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Community. It’s one of the core tenets of the Faith Driven movement. If you’ve been listening for a while, we hope you’ve heard stories from around the world that have opened up your eyes to see that FDEs are everywhere, and they’re faithfully pursuing God’s will right where they are. 

Today, we’re talking with Sue Alice Sauthoff who has recently joined the FDE/FDI team as our Community Manager. She’s going to share all the new initiatives intended to foster community among FDEs all around the world. 

We’re so excited she’s on the team, and we think after listening to this podcast, you will be too…

Episode Transcript

Some listeners have found it helpful to have a transcription of the podcast. Transcription is done by an AI software. While technology is an incredible tool to automate this process, there will be misspellings and typos that might accompany it. Please keep that in mind as you work through it. The FDI movement is a volunteer-led movement, and if you’d like to contribute by editing future transcripts, please email us.

Sue Alice Sauthoff: I think that to bring these entrepreneurs together who often do feel lonely or isolated in their role, not only because of what they do, but because of the great weight of the responsibility that they hold to bring them together with other people, to realize that they’re not alone, that there are other people that understand the situations they’re in and what they’re facing. It brings power. And that’s biblical, right. Jesus said the world will know us by our love for one another. And so if we’re able to show each other love and we’re not competitors, but we are brothers and sisters in Christ coming together, then the world is going to see that love and they’re going to ask questions and they’re going to see that there’s hope that we have. That’s really unique. And so not only is it an encouragement to us as believers to be in a community like that, but it also is shining a light into our world. William Rusty, great to see you both.

Henry Kaestner: Welcome back here. Amazing to be here. So today’s really good topic. I think that one of the things a quote that I’ve been kind of just camping out on for a while now is C.S. Lewis. This is a quote attributed to C.S. Lewis. So we’re just going to say that it is indeed him, which is something along the lines of friends are when you come across somebody who says, oh, wait, I thought I was the only person that blank, you know, played Parcheesi in the pool or whatever the case is. Right. Fill in the blanks. And there’s something about the concept of being a Faith Driven Entrepreneur that is inherently lonely. And when you’re an entrepreneur and or business owner were out there and we’re trying to make it happen. Right. We’re trying to make it happen. We’re trying to go ahead and we’re trying to hire employees. We’re trying to keep employees. We’re trying to get customers in. We’re trying to get funding. And then actually, even when we come home, our spouses, you know, how is work? And, you know, we kind of almost are even selling them because they thought we should have kept that great job that we had at IBM or fill in the blanks. And so there’s something about being a Faith Driven Entrepreneur that is pretty lonely, I think. And I think that our group, the folks that we minister to in our ministered by Faith driven entrepreneurs tend to resonate with that. It’s hard to find really good community you get in church, right. And people are saying, I know they’re coming from all sorts of different walks of life, but you never really feel like your pastor gets you or the person in your small group get you. You guys ever feel that way when you’re in small group?

Rusty Rueff: Totally. Absolutely, totally. I mean, it’s like you’re in an alternate reality sometimes, right? You’re doing your thing and you’ve got these pressures of these stresses on you. But somebody else who’s outside of this sphere of being either an entrepreneur or outside of the sphere of your industry sector, you know, it’s like you should be able to relate, but it’s not relatable. And so you’re on your own. You’re on your own.

William Norvell: And then I find actually the most helpful people in that situation are the people with a lot of wisdom that say, you know, actually, I can’t relate to that. But here’s some thoughts on maybe something else you’re going through. But, you know, then it can get really dicey.

My point is, though, when people try to come in and they really don’t understand what’s going on at all and they try to offer advice and wisdom and it can be misguided and be frustrating and kind of take people down the wrong path at some level, too.

Rusty Rueff: Yeah, well, you would know this, Henry, you know, running sovereign’s capital, you know you know how lonely the journey is because we’ve seen a lot of venture capitalists now who won’t or don’t want to invest in a social entrepreneur. Right. They want to see a co-founder. They want to know that there’s some support system, even if it’s just two of you.

Henry Kaestner: So it’s a known phenomena where two or more together, which doesn’t mean the guy’s not with you as a sole proprietor is an entrepreneur. Right. We’re talking to somebody on a podcast episode. Recently, I was talking about developing a new technology informed by some twenty three. Right. Even though we go through the shadow of death, you’re with me. And that connotes almost kind of I’m alone, but you’re with me. And to be clear, you don’t need to have a partner. We think that at the ministry that it surely is preferable if you can find that person that’s yoked with you and pray with you and cry with you and celebrate with you and all that. But we have tried to get a little bit more intentional about community in the ministry. And we’ve got a guest today that is helping us to lead that initiative. And we have to Saathoff on the podcast with us. And she’s come in as the director of community with what we do, a Faith Driven Entrepreneur. And she’s going explain what does that look like and what does it look like and what could it look like but doesn’t look like it now, et cetera. But with her, as with anybody else that we have on the show, Swails, who are you? Where do you come from? What’s your background to the show?

Sue Alice Sauthoff: Thanks. I’m glad to be here. Yeah, well, first and foremost, I am a wife and a mom. My husband Matt and I have been married for 18 years and we have two girls. Breckon is in seventh grade and Browning is in third. So it’s a fun household with lots of energy all the time. And, you know, professionally, I would have to say that everything kind of started at age 14 when I felt like God really gave this clear call for me to go into missions. And I had just come back from a mission trip to Mexico, grew up in Texas. So we just got across the border for a week. And at the time, my fourteen year old self that you know what that is going to mean? I’m going to live in a hut somewhere the rest of my life. And funny how God takes you on a very different journey than what you imagine as a 14 year old. And I thank him for that. So I went to Baylor University and I graduated with a Spanish degree, English and political science miners. I have no idea what I thought I was going to do, but I had a really smart person tell me. If I learned how to think, then I could do anything. And so I can think in two languages and so can Rusty. I’ve heard that about Rusty I knew.

Rusty Rueff: I mean, I knew you were going to do it. I just wanted to see how long it was going to take. One time I try a little Spanish on another episode of the podcast.

And it’s going to stay with me forever, forever. So, all right, I’ll take that.

Sue Alice Sauthoff: I’ll take it. Yeah. So when I left college, I got married and my husband was getting his masters at Vanderbilt and I got a job teaching Spanish and coaching soccer for several years. And that led into going into the education sector. I worked with a corporation helping them liaise with the Department of Education in Mexico, providing educational programing for offenders who were and in correctional facilities and would be released whatever their home country was afterwards. And so we were providing education for them somehow. That then led me to working with Samaritan’s Purse and I was with them for about five years, developing volunteer networks and growing volunteer teams across the United States, equipping them for the work that God had called them to do. So it’s been a really strange journey. But what has been the constant is that God has shown me that through all of this, this is missions that the work that I’ve been a part of has been taking the gospel and taking the name of Jesus to parts of the earth I didn’t know existed here in the States and literally to other parts of the globe.

And he’s done that in a really unique ways that I could not have thought out myself by any means and so grateful for the journey God has brought me on that now has led me to Faith Driven Entrepreneur.

Henry Kaestner: Indeed, indeed. You are also bobblehead doll fan. What does that mean?

Sue Alice Sauthoff: I have a really special bobblehead doll. I’m a huge women’s basketball fan, especially college basketball. And Baylor coach Kim Mulkey is a bit of a hero of mine. And so Kim sits on my desk beside me with her three national championship trophies to remind me that when I’m tired or when I’m feeling discouraged, I can keep going, I can do it and I can spot all. Had to be a Baylor basketball fan. It is a great year to be a Baylor basketball fan.

William Norvell: So I have a much less heroic bobblehead story. If this was video, you could see this. This probably looks like me because it is. And I have always lamented to my wife, better looking than you. Thanks, Bud. I appreciate that.

Oh, no, it’s because everything looks good. It looks good.

I’ve always lamented to my wife I love bobbleheads and I’ve always just kind of said off the cuff, like, man, I really want my own bobblehead one day and one year for Christmas. This little guy was born.

Henry Kaestner: I was there like the limited release. I mean, can our listeners get them?

William Norvell: You know, there was a limited release of one. But yes, I mean, I’m happy to put these on the site.

Rusty Rueff: Yeah. Yeah, it totally it totally explains one thing about you. That’s why you’re constantly moving your head like that all the time. I never understood why you kind of bob your head around like that, but there you go. It’s definitely not the caffeine and ADT.

Henry Kaestner: So tell us about why you’ve joined our team.

Sue Alice Sauthoff: Yeah, well, I have come on this team as the community manager to really help grow the community of entrepreneurs together globally and to expand that and see that multiply. I think that to bring these entrepreneurs together who often do feel lonely or isolated in their role, not only because of what they do, but because of the great weight of the responsibility that they hold to bring them together with other people, to realize that they’re not alone, that there are other people that understand the situations that are and and what they’re facing. It brings power. And that’s biblical. Right. Jesus said the world will know us by our love for one another. And so if we’re able to show each other love and we’re not competitors, but we are brothers and sisters in Christ coming together, then the world is going to see that love and they’re going to ask questions and they’re going to see that there’s hope that we have. That’s really unique. And so not only is it an encouragement to us as believers to be in a community like that, but it also is shining light into our world.

Henry Kaestner: It tell us a bit about how you see that coming together and kind of practical. So you’ve been on board for a month and a half or so now. And right now you’re in the middle of this initiative we’re doing together the Right Now Media Faith Driven Entrepreneur Partnership video series, eight weeks. We’ve got entrepreneurs from all around the world that get together via a video resume and we’re able to go through this curriculum together with this small video vignettes done in our partnership with Faith and Company, which are so, so good, really just very, very good. High production quality, incredible stories of Faith driven entrepreneurs, followed by teaching by JD Grear. But the magic of it really is this interaction between 12 to 15 entrepreneurs from all around the world coming together and community. And so you’re starting to get a sense of that as you see that, aside from doing more of that. And we’ve got more classes that are starting in March and maybe every month going forward because we’re starting to get some momentum and a lot of the people have gone through it. First Time said, I want to teach it to my own local community. But aside from that. Maybe you can talk about that one particular initiative. What does your vision look like in terms of building community over the course of the next couple of years?

Sue Alice Sauthoff: I think it would be amazing to see it really grow on a global scale, to see community what starts with one, grow to more and more in local communities, whether it’s Johannesburg or Atlanta or Dallas or Jakarta all over that. We’re able to start with the one person, the one person that comes to the group that is activated to really dig deep into what they’re doing, integrating their faith and work together and then passing that on to the next person. And that one person then becomes another group of 15 in their area. And those 15 people are activated. And that grows into more and more communities growing together as believers, but also then as entrepreneurs taking their God given skills and abilities, uniting those together or encouraging them in their individual pursuits to do greater things than they thought they could before activated by that faith that they shared together.

Rusty Rueff: So some people have an experience, some do with small groups, very positive in some places. Some people don’t even know what a small group is. So let’s back all the way up. What’s your definition of the FDE small group experience? And really, why is it important?

Sue Alice Sauthoff: Yeah, so practically, I think this FDE small group is a place where Faith driven entrepreneurs can come together, they have, as Henry mentioned, the short video where they’re able to really see an example, a story told of an entrepreneur who has walked this journey before them, and then they’re able to come together and really discuss it and bring this practical experience. What’s really unique about it is that it’s bringing a lot of entrepreneurs who maybe they’ve read a book before, maybe they have read an article, something that’s really stimulating this idea of integrating faith and work together. But they don’t know what that next step is. They’re not ready to jump into something that’s a much greater commitment, like a Praxis or C12 convene and something like that. This is a great first step to really connect them first to the Faith Driven Entrepreneur community, get them really thinking about their ideas about that, challenging what it looks like to integrate faith and work. And then after this group, we are always really pushing them to those next steps of what does that look like for each person?

Is it going next to Praxis, to C12, convene ocean or whatever that may be to really help them go even deeper?

Rusty Rueff: I love that. I love that. I mean, I think we all sort of need an on ramp, if you will, to how we go deeper in our faith and how we go deeper in our relationships with others that have similar experiences we have. So I think it’s really, really powerful. I’m in a small group in my church and have been for 15 years. And, you know, the journey that we’ve come along together as we’ve all grown, you know, has been just so enriching in my own life. So I encourage everybody to think about this. I know we’re in the midst of our second cohort of these FDE small groups. So can you tell our listeners, you know, what these groups are about, how they’re formed, kind of what they do?

Sue Alice Sauthoff: Yeah. So it really starts with a first step of somebody who’s interested, coming onto our website, filling out a registration form, saying, hey, I’m curious about this. I’m going to find out more. I want to be a part of one of these groups. And then we’re able to place 12 to 15 entrepreneurs and a group that’s led by really incredible facilitators. The people that we have facilitating these groups, they love Jesus. They are experienced entrepreneurs and they have a lot of wisdom to be able to share. But also we’re really good at connecting the people in the group. So Henry and William are both some of our facilitators. We also you’ve heard in other podcasts from Andrew and Vep, and these are some of the people that are facilitating these groups and bringing them together each week. We just meet for an hour, we watch the video, we talk, we share and we celebrate together and talk about challenges that they’re facing and problem solve together where possible as well.

Rusty Rueff: Well, you know, we love stories so early on now a month and a half, two months. You have stories for us about what you’re hearing about what’s happening in these groups.

Sue Alice Sauthoff: Yeah, absolutely. So one of the exciting stories that we just heard a couple of weeks ago is Henry ran one of these cohorts back in the fall and one of the ladies that was a part of that lives in Kampala, Uganda. And she was so encouraged by it that she’s taking this group and she has just started a small group in Kampala with 15 women entrepreneurs. She has a vision to see women in Uganda being able to step into the marketplace, give them access, resources and encouragement. They need to do that. And so she’s using this study as a first step to do that. Another story that’s just been really encouraging has been as we went through week for talking about how excellence matters, one of our small groups had a really personal and intense discussion about what that looks like as believers. And so to watch these entrepreneurs come together and discuss matters of faith and how that applies to the workplace, they were wrestling with specific issues about what it looks like in their particular business to love their customers well, while also maintaining a balance with their family. And they’re talking about how it’s really hard to pursue excellence while also being excellent in their family and their business and everywhere and what that poll looks like as a believer. So hearing some of those just raw moments with people I think have brought a connection. You say love storytelling. I love storytelling, too. And I think that really loves storytelling. So I think when we tell stories, we’re doing exactly what he says throughout the Bible to do, to remember what he has done so that we’re able to then speak faith and truth to other people so that their faith will grow, that if I hear, man, God did this amazing thing for Rusty and I can believe that God’s going to do the same kind of thing for me in the future.

And it builds my faith by sharing and remembering what Gottstein. For others.

Rusty Rueff: Uh, so I know we have listeners right now who are saying there going, oh, I would love to do this, but, you know, I don’t have time. I don’t know how I’d fit it in. Is this really for me? Bring them home, give the pitch. You know, why do they need this? And then we’ll go to, you know, what they do next.

Sue Alice Sauthoff: Yeah. So there’s a million really good things that we can all do with our time. Right. And there’s so many great opportunities. I think what makes this unique and what I would say is the reason that they should take the plunge and do it anyway is that this is a place where God can bring growth in a way that is unique to other places.

I can go to my church and I’m finding immense, profound spiritual growth, but it’s not always connecting with the work that I’m doing. And so to wrestle with other people in that same place is really unique. And that’s not to say that we don’t need to be spending our time wrestling with matters of faith and the church. Absolutely. That’s where we need to be doing that as well. So I would just challenge our entrepreneurs that are listening right now to really ask yourself, what are you looking for right now? Are you looking to grow in your faith and your work together?

And if so, it’s worth taking the time one hour a week for eight weeks to really devote yourself to this study and connecting with other people to see what God can do through you during this time.

Rusty Rueff: I think it’s great. And I like the way you talk about this being additive. So I’m a church guy, right? I love my church. I think it’s important that we’re in church, that we have church community. So we might be in a small group in our church. This is not a replacement for that. This is additive. This is our small group for our vocation, our profession, and how we expand and bring glory to God in our work. So I want to just hit on that point because I would want anybody. We have a lot of pastors listening, right? We don’t want him to go. Oh, wait a minute. They’re trying to take people out of our small groups. No, no, no, no, no. This is all additive.

Henry Kaestner: Absolutely. I’m glad you made that point. The other thing is we’ve talked about before, there are some groups and some ministries take a really, really deep with entrepreneurs and local community. They’ve got just very rigorous approaches to building meaningful community among peers. C12, FCI, convene CIBM. See, of course, the work that is done really intentionally with the ocean accelerator, with Praxis or movement is the top end of the funnel. It’s helping a entrepreneur to understand they’re part of a larger tribe, part of a larger movement that God is doing in the marketplace, and for them to really lean into that and then as they then interact to find different local communities that we really want to help them to find. We have 50 different partner organizations now on the FDE marketplace all around the world. We’re talking about Uganda. And as this group of women are then finished going through the FDE video series, there’s Hindiya, which is on the ground in Uganda. You’ve got the work of Zappos to be able to give some really great training and then further community. So this is a big movement with lots of really key players. And by the way, what we’re talking about that as you want to get more involved in some of the incredible ministries in the world, they’re doing great work in the space. Please reach out to VEP, who’s our director of partnerships for the FDE marketplace, and he can walk you through them. They’re all doing incredible work and many of them are getting contributions in terms of mentors, but then also financial support that we provide them and many others do. So important to note, this is part of a larger ecosystem. Thanks, Rusty.

William Norvell: Absolutely. I feel like we are just blessed with relationships. And, you know, you mentioned some around the world. There’s Missy Wallace at the National Institute of Faith and Work and now taken over Redeemer Faith and Work Center. There’s Jeff Hanan in the difference to the faith and work.

And we really see our goal as being the top of the funnel to help you find your tribe. And what I love about Watsa, Alice is talking about what my group’s experiences.

Hey, this is a great almost like a missing step in the movement to come in for eight weeks, be a part of something, and then we get to build that list of what’s next. Right. You could start your own group if you’re in Denver. You need to be Jeff Hanan. If you’re in Nashville, you need to meet Missy. If you’re in Uganda, you need to meet, you know, the hincker folks and things like that. So it’s been fun to see and help people find their tribe. And I think that’s what Sue Alice, it’s just really been ramping up over the last few months. And so on that note, I would love to give you an opportunity to talk about what else is there. You know, so this eight week program is a nice bite sized approach to come in, get a little taste of things. One of the things I’ve loved in my groups is watching the other people. I’ve been talking to some other people. And this is actually you know, I’ve been getting together with Stephanie on the side. We’ve been talking every week. And so, you know, obviously that’s really fun to see relationship start that will last beyond the group. But what other offerings are you working on right now that maybe if people don’t want to join the group, that other things they could plug into?

Sue Alice Sauthoff: Yeah, that’s great. Well, I would say for one of those things, if you feel like you’ve already kind of done this and this is your. Already, as an entrepreneur, maybe it’s your opportunity to lead one of these small groups that you can take the opportunity to do that wherever you are and step into that. Another thing that we’re doing is called flight school. So once a month, we are bringing in really amazing speakers, not just to talk because anybody can listen to somebody talk.

