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Sometimes you just have to flip the script and shake things up, and that’s exactly what we did with this episode.

On a special edition of Marks on the Markets, we play a little musical chairs and put John Coleman, who usually hosts the show, in the hot seat so he can field questions about the state of the markets so far in 2023.

He joins Richard Cunningham to talk about venture, the debt ceiling, AI, public markets, and more. Plus, Richard gives some exciting updates about what’s happening across the movement. 

If you like this episode, make sure to follow, review, and share the show.

Episode Transcript

Richard Cunningham: Well, good afternoon. Good morning. Wherever you are tuning in, friends, welcome to the Faith Driven Investor Podcast. Welcome specifically to our monthly marks on the Markets segment. We are really grateful to have you joining us today. And now you might be wondering, hey, why does the voice of the host sound far less astute today than it normally does? And if that is the case, you are spot on in your observation. And that is because I am not John Coleman. My name is Richard Cunningham, and I have the privilege of serving on the faith driven, entrepreneur and faith driven investor staffs. And the reason you’re not hearing John Coleman is because we have a flip the microphone around today, folks. We are playing a little bit of musical chairs. And John Coleman, your normal faith driven investor podcast host, is in the hot seat today and he will be the interviewee as we dive into this month’s segment of Mark’s on the market. So your normal host is going to be the one fielding the question today. This is going to be a lot of fun. John how are you, friend? Welcome on.

John Coleman: Yeah. Richard You guys are really scraping the bottom of the barrel. I’m convinced Joey and the producers just wanted to make everyone feel grateful for the real experts that we bring on regularly. And so they thought they’d give them a glimpse of what the world could look like without that expertise by putting me on the mic. So happy to be here today.

Richard Cunningham: You know, most podcast producers are playing checkers. Joey is playing chess. This is an opportunity to say, Hey, let’s do the guest orientation. Let’s get John Coleman on. And what it will do for future episodes is just something that is just the furthest thing from the case. And here’s why. John, everyone knows you and appreciate you as our podcast host. Let’s take an opportunity now for people to understand your day job, what you do, a little bit of your background because it is expansive. We love you as a writer, as an investor. Your work at Soveregin’s Capital, obviously, but to yourself up a little bit to kind of frame this conversation and just who you are, where you come from, a little bit of your story.

John Coleman: Yeah, absolutely. Richard. So my background is I’ve spent most of my career between management consulting and investment management. I actually graduated college thinking we were just talking about this before the show started thinking that I’d be a journalist or an academic. I read a lot of liberal arts stuff in college, but somehow bounced into a first job as a quantitative energy hedge fund trader right out of school. I was objectively the world’s worst quantitative energy hedge fund trader, and so then quickly moved on to a consulting firm called McKinsey and Company. Spent a few years there before and after graduate school, did business school, Public Policy School, and then before joining Sovereign’s, I spent about nine years at a large publicly traded investment manager called INVESCO in a variety of roles, and then about two and a half years ago had the great good fortune to join the team at Sovereign’s Capital. Luke and Henry recruited me on as Henry was moving over to do more on the ministry side to help lead Sovereign’s alongside Luke. And it’s been an amazing ride. It touches on everything I like to do. I love the investment side of the business and I still get to do a little bit of that. I love thinking about the market environment. I love thinking about trends in the industry, including faith driven investing and how that’s evolving and how we as faith driven investors can get more sophisticated about that, can really develop the right frameworks to make that a positive thing. And then I have retained some of that liberal arts urge in that I still write a little bit as well. So I’ve written a few books over time, write a few articles once in a while, and it’s a way that I kind of process what I’m learning. So that’s a little bit about me.

Richard Cunningham: Man that’s fantastic. I know our listeners will love kind of the opportunity. You’re the one usually getting to ask that question. Hey, tell us about yourself. Tell us about your journey. And so a rare privilege to get to ask the host what makes up their story. And real quickly, double click on the writing piece, because I know there are just a lot of exciting things happening. In your work with HPR, you released a book recently, a hit that real quickly.

John Coleman: Yeah, absolutely. So I’ve been writing most of my life. I started back when I was in high school on the school newspaper. So it’s just it’s something I’ve always loved to do. I find it really cathartic. I joke some people golf, I’m not very good at golf, so I write as a hobby. I’ve done a few books over time. My first book was actually a Christian book with Crossway, which is the publisher of the ESV Bible. And then I did two books with the Harvard Business Review, both of them on purpose, meaning Next Generation Leadership, one called Passion and Purpose about 12 years ago, and then one just last year called the HPR Guide to Crafting Your Purpose. And My beat with HPR is really to write about leadership, personal and professional development broadly. That can be about strategy. It can be about the ways in which leaders lead, but it also has a real focus on purpose and meaning. You know, as a person of faith, that’s always been incredibly important to me. I’ve struggled with how do I achieve greater purpose and meaning in the work that I do. It’s part of what led me to Sovereign’s Capital. Actually, the story for me is I signed up to write The HPR Guide to Crafting Your Purpose in 2019. And in the midst of writing that, it got me thinking about the next phase of my career, about the type of work that I wanted to do, and I figured I’d better take my own advice. And so I ended up joining Sovereign’s, helping out with some of the faith driven investor movement. And it’s been such a joy. I mean, I feel like I’m achieving more purpose and meaning in the work that I do now than I ever have. And in the latest book has been totally off the wall. I actually wrote a novel called Miracles that hopefully everyone goes out and buys at least ten copies of. There is kind of a Christian book and a novel about what would happen if miracles started happening out in the world today. So on YouTube, on social media, Tik-Tok captured on iPhones. If something undeniable was happening, how would people react? In my my guess throughout writing it was that it would still be really divisive, just like it was in Jesus’s time. And so I follow a young woman who’s a newspaper reporter as she’s covering these miracles, and you get to see the world react around her to these miracles taking place in my home city of Atlanta. And that just came out about five months ago, right at the beginning of the year. So that’s a little bit of the writing I’ve been doing. And then I write a little bit for faith Driven Investor for Christianity Today and a couple of other publications on the topic of faith driven investing.

Richard Cunningham: Awesome. Awesome. Well, you heard it go out and buy miracles. And then I just loved the 2019 testimony of writing about your purpose, and all of a sudden the Lord starts doing the work in you and brings you over to Sovereign’s capital. And here we are. We’re on Marks on the market. We’re talking today, you know, just what’s happened inside of 2023. It’s been a full five months. And for those that don’t know and I’m sure you unpack this a little bit more, you know, Sovereign’s Capital is a multi asset investment manager across five asset classes. So you see it across five different verticals, whether it be venture capital, private equity fund investing, real estate and now in the public markets as well. And so with Sovereign’s, you’ve got a vantage point of kind of taking all of this macro data that’s happened in in 2023 and seeing it across a wide breadth of strategies. So, you know, before we dive in kind of on an asset class specific kind of rabbit trail of each of those, John, give us some just kind of macro perspective what’s happened this year, some of the kind of the key events frame this conversation for us, if you will, and kind of how you’re seeing all of that and your vantage point.

John Coleman: Yeah, I think this is one of the most unique macroeconomic periods in any of our adult lifetime. I mean, you’d be hard pressed to find someone who invested through a period that even resembled this. I mean, the closest was probably the late seventies, mid to late seventies, with this intersection of supply chain shocks, global political unrest, high interest rates, raising interest rates, high inflation, potential economic impacts of that, etc. The great financial crisis, obviously in 2007 to 2009 or 2010 had a totally different set of characteristics. It was shocking at first, then led this massive bull run that was supported by extremely low interest rates and extremely easy money. And what we’re seeing now is that popping, right? We’re seeing an end to that period. We’re seeing the restoration of a series of global macroeconomic events, whether it’s the rise of China, whether it’s the Russian invasion of Ukraine and the international response to that, whether it’s all the lingering supply chain issues that were initiated by the COVID crisis, but have continued to filter or on the money side, whether it’s the end of this massive expansion of money where the Fed has raised interest rates from effectively 0 to 5.25%, most recently just a dramatic upturn in interest rates, which we then seen manifest in bank failures. Two of the three, I think largest bank failures in US history just over the course the last few months. And it doesn’t even feel like that’s been one of the more notable stories as you look back given the global pandemic and things like that. And so I think we’re in this incredibly unique time. I think given the bank failures where we stand today, I do think the Fed is at or near the end of its interest rate hikes, especially considering that inflation seems to have slowed and begun to decline. Rising inflation and lowering inflation are always lagging. Right. And so there’s an art and a science to trying to capture those. And I think from my perspective, the Fed likely has raised interest rates enough, particularly given the instability in the banking sector, which is also cause contractions. I was catching up with our public equities team recently. We’re actually seeing a real contraction in M2, the money supply right now, which indicates to us that it’s working. Inflation is so persistent. The late seventies taught us this stuff hangs around much longer than you think it will. But the Fed is constantly trying to weigh different factors, which is how much real economic instability and banking instability are we creating? There is a lagging impact. We don’t want to overshoot and have the economy fall into two deeper recession. And so they’re navigating that right now. I guess we’re within 25 basis points of the peak rate unless something goes wrong. And if I had to really guess, they’ll stop right now and see what happens. I think what everyone’s watching now is the impacts on real economy and whether we fall into. A recession. You know, one of the shocking things about this period from 2021 to present. We thought we would go into recession much faster. Typically, when you raise rates like this, what you’re trying to do is provoke a recession, which will end inflation. That recession is accompanied by rising unemployment and a series of other things, and we just haven’t seen that yet. We’ve seen some big tech companies trimming people. We’ve seen startups starting to trim people, which we can get into, but we haven’t seen huge movements in unemployment broadly, and we haven’t seen us really slip into a recession yet. And so employment and economic growth has remained more persistent than I think folks thought. Even as asset prices, which we can get to in growth, equity and venture etc., popped big time last year, you know, some of those are coming back now and housing prices have stayed up. And so it’s this weird economic environment where I think a lot of the levers that we would typically see being pulled or a lot of the impacts that we would see from those just aren’t working like they have historically. And that’s one thing that makes asset by asset classes such an interesting environment to look at.

Richard Cunningham: Yeah, those are really, you know, intriguing insights there because what you kind of said there at the end is like some of those levers or those things you would expect to move in tandem, almost feel like they’re moving in juxtaposition directions, if you will. And so it’s a kind of a first of its kind and, you know, interesting insight. And I think you’re right when it comes to, you know, the interest rate and the Fed’s and what they’re doing, you know, they’re next time to convene is June 14th. And you saw this morning in The Wall Street Journal recording this podcast episode on Thursday, June 1st. For those listening, their next time convene is the 14th. And it sounds like, you know, there is some mixture views as to if they will continue the hike in rates. But John, your points, it feels like we are reaching an end, if you will. And then yeah, let’s go right there to that specific asset class, the venture. Let’s get as close to the action as you can in terms of kind of the earliest stages the founders building at the earliest stages. Talk about just perspectives in the venture capital markets. What you all are seeing, you know, Sovereign’s is in, I believe, fund four on a venture side. So this is somewhere you guys have been for almost a decade now, if not more than a decade. So talk there.

John Coleman: Yeah. Venture capital has been such an interesting environment over the last 18 months or so. The venture market went on this incredible bull run from at least the financial crisis. I mean, you could argue back to the dot com bust and then the subsequent recovery. It’s been on this remarkable bull run, partially encouraged by these incredibly low interest rates since at least the financial crisis. And that kind of ended at the end of 2021 into the beginning of 2022. You know, we were seeing record deals in venture markets. We were seeing record capital flow into it and all that stopped in 2022. You typically see that begin to impact the publicly traded growth equity and technology firms first, and then that kind of filters through growth equity deals on the private side down that kind of Series B and C down to kind of early stage seed in Series A, And the question was always, will those trickling impacts really get all the way down to seed in Series A and start to impact those valuations? Or will the economy recover fast enough that you might not see as much of an impact there? I think we’re seeing a mixed bag right now. Obviously, public markets got just destroyed last year. A number of growth equity stocks were down really substantially. I mean, you’ve got stocks that are down 70, 80, 90% or more sometimes from their highs over the course of 2022 and that trickle down into growth equity markets. We had a partner show us some statistics probably four months ago now. So it might be a little out of date where the average growth equity multiple. So that’s private deals. But nearing public markets, typically pre-IPO investment in private markets had gone from something like 14 to 14 and a half times revenue in 2021, all the way down to about five times revenue. So about a two thirds drop in 2022. And that was beginning to trickle down into the early stage venture markets. I think that’s continued. Compounding that, the banking trouble that happened earlier this year had a disproportionate impact on venture and venture backed companies. You know, Silicon Valley Bank and First Republic and Signature Bank were all three, some of the biggest supporters of venture capital markets in the market. And so venture firms and their portfolio companies were directly impacted, but it also led to a dry up in the venture debt markets, right, Because Silicon Valley Bank and Signature, for example, were two of the leaders in venture debt. And so some of the capital that you would typically see available to venture firms outside of equity raises dried up, even as fundraising has dried up a lot. And so what we are seeing in early stage venture right now is valuations definitely have stabilized. We’re not seeing quite as dramatic a series of drops, I think, early stage as we do late stage in venture, but it’s definitely come down. We’re definitely seeing a lot more companies being very judicious about their cash, trying to extend their cash runway 18 to 24 months venture. Firms are encouraging them to raise additional cash, even if they have to do a flat round or a slightly down round to secure themselves against the prolongation of this dry up in funding for venture. And it’s just a really tough market. Now the other side of that, which we may get to in public markets shortly, is that the public markets in technology have suddenly begun to recover. And so this year you look at the S&P 500 is up about 10%. The Nasdaq is up about 25%. And if you look at the S&P, it’s really been a rally in megacap technology stocks that has led that. If you take out the seven best performing mega-cap tech stocks, the s&p is actually down for the year. And so they’ve driven this 10% outperformance of the entire index. So that’s a little bit on what we’re seeing in venture. We think it’s an opportune time to be looking in venture and to be investing because we do think it’s stabilized a lot. We do think there’s the ability to do great deals right now, but we’re also just like everyone else, encouraging portfolio companies to be very thoughtful about their cash.

Richard Cunningham: And that’s what I was going to ask you. There is is first off, these are just remarkable insights. So the question I’m going to ask you there is, you know, Sovereign’s capital in the venture space led by Jake Thompson, see the series a investor. And when you net it all out and you think about all of the competing factors, you know, the venture debt market, you know, almost drying up the fund raising trail, it feels like there’s just a remarkable number of funds that market right now kind of hunting that same capital from institutional investors, family offices, what have you. Who is at the advantage, you know, is the valuations coming down to the benefit of the venture investor. Is this just a remarkably difficult time for everyone involved? You mentioned this is a good time to invest. How how are you all looking at it right now? Just kind of from your perspective?

John Coleman: Yeah, liquidity is light in the markets right now. Fund raising, if you’re a venture firm, is very hard fundraising. If you’re a venture backed firm, is really hard raising your seed round or series A, you know, it’s just not as explosive as it used to be. It’s taking two or three times as long. We’re seeing a lot of venture and growth Equity funds delay their fundraisers because of that environment. So definitely liquidity has dried up. You know, our perspective right now is you can never perfectly timed these things right. There are some folks who are just entirely sitting out this period. The challenge with that is if you miss the initial upside of a turn in these sorts of markets, it tends to be pretty damaging to overall returns. Just like, you know, in public markets, you always hear catching the five worst down days is 90% of the losses in the five biggest up days is 90% of the gains. You know, something on that order, you can’t really time a lot of the venture markets. So our perspective is just to remain really steady. Right now. We’ve reset our expectations on what the valuations of these rounds are going to be. We find that because liquidity is a little light in markets, there are a greater variety of deals. So deal flow is looking really good right now because there are a lot of deals that are looking for capital to sustain them through this period and that’s great. But it also means that we have to be very thoughtful about evaluating the quality of those deals. Given that the future is uncertain, the near-term future is uncertain. That said, I think, you know, we are moving forward in a steady way on the investment side because we do see really good companies out there and really good valuations. And ironically, I think some of this can actually be good for the venture backed companies as well. And this is my personal perspective, Jake or Phil, who lead our venture fund, might have a slightly different perspective. You know, I think the valuations that we were seeing were making it very hard in tech world because options were constantly under water. People were convinced as talent that they weren’t going to get the value of their options because valuations were too high. And so it was actually difficult to get and retain talent if you were a big venture backed company before. I think that’s recovering a little bit, especially as labor markets in tech have gotten tighter. And I think this is encouraging some discipline that’s healthy for early stage companies as well. You know, before it was all revenue, even the revenue was all subscriber growth or it was all user growth. And then sometimes it was revenue growth. And now I think there has been this realization that, wait a minute, these companies have to make money at some point again. And so there’s more of a cost discipline, more of a planning discipline than I’ve seen in some time. And I think overall that’s really healthy for the market and I think it’s healthy for those venture back companies in the market, though it can seem painful in the moment.

