it. I said, What have you found? He said, I found him. He said, Tell him a joke. The oncologist was somewhat surprised. I said, okay, what’s the joke? You said? How do you treat a patient with me so clearly? Omar? As best as you can anyway. Memorable moments. Since then, I’ve had chemotherapy. Two big operations, 60 rounds of immunotherapy, 60 rounds of radiotherapy. Couple of months ago, they said the cancer’s move from the right lung to the left lung. It’s stopped working. So we’re going back to chemo. So I’m in the middle of chemo, so my brains are fog and I have to sit down and. Here’s my thought. The closer I get to death, the more grateful I am. Because I’ll tell you this. If somebody has got a servant, I’ve got the opposite. I’ve been awful at talking about my faith to other people. I’ve been dreadful at inviting people to Alpha or Christianity explored whatever it might be. But the fact that Jesus gave me an opportunity to invest some of the money that He’s given me in the first place. I mean, don’t you find it fairly hysterical that a rather stupid unemployed actor is is employed to advise people, to persuade other people to give them hundreds of millions of pounds? I find that ludicrous. But the chance to make a difference. We have a cancer club at church. It’s not the most popular club, to be fair. I like it. We’ve lost a few. We’ve gained a few over the years. One of my friends, Sandra, is dying at the moment and she said the closer I get to death, everything drops away. Apart from two things. Love the love that God has for me, the love that I have for others and making a difference every day. Can I make a difference? She coaches from her bed. Six people. She’s an extraordinary woman and I can resonate with that. The chance to make a difference is so important to me. A young man called Ed phoned me up a couple of years ago, said We found a people group in India that has no gospel presence at all, and we found 15 Indian evangelists who want to go full time to invest their time in reaching the gospel with them. I went, Ed, how much would that cost? He went, all in all, 15 full time evangelists, unreached people group. 12,000 pounds a year. 12,000 pounds a year to change the lives of an entire people group. That really excited me. It still does. Let me end with three things I’d love to say to you. Do you know if Western evangelicals gave not 2.5%, but 10%, do you know how much more money would flood into the kingdom every year? I’ll tell you, 100 billion pounds. That’s 100,000 million pounds. That’s the same that Putin is pouring into the war in Ukraine. Imagine that as a power for good across the West, across the world. But I’m not asking you to be more generous of that reason. It’s for purely selfish reasons. This side of heaven. I’ve known very few things that give more joy than being a part of what God is doing financially and in eternity. Actually, we get this treasure. What is this treasure? John Lennox, who many of you know is a mass professor at at Oxford, a lovely Christian man, and he’s written a book on what to do when we invest our time and treasure and talent. And he uses the story that Jesus tells of the dodgy steward. He used money to buy friends. And he says, when we invest our time and our treasure in what God is doing, we. We make friends. We make friends. I have friends all over the world. By God’s grace. And I’m so looking forward to getting to Harvard because we can sit down and I’m going to hear their stories. And the fact that I’ve been able to play some tiny, tiny, tiny, minuscule part in their stories thrills me now. And I know Will through me then I hope that’s part of my treasure. One of my great heroes in life is a man called George Miller. For those of you who don’t know, George Miller was a Victorian German gentleman who got called to move to Bristol, and God called to look after orphans. And in the course of his life, he looked after 10,000 orphans. And he’s one of the founding fathers of orphan care in the UK. George Miller’s life as to extraordinary elements to it. Number one, he never asked anybody for money. And looking after 10,000 orphans costs a lot of money. The only person he asked was God. Every day he asked God and God gave him. 210 million pounds at today’s prices. Now, why could God trust him so much? I think the second thing that makes Muller extraordinary is of the 210 million pounds that God gave him, he gave away to other ministries all across the world. 70 million. One third he gave away. Do you know what Miller’s legacy is? Because at some time he supported 200 missionaries in China. Well, his legacy isn’t just what he’s achieved in the UK. It’s the growth of the Chinese church. Muller’s legacy, 150 years later, is 120 million Christians in China who are there because partly of what he funded. So my question to you is, are you not just serving your local communities and your churches, but are you serving the global church? Because Western money can make a huge difference. Let’s take the 4 million that we spent on our refurbishing our church. If you invested 1 million and you gave it to my friend Ed and the charity called 500 K in India. India, you know, has 500,000 villages with no Christian presence at all. 1 million. There would support 500 full time evangelists for three years and lead to the planting of between 1000 and 1500 churches. If you put 1 million to work in Africa, where so many families live on less than a dollar a day, and you gave it to a Christian charity called Five Talents, you’d actually support 10,000 women. The poorest of the poor. To be able to read and write and count and save and earn their way out of poverty. If you invested 1 million in Bible translation because we know without the Bible, you can’t evangelize. And still 2 billion people on the planet with no translation of scripture in their heart language. If you invest in just 1 million, you be able to translate the Bible for a people group of 20 million. And make God’s story accessible to them. And then if you were really strategic and you decided to use the Internet to access the 12 least rich countries in the world, you know what 1 million would achieve if you gave it to Jesus dot net, who are very smart at this stuff. You’d basically, in those 12 countries, enable the gospel to be seen 100 million times, which would lead to 200,000 people indicating that they wanted to come to Christ and to be followed up on line. Think of the difference that 4 million can make around the world. The last thing I want to say is this. Thank you. Thank you. And bless you in everything you have done for his kingdom and everything you are doing and in everything you will do. Bless you. 

Justin Forman After listening to that message, there might not be a lot of words that need to be said. I can’t think of many, but I hope that you’re inspired. I hope that you’re challenged. I hope that you’re encouraged. I hope that if you’re listening on this on the drive home, that it gives you just a whole booster shot of energy when you run into the things of your family. If you’re running into the workplace, would it leave all of us with this idea that it’s worth the trade, it’s worth the trade of living a life that’s fully alive, living a life that is staring into the headwinds of what society and what culture might say, but saying we are living for something so much bigger than this world. Many of you guys might have a chance to join that conversation even this week. The Faith Driven Entrepreneur Conference. I pray along that journey that you might find friends, that you might find community, that you might find people and fellow travelers that you can lock arms with and live that intentional life, that surrendered life that Richard just shared with us. God, I pray blessings on each and every entrepreneur as they’re listening to this. I’m so grateful for the words that you have given that you gave Richard and that you shared with us today. May we? We’ve challenged and inspired to live fully a life fully devoted to you. And it’s in your name we pray. Amen. 

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The Fed’s long awaited rate cut took place. The US Election is just over a month away. In this episode, Richard Cunningham and John Coleman take a look at the many major headlines interacting with the economy and markets and provide some commentary and perspective. 

We delve into the intricacies of today’s economic landscape, from the Fed’s recent rate cuts to the performance of the ‘Magnificent Seven’ stocks. John Coleman offers valuable insights on private equity, venture capital, and real estate markets, while also addressing the potential impact of the upcoming U.S. election on the economy. Learn how to navigate these complex times with both financial acumen and spiritual wisdom.

Episode Transcript

Richard Cunningham You’re listening to Faith Driven Investor, a podcast that highlights voices from a growing movement of Christ following investors who believe that God owns it all and cares deeply about the heart posture behind our stewardship. Thanks for listening. 

Welcome: Hey everyone! All opinions expressed on this podcast, including the team and guests, are solely their opinions. Hosts and guests may maintain positions in the companies and securities discussed in this podcast is for informational purposes only, and should not be relied upon as specific investment advice for any individual or organization. Thanks for listening. 

Richard Cunningham Welcome back, everybody, to another episode of the Faith Driven Investor podcast. It’s episode 181. We are closing the book on Q3 2024 as when this releases, it will be September 30th. Hard to believe we are entering into the last lap of 2024 as it relates to quarters at least, and we’re talking marks on the markets. We’ve got our resident expert, John Coleman, in the podcast studio. And before we welcome John onto the pod, just a couple of quick things I want to note. If you haven’t yet, listen to our most recent FDI podcast that dropped a couple of weeks ago, episode 180 with Richard Garnett. It was a special tribute to his life. I just cannot recommend enough after you get your marks on the markets. Phil here, to go back and listen to that episode. It was unbelievably fantastic. I promise you, you will end up sharing it with a friend or someone you love. Just the wisdom and the principle shared in it are timeless and it’s worth a listen. And the final thing I want to say is, I know we’ve got a lot of cross-pollination in the faith driven investor and faith driven entrepreneur audiences. And on Friday, the 20th FD hosted its annual conference. And man, it was a big hit. I know I got to attend a watch party here in Austin, Texas. There were dozens, if not hundreds of other watch parties across the globe, and I say that to tease out that if that was a really special experience for you, the FDI conference is coming up in January, which is hard to believe. It’s only three and a half ish months away. And so it’s conference season. It’s the fall of 2020 for John Coleman. We’re talking marks on the mark. It’s great to have you guys on the podcast. How is Team Coleman. How are you guys doing. How’s your summer. How’s the fall kicking off. 

John Coleman Yeah Richard, thank you for having me. Obviously fun to be on this side of the mic. With you interviewing me, the fall is off to a good start. We love the fall. Atlanta, like Austin, can be a little bit hot. And so it’s starting to cool down just a little bit. We’ve got kids. Richard knows we’ve got four kids between 3 and 11. And so I was telling him a lot of my life is is unpaid Uber driver at the moment or chauffeur. And so, you know, but the kids are having fun. It’s super fun to get out and watch them play sports or do their theater performances. You know, this age range is just really special. So the Colemans are having a lot of fun right now. 