You guys are listening to a podcast right now, but this gives interaction as well. So it’s an opportunity once a month to come and not only hear from these incredible speakers, but then interact with them, have a live Q&A time with them, have networking time at some virtual tables where you’re really able to go a bit deeper. And so coming up over the next few months, we’re going to hear from actually, William, you’re going to be up very soon in March. And we also have Rusty coming up as well. Jessica Kim, David Sayer’s and Cleeve, we have some really amazing people coming. So that’s a great place to go. A little bit deeper on specific topics. Those are definitely and more typically focused venue. We also have our conference coming up in September. So on September 9th, we have our FDE conference. One day it’s going to be incredible. And it is a virtual conference about what we’re trying to do is bring it local. Again, we want to take what is happening kind of at this high level and bring it down to the one, bring it down to each person, connect with each person that really needs to integrate their faith and work as an entrepreneur. And so we’re looking to have local site hosts all over the world. We already have a few people committed across the world in Egypt and South Africa and in Atlanta. So you name it, we want to go there. So if that’s something that anyone listening is interested in participating with us and partnering with us as a site host, you can go to our website and check that out and find out more information there.

William Norvell: Absolutely. That’s amazing. And you just want to point out, I mean, I’m going to choose a minute to encourage Rusty a little bit, for instance. Right. I don’t know if we’ve specifically spent a lot of time talking to Rusty background, but Rusty has got a lot of experience and a lot of hard won wisdom in the Amen people management and corporate culture space. And so he’s going to be doing one of these flight schools where he’s going to give if you have not heard, I don’t think we’ve given him the opportunity to give his shadow of a leader talk, but he’s probably sprinkled in snippets over the years. I mean, that is just such an opportunity to learn from someone who’s been in there who understands it. And then it’s a great Q&A format to where you can bring your questions and talk to someone. And it’s going to be amazing. And I’m so excited for those events and to see how that grows. So thank you for doing that.

And by the way, I feel no pressure now. I feel good. Good. We’re going to record it and we’re going to send it to everybody. If you’re on the mailing list, you’re getting it. But it really is. I mean, I learn every time, you know, it’s one of those thought-Provoking things.

When you think about being an entrepreneur and building a company, you can hear over and over and over again and always take great wisdom from it.

And the same for all the other speakers coming up through someone listening, an entrepreneur, you’ve got them hooked. What’s some of the first steps? How would they find out about some of these events? Where can they sign up?

Sue Alice Sauthoff: What’s the best way to get involved so everything can be found on Faith Driven Entrepreneur, ERG? So under the Community and Events tab, you can find information about joining a small group, leading a small group flight school, the conference, all of those things are there, as well as a lot of other really encouraging content videos, podcasts, the daily blog, all of that can be found right there. So the first step is just go to the Web site and filling out one of those forms, taking the bold step to raise your hand and say, I’m ready to try this.

William Norvell: That’s great, and so, Alice, I want to give you one last chance here as we come towards the close, what would be your last plea for entrepreneurs to find a community of minded folks to walk down this journey with?

Sue Alice Sauthoff: You know, statistics show us that entrepreneurs are anywhere from two to 10 times more likely to suffer from mental challenges. The stress is really intense scene that personally, even within my own family, of how that has affected them. And so God didn’t design us to live alone. He designed us to live in community. We are many parts of one body, and when the body tries to function, a person tries to function as the body all by itself, not realizing that it’s just a part. It doesn’t go well. That’s not how God created us. And so this is an opportunity for the body of Christ as entrepreneur, specifically in your vocation, to come together and encourage one another and build each other up and be encouraged and be built up and walk this journey with other people that just can’t be oversold because that’s how God designed us.

William Norvell: Can’t say much better than that. Thank you for giving us that vision for what it could be like to be in community. And as we do come to a close, the thing we love to do is try to transcend our listeners and our audience through the word of God. And I would love to invite you to share where God has you in his word, either today or in the season, whatever might come to mind to share with them and walk us through that.

Sue Alice Sauthoff: So three years ago, God said it was time to start walking through the Bible very slowly, cover to cover three years. Then I’m in Isaiah now, very slow journey. But what’s been really beautiful to see as I’ve been reflecting over themes of where God has brought his people up through the time of where I am and Isaiah, is this constant battle between the children of Israel trusting God and his story that he’s writing for them or trusting empire? And as we’ve had kind of a crazy last few months, I think God has shown me where I have wanted to trust Empire, where I’ve wanted to trust in the security that the world can offer, whether that’s a stable government health economy, stabilized things that maybe living in this Western world that I do, I don’t even realize how much faith and trust I put in those rather than trusting God and the story that he’s writing for me. And like in Isaiah Chapter 30, he says you look to Egypt for certainty and he says your identity is wrapped up in the holy city. It’s not wrapped up in God. But then he says in returning and Rusty will be saved and quietness and trust, you’ll find strength. And so that’s where I’m really trying to sit and rest right now and be quiet before him and let him remind me that I can trust his story, I can trust what he is doing and that he is good. He wants good for me and that my certainty is not in a place or other people, but it’s in a God who creates places for me to bring him into the world.

William Norvell: Hmm, Amen, thank you for sharing. Thank you for joining us. Thank you for all you do. Amen FDE and for bringing this Much-Needed piece of community to entrepreneurs around the world. Was really great to be with you guys today.

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We can confidently say that today’s guest is the first person we’ve had on the show who was also a part of The Bachelorette. That’s right. Before Jason Illian was pioneering disruptive technologies, he spent time sharing a house with 24 other guys trying to woo one girl’s heart. 

He didn’t make it very far in the show (something he and his current wife are both grateful for!), but he did take that platform and use it for something else—namely, sharing his faith. He has written a book, started a Christian version of YouTube, but is here today to talk to us about Koch Disruptive Technologies, where he is looking for emerging high-growth technologies across a range of industries that are poised to be a benefit to society.

Episode Transcript

Some listeners have found it helpful to have a transcription of the podcast. Transcription is done by an AI software. While technology is an incredible tool to automate this process, there will be misspellings and typos that might accompany it. Please keep that in mind as you work through it. The FDI movement is a volunteer-led movement, and if you’d like to contribute by editing future transcripts, please email us.

Jason Illian: Listen, I grew up in Nebraska, and it used to be it just jumped on your tractor and now the tractor drives itself right now. The soil is monitoring itself. And now we’re using next generation technology to fertilize it and keep track of it and measure it. And so technology and breakthroughs are happening everywhere. And we believe as part of it is we want to be part of that. Doesn’t matter if you’re in Silicon Valley, if you’re in Israel or if you’re in Cincinnati. You know, we want to back those best entrepreneurs and learn from them, be a true partner.

Henry Kaestner: Welcome back to the Faith Driven Investor podcast, this is the podcast for you as you endeavor to understand what’s a community of believers talking about, thinking about what’s going on as people come to understand how they might stored the wealth that God has entrusted them with. And every week we talk to somebody else that has a new perspective, a different story about how God is using them. And the hope, of course, is that you’ll come away from this time understanding and knowing God a little bit more fully by talking to somebody else that shares your faith and is intentional understanding how to bring faith into the investment world as you are and that you’ll just be encouraged by the broader community of people that are looking at this space. And we’ve got a great guest today. We’ve got Jason Elián, who’s got such a really, really cool background that I hope that he’ll share with us, but then also great perspectives and experience and what he does right now as he allocates capital and is driven by his faith as he does so. So, Jason, welcome to the program.

Jason Illian: Hey, thanks for having me. I’ve been looking forward to this.

Henry Kaestner: So with every guest, we like to understand a bit of their background, who they are. A quick autobiographical sketch. I know enough about your background to think that this rather than just kind of just doing a quick flyover of 90 seconds, that this is worth spending a little bit more time on. So do that. Who are you where do you come from now that I’ve intrigued our audience like that?

Jason Illian: Yeah. Yeah. Well, first of all, thanks for having me. You know, it’s interesting during the day, right? It’s Jason Allen, one of the managing directors at Koch. But most of the day I’m being known as either Alicia’s husband. Right. Or dad to my three kids, rogue, rain and sage. And so my three kiddos, they’re almost 13, 11 and 10. Their names are all biblical names like Rain Comes from Isaiah. Forty five. We’re talking about how the Lord reigns and how he’s going to tear down mountains and do things in his name. So that’s where his name comes from. And Sage is for the Lord’s wisdom comes from Zephaniah. And then my youngest is named Roeg. And Roeg is as is set apart for the Lord. Before I knew you in the womb, I set you apart. And his name’s Roeg and so is really important from us, my wife and I, from just the word go to say, hey, they’re dedicated to the Lord. This is what our family is going to be about. And and most of the time, like I said, I’m known as Alicia’s husband. And if you’ve met my wife, you realize you have the wrong one on the podcast. Right now, I’ve clearly outputted my wife. We could switch you. She really should. Lifeline a lifeline. Yes. This is where you phone a friend and get her on the line and you get much more interesting biblical insights than you get from her husband. But I met my wife speaking actually at a church about fifteen years ago, and she just finished writing a book called Chasing Perfect, which is helping Christian women get through the noise to really have a personal relationship with Jesus. And so we met fifteen years ago, kind of taking a step back to hear just a little bit more from me as I ended up going to school at TCU and Fort Worth, Texas, came to know the Lord when I was 17 years old at an NCAA football camp. I thought I was going to the camp so that I could show my great athletic prowess. And they were giving an award for somebody that exemplified the most Christlike behavior. And I was thinking, well, that must be me. And if you’re thinking it’s you, it’s definitely not you. Right? And so they had this kid come out and pray for us. And as he was praying, I realized he had something I didn’t. He had this relationship with the creator, God Almighty, and it was real and it was authentic. And he had this piece about him. And I based a lot of my identity on what I could do right. And playing football and doing well in school. And that just shifted it completely and came to know the Lord there. And then I went off TCU played college football, Texas Christian University go Frogs’. I know we have some other Bama and Baylor guys around. That’s OK.

William Norvell: I’ll speak slowly for you guys in North Carolina this year. Let’s not leave him. Yeah that’s true. They showed up this year.

Henry Kaestner: Thank you, William. The essay did Mack Brown.

Jason Illian: They brought their game so I wouldn’t play ball out there. And my goal had always been to go play NFL football, but had some injuries there. But really what I found is when I got there, I became part of the FCA. I’d never really led any Christian ministry before, but the FCA grew from about 40 or 50 kids to at the time when I left about five hundred and fifty. And that guy just blessed it. Right. And God gave me this amazing opportunity at TCU to grow athletically. Intellectually, my background is international finance as well as spiritually. Just put amazing godly men around me to help form the type of man I am today. I owe a lot of that to my time at TCU. My degree was finance. So I went to the London School of Economics, got recruited at Strong Capital Management. They did investment management had about forty five billion in assets under management.

And when I was there, this was late 90s, early 2000s. We were tracking all these companies in this tech space and some of my friends were like the first non founding member of Napster. We’re building a company called Friendster. One of my friends had their distribution rights to this small company called the Amazon, and I was watching these things in my real interest was the Internet back in the day, used to just be flat. You just went there for information. And what was happening is it started to become transactional and even more importantly, started becoming relational. And when I saw that you could start to build relationships potentially over, this became really intriguing to me. And so I ended up being in finance for four or five years, moved back to Dallas and ran a company called Gadhia, which was the first Christian video site. And one month we had twenty thousand users. In the next month we had two million and it really grew that fast.

Henry Kaestner: One that feels like kind of like how our podcast is exploded with with our listener base.

William Norvell: I mean, you know, it’s it’s a little bit I mean, I think we’ve eclipsed most of that at this point, but yeah.

Jason Illian: That those are small for you guys.

Henry Kaestner: Twenty thousand to two million. That’s unbelievable.

Jason Illian: Yeah. I want to say in the early 2000s, for a couple of months, we on the fastest growing websites on the planet, we just grew tremendously and would love to take credit for that. But the reality was, is it was content that people were really hungry for. Right. They really wanted to have the Google centered content that was safe for their kids. And, you know, we had a few videos that just went viral. And as they went viral, it just grew and grew the site. And we later ended up selling the site to Salem Communications, started another company called Bookshop, which was an e-book company. And then I ran that until twenty seventeen and sold that to a private equity group and then decided that I was going to take some time off. So my wife in her wisdom said, hey, you’ve been running hard. And as you guys know from the type of people you interview and work with this building companies and building startups is hard, right? It wears you out physically, emotionally, spiritually. And my wife said you should just pray about this and take a year off. And so I was at my home in Dallas just playing with my kids, you know, swimming, mowing the lawn, doing Bible studies and driving back and forth between Wichita to see my wife’s family from time to time. And through those connections and some other God ordained introductions 10 years earlier, I got to know the team at Coach and Chase Koch, who is the president of our division and the son of Charles, our founder. So he was getting ready to start a growth and venture arm for Koch Industries and asked if I want to be part of it. And so my wife and I prayed about it and we thought about it and decided this is where God would have us be. So we sold our home that we’d lived in for less than a year and moved to Wichita, Kansas, which is where I am today.

Henry Kaestner: So this is the faith of investors, most definitely not the faith driven reality show participant, but some of our listeners are going to know a little bit about that story. And presumably, as you’re coming out of FCA, motivated by your faith, you see that there’s an opportunity to live that out in a way that actually made quite an impression on a lot of people because it was a great witness and testimony. You were on The Bachelorette in your faith, came to play to spend just a second on that. What that looked like. As you know, you’re in an environment now where you’re doing something that’s unexpected is countercultural. And I think that maybe there are aspects that shouldn’t be presumptuous or prescriptive, but there’s things that you might have an opportunity as an investor to be countercultural. But this won’t be the first time that you’ve been countercultural. You’ve done that before. Just speak briefly to that.

Jason Illian: Yeah. You know, one of the things that’s really interesting about life and how God has it is our paths aren’t linear. Right. And his ways are greater than our ways. His thoughts are greater than our thoughts. And he’s just asking us to be faithful in whatever moment that we’re in, in whatever situation that we’re in and how do we live that out. And so that’s certainly played out in my life many ways. And one of those was through being on this reality television show, The Bachelorette, which was it was like the second season I was on. So it was still relatively new to this. And how it came about was even throughout this story that I just told you, this narrative of my life, I’ve continued to be involved in ministry. And I came home one night from speaking at church and I flipped on the TV and The Bachelor was on. And while I was making dinner, Jesse Palmer, who is now on ESPN, he was on the show and one of the girls asked him, why are you here? And he said, well, you know, I get tired of waking up every morning with a different girl, not knowing her name where I am.

And I just stopped and said, where do they find these idiots? Like he’s doing more damage in ten seconds on television than all of the things that we’re trying to talk about our faith and how do we should live out purity and how do we push towards traditional family and marriage? And I was telling one of my friends about it and he said, well, if you think you can do better, why don’t you send your application in and almost out of a dare? I just did. So I sent it and I didn’t think much of it. About three or four weeks later, I get this call and it was so and so from ABC’s The Bachelorette. And I thought it was my friend. That is give me a tough time, so I just gave them a tough time, I gave this person a tough time for like 10 minutes on the phone. And I’m like, yeah, sure you are. And I’m the pope. How can I help you? And I just kept going on and on until I finally realized that it was them. And I said, I’m really not a fit for your show. I’m like, I’ve seen the type of people on your show. That’s not the life that I live. It’s not a lot of the things that I believe in from a faith perspective. And they said, listen, just come on the show and just interview. There’s like five rounds of interviews and you may not make it through anyways, but we’d love to talk to you. So I did. And, you know, you do on camera interview and do in person interview. And there’s one where you fill out, I don’t know, an inch thick of background paperwork. And in there they asked, you know, all the people you’ve slept with. Well, it was a virgin at the time, right? I was saving myself for marriage, so I just left it blank and I turned it in and they brought it back and said, you missed the section. And I said, no, I just hadn’t slept with anyone. And when I said that, you could have heard a pin drop in the room, right. It was like they just cast a serial killer on the show or something. Right. They just couldn’t fathom why anybody would do this. And so it just started this ongoing conversation of my time throughout this television show, just saying, listen, what I believe and what God has for us and at the highest level of intimacy is matched at the highest level of commitment marriage. I said that’s how God has designed our family structure. And so I got a chance in front of ten million of my closest friends to have this conversation on national TV with Gen Sheft, who was The Bachelorette at the time. And it was because of that conversation that I got voted off. Right, because she didn’t believe that was very lovable. But what most people don’t know is I got thousands, hundreds of thousands of emails and calls from people that just said thank you. I said we need more examples of this and said I didn’t go on the show necessarily to make a point. Right. I didn’t go there saying, hey, I’m going to pound my hand on the table and here’s what I’m standing for. I’m just honestly just living my life as I feel like God’s called me to that. And, you know, God’s provides those opportunities. Right? He did that with The Bachelorette.

You know, I wrote a book early on called MySpace My Kids, when MySpace was just roughly a million users that was helping Christian families just understand this thing called social networking. It seems so basic today, but back in the day, we didn’t know what we were about to embark upon. And so when God opens those doors, I just try to be faithful. It’s not that I had this master plan. I’m sure God does, but I don’t see it clearly. And just take those moments to be faithful and try to have an impact.

Henry Kaestner: So that’s and an obvious question. And maybe we’ll go there, which is that was, as I said before, it’s countercultural for you to talk about celibacy on a show like The Bachelorette. Do you see opportunities to be countercultural and what’s going on right now in the world through what you do right now? So you’re managing director of Koch Industries for Disruptive Technologies. Yeah, and I’m going to ask a two part question. One is, some people are going to say, what in the world is disruptive technologies? But then also, why don’t you riff a little bit about how your faith in your worldview impacts the way that you see your job?

Jason Illian: Yeah. Yeah, it’s a good question. So maybe to back up just a little bit, Koch Industries, if most people don’t know. Right, we’re roughly one hundred and twenty dollars billion privately held company and it’s really a number of companies that are put together. So if you have a cell phone, this components in that cell phone from one of our companies called Molex. If you are living in any type of house or building structure, it’s probably has Georgia-Pacific Materials, which is a Kochcompany.

Henry Kaestner: So it doesn’t apply to people living in teepees.