Richard Cunningham: Well-said. Yeah, a little bit of a reshift in what fundamentals, what things do we have the microscope on and should the bull’s eye be, you know, shifting appropriately at an appropriate level, if you will. All right. Well, let’s go venture before we go into private equity and real estate and kind of transition markets and asset classes, let’s see the maturity of venture kind of into the public markets. You leaned on it a little bit. And what’s happened in the S&P this year and NASDAQ as well. Any commentary on the public markets? And one of the things that, you know, I think everyone. Is reading any type of headline as focused on, you know, go up into the kind of the congressional ranks. Right now, we’ve got this debt ceiling crisis. Some people are throwing that word around there. There’s, you know, just bipartisan efforts to try to pass a bill that kind of potentially prevent any type of crisis. So any commentary there and what you’re seeing in the public markets and what’s going on and how this debt ceiling situation and the approaching ex date that Congress has tossed around.

John Coleman: Yeah, obviously super hot topic right now. I want to make one kind of 60 seconds comment before I get into that even is the Faith Driven Investor podcast. One thing I would note is this is an awesome opportunity for people of faith who are venture investors to support their founders spiritually, mentally. This is a super stressful time. I’m kind of talking about the potential silver linings and things like that for venture investors, for limited partners and certainly for founders. This is a really, really stressful time and we are seeing some companies that simply don’t make it right, which is always true in venture, but I think we’re acutely aware of it now. And my encouragement to the folks that are listening is, you know, if you’re a venture backed founder, lean into your real identity. You know, our identity is in Christ. It’s not in the money that we make. It’s not even in the success of our companies that we want to do well by those who have backed us. And if you’re an investor, whether a limited partner or a fund. Never forget the spiritual component of this and never forget that even in the midst of difficult decisions, sometimes, you know, we’re called to be good counselors to others and encouragers to others. And there are ways you can do that even while making tough business decisions. And so I think for faith driven investors, that’s important to remember as we dovetail into the public markets in this big macro fight, it looks like the debt ceiling fight is over. So again, we’re recording this June 1st. This week, they had announced that McCarthy and Biden had reached a deal, I believe it was yesterday that it finally passed through the House. It ended up that it had more Democratic support than Republican support, which was a surprise. There is a lot of criticism on all sides right now. It is one of the most bipartisan deals I’ve seen lately in the sense that, you know, basically everything we see right now is either know, 100% Republican against 100% Democrat or vice versa. This was mixed. It was mixed, Right. I don’t think anyone’s happy because it was a compromise solution. But I believe they reached a deal to extend through 2025. And so the immediate term crisis of potentially defaulting on the debt has subsided. It’s over. People were worried about that and it was delaying deals. I think it really it caused some tumult in public markets. But public markets have been super interesting this year. There have been a couple of runs that have really defined them public markets over the last five months. I mentioned one earlier, which is these technology based mega-cap stocks that just got crushed last year have been on an incredible run. I did pull up a couple of statistics this morning because I’m a nerd, but I mentioned the Nasdaq’s up about 25, S&P is up ten. The S&P would be negative without the seven biggest movers in tech rally. And if you look at those and this is not an endorsement of any of these companies, I’m just reading off statistics. Apple has been up 36% this year. Microsoft, which obviously did the deal with chatGPT Open ai to incorporate AI, which is a huge thing, up 37%, alphabet up 39%, Amazon up 44%, NVIDIA, which is effectively the chipmaker behind all the artificial intelligence right now, up 159% this year, 159%, Meta up 120%, Tesla up 66% this year. And those seven stocks have effectively created all the gains in the S&P 500 this year. That’s interesting because some of that is simply a reversal of some of the losses last year. Some of that is a flight to quality where these mega-cap stocks, the ones that I mentioned, are largely profitable companies that we know are sustainable, that aren’t going to disappear. I think the growth stocks that are still mostly underwater, those without profitability, where they’re still struggling to get margin, where the companies I read off by and large are not. And then there’s been an interesting artificial intelligence angle to this where, you know, I talked to a lot of people right now and they think artificial intelligence is the biggest thing since the Internet. And I would probably agree actually, this is probably the biggest thing to happen in markets in at least 25, 30 years in AI has the potential to fundamentally transform life right in the way that the Internet did, maybe even more. And so what you’re seeing is companies that may benefit from that, they’re in the mix for that are just exploding like Nvidia, like Microsoft. And I think that’s going to be a persistent theme. The other side of that is that for the first time in a while, Smallcaps have really lagged the mega-cap especially so we’ve seen. Huge headwinds in small caps. And if you look at the statistics right now, I talked to Matt just in our public equity teams, you know, small caps look like a value for the first time in a while. Right now, they’re undervalued relative to the large cap stocks. And so if you’re looking at markets, there’s been a run in growth recently after the big collapse last year, but there might be some value to be had moving down market to small and mid-cap stocks.

Richard Cunningham: I mean, there’s a lot there, you know, you talk to NVIDIA and just kind of the the AI frenzy that is taking place. I believe NVIDIA touched $1,000,000,000,000 market capitalization, which is just staggering, shocking when you think about it.

John Coleman: Has like an Nvidia tattoo. I think I saw somewhere.

Richard Cunningham: Sovereign’s capital tattoo.

John Coleman: Who says I don’t have one? Richard So.

Richard Cunningham: That’s awesome. So one of the directions I want to go quickly before we kind of have you speak to what Sovereign’s is doing in the public markets and kind of some final commentary there is, you know, Faith driven investor podcast. You made the remarkable comments just in terms of the opportunity for investors to lean in with more than just capital in this season, specifically in the venture markets, those that are angel investors, venture capitalists, that you have an opportunity here to be the hands and feet to love God, love neighbor in a very real way. You know, it is for founders who are experiencing a lot of pressure and and kind of on the front lines of what is a tougher time talk about, you know, from a faith driven investor lens, the AI frenzy. There’s a lot of people who are sitting there and saying job replacement, the ethics that can be at play here in terms of how far AI can go. Any commentary or insights there? In a ways, you kind of are looking at that.

John Coleman: Yeah. Wow, such a good question. I haven’t thought a ton about the intersection of the Faith and AI component. I would say, and this is a personal perspective, so not everything I say certainly is on behalf of FDI or Sovereign’s. I think being a person of faith means that I don’t have to get quite as worried about technology trends as some people seem to. You know, that’s good. I think, A, if you believe that Christianity is true, then we are in touch with fundamental truth about human nature that are not going to change. Right? God is sovereign. He has a plan, right? We are following that plan. He has plans for the world are beyond our comprehension. But I don’t think we fundamentally have much to fear either in scientific discovery, because ultimately that’s always going to align with the truth that we know or in technological innovation, because he is sovereign. And, you know, even if AI ended up eating the world and one day the world may end and nuclear crises could in the world, you know, we have confidence that our future is secure because of our faith. And so I probably tend to be a little less alarmist about those sorts of trends in general. I also think from a practical perspective, every time we’ve had a panic about technology ruining employment, making life more difficult, etc., it’s proven false. It’s factually never been true in the history of human nature. So if you go back to the Industrial Revolution, what was it? It was Captain Swing or something. There were all these movements basically where workers of the world were just like raiding factories and destroying factory equipment because they thought it would put everyone out of work and that employment would skyrocket. Only the owners of the factory equipment would effectively have any future. And of course, that didn’t end up true, right? The Industrial Revolution had bumps. It certainly had many negative sides, but at the end of the day, what it actually did was relieved a lot of individuals of incredibly grueling manual labor that was unsafe and improved worker safety standards. It opened up freedom of movement for workers to do more innovative and exciting things over time. The Internet revolution did the same thing right. The automobiles and airplanes that we invented did the same thing, electricity did the same thing. So if I had to guess, artificial intelligence will dramatically shift the economic landscape. It will be a difficult adjustment in the near term, but it will ultimately help improve humanity’s ability to pursue the things that they love. It might even make our lives easier, like most technological periods in the past. I do think that raises a spiritual crisis, right? Because if you look at markets or if you look out at studies right now, we’re the most prosperous, the most safe, the most healthy we’ve ever been in the history of the world, ten, 20,000 years, history of humanity. And yet statistics on happiness, loneliness, purpose are all pointing in the wrong direction. We’re seeing statistics come out right now about, tragically, things like suicidal ideation among teenage girls, loneliness and depression, mental health issues among people of all ages. And all of this prosperity has not helped that it’s actually maybe made it worse. And there are underlying factors for that. And so I think the real spiritual challenge of the age might be how do we deal with the spiritual crisis that can erupt when societies become prosperous, when they become less in need of God, when leisure time increases and when people start to lose hope? How do we deal with that? Spiritual crisis. So I’m much more worried about that than I am an economic crisis on the back of AI.

Richard Cunningham: Really, really good comments. All the more reason to go back to the point you made at the beginning about this of the worship of a sovereign God. Anything happening on this planet did not happen by surprise to him. It did not pass through his hands as a surprise. He didn’t miss this one. And all the more reason to go back to that sovereign God and ask for his will, his design for our specific stories, and then beyond that, our companies investments as a byproduct of that kind of overflow. So great comments. Thank you. Well, hey, I want to close on the public markets and we’ve hit on AI we’ve hit on what’s happening with these mega-cap stocks, just kind of what’s happening at Sovereign’s Capital in the way you are specifically investing in the public markets. I know this is a newer strategy for Sovereign’s. It’s been a really exciting one. Couple of comments there and then we’ll move into, you know, the real estate market. In the private equity market.

John Coleman: I won’t get specific just because of […] limitations on this. Maybe I’ll make a couple of general comments, Richard, just about my outlook on public markets. And I think our outlook, you know, one of the other interesting trends and this will dovetail into the FDI conversation, I want to get your update on where faith driven investing stands as well. I’d love to have a dialog about that. Marks on the market today, June 1st, the last 12 to 18 months, we’ve seen the biggest push back in the mainstream values investing movement, which is basically synonymous with the ESG movement in decades. Right. 23 years ago, ESG was almost nothing. I think now it’s somewhere around $35 trillion. I looked at the latest statistics. It’s been booming. I mean, sometimes doubling in a given year, although that’s slowed a bit. The growth in ESG declined 76% in 2022. And there’s been this massive pushback from the left or from some people that has been a pushback against greenwashing or justice washing this idea that ESG is really a commercial grift, you know, it’s not authentic from centrist or slightly right leaning groups. You see push back on performance. ESG is hampering performance. It’s not in the fiduciary interest of folks or asset managers are voting ESG stuff without telling their constituents that they’re doing it. Denying them that choice is the wrong thing to do. And then I think people on the political right or sometimes people of faith have pushed back on the nature of the policies embedded within ESG, that they’re more progressive politically. They’ve been very focused on things like climate diversity, social justice, so to speak, those sorts of things. And there’s been a pushback on the political right. And so ESG has actually began to retract. And I think correspondingly, awareness of ESG and values investing is the highest it’s ever been, the highest it’s ever been. I think five years ago, the average investor didn’t know much about this. It was driven by institutions and asset managers. Now everybody knows about it. I think that is a massive opening in private and public markets. To do something different is, I think, the right way to push back. If people want to push back on ESG, it’s not to simply say all this is wrong, right? We want to get rid of it. Because to get rid of something, you have to replace it with something. I think it’s an amazing time to posit a positive vision for the future, to say these are the things we don’t like about the existing mainstream approach. But here is a way that we can create love of neighbor and human flourishing in companies in real estate developments. Here’s what is fundamental about our faith and what that implies for human flourishing. How to make people’s lives better, which is what faith driven investors want to do, right? We want to make their lives better because of love of neighbor. And how can we begin to advocate that in public and private markets? That’s what we focus on every day, is how can we advocate for human flourishing, love of God, love of neighbor in the companies and real estate developments that we work with and do so in such a way that leads to outperformance because we believe great cultures are the greatest competitive advantage in business and they have the opportunity to outperform if done well. And so I think my hope right now is because of all this awareness to be the pushback against ESG, people are now more aware of the impacts of their capital, good and bad, in the world. We say all investing is impact investing, right? Just what impact you’re having. And I think our opportunity as faith driven investors in public and private markets is to redefine what values investing looks like, to really set a new standard for what can authentically create human flourishing in the marketplace, and to do so in a way that continues to unleash the innovative and economic power, the creative power of capitalism, which I think is not necessarily in conflict with those things. And so I know that’s not specifically an answer to the public equities question, Richard, but that’s kind of where my head is at right now. And what I think the massive opportunity for us and for others in this space is at the moment.

Richard Cunningham: I think that’s fantastic commentary, John, because I think what you’re advocating there I think is really a good conviction push to our listeners, to our audience is saying, hey, unlike ever before in history. There is an axis of information, there is a proximity to the investment process and methodology that otherwise might not have existed. You know, I’m Joe and Jane Smith, and I invest with my financial advisor and I kind of leave all of the decisions up to them. And I trust that my financial advisors, a good guy or good gal who has my best interest in mind, there is now an opportunity to get as close as you can under the hood as possible and look under that hood and say, Hey, what am I in? What am I actively deployed in? And like you said, there’s been pushback to ESG. You know, just this morning, Delta was sued for greenwashing and a massive kind of class action lawsuit. And there’ll be, you know, multiple years of that playing out. But you’re starting to see kind of mainstream media wake up to the fact of like, oh, we really pushed this hard. And so what is that alternative? What is that replacement is faith driven investors like you’re saying there is a real call to stewardship here, a real call to have the information is accessible, unlike it probably was ever before for you to lean and understand, Hey, this movement of this dollar pushing this capital towards something is almost an endorsement. It’s impact investing. So what kind of impact do I want to have? You know, whose hands I’m going to leave that impact? And so I appreciate your commentary there. All right.

John Coleman: So what are you saying? I mean, you sit at the center of the world here as part of faith driven investor. What are you markets right now? What do you think is happening?

Richard Cunningham: I mean, that’s a world class question. I appreciate you asking, know, quick commentary. I would have, as you know, our one of our co-founders, Henry Kaestner, who I know many of you know on the face you’re an Entrepreneur podcast, is on the feature and investor podcast as well. He’s in Africa right now, and by no means is this an advocacy that the only faith driven investing can happen in emerging markets and frontier markets in places like Africa? But we were talking this morning on the phone this the encouragement he has from the people who are flocking to this concept in an economy like Africa, you know, the big four markets in Africa are Lagos, Nigeria, Nairobi, Kenya, Cairo, Egypt, and then is kind of broadly South Africa. The youth on this continent, like if you look at that kind of population demographic and how much of Africa’s massive population is concentrated at the younger end of the spectrum and how many of these people are well-educated, coming out of school but then do not have access to work because of just a work shortage crisis taking place in Africa. The youth in Africa are building. They’re in the entrepreneurial space. They’re showing up by the hundreds to faith driven entrepreneur events, which is just such an incredible encouragement. And then what I believe is even more encouraging from kind of the faith driven investor aspect is the local capital, the local skin in the game, The folks that want to say, Hey, I want to back what’s taking place in my backyard. It’s no longer that an African entrepreneur or a Southeast Asia based entrepreneur has to fly to New York, has to fly to San Francisco as really the only source of capital. There are leaders in their own economies who can be those friends and family investors, who can be those angel investors. And so that’s one aspect that is just remarkably encouraging is just what’s taking place in emerging and frontier markets, the innovation, the building, you know, the ai frenzy, the Internet, kind of democratizing availability to technology is something that’s remarkably encouraging. I’d say another trend and I’ll finish here is just we talked about this earlier in the podcast as the number of funds and markets just led by exceptional Christ followers who have something inside their thesis that it really gravitates you in from a faith driven investing standpoint. So, you know, sovereign’s, you all invest explicitly in Christ following owners and operators because you believe the best cultures are set forth by those leaders. And there’s alpha to be had there. There’s other fund managers and funds out there and market who are investing in what we’re calling the great wealth transfer. Now there’s going to be $60 trillion handed down from really the baby boomer generation into this next millennial, Gen Z, Gen-Y gen X, next generation. And what’s also being passed down in that great wealth transfer is a number of Main Street businesses and it’s people waking up to the fact of like, well, this is a rare and privileged opportunity to go and acquire these family owned businesses with great legacies that employ dozens, if not hundreds of people. We can go in and compensate the baby boomer for really a job well done at a really healthy, fair. You know, Ebro multiple, whatever it might be kind of in the private markets. And then we can now operate that business, keeping those values intact. And so there’s a number of those funds and markets out there saying, hey, let’s be the next generation, next next kind of owners, if you will, of the baton that’s being passed. So I think that’s really exciting. I think there’s a huge push to philanthropy and generosity unlike we have ever seen. Folks are waking up to the incredible tools within the donor advice fund markets and things of that nature. And a lot of that wealth that’s transferring is being passed down in a state that’s being passed down in charitable vehicles. And so people are saying, hey, what am I waking up to that I’m uniquely called to that. Now I have $500,000 in this trust that I can’t access for my family, but I could potentially access for good in the world, whether that be impact investing, whether that be giving to that charity that I’m extremely passionate about. So that be kind of my general commentary around. FDI and what’s happening in the world of faith driven investing. And I think the last thing I would say is this is not a prescriptive or presumptuous movement. Faith driven investing is just as much backing an early stage entrepreneur and their very beginning stages of growth as it is being a financial adviser, walking alongside families. And they’re primarily invested in the public markets because they aren’t an accredited investor, a qualified purchaser. They’re kind of the retail investor who just wants to be an excellent steward with what they have in their 41 K or their IRA. And so I think that’s just as much the faith driven investing conversation.