Richard Cunningham Great. Fantastic. Well, John, this pod comes at a great time because I feel like we’ve got kind of one of those organic stopping points in the calendar where it’s the end of September, Q3 is over. And that’s going to kind of be the theme of today is that’s, you know, we’re in an election year. We’ve got three fourths of the year covered. We’ve had some massive kind of markets and economic headlines. And so we’re just gonna kind of go subject by subject on a few big items and let you kind of provide some commentary and some thoughts and always that kind of redemptive and biblical perspective on things. And let’s start with the big one from just this past week, September 18th. The fed cut rates, and it is a long expected, long anticipated rate cut. They’ve been at, you know, multi-year highs, I think as a 23 year high cut rates down to 50 basis points. And so what has kind of been the storyline. Why did we go on this rate hiking situation and kind of cycle in the first place and kind us kind of some of the commentary and background as to the decisions the Fed’s been making. 

John Coleman Yeah, obviously huge news this week, Richard, in softening in the fed rate. You know effectively we started this rate hike cycle because of inflation. So we went through this uniquely long period of low interest rates globally after the great financial crisis in 2008. And we’ve talked about this on the podcast before that period, 2008 to 2000, 22 or so was really one of the more unusual in economic history. You know, we began to think of that as normal because for most of us in our adult lives, that was kind of normal. But if you looked at the prior hundred years, for example, the interest rates that prevailed during that time were unusually low. Our current rates are actually more in line with historical averages. If you were to look back in the 60s, 70s, 80s, 90s and before, in fact, in the 70s and 80s, interest rates were obviously quite, quite a lot higher than they are right now. And so that period after the great financial crisis was unusually low. And what happened at that point was in order to avoid a Great Depression, you know, a repeat of 1929. In the 1930s, the central banks around the world, not just in the United States or around the world, felt the need to drop interest rates artificially low. And when you drop interest rates, that obviously spurs economic activity because money becomes cheaper to borrow, you can borrow money to buy a house, you can borrow money to buy business to finance new capital. And so it’s stimulatory to the economy. As we rolled through Covid, right, interest rates were still unusually low in the United States and around the world. But then we got hit with a ton of fiscal stimulus. Right? So we went into Covid. The federal government just dropped from a helicopter a ton of money into the economy that was warranted at the time because it felt like in the initial lockdowns, we could risk going into a severe economic recession and then coming out of that, what a lot of people believe is the federal government, they can continue to stimulate the economy too far. So the Biden administration’s so-called Inflation Reduction Act, which was like a very Orwellian term because it was actually a very stimulatory inflation causing act, dumped a ton more money into the economy. They continued Covid stimulus long after the lockdowns were over as a reality. And what happened on the backs of that is massive inflation, which we’ve been living through for the last couple of years. Right. And I say massive inflation. I mean, this wasn’t like Argentine style inflation that we experienced as the United States, but it was very high inflation relative to what we’d experienced for the couple of decades prior. In response to that, the fed had to go through one of the most aggressive tightening cycles of our lifetimes. And tightening means they’re raising the federal funds rate, which is the rate at which they loan to banks, which raises interest rates all over the economy. Right. And they did so up until we got to kind of like 5.5%, which was much higher than where we had been previously, or almost 6%. So what’s happened most recently is the fed has now begun to loosen the economy. So inflation has slowed. There are some signs that the fundamental economy might be softening a little bit. You know, what was really interesting about this tightening cycle is usually when the fed raises interest rates, you slip into recession and they basically break the back of inflation by forcing the economy into a recession, which kills inflation, hopefully. And that’s kind of what happened coming out of the 1970s. In this case, we never actually slipped into recession. We never actually saw unemployment rise to the level. You could characterize it as problematic or outside of historical norms. And we never actually saw at least the official growth rates of the US slip into recession territory. Although we’ve seen there there’s been some funny business with those numbers over the course of the last 18 months or so. So it’s difficult to tell. And so now the fed is living in this interesting period, Richard, where the economy is softening a bit, but it’s not yet that the inflation is coming down and more under control, but not yet at their target rates. And yet they’re anticipating problems. And so the fed is now trying to cut rates to get ahead of those problems so that they can have a so-called soft landing where, you know, the nirvana here is that we get inflation under control and then we start to lower rates in a way that keeps inflation under control, but avoids any sort of dramatic rise in unemployment or dramatic recession in the economy. And that’s what they’re targeting so far. It seems like they might have achieved that. It’s a bit too soon to tell. We’ll know in a year. But this week they dropped rates by 50 basis points. The prediction markets would tell us that most people are anticipating they’ll drop it by another 50 basis points before the end of the year. So a full percentage drop between this week and the end of the year, which would be a fairly dramatic cut and would get us back to even below historical levels at like 4.5%. I think, you know, the fed is probably targeting getting to something like 3% by 2026, which may be the new normal for interest rates. More what we’ve lived through previously. If they can keep inflation under control. 

Richard Cunningham Well, man, that’s a fantastic run down. And so just to recap kind of some of the actual rate numbers behind it. So in March 17th, 2022, as John alluded to, the hiking began and it rates were down in the 0.25, 2.5 50% range to 25 Bips to 50 Bips, and they aggressively spiked them over the last two and a half years. And finally, on September 18th, 2024, we saw our first cut. And we’re back in that 4.75 to 5% federal funds rate as John was speaking to John. Fantastic rundown. And so here’s kind of, you know, hindsight’s 2020. And I know it’s as you’ve kind of mentioned right now, it feels like the fed has navigated us to a spot that is digestible. But there have been nine rate cutting cycles over the past 30 years that have taken place. Three of those nine have began with a 25 bips cut, and six began with a 50 basis points cut. As we just saw, history suggests that after the 50 basis point rate cuts, we tend to see recessionary periods and markets the S&P 500 declining on the back of that recessionary period. Do you think that is a possible outcome here, or would you kind of say, hey, I think we’re heading in the right direction? This was the move that needed to be made. Recession is just TBD. 

John Coleman Yeah. No one knows. For sure. But I do think there is a correlation causation issue there that we have to be aware of. So typically rate cuts are because we’re already heading into recession. Right. So if you think about it, the rate cut itself might not be the causal factor throwing an economy into recession or increasing unemployment, right. It could be that the economy is already sliding into recession, unemployment is spiking and the fed cuts rates as a response. And so it would be natural that as the economy deteriorates, even if the fed is cutting rates, that it might continue to deteriorate. Right. And that that might be what’s actually causing the recession or causing a decline in markets. I think that’s entirely possible here. Right? We don’t know how deep this slide and underlying the slip in underlying economic indicators is. I would say it’s tough to parse the data right now because a lot of the economic growth in the United States, I think, is currently funded by deficit spending, by government spending, because we’re still running massive historically high deficits and running up a huge, unsustainable debt, which we could talk about. We we also see employment information is a bit off in the sense that, a lot of it is spurred by immigration. And so, citizens in the United States, the employment data is a little bit weaker than in the economy overall, which would include a wide variety of workers. And so without any judgment on any of those underlying trends, it can be tough to parse just how strong or weak the underlying economy really is. I would say, given the way that this has played out, our chances of avoiding a significant recession or a significant rise in unemployment feel to me better than in the past. I think the economy, the fed, is really trying to get ahead of significant deterioration right now. So I think the real economy has a decent shot of maybe, maybe a mild recession, maybe some continued deterioration, but potentially not getting that bad. Markets are a little bit more difficult to predict in my mind, Richard, because they are at such high levels of valuation right now. So particularly at the top end of the market in large cap growth stocks, the Magnificent Seven, we are at much greater than average price to earnings ratios for those biggest stocks right now. And in fact for that top I think it’s like quartile the Russell three 3000. The price to earnings ratios are above historical averages in significant ways. How that interacts with this rate cut with some softness in the underlying economy. I don’t know if I were to tell you what I’d really be predicting is that if it looks like we’re going to get a soft landing, that small caps will likely appreciate some, that The Magnificent Seven and some of the other large caps are likely to return to historical averages of price to earnings ratios, or that they’re going to come down a little bit. The overall impact on markets is likely to be slightly negative on, kind of market cap weighted index perspective, but that’s because the valuations of those are so high right now. So there’s a lot going on in the economy right now. I don’t think anybody has exactly the right picture of what’s going on. But if I had to predict the next year, it’s kind of a sluggish economy that’s not quite in recession, where we’re kind of chugging along the chance that markets kind of come back to historical averages for price to earnings ratios or decline a little bit would be somewhat high. And the fed is going to continue to be relatively cautious, do a 50 basis point cut, I think by the end of the year, and then take a wait and see approach in the new year to see how much of an impact that had. 

Richard Cunningham Fair, fair, really good breakdown. Let’s go to that next because I want to talk about how what’s taking place in the economy with the fed is kind of dovetailed into markets and how they’ve interacted. So you spoke to Magnificent Seven. As we all know, a large part of the S&P 500 performance is attributable to those seven largest market cap weighted stocks. And so you’ve got the S&P is up 20.57% year to date. We’re recording this on the 24th of September. So barring something massive happens between now and release date that’s kind of where we are. Nvidia up 141.35%. Meta up 62.99%, Amazon 29%, Apple 21%, Google and Microsoft, respectively. Almost 17% Tesla, who’s kind of that seventh member of the Magnificent Seven who had been on a really tough slog. Looks like they’ve benefited from the rate cut. They’re back up and 64 bips on the year, but that is up almost 5% in the last five days alone. And then compare that to the Russell 2000, which is kind of the representative small cap universe, if you will, not having a bad year up 10.31%. But comparatively to what’s taking place in the S&P 500 and with kind of the mega-cap stocks, if you will, still lagging far behind. So that’s kind of one. Realm is the public markets and their interaction with what’s taking place in the economy. But John, you’re investing across multiple asset classes. And your role at Sovereigns Capital, whether it be private equity, venture capital, real estate and elsewhere, what have you seen kind of on a on a macro perspective with where the economy has been, what’s been taking place and how it’s kind of permeating into multiple different markets? 