Jason Illian: But if you live in a house where the tea is made of toilet paper, then yes, because that’s also Georgia-Pacific, right? So, yeah. Yeah. So basically, think of it this way. Right. We’re in sixty five countries. We have roughly forty thousand trucks on the road at any time that have Kochmaterial in them. And you know, if you popped open the hood of Koch industries, what you’d really realize is it was built by entrepreneurs for entrepreneurs. Right. So one things that Charles has really done is saying I’m going to align incentives, push decision rates down to the bottom and let people create products and services that will make people’s lives better. And we want to do it at an affordable and efficient way. And so as the company continues to grow, they said, hey, we need to build a growth in venture arm so that we don’t get disconnected from those people that make transformative change. And that’s really what birth certificate. And so day one, there was two of us here chased Koch and myself as one of the founding members. And we built a team of about twenty five investment professionals, including three in Israel. And we’re a stage in industry agnostic arm, so we can write a check as small as a couple million and as large as a few. Million dollars per check and it’s a greenfield fund, right? So it’s all of our own cash on balance sheet, we can do 15 investments this year. We can do one investment. You know, we’re only really bound by what we deem to be something that will truly be disruptive. And so what does that mean? I mean, what is disruptive actually mean? Well, I look at it. Is is it a platform? Is it something that is going to make people’s lives better, more efficient, cheaper change the way that they live their life? So I remember the first time I heard a pitch for something like Uber, right? It was people like, hey, one day random strangers are going to pick you up in their car and take you to where you want to go. And people were like, are you crazy? I’m never getting in some stranger’s car. And now that’s just what we do, right? You guys know with grab I mean, you guys are that’s you understand. But this is a lot of the things that sounded crazy back in the day or just the way we do things today. Airbnb is another example, right? You’re going to stay in somebody else’s house on their couch, like who’s going to do that? And so these are transformative companies that change our behavior in the way that we live our lives. And a lot of those came in consumer areas to start with. But they’re also now coming across be to be industrial manufacturing, a number of other areas as well. And so, you know, we invested in a company called Desktop Metal, which prints three D metal parts, which are being used by Jewelleries, like Tiffany’s, are being used by BMW for parts. And so we look at all those types of various technologies and really invest in the people, because at the end of the day, you’re investing in the people who are building those types of technologies. And yeah, we put about a billion dollars to work over the last three years and I think we’re just getting started.

William Norvell: Wow, that’s fantastic. So when I think about the rise of entrepreneurship has just been incredible, I think over the last 10 years, you know, we talk about that our entrepreneurs are cultural change agents. You know what Elon Musk is to our generation? Mickey Mantle was to my dad’s right. And it’s just amazing how that’s continued and continues to spread across the country. You know, Henry and I are here in Silicon Valley or maybe that was a thing 20 years ago and we’re obviously biased. But I grew up in Alabama where when I go back home in my small town of 60000 people, I see, you know, coworking spaces and tech hubs and, you know, of course, in the bigger cities, Birmingham and Huntsville, it’s just it’s all anyone can talk about. And from Wichita, Kansas, I would imagine, you know, that name doesn’t scream innovation and entrepreneurship to most of our listeners, maybe screams fantastic college basketball first. But could you let us in to what you see? So you’re around the world now, but specifically maybe from the Midwest perspective of what do you see happening in entrepreneurship and in sort of how that is part of society and how God could be using that to bring his visions into the workplace?

Jason Illian: It’s a good question. And I think what people in you and Henry can probably speak to this better than I can. But what happened in Silicon Valley didn’t happen overnight. Right? It was decades and decades of building on top of one another with defense and semiconductors, Internet and mobile. It grew into what it has become, right. It became that melting pot of great ideas and ways for people to interact and take new risks in terms of building next generation platforms. And I think what you see happening is that’s starting to happen all over the country and all over the world. Right. So look at what Brad Feld has built in Boulder, Colorado. Right. It used to be you walk down downtown Boulder. Yeah, I maybe grab a bite to eat, but that was about it. Now you walk down there and there’s tech companies and people all over the place building next generation technology. Same things with the Walton family’s done in northwestern Arkansas. That has become a vibrant tech hub where people are wanting to move. They want to raise their families there. They can look at anything from mobility services to next generation data companies. And then I think what you’re seeing in Austin, too, right? I think you and Henry had the way to make a sound in the media. You may be the only thing left in California because our base moved Austin. Right. And so what’s happening is you’re starting to see great entrepreneurship. And it’s one of the reasons we’re friends with Eric Schmidt. And what Steve Case is doing with Rise of the rest is there’s all these ecosystems that are starting to grow up and there can be great entrepreneurs anywhere. Right. Great entrepreneurs don’t want to guarantee. They just want an opportunity. Right. So how do we find those and give them an opportunity? And so, you know, Steve Case made this bet before covid hit. And I think Ovid’s only accelerated that to say, yeah, you can talk about the Austins and you can talk about the boulders. But what you’re starting to see is what’s happening in Cincinnati and Miami and Minneapolis and hopefully Wichita as well, that we can start to think of ourselves as a place where we’re giving people new opportunities and those new opportunities. Without a cap on them in terms of what they want to grow and what they want to build, but with that comes the need for capital, right? Need for community. You have to have the people and the right skill sets around you and also just the knowledge sets that you’re going to need to bring in there because problems become more complex as we break into new areas. But listen, I grew up in Nebraska and it used to be it just jumped on your tractor and now the tractor drives itself. Right now, the soil is monitoring itself. And now we’re using next generation technology to fertilize it and keep track of it and measure it. And so technology and breakthroughs are happening everywhere. And we believe as part of it is we want to be part of that. Doesn’t matter if you’re in Silicon Valley, if you’re in Israel or if you’re in Cincinnati. You know, we want to back those best entrepreneurs and learn from them, be a true partner.

William Norvell: Now, that’s great. And did you give us a sense and I don’t know, you know, do you have a sense for our investments in those areas? I’m trying to play the cynic here. Right. You know, I read a report this morning that, yes. You know, tech hubs are growing, of course. But if you look at the data from last year, you know, the venture capital dollars in San Francisco still outstrip L.A., New York, Seattle, Portland, Austin combined. Right. That’s just a data point, is it today? Right. That’s a balance sheet metric. But I’m interested in what you’re seeing out there in the field as you invest and sort of come alongside rise of the rest. I mean, is it working? You know, are we in inning three and we’re, you know, five innings away or they’re still unknowns out there about whether it’s going to work? Or is it just exactly what you said about San Francisco right now? We just got to keep building layer after layer and it’s clearly working.

Jason Illian: Yeah, I mean, listen, there’s not one answer. That’s a broad brush that works in every community. It’s working in some places better than others, and some are more mature than others. And so at the end of the day, if you go to Austin now versus Austin 10 years ago, it’s working significantly better. Right. Wichita still has some work to do, right? We’re not as far along. But what I would say is what covid really did is kind of lead just five years into the future, 10 years into the future, and you’re starting to see even just the prices and cost of living like living where you live versus living where I live, you know, where your kids can go to school. The other amenities and things that you want to have covered has taught us we can work remote. And so what’s happening is it’s causing people to spread out. And you’re going to have these events where there’s a black swan event or just technology accelerating that creates these communities around. And, you know, people sometimes forget that MailChimp, which is one of the largest privately held tech companies, is in Atlanta. It’s not in the Bay Area. Right. A few of our big investments have happened in Denver because people have said, hey, we’re going to leave the Bay Area, but we want to be in Denver. And I just think there’s great people everywhere. Now, it may not have the concentration of Silicon Valley yet, but that’s not to be expected overnight. We got to continue to build on it. And Chicago’s a good example. You get something like Groupon that’s successful and those founders spread out and create more companies and they invest in other great entrepreneurs and that ecosystem continues to build.

Henry Kaestner: Tell us about Israel. So you’ve got a guy on the ground in Israel. I’ve been to Haifa before. I seen some of the dynamism there listening to this podcast. Are you going to be interested in just what happens in a kind of a special geography that’s politically charged? It’s got a spiritual foundation, but there is something special about what’s going on in Israel. Maybe you can comment on that a little bit.

Jason Illian: Yeah, you know, it’s interesting. Israel is a leader in technology, in building platforms. And part of this comes because everybody’s trained in the military over there. Everybody has to be trained and a lot of them have technology backgrounds that they’ve actually been trained in. And I also think you’re willing to take risk goes up when you live, you know, fifty miles from somebody willing to shoot a rocket at you at any time. Right. So you live in an environment that you realize that taking risk building a tech company is not as risky as getting shot by a rocket or by somebody that doesn’t have the same belief system as you do. And so what Israel is built is this really robust ecosystem of great technical entrepreneurs. And they’re coming up with all sorts of great technologies. And you can talk about companies like Mobileye which have help helping autonomous driving. But even our first investment as a company called Tech and we invested over one hundred million dollars in this company, does noninvasive focus ultrasound on people that have essential tremors or Parkinson’s? So the first time I saw this, a gentleman was shaking so bad that he couldn’t write his own name or hold a cup of coffee. So he lays in an ultrasound machine, special helmet, and it uses ultrasound waves to ablate the part of the brain that deals with the shakes. He stands up two and a half hours later in the shakes are gone and it looks like magic, noninvasive, like no cutting the skull open, no peeling your head back. This is hey, what if we use the ultra? Sound waves, and we pinpointed them at a place that we could kill whatever is causing that to happen. We’ll take the next step. What if we can use that for cancer? What if we could use that for blood clots? What if we could use it for all sorts of other things? This is an Israeli company, right? So our thought is like, listen, once again, there’s great entrepreneurs all over the place. How do we help connect to them, help you, that connective tissue? Because we’re in different countries and a big part of our investing mandate is not that we can just deploy capital. I think there’s a lot of really smart investors that do that. But how can we come alongside them as a partner? How can we help them accelerate the growth of their platform and those entrepreneurs that want to do well by doing good. And they need a real partner to do that. That has capital. You know, we may be a good place for them.

Henry Kaestner: So as you talk through this and you talk about technologies that can and maybe I shouldn’t get overly biblical about this, you know, it’s in the Holy Land, Jesus was healing people that had leprosy and others. And there’s kind of a two thousand years on, you know, walking with tremors and you walk out without it. It’s almost miraculous and almost feels that is you’re in this space. And we all have found ourselves kind of in this world of these disruptive technologies and investing in them, that if you have a propensity towards a God complex, you get involved in inventing technologies like that or and financing technologies. You know, there’s a temptation to kind of feel like, you know, Alec Baldwin in the movie Malice, which talks about, you know, you want to know if I’ve got a God complex. Well, who is the person saving your life at 12, 30 am an emergency or operating room for when you talk about the technology you just talked about? I think about Kalikow, which is this initiative to end aging. Right. That’s the final frontier for us to become godlike, immortal. And yet you’re talking to people, entrepreneurs and technologists every day that see that aging might end. Right. How does your faith come to bear in all of that?

Jason Illian: Yeah, I think you’re asking a really important question that we haven’t asked ourselves enough in the technology space is we often ask what we can do and we don’t ask why or what are our boundaries are on this like. So why do we want to stop aging, right? Or why do we want to change the financial system and what are the repercussions? So we’re seeing the repercussions of social media right now. We wanted a better way to communicate. Now, what we’ve got is we have partizan division. We have people being blocked because of this. We have some large tech conglomerates that are starting to tell you what you can and can’t say. Right. So, you know, I’m not a conspiracy theorist by any stretch, but somewhere between nineteen eighty four and brave new world things are happening. Right. And we see this in China with the social credit system. What happens when all of a sudden technology can become used to monitor everything you do? So it’s very important that we’re investing in those entrepreneurs that one have a sense of humility, that they’re not leaning towards this God complex of taking over the world, but they want to do well and they know their limitations. Right. I think it’s very important that we are investing in entrepreneurs that know their limitations and are also putting other great entrepreneurs and investors beside them. Right. Scripture says plans fail for lack of a council, but with many advisors they succeed. So how do we put people around ourselves, just like we should do in our own personal lives, to have people point out our blind spots left to my own? I’m going to step into the ditch where the ditch is on the right or left hand side of the road. I’m going to hit one of the ditches unless I have brothers, advisors, counselors, mentors helping remind me of my limitations in the team that we put in place. And so we want to invest in those entrepreneurs. Right? We certainly want to invest in those entrepreneurs that know their own limitations, build great teams around them, but also have what I call cognitive flexibility, ability to take different mental models and know when and where to apply them, because there are new challenges that are coming up in our world and we need to know how to approach them as believers and have a stance on those. Right. A lot of people say we got to defend the faith. The word defend doesn’t resonate well with me because you don’t need to defend a lion. You just need to unchain it and let it defend itself. So we just need to be bold in our stances and we need to be honest. We need to be intellectually faithful to know what we believe and how to apply that. And we need to give other believers by standing up the courage to stand up and say what they believe as well. And I think that as people that invest in technology in the future, in these next new platforms, if you are to invest the next Facebook or Twitter or go beyond communication platforms to whatever. Her new medical technology. We have a responsibility beyond just the shareholder responsibility to make money, to know why we’re doing this and how this benefits society in a positive way that ultimately points to our creator and savior.

Henry Kaestner: You’re out there, you’re talking to some of the most exciting entrepreneurs in the world. Do you ever get a chance to share your story? You know, everybody, whether they’re in Israel or Silicon Valley or Wichita, has a world view that kind of directs them towards what they’re doing. And I’m wondering if any of those folks that are developing some of this disruptive technology. I know some to be clear. I did. I’m an investor, so I know some, but maybe not at the scale that you’re looking at. Do you see any that are motivated by their Christian faith? You see that any that are open to that, any that are as they go about inventing, they’re trying to figure out why they’re doing it and what’s the bigger metanarrative here? I don’t want to overly spiritualized what you do every day, but I am curious about these personal relationships that you end up developing with some really, really interesting people about what are they thinking and does that ever give you an opportunity to kind of be in a relationship with people and maybe not the same way that so deliberately countercultural as it was for you on The Bachelorette, but what does that look like?

Jason Illian: Yeah, I think sometimes we over Spiritualized sharing our faith. I mean, really what that means is building relationships and valuing the people that are in your life. Right. And as you value people, as you listen to their story, they want to know your story as well. And so I take every opportunity or I attempt to take every opportunity with any great entrepreneur to ask what they’re building, why they built it, like, what are your challenges and tell me about your family. And what happens is we build this personal relationship and then it becomes a conversation right here. I want to know what you believe. Tell me what you believe. Give me your world view. How are you seeing this world? And then can I share my world view, too? Because I would love for you to understand how I look at the world. In my world, view is a biblical world view. Now, I’m very fortunate because here at Koch, Koch are not necessarily a Christian entity, but they have what we call market based management mbm in the market based management. A lot of the philosophies around that align very well with biblical framework. Right. And so it gives me that opportunity to engage people where they are. And when you engage people and you share your story with them and they show you, you start to understand the type of people you want to do business with and live your life with. And as you know, many of these companies take years and years and years to build. And we’re going to be sitting on the boards and we’re going to be sending Christmas cards to each other and we’re going to have dinners together. You want to work with people you like, trust and respect. And that doesn’t mean they’re going to share the same Christian faith with me every time. And that’s OK, right? It’s an opportunity to build a relationship with them. But I will say there are a lot more believers in the trenches that are trying to make a difference for the kingdom than you know, and it’s an opportunity to encourage them when you run into them. And so it’s either an opportunity to share, encourage, but no matter what, it’s an opportunity to build a relationship and then see what God has with it. Things don’t always change overnight. It may be 10, 15 years down the road when somebody comes back and says, I remember this conversation I had with you, and those are wonderful conversations to have. Or when an entrepreneur calls you and said, I’m having a tough time with my wife, I’d love for you to get some feedback. Great. I’d love to share. Matthew, 18 conflict resolution with you. Let me tell you what works in my family and let me tell you all the ways it’s gone wrong. When I approached my wife like this and just to be honest, right. Believers make all the same mistakes that nonbelievers do. We just believing there’s grace for that and that, you know, God’s given us a path to that redemption and how we should interact with others.

Henry Kaestner: Now, it’s beautiful. And, you know, for our listeners, there are a great number of men and women really driven by their faith that are leaning into technology in this time. And of course, we both know the Anthony Tan story. Grab and Mark, seriously, CloudFactory. And there are many, many, many more that’s really encouraging.

William Norvell: Absolutely. And yeah, love sort of some of the concepts you talked about. I think from a code perspective, which we talked about a little bit, I read good profit years ago. I think a lot of kind of what you’re talking about is sort of espoused in there and just some incredible wisdom on how to treat people well and build transactions and deals that honor both parties and of course, a lot of their management, the MBM process you took as well. So it’s a good read for sure. If anybody finds himself needing to read about one of the largest private organizations in the world and how they become who they are.

Jason Illian: Yeah, and I think one really interesting thing is, you know, we’re told that a tree is recognized by its fruit. So I can tell you what kind of tree it is by the fruit that it’s going to show. And Charles Koch is eighty five years old. And he still is as active as he was when he was 40. Right. He is still using his opportunity and his platform to make people’s lives better. And he still comes to the office. He still gives back tremendously to things like criminal justice reform and, you know, next generation education. And I can go down the list of like 15 things that he is spearheading because he’s not sitting on a beach somewhere. Right. He did not make a ton of money and say, I’m checking out. He’s like, I have this opportunity to give back. And those are the type of men I want to work for. I want to work for those that are going to the grave, trying to help make other people’s lives better. And I feel very blessed and fortunate to do that.

William Norvell: Women and men. And as we come to closure, this section of the podcast, we always love to invite our guests to share with our listeners where God has them in scripture these days. And that could be something you read this morning. It could be something you’ve been meditating on for a season, but just maybe a story or a verse or whatever God has brought to the forefront of your life through his word.

Jason Illian: You know, I think all of us, anybody listening to the podcast and ourselves included, 12 months ago or so, we did not know we were going to be hit by something like covid, which I think’s changed all of our lives in various ways. On top of that, we went through one of the toughest election cycles that I can ever remember. I feel like we have a country that feels very divided. We have racial tensions. We have all sorts of challenges that as believers and as the church, we need to step up and lead through. Right. And so a lot of where God has been moving on my heart are just things like Joshua five, right. When Joshua is sitting there in the Angel of the Lord appears to him and he says, hey, which side are you here for? Right. Thinking like if you’re with me, we’re said, if you’re for our enemies, we’re in trouble. And the angel replies, Neither. I’m here for the Army of the Lord, saying, I’m here on behalf of God. I’m not taking sides. I’m coming to take over. Right. I’m coming to take over. So that’s when he bowed down and realizes my first thing is to worship God. Right. My first things to be at his feet. And that’s reflected again in the second chronicles where, you know, Solomon could have asked for anything and he could have asked for anything to you could ask for wisdom. He could have asked for riches. He could ask for anything. And what he really asked for is, God, give me wisdom to lead your people. How great is your people? And I need the wisdom discernment to lead them well. And because of that, everything else was a symptom of that primary ask because he desired in his heart to lead God’s people well. And that’s the same desire I want to have. I just want to have this desire to lead God’s people well, not that I’m leaving a legacy of money or how many deals that I’ve done or how successful. Hopefully those will be great symptoms because I lived my life appropriately. And it comes back to just the Sermon on the Mount of where you said, you know, blessed are the meek. Right? So I’m doing a Bible study with my kids every night. So we do a devotional every night together. And so we have to read over something again that you read over a thousand times. It makes you stop and reflect upon it. And we’re so blessed are the meek for they inherit the earth. I ask my kids, what is meek mean? And then I thought to myself, I don’t know if I know it. Right. And as we started talking about this and looking it up and what really it is, it’s power under control. It’s power under control. Right. And what we need is we need men and women that are willing to worship and recognize God is who he is. And Joshua to ask for wisdom, to lead God’s people well and then be meek. We don’t need to be shouting from the rooftops. We don’t need to be screaming on social media. We just need to know what we believe into Henry’s point early to build relationships with those people. Right. The outcome is going to be based on how the Lord wants that. I’m not in charge of the outcome any more than I was in charge of winning every TCU football game. I had a role to play. And if I caught passes and made blocks and hopefully at the end of the game, the score was in my favor. But when it wasn’t in my favor, then I got to walk away with something to learn. And in my house, my kids learned through the sports that they’re in. We either win or we learn those are our options. And so every day, just meditating on those scriptures, bringing them to the office, knowing that I’m going to have a dozen amazing potential entrepreneurs and people I get to interact with, how can I help make their lives better and value them so that they will go out there and do that to others and that virtuous cycle will continue to replicate itself. And if it does, I happen to believe lives will be changed. We’ll make money doing it right. New technologies will make this world a better place and overly hopefully it will bring us all together and make us realize that these differences that we’re fighting about, some of them are completely perceived and the other ones aren’t as wide. We think they are we just need to be able to sit at the table and have a civil discourse on most of them, Amen, Amen, that’s one of my favorite words.