John Coleman: And let me take a moment to pitch Richard’s incredible platform, which is if you think that sounds interesting to an investor now has a series of small groups you can be a part of, you go to the website and sign up on those. Richard and team have created genuinely one of the most fascinating libraries of content. I think out there. Experts that we’ve had around the Finny Kuruvilla all over the world, the Andy Crouch is of the world, you know, etc. Shundrawn Thomas, all these awesome, awesome people who are in investment management. And I think you guys do a great job of supporting those who want to lean into this with content like the small groups which people can sign up for, of creating content that help to educate people and also just highlighting the amazing people in the space because there are many more Christians who are very serious about their work as investors and very serious about their faith. And people realize, I think you can clearly see to think that investments is a space without that kind of moral compass. And Richard, you and I know that we meet people at all these amazing firms. We just have Brent Beshore for permanent equity, Marcus Stroud from TXV. We’ve had Evan Beyer from Warren Capital and Victor Hugh from Lumos and all these other folks. And they’re just amazing firms out there doing the right thing. And I think a kudos to you, Richard, for creating a platform. I think that’s so adept at helping people to lean into their faith as they invest.

Richard Cunningham: Appreciate that, John. I think the the commentary I’d give there is this is a it’s a big, large conversation and faith driven investing for us as Christ followers. We do not want to put a box around it and limit, you know, what the Holy Spirit can do in the work of someone’s life and what that actually plays out in terms of how they run their business. As the entrepreneur of the faith, you’re an entrepreneur. And then also how they steward capital is the faith driven investor. And so to the groups portion of what you’re talking about, that’s a lifetime of wrestling to come up with that maybe investment thesis as a family, as a fund manager, as someone who stewarding capital, as an advisor, or maybe just your everyday kind of personal angel investor, It’s a lifetime of wrestling. So that’s what these groups are for. That’s what our website, this podcast, these resources that we produce, are forced to essentially help you take that first step of, Hey, what is practically getting in the game look like for me and my spouse, my family, my children, you know, the generational impact I want to have. And so I appreciate your kind words there, but we are coming up on a close here before I have our kind of legendary FDI question where we get to ask you. So plant a seed here about what you’re learning in scripture. Real quick commentary on anything you’re saying specifically just in the private equity markets and the real estate markets. And then we’ll close.

John Coleman: Yeah, absolutely. I’ll just touch on real estate briefly. What a confusing real estate market right now. No kidding. No kidding.

John Coleman: We’re all waiting on pins and needles to see what happens in office, in retail right now, with rates resetting, with leases resetting. I think I’m nervous about that space in housing, single-family housing and multifamily housing. There was this COVID boom in home prices, the greatest gap between median home price and median income in the history of the United States. We all thought rising interest rates, which have effectively doubled the cost of owning a home because of mortgage rates, would lead to falling house prices. But what’s happened is because no one’s selling their houses and there’s a structural shortage, even though it’s more expensive to buy a house. With mortgage rates rising, the prices have not come down because no one’s selling. So the supply is incredibly limited. And so I think private equity is going full steam ahead right now. You know, leverage is has been a problem. If you were a private equity firm banking on leverage to help you do deals, I think you’re in trouble if you’re more operationally focused. And I think a lot of private equity is doing well. I think real estate is a very intriguing sector right now, let’s say, because the dynamics with interest rates, with office occupancy, with a structural housing shortage, have just created some of the most fascinating moments in markets that I can remember.

Richard Cunningham: Yeah, that’s right. That’s really well. So one of the things I sit there and think is, you know, if I’m a homeowner right now and I bought ten, 15 years ago, whatever it might have been, and I was, you know, buying it with almost free money, a two, 3% interest rate, why would I ever want to go refinance? Why would I want to sell in this environment to go now lock in a new 30 year fixed mortgage at 7% or 6%, whatever the new kind of going rate is that’s available in your local financing context. But then I drive around here in Austin, Texas, where I’m based, and there’s for sale signs everywhere. Once again, it’s kind of those those levers you would expect to move in tandem feel juxtaposed. And I think you’re right, we’re all kind of waiting on pins and needles to see what plays out. So. John, That is remarkable commentary from top to bottom. I know for your listeners there, we hit a lot of markets. We went from venture to private equity to real estate. We touched on what’s all happening in ai the public markets. John, of course, hits all of it with just excellence. He is far more than just a podcast host. He’s proven himself a capable guest. And so, John, we’ll close here. What’s the Lord teaching you in scripture? Take us home there. That’s an encouraging word of what God’s kind of showing you on that side.

John Coleman: Well, the good news, Richard, is anything that I got wrong today, I’m going to hear from the various leaders of our teams within 24 hours of airing about all the statistics I got wrong. So, you know, caveat emptor, the passages that a few of my partners and I have been lingering on lately is Luke 16, 11 through 12, which people know is the true riches passage. It says if then you have not been faithful in unrighteous wealth, Mammon money, right? Money. Who will entrust you with true riches? And if you’ve not been faithful in that which is in others, who will give to you that which is your own. And really, I’ve been trying to reflect on this passage in in effectively two ways. One is this is a call to be faithful in the stewardship of wealth, particularly the wealth of others. Right. Which is the game that we are in. This is my profession is how do I try and take money that others have worked very hard for that supports their retirement, their missions, their charitable giving, and try and help them get a return on them that allows them to do more good work. Right. So it is a conviction that we as stewards of our own wealth and of others wealth, need to take that very seriously. It is also a reminder that money is not true riches. I think the easiest thing to get sucked into when you’re in the investment world, I see this among wealthy people. I see this among professional investors. Wealth managers is you keep score with money. It’s easy to measure, it’s easy to manage. Your world, start to become money. You start to view that as something more important than it is. I saw a shocking Wall Street Journal ORC poll just a few weeks ago that people now in the United States value money more than religion, more than community, more than their profession, more than patriotism, more than this host of other things. They value and trust money more now. And I think that’s part of this hollowing out of society that we’re struggling with. Money has always been a tool. Money is a great servant and a poor master. And the Bible talks to us a lot about serving money, but it warns about almost nothing more than the love of money, right. And being a servant to money. And so we’ve been reflecting on that passage a lot. This idea of true riches, both in terms of how can we be better stewards, but also how can we keep front and center for us and for those that we serve? That money is actually not a good measure of value. That money is not true riches in the Christian faith. That money has a role to play as a tool, but it never touches on what’s so unique about our Christian faith in the eternity that we’re targeting. And so I think that passage is one that my partners and I are batting around, and it’s one that I’m trying to kind of reflect on and understand. And I think it’s one that all people of faith, all people of means should really take seriously in terms of what it calls us to do on both sides of the equation.

Richard Cunningham: Man John Coleman, that’s a fantastic word. Let’s reframe the conversation. Let’s move the balls out of faithfulness and let’s get it off of money as the scorecard. And so, John Coleman, thank you for being on the day of.

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Many investors from other religious backgrounds are asking the same core question we are: how do my beliefs shape the way I think about my work? 

While theological differences will always come up, we can still learn from their perspectives. That’s why we’ve invited Michael Eisenberg back on the show. 

Michael has joined us before both on the podcast and at the conference, providing us with incredible insight about how the Hebrew Scriptures give us practical wisdom in business. 

We welcome Michael back for an open conversation about how his Jewish faith influences his views of investing. 

Find the episode at the link in the comments and don’t forget to rate, review, and follow the show.

Episode Transcript

John Coleman: Welcome back to the Faith Driven Investor podcast. This is John Coleman, your host. And we have a very, very exciting episode today, I think, with a great friend of the Faith Driven Investor podcast, the Faith Driven Investor movement, our firm Sovereign’s Capital. Michael Eisenberg Michael has been on the podcast before talking about his wonderful book, The Tree of Life and Prosperity. But today we’re going to get to delve even deeper in what the Jewish Scriptures and Jewish philosophy say about investing in financial life. Michael is a long term venture capitalist. He co-founded and now leads Alef, a Tel Aviv based venture capital firm that invests in technology companies. He’s a frequent author on many different topics, and we’re going to talk about a massive writing project that he’s taken on with multiple books now. I’ve had a chance to read one. I’m anxiously awaiting the translation into English of the others, and we’ll get into that more deeply. And he’s also a family man, and we can talk about that large family there, all of whom are remarkable people and has been deeply involved in community service and government since he migrated to Israel from the United States in 1993. And so we’re very, very privileged to welcome Michael on the podcast. Thanks for joining us today.

MIchael Eisenberg: Thanks for having me, John. And I’m looking forward to welcome you back to Israel personally and physically so we can share a handshake and a hug.

John Coleman: Awesome. Awesome. I did get to visit Michael last year, last spring in Israel. It was my first trip to Israel, although my wife had been a couple of times and he was a really gracious host in his beautiful office there. So we were very grateful to visit. Michael You know, one of the things that impresses me most is just your remarkable capacity for intellectual exploration, for ideas, for writing. And that’s been a part of your life forever. Talk to me a little bit before we get directly into the investing side. I think this will lead in. Where did you first get interested in writing and grappling with ideas through writing?

MIchael Eisenberg: I had a ninth grade English teacher whose name was Ms. […..]. We used to call her the little lady. She was tough as nails. I mean tough as nails. About five foot one. She yelled all the time at us, but she forced us to write. We read a book, I think it was every two weeks or maybe every week. I can’t remember. And I think it was Wednesdays. She would say 20 pages, write. And you start writing and you had to kind of quickly organize your thoughts. Sometimes she would just give topics and say, seven pages start writing. And I thought she was amazing. And I kind of became interested in writing, I think, through her, funny story about it I had her in both the ninth and the 10th grade, and she taught 11th grade too, but everyone wanted out of her because she would often she put you in the corner. She had this great line. She would say, Do you see what’s written behind the me on the on the blackboard? You know, says, No fidgeting, No, stop fidgeting. And everyone wanted out. But in 11th grade, I wanted to go back there and I went to the principal because they put me in a different English class that I’d like to go back to Miss [….]. They go, Nobody wants to go back to Miss […..]. So no, you can’t. And they didn’t let me go back. But I. I give her a lot of credit for my love of writing.

John Coleman: Well, what I love when I read your stuff and maybe it’s the same for you. I write because I know so little. I feel like when I’m interested in and passionate about a topic, the best way for me to explore it is to research it well enough to write about it, because I figure if I can write about it well and teach others, that means that I’ve actually taken the time to understand it. And I can sense that kind of intellectual exploration in your writing to where you’re really reflecting deeply on the topics that you explore. Is that something similar to the way that you approach it, and how do you pick the topics that you’re going to write about Michael?

MIchael Eisenberg: I’ll start with the second question first, which is how do I pick the topics I don’t is what happens. So I think life happens and in my life I’m an investor, I’m a venture capitalist and a person of faith. And we read, as is the Orthodox Jewish tradition, we read the Hebrew Bible every week in synagogue, and you read one portion of the Bible, and so you run into it every week. And as you kind of run into it, you develop your own lens. And I think we need to take these things seriously and I take them seriously cause you to ask questions, particularly as a modern person. And when you ask questions as a modern person, both of the texts and of other people and you want to take it seriously, you need to figure out both how you apply it to modern times and to kind of what is the intent here, even if the situation is different than an old agrarian economy. And that’s what I found myself exploring. And at the same time, I literally just finished yesterday what you call a […..]. So in Jewish law, which persists, the way it evolves is through questions and answers. It obviously started to evolve through the Talmud and then through questions and answers. And I’ve run into particular questions. When Silicon Valley Bank failed, it was Sabbath in Israel. And so how do you deal with a failing bank when you’re, you know, 9 thousand miles away, and it’s the Sabbath under Jewish law. So I just finished yesterday the a two and a half month journey that describes exactly what you said, which is I got to figure this out. And so I spent together with my study partner and writer of my book, two and a half months deep in this topic. And we sent out the 23 page response yesterday to ten rabbis to get their feedback to see what they thought about the Jewish legal analysis of this problem of what happens when Silicon Valley Bank fails on the Sabbath. Wow.

John Coleman: Wait a minute. I almost have to ask the follow up now. Any early insights into how a faithful Jewish believer can approach that question?

MIchael Eisenberg: So in general, under Jewish law, we have a rule which says that things that endanger your life allows you to violate the Sabbath. This obviously doesn’t qualify as something that endangers your life. It’s very fundamental. There is a a commentator from about 300 years ago. It was called the McGuane Abraham the Shield of Abraham, who writes that in certain conditions of massive financial loss, you can violate rabbinic prohibitions of the Sabbath, but not biblical prohibitions of the Sabbath. And there’s more to it than that. We took an entirely different approach because we think it’s very difficult to figure out how this is a risk to your life. And also, we think the notion of a large financial loss is a very blunt tool. But we think in the digital economy, which is I think was very different here, we had a digital bank run within 48 hours. Depositors withdrew their money and sank a bank. And we think in a digital economy, things both like cyber and digital bank runs fall into an entirely different category that has been lost to the Jewish people for 2000 years. But it does appear in the Talmud because we haven’t had sovereignty. And so what we suggested is that in a sovereign country, businesses and particularly digitally connected businesses are actually part of the piercing of sovereignty when they fail. And because of that, it would be permitted to violate rabbinic prohibitions on the Sabbath in order to make sure that the businesses stand up or businesses are not attacked either by digital bank runs or cyber attacks or whatever it is. That’s the approach we took, you know, still under investigation and dialog. We’ll see how it comes out.

John Coleman: Man, Michael, I love this. I love this. And I want to follow up about this broader reflection on the Scriptures, on the Bible that you’re doing and how that integrates with economics and technology. As I understand it, like you said, you’ve been writing about that intersection for some time on a weekly basis. And I think one of the things that I’ve come to admire the most about my Jewish friends is the deep reflection you do on the Scripture portion every week and how that begins to inform your evolving faith and how much debate there is about that. You know, it’s really an active intellectual life. Talk to me about this massive writing project that you’ve taken on, starting with the Tree of Life and Prosperity and how that intersects between those three things your faith, technology and economics.

MIchael Eisenberg: So first, you give me more credit than I’m entitled to. You described it as a massive writing project. I actually didn’t sit down to do this. It’s kind of happened in waves along the way. I sat down to discuss the topics with my kids at the Sabbath dinner table, and I started writing myself notes. It evolved into longer form items and then it evolved into the first book, and then I became obsessed. And I’m now four volumes into the five books of Moses. So I’ve done Genesis, Exodus, Leviticus and numbers, and I’m already kind of done with the rough infrastructure of Deuteronomy as well in Hebrew. And I think as I was saying before, one of the benefits of being in synagogue every Sabbath and kind of, you know, coursing through the Bible every Sabbath, is that you become familiar with the text. But I find that too often there is a dichotomy between our modern situation, let’s just call it and text that we consider to be eternal, but we actually don’t treat them that way. They’re kind of some nostalgic thing we put on the side, and I consider myself very fortunate that our own rituals put us in this context of the biblical scriptures every week. And so when I sat down to do was to look at how you apply scripture to an active, technologically advanced economy, what are the foundational principles of the text itself? Reread There was a commentary in the Middle Ages because there was Rabbi Samuel, the son of Moses, who was a grandson of the famous Jewish [….] named Rashi. Rabbi Solomon Isaac or a son of Isaac who said that there’s something called the Scriptures that are reinterpreted in every time. What does that mean? If we think they’re eternal, it means that they have meanings that we can then infuse with what’s going on today and then try to apply them as faithfully as possible to the problems we have today. And my own view is that the Hebrew Bible and this may be controversial. My own view is that the Hebrew Bible in particular is not just a set of metaphors and. It’s not just a set of precepts. It’s actually a blueprint for life and society. And if you take that seriously, then one should attempt to apply it to a modern life in society. And I take that seriously. By the way, I think the founding fathers of America thought the same thing. You know, if you believe in the Declaration of Independence as a foundational document, they were talking about people created in the image of God in that way. And they kind of had a blueprint for a very tolerant America, tolerant of religious freedom. But at the same time, much of Christian society in large ways. I know that’s not politically correct to say today, but I think it’s what the founders had in mind. And so they attempted to apply in the separation of powers. I think the same biblical text where the Hebrew Bible had a king, a prophet and judges. Right. And you had, you know, during the time of Ezra, the scribe, who is mentioned in the Book of Ezra, which is an Old Testament book in the Scriptures. He had a council of elders, which I think is the way to think about the US Senate. And so I think they took this really, really seriously. I mean, I think we need to as well at a societal level.