John Coleman Yeah. Great question, Richard. So to start with public markets, I think you highlighted the trends perfectly. We’ve been on this crazy run in stocks generally. I think people are starting to assume like I get 20% a year in stocks and that’s not true. You know, the historical rate is like 7 or 8% in public markets if you look over time. And I would expect that at some point we kind of get back to that 7 or 8%, which means we’ve got to have some sort of significant decline for averages to start to take hold. There’s really, as people have been fearful of a potential recession and also very enthusiastic about the rise of artificial intelligence and other technology trends. There’s been a flight to quality at the top end of the stock market in these technology enabled stocks. And I would say that Google, meta, Nvidia certainly we could talk about that separately. Amazon. These are all stocks that are not just quality stocks. You know they’re performing. They’re profitable. They’re growing. They also intersect with artificial intelligence quite a lot. Tesla is that story too in a very different way. They’re not large language models, but Tesla is trying to develop artificial general intelligence for driving, for physical spaces and for robotics. And so you’ve got this thing where at the top of the market, there are these high quality stocks in a growth market where people are flying to quality, and they all intersect with the biggest trend in markets, which is artificial intelligence. And so they’ve been bid up above historical price to earnings ratios. And people have been a bit nervous about being in small and mid-cap because of the fears of recession. Again, I would expect if we hit a soft landing for some of that to normalize. I think that enthusiasm around artificial intelligence is also likely to normalize. I firmly believe that artificial intelligence is at least the biggest trend since the internet. I mean, it has the power to be incredibly transformative, especially moving beyond the large language models like ChatGPT. If you start thinking about like what Tesla is doing, trying to develop artificial intelligence for physical spaces, for driving, for robotics, that’s where I think we take a leap where this begins to dramatically impact the economy, even as large language models are, you know, revolutionizing certain areas of the economy, like customer service or some legal tasks, things like that. And so I think those underlying trends are somewhat likely to continue. But I do think we’ll see a normalization in public markets. I think in private markets you are seeing continued sluggishness. Right. And that has a few sources. One is we’ve just seen fewer exits in private markets lately. And private equity and venture capital real estate is its own segment, which we could talk about in a moment, because I think that’s a totally different set of trends. You know, the FTC in the United States has been very aggressive about restricting acquisitions and mergers in the United States. So Lina Khan has been particularly aggressive about that, meaning the lot of potential options for venture backed companies to exit have not materialize. They haven’t been able to be acquired or to go public with the public market. IPO market and the Spac markets have been quite slow lately, and so there haven’t been as many opportunities for exits, which means that if you invest in in a venture capital fund ten years ago, you might not be getting your money back in the way that you thought, which means you can invest it in a new thing. Right? So I was listening to a very good podcast, the All In Podcast, last week, and they had a stat which I haven’t had a chance to verify independently, but they had a stat where, you know, typically over the last period of time, first time venture funds, about 50% of them are able to raise a second fund. Right now, the stats are that about 15% one 5% of venture funds are able to raise a second fund after the first fund. Because it’s been so difficult to fundraise, it’s been so difficult to get returns. The vintages have been really challenged for 2019, 2021 because of the collapse in venture markets and the slow period to get liquidity. And I would say from my point of view, we’re seeing that I think our team that looks at different fund managers, I want to say this statistic was something like the average fund manager was only raising about 60% of its target, according to the broad based indexes that we look at, which is resonant with this idea that most venture funds, that sort of fund one are not getting to fund two right now. You know, a lot of clients pay to invest in their new venture and private equity funds by getting DPI or distributions from their old funds. Nobody’s distributing capital right now, which we’ve seen. People are not selling positions they bought at inflated rates. Financing is more expensive right now, so leveraged buyouts are more challenged at the moment because rates are higher. And so that’s generated real sluggishness, I think, in the private markets, both for limited partners and general partners. What that hasn’t meant is that the underlying companies are necessarily doing badly. You know, some of these fast growing tech stocks in the venture markets have obviously had a difficult time because there aren’t many exit opportunities. And there’s been this, you know, 2021 was this weird upcycle in venture where everything was really over bed. So valuations have come down from that. But if you look at like real companies in the economy, a lot of them are still doing pretty well. And you know, we see that across the companies that we look at. Employment was really tied a couple of years ago. It’s hard to get good people still hard in certain skilled trades, but that softened a little bit. So hiring is a bit easier right now. Borrowings expensive but not out of control. Expensive like it was in the 70s, for example. So you can sell finance equipment and things like that. A variety of private lenders have sprung up in the private market, so it’s a little harder to get bank loans right now because of some problems in banks where they’ve got exposures they’re trying to manage. But there are private credit markets where you can get loans. So we’re still seeing reasonable health in the underlying economy itself. But transactionally things have slowed. And that means that the funds markets have slowed. And again, I’ll pause there. We could talk about real estate a bit if you want, but that’s what we’re seeing in the private company world. 

Richard Cunningham Yeah, it’s a great recap. And I’m looking at a couple of charts here that relate to what you’ve just talked about. And so going back to the venture and kind of the market for exits in the IPO market, you mentioned that wild year of 2021. And then there’s kind of the Spac craze and everything like that going on. But there was and U.S. stock markets, public markets, there is 1035 exits that took place. And then in 2022, it dropped all the way down to 181 exits. In 23, it was 154. We are at currently 145 exits here in U.S. kind of IPO markets. And so, as John was talking about for these high growth tech companies that venture capital funds back, you know, it’s either get acquired by a strategic to get distributions back or take the company public. And when those exit markets have dried up, as we’ve talked about, not fully dried up. These aren’t crazy off of historical averages. It’s just in 2021, everyone, when they’re seeing companies go exit hand over fist, decided to launch a venture fund and said, I want to get in the game. We can go take this company public in a matter of months. Things have just come back to reality. And then additionally, John, you were talking about private equity and private credit and things like that, and just the difficulty for fund managers to raise funds. And there’s just been LP hesitancy because of the lack of DPI or liquidity coming back to them. A vintage year is when a fund launches and ultimately, you know, kind of classifies the year that fund was launched and how their performance ranks amongst their peers. That also launch that year, 2023 vintage private equity funds are down 8.85%, venture capital funds are down 6.22%. This is a chart from PitchBook 2022. Vintage funds are a little better, private equity is roughly flat and venture capital is down 6%. And it takes you going back almost to kind of 2020, 2019 realms to find that kind of outsized market performance in terms of IRR amongst private equity and venture capital funds. 

John Coleman And one thing to be cautious at there, you know, is the J curve. So I would expect that 20 2223 tight private funds, maybe even 2022 would be a negative right now because of. So for listeners unfamiliar, there’s some called the J curve in private markets where money tends to go out quicker than it comes in, there are transaction costs to it. And so if you hold a private equity fund, it’s not unusual to see it go negative for a couple of years and then come out of it. What I would say is like, you know, we were looking at venture funds that were posting 4,050% paper returns, IRR, you know, with no DPI, but 50% paper returns a few years ago. Some of those firms are still posting pretty good paper returns IRR. There is no DPI, right. Or there’s very limited DPI and funds are stretching on past their like ten year windows and things like that. And so one of the challenges, particularly in venture private equity is a bit different is are the paper returns really real if you can’t get money from them? And how are you going to start to get DPI? How are you going to start to get liquidity if the exit markets are not so good, that’s where you can start to use secondary markets, which has come into favor. But secondaries are trading at deep discounts right now. So you’re taking a hit on your IRR. So I think it’s a bit too soon to tell how these most recent couple of years of vintages will turn out. I’m actually optimistic that the vintages starting in like 2022, where they’re investing end of 2022, 23 are going to end up being positive. Typically, when you see a big dip like we saw in 22 when the rate cycle started, it hurts the vintage a few years prior to that, but really helped. The vintage coming out of that. So if you went back to the great financial crisis, I think it was like 20. 2006 vintages were really bad, and then like 2009 vintages were really good, or ten vintages. I’m maybe beginning that just a little bit wrong. You might see something like that here, but certainly, you know, the returns are going to be flatter than they looked for these like 2016 vintages that were just killing it in 2021 overbid. And we really don’t know how the venture funds are going to turn out until we start getting real cash back. Right. These paper returns are much more difficult to assess. 

Richard Cunningham Well said, well said. Yeah. And our actually two podcasts ago we had Chris Kim on who is from a secondaries firm breaking down just what it looks like to be a provider of those liquidity solutions where they come in and buy, you know, LP interest and private markets position. So definitely worth checking out. And if you’re curious about kind of some of these exit solutions John is talking about and what a secondary is. All right. Let’s quickly hit on real estate because we’ve alluded to it a number of times. It’s, you know, acutely affected by the rate environment. And then let’s go on to after we talk real estate, just some of the election year stuff. You’ve made a few nods to government intervention and activity throughout this podcast. And so I want to talk about that. But real quick on real estate, John. 