I love it. I love Mique. So glad you brought that in. And also, I totally empathize with reading the exact same stories over and over. My three year old is currently obsessed with Nayman. It’s his favorite character. So we read about Sickness Amen and Healed Neyman. That’s a great story over and over and over again. And it is. It made me read it again like multiple times and it’s amazing.

So my son just asked on this exact story because I think name is a perfect example that he wanted to do something miraculous. He wanted to do something big in his simple thing was like, hey, just washing the Jordan is like, wait, I don’t want to do that. I wanna do something big in your name. He’s like, just be faithful where you are. And that’s that’s what I tell my kids is like, just be faithful where you are. And when I tell them that I’m always looking in the mirror being like, am I being faithful or I am, I’m just telling my kids this, but I got to live it out. And so what you guys are doing and how you’re continuing to have this impact through podcasts and your network and stuff is tremendous. And so thank you for what you do. And I’ll certainly be praying for all that you do. Thanks for. Thank you, brother.

It’s great being with you. Yeah, likewise, guys.

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Today’s guest is Ben Chelf. Ben is a founding partner at Elementum Ventures, has been named to ComputerWorld’s Top 40 under 40 Innovative IT Professionals, and is in the Stanford Inventor Hall of Fame. 

He has lived every part of the entrepreneurial cycle and is passionate about sharing his knowledge and experience. As part of this work, Ben also heads up the Venture Lab at Praxis, helping serial entrepreneurs research and develop new organizations from the moment of inspiration to incorporation. 

He has lived both the Faith Driven Investor and the Faith Driven Entrepreneur story, and we think you’ll enjoy hearing him talk about both.

Episode Transcript

Some listeners have found it helpful to have a transcription of the podcast. Transcription is done by an AI software. While technology is an incredible tool to automate this process, there will be misspellings and typos that might accompany it. Please keep that in mind as you work through it. The FDI movement is a volunteer-led movement, and if you’d like to contribute by editing future transcripts, please email us.

Ben Chelf: It’s about the heart posture of the investor, it is about recognizing that God is constantly working on us, teaching us things, sanctifying us to use the big term.

And honestly, that’s all that’s required, paying attention to the way that the Lord is directing, being really intentional about looking for what God wants to teach you in any given moment, the way he wants to apply the gifts and talents and resources that he’s given to you, all the product on the shelf, all the different options. Look, there are tons and tons of ways, both, quote unquote, faith driven and not to deploy capital. And God can use all of it. And God does use all of it.

Henry Kaestner: Welcome back to the Faith Driven Entrepreneur podcast, I’m here with my partner and co-host, Luke Roth. Luke, good morning. Good morning. Good to be here, Luke in from our virtual studio and Sweet and Spy and Nash, Vegas and Nashville.

Luke Roush: How does it feel to be in that it’s our new home? It’s a cool thing. Everybody’s doing it. Come on out. Water’s warm. That’s right, everybody.

Ben Chelf: Don’t do that. Don’t do that. Come on. San Francisco Bay Area. There’s hope. There is.

Henry Kaestner: Yes, there is. Ben isn’t there? And Ben is our special guest. Ben is with us in San Francisco. As you may have just gathered and I am in the South Bay down in Los Gatos. And we are going to be talking and Ben, about a whole bunch of different things today. There’s just a myriad of things we talk about. We can talk about entrepreneurship. And I think we well, a bit we’ll talk about investing. He’s a partner Elementum partners. He’s also a venture partner. I think that’s your official title. Maybe a Praxis talk about Praxis a lot because they’re really, really good at what they do as they work with us on thinking about the redemptive frame of entrepreneurship and investing. And our hope is that during today that you get a sense of, again, just a broader sense, a more textured sense, maybe, if you will, of the way the guy is working in the marketplace out here in Silicon Valley, but through investments and that you might leave your time with us today, encouraged and that you might feel that much more clarity about how you might store the wealth and the resources that God has entrusted you with and how you might participate in the work that he’s doing the world, how your interactions with entrepreneurs might be advanced and richer for you and for the entrepreneur, and that you’ll feel closer to God. That’s our hope. That’s our hope with every episode. And then it’s great to have you. We like to get a biographical sketch of every one of our guests. Who are you? Where do you come from? Why do you like baseball so much? Anything is fair game. So bring us right through, including your entrepreneurial career, including snowboarding and snowboarding. A long time. I’m asking you about it. OK, so who are you? Where do you come from? Please weave your faith. Of course, because it’s the faith driven investor. Weave your faith into that too. You grew up in a Christian house.

Ben Chelf: Yeah, well, you asked about baseball. I guess we’ll start there. That’s the most important thing, I guess. I grew up in Indiana. How did I get into baseball? It started in first grade when I’d come home. There were really only four channels on the TV at home, the major networks and WGAN, which is Chicago’s local station, where they played the Cubs games and White Sox games and whatnot. And so I come home from school. And because Wrigley Field didn’t have lights at the time, all the games are played during the day, come home from school, flip on the TV, there would be WGAN and the Cubs would be playing. And I got used to watching the Cubs after school every day. And in fact, they just happened to be on a home stretch.

And so there were a number of days in a row where was true. And then I remember the first day I come home and I flipped on the TV after school and the Cubs were playing and I was really distraught. And I asked my dad, like, where’s the Cubs game? And that’s when he taught me about baseball schedules and the fact that they travel around. And that’s kind of how I got into baseball from a very young age. My mom and dad met in seminary. And so that gives you a bit of window into the church environment at home. Tons of church in home, Sunday morning, Sunday night, Wednesday night, the whole nine yards. But like a lot of people, my own faith had ebbs and flows throughout, you know, definitely grew up in the church, learned a ton about God and a ton about Jesus. But when I went to college. Faith kind of took a backseat, didn’t rediscover it until graduate school. And then kind of from there, my faith matured as I became an adult, kind of interweaving the life stuff. I did come out to California for college. I like to joke that I’m a Silicon Valley cliche in every way, except for that I have faith in God. You know, I went to Stanford, I dropped out of Stanford, I started a software company. I started another company. I became a venture capitalist. I mean, I don’t know how you draw it up any differently as cliche as it comes out here, but yeah. So that’s a little bit of the personal track in the faith track.

Henry Kaestner: So tell us about that software company. You know, we also have a sister podcast for those of you don’t know, called the Faith Driven Entrepreneur talk to us about that software company dropping out of Stanford. It must have been a pretty good opportunity.

Ben Chelf: Yeah. So I was working on some new technology in the research lab there that would analyze software, looking for problems, quality problems, security problems and really, really tough stuff to find stuff that’s difficult to find in Cuba and whatnot. So oftentimes problems that would manifest themselves out in the field. And we started getting a lot of inbound requests from folks who wanted to use this technology. So we smelled the market opportunity and we decided to start a company based on that. And we productize that technology. We started selling it in the market. We grew that business to about three, four hundred fifty people before it was acquired in twenty fourteen.

Luke Roush: How many partners did you have when you got started?

Ben Chelf: And yeah, there were four of us in graduate school together and we kind of all jumped out of school over that first year to start the thing full time. And then of course our professor was involved. So we had technically five co-founders. It was a really robust group of co-founders which allowed us to really grow the business. In a cash flow positive way, actually, before even raising funds, so we bootstrapped the thing for five years before doing just a single round of financing anything, here’s the big pithy kind of cliche type of open ended question.

Henry Kaestner: Anything about God that you learned through your process of running a company and growing a company, exiting a company?

Ben Chelf: That’s just such a big question. It’s hard to come up with an answer to that question. But Faith Driven Entrepreneur.

Henry Kaestner: So let’s start with us. So you’ve got a bunch of partners. Yeah. And you’re out there. Any of them share your faith?

Ben Chelf: Yes. One of them in my first company did.

Henry Kaestner: Was prayer a part of what you did? Was your faith ever brought in a question? Did you sense that there’s a holy ambition of what you’re doing?

Ben Chelf: Yeah. So I’ll kind of describe a company one and company to the second company was in the entertainment industry and we were developing software and other tools for doing story development in a new way. And I would say with the first company, I was still in that mindset of sacred secular divide and plugged in a church service in junior high in ministry. Did my Bible study all the things that you would do? But at work there wasn’t much talk about that. And I felt like we should do a good job at work. I should build this business. Your question about what did you learn about God? It was so clear that God was just opening doors and providing opportunities. But what was interesting is as I got more wrapped up in that business and my identity was as Silicon Valley co-founder or founder or tech startup founder, from a character standpoint, I started putting God making God smaller and smaller. And it was more about me and me and my company and us and much to my own detriment, and took years to kind of realize that because it started small and then it kind of creeps up and creeps up. So while I think the work we were doing was good work for other people who were writing software, and there was certainly a care for those people and wanting to make their lives better that I could see God in and God blessing, I allowed my they didn’t get too wrapped up in that one. And so coming out of that experience and then thinking about what to do next and how to do it, I did kind of have a real come to Jesus moment for lack of a better way of putting it and saying, all right, Lord, I want to do better this next time or from an ongoing standpoint. And so how can I kind of keep the priorities straight? And so we built the second business a little bit different way and kind of made sure that from an identity standpoint, I didn’t have everything in me kind of wrapped up in that. And I tried to keep my identity where it was supposed to be.

Luke Roush: And how much gap between kind of company one and company two to one or more of your co-founders come over to Company two with you, or was that just a totally Denovo experience?

Ben Chelf: Yeah, totally start over from scratch and back, basically, because it was in the entertainment industry, I kind of left Silicon Valley. We built the business here, but it was much more of a Hollywood type of thing than it was a Silicon Valley type of thing. So we had different network of people, different co-founders. And it was about nine months from when I left, when I started having the inkling for the next company. And then another six months after that, when I kind of had the cool founding team and we got incorporated and off to the races.

Henry Kaestner: So when you talk about the second company being a little less about the secular spiritual divide and a little bit less like a smaller guy, just for fun, that a little bit. Tell me a little bit more about what that look like, and especially now as you work with Faith driven entrepreneurs through your work at Praxis, what does it look like to be more intentional about weaving your faith in.

Ben Chelf: Yeah, so I talk to some folks at church about a year ago on the intersection of faith and work or the integrating your faith into your work as I think is a common phrase. And the point I made there and this is you know, this is a bit of a bold statement, but bear with me. I said, look, if you’re trying to integrate your faith into your work, you’ve probably already missed it because it is not about this puzzle that you’re trying to, like, put the pieces together. It’s rather your faith should be so foundational to who you are and what you are and what you’re trying to do, that pretty much everything should flow from that. And that’s obviously an aspiration that Jesus did perfectly and we will never do perfectly. But I think that when we try to just start manipulating things or orchestrating is such a OK, I’m going to pray at this hour, during this day at work, because that’s how I’m integrating my faith into my work. I think we’ve we’ve kind of missed it.

And I’m learning these things through the years as well. I always say when I first started getting really intentional about integrating faith and work, it was a little bit more of that. It was like the Ben-Chelf-integration show as opposed to the Lord fueling everything that I do and giving me the energy and me being rooted in that and just letting the work be the work. And so I think one of my favorite verses is first. Thessalonians, five 17, pray without ceasing. I think it’s just an incredible concise call to the kind of relationships we’re supposed to have with the Lord, and that’s obviously not to me. We’re just on our knees talking to God 24/7, but rather the spirit of that continual communion that he is always present in every thought and everything we say and everything we do.

Luke Roush: So when you now as an investor at Omentum, when you work with portfolio companies, how do you counsel? What I hear you saying is that it’s not so much prescriptive sort of here is this tactic or that tactic, but it’s more descriptive of kind of where the heart posture and posture kind of indwelling of the Holy Spirit in somebody’s life. How do you counsel one of your business leaders in a direction that isn’t sort of some kind of a forced integration or both on spiritual integration, but actually kind of dwelling? How do you counsel them?

Ben Chelf: Yeah, good question. One of the things that I notice is that so much of the entrepreneurial journey, I mean, is the life journey is kind of about self-discovery. Entrepreneurs are constantly learning about their businesses, about market share, but about themselves in the process. And, you know, one of our founders, Christian Guy, was exposed to Praxis, became a Praxis fellow. And what it did is he got to see other Christians working out their faith in their businesses and their lives. And he kind of came back with this new excitement about faith that he hadn’t had previously and just could see how, you know, there could be a more holistic view of faith as it pertains to life and work and whatnot. And I simply told him, pay attention to that, pay attention to what you see in others and what you see, like in the energy that you have. You know, this brings to you to be considering, you know, the way or your faith can play out. And so I think a lot of it, in terms of counseling, to answer your question more directly, is pay attention to the work that God is doing in you and work on that more than anything else.

Henry Kaestner: So that’s some great counsel, particularly for those listeners that are angel investors working with entrepreneurs. I want to shift gears just a little bit and focus on a faith driven investor ministry a bit. And I want to turn back the clock to the beginning of faith driven investor. And there’s this working guy that maybe twenty five or thirty of us we’re all working on together, which is the sense of, well, you know, there’s probably a community out there of Christ followers that are in the investment world and venture capital and private equity. And what’s it look like? We come together to encourage each other to share best practices. And if we can do that, what’s a mission and a vision? What are the problems we’re trying to solve? Where are the things that we’re for? And in that, one of our hypotheses was that there wasn’t a lot of selection that at times we described the movement like walking into a Russian grocery store in the 1980s, and it’s not really a lot of product on the shelves. And what does it look like to get out there and to encourage the formation of other funds that are in real estate and private equity and public equity, domestic and overseas? And actually, interestingly, over the course of last 18 to 24 months, we found dozens and dozens of funds, some that already existed, a whole bunch that are new, always spiritual integration. But the problem that we really saw was that there wasn’t a lot of selection on the shelves. And I’ll never forget you looking at that and saying, nope, that’s not the problem. That’s not the problem. What do you mean it’s not the problem? You know, the people want to be intentional about how they store their capital and they want to be able to find funds that they’re going to be able to see some sort of chaplaincy or some sort of faith driven employee resource group kind of work into the fabric like, no, that’s not it. The formation, the foundation of the movement needs to be about something else. What was that something else?

Ben Chelf: It’s about the heart posture of the investor. It is about recognizing that God is constantly working on us, teaching us things, sanctifying us to use the big term.

And honestly, that’s all that’s required, paying attention to the way that the Lord is directing, being really intentional about looking for what God wants to teach you in any given moment, the way he wants to apply the gifts and talents and resources that he’s given to you, all the product on the shelf, all the different options. Look, there are tons and tons of ways, both, quote unquote, faith driven and not to deploy capital. And God can use all of it and God does use all of it.

And so I think if we just had Christians who are just 100 percent sold out to all right, Lord, I want my balance sheet to look exactly like you want it to look. I want my pencil to look exactly like you want it to look. I want my cash flow to look exactly like you want it to look. And I’m willing to sacrifice I’m willing to lay it all out there for you to teach me things and. Reallocate things according to what you need to teach me in any given moment, whether that be very safe positions like cash or more speculative things or more impact things, you know, he can lead us. And I think to the Lord, these are just the tools he uses to grow us closer to him and to love us, because that’s the bottom line. It’s about that relationship with him, his love for us and our response and love to him.

Luke Roush: Maybe share just a little bit about from your personal story. I mean, I think one thing that you and I have talked about previously is a loan that you made to a ministry in San Francisco, just kind of responding to the holy Crompton’s call, Holy Spirit’s prompting on your life, maybe shared just for a little bit on that.

Ben Chelf: Yeah, yeah. I want to keep the details vague enough for public distribution. Sure, sure. Sure.

But look, they’re going to be times where you take a look at a circumstance and there’s a clear need. And in this case, you know, it was an organization who, due to the circumstance, there was a threat to their real estate situation. Right. And they were renting before. And suddenly that was not going to be an option. They were going to get evicted unless they were able to purchase the property. And these things happened in this particular case, it happened very quickly because there was a family inheritance involved and there was another buyer lined up and so on.

And this was one of those cases where, you know, if you looked at it on paper and we talked to our quote unquote financial advisors, we talked to our financial advisors about it, and they said, now this is this is a little bit beyond the pale of what would be responsible just in terms of the size of the loan relative to our balance sheet. And but, you know, again, using the gifts that God had given me, I felt like I could do at least a cursory analysis of the business to determine if it was a reasonable loan. I’m not a banker. I don’t know how to underwrite loans technically. But, you know, I could do a little bit of math and do my own guess as to is this a fundable thing in the medium term if they had more time.

And so I sat down with the people of the organization and I looked at their books and I did the best I could. And my wife and I, we prayed about it and we just felt like God said, hey, you can help here, so help. And we structured a deal that, again, it was it was extra risk. Right. It was a risk that we didn’t need to take from a purely portfolio management standpoint. But we could help. And, you know, in this case, it was a happy ending. Right? We made them the kind of bridge loan they bought the building within. I think it was three or four months. They had a bank do a real mortgage. And so we were paid back and it was then we could just use that capital for something else. But yeah, I think as an example of just being open to things that go a little bit beyond the norms in terms of asset allocation. And honestly, we had to be prepared for it to end badly where either that capital got locked up or we ended up having to foreclose. I mean, there was all sorts of ways it could have gone wrong, but maybe a little bit on that, which is, I think in my own observations, is we can play things pretty safe where we can isolate ourselves from the mess.

That’s one temptation that wealth can afford, is ability to isolate ourselves and not take risk and not get in the messy details of relationship and life. And the Lord just wants us to be in community. He wants us to love and serve other people. And guess what? That’s messy. I guess there’s there’s risk in that. And so if you use your wealth to eliminate all risk, chances are you might not be all the way putting yourself into these relationships and a sacrificial mindset.