John Coleman: Wow, I absolutely love that. That’s really interesting. And it is interesting if you date back to the beginning, you know, in some respects, not completely, but in some respects, the American founding was the story of religious refugees generally. And there is evidence, at least in many parts of the country, and especially amongst the founders, that Jewish people were part of that They were welcomed with open arms, at least in many circles. And that is hopefully a credit to the country at that time. You know, as you think about the project that you’ve taken up, and maybe this helps us reflect as well in a way that Christians can help to understand the Jewish scriptures more. Talk to us about this book series that you’re publishing that began with the Tree of Life and Prosperity. I think the next book title from Remembering Properly is Everyone Can Be Moses, which is being translated and then the Land of Milk, Honey and Uncertainty, which is coming out. And you’re kind of marching through books to the Bible, talking about really interesting, counterintuitive scriptural lessons. Talk to us about what’s there, what’s that evolving into. And also just how the Jewish scriptures are unique from what we would consider the Christian scriptures, where the difference is there as well as the similarities.

MIchael Eisenberg: How many hours do we have?

John Coleman: As many as you want, Michael. I know I ask a lot of questions, all bundled up in one there.

MIchael Eisenberg: So like I said, I’m for books in on the biblical series. I also have a book I wrote years ago on the Book of Esther, which is about Jewish identity, by the way. Funny story. And the one I wrote on the Book of Esther, I got a call from a Catholic friend of mine in Los Angeles who called me up saying, You know, you could have written that book about Catholics as well, and not just about Jews. So I told him I would, but I didn’t have the same experience. So he was free to take it and adapt it as he saw fit in the biblical series of the five books of Moses. So I’ve done The Tree of Life, of Prosperity and Genesis. Everyone can be Moses on Exodus, what I call Roaring Tribe on Leviticus. I’ll spend more time with that in a second. And the most recent one is Milk, Honey and Uncertainty on the Book of Numbers. And the Book of Deuteronomy, which I’m working on now in Hebrew, doesn’t have a name yet. So Genesis, I’ll start there, takes a look at the stories of the forefathers in the context of, Hey, this is real life. And so, for example, if you look at the story of the Garden of Eden, I view that as a situation of universal basic income. Adam and Eve were fed, you know, Christian doctrine is to look at it as original sin. In Judaism, there’s two schools of thought on that, whether it was a sin or just call it, you know, growing out of adolescence. But, you know, the Bible chooses to tell us the story of somebody in an idyllic society where all his needs are provided for by God and he either sins or grows out of it or definitely does something inappropriate, and then he’s expelled. And as he begins to sweat and work by the sweat of his brow and harvest, he for the first time has children. And I think what it tells us, there aren’t any children in the Garden of Eden. Right. And I think because man and woman, by the way, man doesn’t even talk to woman there. Adam does not talk to Eve. They don’t have a joint project and everything to work on. They have no future look forward to. Everything’s provided for them. They become indolent. And you know, the scholars, the sages say that indolence leads to boredom. And boredom leads to sin. And, you know, I think that happens when we have our basic needs provided for. And man was actually destined to work. I used to joke about a rabbi of mine that he was the first Orthodox Jewish Protestant, you know, Calvinist in that way. And I believe in the value work. And I think the Bible believes in the value of work and in being productive. And so I looked at universal basic income, you know, for something that’s very relevant to today, the story of Noah. You know, if I asked you who was Noah, your obvious answer. That’s the average person on the street, Jew or Christian, by the way. Who is Noah? Well, he built the ark, but we can actually prove through the scripture. Itself. And the rabbis tell us this also that Noah invented the plow. Noah didn’t only invent the plow. Noah invented chemistry because it says he planted a vineyard and grew wine. And when you think about that and you think about our modern challenges of, you know, AI it’s all over the place now in the world. AI is destructive. AI is the best thing that ever happened to man. And yet there is technology, like the invention of the mechanical plow, like the invention of chemistry is a tool. And if we don’t put an Abrahamic ethical framework around it, it’s going to run awry and it’s going to corrupt society. Exactly what happened to Noah and why we had the flood. Exactly what happened to Noah in his tent after he drank too much wine and was castrated or abused by his son. And so every technology is dual use, so to speak. It can be used for good and used for bad. And so I spent most of Genesis working through story after story about what the core values are economically that the Bible is trying to impart to us. And then I spent Exodus and everyone can be Moses looking for the leadership and societal lessons called The Adventures of Moses or the Society as described in the Ten Commandments there and the building at the Tabernacle. Just one example is they went to Michael Dell, who’s the CEO of Dell Computing, and asked him what was the most important trait for a leader in the 21st century? And he said, curiosity. Well, good for him. He learned it from Moses. How do I know? Because we can ask a simple question Why did God choose Moses? And you think about Moses by the ways we don’t appreciate this, but the guy walks into the most powerful ruler in the world and says, Let my people go. So we talk about God sending a message to a lot of people who think that God maybe spoke to them, but they don’t have the […..] to stand up to the most powerful ruler in the world and say something to them. And I think Moses, when he kind of is drifting in the wilderness and he sees the burning bush that will not be consumed, he goes to explore it. And the verse literally says, and God saw that he strayed from his path to observe and behold, the burning bush would not be consume. And God calls out to him, Moses, Moses. And he says, I am here, God. Right. So what God saw was that Moses strayed from his path. Curiously, out of curiosity, to see why this book should not be consumed, even though it was burning. And so Moses teaching as the curiosity is the key trait for a leader who wants to make change. And I think, by the way, that’s been true throughout history. And I spent a fair amount of time, you know, for example, on what is the modern application of do not covet the 10th of the commandments of the Ten Commandments and do not covet like a zero sum thing, right? Do not covet your fellow’s wife. Do not covet is donkey or his farm animal. And the reason is, by the way, those are both the means of production. The farm animals. That’s a factory, right? And his wife is what turns him into someone who protects his home and he can’t be there for be an economic character. But in the digital age, these are not zero sum games. And so empowering people to be successful in the digital age by sharing knowledge is actually economically increasing. It increases GDP, it increases economic output because this kind of interaction between different kinds of knowledge helps us out. I’ll move quickly to Leviticus, which is called the Roaring Tribe. I what I described there, you know, we’re all suffering right now across the world from tribalism. This is great new book by Tim Urban. I don’t know if you’ve read it. I think it’s called What’s Our Story. You know, he describes the increasing tribalism right in blue in America. It’s true everywhere. He has his own prescription. Mine in the book says that Leviticus is about a tribe called the tribe of Levi, which has the priests in it. And an increasing outward spiral where it’s attempting to do is to create a covenant, an economic covenant among the people, to empower others to be successful, to take responsibility for your fellow, for your brother there. But it also creates some bridges to other tribes. You asked before about Christians and Jews. And so if the Jewish people is a covenant, there are other people who have covenant. And our job is and this is why it’s called the roaring tribe, what we’re after in society is what I call respectful tribalism. Sebastian Junger has a great book called Tribe. We all want to be part of a tribe. It could be a religious tribe, it can be a political tribe, etc. That’s great because it gives us safety, security, you know, a capitalist network, etc.. But if we’re not respectful of other tribes, we’re going to end up in where we are right now, which is a disaster. The last book is called Milk and Honey Uncertainty in the Book of Numbers, where I chart through that this 40 year sojourn through the wilderness is basically to teach the Jewish people to deal with uncertainty. How you deal with leadership challenges in uncertainty, how you deal with changing economic circumstances, uncertainty how you deal with shortages, water shortages and food shortages that they encounter and that create uncertainty. And what are the lessons from that, both for investors, for businesspeople and for society at large? And just to finish out the thought, one of the things that I think we get wrong a lot is the difference between risk management and uncertainty. Somebody who manages a hedge fund is a risk manager, is looking for the number of standard deviations from the norm. Guys in the venture capital business like myself are investing into uncertainty and trying to benefit and leverage uncertainty. And that’s a whole different set of skills and. I think tells us a lot about where we are at society today.

John Coleman: Now, that’s awesome. Michael and I honestly can’t wait for the translations. I think I knocked out the Tree of Life and Prosperity in about 48 hours, and I think one of the things that I really appreciated for my own faith is just how diligently people like yourself and so many in Judaism reflect on the scriptures, dig deeply into them. I remember coming across your analysis of Noah, which you talked about with all of this great rich scriptural interpretation of the Noah story about him as an innovator and an inventor. I had no idea about the plow, about the vineyards, and it was just shocking how much more depth there was to the scriptures than I had taken from them. And I think a thinker like you who’s not afraid to be counterintuitive, he’s not afraid to to kind of dig deeply into areas that others haven’t interpreted and only enlivens that in the spirit of getting to this idea of faith driven investing. I wanted to dive right in to getting your insights on what faith driven investing looks like in Judaism. You know it sovereign’s capital and faith driven investor. We often talk about this idea that all investing is impact investing, that basically since the dawn of humanity, people have tried to align their financial lives with their most deeply held values. And certainly I think the scriptures, the Jewish scriptures, were one of the first places in which that manifests. As you reflect on what faith driven investing means in the Jewish context. Michael, what are some of the key tenets of that, both historically and that you see manifesting today?

MIchael Eisenberg: So I have been talking about a term more recently which has come out of a lot of the speeches I gave around the book. And after kind of reflecting on this, I think what the Bible advocates is what I call now covenantal capitalism. And it has two points to it. Capitalism says I have private property. Capitalism says that the profit motive is good, much like Adam Smith did in the brewer and the baker. Doing their job should increase all of our welfare and output. What I think people miss, and I think by the way, your podcast, your movement has done a great job of driving home to people is capitalism works. When there is an underlying covenant. There is a great writer. His name is Barbara Allen. She wrote on de Tocqueville, who points out that the Protestant covenant underlies the foundation of capitalism in America. And so what happens when the covenant is frayed is capitalism comes unmoored. But if the community or the covenant, as I prefer to call it, takes care of its members, empowers its members, asks about what are my responsibilities to the other members and not just what are my rights as an individual? Then capitalism thrives. And so the problem you ever saw about the problem of capitalism, there’s nothing wrong with capitalism. The problem is with we, you know, an individualistic society frays the kind of underlying fabric that is needed for capitalism. And that’s what we need to fix. And so I think the notion of scripture, which talks about brother and fellow didn’t think about sisters back then as much, but brother and fellow and the transparency that covenant and community deliver so that they don’t screw or take advantage of my neighbor or my fellow is foundational to the future of capitalism. And so one of the very important elements of the Jewish faith and by the way, this was a challenge between Jews and Christians in the Middle Ages that thankfully we’ve gotten past is lending with interest is a big challenge in Judaism, by the way, in Islam as well, in Shariah law as well. And so why is that? We need to ask, why is that? And the answer is that in the Book of Proverbs, it tells us that the borrower is enslaved to the lender. By the way, if that sounds like a lot of people underwater on their houses right now, it’s not an accident. And when we are in debt, we develop a scarcity mentality. There’s a professor at Princeton. His name is Arnon Shafir, who spends a lot of time talking about what happens when people are in scarcity mentality. They turn on their survival instincts and make terrible decisions about their own finances. And so the Bible is trying to create an air of abundance in the economy, number one, and number two, to make sure that we are not enslaved to the people we borrow money from and hence interest rates, which tend to compound and be variable, as the case may be today, are a very challenging mechanism for that. But we need to separate that, by the way, from business credit, because business credit’s like an investment. There’s no personal liability if you’ve got a corporate veil. And so you don’t become enslaved to it. But we need to be very, very careful about consumer credit. And so, you know, I backed a company here called Rise Up, which is taking on the consumer credit narrative. I mean, you watch television today, which I try not to do, and all they’re doing is pushing consumer credit at you. It’s a disaster. We are enslaving people to their credit cards and we need to be careful with that.

John Coleman: Yeah Michael. I’d love a couple of the comments you’re making there. You know, one of my mentors in college was actually a Catholic scholar named Peter Lawlor, who was one of the great Tocqueville scholars and wrote a book called Self-interest Rightly Understood, which effectively argued that Tocqueville, in self-interest, the way that the United States was founded, was actually very different than the kind of isolationist, individualistic self-interest that many people consider it today, that it actually was underpinned by a communal instinct, by commitment to community institutions and by faith. And when I was in business school, I had this reiterated I don’t know if you’re familiar with that business scholar named Clay Christiansen. He passed away just a few years ago, a faithful Mormon believer. And he actually has a great video up on the connection between religion and capitalism. And he had had a dialog with a Chinese scholar who had pushed the idea to Clay that capitalism couldn’t work in a society like modern China had been eroded of its religious foundations or of any religious foundations, because capitalism only worked in a society of mutual trust, of values that allowed people to work together constructively, that you effectively couldn’t build the compliance into capitalism to control its worst instincts, that that had to be underpinned by a moral foundation. And what you’re describing, I think, is the way that most religious traditions historically, at least have thought about capitalism and free enterprise is is it’s got enormous power. Societies have been structured around this for some time. However, that power has to be countered by a shared set of values. I love the concept of tribalism that you had a constructive tribalism and that those values have to be moral. They have to be deeply held so that they can guide those instincts of capitalism, which is what I think you’re describing. And I do think that is the underpinning of all types of faith driven investing now.

MIchael Eisenberg: Yeah. So, you know, I think there’s a lot of truth to this notion that in atheists societies it is more difficult. Doesn’t mean it’s impossible, but it’s more difficult to create the level of trust that capitalism requires because it’s impossible to regulate for every scenario, just impossible. And so we need to assume a basic level of trust. There are proxies for it other than faith. But, you know, you use Plato’s rings of guidance. There are certain things that religion causes us to be fearful of, including do not covet things. You just wouldn’t do that other people, in the absence of faith, would think differently about That doesn’t mean all of them. There are plenty of moral and ethical people who are invested in community who aren’t like that. But I think if you have a large society of people where there’s a complete absence of faith, you could end up in a difficult spot for capitalism over time.

John Coleman: Yeah, I think that’s exactly right. Yeah, that’s not to discount that as certain people without religious faith can’t be moral, can’t be great people. Like you said, in a large society, the absence of their shared values I think is quite challenging. You describe this kind of covenantal capitalism, which I love. I love that term honestly, And how that impacts the way that people do business as you look at modern Judaism and the way that faith manifests in investing principles. Do you see a faith driven investing ecosystem now around Judaism and do you see firms that are trying to operate specifically by Jewish faith, either through negative screening or positive screening or different business practices, or what does that ecosystem look like right now in Judaism?

MIchael Eisenberg: I think the first thing is, is that there are a lot of communities and the Jewish community writ large. We’re helping other people get started in business. And patronizing those businesses helps people get their businesses started. And so I think that’s kind of the first level of it. I think there are a number of people who practice what I talked about before, which is providing interest free loans. There is this amazing for profit almost organization in Israel called Ogen, which provides interest free loans to people. How is for profit? I spent in a different time when I have time for that that enables people to get their small businesses started. And so that’s a real implementation of this, what I call a biblical setup that says be someone’s partner and not their creditor. And I think, by the way, the whole biblical system I cover this in the book Roaring Tribe is set up so that we should become partners and not creditors. And that’s why the system has prohibitions on taking interest, and that’s why the system has mechanisms for dealing with price gouging of your fellow or your brother. There are less what I would call kind of investment funds that specifically talk about this. But I think there are a lot of what I would call a Jewish values based investing principles that manifest himself and many Israeli companies I’ve talked about this in the context of, you know, a company called Empathy that we’re invested in, which is helping next of kin after a loved one passes away. And they’re kind of a very empathetic and empowering way that helping them interact with their life insurance companies rise up, which is a company I mentioned earlier, which is getting people out of debt and making them investors and has kind of issued this kind of conspicuous consumption or credit card consumption approach to life so people don’t fall into debt. And we’ve made a bunch of investments around these themes. And it’s not only religious in nature. I think there’s something about community and DNA. DNA. I don’t mean genes, by the way. I mean a cultural DNA that causes one to do this. And by the way, if you go to a synagogue or a church that becomes your social network and going back to de Tocqueville, I think that’s what he saw in many Christian communities around the United States, is the church was your support community, your business community. People could lean on. And that was incredibly valuable financially and economically for these communities and for capitalism.

John Coleman: Yeah. And that concept of self-interest, rightly understood is the individual centered in community rather than the individual as as a pure entity or as it is a solely individualistic entity.

MIchael Eisenberg: Yeah. By the way, you know, we only get to impact investing because we have individualism. If the system works based on community, you can make as much money as you want because ultimately you were supporting your community. I don’t mean charitable, by the way, but enabling other people to become wealthy as well as successful. And so I’d argue impact investing is a response to, you know, individualism, which is kind of capitalism unmoored rather than a return to the roots of let’s create the community first and then capitalism will be just fine if we kind of reinvest in covenant and empowering our businesses, our local businesses, our communities, the people we connect with and be empathetic towards them and empowering, we don’t need to get to impact investing. We should all make as much money as we can.