John Coleman Yeah, so on the real estate markets, it’s so pretty dicey right now. Honestly, Richard, you know, some of the more attractive segments like industrial or warehouses etc. got a little bit overbid. And so there’s still a lot of demand for those as we have this kind of secular increase in the need for those types of facilities in the US office is still very precarious. I think any of these real estate cycles can sometimes take some time to work through because of all the lease agreements. You know, we’re still working through leases that were signed five, six, seven, ten years ago sometimes. And so it’s not a cliff. You know, those tend to roll off over time as rates reset, etc.. I would say office is still somewhat weak. We’re seeing a lot more return to office, but I don’t think we’re seeing anything like the demand for office that we saw in 2019, for example. I mean that structurally things have just changed in the way that people work. And I think that’s going to stick. And then residential is in this odd period of time where because a lot of people locked in rates for their properties that are renting a few years ago and rates have gone up so dramatically, it is much more expensive to buy an apartment condo house right now in most areas than it is to rent. There’s been this inversion where, you know, the natural order of things is it’s a bit more expensive to rent and to buy because landlords are getting rewarded for basically their outlay of risk capital. So you pay a premium to rent, not outlay any upfront or risk capital. And then if you buy something you kind of benefit from that over time. Right now there’s an inversion of that where it’s much cheaper to rent than to buy. I think because of the movement in interest rates over the last couple of years. I saw a chart recently where, you know, cap rates on rental properties right now, which is which is obviously the income from that property divided by its value are lower than the mortgage rate. So there’s an inversion in that because mortgage rates are higher. And that’s just caused a lot of sluggishness in the home market. Rates are coming down but they’re still high. You know mortgage rates I think for really good credit score like six a little over 6% right now. Many people are locked in at like three, which is, you know, almost twice the cost on a monthly basis. I mean, not quite twice the cost. And so people aren’t selling. A lot of people aren’t buying. A lot of people who stocked up on these kind of rental properties, Airbnb, Vrbo that’s coming back down to earth. And there’s been some not distress in that area. But I think you’re starting to see that space more challenged. And it still just doesn’t make sense to buy a new property right now to rent. Right. That’s inverted at the moment. And so that continues to be sluggish. The other thing that’s been true for more than a decade now is sluggishness in new home starts, a lot of which never really recovered to pre great financial crisis levels. I think that’s continue to be sluggish, although I think the August numbers said new home starts were up just a bit. Obviously there’s a secular shortage in housing in America. Our population is growing faster than our housing stock, especially when you include immigration. And so there’s a shortage of housing right now, whether rental or purchase. And so you would think that would lead to more construction. It’s helping to lead to higher prices, right? Where there’s the highest gap between the price of a property and the average median income in history, basically over the last couple of years. So that shortage is driving up prices. You would think it would drive up new home starts or new construction. And maybe that’s starting to happen, although that’s a pretty sluggish indicator. And so housing right now is still continues to be tough. The mortgage market continues to be tough. And if I were, you know, to predict I don’t. I think that dramatically changes in 25. Even with interest rates coming down. Although if we come down another 50 basis points, and especially if the fed were to bring things down another full percentage point next year and we get in the kind of threes again on the fed funds rate, mortgage rates get down in the force. We see that starting to loosen up quite a lot. But I think that remains to be seen. 

Richard Cunningham That’s a really good analysis. I know the season of life we find ourselves in, it is friends and family. Friends and all that situation are looking to be that first time homebuyer. And they sit there and they say, man, my rent payment as you’re talking about, would double because of where interest rates are and mortgage rates are, even though I can afford a 20% down payment. And so why go under that duress or that stress when you can rent it below market rates, if you will? And I know people are feeling that acutely. All right let’s pivot John. And we’ve got a few minutes left here. And we have got an election coming up in a month and some change. We currently have a Democrat controlled Senate, a Republican controlled House and a Democrat controlled white House. Obviously, you’ve got Kamala Harris running and the Democrat Party, you’ve got Donald Trump running on the Republican side. We are in debate season. We saw the debate a few weeks back, and it feels like the tension and the temperature is up, as always in an election year, but maybe help kind of bring us back down to earth and steady us as you kind of provide some of the maybe economic commentary on both candidates or some of the things you’re seeing and what the bigger issues are as we head into November’s election season. 

John Coleman Yeah. I mean, anybody who tells you they know what’s going to happen right now is lying to you. This has been and this continues to be like the craziest political environment of my lifetime. Certainly, you know, we’ve had two assassination attempts. We’ve had a president be revealed to be in cognitive decline, ousted from office, a new nominee basically appointed by the party without a process, massive reversals in polls, obviously, just a number of kind of crazy policy proposals. And I think more than at any point in my lifetime, too, we’re also seeing candidates just throw spaghetti at the wall in terms of policies. They think we’ll get them votes right. So every day some new promise comes out to try and for lack of a better term, by a vote, right up. Student loan forgiveness, no tax on tips, no tax on overtime. You know, mortgage, first time homebuyer assistance. I mean, we’re running trillions of dollars in deficits. And every day I wake up and there’s some new handout that people are proposing. I think, look, this won’t be revolutionary analysis. I think that in general, it’s likely that markets would react better to a Trump win than a Harris win at this point. What do markets not like about the Trump candidacy? I think and this is one man’s opinion. I don’t think they like some of what they perceive as the volatility of that, not knowing exactly what might come of that, not knowing exactly how the administration will behave in certain circumstances. What I think they favor versus a Harris administration would be a lot of kind of traditionally conservative policies that would be positives for the underlying economy. Right? I think a Trump presidency is staked out pretty clearly that it would try and slash regulation, that it would cut down on the regulatory burden of the business environment in the United States right now, or at least that’s what they’ve stated they would do. They did some of that last time. That would be very stimulatory for business right now in a positive way. I think the Harris administration has signaled in alignment with the Biden administration on some just absolutely insane policy proposals on tax. To be honest, a lot of people now are saying, well, you know, she kind of doesn’t mean it. She’s just appealing to her base. But this idea of taxing unrealized capital gains, for example, even if they’re only doing that higher income people of dramatically raising capital gains taxes at the federal level, of dramatically raising income tax rates, all of these would range from slightly negative to catastrophic for markets if they were to be implemented, and seemed so poorly considered that a lot of people are basically saying they don’t mean it, they’re just appealing to people. I think that with regards to potential negative shocks in the international environment, you know, we’ve obviously got very volatile situations right now with China, with Ukraine and Russia with a widening conflict in the Middle East, where Israel is now effectively, openly at war with Hezbollah in Lebanon, which has been a breaking thing this week as they’ve stepped up that conflict, moving beyond pushing back on the terrorist attacks that occurred out of Gaza. I mean, so that’s very volatile. I think people are very split on which candidate would be positive for that. I think there are wide contingent of. Folks who believe that a Trump presidency would potentially change that environment a bit, that Russia and China would be a bit more cautious during a Trump presidency than during a Harris presidency. And there’s a lot of fear, honestly, right now, with Joe Biden seemingly not as engaged as president, as he was before that something could happen between now and inauguration, right where it’s kind of unclear how the power structure is operating at the moment. So I do think there are some near-term risks to that. And then, you know, one thing. I’ll make an overarching comment, Richard, and it kind of goes back to this. You know, we’re in the handout stage of the election process where everybody’s just trying to announce new policies. They think people will vote for neither candidate, neither party has in their platform any significant way of addressing the structural deficits and debt that we’re accruing right now. Early in the next year, our interest payments on the federal debt are going to go over $1 trillion, effectively, no matter what happens with rates, you know, our entitlement payments for health care and for Social Security in our interest rate payments now eat up the vast majority of the federal budget. They dwarf defense spending. They dwarf spending on the apparatus of the federal government itself. And I heard a stat the other day that almost half of the US economy in some way touches government spending, meaning either is directly a federal agency or state or local agency, or is reliant as a private sector business on funding from those. Right. So we’re reaching this point where the government has just become an enormous part of the federal, state and local economies. Right. And that used to be a platform of the Conservative Party, the Republican Party, that was a loser electorally, because no one likes to hear that we’re out of money and we can’t spend anymore. And everybody wants to know that you can. No one likes higher tax rates, which is the other way to solve that. Although higher tax rates at this point, a lot of people think would be negative for the economy. You reach a point at which if you tax more, you actually hurt the economy. And some people think we’re there, and I just don’t know who’s going to actually begin to fix that. It might be a significant crisis with our debt that forces us to do any sort of cuts or reform to things like Social Security and Medicaid or Medicare, which are really the only ways to fix this imbalance going forward. So I think the next couple months are going to be nuts. Honestly, next month and a half, whatever, it’s in the election. I think it’s going to be pretty dicey all the way through inauguration, because I think the likelihood that we definitively know who won the election on the night of the election is as low as it has been the case since Bush versus Gore, and I think we’re going to see a lot of tumult no matter who wins. And so I would just be prepared for a ton of volatility through at least the inauguration. And then after that, you know, I do think Trump would be initially better received by markets, especially because of the tax policies that have been proposed by the Harris administration. But I do think the long term health of the US economy will be contingent upon whether either of the parties faces up to this deficit and debt problem that we have in a responsible way, and help the United States kind of fix the imbalances that are going on there, which it doesn’t seem like either party or the voters behind them have any appetite to deal with right now. 