Luke Roush: Yes. What you’re speaking to just in that example, but also in what you were sharing earlier, is this idea of the entwining. The Holy Spirit in the context of business oftentimes needs to be unscripted. You know, we sometimes have a bunch of debate within our partnership and with others externally that are like, hey, you know, what are the programmatic elements that every one of your portfolio companies does to manifest scripture in the context of business operations? And we wrestle with that internally. We get pushed on it in some cases appropriately, externally, to understand what the KPIs are across the portfolio. But how do you think through just on the one hand, when it’s unscripted, it can feel mushy, it can feel kind of situational, can feel even like convenience. That’s really convenient, that it’s different for every company. But maybe just speak to how you’ve navigated that an element of.

Ben Chelf: Yeah, that’s a really hard one, and I’m lucky enough, the my partner is that element and we share the same faith. And so there’s a a trust element to each of our own discernment with respect to that, where our goal is to always use the intellectual capabilities, the rigor, the data, all the stuff that God has given us to make decisions, to use all of that and kind of intention with that sometimes is the kind of prompting of the Holy Spirit, the just like what is our gut telling us how we should operate from a faith perspective, we’ve seen it work a couple of ways where we’ll make an investment that we think has certain upside from a data standpoint. But it might be, say, 70 percent of what we would normally like to see. Right. But then there’s a strong spiritual component to it. Or we might make a decision to, in some sense, be a really good actor in an investing scenario and follow on rounds happen. And that’s not necessarily the best move financially, but it is the right thing to do. And what’s been interesting, and I’ve been at this with elements and for just over five years now is almost without fail when we feel like we’re quote on quote sacrificing or when we feel like we’re maybe conceding something, it turns out we’re actually not.

It turns out that ended up being the more financially savvy thing to do or the better upside thing to do. And I don’t know if that’s God blessing the decision or, you know, a lot of times just these ideas of love. Your neighbor work out to be really good business practices to.

Henry Kaestner: So, Ben, you’ve been an entrepreneur, you’re an investor, you’ve been involved with Praxis. You have an opportunity being where you live to just kind of reflect on what’s going on in the world. And because you’ve been really good at challenging us, as we have looked to with others, grow the movement. What are some of your reflections about what is broken and what might need to be redeemed about the investment, space and world? What would you like to see happen over the next five or 10 years? As you say, this is a healthier ecosystem, but maybe there’s too much in that because it maybe it’s the fact that maybe the ecosystem in the way that investors work with entrepreneurs isn’t broken or that it’s not healthy now. So maybe you think it is. But just what are your reflections on where you’d like to see the industry go and how people think about investing? Yeah. Is it broken? Is it not broken? What do you think?

Ben Chelf: There are a lot of broken things, that’s for sure. I think, honestly, one of the biggest ways that it’s broken is both investors and entrepreneurs are not brutally honest with themselves. I think having been an entrepreneur a couple of times, there’s a certain amount of optimism that you have to have. There’s this like almost blindness to reality, you have to say. Right. And that’s fine and good. Right.

That’s that’s why stuff gets started. Otherwise, nothing would ever get started. That being said, I think there are a lot of companies that just kind of meander along for and should just be cut off, should be done.

But for lack of on the part of both entrepreneur and investor, just being really honest about the opportunity and not being afraid of saying, hey, we tried, we could swing and we missed. They’re going to be other at bats. But in this one we took a swing and we missed. I think that’s one of the big things that’s broken. I think a lot of times in the faith driven world especially, we can be a little bit conflict avoidant. We can be afraid of that conversation because it might be seen as not the Christian thing to do, to just cut something off, especially if there’s a maybe an investor has a perspective. That’s right. That the entrepreneur doesn’t and says that or the other way around or the entrepreneur or the investors really want the entrepreneur to keep trying and giving, potentially providing more funding. And the entrepreneur knows it’s like, well, I guess I could, but it’s really just not going to work. I think that’s the biggest thing that I would love to see. Just more conversation about more honest rigor on both sides to try to address more specifically to the investor. I think the brutal honesty for investors is to just truly recognize where they have expertize to deploy capital and where they don’t. And that heart is great. But I did some angel investing before becoming a C, and there’s a big difference between investing as a hobby and investing as a profession. And, hey, look, it’s great to have hobbies and it can bust a lot of people with your hobbies. And we’ll talk about snowboarding in a minute. But yeah, I think to really be honest, OK, I invest because it’s a hobby. I have these objectives. And to recognize that there can be some danger as someone who deploys capital as a hobby for the companies you’re investing in. So those are some of the things that come to mind.

Luke Roush: So maybe just a couple of like with our name and. Names, specific examples where you feel like you’ve done a good job to speak the truth in love, right, because there’s a relationship, particularly if there’s a lot of faith between an investor and a company. Right. There’s a desire to kind of love them. Well, even when you’re telling them something that they don’t want to hear, any specific examples from your own experience, maybe just encourages with.

Ben Chelf: Yeah, look, we ended up kind of doing an asset sale of my second company, which from a financial standpoint wasn’t a home run that everybody was hoping for. And I think that’s an example where not to toot my own horn, but I think we did that well. We tried a number of different things, always in conversation with the investors. When my co-founder and I when we decided to wrap it up, it was a mutual decision between the two of us. Obviously, the staff was very sad. It was a very hard couple of months to do all of that and to end it as well as we could end. And then in the conversations with the investors, you know, obviously we’ve been keeping them appraised of everything through the years. And, you know, one of the key angel investors, when I asked him about it as we were wrapping up, after I kind of told him and look, I think it’s time to call it, he said, Ben, you tried everything you said you were going to try. You worked really hard at this for years and it didn’t work. I’m satisfied. Like you lost money and this wasn’t a Christian guy. So I think that’s kind of what I’m talking about is just that critical eye towards things. And, yeah, it’s not easy to do that. It’s harder, but it seems like the right thing to do.

Henry Kaestner: And as we come to a close here, I do want to hit on just a couple other things. One is the concept of Sabbath. And so, yes, we talked about snowboarding. Talk to us about seasons of Sabbath. Talk to us about what it looks like for somebody to worship their work. And just reflections on work versus Sabbath.

Ben Chelf: Yeah, I’m pro Sabbath. I think you took an incredible Sabbath Sabbath that I wish I was getting somewhere along the way. Yeah. So when I left my first company, I knew that I needed a break and not just I take a couple of weeks in Hawaii and then you’re better.

And so there is a whole confluence of things with respect to my girlfriend now wife that led to actually just having this time where I could be away. But I decided to move to the mountains, so I moved up to Tahoe for a winter. I’d snowboard for exactly one weekend in my entire life before I did this, but I decided I’m going to actually learn to snowboard. I’m a serial hobbyist. I love picking up hobbies and learning new things.

And so that winter, I just decided I’m going to spend three or four months learning to snowboard. I thought that was the primary goal of that time. But in reality, the primary goal of that time was for me to really connect with God in a much deeper and wonderfully holistic way, which was kind of born about I’m going back to honesty, me being really honest with God and airing some things that I had been thinking about for years that I had never really voiced to him or others in terms of my own wrestling with faith and why things were the way they were.

And much of what we’re talking about today in terms of my perspective on investing and faith driven investing and why it’s a hard posture thing was born out of that time in the mountains, going to snowboard every day. And so it’s kind of funny how the Lord uses uses our own wiring, our own desires to kind of catch us in different ways and teach us different things. But yeah, so I spent I guess it was four months living up in the mountains. It was really sabbat I mean I didn’t work at all. I mean unless you count getting up and going to the mountain to snowboard and try to learn. My time was cut short by a couple of weeks when I dislocated my shoulder, taking a jump too high in the park, but otherwise it was an amazing time.

And so my own view on the Sabbath, and that’s a very long winded way of getting to that. But my own view of Sabbath is it is not one of balance. I think people will talk about balance like, OK, I want to have good balance in my life of work and rest. I don’t think that’s quite it.

I think there’s a certain intensity to seasons that require just being all in starting companies is so hard that the idea of, oh, I’m going to have two or three hours every day carved out to rest or I’m going to have a full day, a week carved out to rest. It just might not happen. I might regret saying that on a podcast, but I think looking at the balance of a month or a year or whatnot, and if you can’t identify the places where you stopped to rest, like the Lord stopped to rest after creating the universe, then something’s off. Right. And so I think for me, what that’s look like practically, it’s meant three kids. Everything is a little different now that I have a couple little kids. But pre kids, it was at least one ten day period every year where I had no outside communication, no Internet, nothing like that, completely unplugged for ten days. That was kind of the yearly rhythm for me. And from a daily rhythm standpoint, I have when the season affords. I’m a big fan of Friday night after work to Sunday afternoon after church, kind of that window being the key either unplugged time or you’re really trying to let your mind rest from other things. For me, a lot of it has to do with digital connectivity. If I’m on email or on my phone, that’s not restful. I think that’s another thing for Sabbath is you really have to figure out what is rest. A lot of people will flip on Netflix, myself included, or browse the Internet on your phone or you kind of have these rest ish things that aren’t actually rests.

So when you’re going to take the time to Sabbath, I’d say actually take it, even if it’s just going to be a few hours on a Saturday afternoon or Sunday afternoon. But yeah. So those are some thoughts.

Henry Kaestner: So I’m grateful for you. I’m grateful for what you have taught us and our listeners about our posture. It’s become really the anchor bedrock value is we talk about faith driven investing. If you’re a listener to this, it is about heart posture. Faith driven investing is not prescriptive, non presumptuous. There are all sorts of different things you can do across now, all asset classes, all different types of geographies to really have spiritual integration. And even a gospel proclamation is a part of the investments that you make. And yet it’s about our posture. It’s about getting down on your knees, as Ben did with Cam back after an exit and just saying, God, how would you have us use the resources you’ve given us for your glory? What does that look like? And you may come out of that experience. Out of that exercise. Out of that time with God and feel that you are absolutely called to invest in solar farms in the Nevada desert, and that is equally valid, of course, then somebody who wants to invest in entrepreneurs in Africa or Eastern Europe or whatever, fill in the blanks. Ultimately, it’s about an opportunity to participate in the work that God is doing the world and commune with him. And so then you early on were very helpful to get us grounded in that and speak in the movement. So thank you. One of the things the thing rather, that we like to do is we close out every episode is to ask our guests what they’re hearing from God in his word recently. How do you feel that God is speaking to you now? Maybe it’s something this morning, though. It truly doesn’t need to be. It could be over, of course, last week, over the course of last month. But what do you hear God speaking to you now?

Ben Chelf: Yeah, it’s always such a good question. I’m working on kind of a new experience for Bible reading and leave it at that. It’s still kind of under wraps and in development, but I’ve been tinkering a lot. So my desk is full of wires and gadgets and all that stuff about reading scripture. Yeah, well, you can’t tell us about it. Yeah.

Among other things, maybe in like six months when I get a kick started going, I’ll tell you about it or we’re going to look at this seriously.

Yeah, exactly.

So I’m in full on tinkering mode right now, which is fun. And again, like I said, I always have a hobby. I always have something I’m working on inside and I’m using some twenty three is kind of the text that I’m testing with a lot. So I’ve been looking at Psalm 23 every day the last couple of weeks, and in verse three there is a phrase that’s just says he restores my soul and that phrase is just kind of really resonated with me.

That is the promise. If you put your faith in God, that makes all the anxiety and the things we worry about and the world. And what a year, right? This last year with everything that’s gone on. But he restores my soul and it speaks to the brokenness. Right. We only restore things that need to be restored, that have some sort of brokenness. It speaks to the simplicity of it. And so, yeah, I’ve just been relishing those four words this week. He restores my soul.

Henry Kaestner: That is awesome. That’s very good. That’s a very good word. Look, how come we don’t have been on every week?

Ben Chelf: I think we should. I think we should, actually.

Luke Roush: So, Ben, thank you so much for taking time. Grateful for your insight. I always find your perspectives to be helpful and informed and reflective of just a lot of contemplation on your end and listening to what God is telling you. So grateful for your friendship and grateful for your insights. I think our listeners really enjoy it. Thanks, Ben.

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Welcome to Opportunity Zones 101. Today, we’re talking with Jeff Shafer, Co-Founder and CEO of CommonGood Capital and Jerome Garciano on Opportunity Zones—what they are, why they matter, and how Faith Driven Investors can approach these unique ventures as a way to integrate their faith and investing. 

If you’re familiar with Opportunity Zones, or if this is literally the first time you’ve ever heard that phrase, today’s episode is a chance to get acquainted with something that can provide value to you, the investor, and to local cities across the U.S.

Episode Transcript

Some listeners have found it helpful to have a transcription of the podcast. Transcription is done by an AI software. While technology is an incredible tool to automate this process, there will be misspellings and typos that might accompany it. Please keep that in mind as you work through it. The FDI movement is a volunteer-led movement, and if you’d like to contribute by editing future transcripts, please email us.

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Henry Kaestner: Welcome back to the faith driven investor podcast. This is a special edition. I guess I said that for other guests, and yet that’s true every time and that we’re taking some new ground and looking at an area of investing and putting a faith driven investment lens on it. And so today we’re going to learn and together we’re gonna learn because I don’t know a lot about opportunity zones and investing, but we’re going to learn from some experts and some guys with some really interesting backgrounds have gotten to know a bit over time that have brought them into the opportunity zone space. And so we’ve got two guests. Jerome Garciano and then we also have Jeff Shafer on the line with us. Guys, thank you very much for being on the program.

Jeff Shafer: It’s great to be here.

Jerome Garciano: Yeah. Thanks for having us.

Want to start with each your backgrounds. And Jeff, we’ll start with you. Tell us a bit about how you’ve come to this space maybe weave in just a bit of your faith journey, but then most specifically, common good capital and in opportunity zones. And of course, Jerome, we’re going to do the same with you.

Jeff Shafer: Yeah, great. Well, let me take you back just a little bit and I’ll try to get through this quickly, because this is a story that could go on for a long time. But as you mentioned, I was an executive at a company called CNL, which we were leading alternative investment manager. Today, that company’s been around give or take, you know, 45, 46 years. I’m not sure. I left roughly five, six years ago. But the quick story was I was an executive there. I was a workaholic. And when I was 40s, this is almost seven years ago now. God literally and figuratively brought me to my knees through a number of circumstances. But really, it was a combination of back surgery. And so it’s a great analogy of probably where I was at. I was trying to carry too much of the weight on my own and was brought to my knees. Out of that time period, though, my wife and I started to ask the question of what does it mean to be a steward of our time, town and treasuries? And I’m sure we’ve all asked questions at different times. This one just felt like a much deeper questioning across every aspect of our life. And in that time period, a friend of mine actually came to me and from an investment opportunities here in the Orlando area, they were doing some investing in affordable housing. And I remember I was recovering from back surgery on my couch and was watching the little DVD of the video. And yes, there the investment thesis, which was very compelling. In fact, the returns were extremely compelling. But really what hit me was what that did to the residents and the communities, what that capital did without intentionality did to those communities. It lifted them up. And the residents talked about and I can still hear it in my head today. They brought me dignity. I’m excited to have people come over to my house. And so that’s what a light bulb went on for me. I’d been in traditional finance at the time for about 20 years. And we really then started to look at this whole idea of how do you align your values? How do you on your faith with your capital? Now, typically in the faith based world, at least my growing up. That’s a question I’d ask. But it always been on the giving side. And I never had really thought about it. I’m an investor capital side. So that’s really what spawned me. And then also my brother to start Amen good capital is. How do you essentially take the traditional financial world? How do you marry together with our values and our faith? And how do you make an impact? And not only in the lives of the individuals who this capital is going towards or investing in. And that’s typically what most people talk about. The part that intrigues me, even maybe not more, but equally so, is when you invest this way. What it does to the heart and psyche of the investor. So we start a common good capital with that very vision that there is these massive trends and movements that are happening. And so we essentially source due diligence. Different asset managers who do impact investing. And then we create a platform and we bring that to financial advisors so that their investors are able to access different deals. In that vein is how we came into opportunity zones well before they were out. And well before they were popular. It wasn’t that we were ahead of the curve because we had some great insight. It was the opportunity zone legislation, which I’m sure will touch on, was created for this very thing to go into now and make competitive returns, but equally important, to lift up, increase human flourishing among the community of individuals in these opportunity zones.

Henry Kaestner: OK. Thank you. Great overview. Jerome, I want to do the same with you, especially because you not only are interested in opportunity zones, but you’re just more generally interested in Christ centered community development as well. So bring us through your background, how you got here as well. And then what we’ll do is I’ll ask you each to define what are opportunity zones and help us to understand what in the world we’re talking about.

Jerome Garciano: Sure. Thank you, Henry and Justin. So, you know, I was born in Southern California. My parents are immigrants from the Philippines. It wasn’t really, you know, until college when thinking about. Career and kind of purpose, and you know how the gospel really impacts my life is where I think I you know, my faith really kind of grew. And I think a critical component of it is by calling and vocation. And I think, you know, a lot of people interested in FDI talk about all the time reflect upon that all the time.

But I feel like where God calls us to is a place where we are flourishing in the skills and the gifts that he’s given to each of us individually and as organizations and a calling to serve others and a reflection of thankfulness for the gospel and for what God has done for us and to pour that thankfulness into concrete action. So I think for me it’s a lot about creativity and bringing together skills and experiences that might not necessarily be considered critical ministries. So, for example, I am an attorney in Boston. My firm is called Robinson and Cole. I started off my legal career in doing a lot of tax work. And currently I’m doing a lot of more finance and real estate and have done almost 20 years worth of transactional work in affordable housing. And so I’ve done a lot of work in tax credits and you markets, tax credits, community development efforts generally for for profit profit making companies and developers and investors. So my whole journey has been, you know, how can those opportunities and skills and experiences be leverage for the kingdom, be leveraged for the care of the most needy? And I’ve been very blessed in terms of I mean, I do affordable housing every day. You know, that’s that’s what I do every day and have worked for a really developer that focus on that. We’re for investors that are very sophisticated and creative in terms of, you know, trying to use capital for that type of purpose. As you mentioned, I’m also involved in a group called Christian Community Development Association. So it’s a faith based network of churches and nonprofit ministries that are really trying to, you know, seek God and his kingdom in the city among the least of these among those who Jesus calls us to and very inspiring group. And I’m very privileged to be on the board of that. And so it’s talking with groups like them about programs like tax credits and opportunity zones and different types of impact investing and social enterprise to really be creative and to engage people of faith churches, you know, in all these aspects that might not necessarily come to mind as ministry, but really, in fact, I think could be more creative tools in that space.

Henry Kaestner: OK, good. Thank you. So we’ll stay with you. What is the definition of an opportunity zone, as you understand it, and help us help a lay person to get that?