John Coleman: Yeah, and what’s been shown very clearly, I think, over the last 30 or 40 years is that capitalism is the greatest enemy of poverty. And stagnation in history, right? I mean, it’s been a tool that’s lifted billions and billions of people out of poverty, out of destitution, out of hunger. It’s unleashed this remarkable human potential. Right. And it is I think there are distinctively, at least in our faith tradition, Christian elements to that. Right. I wouldn’t argue that capitalism and Christianity are exactly the same thing. And I think there are some errors to correct for in unbridled capitalism, but it’s actually the foundation of capitalism and free enterprise that allows individuals to flourish with all the creativity that they possess. So I couldn’t agree more about its power to really empower a community and to do good for people. And it’s done more arguably for people than charitable enterprises have over the last 40 or 50 years in a lot of respects. Digging into the way that you run Aleph. Michael, you’ve talked about this a little bit. It seems like you’re investing in companies that also have a deep missional impact, or at least that’s my reflection on some of those that you’re describing. How does your faith influence the way that you run Aleph as a venture capital firm?

MIchael Eisenberg: You know, it’s important for me to point out that my partners are not necessarily people of faith. I love them dearly. They’re my brothers and we have a wonderful partnership, marriage. And so, you know, we run Aleph as an equal partnership and we each have equal say. I have a view that businesses that do good by their customers rather than abuse them, end up being just better businesses. And so like I often use Lemonade, which is an insurance company as an example, where, you know, if you think about a traditional insurance company, State Farm, Allstate, whoever it is, their business model is they make money by making you miserable. What does that mean? They make more profit when they deny your claim, You know, lemonade or I’m an investor, a public company now, you know, set up its business so it’s not conflicted with its customers. They take a flat fee to run the pool. That in my view, and by the way, they give the leftover premiums to charity of the consumer’s choice. I think that’s a much more aligned business model that wants to make a lot of money to do that. And that’s a reflection of what you call values. I think just good investing right now. I think this is exactly what people want. We are all longing for a time where we are aligned, where we have a covenant and a community. I told the story in the article I wrote for Fortune on Covenantal Capitalism about speaking to a group of Harvard students. There was a young woman there was from New Zealand, and I asked her if she had a local bakery and she said yes. She said, What happened during COVID? She said it went out of business. I said, Why is it what people didn’t patronize in the supply chain and this, that and the other? I said, You miss? And she said, Yes. I said, Well, in our community in Jerusalem, we had a similar problem. The difference is that the people in the community got together, advanced their money, meaning they bought things on account for, you know, a year forward so that they would have enough cash flow to get through COVID. And now we’re so happy because the people in our community, we had a so unbelievable bakery. They’re a staple in the community. And now, by the way, they turn up at our family events and they’re part of the community. And I think that’s kind of a hallmark of covenantal capitalism. They’re making good money now. They’re doing good, but, you know, get people through tough times so that they can be economically empowered. And I think that kind of alignment and covenant matters a lot.

John Coleman: You know, we talk a lot about love of neighbor and the Christian tradition and that love of neighbor that you’re talking about, just how effortless that is and the ability to lean into others and support one another. And you’re right, still using the profit motive. Hopefully everybody ends up doing well for themselves, but it just shows a real empathy and care for others.

MIchael Eisenberg: I’ll say, show me controversial. Can I say some controversial?

John Coleman: Yes.

MIchael Eisenberg: I think we can sometimes fool ourselves and say love, our neighbor is actually love. But the question is, what are you willing to sacrifice for it? And I think, you know, when you part with money, not just in a charitable way, but, you know, you may even hurt for the short term, that shows on some level an even deeper love or covenant that drives that love. And I think that’s important to force people out of their comfort zone to feel a little bit of sacrifice, you know, to show that love.

John Coleman: Yeah. You’re a father of eight. I’m a father of four. I think we both know that love always involves sacrifice. What a great point. But, you know, that does involve giving something real of yourself. And I think what you’re describing is exactly that. You live in this world of venture capital. Now you’ve got a view of investing broadly. Compare and contrast, if you would, kind of the dominant ESG approach to investing or social responsibility that you see out there right now with what you’re describing, because obviously I don’t know how it is in Israel at the moment in the United States, ESG has exploded, but recently it’s also become a bit controversial in terms of some of the ideas that it’s forwarding. And so we often get the question, you know, what’s the difference between faith driven investing and ESG? And in this case, you know, this covenantal capitalism that you’re describing, What are the differences and similarities with ESG as you see it?

MIchael Eisenberg: Oh, man, I think ESG is a grift. And it was a way for asset managers to aggregate asset and deliver subpar returns and not be criticized for it.

John Coleman: Tell us. How you really feel, Michael.

MIchael Eisenberg: Yeah, I think I argue this in the book. I can’t remember in which one of them. I think the first one, the one you have to life and prosperity. So, you know, these are all sorts of big words, ESG, everyone measures them differently. It’s not clear how they either impact the bottom line or actually impact society or create a better society. I laughed. You know, lemonade, which I think is not a pretty aligned business model, was rated lower than I think like Exxon. I’m a fan. Exxon do not missunderstand me and it’s like it’s a very poorly defined, even more poorly measured investment principle with no teeth other than making people feel good and no real underlying values other than kind of the new new thing of whatever somebody’s dreamed up is called environmental or social or governance. And I think we’d all agree that we all have different views of many of these social values. And so, you know, I’m personally a big fan of transparency rather than any of these other things. tell me, what you really think? Yeah, I’ll say something complex. You know, Ben Jerry’s I think it’s a very good ESG rating. I think they’ve been terribly anti-Semitic. I was happy to find that out so I don’t have to buy their products. And, you know, Unilever got hurt by it and they obviously somehow the s got okay there, even there. I thought they were terribly anti-Semitic know. I know it’s run by two Jewish guys. And so I don’t know what to make of ESG. I really think it’s just an unbelievable way for asset managers to collect assets and deliver subpar returns. Great marketing, by the way. Amazing. Brilliant marketing. There’s no covenants in it, though. In a covenant, they would have made sure that their investors made a lot more money, not less.

John Coleman: And I think, look, I saw a ton of elements of what you’re describing in my time in asset management where, you know, I think there are people who went into it on a mission. Some of those people I would disagree with the mission that they were on, but went into it with a mission and they’re still the true believers. But so much of this has turned into a commercial activity [….], as you described it, in the sense that once it became better to have the rating than not, once it became kind of a part of doing business to get the rating, people began to manipulate the ratings. The whole system kind of grew up to manipulate it. There was a great tweet by the ever controversial Elon Musk, like a year ago, a year or two ago, where he pointed out the same thing you did with eliminate, where Tesla was rated lower than some of the big oil and gas companies on the E part of ESG. And he said, you know, what kind of rating system could possibly come up with this if it were legitimately about what’s transforming the environment? And that was true, right? I love the oil and gas companies. I think oil and gas has a bright future. I think it’s been incredibly important for unleashing human potential. But hard to argue, you know, that Exxon would be better environmentally than Lemonade or Tesla, for example. I want to switch to what we call lightning Round in a moment, just to get to a few quick questions with you, Michael. But one thing I wanted to end on was also just to ask you a broad question. As you study the Hebrew Bible and you’ve got many close associates who are Christians, what are parts of the Hebrew Bible that you think Christians don’t dig deeply into and not for what’s a part of the Hebrew Bible that you would encourage all Christians to study more carefully.

MIchael Eisenberg: I want to make a meta comment first, if I can, which is and as I told you, I maybe I’ll give you a surprise. I have this idea that I think we need to do like a covenantal conference in Jerusalem about the future of capitalism. And yes, it should involve Jews and Christians and Muslims to think about, you know, what are the covenant of the future that will undergird our economic growth as peoples for the future. And I think the kind of meta comment is there is a lot of work to be done right now across different faith backgrounds, people of different faith backgrounds, to kind of reinvest in this covenant so that capitalism can kind of keep growing and as you said before, be the greatest engine of prosperity and of human advance that we know. And I think there’s a benefit to diversity of different religious experiences in creating that, you know, foundation for the future. And so the first thing I would actually say to what you call a Christian audience is that both the old and the New Testament, by the way, which I’ve read, I don’t study nearly as much as I do the Hebrew Bible, but I have read it. And you need to invest in Scripture to the extent we really believe that these are foundational principles, they should be read and reread and internalized over time. That’s kind of point 1 in the Hebrew Bible. I think one of the core elements that we need to kind of dig into is this notion of empowering our brothers and sisters through the economy. And I think that’s more present in the Hebrew Bible. Than it is in the New Testament, particularly in the Book of Leviticus and the Book of Deuteronomy, and then in some levels in the book of Jeremiah and Isaiah. And so I think that’s super important and I would dig into that. The last piece is we need to ask ourselves is people of faith in a modern world. Where are the areas that we think there are changes and where are the areas that we need to be steadfast? And I think one of the interesting things about the Hebrew biblical experience, which I believe is different from the Christian biblical experience, is the way the rabbis interpreted and reinterpreted. We have this notion of oral law, of essentially an evolving set of laws and applications for how we apply scripture through the generations as they become more modern and they change. And I think that’s actually something, although it’s not in the Hebrew Bible, it’s more in the Talmudic realm that is valuable for a Christian audience as well.

John Coleman: Well, Michael, this has been an extraordinarily helpful discussion. I love this idea of a covenantal conference, and so I hope you’ll count us in as partners on that if if you’re serious about it and if we want it.

MIchael Eisenberg: I’m very serious about it. I’m talking to someone. We both know about it. We’ll see if we get there.

John Coleman: Yeah. I would love to dig into this more with you offline before we close out today and maybe a more personal question, we ask everyone at the end of the Faith driven Ambassador podcast what God is teaching them right now through Scripture. So just kind of in your personal studies of Scripture, is there something that God’s teaching you right now in any realm that you’d want to share with others?

MIchael Eisenberg: So I have. Don’t take this the wrong way. I’m never sure what God is telling me or teaching me. What I can say is that the Bible and the thousands of years it’s been around teaches us to have a long term view. And I think in the social media era, most people have a, you know, 24 hour or ten second view. And I think the perspective given by biblical scripture tells us processes take time and we need to take a longer view of what’s going on in the world right now than what’s maybe under our nose are disappearing in a tweet from 10 minutes ago.

John Coleman: I love that. Michael Eisenberg, we’re very excited to see your new books coming out. We’re very excited about the investing that you’re doing through Aleph, which I’ve been mispronouncing for most of the podcast. I apologize.

MIchael Eisenberg: That’s okay.

John Coleman: We’re very excited to see the follow up on this covenantal conference and the development of this idea of covenant capitalism, and just so grateful to you for your willingness to share with us and for the positive difference you’re making in the world through your work in writing. So thank you so much for being on the Faith Driven Investor podcast today.

MIchael Eisenberg: Thank you, John. I want to commend you. I think it’s not obvious that you’ve reached out to people of other faiths, and I value our friendship and our meeting. And I hope, like I said, I’ll see you, your wife and your kids again in Israel soon or in the U.S. And I think, you know, the work you’re doing is special and important, and I commend you for it. It’s not trivial. So thank you. Thank you for the hard work you’re doing.

John Coleman: Thank you, Michael. And see you soon.

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“Dad, when are you going to get a real job?” 

Investors might find it hard to explain their careers to their kids, but that’s not the case in the Harris household. There, faith driven investing runs in the family. 

Britt is currently the President, CEO, and CIO at UTIMCO, the largest public endowment in America, and his son, Matt, previously served as Vice President of the Blackstone Group and is now on the investment team at Draper Associates. 

In this episode, we talk to both of them about being part of a family with shared faith and passion to impact culture through investments. Listen in as Matt and Britt discuss their intergenerational perspectives on the state of the market, ESG investment, and being a saint in the boardroom.

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Most investors often start with how to maximize returns and minimize risk. Don Simmons, CFP Professional and Founder and CEO of Simmons Capital Group, believes that Faith Driven Investors should seek to optimize beneficial outcomes instead. 

As a CFP Professional with a degree in counseling and post graduate training as a portfolio asset allocation specialist, Don fuses professional portfolio strategy with investor psychology and behavior. 

Don joins our podcast to talk about his recently released book “The Steward Investor: Investing God’s Resources for Eternal Impact.” Don shares that as Christians, we need to be on the forefront of planting business in economically difficult areas where issues like unemployment and human trafficking prevent human flourishing. Listen in as Don pushes the envelope on the role of Christians as stewards of God’s resources.

To learn more about The Steward Investor, missional investing, and news about Don’s speaking, sign up for his newsletter at https://thestewardinvestor.com/

Episode Transcript

John Coleman: Welcome back to the Faith Driven Investor podcast. This is John Coleman and I am here with my partner Luke Roush today, freshly coming off a very good Christian economic forum in Beaver Creek, Colorado. Luke, it’s great to see you. How did you like last week?

Luke Roush: It was great. It’s always a special time of community with folks from here in the U.S. and also around the world. So it’s a reminder of just the scope and scale of God’s church and special things that can occur when we convene and share ideas, knowing that the answers to humanity’s biggest problems don’t come from humanity, but they come from God’s word and fellowship in prayer. So it was a great, great couple of days there in Beaver Creek.

John Coleman: Amen. And it’s a ministry of Crown Financial Services and part of the great work that they do. And I was only introduced to it by you all last year, so it was my first time. And I mean, I just find it really enriching every year. And one of the most enriching parts is Luke mentioned are the great people that you meet there, one of whom is on the podcast today. So we are really privileged to welcome Don Simmons. Don established Simmons Capital Group in 1988 and became one of the first fee based registered investment advisors in upstate New York. He is a legend in the faith driven investment and wealth management space and has recently written a book called The Steward Investor Investing God’s Resources for Eternal Impact. And we’re really privileged to welcome him on the podcast today and talk to him about some of the principles in that book and in the life he’s crafted in investing. So thanks so much, Don, and welcome.

Don Simmons: Thanks, John. Glad to be here.

John Coleman: Well, Don, I want to start with this exciting new book, The Steward Investor. You’ve obviously been quite thoughtful about the topic, but just give us a little bit of background. What is the steward investor and what’s the core thesis of the book?

Don Simmons: Yeah, you know, I’m not really a writer. I guess I’m an accidental author in that this book kind of just spilled out of me last year when I took a leave of absence from work, and it spilled out around really the issue of as Christians, do we really believe what we say we believe? And as a professional money manager, the question that really came to my mind is we frequently say that God owns it all, but there are implications to that, especially in regard to how we invest. So the book really dives into our current understanding of stewardship being primarily about financial competence, which is true whether you’re a Christian or not. And I try to get into more the issue of stewardship being about ownership and being a fiduciary for God who truly owns it all. And that has very direct implications on how we invest. So the book was an attempt to address this issue of investing as a steward, not just making money and then giving it away, but in the making of the money. How do we honor God and bring forth eternal impact in our investing.

John Coleman: And Don, I love how you touched on this idea of stewardship is present even outside of faith driven circles. But certainly for Christians, there are distinctive elements of that. You know, as you looked at the realm of stewardship in the mainstream world and then think about it in the faith driven world, what are some of the similarities with the way that the rest of the world views stewardship? And what do you think is distinctively Christian in our understanding of stewardship?

Don Simmons: Yeah, unfortunately, John, my experience having attended some of the largest impact investment forums in the world, the Global Impact Investing Conference that is held annually in London in the U.K. my primary finding or observation is that Christians are at least a decade or 15 years behind the secular space relative to thinking about investing in ways that accomplish multiple bottom line outcomes, not just a financial return. So how are we similar? We’re similar in the sense that Christians are finally starting to grab a hold of this idea. But we’re still very young relative to the secular world in terms of multiple bottom line impact through investing.

Luke Roush: Don, one of the things that I love about just you’re witnessing in your work is that you haven’t just written about it, you haven’t just talked about it, but you’ve also done it. And one of the first funds that we encountered when we were starting our work a decade ago was some of the work that you guys had done through IBEX. I’d love to have you maybe just speak to that a bit and what that part of your journey has been that kind of guided you to where you are today?