Richard Cunningham Like one double clicking on the the debt problem is Donald Trump’s proposed a government efficiency commission, if you will. And he’s specifically and maybe this is just social media world, as you know, called on Elon Musk to be the person to come in and almost clean house and just let’s evaluate where overspending is taking place. And to be clear, there’s some phenomenal people that do incredible tasks for the US government. But as John has kind of alluded to, there has been some just wild overspending which has led to our debt levels. Any thoughts on just kind of that approach, if you will, instead of kind of looking across just government inefficiencies and waste of money, if you will. 

John Coleman Look, I think it is I won’t comment on the Elon thing. I won’t comment on that specific circumstance. I would say, obviously government spending is inefficient right now. Right? I think there’s been a lot of news recently about this, like Federal Broadband Initiative that put forward $45 billion and has not connected a single user to broadband, right? The cost to build infrastructure in US cities now is often two, three, four times as high as it is in European cities, which shocks a lot of Americans. The American government is not working well right now, and we need significant reforms to the way in which we spend to the structure of the federal government structure of state governments in certain circumstances, and there is huge opportunity for efficiency in that. I think it is a no brainer to try and take that on. I think it’s quite difficult to take on because of various employment rules around the federal government. I think it’s needed. I don’t think it fully solves our debt or deficit problem, and I don’t say that in a dismissive way, in the sense that I think we should do it. But ultimately, you don’t solve the federal deficit problem unless you either dramatically increase taxes. And again, I’m skeptical that you can do that to fix our current deficits, because I think it would flip us in. To negative growth territory, or you have to rein in the entitlement programs Medicare, Medicaid, Social Security and have positive interest rate movements, which would lower the interest rate on the debt a little bit. And there are some straightforward mathematical fixes to that. Like, you can mean Social Security, you can raise the retirement age, you can do some other things on the health care side. But right now, neither political party has expressed an interest in anything, which I understand because they’re deeply unpopular with citizens. And so I think it’s a no brainer to try and do efficiency in the federal government. I don’t think it gets us all the way to fixing the structural imbalances that we have. 

Richard Cunningham Fair enough. Well said. Well, as we’re talking election volatility and just the chaos that is likely to ensue throughout the month of October and into November. Let’s rein it back in with kind of the eternal and redemptive perspective and close here with just kind of man. What’s the Lord been teaching you lately, John? And and through his word and just kind of in your time with him? 

John Coleman Yeah. Apropos to this kind of discussion, Richard, I think I’ve mentioned it once on the podcast here. I’m writing this book on money at the moment for my publisher, Harvard Business Review. And the idea is like, what are the principles for money that can make it a tool for human flourishing rather than something that’s destructive? And I just wrote a Substack about this particular point. I have this Substack on purpose, and I wrote about this passage from First Kings, about Solomon, you know, the passage where God asks Solomon what he wants, basically as he emerges as king and he asks of all things for wisdom. And because he asks for wisdom, God gives him wealth and power and those kind of things, at least out of the gates. And then, of course, we know Solomon kind of lost his wisdom over time, but it really made me reflect. In this latest piece, I put up on wisdom as a precursor to getting those other things right. I think one of the errors that we make in modern life is to turn means into ends. So power and money, for example, should be a means to doing something good in the world. You know, in the Christian world, we think of that as stewardship. Did that power money belong to God? He doesn’t need us, but he can entrust us with those things to do his purposes. And the way to use that well is to do what God intends for it, right? To use that as a steward, not to think of it as ours, our money, our power for our purposes, but his money, his power for his purposes and to submit ourselves to that. A lot of people today confuse that as an ends. I want money for money’s sake. I want power for power sake. That is the end of itself. And I think that’s obviously distorting point of view. And the wisdom of Solomon was to ask for the right judgment and discernment in wielding the authority that was going to be given to him. And, you know, that’s something that’s natural to us. But I think we do lose sight of that in day to day life, right? That wisdom is an end of itself. It is good to be wise. It is a means to stewarding all these other things because it’s discernment for God, but it is also an in. It’s good to be wise regardless of anything else. It’s good to be wise for wisdom sake. And so it’s encouraged me to think a lot more about praying for wisdom, for discernment, for judgment. Many of the folks listening this have been blessed with financial resources. They’ve been blessed with professional position. They’ve been blessed with political power. They’ve been blessed with an audience like you, Richard, on this podcast. And those things aren’t good or bad in themselves, right? They are only good or bad, depending on what we do with them. And so it should be each of our prayer every day for wisdom, discernment, judgment so that we can see the path God has for them and that we don’t ask him to join our path, but we ask that we see and join his path, that we see his will for that, and that we align ourselves with it. And so that passage in First Kings about Solomon has caused me to just reflect more and more on am I seeking and praying for wisdom enough for discernment, for judgment in every area in which I’ve been given authority, so that God may trust me with that authority and whatever else he chooses to give me, that I would be trustworthy of that, and I would have submitted myself to his will for that, and that I would have the discernment to see it. And I think all of us could potentially lean into that. 

Richard Cunningham Man, that’s fantastic. Especially relevant to me as I turn the chapter this morning out of first Chronicles, and Samuel in the first Kings of David is handing over kind of the throne to Solomon. So historically relevant to me in my own scripture time. John Coleman, thank you for that, man. How fun to keep kind of this podcast inside the FDA host family this time around. And he remarks on so many things from the fed to the economy to markets to the US election, and just always grateful for your wisdom and your timeless kind of insights that apply on this podcast. And so, folks, thank you so much for joining us. We will catch you next time. 

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In this joint release episode Richard Cunningham and Justin Foreman discuss the problem of joblessness as part of the initiative, Solving the World’s Greatest Problems. They are joined by Keren Pybus, CEO of Ethical Apparel Africa, and Ronald Ishak, CEO of Hacktiv8. They explore the impact of job creation and upskilling on individuals, families, and communities.

Episode Transcript

Richard Cunningham Welcome back, everybody, to another episode of the Faith Driven Investor podcast. And you’re about to hear this, right? The Faith Driven Entrepreneur podcast as well. Really exciting episode today as we were doing a joint release on both the FDI and FDE pods. As Justin Forman, executive director, co-founder, president of Faith Driven Movements, is in the podcast studio with me today. And Justin, we’re shaking things up a little bit, doing a joint release for the faith driven Investor and Faith and Entrepreneur podcast. As we were zooming in a little bit on a new initiative we have. Solving the world’s greatest problems, Solving the world’s greatest Problems has its own website, its own podcast. It is newly launched, newly released. And today we kind of want to go out to the FDA and FDA audiences respectively, and zoom in on one of those great problems, the problem of joblessness. And we’ll welcome our guests here shortly. But Justin, what are we up to today with this kind of special edition joint release podcast?

Justin Forman Man, good to be on the podcast with you again. You make it sound all fancy and technical like we had some deep, deep things to get to, but we were just looking for an excuse to get Richard Cunningham back on the podcast here for Faith Driven Entrepreneur. So we’re going to take what we can get. We’re competing with Baylor Baseball, Baylor Sports and all the different things that you’re commentating and jumping in on. I mean, yeah, it’s great to be back here together. It’s great to be talking about issues that matter and talking about things that matter. And so many of you guys, if you’re familiar with that, you’re an entrepreneur and faith driven investor. I’ve been following long of a new initiative called Solving the World’s Greatest Problems. And what we endeavored to do with that is to say, what can we do to create a trusted place that people can discover ways that they might be called to get involved? You know, I think when we think about this message, we think about this idea 20 years ago, information was scarce. I mean, I was looking the other day at some of these images when they were talking about Google when it first launched and some of the first images to it. And they had the search bar and right underneath it and it said like, you know, searching 250,000 pages or something like that and more coming soon or whatever it is. And it was like the point was, is when they first launched, they were trying to make the case for more information is coming. More information is coming. Hold on. Today, 20 years later, we’re at the exact opposite where we have to use machine learning. We have to use other things to try to take all of the complex and make it accessible. And so solving the world’s greatest problems is trying to be that bridge, trying to be a place that as God moves you as an entrepreneur or an investor to get involved, that you can find that first step. And so we do that through content. We do that through stories, we do that through podcasts. But that’s just the start. There’s going to be so much more coming from giving collaborations and groups to to give and to invest together with. And so there’s a lot of that that’s coming. But where we have started is we have started with some content, we started some podcast, and so you may have been able to check that out. There’s been a couple of episodes recently released where we talked about the idea, we talk about the campaign, and then we started to talk about some of these upstream issues, starting with gospel poverty. We had David Platt, we had Mart Green. Let’s talk about just some of the opportunities are in front of us and today we’re present into this idea of joblessness. And as you saw our creative team, if you check this out on the site, you’ll see this this image of these dominoes. And we really think that this is one of those issues represented by those dominoes. It’s upstream that if we can get some of this stuff right, not only can we find ways to better care for people and avoid some of the hurts and heartaches that come about when that’s not the case, but to we can just think about the opportunity that entrepreneurs, investors have, that we can be sources of either redemption or brokenness. That’s a very way that we go about it. We could be furthering some of the world’s problems if we’re not careful, or we can be a source on the other side. So yeah, super excited to talk about that. Today. We’re going to press on with some fun guests about this issue. But before we do that, we wanted to give you a little teaser. This is a little teaser, a couple of minutes of an episode for solving the World’s Greatest Problems podcast. It’s a fun style where it’s kind of like how I built this Guy Raz versus Radiolab just kind of mashed up together of all of these stories in a fun, engaging way. So let’s listen to that and then Richard will kick us off and some conversation.