Jerome Garciano: All right. So first of all, it’s a program it’s a federal program that was enacted in 2017. It’s part of the tax reform legislation. So a zone is obviously a geographic region and it’s broken by census tracts. So if you’re talking about opportunity zone, so that’s a place and it’s designated as a U.S. Census tract and that there are certain definitions around poverty and other types of demographic information about that census tract. There was also a period when the program began where certain governors and other leaders can designate which low income census tracts could be opportunity zones. And then after a few months, the Treasury actually officially selected those zones. So the zone is a place. And in order to benefit from this program, an investor has to make an investment through a qualified opportunity zone fund into that opportunity zone. So those are the basics.

Henry Kaestner: Jeff, build on that a bit for us. And also maybe give us some illustrations of some of the opportunity zones that you’ve worked in.

Jeff Shafer: Yeah. Let me just take one quick step back. I think it’s important, in addition to information, you’ve just heard the rationale for why opportunity zones were created. I think it’s helpful here that a white paper that was written in 2015 by a group called EIG, the Economic Innovation Group, and they point out three things. One is they analyzed the recovery of communities after the global financial crisis. And what they found is there’s huge dispersion in the recovery, economic coercion. Secondly, they recognize was with the markets going up. At the time and there’s been a huge stockpile of capital gains. And then the third thing they looked at is they said, hey, there, that other programs and fact, some of the programs are just what we just heard. They’re tried to help these communities out. And some had been successful, some had not been successful, but they essentially kind of put that into a blender, so to speak, and out popped this legislation. So I think it’s important to note that the whole idea was to create human flourishing and then to attract capital to those areas. They created some tax incentives for investors really accessing private capital. To me, the starting point for as you look at opportunity sounds. I think it’s important that if you want to be congruent with the rationale for why these were created, you could simply attack it just as a tax benefit, which I wouldn’t personally. I don’t give a wrong with that. But that’s not how I view it. I look at it go. How do you create human flourishing inside of these zones? And how do you also get a tax benefit from it? And by doing that, you’re creating a win win. And actually, I think there are reasons besides, you know, moral reasons or even ethical reasons why you’d want to do this. I think as soon as you start investing in upcoming zones that maybe don’t have a meaningful impact to the communities, you set yourself up for scrutiny. And you saw that early on in the program. But practically, just give some examples. And I didn’t realize we both were going to have expertize in affordable housing. That is a natural asset class that fits with inside these opportunity zones. So we personally are involved with a group that does affordable housing all across the United States. I think one thing important to note is affordable housing is just a huge need anyways. And then a lot of these developers have been developing in these opportunity zones already. They just haven’t had this extra benefit. And so I think one of the things that we looked at early on is we want to find a model that could capitalize on this capital gain structure or relief. And I can explain that here in a second. But it wasn’t just a new business model that a company goes into. And so the natural spot for us is affordable housing. It’s just there’s a fundamental need that we get in some of the stats and reasons why. I will tell you, the group that we work with has done one here in Orlando in my backyard, and I’ve actually done that with the major bank. One other thing I should note is as an investor, you need to view this as an investment and then you need to look at the tax benefit kind of as gravy. And then obviously you need to think about the impact that you want to have. There’s really two things to look at from a tax consideration standpoint. This program allows for an investor who has a capital gains for simplicity. I’m going to say it’s pretty liberal in what type of capital gain it can be. There are some nuances, but whether it’s a stock, whether it’s the sale of a house, whether it’s a business. So there are taxes. If you’d sold that asset that you don’t pay taxes, that the government is basically said if you take that capital, that whole capital gains, then have all that. But you take that capital gains and you roll it into a fund that is investing into these geographic areas, then you don’t have to pay capital gains tax on that that you normally would have until the end of 2026 and you get a step up in basis in this case. Today, it’s about a 10 percent step up in basis. So you get to defer it. And presumably of tax rates stay the same. You actually will pay less as well in 2026. That’s one component. And the second component is the money that you invest inside of the qualified opportunity zone to fund those assets. If they’re held for 10 years, which you’d want all the Putin years when those assets are sold. Then you do not pay capital gains on those assets as well. And so to extent, we want to we can go into examples of that and you’ll hear, you know, how much kind of return that should add to the investments. It is real dollars in your pocket when you do the math, assuming you buy a good investment, assuming you buy good investment.

Henry Kaestner: So talk to us about what’s the most good investments are. Jerome, illustrate an example and maybe will stay in affordable housing. Something you know of. Talk to us about specific zone specific investment and maybe one that was done in a fund, maybe one that was just done outside of one. But what were the mechanics of it?

Jerome Garciano: Yeah, so our fund that I’m a part of has been involved in a couple of transactions. They were last year. One was affordable housing in New York. So in that instance, there was an investor who had a capital gain. It was a financial institution, and they worked with what they call net farm housing interest, syndicator of essentially of a broker or intermediary that matches up investors with projects, you know. And so in that case, you know, there was the typical tax benefits for an investor that would be driven by the credits. Obviously, they would still need to underwrite the project in terms of the rental income would qualify both for the housing program as well as an operating expense needs and debt service for the project. So, you know, it’s typical underwriting the tax benefit, again, was calculated really at the fund level. So it was a part of the benefit, but it was separate over and above kind of what the real estate economics were about. So certainly that was one example. The other example that we had wasn’t actually an operating business to keep in mind. Opportunities on is not just about real estate, it’s actually about operating businesses as well. And so so that was an M&A transaction. I wasn’t. Directly involved with, but my colleagues were. And so they were working with, you know, a private equity firm that acquired some assets and. And those happened to be an asylum so that they were able to get work with kind of underwriting and evaluation of the business. And then, you know, kind of a key component of that was there is a requirement that assets need to be either new assets being purchased by a qualified opportunities on business or that those assets need to be substantially improved. So, you know, there are definitely some structuring and some programmatic things that need to be laid out and everybody needs to be on the same page on that. So that was an exercise of making sure that there was in this acquisition of a business, that new assets would be placed in service, there would be substantial improvement on the property that that business had. So those are a couple examples.

Henry Kaestner: Jerome I want to stay with you. Both of you are very motivated by your faith. I’ve come to know and appreciate and love that, both of you. But, Jerome, you come out of this from the CCDA perspective, the Christian community development. What is the particular faith lens on this? Presumably at some level, of course, we’re investing in human flourishing and we’re investing in some really challenged neighborhoods. But is there a way to bring the church in? Is there a way to bring word ministry in? Is that too contrived? Talk us through that.

Jerome Garciano: I mean, I think you come at it from a couple different angles. I mean, certainly because, you know, the ease of kind of connection between real estate in place, making an opportunity zone. I mean, I think churches are already good at that. They’re good at kind of creating places and experiences that, you know, point to God and they can point to, you know, our faith. But I think it does take some creativity. I think it takes some new almost like, you know, because this concept of new wineskin for a new time and in kind of a new place of ministry and serving others, you know, for such a time as this as, you know, what we’re experiencing now.

So I feel like investing in people and relationships are at the core of everything. And one of the core tenets of the Christian community development ethos is really being with the poor and being in solidarity with kind of the struggles and the challenges and often the injustices that face those on the margins. And so I think that expresses, you know, theologically this idea of, you know, guy coming down to man and really experiencing kind of what the challenges are. And I think that reflects on even those of us who aren’t, you know, in that economic situation, like what that means and how that reminds us of kind of our need for God and hopefully thankfulness for kind of what he did for us on the cross. And so I think very deep past theological. I mean, I think there’s also, you know, very strong kind of biblical references to what it means to be just and to be equitable and to give everybody an equal opportunity. And so I think that discussion is raised in the context of kind of our Christian community development groups that, you know, kind of focus on that. I think there’s also a sense tragedy of we’re not just meeting physical needs, we’re not just meeting kind of financial needs, but we’re bringing in the gospel and what that means and how God has made us whole through Christ life, death and resurrection. And so, you know, a lot of it is also, you know, people aren’t going to hear the message until maybe you show them that you’re more interested or you’re equally as interested in kind of their practical situations and challenges that they’re facing. So I think there are a few different ways to think about it.

Henry Kaestner: Jeff, would you pile on to that?

Jeff Shafer: Yeah. So let me give you some tangible examples of where I have seen integration. It’s not necessarily an opportunity zone structure, although these assets are in opportunity zones. So we’ve come across managers in specifically affordable housing who they have a nonprofit organization that sets out the properties. And there is so management company that manage the day to day operations of it. But they almost are a dorm parent, so to speak, for the communities. And, you know, part of their ministry is fixing flat tires and being a counselor there, you know, 2:00 in the morning. And when somebody gets sick in English as a second language and then obviously embedded in that is their faith component. And so I’ve seen that model in several different ways. They other think that I’ve started to think about is from a biblical perspective. If you think about this emotional ministry, you know, are we called to be more. I don’t think it’s right or wrong. Are you called to be more evangelistic in the way that you invest? And I think that would be obviously more directly kind of faith based, at least in my mind, than you have. Is it more of a discipleship model or are you cycling coming alongside of people of faith and continuing to build their faith or even the other type of ministry that, you know, through a faith perspective we talk about? Is it more of a mercy ministry where you’re doing it in the name of the Lord, but you’re feeding the poor or whatever it is? And so I think you can use those models as framework. When you look across different types of assets and their faith integration and, you know, we not only work on the real estate side, but we also do. Private credit and private equity, and there isn’t a cookie cutter, a way to integrate it, which is part of the excitement of it, because it’s yet to use your creativity and ingenuity in each scenario and figure out how to meet whatever need that you’re trying to meet. And obviously, spiritual is a huge part of it.

Henry Kaestner: I’m intrigued by that. I love the framework that you just gave. And I think that we all, as Christ followers, need to be thinking through the different models. And we should never be prescriptive. We should never be over the top. We should definitely not force a ministry impact in this. Something that doesn’t feel genuine isn’t done with gentleness and respect. And yet it sounds like these are different investment projects that are going on in different zones where there might be a partnership with either a parish church ministry. I think that’s Jeff, what you’re talking about, but then also potentially with the local church as well. We’ve done episodes in the past where we’ve talked about what it might look like for a local church to adopt multi-family real estate and get involved there. Drome, are you seeing people within the church that are leaders of denominations or individual churches that are seen? This is something that they can get alongside and partner with?

Jerome Garciano: Yeah, definitely. I mean, you know, even before kind of the shutdown and the things that we’ve gone through now, I mean, you know, underutilized church property. Right. I think it depends on the different type of church or denomination. But there are opportunities to use building assets, you know, in ways that are beyond have the traditional Sunday service. And I think there were a lot of creative thinking around, you know, how do we engage the community? How do we serve and meet the needs of a community through these facilities, whether it be something that’s related to something like a community center or something that’s related to, you know, working with the children and after school programs. And so, you know, multi-family and affordable housing is definitely on the forefront. You know, I know a lot of churches that are looking to incorporate on their actual church campus or property housing. And, you know, I think even more so in the future. And let’s see, you know, how this plays out. But I feel like there’ll be a lot of opportunities to kind of rethink and reimagine kind of how these assets are used. So, you know, one group in California, in major cities that have homeless crisis, they’re looking into do some tiny home development, like on church property, you know, and the idea would be to lease some of the land to the developer so that a local church can get a little bit of income and then they would provide these homes that would be able to be, you know, occupied by people who need the affordable housing. You know, there’s certainly other partnerships in terms of, you know, parking lots that have been sold and, you know, developed into housing tax rental projects. So, you know, depends on obviously the sophistication of a local church and kind of what the development team looks like and what their overall goals are. But there are plenty of examples and opportunities to partner in that way.

Henry Kaestner: Okay. I think I’m following I think a lot of our audience is following now about the origination 2017 of this opportunity zone legislation, some of the financial benefits to investors. I want to talk next about how to get involved. If you’re listening to this either as an investor or as a service provider, maybe we’ll start as an investor. We’ll start with you, Jeff. Some listeners podcasts. I might get us this great. I can love on the poor and these challenging neighborhoods and put my investment capital to work there with flourishing. Maybe there’s an opportunity partnering with the church, but definitely motivated by my faith to see a disadvantaged neighborhood get back on par. What do I do now? Are there funds that do this? Are there individual deals? Is there a marketplace? Is there a funder? What do I do?

Jeff Shafer: Yeah. Funny as you’re asking the question, I’m like, what do you do? So a couple of things. And let me start with this and Be very practical for you. I myself have invested in an opportunity zone fund as well. And I think these are three questions that every potential investor needs to ask themselves. And depending if you can answer. Yes. And I think it makes sense to continue the dialog. You know, where do you find opportunity zones? And then really, you’ve got to also think through, do I want to go into a fund? Do I want to do a single asset deal? Do you want somebody else to manage or do you want to manage it yourself? But here are the three questions that I think are foundational. And there’s more than that. But if I just was to give you three questions you need to ask is in this order. So you have a game. You go. Do I pay tax on this gain or do I take some mosquito and roll it into an opportunity zone on? The first question is, you know, what kind of return can you generate? I think you have to view this fundamentally as an investment, because if it doesn’t perform as an investment, then ultimately you’d be better off just paying your capital gains and going elsewhere. Now, obviously, you can try to find different assets to perform at different levels and a different level of risk. But I think you need to start from. This is fundamentally an investment. That’s number one. Number two is can you hold this for 10 years? The way the rules are written to maximize all the tax benefits, you need to hold it for 10 years. It doesn’t mean that they’re. Ways and there may be some reasons why you wouldn’t hold the 10, but the blanket statement, that’s pretty solid. If you can’t hold the investment for 10 years, then you shouldn’t consider it. And the last thing is, can you get comfortable with some incremental risk that needs to be followed so that you actually get the tax benefit that you can? And if you can answer yes to those three questions, then it probably makes sense to go. All right. I want to look at this. One of the things, too, that’s unique. If you’re familiar with the 10 30 one investment, some people compare these and their similarities and differences.

But one of things I want to point out is if I had a half a million dollar gain as an example, I do not have to roll my whole half a million dollars into an opportunity zone. And at ten, thirty one, you really do. And so then you need to figure out how much you’d want to put in there. The other things you want to consider is do you go into a fund that has multiple assets in it? Or do you try to find a one off deal? You can find both out there. Some Web sites that I would at least looked at would be a Web site called AIG dot org. Another one is Noboa Graddick. There really is no great centralized place. I mean, there are some typically you are going to talk to your advisor, attorney, local real estate developers. This whole marketplaces developing in. One of the big questions is, does it continue to develop long term? And I think part of that is dependent on the regulations. And if they continue this program, which is, you know, we’ll find out. I do think they’ll given the Koban 19 and what’s happened there clearly is a renewed interest in that why opportunity zones were created. So not to predict what the government’s going to do. But man two the statement said earlier, for such a time as this, this structure could be extremely powerful tool to help rebuild America at a time when we’re going to need it. The short answer is we can help you find opportunity zones and we can get some places where you can go to Henry Antin and you can check out some Web sites as well.

Henry Kaestner: Jerome, maybe supplement that. But I also want to focus on the service provider aspect of it. Say I’m a church Amen ministry, not for profit in an opportunity zone. I can think of creative uses. Maybe it’s unused property on a church, maybe it’s unused facilities within a church building. Where do I go to take next steps and learn more so that I can get actively involved? Or maybe it’s just I’m a church and I just want to partner and just love on people through some of these new investments are coming in. What do I do?

Jerome Garciano: Sure. I saw, you know, through the CCD network, there was a group of us that started the Jubilee Impact Fund. And so Jubilee Impact Fund is trying to use the Opportunity Zone program to gather faith driven investors, other types of denominational connected investors to opportunity zones, and also trying to bring in on the debt side groups what they’re calling the community development financial institutions. Essentially, you know, lenders and banks that are focused on lower income is providing capital. So we are trying to launch this and we’re trying to partner with local churches. And so we have, you know, dozens of organizations around the country doing ministry already. And, you know, typically inner city areas and we’re having a discussion with them is how can you, you know, look at the existing initiatives and projects, incorporate things like affordable housing and things like a business incubators that could, you know, provide venture capital and other technical assistance and support to Minority and Low-Income Entrepreneurs. How can you engage the neighborhood with, you know, other types of services that could be funded through opportunities on equity? So the niche that we’re trying to make is a connection between the kind of faith driven investors, the people of faith who would be interested in opportunity zones and these initiatives on the grounds where these churches are already serving. I mean, I think that’s thing. I think the churches are already serving in these neighborhoods that are designated opportunity zones. It’s really just trying to make the connection and create, you know, the fund structure and kind of a consistent approach to capitalizing these projects. And I agree with what’s been said before. I mean, it has to make financial sense. I have to pencil out. But the idea would be, how do we creatively do that while maintaining the ministry impact as well as having the positive benefit for the community? Because I think was alluded to earlier, this program is fairly open. I mean, there are not a lot of rules and regulations, which is, you know, in some sense a nice thing, a beautiful thing, a flexible thing. But in other cases, there are no restrictions in terms of challenges like gentrification or displacement of, you know, the existing populations of the zones which actually harm these neighborhoods. So. You know, given the very flexible nature of it, there is creativity. But I think we need to be intentional in terms of what types of products we invest in and how we do that and how we engage the community for true stakeholder engagement to be able to do a successful opportunities on investment.

Henry Kaestner: Fascinating. I’m intrigued by this. I’m grateful for both of you being on the program. If you’ve turned in before, you know, one of the things that we want to make sure that we close out every one of our episodes with is asking our guest what they’re hearing from God about in his word. And it doesn’t need to be necessarily this morning through your quiet time, but maybe sometime last week or sometime recently about some way that you feel that God is speaking to you through time in the Bible. Jeff, we’ll start with you and then Jerome, close out with you.

Jeff Shafer: Yeah, well, if we want to get really personal, what God is challenging me on this question of, and it’s funny, I wasn’t planning on talking about this, but I started to write just for myself. I wrote a question and the question was, can you trust God in the midst of human suffering? And I just wanted to know obviously have Russell before, but I really want to get this on paper for my own self. And really, what is the question ultimately key and personal senses? Do I trust God? Is God a good God in the midst of all this, in the midst of just human suffering?

And I tell you, I’ve got a senior and a junior in high school, and obviously my wife and I and we have been chatting about this very question the last two or three days. And really where I want to go is is intellectually I want to have an answer. But more importantly, I want to know that my heart’s in alignment. And then the key is, am I actually living in that truth? And I got to be honest, I think intellectually I’m probably there. I think my heart is there at times. But really, what’s been challenged in me is, is am I living that out intentionally? Day to day. So now to be where I’m at this very moment.

Henry Kaestner: I think a lot of us are at that very moment. And I love the fact that you lean into that with your kids. Jerome.