Don Simmons: Yeah, my involvement with them goes back to about 2008 and all I can say is that their work particularly in the least reached unengaged part of the world relative to the Gospel I think is second to none. So much of what I wrote about in the book is from my experience in How can we invest for God’s glory among the least reached, the most impoverished and quite frankly, the most corrupt countries in the world? Unfortunately, I wasn’t able to tell many of the stories that I’ve been involved with simply for security reasons. So I tried to use some of the stories in locations that are not as restricted where security isn’t that critical. But what I learned during my time as the chief operating officer for them was that this kind of investing needs to be done in a way that seeks to optimize a number of different outcomes as opposed to just maximizing financial return. And so optimizing outcomes across both economic, environmental, social and spiritual transformative elements is really critical. And so many times as investors, we start with how do we maximize return and then how can we add to these other things? Well, an optimization approach says all of these pieces have to be addressed simultaneously. And it’s like moving a set of levers or dials. And as you dial one dial one way, it affects the performance in other areas. So optimization is about getting the best outcomes, not the maximum outcome in any individual category, but the best outcomes across all categories. And that’s you know, it’s really exciting when you can do that. And some of the stories that I tell in the book just exemplify the wonderful transformation that’s occurred in communities. And our hope is across entire countries because of the businesses that we’re planting.

Luke Roush: Well, and one of the things that I really appreciated about the IBEX story is the way that you and others in that fund waded into what many folks would probably call the messy middle. Right. It wasn’t philanthropy. It wasn’t even sort of zero interest lending. But it also wasn’t always kind of at market risk adjusted rate of return investing, which there’s flavors of that within FTI as well. And I think that one of the things that IBEX did well is trying to wade into that middle ground of this is work that needs to get done in parts of the world that are quite dark and we want to be able to introduce market mechanisms to how we supply capital, but we want to do it in a way that also maintains focus on non-economic outcomes. So maybe just speak to kind of that and what that journey look like over time.

Don Simmons: Yeah, and we’d love to have this discussion about market like returns or concessionary returns. And I want to be frank that I am a capitalist. I believe in investing. I believe that profit is the lifeblood of a business. But as a follower of Christ, I’ve come to believe that maximizing financial return is not my top priority. And so I believe that it’s appropriate to have funds like sovereigns and others that are participating in the public marketplace with traditional investments seeking high returns in ways that honor Christ. But my book is really challenging to the Body of Christ because most of us want to migrate toward the financial return because that benefits ourselves. When I look at managing money for God, I have to think about, well, what are his objectives? You know, he commands us to go and make disciples to the ends of the earth. He calls us to be the salt and light of the Gospel and to bring forth the great commandment, loving our neighbor as ourselves. And many of those times, you can’t do that in these difficult places and start with a financial return mindset. In fact, the kind of investing that we do as a professional, I would say you can’t possibly get the appropriate return to justify the level of risk that we’re taking. So if that’s the metric that I start with, we might as well just abandon it. And I simply disagree that as Christians, we need to be in the marketplace, we need to be planting businesses in very difficult locations. And often we have to be making decisions to plant businesses where they may not likely succeed in the way that we normally think, because the infrastructure isn’t there, the trained workforce isn’t there, there isn’t reliable electricity or Internet. There’s high corruption. It’s hard to start with a financial return mindset and be successful in those environments unless your priorities are how do we reduce unemployment from 80% down to 20%? How do we care for those who’ve been exploited because of human trafficking and making sure that they have jobs that can support their family without returning to that enslavement that they had been a part of? These are difficult questions, but I want to push the envelope with Christians to think that part of our role as stewards is to address those issues. And it’s not about donations being sacred and business being secular. We can address those concerns in the making of the money, in the way that we invest. I think in a way that’s more impactful than just through donations.

Luke Roush: I think it’s a great push on. It’s a good challenge for us and for just the entire movement. So I’m grateful for you pushing on that.

John Coleman: And Don, I’m a story guy, so I wanted to touch on, you mentioned there are a lot of great stories in the book where you’ve seen this in action. I would love to hear one of those stories, if you don’t mind, to put color around the concepts that you’re talking about, where you just seen the ability to create a company or some other type of asset in these places that you think has had a remarkable impact.

Don Simmons: Yeah, and this is one of the stories that’s in the book that perhaps may be my favorite because of the involvement of my own daughters in this story. We had made an investment in a project in Nepal, what would be termed a freedom business, which is a business that is specifically set up in order to help provide jobs for those who’ve been exploited because of human trafficking. And so I took two of my girls to Nepal with me to visit a handful of freedom businesses in Kathmandu and get a feel for this tragic problem. After visiting a number of freedom businesses. We took a hiking trek up into the mountains where human trafficking had been most prevalent in this area. And it was about the third day of trekking after a six hour jeep drive across muddy roads that you thought you were going to fall off of the cliff. But then we started hiking and on the third day, my 18 year old daughter, Kristie, looked at me and said, dad, why are there no girls? And before she finished the word girls, she looked at me and said, Oh, those businesses that we visited in Kathmandu are for the girls that are no longer here, because in those small villages there were no teenage girls. There were no girls over the age of about seven because they had all been sold into human trafficking. And it wasn’t until one of the last days that we had a deeper conversation. We had been staying at what are called homestays. They’re like a little youth hostel in each village, and these youth hostels had been set up by a very wise business group for the specific purpose of helping to create an industry among these impoverished villages where trekkers could stay at these homestays and it would generate revenue, locals could sell chickens to the tourists or candy or water, and it created really a vibrant economy in these villages. And on the last day, we stayed in one homestay and there was a girl who was 14 years old. She was the first teenage girl in these villages in many, many years. And it’s because her family owned a homestay. And so for me and the impact on my daughter, to see that and also to ask myself if I lived there, would I have sold my daughter because there was no other way to provide for the rest of my family. So it’s just wonderful to see how business in that case has almost eradicated the human trafficking in that part of the country in about a decade of work. Just an incredible story.

John Coleman: Wow. Don. That is remarkably powerful. I was reminded of something similar, not quite as intense. I was able to take my oldest son, my nine year old, on a mission trip recently, his first in the developing world. And it’s just so powerful to be exposed or in my case, to be re-exposed to the way that other people have to live and to really put yourselves in their seats and to understand how difficult some of these choices are and to understand how deep the need is. To serve others in these parts of the world. And the idea that you can do that not just through nonprofits or through charity or through missions, but also through building redemptive enterprises in these countries, I think is inspiring. I know we want to pivot a little bit to how you advise people on this and maybe to kick that off. It can be overwhelming looking at opportunities like you just described for the average investor who’s in a 6040 public portfolio to think, how do I get into this? How do I start making an impact? You know, as you talk to folks and they want to do more of what you just described, what are the first steps that you often advise people on is they want to deepen the impact that they can have with their financial stewardship.

Don Simmons: I think the first question is whether a Christian’s portfolio should look any different from a non-Christians portfolio. If we’ve come to believe that stewardship is about financial competence, we may think the answer to that is no. We should do the very best that we can to make as much money as we can so that we can give money away. And I simply have come to disagree with that. And I manage several hundred million dollars for people in traditionally traded investments. Most of my clients are not Christians, but when I manage my own money and at least ask the questions of other Christians, how should my portfolio differ? As a follower of Christ, I have to either consider that maybe there should be some screening on my traditional investments so that my investments align with my moral and Christian values. But I have never been one who looks at my faith as do’s and don’ts, so I’d rather not be one who just excludes things, because that’s what my faith says. I’d rather be proactive. I call it proactive values investing. PVI How do we find investments that clearly align with our values that are seeking great commission outcomes, that are seeking to disciple people in the Muslim, Hindu and Buddhist part of the world? That’s a very different approach, and it requires a comprehensive management of all of the portfolio so that you can balance the risk and return with traditional investments to offset perhaps the higher risk and lower returns of these missional kinds of investments. And it’s yeah, it’s not easy. I think that people will need a guide for that. Unfortunately, the financial services world is one where regulation prevents most financial advisors from even talking about these kinds of things because their private placement, non publicly traded investments. And if you operate within a broker dealer FINRA regulated system, you can’t talk about a private placement investment in Ethiopia because your broker dealer doesn’t approve that. So my hope over the next few years is to be a voice into the financial services community. How do we release financial planners to provide this kind of advice? And that’s where I hope that FDI, Kingdom Advisors and Crown and others can start to address the compliance and regulatory issues and just the structural issues of financial advisor firms so that they can provide. That’s my publisher, really. Before publishing the book, when he had the manuscript, he said, Don, you’ve persuaded me. I need to invest differently, but who’s going to be a guide? And at that time I said, Well, there’s really not a guide. And over the course of a few months, I was persuaded by the Lord that somebody needed to set up an advisory firm to do that. So we’ve just gotten FCC approval, and we’re fully in business now to help people manage their money holistically, to include a comprehensive, risk adjusted portfolio that aligns with people’s values and simultaneously brings in these unique private placement investments that proactively bring forth missional and redemptive outcomes.

Luke Roush: So for the financial advisors who are listeners to the podcast and are likely very interested in this topic, what are the on ramps for them to be able to engage with you or be able to? You know, we talk a lot about how do we leave the ladder down for others? So like, what does it look like for you with your work to either leave the ladder down for others or to be able to engage with advisors who are interested in this space but aren’t really sure kind of what the first three or four steps looks like.

Don Simmons: Yeah, that’s a tough question, Luke. I think FDI can play a big part in that, that perhaps we may need to have a discussion group that’s specifically on this topic for advisors that gets beyond BRI, which is wonderful, but how do we start to engage at a deeper level of proactive values investing? Certainly they can connect with me at my website Steward Advisors Group dot com or the book web site, the steward advisor dot com. Mark Weston in Birmingham has an R.I.A. that is called Eversource. They are also starting to dip their toe into the water. Rachel McDonough has been involved with FDI and Kingdom Advisors. She’s got a business set up to help to train and coach advisors in this area. So the good news is, compared to five years ago, I would have said there was no advisors doing this kind of stuff. Now I can say, well, there’s three names that are starting to explore this, and I would hope that in ten years we have 100 RIA firms that are doing this.

John Coleman: Don That’s awesome. And it’s an encouragement and it mirrors what we’re seeing where the number of investment managers has dramatically expanded in public and private markets over the course of the last five or ten years. And the quality of those investment managers is continued to improve as well. Their ability to access great deals, to navigate those well, to be a good fiduciary for their clients. And I think that explosion of interest in faith driven investing and the ability to action it through great advisors and investment managers is really essential to move the industry forward. I’ve seen what you’ve seen. I came out of the mainstream investing world and you know, I would say the mainstream values investing world has at least a 20 to 30 year jump on Faith Driven Investing right now, I mean, it’s huge, but there’s a lot we can learn from that, right? And there’s a lot of ways in which we can catch up as we’re navigating a distinctively Christian approach to those topics. I think, you know, one thing that strikes me as I listen to you, Don, if we can back up maybe and focus a little bit more on you, is talking to you that you’re the kind of person who often becomes a pastor or a missionary who has a deep and deep passion for this. And yet you became not only a business person, but a financial person, which many people view is very far from the mission field. Talk to us a little bit about your history and just how you came to this field and came to believe it was your calling.

Don Simmons: Oh, you know, it really starts in college. I was a computer science major, so I kind of am a math geek. But by my junior year, I had determined that I didn’t want to sit behind a computer debugging program, so I needed a social outlet. So I ended up with a double major in computer science and psychology counseling, just the opposite figure that’s as far away from analytics as you can get. But as it turns out, being a financial advisor requires both. You have to be really good at the mathematics, and then you need to be able to communicate that with people and ways that they can understand. After college and I was in ministry, I worked for several years as an area director for Young Life, basically, which is an outreach to high school students, not a church youth group leader, but just to the kids that are at the high school. And when I look at my career now, the last 15 years, being involved in that business as Mission BAM or B for T business, for transformation movement. For those of you who understand young life, I just say this is just young life with business people. It’s the incarnation of ministry in the marketplace. It’s going to where people are. And so, you know, what I love about financial services and business, if we dispel the idea of a sacred secular divide, there’s no sacred or secular vocation. And we also have to remember that donations are not sacred and investments are not secular, that our investments are just as sacred as the donations that we make when we’re managing it all as God’s fiduciary. In the book, I call it Gods oikonomos. That’s the Greek word for household manager. A fiduciary or an oikonomos owns nothing that they manage. And personally, as I understand my role as God’s steward, I own nothing. Therefore, everything should be managed for His glory and to point people to him.

John Coleman: That’s awesome. Don, and you know, in that context, I also know you’re an engaged husband and father of four. I think I have four as well. And you do act. To fully participate in service offerings around the world. Talk to us a little bit more about how your faith plays into just your role as a husband and father, and also just how you, outside of your core business, seek to engage your faith in service.

Don Simmons: Yeah, I have a hard time drawing lines between personal and business, hence the reason that once my kids are 16, they’re kind of on the rotation to go on these adventures with me to strange parts of the world, you know? To answer your question, John, I just think that everything that I do is in service to the Lord. So it’s critical that I have a number one responsibility to my family and raising them up to understand matters of faith. Of course, as they become adults, they have to make their own decisions. But I want to plant as many seeds into them while they’re young, not just by sending them to church or Sunday school or camp, but for them to see in real life. How does this play itself out as a business owner, as a dad, as a husband? You know, my faith, just like I started that conversation, if I really believe what I say I believe, then God has to control and influence and invade every aspect of my life. So to me, it’s hard to draw a line between the two. It all kind of melds together.

John Coleman: That’s awesome. Don I think what we might do now is pivot to a very fun part of the program, which we call the Lightning Round. So we have explored a bunch of in-depth topics. Now we want to try and get your 30 to 60 second responses to a couple of fun topics. And I am going to start with a fun little fact that I learned about you in preparing for this show. Apparently you like to fly a 1948 Aeronca sedan float plane in 60 seconds. How the heck did you start driving a float plane? And what’s that like?

Don Simmons: I grew up on a lake, so I love water and boats and swimming. When I was probably about 30, 35, I got an interest in flying very quickly, got my private pilot’s license, and in order to stay current, you have to take extra classes every other year. My first class was flying a seaplane and I fell in love with it because of my love for boating and my love for flying. The problem is, is that you can’t rent sea planes. So if I was ever going to really enjoy that passion, I was going to have to buy a seaplane. And a 1948 plane is less expensive than most people’s car. So that’s how I ended up with Aeronca sedan, which was the float claim to have. If you lived in Alaska in the 1940. it can haul a lot of people and it’s got big windows, so it’s great for sightseeing.

John Coleman: As a financial person, before Luke takes the next question, I am struggling to think what the underwriting for renters insurance on a 1948 Sea plan would look like. So I can’t imagine that the sea plane renting business is not very active.

Don Simmons: That’s why you can’t rent them. You either need to buy them, usually in partnership with other people. So I bought this with a friend who restores airplanes and he completely restored it. It’s. It’s beautiful.

Luke Roush: Wow, that’s awesome. I want to pivot it over to just mentoring and just the importance of it’s something that you’ve talked about, love to understand your quick take on why this should not just be a priority for some but should be a priority for all.

Don Simmons: Yeah. I mean, mentoring younger people has always been a passion of mine, but specifically starting this new business at age 59, I’m thinking very differently than I did when I started the business at 23 in that I’m trying to identify successors, maybe people who can take the reins of this business in five years or ten years whenever the Lord has me start to slow down. So it’s not just in terms of business that I want to mentor people, but it seems like most of the conversations I have today with young folks who are are millennials or Gen Z. They’re already passionate about this holistic integrating faith into everything, but they need the wisdom and experience of those of us who have gone before that. So it’s not just the passions, but how do you tie that with the reality and you only get that with experience.

John Coleman: So, Don, I’m going to give you one last lightning round question. You’re a well-traveled person, often to relatively off the grid places. What’s been your favorite place that you’ve visited and why?

Don Simmons: Yeah, I think my favorite. Is Kyrgyzstan simply because of the deep friendships that I made there. And it is a country that is just spectacular with beauty. I was mentoring a printing publishing company there for many years from 2010 when there was a overthrow of the government for maybe the next ten years. And we would have our board meetings as camping trips out to the mountains between Kyrgyzstan and Kazakhstan. Frequently we’d have our campsite and campfires at about 10,000 feet of elevation. Just a spectacular, spectacular country. And the people are wonderful.

John Coleman: Yeah, I had a chance to spend a little bit of time in Central Asia, in Afghanistan, in Mazar I Sharif, which is up in the northern part of the country. And it is I mean, Central Asia is beautiful and desolate and different and everything you could describe and I know all the countries are quite different as well, but it’s one of those places that most people haven’t had the chance to be. And it’s one that I hope people get to at some point, because it’s often overlooked.

Luke Roush: And I was actually always curious where the name IBEX from IBEX Fund originally came from. But now I know because that’s actually where you find IBEX is above eight or 9000 feet in Kyrgyzstan, Tajikistan, Afghanistan. So that’s I assume that you saw them when you were over there.

Don Simmons: Oh, absolutely. And a great icon for a great business, thriving in difficult places.

Luke Roush: Oh, yeah. That’s awesome. Hey, one last question for you. We always like to wrap each podcast with some part of where God’s word is speaking to you lately. And so how would you just speak to what God has taught you lately through his word.