Narrator What happens when a job is lost? Many of us understand the individual challenges one might face in unemployment. You know, things like increased stress, depression and insecurity. But that’s not even the worst part of it. The compounding effects of joblessness often lead to worse schooling outcomes for children, and those same children will have a much more difficult time in the labor market getting jobs once they become adults. Now, let’s let’s zoom out a little bit further and think about this on a macro level. Picture an entire community of people facing unemployment. Think about all the individuals who would struggle with their mental health. Think about the families this would affect. These are not imagined scenarios. You know, we can look at a city like Detroit in the United States and see the effects of joblessness on an entire community. In the mid 20th century, Detroit was a booming city with nearly 2 million people. It was among the country’s five most populous cities as people came in droves to work for the auto industry. Jobs were plentiful until suddenly. They weren’t between 1950 and 2010. The city saw more than a 60% decrease in its population. In 2013, the entire city filed for bankruptcy, and by 2022, the poverty rate was 33.8%, more than twice the average of the rest of the state of Michigan. Today, nearly half of all the children in Detroit grow up in poverty. While no one can limit the city’s downfall to one specific thing. There’s no doubt that the radical decrease in employment accelerated its downfall. The auto industry that once played the city’s hero quickly became the villain as thousands upon thousands of jobs were lost. And the lack of jobs affects more than the worker. You know, joblessness can shatter families, communities and entire cities. But that means the flipside is also true. Job creation can create positive and generational impact. It revitalizes, redeems and restores. My name is Afl-cio John. I’m the director of Global prosperity at the Cleveland Christian. And I’ll be a host of this episode of Solving the World’s Greatest. Today on the show, we’re going to talk about ways that Christian builders, investors and givers are helping the church win in this fight against darkness by creating jobs that bring positive and lasting change. Now let’s dive in. Act one Creating better systems. We’ll start the show off today addressing the urgency of the situation. Now, if you’d like to stress yourself out about the future, just take a look at recent studies on the global job market. A recent report by the World Economic Forum forecast that in the next five years, job growth will increase by 69 million. That sounds pretty good until you read on. There will also be a decline of 83 million jobs in that same time period. In essence, we are going to lose more jobs than we gain. And to be clear, this data represents a job market across the entire world. Sometimes people hear about the issue of joblessness and mentally relegated to certain countries or think that it only applies to developing regions. But wealthier economies are not immune to the changing winds. In fact, Jack Kelly, a senior contributor for Forbes, wrote an article in 2023 summarizing a study by Goldman Sachs that predicts that 300 million jobs will be lost because of artificial intelligence. Kelly puts the issue bluntly in the article, writing that if generative A.I. lives up to its hype, the workforce in the United States and Europe will be upended. This is a global issue, but it is not unsolvable. Many of our brothers and sisters around the world have been fighting this battle already, and they have been winning, especially in areas where joblessness is not a new problem.

Richard Cunningham Welcome back, everyone. All right. Let’s dive into today’s conversation. We have got a couple of just extraordinary seasoned builders. And while Justin Foreman and I are both in the state of Texas, I’m in Austin and Justin is up in the DFW area. We are traveling across the world for this one as we have Keren Pybus of Ethical Apparel Africa, located in West Africa. And Ronald Ishak of Hacktiv8 coming to us from Jakarta, Indonesia. So what a joy to have so many geographies and time zones covered. Friends. Ronald, we’ll start with you. Welcome to the podcast. Thanks for being with us.

Ronald Ishak Thanks for having me.

Richard Cunningham It’s fun. Yeah, absolutely. And Keren, you as well. Hey, let’s do this to kind of help set the stage. How about a 30 to 60 second kind of intro and background from each of you personally and professionally? And then we’ll get going.

Keren Pybus Okay. Hi, I’m Keren, and I’m the CEO of Ethical Apparel Africa and the co founder. We are seeking to create jobs in West Africa through ethical apparel manufacturing. We have a factory there and work with multiple other factories as well to create jobs through an ethical way of manufacturing clothing where we put all of our profits back into the workers and worker empowerment and creating the best place to work. We want to do it on a large scale, so we’re mainly exporting to the US and a bit to the UK and Europe. I’ve been in the textile and fashion industry for 30 years, so it’s my passion and my love all together.

Ronald Ishak Yeah. And I’m Ronald Ishak and I do have debate. I’ve been building this for the last eight years. I founded it and leading it as CEO. We’re basically a program that turns absolute beginners into job ready developers. And 12 to 16 weeks and then help them find jobs not just in Indonesia, but also around the world as well. And so, Dan, we’ve trained today up to 50,000 people through our multiple programs, from bootcamps to corporate training programs to video based courses and things like that. And it’s been a fun and exciting journey just to see people from a stage where they’re very insecure, where they are, to see them thrive and succeed using just the power of technology. So thanks for having me.

Richard Cunningham Yeah, it’s great to have both you guys on. It’s been fun to capture both of your stories in different ways. So for our listeners here, they’re dialing in. There’s two great video stories capturing both of the journeys here. And so be sure to check that out either on the Solving the World’s Greatest Problems website or faith driven investor websites. But Keren, I was hoping that maybe you could kind of kick us off here when we talk about solving some of the world’s greatest problems. Oftentimes we think about maybe aid and we think about charity. We think about the different ways that nonprofits step in to solve some of these problems. But I would love for you to just kind of cast the vision of like when people say a job is created. We hear that in our report here in the West. We might hear that in a jobs report varies around the world. But when a job is created, when that’s happened, can you just kind of give us kind of some of the perspective of what that does, either for a family or for a community and just the ways that that has such a ripple effect beyond just even that one individual job?

Keren Pybus Yeah, definitely. I think for us it was really about giving people sustainability and giving people security. And when you’re working in an environment where there’s a huge amount of informal employment and lots of opportunities for informal employment, it doesn’t give us stability. And that’s really what creating these jobs is doing, not just for the individual but also for their family. And quite often they can be the breadwinner or maybe 1 or 2 breadwinners in the family, which means that they can provide a really basic level. They’re providing food, they’re providing housing, they’re providing amenities, they’re providing a lifestyle. There’s even beyond just those basics for those people. But it means that they can rely on it. They can save for their futures. They can you know, in Africa, saving for your funeral fund is a really big, huge deal. And at the same time, they can have support and things that are going to enable them to live their lives in a secure way, too. So whether that’s the health insurance that comes with it or whether it’s other things like the free lunch that they get, which means that they don’t have to then feed themselves, you know, a big meal again later on because they’ve had a really big meal at lunchtime or something like that. So it’s more than just a job. It’s about creating a a way that people have security and sustainability for them and for their family.

Richard Cunningham Let’s talk about that a little bit more. When you talk about the family work, what does that look like? Because I love where you’re going with this, because, you know, when we talk about solving the world’s greatest problems, the website, we talk about 30 of the problems, we talk about some of the different ones, and we talk about fracturing families. We talk about health care, we talk about anxiety. We talk about hunger, we talk about homelessness. We talk about all these different things. And I think that you’re taking us some places, but specifically with the family. Can you talk about the confidence or the ways that the family is able to thrive when you have that consistency of employment?

Keren Pybus Yeah, in a lot of developing countries and culturally. So a family stays together, so you will have generations of family living together. It’s not always true. We’ve got people that are in our factories that are in their 20s living on their own. So it doesn’t necessarily mean that, but sometimes they’ll also travel in and they’ll have families living in villages elsewhere. And so you’re not just providing for your own disposable income, you’re providing for a network of people that are reliant on you. Now, we’re very fortunate in Ghana that education is free up to the age of 18, so that’s not necessarily a factor. But that’s not true in many, many countries where people are having to pay for education. So you’re paying for that next generation that you may be paying for a younger sibling to go through university, for example, to create opportunities for that person for the future. You may be supporting health care with one of your older relatives that maybe would have just necessarily died younger for no reason at all if they hadn’t been able to access that health care that you are able to do. You’re providing also in a lot of situations, people to be able to stand on their own if they’re in a really bad situation. Domestic abuse, adultery, anything like that, which means somebody needs to be able to go out on their own. They can do that. They can support themselves being able to they can remove themselves from a dangerous situation because they’ve got the security of that job and the security of not just the job. And I think what’s really important within this and. Maybe we’ll come onto this later. It is not about just a job. It’s about that job being worthwhile, sustainable, safe, and a place that they can have a family within that job environment as well as their family that’s outside of that. So it takes away a lot of that. What if what can I do? That kind of thing? And it creates people honestly. We’ve noticed a real shift into from short term thinking into long term thinking. They’re not just thinking about what’s going to happen the next day. What do I need to spend my money on for the next day? They’re thinking about what can I do for the future? How can I change my living accommodation? How can I provide for my sibling to do this or whatever? And because they’ve got the security of longevity.

Richard Cunningham Keren That’s incredible context and setting the stage, we’re going to come back to you in a number of points you just unpacked. But let’s go over to Ron real quickly and kind of hear some of the initial context as well. And your camp, Ron, because for lack of better terms, you’ve created a coding school that takes individuals and gives them the ability to access so many various different types of work across Asia. And so we’d love to hear kind of some of this from your perspective and activate.