Jerome Garciano: Yeah. I guess for me, you know, this almost hopefulness about kind of what is to come, because I feel like God is doing something. And obviously in the midst of very difficult times, there is always hope and we need, as Christians need to carry that and amplify that and share that with those who might not have any right now. So this idea of kind of the new wineskin and you kind of creative models and theories and programs. I feel like people are ready to be creative. And that is very refreshing. And I feel like there is such an opportunity there. So, yeah, I mean, this idea of new wine scans and how can we prepare and be humble and be creative in a time when in a lot of ways were challenging kind of the existing way we do things right. And so how does that balance in terms of, you know, a lot of ways, morning, maybe what we’ve lost and maybe things that we’ve lost permanently in terms of kind of how we gather and kind of how we worship and how we express our faith, but then also embracing kind of a new. And so for me, that definitely still attention and praying about that every day. But I also am very hopeful because I think there’s things that our God will show us and we can just live into and just be thankful for drove.

Henry Kaestner: Thank you, Jeff. Thank you. This has been great. Really appreciate you taking the time. I hope that people will look into the Jubilee Impact Fund, common good capital websites, Jeff, that you shared and put up some show notes to this as well and just appreciate the opportunity to talk to y’all about what does it look like for Chrysler to be intentional about their investment deployment and how to be wise as a serpent, innocent as a dove, be able to take advantage of tax code opportunities, to be able to take advantage of of the passion that we all have to love our neighbor and to take care of the least of these. And lots of those are in our midst and some is opportunity zones that are not very far away from us. So thank you for taking the time and for your leadership in the movement.

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If you’re not already familiar with the name Casey Crawford, then you need to be. We had him on the FDE podcast a while ago and even then, we knew he’d be back. 

Today is that day. Casey is here to talk to us about Movement Charter Schools and the work they’re doing in Opportunity Zones. As always, Casey’s enthusiasm is contagious, so we’ll let you tune in and hear for yourself.

Episode Transcript

Some listeners have found it helpful to have a transcription of the podcast. Transcription is done by an AI software. While technology is an incredible tool to automate this process, there will be misspellings and typos that might accompany it. Please keep that in mind as you work through it. The FDI movement is a volunteer-led movement, and if you’d like to contribute by editing future transcripts, please email us.

Henry Kaestner: Welcome to the feature of an investor podcast, if you’re a fund manager, investor or financial adviser driven by your faith or want to be driven by your faith, then you’re in the right place. The best way to stay connected in the faith driven investor community is to sign up for our newsletter, Faith Driven Investor ERG. This podcast doesn’t exist without you, our community. One of the things we’ve heard the community asks for is help in finding great deals to invest in. And so we’ve launched Marketplace. It’s a new platform of funds and direct deals, everything from private equity and real estate funds to ETFs, from philanthropic to market rate deals made in the US in emerging markets. Check it out. At the age of an investor ERG for Marketplace. While you’re there, please send us any thoughts you have about how this podcast might better serve you or any questions you have about being a faith driven investor.

Host: All opinions expressed on this podcast, including your team and guests, are solely their opinions. Host and guest may maintain positions in the companies and securities discussed. This podcast is for informational purposes only and should not be relied upon as specific investment advice for any individual or organization or school.

Casey Crawford: It was five miles to the nearest pediatrician, so most parents don’t have transportation on public transportation. It was five miles from New York’s pediatrician and the health care system came and told us that and said, hey, if you provide a space that will staff and we could really use that. The yeah, we’ll that for ten years. And I guess we saw the opportunity for partnership in these big infrastructures, education, health care, affordable housing. When you can work collaboratively with your state and federal governments, with power institutions that be, you can actually create some really synergistic impact.

And what we’ve seen, again, with a really nice, stable investment returns where it’s sustainable and scalable.

Henry Kaestner: Welcome back, everyone, to the Faith Driven Entrepreneur podcast. If you’re not already familiar with the name Casey Crawford, then you need to be. We had him on the Faith Driven Entrepreneur podcast a while ago and even then we knew he’d be back. Today’s that day. Casey is here to talk to us about the movement, charter schools and the work they’re doing in opportunity zones. As always, Casey’s enthusiasm is contagious. So we’re just going to catch it and let him take it from here.

Henry Kaestner: Welcome to the future of an Investor podcast. We’re not supposed to have favorites and guests on any of our programs. It’s just not fair. I mean, we’ve got maybe one hundred and seventy five different episodes now across the two properties, and that’s not even counting feature of an athlete. And actually, William, I think Casey is probably the only one would be crossover between all three. Right.

William Norvell: I’ve thought about it. Yeah.

Henry Kaestner: Right now. Yeah. We’ve never spent any time talking to Casey about his athletic career at all. I mean, Super Bowl and all that stuff. And we’re not going to know either, but maybe maybe for some other episode. But what I do want to mention is that the reason why if I were to have a favorite and clearly I can’t because we have so many children as you, well, it’s not fair to pick one up, but if I were to have one, one would clearly be Casey, because last time when we got on the phone with him, we just started riffing on one of my favorite podcasts that we’ve ever done, fill fishers with sharks about identity and talks about anxiety and effectively talks about the fact that, gosh, if you’ve got high levels of anxiety, maybe that’s a chance to really look at where your identity is. And Phil did such a good job of unpacking that. There’s a five minute segment there on Identi, maybe my favorite five minutes of any podcasts. And when we start off last time, Casey, I think appropriately said, dude, I liked it. I think I really liked it. But still, there’s some part of it just doesn’t resonate with me. And Casey, would you say?

Casey Crawford: I think it was haunting me because I so couldn’t identify it when I feel anxious often like I feel like the Lord continues to lead me into places where I’m very anxious and very hopeful that he’s going to come down and save me from whatever you just called me to us again, want to look to scripture. I see that same story playing out time after time with these guys that, you know, lift it up as heroes in the Bible, namely Jesus, who like I mean, the night before his greatest act of work is is in the guard against. And he just stressed out and seems like pretty anxious and seems pretty troubled and seems pretty stressed and stressed as he contemplates, you know, going and laying out his life.

Obviously, you know, half and and so I just I was processing that man that the Lord, I think, oftentimes has led me to these places where in my flesh I do have a lot of stress and maybe some anxiety. And it caused me it focuses me to, you know, look back up to him.

Guy Lord, in the physical, this makes very little sense. And I’m very nervous about it. I’m very anxious about it. It’s caused me a lot of stress. Like, you know, I’m thankful that you are above all of the physical world that you put me in.

And it’s you you have you’ve called me to it. You walk and see me through whatever that may look like. And so you’re that tension man of always being stressed and stressed and called into the battle. I think that God so often does not always want to be. It’s not in the cabana, you know, relaxing under the sun. It’s in the fight. It’s in the. Is it stretching, straining kind of place and that’s, I think, where the Lords will use those places to grow and grow. My hope and faith in him, I agree completely, and I think that that was great.

Henry Kaestner: So a lot of times will suggest that people listen to both of those podcasts now. And if you’re listening to this, you’re probably a part of the faith driven investor community. This is a faith driven investor podcast. And what we’re referring to is a Faith driven entrepreneurs series, maybe one hundred and thirty 140 of them. If you take those two together, the Phil Vishwa one and the Casey Crawford one, you’ll have a great foundation. And I’m not suggesting you stop listening right now and go listeners, but you might want to later. So today, Casey is on the fate of an investor podcast. And there are two things that I want to unpack with Casey. We talked a little bit, not nearly as much as I would have liked to last time about your emphasis on mentoring, because I think that mentoring has such a play as we make investments when we come alongside an angel investment opportunity point in the life of an entrepreneur. What is mentoring look like there? I want to talk about that and then I want to talk about something I think is super cool. We’ve unpacked this a bunch of times, just you and I personally, about how you have taken investment capital and relational capital and a love and commitment for inner city Charlotte to come up with something as super innovative. And one of the hopes that I have is that listeners to this podcast will come away and say, yes, I’ve heard about some really neat funds. I can make some investments there. And maybe, yes, I’ve heard about a marketplace where I can find different angel investments.

But this kind of concept of just how do I take all that I am and what might be unique and individual that God might place on my heart. Well, that’s been your answer. You haven’t just invested in index funds. You haven’t just invested in Eventide and Praxis and Timothee funds. As cool as they are, you’ve done something really unique and innovative. And so I want to get there on this podcast interview, too. But to do things in succession, let’s bridge off of that concept I’ve introduced, which is mentoring. You have this opportunity to mentor the entrepreneurs that you’ve invested in and comes from what you do, what movement, what is it you do?

Casey Crawford: So we try to think about think words are also very important. We try to think about phrases in language that’s relevant to culture and not just to Christendom, but really to the greater culture and mortgage. We have about four thousand employees we’re able to do about one out of every fifty home finance is now in America. So we’re kind of a broad reach and really engaged, lots of different khamees, a lot of different cultures around the US and a really intentional to think about the yes that while some of us are very much living out our faith day to day, that we want to do so in a way that’s when that’s engaging the culture in the culture. I understand. So we try not to use a lot of Christian and Christian words that frankly don’t resonate with even like many millennials who are themselves Christians. So one word that I grew up with hearing was discipleship. And then you should be a disciple maker and you need to be disciple and you need to be a discipleship. And over the last decade of being a business, you have lots of young folks in our company is a loving and engaging.

And about once a day I get an email or a LinkedIn or Facebook from somebody that says, Hey, Casey, will you? None of them said discipling everyone. I’m says, will you? And typically it’s mentor me. Will you mentor me? Will you mention mean?

I think millennials very much have it right and they understand the value of mentorship and maybe even worse than we used to call it, the value of discipleship, having someone that was older, more spiritually mature, kind of helped grow us in faith and understanding of God and who he is and how he loves us. Now we interact with that. And so we came up with Citizen Movement Mentor. We absolutely want to love and value our people. And if they want to grow spiritually, we want to provide them that opportunity to do so.

And so we created a mentoring group and it really came so many things that are borne out of God convicting me of sin, of sin in my life. And we put a lot of emphasis on physical wellness and kind of like loving the whole person in our community and company. I had a really great friend who I put into it who would be in the gym together like four or five days a week for a couple of years. You transformed by. But I was watching makes some kind of crazy decisions, like crazy decisions in his life.

I did not think lined up with the faith. The man that he had told me he wanted to be, the person he was in Christ and man, the Lord convicted me. I mean, I was considered judging him Amen he’s not doing this. He’s not in this these others. And Lord said if you put into him spiritually the way you put into him physically, we wouldn’t be having any of these problems. And I was walking by our gym when that happened, and he and I worked out four or five days a week together and I said, man, if we had that kind of time investment spiritually, where we were really spiritually being minted ourselves by the word and by those, you know, gross material, our faith, I think we’d be in such a different place and he’d be in such a place.

And so right then I called my say, hey, man, we’re still great friends. And, hey, look, I love you and I want you to know that you’re like the legacy you’re leaving. Here is one of mentorship. We’re gonna have a mentorship program that is dedicated, inspired by you and my lack of faithfulness to grow our folks spirits.

And so I hired a buddy of mine who had been in ministry for like 20 years. I played football with. And so I I need some help on some adult supervision in this because I’ve never put together a mentorship program. And Steve Macfarlan came in and he became our CTO or chief pastoral officer and he wrote a 40 week curriculum that our organization is completely voluntary, all volunteer based. And we have about five hundred folks now in our organization that are actively engaged in mentor groups. And as mentor groups go on for 40 weeks, you know, it’s a really in-depth commitment of four or five members of our community to just be open and vulnerable with each other and go on a spiritual journey to grow in their faith. And some folks come into it really far from God, maybe never setting foot in a church, not really knowing what this is, who he looks like, how I can relate to him. And some folks come into these groups having walked with Jesus for a number of years and a lot and being really close in that. And it has been true. I’ve been in small groups kind of my whole life. I can tell you doing them in the workplace has been one of the most transformative, powerful things I’ve ever done in my life, because the bottom line is we can’t hide from each other at work. And we have just seen, oh, my gosh, we’ve seen incredible life transformation happen in and through our mentor groups. And honestly, we wanted to keep it small because we didn’t know we were doing it. First of all, we just like 40 or 50 people and see how this goes and kind of iterate expand. We’ve had such a hunger for people that want authentic, intimate relationships with each other. And now during covid even more so and so, the groups have really exploded, expanded with about 20 other companies now that have picked up this mentoring program and done themselves. It’s not no rocket science to it, but I think there is a beautiful nuance of doing it in the workplace that makes it easier than anything I’ve ever done in the church. In church, I see maybe once a week, maybe four, five or ten minutes before the service that we all get up and sing and listen and don’t talk and go home at work. And we have 40, 50 hours a week where we are locking arms with each other. We’re providing for our families. We’re like living out, missioning, calling, or at least just our vocational occupation together. And we have some really deep beliefs. And you can see people laugh and see him crying and when they’re hurting. And so it’s so easy then to get into those really intimate mentoring groups where you can be open, vulnerable. And if you have some great material to go through, mean we just see people grow like crazy spiritually. So one of those powerful things we’ve ever done, that’s awesome.

Henry Kaestner: OK, so I want to get back to that here in a second. And I want to unpack a little bit more about what a chief pastor officer does when he finished writing it. Figure it out. Yeah, he’s still there. Is he still working? Oh, yeah.

Casey Crawford: Oh, yeah, yeah, yeah. He’s yes, he is going in a thousand directions. I mean, again, he was doing church planting time in the Redeemer Network on the West Coast. And what he would tell you is that he’s disengaging more people now than he ever did as a pastor, reaching kind of more folks are really far from God because, you know, folks in greater degrees will not darken the door of church.

They will not go into a church, but they will come into work. And he kind of jokes nice. You know, I used to beg him to come to church for an hour week and then I’d ask him to give me money because now I get him for forty hours and we’re buying them a paycheck at the end of the week. So this is a great deal.

So yeah, it’s been really, really neat journey with Stephen, what he’s been able to bring to our culture.

William Norvell: I just want to comment on that real quick, because we talk a lot about investing and we spend a lot of time talking about money. Right. Of course, on this podcast, I got such an incredible story, though, of, you know, you get the resources you had, the organization you had and decided to invest in that direction. Right. Not taking your money and putting it in. But I don’t think that’s such an interesting thing. You know, as you peel back the parable of the talents, I think a lot of people can narrowly end up talking about rate of returns and money, but God gives us so much more stewards, relationships, employees, suppliers, all of these relationships. And I just love that you took that and said, well, this is a place to invest my time and my energy and the resources.

Casey Crawford: Well, also leverage to write what you think about money and how we’re going to invest. And I know lots of folks who I will share Stephen’s salary, but it’s not like the biggest salary in the company. Something I mean, he’s kind of paid like our middle level managers. And yet we have one chief master lost and almost four thousand employees. That’s awesome. Leverage the material he puts out. You got seen. It’s up on the Web. Any one organization can access it. And now, again, over 20 other organizations, we have churches that are using this stuff. And so as I think about Kingdome stewardship of resources, I’m always thinking about leverage and what is a great use of leverage. And, you know, we’ve had corporate chaplains of Americans. Those were neat and were good. They definitely serve a cool role. But, man, we found incredible leverage in a role like this because all of our mentor groups, they’re. Volunteer, nobody’s paid to lead a mentor like no one goes to church because, oh man, William, I’ll pay you X dollars to lead your small group. That’s not how it works. So, yeah, it’s been a great investment to your point and a great use of leverage and scale.

William Norvell: It’s amazing to think about that. And I know you’re telling us, right. Probably jumped on about the first day of school. First day of school. Yeah. Yeah. I got to hear about this. So you’ve also leveraged this into movement charter schools. Tell us. I came about where that is.

Casey Crawford: So, you know, we were founded really as a mortgage company in a bank. And when we got to do that and really my vision, you know, seven or eight banks had been at the epicenter of the greatest really acts of financial violence perpetrated against the world in decades. And I mean, they were known for a lot of darkness, a lot of greed, a lot of destruction in our nation and even reverberating around the world. What really convicted me on was like, hey, what would it look like if a bank actually became known for how it loved and serve the marginalized? Know how a bank. Yes, maybe the wealthiest of those are able to afford homes, were able to even have bank accounts, but they took the profits and reinvested it to transform the experience of the marginalized. Maybe those who weren’t customers maybe would never be customers. And I got really expensive. Man, that would be a cool, cool story. Lord, I would actually love to be a part of that. That sounds like something like you would do it. It sounded insane. Crazy. There’s a whole law deal with that. But part of that call did we kind of stepped into this was like kind of like to go into land. I will show you something that sounds exciting. But how how how am I going to take resources and reinvest them in ways to see your kingdom come and love the marginalized? And that’s a tough question to wrestle with an answer. And I talked about that with Aton. I’m sure lots of listeners grapple with that, how to steward these resources. And I mean, I think all of us that are followers of Jesus are going to say, hey, first and foremost, look, if the Lord calls you to something that’s like kind of a do not pass go, don’t you know where to go do that? Thankfully, I think with my background in football, I didn’t have the brains and some of you all do to really deftly kind of evaluate all these different investment options and how we’re going to do these cool ways to just kind of gave me some stuff. And the first thing you gave me was this concept of a charter school. And a woman had written her doctoral thesis on why Christian schools, the only inner city serving the report. Four pages later, I’m going to save you the reading. They run out of money. We run out of money. At some point, they run out of money. Christian schools work really well. The wealthy suburbs where parents have the means to afford them. When they’re serving the poor, they run out of money. But there is a new structure. This is like fifteen years ago. It’s called a public charter and it’s a faith based, not for profit, buys a building, buys real estate, leases it back to a public charter. The faith based not for profit can own the building control. What goes on in that building? Twenty four hours a day. Seven days a week. The return on the investment can be created by the lease with that public charter school, the public charter, to faithfully secular curriculum. If kids want to come in at eight and leave it to no problem, they will do so. However, you can offer faith based wraparound services in that same building that the school occupies before school, after school and on weekends. And I read that thesis and it was like a lightning bolt that went through me. I understood it. I got leverage, I got scale. I understood real estate. I knew that, hey, we’re in the business of financing homes. The first question people ask, what are the schools like with the schools? Like when you bring world class education to a neighborhood, you actually lift the entire neighborhood, you bring all the property values up. And we were Amen, you know, churches these days are kind of starting to understand that like a 20 million dollar building to be used three hours a week, not the greatest use of investment leverage and scale. And so, I mean, why not occupy another space that had a really redemptive purpose to it for the other six days of the week? Right. And so we kind of imagined that we could bring churches in to come and to leverage space for multiple uses, create a return on the real estate investment. So lift the neighborhood, have this wraparound redemptive purpose and provide this incredibly needed service to children in America of education. And so that was the vision. And it was, man, it was big and scary because this is when we were teeny. We had five, ten employees and was one man. But it seems like those are 10 or 20 million. How are we ever for this? Do it so many questions. And so yet, I guess it’s ten years later now we’re opening up our fourth school and today is our first day of school. So we just welcome four hundred new, bright, smiling faces onto our brand new elementary school. It’s kindergarten and first grade on the east side town in the middle of covid. And we are so incredibly blessed because every kid is suffering a little bit with their lives, have changed a little bit, but by far the most impacted or the most marginalized if you’re living at or below the poverty line, covid has devastated a lot of things in your world. About two thirds of our kids in school get their meals at the school, so we serve breakfast and lunch at the school. And for many mothers, the meals they count on every day. And so we’re literally we’re balancing two. We have our kids come in in person and be able to eat or do we risk exposure to this infectious disease. And so we have an incredibly courageous group of teachers and administrators who have an amazing church partner who built a big, beautiful church in there. And yet we welcomed in our kids for the first day of school, a brand new school. We have two others that are up and running already. The new one was today. So we’re thrilled to be in this business and thrilled with God has done it and through it.