Don Simmons: You know, I wrote about this in the book about the Lord’s Prayer and specifically about give us this day, our daily bread. You know, the longer that we’re in our careers, especially one who’s a financial service guy, we should typically be approaching age 60 at a point of financial independence. And one of the things that I’ve learned, probably because of the involvement in so many businesses that struggle, is that I pray every day now for my daily bread, not just for my family’s needs, but for the daily bread, for the businesses that I’m involved with that are struggling. And my wife, Amy and I have made a commitment for the last 15 years that we need to live in the same level of faith as those who are dependent on us for financial support, either through donations or by the investments that we make in their business. We heard one wise man many years ago talk about matters of faith and that when you’re in your twenties, it may be a lot to give $1,000 to something that requires a lot of faith. But for those of us who are farther down the journey, we need to have the same level of faith. It probably just means we need to add more zeros to those things that we’re praying about. So to answer your question, Luke, praying today for the daily bread for myself and those that we are partnered with, because I believe God has provided enough resources in the world, they’re just not properly distributed. And in America we tend to hoard them for our own needs so that we think we can be financially independent, when in fact we really need to be dependent on God on our nest eggs. Hmm.

Luke Roush: Don, we’re grateful for you sharing wisdom with us and our listeners today. We’re grateful for the gift that you’ve given to a community with the book steward investor, and I look forward to reading it in more detail in the coming months. It just arrived last week and so excited to get into it and grateful for your example in a really positive and redemptive direction over the last decade plus. So we appreciate you.

Don Simmons: Thanks. Luke and John, this has been a lot of fun.

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Phil Clemens spent 52 years on the payroll of the Clemens Food Group, a sixth-generation family-owned business providing quality pork products to the U.S. The business is now the 5th largest producer of pork in the U.S. with annual sales in excess of $1 billion. 

As the former chairman of the Clemens Family Corporation, Phil spent 14 years developing a succession plan for when he retired. Phil joins the Faith Driven Investor Podcast today to talk about the importance of legacy and how a family business can successfully and effectively be passed to the next generation.

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Episode Transcript

John Coleman: Welcome back to the Faith Driven Investor podcast. Today we have a very, very special session as we are pleased to welcome Phil Clemens. Phil was formerly the CEO of his family business, the Clemmens Food Group, which had more than 3500 team members around the world. He has worked in a variety of businesses, served on a number of boards, and I’ll say also is just known in the community as someone who’s incredibly supportive of others. He’s constantly looking to invest in others and just has a genuine kingdom mindset. And we’re really excited to learn from him today, both about his approach to investment and to thinking about faith led businesses and also the way in which he’s approached family legacy, family business and encouraging other families that are in entrepreneurship and running businesses. So, Phil, thanks so much and welcome to the show today.

Phil Clemens: Glad to be here.

John Coleman: Well, Phil why don’t we get started just with a brief biography. We reviewed a few of the details just now, but who are you and where do you come from and what is your experience been over the course of the last few years?

Phil Clemens: Okay. Well, my parents were less and Kay Clemens. My dad was in the business before me. I’m married to Linda. Next year, we celebrate 50 years in marriage. We have three daughters. Our oldest daughter actually works in the business. Our second oldest daughter is a missionary. She’s married to Paul College there with Mission Aviation Fellowship, and they were in Indonesia for 12 years and now they work in member care and they have four sons. And then my youngest daughter Ruth is married to Brant College. She was a schoolteacher. She’s a stay at home mom now and she has three boys. So we raised three girls and now we have seven grandsons.

John Coleman: That is a houseful, I bet, at holidays.

Phil Clemens: It is. It is. It’s fun.

John Coleman: That’s awesome. Phil and tell me you’ve had a pretty long history in your family business. Tell us a bit more about that, how it started and how you work through the ranks there.

Phil Clemens: Well, when my parents got married, they lived right next to the business. And at the age of ten, I was a middle son. I had two other brothers, one older, one younger. My parents gave us the option to go to work at the family business or do more chores around the house, both for the same pay nothing. So I decided I’d go to work at the family business. So the first two years have been get paid. At age 12, I got on the payroll at $0.75 an hour and work part time up through all of high school till into college. And then I began full time while I was in college. And when I got out of college, I actually asked to be interviewed with the business to see if I wanted to stay there. I didn’t want to feel that I was entitled to a job, that it was something I wanted to look and see. Did they want to hire me and did I want to work there? And I actually had interviewed quite a few places and the company business was the lowest pay, but the greatest challenge. So I went to work for the family business.

John Coleman: Well, they got a discount and they hired well, Phil, because you eventually went on to be CEO and chairman, although you stepped out of that role in 2015. And I want to pivot in a moment because I know you’ve been very thoughtful about investments and the impact of building faith aligned businesses, but just give us a brief overview of what you’ve been doing since 2015 as we circle back to that later.

Phil Clemens: Well, you know, I was always taught that you spend your first 20 or 25 years learning the next 40 or 50 years earning and your final years in returning. So I’ve been in the returning phase and for the last seven years I’ve been involved with about 12 or 13 boards. Some are faith based, others are family businesses and trying to help them. Some I actually go on boards where I become salt and light and try to share my testimony with others in business. So it’s been a real time of returning to others.

John Coleman: That’s awesome. Phil And we’re going to circle back a lot to this concept of family business because it’s something you’ve been really thoughtful about, both in your own business as well as those of others. Before we do, though, you know, this is the Faith Driven Investor podcast and we think a lot about the ways in which people can integrate their faith into the way that they invest. Would you mind talking for a moment just how you think about that topic?

Phil Clemens: Yeah, I think, you know, as a business person, we invest our time, our talent and our treasure. And some of it’s the capital investing financial capital. And how do we get a return on that and how do we become a good steward of what God has given us? And one of the things we have done as a company is we believe in tithing our profits and not only tithing our profits, but we share about one third of our profits with our team members. We believe it’s really important for the team that helps to generate the profit, that they get a fair amount of that profit. And so we encourage the company to continue to invest globally, but also invest back in our community and back into our people. We think that’s really, really important. And from a stewardship standpoint, I think some day God’s going to ask us, what did you do with what I gave you? And we’ll look at and even give answers of how we actually invested back in our community and to our people.

John Coleman: Phil that’s awesome. And, you know, one of the things you brought up, you’re describing a bit what some people would call stakeholder capitalism, right? Where you’re thinking about shareholders is one of many groups that you’re considering, whether it be the community employees, in this case, your own faith in God. How do you balance those tensions between the economic returns of the business and these other stakeholders that you want to account for?

Phil Clemens: Well, we think it’s really important that we actually put ourselves last. We believe putting God first, putting our employees second, and then the shareholders come last. You know, a lot of businesses do just the opposite. They say shareholders get the first amount and then we give some to our employees and maybe some to charity. We believe it’s just the opposite model that God has told us. If we put him first, he will bless us. And I think he blesses us to be a blessing to others.

John Coleman: That’s awesome Phil. And as you think about the way that that’s impacted your employees, you know, one of the things we observe is that we have a conviction at the firm that I work at, that healthy cultures create competitive advantage, that investments in people actually do have a really positive return on investments and that caring for people will actually lead to greater economic success for the business. Have you seen that in your own business and how has that manifested for employees? What does it look like for you to invest in employees?

Phil Clemens: Well, yes, we have absolutely seen it. And, you know, you don’t do it to get the economic benefit. That’s just a consequence of God allows because of a choice you’ve made. And to me, when you invest in your employees, I can give you a story after story of how we’ve blessed our employees from time to time. And oftentimes when we bless them, we ask them, Is there somebody that you should be blessing because you’ve been blessed? And I will tell you, there’s times when we’ve give significant bonuses to our team members, and I hear stories of how they turned around and gave their entire bonus away to somebody else who was hurting because they had a chance to bless somebody else because they have been blessed.

John Coleman: Wow, isn’t that amazing? And that’s such a great reflection of scripture and really the core element of the great commandment, right to love God and love others. And you see that as you express that, that it makes it even easier for others to express that in the way that they live. I want to pivot now to the specifics of a family business, which is obviously quite a unique context, as opposed to just a general business. What do you think are the unique challenges of running a family business?

Phil Clemens: Well, every family business has three unique circles where other businesses only have two circles. In a normal business, you have the business circle and you have the ownership circle. In a family business, you add one other circle, and that’s the family circle. And what’s really critical is you need to know what hat you’re wearing. You know when to wear a family hat, when do you wear an ownership hat and where do you wear the employee hat? And unfortunately, many family businesses, actually, they only wear one hat. They wear a family hat, and that trumps everything. But unfortunately, when you enmesh those together, it ends up with a lot of confusion to family, to employees, and to others and actually to yourself.

John Coleman: One, it can make it a bit more personal, I would imagine, to, you know, with in a typical business context, we obviously try and express love for those with whom we work, but they’re not actually family. Whereas, you know, the potential for hurt feelings or for things to be taken personally in a family business seem to be much higher. How have you navigated that over time, especially as you walk that balance between owner, employee and family member?

Phil Clemens: Well, I would tell you that in my years of employment, I’ve probably have terminated at least a dozen of our family members. And I have to realize when I terminating them, when I was wearing the boss hat and as soon as I terminated them, I immediately took off the boss hat and put on the family hat because they’re still a family member. And how do I relate to them as we go through it? And one of the things that I have a rule that I set up is what I call my communion rule. And that means I may terminate you as an employee, but if I come to church with you on Sunday and we have communion, if I can’t take communion with you, I’ve done something wrong. While you may not want to take me with me, but that’s okay if I can’t have communion with you. I’ve done something wrong and I need to go and confess something to you.

John Coleman: Wow. That’s an amazing heart check, Phil. I’ve never actually heard someone describe that. You know, that would be useful metric, I think interacting with anyone, if you’ve treated anyone in a way, you feel like you can’t take communion with them. It’s probably a gut check that you’ve done something wrong in that relationship.

Phil Clemens: Yeah. And oftentimes those damage relationship and they damage every one of the circles. They damage family relationships, the ownership relationship and the business relationship.

John Coleman: You know, one of the other unique elements of a family business is that the shareholders or owners of the business aren’t some disembodied third party or large group of investors. Employees see the family every day, and that probably creates unique opportunities and tensions. How do you make sure the family and the employee base are really aligned?

Phil Clemens: Well, I should tell you that our family is really large. Let me just give you a little bit of history from our family. My grandparents had 14 children. For those children died before their first birthday. So they raised ten children, five boys and five girls. So living in our family today from my grandparents are about 850 to 900 family members.

John Coleman: Wow.

Phil Clemens: 380 of them are shareholders of our company. So less than half of the family are actually shareholders. 23 of those actually work in the business. So how do the 23 relate to all of our team members? Is they don’t relate to the entire family. But, you know, from time to time, we eventually invite the entire family to be with our shareholder base because we want them to see our team members as part of the family.

John Coleman: Phil I had no idea how big your family was actually in more than 300 shareholders. That is remarkably complex for a family business.

Phil Clemens: When our shareholders actually go right now from the second generation to the sixth generation.

John Coleman: Unreal. What does it look like to have a shareholder meeting just tactically? How do you think about that and what are the conversations look like?

Phil Clemens: Well, we try to really focus on the business, not focus on the family, but we also look and say, what does it mean as owners? How do we look at this business and again, really have them understand a mindset that they’re an owner, but they really only have ownership. They don’t actually act as an owner. So it’s a very different mindset. As an owner, I can go do with it whatever we want. Well, if we really believe God owns this business, He owns that business and we just have ownership in it and we’re stewards in it. So we really want our shareholders to see the business as a stewardship business, but also when they get shares given to them from their parents or grandparents, that they really see this as an heirloom, something that they can take care of and gain a value to pass to the next generations.

John Coleman: So there’s a real cultural element to it, just the mindset that your family has about its ownership stake in the business, and then there must be kind of a tactical component to it as well. So do you have almost like an executive board within that shareholder base that really leads most of the day to day decisions in the business? Or how do you think about that and how is that group selected from such a large group of family members?

Phil Clemens: Well, what’s really interesting, we do have something we call the Clemens Family Owners Board. That’s a group that speaks for all of our shareholders to speak as one voice. We actually have a board of directors to oversee the business, and it’s always been our intention to have the majority of our board members be independent directors and only have a few family members on the board. We want to have the board held very high accountability to our management team.

John Coleman: I mean, that’s best practice. Even if you think about public companies where you’re generating real independence for the board, that’s going to feel risky to some family members. Though I would imagine appointing independents, how do you select those folks and how do you get the confidence of the family as you’re picking those people?

Phil Clemens: Well, we have real criteria. We look at we want to make sure that they are going to be in align and embrace our mission. Now, our mission of our company is very unusual. It says this We aspire to operate in a way that honors the Lord Jesus Christ as demonstrated through ethics, integrity and stewardship. So when we go and interview potential board members. We want to say we have a very unique mission. And we’re going to ask, can you embrace this as we go forward, because it clearly is not politically correct in the 21st century?

John Coleman: Yeah, that’s a very distinctive mission. I mean, we I often say as I write about things like purpose, culture and mission, that a really good culture and a really good mission will turn off as many people as it excites. Right, that people

Phil Clemens: It does.

John Coleman: Know they want to join and no, they don’t want to join by looking at it. And if it’s something that’s kind of so broadly acceptable that everyone kind of thinks they want to join or be part of it, it’s probably not very distinctive right now. And so what I love about that is you’re so distinctive about the values of the business and so clear with everyone who joins about the expectations coming into the business.

Phil Clemens: And what we do, we actually take a look at that. Our core values is our foundation. And our core values are ethics, integrity and stewardship, which is right in our mission statement. But we also give them very simple definitions ethics. I’ll do the right thing. Integrity, I’ll do what I say. Stewardship, I’ll build a foundation for the future. From that core value, we build our mission and therefore we add the Lord Jesus Christ into it because that’s who we’re serving. And we want people to know that we’re going to be held to a higher standard because of having him at our mission statement. We don’t try to wear it on our sleeves as a banner. It’s just this is who we’re going to be accountable to.

John Coleman: Well, it’s in some ways, it is a great accountability mechanism. I know I work in a business that has got explicitly as part of our mission. And I was in a debate recently with some of our team members, and one of the team members said, you know, are you comfortable with this decision with people holding us to a higher standard and think of us as a representation of Christians in this area? And it was kind of a dagger like you really do have to hold yourself to an exceptionally high standard, probably higher than most people would, because you feel the burden of reflecting on your creator and of your savior. And that’s a higher burden, I think, than any fiduciary burden that exists.

Phil Clemens: Absolutely. But let me just tell you one story real quick about I was teaching a leadership class at our company, and part of it was about our mission statement and one of our team members who is new out of college, a real potential rising star. So the reason I came to work for this company is because of your mission statement. And so I asked the question, are you a Christ follower? She said, Absolutely not. She said, When I was growing up, I was raised Catholic. When I went to college, I threw away all my religious beliefs. But when I came out and I saw what this mission statement was, I was attract this company. And I said, so let me ask you this. How do you think you honor Jesus Christ? The Lord Jesus Christ. That’s very easy. She goes, She said, We have our core values. The first is ethics. I’ll do the right thing. If I come to work every day and I’m doing the right thing, I think that’s going to honor Jesus Christ. If I come and I keep my promises with integrity, I’m going to honor Jesus Christ. And if I do stewardship, which I build a foundation for the future, I don’t have a short term mindset of a long term mindset. I think that honors Jesus Christ. And I believe honoring Jesus Christ is a good thing to do. Even though I am not a Christian or a Christ follower. I just think that’s something that’s really amazing. And I call this person a pre-Christian. She’s moving towards it.

John Coleman: Isn’t that amazing? You it shows not to go off in too much of a tangent, but it just shows what a powerful figure Jesus was that even in the midst of cultural debates about Christianity and different perspectives on that, I think the figure of Jesus and what Jesus stood for so very clearly in terms of loving others, in terms of caring for others, in terms of acting with integrity, is almost unassailable. And people see that and they’re drawn to it. I mean, that’s nothing original to say, but you really are drawn to it and it’s such a good reminder of that. When we talk a little bit about, you know, you’ve mentioned the ways you interacted with employees, etc.. How long were you CEO of the business? Remind me.

Phil Clemens: I was CEO from 1994 until I retired in 2015.

John Coleman: Wow. An incredibly long tenure. And what I’ve heard is you actually spent a ton of time on succession planning within that. And again, with the complexity of family ownership and presumably family leadership in the business, what does succession planning look like in a family owned business like this versus, you know, a publicly traded business or some other form?

Phil Clemens: Well, you have to be very intentional in succession planning. Our owners have come along and said we prefer to have a qualified family member leading this business. Now, if we don’t have a qualified family member, we won’t have the most qualified person in the business deleted family or not. So as I was looking towards my own retirement, I wanted to make sure that I could take to our independent board between three and five highly qualified family members. So I went through a process. It took almost 15 years of meeting with anybody who wanted to see what leadership was all about. And I met with them on a quarterly basis where they read a book. I talked to something I called Lessons in Leadership. What do leaders have to know? How do you really build your character? For instance, I spent a lot of time on, you know, about the cost of leadership. So often times people want to understand all the benefits of leadership and what are all the perks that come with it. I want to tell you what this if you don’t understand the cost, you’ll never appreciate the benefits. And I want to let them know that there’s a big cost to leadership. And if you’re not called to be there, you won’t be effective. And are you really called to be a leader and challenge them? Don’t just try to get a job that you think is going to be one that I can brag about and say, here’s what I’ve done, but one that you’re really saying, this is what I’m called to do because it’s not going to be easy.