Ronald Ishak So I think like what comes to mind to me is thinking about the minimum wage in Indonesia. You know, in US dollar terms, like a month salary here in Indonesia is equivalent to about $400, and that’s the formal one, right? And then so there’s a lot more informal people taking jobs like, you know, selling things on the street and things like that. It might be a lot, lot less motorcycle delivery drivers perhaps. And so when we think about what we can unlock by, you know, teaching people how to code, it’s really unlocking not just, you know, to go beyond the minimum wage of what’s possible, but also being able to cross political boundaries, people to be able to work somewhere, you know, Singapore to Australia, where the minimum wage is, you know, significantly higher, the pay is significantly better. And then on top of that, as a software developer, they can just do so much more to the point that, you know, when those opportunities are unlocked, you know, somebody can suddenly, you know, support their entire family and just do incredible, incredible things.

Richard Cunningham So talk a little bit about that, Ron, because I think here’s one of the things that we think about. We think sometimes we create a job and it’s like a static thing and we’ve created it and like we’ve added to the count and. All right, good. Well, let’s go on to be creating the next one. But yet we live in this inflationary environment. We live in these places where the costs continue to go up, where we figure out some of these different things that are happening. And even in your business, when you talk about coding and teaching coding, that’s always changing. You’re always having to upgrade, you’re always having to change. I would imagine, you know, artificial intelligence, machine learning that’s changed and pushed you guys to figure out, okay, how does that change for us? So how has something like that forced you guys to continually be upskilling and innovating?

Ronald Ishak I think A.I. has really changed my business quite a lot. You know, it’s kind of like giving somebody a calculator, right? You know, it increases the productivity significantly. And then so we’ve had to upgrade our programs to help people sort of adapt to all these new tools for us to produce more output in just much shorter periods of time. But I think one of the challenges being a school is kind of like just like giving somebody a calculator. You want them to learn the math first before they just use, you know, just the buttons and press the equals and then have the results fit out. And so, you know, those might be some of the initial challenges. But I think like, you know, once it’s enabled people to just be significantly more productive, like ten x more productive, I think it’s just amazing what it unlocks.

Richard Cunningham And tosses out openly to both of you guys. We often talk about entrepreneurs that things have changed and for entrepreneurs that I guess we’d put it this way the hero of the problems of the world years ago often was like the celebrity cause it was the big concert, it was big business, it was aid, it was all of that. And now, as we’ve been talking about, like, it’s changed and people are noticing job creation, they’re noticing economics, they’re noticing the important sustainability. How have you guys seen that not just being noticed by the church, but just maybe other like local city governments, municipalities? How are you seeing opportunities to partner just with the broader ecosystem of investors, NGOs? How are you seeing some of this kind of come into play where people are saying, man, you’re solving a problem and that we have a shared vision of making sure that there’s growth in that? I mean, because here in Texas, I mean, people are recruiting businesses left and right. We are trying to just harness economic development left and right. How are you guys seeing that in your context? How are you seeing other people value the job creation potential of entrepreneurs?

Keren Pybus I think the biggest change for me is actually being with the big donor agencies. So where a lot of US aid or the Foreign Commonwealth Development Office or Jay-Z or Solidaridad, those people’s money went into pure aid. And there’s still some very, very important elements of that part of it. They have shifted huge budgets into trade facilitation, which in turn creates jobs. Because you’re creating manufacturing in different places. And it’s not just about creating market linkages. It’s about funding to create capacity building, create technical skills, create career path, create opportunities for locals. So for us, you know, we’re trying to create a textile industry in Ghana that, you know, really has a huge, deep roots in a lot of very traditional manufacturing but doesn’t have the experience of doing it to international standards or international compliance standards. We have to bring in a lot of expats to do a lot of those things, to be in with a lot of skills training to be able to pass on that knowledge. One of the big things with the donor agencies is how do we pass that skills to the locals so that it doesn’t become reliant on an expat type of business. But actually you’re upskilling the locals. So I’d say the donor agencies have really changed their mindset around that, which means that there’s a lot more money available to get grants and things to be able to kick start some of these programs or to be able to work with programs and work with investors as well. So a lot of it’s also then linked to how are investors going to work with it. So there’s a lot of match funding available to. So if you got an investor that’s going to work alongside you, then the donor agency will match that funding, which makes it really attractive for an investor as well because they’re getting a great deal for that money. So I think the donor agencies definitely wrong.

Richard Cunningham What would you say to that?

Ronald Ishak You know, I think for me, like looking back in the last few years, you know, I think one of the big things to sort of happened was the pandemic. But one of the things that come out of that for us is actually building this thing called the Association of Digital Talents Training of Indonesia. And so this is a collaboration effort between me and my competitors, but then sort of working for the greater good, working closer to the government. We now have a channel to work with together with them, sort of see why we need more talent in the marketplace that knows how to use technology. And also thinking that, you know, ever since the pandemic, sort of the acceleration of a lot of these traditional companies suddenly coming to become digital, you know, the need of talent for digital in Indonesia has spiked quite a lot. And then so now, you know, the government is more receptive to sort of like, okay, you know, let’s start to build standards so that we can scale this faster. Let’s create some protections here and there. So I think that has sort of been this shift that I see in the last few years for us.

Richard Cunningham Ron, I wanted to push into something you said there. When you’re talking about change, you’re making change. You just said that you weren’t going about it on your own, but you were linking arms with even some of your competitors. How would that change the dynamic? How has the conversation changed within that? There’s something unique there that oftentimes competition is a funny word, especially in the church. What are you learning through that process?

Ronald Ishak You know, one of the most unique parts about this association is sort of how it sort of came together as well. You know, I remember in the middle of the pandemic, you know, everybody was stressed out. My competitors were stressed out. And we actually got in a Zoom call together and we ended up praying together, funny enough, and sort of that relationship of just, you know, instead of seeing each other as competitors, sort of as like, hey, we got to survive this together so that we can come out of this, you know, we’ll be stronger together. It really started out of that. And then so that relationship was built out, you know, over the next 2 to 3 years. We only set up the association this year, sort of putting all of the competitors together, working for a greater good. I think that’s the beauty of working in education. It’s not trying to kill each other. It’s not trying to like, you know, winner takes all type of game. But then with education, you know, it’s kind of like we can help enlarge the pie. We can create more opportunities. So it’s been cool to sort of see that roll out, especially because I’ve been in the field of like, you know, building startups, trying to kill each other and things like that. But then in education, it’s just like, Hey, we’re here, you know, for the greater good type thing. And so it’s a cool collaboration. I think it’s something cool to observe.

Keren Pybus I would add to that too, because I think you’re absolutely right. We work with multiple different factories across Ghana and trying to bring all of their different skills, and they are technically all competitors. But for a buyer coming into the country, they don’t want to come into the country and buy from one factory. They want to be able to come in and make the trip worthwhile. They want to be able to buy from multiple factories. So if those factories can work together in terms of finding their own unique selling points, what is the thing that makes them specific? It might be a type of machinery they’ve got. It might be a type of product they’re making. It might be a particular type of market that they’re serving. They can all then layer together and work together with things. Then you create something that is more attractive from a trade perspective as well, and you’re not working against each other. You’re putting your energies into working together. So I think there’s huge value in as Christians leading that and being people that don’t put the competition factor first is something that sometimes does make us different within a marketplace as well.

Richard Cunningham A tide that raises all boats, if you will need to hear you both riff on that. All right. Well, hey, I want to get you almost personal in this aspect of it. Keren, maybe you at the job creation, Ron, you with almost the job upskilling. Can you think about a specific story or stories of some lives that you’ve seen, people that you’ve been fortunate enough to employ or maybe Ron, you’ve seen come through your program and just kind of the effects and this the transformation that you’ve witnessed take place in a particular live or lives. Keren, I’ll start with you.

Keren Pybus Yeah, sure. If you watch the video of Africa about Africa, you’ll see a girl who Florence, who’s profiled on there and Florence came to us as an operator not hugely long out of school, and we saw a skill set in her in terms of her ability to think outside the box, her ability to embrace technology. And we put a lot of effort and work into creating different skill sets with her. So first, full motor skills on different machinery, teaching her all the basics of sewing and moving her through the kind of ranks, putting us into some external training around pattern creation. And she is now the assistant person manager in the factory, and she’s gone from, in her family kind of being somebody that is part of that family environment to being one of the major breadwinners in that family, ensuring that her grandmother could get the health care that she needed. And so seeing individuals like that moving through is just really exciting. A warehouse manager came same, similar saying Raphael came through the ranks, really try some different things and we’re just able to hone those skills and and I think they then act as role models to others in the factory because yeah we need to bring in a lot of expert expertise and everything else. But sometimes we as expats can be almost out of reach for the locals. They can’t identify with how they can get there, how they can develop that skill set. And especially when you’re trying to teach not just a technical thing, you’re trying to teach people to think outside the box. You’re trying to get them to think horizontally and vertically and problem solving. You’re trying to, you know, look at different attitudes to work towards work and those kind of things. You’re trying to teach all of those things, not just the if you sit at this machine and press this button, it’s going to do this type thing. And so by seeing other Ghanaians that have moved through the factory and move through the industry into other things and to other roles and progress and seen how their lifestyle changes as an impact or how they then steward the resources that God has given them. It inspires other people and inspires others to look at it and to take that job and think, this isn’t just about coming in and working your 8 to 5 shift. This is actually about something that could be more than this and creating something for themselves as well as their family.

Richard Cunningham What would you like to happen on that?

Ronald Ishak I think, you know, when I think about the stories that we there’s so many I think the one that I always come back to is this guy. You know, whether you’re one of our alumni who has sort of joined our program during the pandemic, in the video there, a whole section of it in there where they get to interview him. But it’s just a cool story to sort of see somebody from a motorcycle delivery driver that had dropped out of school, couldn’t afford to pay for his university degrees, sort of join Activate, took up our income share agreement program where he didn’t have to pay anything now, but then he would pay later after he would get a job from the Activate program. Sort of just see that transformation and that just sort of even wanting to see it all the way till the day where he sort of jump from one job to another job and just seeing his career progress, it’s always like exciting, you know, to sort of just give somebody the tools to build and then sort of see what they can build from that. And I think what’s really cool as well is also seeing him, you know, volunteering to be able to teach some of the Activate classes as well, you know, sometimes as a guest lecturer and things like that. I think it’s just heartwarming to sort of see once you sort of help somebody overcome that deep insecurity or that one thing and then the amount of gratitude that they have afterwards, I think it’s just amazing.

Richard Cunningham Great thoughts. Very grateful for the work that both of you guys are doing. We often say that business has the opportunity to create redemption or to create brokenness. We can run businesses in ways that can further some of the very problems that we’re trying to prevent. Or we can step into those dark spots and be light and that can be that redemptive tool. So one of the things that we do with solving the world’s greatest problems is try to make the complex accessible to try to help people take that first step. And so I would love for you guys as we close here to give just kind of a word of advice. If you’ve got an investor or an entrepreneur that’s listening to this for the first time listening to this and they’re hearing for the first time in some ways that jobs can be some of the upstream solutions to some of the world’s greatest problems. Maybe in the past, everything that they thought about, they’ve been thinking about the giving pocket and the giving side of things. And they’re starting to see that really all comes from one pocket, whether it’s giving or it’s investing, it’s all the resources that we’ve been entrusted. So they’re coming to that place and they’re throwing their hands up saying, I want to know more. I want you guys to speak. Maybe there’s an article, maybe there’s a. Maybe there’s a moment, maybe there’s scripture, something on each of your journeys that really kind of is the moment where the lightbulb turned on for you and you realized, wow, this has an opportunity for this is is just as much ministry and impact as some of the traditional things in the traditional viewpoints. So for listeners out there, where should they start? What’s a good place for them? What’s a good article or something to go through? Keren. I’ll turn to you first. What would you encourage people to do to take their step to explore further?

Keren Pybus Well, that’s quite a big question. I think for me, right at the beginning, I think where your passion and your skills meet is often where your calling is. And I think just because you’re really passionate about something doesn’t mean you have to necessarily give up on it. So if there’s an industry that you’re passionate about, you’ve got skills in that industry. Embracing and seeing what you can do in that industry is really important. My kind of big changing moment, I guess, was reading the John Ortberg book, If you want to walk on the water, you’ve got to get out of the boat. And just knowing that actually you’re never going to solve it or you’re going to get out of that boat and there’s going to be moments where you’re sinking and moments when you don’t know what you’re doing, but fixing your eyes on Jesus and just keeping that kind of like one thing has been really good. I think a learning for us, particularly when you’re thinking about job creation, is making sure that within there your recruitment policies and the process for bringing people on board is really thorough and robust. You don’t have to kind of shy away from that just because you’re trying to give all these jobs to people. You know, we’ve got people queuing up outside the factory every day looking for work. I can’t give a job to everybody and solve all of the world’s joblessness. And so it’s about getting the right people, praying through that, but also creating what are the right tests. Interview stage. How do you test for attitude, for behavior as much as technical skills? How do you give people that proper training that gives them the chance to swim at the beginning and not just sink because you bring somebody in the new pulse so much things on and that they can’t actually cope with it. How do you hold people’s hands through that? How do you give them the life skills training that goes along the side, the jobs training as well, so that, you know, most of the people that we’ve employed have never had a formal job in their life before. So even just the concept of turning up to work on time every day at the same time every day is a completely alien concept. And so explaining the why for a lot of these things, as well as the what becomes really important and for investors. You know, we had a moment, I guess we went on the marketplace very early on in our kind of FDI journey. And we have an incredible investor, Jeff, who you will see on our video. I’ll name him because he’s on the video. So you’ll see him anyway, who saw at the beginning of vision for this and saw also that you’ve got to go through a training cycle when you’re creating jobs and you’re not creating income while you’re training. And so having money to pay those salaries and be able to support those people and create that whilst maybe they’re not creating value for your organization because you’re in a training environment, but you need to do that is where investment becomes really important because having that cash in to be able to do that and then to be able to support those people through that training environment as you then are able to then turn that their work and their things into output for the business later on becomes this really important marriage between what the investors can do and what the entrepreneurs can do. So I’d say go for it. Find your passion for your skills, putting together, pray about it and jump out of the boat.

Richard Cunningham Richard We should have just started in in the podcast right there. We should just hand the mic to Keren. Gotten out of the way. I mean, that’s. Aaron. That’s going to be tough to top, man, but that was really good.

Ronald Ishak That was really good. I think, you know, for me, thinking back, like the last, gosh, eight years, I think that the journey of Building Activate came with a lot of insecurities. You know, it came with a lot of doubt for me. But I remember somebody telling me, you know, God doesn’t call the qualified, but he qualifies the call. And I think like that really put it into perspective for me to remember what I need to lean on. But this time, where when there’s things that I can’t do, I need to pray about it. And sort of just seeking God in every moment of building something and sort of just, you know, looking back now, it’s just being a maze of what, you know, putting and leading on God was able to do. And so I think, you know, there’s listeners out there sort of thinking about, you know, I want to build something, know I want to create more jobs in the marketplace. And I believe that if God has planted that in your heart and that’s something that you step out in faith to do, that I really do believe that God can use that for his kingdom and for his glory.

Richard Cunningham Man Great words from both you guys. So grateful for the wisdom. I love what you’re talking about. Keren, is this as you talk about this idea that you can’t give a job to everyone, and in those moments you have your heart tugging your head, kind of wrestling through that. There’s still sequence, there’s a process. There’s still best practice. This is to learn from love the perspective. What you’re talking about, Ron, is we’re always learning. We’re always learning to upskill. We’re always learning to that. And even as much like what you hit on there at the end as independent and as driven as we are, that we really at our core are designed to be dependent. And that is a weird, weird thing for an entrepreneur to face and wrestle with daily. So grateful for Wisdom listeners that you are dialing into this. Here’s my encouragement. You might be feeling this thought of man. I want to explore this more, but I don’t know where to go. I don’t know where to start. There’s some great resources. John Edwards book. I love the thought of just kind of getting out of the boat, a way to get out of the boat. And way to step into this is to have a conversation with other like minded entrepreneurs or other like minded investors. And so Richard, myself and others on the team of all been a part of leading different faith driven entrepreneur and faith through an investor groups they meet either in person or online. But if you’re an investor and you really wrestling with this idea and thinking, man, God, give me some capital or family, some capital to entrust to invest in the businesses that are upstream of this or to give to some of those organizations that are helping facilitate some of the job creation, whatever that might look like. My encouragement would be is to check out the Solving the World’s Greatest Problems website, but then check out one of these faith driven investor groups. There are some just robust conversations that are taking place there. And as Richard can attest to, there’s a lot of like minded investors that are meeting each other for the first time, realizing that that passion that God has placed in you, there are others that share that passion. And when you connect with them, man, it changes everything. Richard, any closing thoughts for us as we come to a wrap? And I think the thing I would say is Ron, Keren, just knowing some of your stories and your journeys, you’re both backed by faith driven investors. And I can just imagine maybe just a quick word on that. As a faith driven entrepreneur building something, stepping out of the boat, what an encouragement is to have like minded values on the cap table, am I right?

Keren Pybus 100%. It’s been an absolute privilege and just a faith building thing when when people just cool you up off the back of a podcast or a back of a video and go, I love what you’re doing and I feel that goes calling me to work with you and you just like, Wow, this is just incredible for people like on the opposite side of the world that maybe I’ve never even visited the country you’re working in to want to go on that journey. And so I’m really grateful for anyone that’s invested in ethical apparel, Africa or anybody that wants to in the future as well. And it has been incredible witness to, you know, we don’t employ all Christians. And so for the team to see the amount of Christian investors that we have on as well has been also a really amazing witness as well. And for those that have managed to come and visit and see what you do. So yeah, get on the train. It’s a great one to be on.

Ronald Ishak Absolutely. I think like I remember the times, you know, when things are difficult and when you get your investors to pray together with you, I think it’s just so empowering. So, yeah, I’m just so grateful for that.

Richard Cunningham Some Brownie Shack activate out of Jakarta, Indonesia. Keren Pybus of Ethical Apparel, Africa and Ghana. What a fun episode. What a joy to have you both on for a special faith. You’re an entrepreneur and faith driven investor kind of release episode looking at solving the world’s greatest problems. For Justin Foreman, I’m Richard Cunningham. Thank you so much for joining us. Friends. We will catch you next time.

Narrator We are grateful for the opportunity to serve this community and see your listeners come in for more than 100 countries Faith driven investing can be a lonely journey, but it doesn’t have to be. The best way to stay connected is to join a group study with other investors looking to get the same answers, the questions you have and find great community as they do so there’s no cost, no catch. In person or online, you can meet an hour a week with other peers from your backyard or the other side of the world. You can also stay connected by signing up for our monthly newsletter and faith driven investing Dawg. This podcast wouldn’t be possible without the help of many of our friends. Executive Producer Justin Foreman. Intro mixed and arranged by Summer Drags Audio and Editing by Richard Barley. Our theme song is Sweet Ever After by Ellie Holcomb.