John Coleman: That’s remarkable, Phil. And, you know, as you’ve put that challenge before people. How have they responded and what is that mentorship of the next generation look like over a period that long?

Phil Clemens: I think if you go back to the Old Testament, the Old Testament talks about telling the story and be able to tell it wherever you’re going. And I think it’s really important, as you mentor, the next generation. They don’t understand all the struggles that happened in the early days. They don’t understand how we got to be where we are today. And they need to know what are the struggles? What are the things we did right? I think one of the things with family business is you’ve got to tell the story, warts and all. Tell them what you did wrong and how did you learn from it. And again, let them know that you’re not perfect, that you’ve stumbled, you’ve done some things wrong. But here’s how we’ve corrected it and here’s how we go forward in doing that. And that’s really part of the whole mentoring process. And to sit down and say, Here’s lessons I’ve learned. I’ll tell you where I screwed up and stuff that I didn’t do right. And I want to prevent you from going down that trail.

John Coleman: Well, you’re describing a really thoughtful succession process, but also a complex one. And you’ve got a complex ownership structure. As you mentioned. You’ve got this whole third circle of accountability versus a typical business, and the business has been around for a very long time. Over that time, you must have gotten pressure to sell the business, either from parties coming in to try and buy the business or from family members who thought it might be time. Why has it been so important for you to maintain that family ownership structure?

Phil Clemens: Well, we actually look at this as being our legacy, and the legacy is an heirloom. And, you know, any time you receive an heirloom from the prior generation, you can do one or three things with it. You can put it on the mantle or put it there for everybody to look at and just see what it’s like. The other thing is you can say, well, this heirloom doesn’t mean a whole lot to me. Let me see if we can sell it and see what it’s worth. Or the third thing is you can treat it as a real stewardship issue. It’s been handed to you. How can I make it of more value to pass it to the next generation? And that’s really what we try to do is try to say, this is an heirloom, it’s our legacy and we would really like to pass to the next generation. Yes, we could sell it, make a lot of money. But that’s not what life’s all about. Life’s about how do we treat our employees? How do we treat our animals? How do we treat our customers? How do we treat our community? How do we become salt and light in so many different areas? And so the business is really it’s not ours, it’s God’s. And how do we take care of it for him? Because some day we will give an account for what we did with what he gave us.

John Coleman: I want to touch on one thing you mentioned, because it’s another unique element to this business that doesn’t exist anywhere, which is the treatment of animals. Obviously, this can be a tricky sector and I’m sure that some family members are more sensitive to that than others, as are people in the community, in the pork business, obviously you’re dealing with live animals and there are slaughterhouses involved, etc.. How do you, as a business and a family, think about the proper care of animals in that perspective?

Phil Clemens: We actually go back to the Bible, talks a lot about it, and you take care of God’s creation in the best way possible. And we try to have the best animal welfare programs in the world providing space, providing proper diets, proper medical care for our animals. We try to really treat them really in the best way possible. And I will tell you this, when you treat the animals in the best way possible, they do actually produce a much better meat product. So it’s a full circle that comes around. But we look and say, I’m going to actually answer to God, how did I take care of his creation? Did we treat those animals with respect even though we’re going to harvest them and we harvest 22,000 hogs per day, so we harvest a lot of hogs and we take care of a lot of animals, but we want to take care of them in a proper way.

John Coleman: That’s remarkable, Phil. I want to circle to another concept I’ve heard you all talk about before, and maybe you can articulate it for us, which was this transition from a family business to a business family. And obviously this starts to lead into just the way in which you consult other families now. But what does that mean exactly? And what did that mean for your company as you went through that transition?

Phil Clemens: Well, let me just explain part of the process this way. When you look in the mirror each and every day, you know, you look and say, what do I see in the mirror? Well, it looks exactly like me, but it’s exactly the opposite. The same is true of a family business versus a business family. Now, let me describe a family business, and most of them are family businesses here, especially in the United States. Family members feel they’re entitled to a job. They’re guaranteed a job. Sometimes a parent say, we mandate you come to work in the business. And that’s what a family business. I have a job because I have the right last name and I become the employer of last resort. If I can’t get a job anywhere else, the family will hire me when I come to work at a family business. The rules are very different for family members than they are for any other employees. Whether it’s wages, benefits, anything, they’re just different for family. When it comes to leadership, the family always chooses the leader. Now, on some families, it goes to the point in time it’s got to be the oldest bloodline family member. Some it has to be only a male. But family businesses can also choose an outsider to lead their business. But the key is the family always chooses the leader. Finally, the main goal of family business is family harmony. We all need to get along. And I tell you this, when you have 380 family shareholders, that’s not going to happen. So family harmony is really hard to achieve. That’s why the average family business only last 25 years, only one third go to the second generation, only 12% go to the third generation, less than 4% go to the fourth generation. Wow. Now, when it comes to a business, family, family members are encouraged to come into the business, but they have to be qualified. They don’t get there because of the great last name or because they’re an owner. They get there because they’re qualified to come into the business. And when you come into the business, the only hat you can wear is employee hat. You can’t wear a family hat. You can’t wear a shareholder hat. Only a family hat. When it comes to leadership in the business family. It’s always to the most qualified. If that’s family, it’s great. If it’s not family, that’s okay. Also, because it’s the most qualified when it comes to work rules. Work rules are the same for everybody. You don’t get special privileges just because you’re a shareholder or family member, you know? And the business is there to help the family owners. In a family business, it’s kind of like the family comes in and it’s like the IRS knocking at your door. I’m from the IRS. I’m here to help. Well, in the family. I’m from the family. I’m here to help you run this business. That’s not a help at all. So the main goal of a business family is profitability. And as a result of being profitable, you can work on family harmony. Two models, exactly the opposite of each other. The unfortunate part about it, I would say 80 to 90% of family businesses in the United States operate under the family business model. They’re going down a pathway of unsustainability. But to make the change to a business family is extremely hard. It is not an easy process. And we went through it. I had to terminate some of our long term family member employees. I had to terminate our largest shareholder as we went through this process again, but still put on that hat. They’re still a family member. There’s still an owner. They’re just not in the business.

John Coleman: That’s got to be a remarkably hard process, as you described. And then to immediately switch hats from kind of owner or employee or CEO having to terminate these folks to a family member, comforting them and trying to rebuild relationships is not a seamless transition. You know, you’re consulting a ton of other family businesses now and you’re giving back partially by trying to help families be more thoughtful about the way in which they run their business. Where do you see that go wrong for families right now, or what are some examples that there are folks running, family businesses listening now we’re investing in them. What are some of the most common errors that you see?

Phil Clemens: Well, I think that one of the biggest errors is the title of entitlement. I’m entitled as the owner. I get to do what I want to do. I get the call, all the shots. It really is all about me, even though they don’t say it in that way. But that’s what really happens. And they go down a path. It’s a great destruction. Let me just go back to one thing that I try to share with the people I consult with is let me tell you economically what happened to us. And we did not do this for economics. We did it because it was the right thing for us to do. Our stock gets valued by an outside agency each and every year. In 2000, we went through this change. Our stock was valued at $30.62 a share. Our share price in 2022 is $2,065 a share. It’s been in a remarkable growth. We didn’t do it for the economics. But when you do things the right way, you do get rewarded.

John Coleman: That’s an awesome reminder. Phil, one of the things you’ve emphasized throughout, I think implicitly is this idea of being a servant leader and even listening to the way in which you approached your job as CEO and as chairman. Think about animal care, employees community. How do you personally keep a focus on a servant leadership mindset when you’re in that position, and particularly in a family business or in an owner operated business where, you know, there are all kinds of temptations with the economic benefits, with the way in which people treat you, it’s easy to lose sight of the fact that you’re actually serving others. How do you stay grounded in that context and continue to be a servant leader?

Phil Clemens: Well, let me start with the economics and then go back to the mindset. One of the things that we did in our company is we have a very strong profit sharing plan and bonus programs. Our bonus programs start with our hourly employees before any management can get a bonus. Hourly employees have to get their full bonus. And when it goes up the line that the supervisors or the other people get their bonuses, but the officers do not get any bonus until the people underneath them get a full bonus. And we’ve had years where the officers got zero bonus and everybody else in the company got full bonuses. Again, that’s putting yourself as the last one in the line rather than the first one. You know, the average business, the CEO, he’s the first one to get a bonus. And if there’s anything left over, then we’ll give it to others. We do just the opposite. And again, it’s because we have this servant leader mindset. One of the questions I like to ask people, how can I help you? Or How can I serve you? And it’s surprising when, as the CEO, when you come down and say, How can I serve you? They look and say, Oh, you’re the boss. I need to serve you. No, no. How can I help you? Because if I can help you, in reality, we help everyone. And how do we do that? And it’s a real mindset of when the person said we actually should change our name from the chief executive office to the lead servant. And to me, that’s what we want to be, is put others first. And when you put others first, it’s surprising how you get actually rewarded. But you don’t do it because you’re getting rewarded. It’s just the right thing to do.

John Coleman: Once again, what we see time and again is it creates an exceptional culture. And again, I firmly believe that culture is the greatest competitive advantage in business. It’s the hardest to replicate. You can’t flip a switch and create a culture and creating a business that people want to work in, where you’re getting the best talent, where they’re staying, where they’re dedicated to your mission, can create extraordinary performance and excellence in the business. But no one works for a leader who comes across as selfish or narcissistic and wants to be that dedicated to the culture. It just doesn’t happen. You almost have to have a leader who’s humble, who’s willing to elevate others, and who’s a servant leader to create the kind of culture that can outperform.

Phil Clemens: Absolutely. Let me just give you one story that just happened last year. Our current CEO told me he said we had an employee, a long time employee came up and said, I’d like to sit down and talk with you. I’m leaving the company. And the CEOs thought, okay, what did we do wrong? Why does he want to talk to me before? Why is he leaving? He came up and he said, Well, I need to move out of the area because I have some close family relatives that are sick. But he said, I want to come up and tell you how much this company has meant to me. Before we had one of our employee meetings, you ask everybody, is there anybody we can be praying for? And he said, I raised my hand. He said, My wife is very sick. And you said, Can we stop and pray for her right now? He said, You won’t know what that did for me. When the CEO takes time to pray for me and my family, he said, it’s the hardest decision I ever made to leave this company because this company means so much to me. But I’ve got to take care of my family.

John Coleman: Isn’t that extraordinary? I mean, that’s extraordinary. And you just love it because you feel as a leader. One of the things that’s closest to your heart, I think, or at least I know this on my end, is you want the people under your care to flourish. You want the people that you’re entrusted with leading to flourish, to enjoy their lives, to be fulfilled, to have a sense of purpose and meaning. And again, to hear that from someone. And to hear that that’s clicking and that they’re invested in it. It’s just one of the greatest rewards I think that you can have as a leader.

Phil Clemens: Absolutely is.

John Coleman: So, Phil, we’re going to do something fun now. We’re going to transition to the lightning round. We could go forever. And this is a super interesting conversation for The Lightning Round. We like to keep it punchy. We answer in kind of 60 to 90 seconds. Some of the questions will be a little bit fun. Some will be a little bit deeper. And then we always wrap up by asking people, what are you learning through God’s word right now that you’d want to share with others? And we prep people for that because some of us like me are bad at remembering verses. So give us a minute to collect your thoughts if you if you want to, about what you’re going through recently. But to kind of start the lightning round with a fun one, you work in the pork business or you’ve worked in the pork business. I imagine you, like me, are a fan of various pork products, whether it’s bacon or pork sausage or pork chops. Do you have a favorite pork product and how do you like to prepare it?

Phil Clemens: Bacon By far, bacon makes everything taste better. In fact, we gave our shareholders all a sweatshirt there that says Bacon makes everything taste better because it just it adds flavor to everything.

John Coleman: I’ll tell you, the first time I realized that was the first time I had chocolate with bacon in it. Bacon, chocolate. And I thought, oh, my gosh, there’s nothing that bacon doesn’t make better. Yeah, it’s true. On a more serious note, we’ve talked about a bunch of different lessons today. If there was one. One key message you could deliver to the CEO of a family business right now who is a family member, someone running a family business. What key piece of advice would you give them?

Phil Clemens: Develop a thick skin. People will say things to possibly hurt you. Just allow things to go right on through. Don’t dwell on them. Develop real thick skin.

John Coleman: As one of three brothers and a father of four, I just can’t imagine that siblings and family members would ever say anything hurtful to one another. Phil That never happens in our family. That’s.

Phil Clemens: It happens. It happens whether you’re a Christian family or not. That’s for sure.

John Coleman: It’s for sure. You know, this is such a unique area. One of the questions I have for you is, is there a good book or two that you would recommend to people thinking about family businesses?

Phil Clemens: Well, there’s a couple actually a book that’s not about family business, but I think it’s really good. Andy Stanley wrote a book called Principle of the Path, and the principle is direction, not intention determines destination. And so you really have to examine what direction am I going in, because every path leads to a destination and am I going to my desired destination or not?

John Coleman: Well, you didn’t know this Phil, but you won me over, Andy he’s my pastor. I go to Buckhead Church in Atlanta and I remember the original sermon with the Principle of the Path. And then I read the book and man, Andy just has such a magical talent for synthesizing complex topics, for making them simple and for making them. You hear it and you think, Oh my gosh, that’s obviously true, and it can help you reorient your life. And that’s such a talent, I think, for a leader which which I think Andy is, is to take the complex, make it simple, make it powerful, and make it such that it’s practical for people’s lives.

Phil Clemens: And his new book, Better Decisions, Fewer Regrets, you know, asking those five different questions, they can really help you in business to say, how am I really doing in business? From integrity to wisdom, just all the questions he asks are really, really important.

John Coleman: All right. One more fun question, one more serious question, and then we’ll turn to what you’re learning from scripture. You work in a pretty interesting family business. You’ve talked to a lot of family businesses. What is the most interesting family business that you’ve encountered?

Phil Clemens: I would say this every family business is unique, but each one is the same. And I would say that the family business said probably one that I worked with, which is really dysfunctional. They were in the cabinet making business and the father was one that. Just would not let go. And they just. If you talk about ways they could screw things up in different ways, they just couldn’t get out of the way of killing each other. It’s really a shame, but I think that’s probably one of the most unique businesses. How that people can treat family within a business is just unbelievable.

John Coleman: What’s the and we’ll do one last question. What is the best piece of advice you’ve ever received?

Phil Clemens: I think the best piece is engage brain before you put your tongue into action. You know, so often times we think we’re really smart. We can answer real quick. But if we stop and think first before we talk, it’s really, really important.

John Coleman: Here’s the danger. Phil, everybody listening to this is listening. In the past few years since I started hosting knows that I probably don’t do that often enough on this podcast. So that’s good advice for me to make sure I’m thinking things through before I spit something out, maybe to just close this out. Phil, I mean, you’re obviously such a thoughtful believer in your walk right now. What is God teaching you that you might want to share with others?

Phil Clemens: Well, I think God’s teaching right now is one of the greatest gifts he’s given us is choice. You know, the old saying is, you can choose your choices, but you can’t choose the consequences of your choices. Once you choose them, they make you. And if you go all the way back to Genesis chapter two in the Garden of Eden, he gave Adam and Eve a choice, and he said, There’s a consequence if you don’t make the right choice. And if you go to the Bible, there’s so many times that God has given us choices. You know, if you think of Jeremiah, he talks about, I have plans for you, I want a hope and to succeed. That’s a consequence of he says in the verses right after that, who you’re going to choose to follow. And that goes back to Joshua. Joshua, 24 Joshua asks the people, Whom will you serve the God of your fathers or the other gods around you? He says, For me, and my household, we choose to follow the Lord. And, you know, unfortunately the nation didn’t follow. But you look at Jesus, he says, Matthew 24, he says their choice Are you going to serve God? Are you going to serve money? You can only serve one. Which one are you going to choose? And there’s consequences for choosing either one. And I think to me, I’m constantly drawn to God. Why did you give me all these choices? Well, he wants us to be thinking. And how do we learn to make the right choice day in and day out?

John Coleman: Man. Phil, that’s such a good word and such a great way to conclude the podcast. It’s obvious talking to you why so many people respect you and seek you out for advice on these topics, and just a reflection of the great leadership that you’ve had through the years. So thank you so much for coming on today and sharing what you’ve learned with the listeners for the Faith Driven Investor podcast.

Phil Clemens: It’s my pleasure to do it.