Henry Kaestner: That’s amazing. That’s just a beautiful story. By the way. I love the fact that William and I are ascribed to being deft evaluators. I think I’m trusting you, man. I’m. Oh, yeah. Amen. Yes. No, thank you. That’s right. Maybe I should just own it. No, that’s definitely William is one of those one of the things that is really just trying to put myself in the shoes of some listeners right now who are saying, that sounds awesome.

Henry Kaestner: You’re suggesting that I can go ahead and I can take some investment capital and I can do a partnership with a public charter school. I can get a return on my investment by leasing the facility out. I can control some level of the of integration. And with that, I can do some amount of partnership with the local church. Sounds like you do that with local health clinics, et cetera. I don’t know if I have the same and maybe I shouldn’t say that. Same background, same resource.

Maybe they do just want to make it back. And I can assure you of that. That provides some great resources to go do this, no doubt about that. But you couldn’t have a less qualified background. I had there’s no teacher in my history that would have put money on me opening the school.

William Norvell: Well, what I love to I mean, I think this is such a big thing. I don’t think you’ve talked about this in the podcast. Right. I mean, I also hear in your story, I mean, you’ve got this vision, if you will, a long time ago. And one of my favorite quotes, I think it’s a tribute to Bill Gates is always most people overestimate what they can do in a year and underestimate what they can do in ten. And mean when you’re talking about that is investment, that is leverage. That is like watching something grow compounded interest every single day, working on it, making it a little bit better. Of course, I have to talk a bit about football. But, you know, Nick Saban, they don’t strategy is tee shirt for like years when he got there, was outworked yesterday. You know, it was just like to do a little bit better, just do a little bit better. And by that twelfth game, we’re going to not be tired in the fourth quarter. And I hear that it’s like, yeah, I didn’t do this all tomorrow. I didn’t have ten million dollars. When I set out on this journey, I took a step and and ten years later, I couldn’t even imagine what it would be. And it’s bigger than I even thought. And the Holy Spirit.

Henry Kaestner: Yeah. William, I think you hit on that really well with a great quote about overestimating the one year underestimating the ten year walk back through some of the details about how you got started. So I’m listening to this right now. I’m an investor. I’m in Milwaukee. I’m like, oh, my goodness. Of course, that’s a no brainer. It’s education, it’s health care, it’s the church. It’s all those different things. And I think maybe I know some different people to do it. But what was it? You did so some of the particulars, for instance, you know, it’s old big box and old came out, right?

Yes, yes. The real estate first, right?

Casey Crawford: That’s right. I mean, to billions when we start small, we had this big vision, was committed to it, but then started looking sort of survey research like you would in any investment register to understand who are the good operators in the space and how do we want to emulate these folks and could they make the numbers work and what that look like?

And I was blessed to find a model right in my backyard in Charlotte, North Carolina, that was making the numbers work. They were getting no outside investment. They had ninety five percent of kids were minority. Ninety five percent of kids were at or below poverty line. And they were having three hundred percent better academic performance than their demographic peers. And they were doing it at a surplus every year. So that surplus and they were paying down five percent. Note on that facility, too, because they got no investors and they said taken out a loan. And so I kind of looked at them well, and they’re actually if I kind of strip this out without thinking about any appreciation, they’re creating like a six and a half, seven percent cash on cash return right now, serving twelve hundred kids in an incredibly redemptive way. And that’s kind of like that whole picture to me was a great return. When I think about the six and eight percent, I think about the stability, I think about the fact that it’s really underpinned by federal and state dollars ought to do is attract the kids and educate them well is doing something for sure, but that’s a pretty predictable source of income. I like the underline credit. Right. I kind of think and then think about wow.

And now I get to Steward a thousand lives for 12 years and pour into these kids because we educate our kids year round because they need that to catch up. And I get the point of all year for 12 years when we can actually start to change the trajectory of lives. And here’s what gets really exciting to me when I looked at it. This is a big pull to plan. And if we can actually raise the bar with our schools, we can raise the bar for every school because the market chases excellence.

And so there are a hundred and some odd schools in Charlotte. I don’t have to own and build one hundred some odd schools is the kind of tipping point concept. If I build 10 that are having three hundred percent better academic performance than the rest, I believe we now have a platform from which to speak. By the way we build our schools. About a third of the cost of the traditional public schools are built. So we’re already having architects come and go. We you built that house. What, your cost per square foot. What? Because we share a parking lot with a 70 million dollar elementary school. We just opened up our lives. When we’re 70, it’s going to house the same number of kids. And so already we’re starting to affect and impact the way school is done just by setting a new standard of excellence.

So when I look at the capital return, the spiritual return and then the reverberating impact, the leverage that excellence creates in a massive space like education, public education, for me it was just easy, no brainer stuff of where to allocate resources.

Henry Kaestner: So what are you going to do with that from here? What’s it look like? You’ve got a playbook. Are you sharing it with others? Are you going to run?

Oh, gosh, we have zero secrets and we’re learning as we go. So our plan is through ten schools in Charlotte.

We think if and when we do ten, we’re having two or three hundred percent better academic performance than our demographic peers.

We’re doing it, by the way, for only 70 percent of the dollar. So the traditional public schools will get almost twelve thousand bucks per kid. We only get eight. So we’re doing we’re actually saving the state money on every single child we educate and doing it two or three hundred percent higher rate of academic performance, and then we’re making it a sustainable investment. And, you know, we didn’t talk about this much, but we’ve also partnered with our health care providers to carve out pieces of our school to bring health care to serve the urban poor. It is a major problem right now is being a big shift in Medicaid. And so we go, gosh, we already have this space. It doesn’t cost us that much to carve out twelve hundred square feet, 30, 600 square feet and bring world class doctors and physicians into the neighborhood to kids that otherwise have a tough time getting to our first school, it was five miles to the nearest pediatrician. So most of our parents don’t have transportation on public transportation. It was five miles from new the pediatrician and the health care system came and told us that and said, hey, if you provide a space that will staff and we could really use that. The idea was that for 10 years and I guess we saw the opportunity for partnership in these big infrastructures education, health care, affordable housing. When you can work collaboratively with your state and federal governments, with power institutions that be, you can actually create some really synergistic impact. And what we’ve seen, again, with a really nice, stable investment return where it’s sustainable and scalable.

And that was our real hope, Henries, that we could build these redemptive projects in such a way that they could attract major investment capital because we know the is going to allow us to do it. We’ve been able to invest about one hundred million dollars and we’re thrilled with that. And we might be another 50 million this year. We’re thrilled with that.

But this is a massive problem that way outstrips our balance sheet, whatever that might ever look like. And we’re going to need to attract capital to some of these problems. So we kind of our thesis was made if we build these in a way, they can create a four, six, seven percent return in a really collaborative, synergistic way. We can attract some major institutional capital that might just like the return. I mean, you go by CBS for a lower cap rate than that. So we go, hey, if we can do this and have major, major impact, it’s a scaled amplify lever that we can pull in the marketplace.

William Norvell: So it’s super compelling. What do you think are the barriers to seeing this scale? At one point, I guess you get to 10 schools and then maybe does the governor said there are charter networks out there that have gone pretty fast.

Casey Crawford: Like one hundred know there’s some great ones out in Texas that go like one hundred two hundred maybe. And that’s great. So we’re that’s what we’re on track to do.

William Norvell: I’ve done that with the faith integration, though. Have they done that with their partnership with health care?

Casey Crawford: No. But you know what? They’ve blazed the trail, right?

Like there was no one that had done one hundred networks when they started. So that was kind of their battle. How do we scale this to one hundred? Two hundred? And they’ve given us a roadmap for how to go do that with kind of scaling of the leadership. So now we’re just adding a few elements, right? We’re adding it. I mean, I would say they’re really critical because the faith can be a critical and integral one. But we John Machel’s right in our leadership curriculum for our kids right now. So we’re going to have like kind of Maxwells sort of five leadership academies where kids are going to get all his stuff growing up for 12 years in our life. And we’re teaching the kind of values we have an after school program that we kind of developed with the faith centered after school program that’s against totally voluntary. No one has to be leveraging the faith based programs they don’t want to. And then the integration with the different health providers is stuff that we’re learning as we go. We stole that idea from Ben Novarro down in South Carolina who worked with a South Carolina hospital system to bring health care in his school. So, yeah, we’re trying to add kind of our own contributions to the movement as we move along.

William Norvell: He’s one of the things I’m struck by when I hear your story. As you mentioned, Charlotte, that’s where your company is. Obviously, your your company has employees other places as well. But that’s kind of your hub. And you explain in your story, right, of God working three, working out with a buddy and convicting you of something else that sort of sponsors and moves into something else. And I’ve heard you tell stories before and you’re so good at it. That’s why we love having you on God’s giving you that gift. I’m really interested in how you encourage people in investing specifically to think through their story. Right. What God has put in front of them, because I think it can be overwhelming sometimes you can listen to a podcast.

Yes, I need to integrate my faith of my investing. Like, what does that mean, sell all my stocks? Like, put it into something good, take it out. I realize I mean, you’ve mentioned two or three huge concepts. Right. But like, they’re unique to you. And that’s exciting to me that I don’t think that story gets told a ton is it doesn’t happen. And it’s great to piggyback on other things sometimes. Yeah. But other times for you, like.

Casey Crawford: Yeah, right. Right. I am. We do. And I do love to piggyback and love to amplify. The great work that I feel like I’ve got is others too. We’re getting to do a little bit more of that now, which is amazing. I’ll tell you, a part of our story is fascinating. And again, I didn’t grow up doing that a whole lot, afraid of what or whatever, didn’t spend a lot of time fast and growing up. But man, the Lord Rusty in season right now, a company like everyone, a mentor said, hey, man, I’d love for you all to join the other Muslims fast and pray together because they were in such a season right now of it’s kind of overwhelming. Let’s make more business than we could imagine because the federal government is using the mortgage industry to subsidize credit across the United States. So every mortgage companies just have a. They can imagine a stimulus that appropriate for like is this really bad history of God’s people when they received their blessing giving it. And so we fast and pray. And I would say you even the to start the company was a time of fasting and praying and then in working and thinking about how am I supposed to reinvest redemptive Lee and, you know, kind of understand what this look like, redemptive banquets that mean to look like and may God has been faithful every time to kind of bring the right and next project to us. And I know that’s not everybody’s story. And I hope it’s not a frustrating answer for some folks. I can hear folks going, I’ve certainly been a great man. God didn’t drop in front of me. This answer the first I say, I mean, just being honest with yourself, did you really spend some time fasting prayer over it and really seeking in that that he would like? Because I’ve certainly sometimes gotten frustrated while Lord, you direct me and then good friends that love me would convict me that process again. So I’d really move fast and pray over your investments the way you would over any other decision that you’re really wrestling with in life, because I think it’s precious. That resource that he’s entrusted us with is so precious and there’s so much potential wrapped in those resources. I don’t think his believers were called to invest like the rest of the world.

And we really, I think, better be thinking about that maximum Kingdome impact that that treasure is going to have is maybe sometimes that an alpha return or whatever, but great. But it’s so that I can take that return and do something internal with it. Right. It’s always got to have some kind of internal purpose to the investment. So, yeah, that’s always been our hard that’s been our story and it’s kind of God’s to test me in this game. It’s not the type concept, but like I would just say testing and test and testing this really cecum bass, Craig and Resler beg him to show you what to do next. And then if he let you down, email case you your movement dotcom and I’ll I’ll go talk to him.

Henry Kaestner: Yeah. Yeah. So this has been awesome. A whole bunch of different things and a whole bunch of different things I want to talk about next time. I think we’ve already established fact there’s an opportunity to talk about your story as an athlete and how this all works in as well with this new property we’ve got. But we need that next time. And just grateful for your partnership. One thing that we always like to do in cash, I’m still on something from Williams script, so I’m going to hand it actually right back to William. William, what’s the one thing we want to ask of all of our guests?

William Norvell: I’m going to say that’s all I get guaranteed to me. I can’t believe you’re going to steal my heart. Do that. You can’t do that. Like, say, hey, we’re going to send the kicker out. But sorry, but this time we’re going to let the quarterback take that one, too. He just he’s been warming up. He looked good in warmups. We’re going to let him take this. It’s just an extra point. It’s just an extra point. You know, what’s the point we love and you just fasting and pray.

Gosh, really love you pointing us back to that. And I love your urge to gently. Have you really done it? You know, but with that, what we do love to close with, we love to watch exactly what you’re talking about in weird ways, how our guest and our listeners get linked together through the word of God. It’s amazing when we hear the stories of, wow, I just really needed that word from the Lord. And while your other words were fantastic and we want to hear what God may be doing through your life, through his word right now, that could be the season. It could be today, it could be months, maybe something you’ve been meditating on or something God divinely gives you right now in the scripture to tell our listeners, well, I’ll go.

Casey Crawford: Just two hours ago, we had our mentoring phone call and there’s a number of us that are kind of taking Mondays to fast and bread. And Steven failed that test. Will also I mentioned to is leading us through. OK, so we were Daniel for like, it’s never gonna happen his dream. And he’s asking Daniel, what does this dream mean?

And Daniel’s basically down payment. You’re full of pride. You take in all God’s glory. And he is about to humble you, buddy, in a big way and never assume here will not doesn’t have ears to hear.

He’s being told like humble yourself doesn’t have to hear. He’s going to keep taking guts. Glory. That was today of Suku processing that with community. And we talk about the mentoring group and the importance of the community in the workplace, a crisis in our community and how God uses that. And so I’ll share with the guys today that my first ever play in the NFL first ever play.

Maybe we’ll touch this the next with him first ever play kick off the ball game on kickoff return on the way, if you remember the way only do to allow you to do this anymore, just like human cannon fodder. I just run back and throw yourself into the other day.

Sorry, I’m on the wedge and I’m running up to protect our ball carrier and I just smash into this like human fire hydrant.

And when I hit them like everything’s black for a minute and I kind of woke up and shook my hands and like, instinctively grabbed his shoulder pads and ran, ran, ran and whistle goes, that’s all kind of off me.

And I mean, I was, you know, when you were playing, I was on I looked down on my shirt and a white jersey and he’s just covered just a big red bloody mess all over my jersey.

And now, mind you, he had just about knocked. Me out, turns out here broken my nose, not both snaps off of my chin strap first. I was so arrogant football player I shoved him looking at you bleeding all over me.

William Norvell: He says those exact words, the arrogance piece of that sorry.

Casey Crawford: I guess that is one area where I leave and now I run to the sidelines, of course.

And the train, which he’s made your nose broken. You’re an asshole to me, man. Sometimes in life don’t we just need a community to look at us and tell us how you got a problem?

Hey, you never, never needed it. You couldn’t hear it from there. My dad was like, Anchorman, you got a problem. It’s all over. We all see it bleed all over you.

You’re full of pride, you feel, and God would stop it. And then the beauty of a crisis to me in the workplace, I think, is that we have those other brothers and sisters that can come around us like let and know we got a mess. I right. We’ll take care of and clean up. And that’s been the greatest gift I’m sitting in. I was almost in tears looking like 40. My teammates were just coming alongside the fast and the crying to see the Lord encourage each other and challenge each other and make sure that we are being humble and given God all the way.

That is his and his alone only he deserves that. None of us rob from that. And I need that in my life. And I think what God really revealed to me is just the power of that in the workplace.

Man, when we can have brothers and sisters in Christ, the workplace is weird and 40, 50, 60 hours a week with and they’re point things like that. That is an incredible, incredible gift.

Henry Kaestner: Indeed. Indeed, it’s a great word always says Casey Yurok, thank you for being our friend and our partner in the overall mission and really going to be fascinating to follow what you do over the next year. I think that you are an exception maybe to what Bill Gates has said. I think that you’ll be able to get those things done. And if there’s anything we do to help you to get that and then have you back on the show, if you have, God might use you to not only transform the mortgage industry as he’s done through you, as you’re intentional about giving him the glory, if he might use you.

And some of those that I know that are friends and partners with you on the real estate side to do the same thing with real estate investing in education investing, that’d be an amazing, amazing thing. So continue to want to watch your story. Grateful for you. Thank you, brother.

Casey Crawford: I love you guys. Honored to be on here. Man, it is so much fun. Just walk this out with you guys. So glad we got connected.

Henry Kaestner: Thank you so much for joining us on today’s show. We’re very, very grateful for the opportunity to serve the larger faith driven investor community. Hey, the best way for you to stay connected is to sign up for our monthly newsletter at faith driven investor Doug. And while you’re there, we, of course, want to hear from you. We derive great joy from interacting with many of you. And it’s been very rewarding to see people join the discussion now from all around the world. But it’s also very important to us that you feel like this is your show and that you’ll help make it something that best equips you on your journey, one that you’re proud of and one that you’ll share with others.

This podcast, it wouldn’t be possible without the help from many of our friends. Executive producer Justin Forman, program director Johnny Will’s music by Carl. Well, you can see and hear more of his work at Summer Drugstore.com and Audio and editing by Richard Bahle of Cornerstone Church in San Francisco.

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Today, we’re talking about playing the long game. So many investors work to get as big of a return as they can as quickly as they can. But the two people on the show have a different approach. 

John Denniston and Tom Blaisdell are our resident experts on long-term capital, and today, they’re going to break down the benefits of patient investing, the discipleship opportunities it provides, and how all of this relates to you, the Faith Driven Investor.

Episode Transcript

Some listeners have found it helpful to have a transcription of the podcast. Transcription is done by an AI software. While technology is an incredible tool to automate this process, there will be misspellings and typos that might accompany it. Please keep that in mind as you work through it. The FDI movement is a volunteer-led movement, and if you’d like to contribute by editing future transcripts, please email us.

Henry Kaestner: Welcome back to the fate of an investor podcast, great episode today we’ve got two awesome guests to help us to understand the concept of permanent capital. And we live in Silicon Valley, which is really the capital of venture capital, if not more broadly, private equity. And it’s interesting that we’re going to be looking at this topic today with two guys that really come from a background of venture capital at the very highest levels, talking to us about a new model that we really all think might transcend the 10 year lifecycle of a fund, as Henry mentioned.

William Norvell: A big thing we want to dig into is you both have a lot of experience in capital raising, both as entrepreneurs and as venture capitalist, as a lawyer, as an investment banker. I mean, I personally think you really redeemed yourself. I mean, going from law investment banking. I mean, that’s where, you know, the magic happens. I know people see them and much, much better light. I like the journey you’ve taken here now, but this permanent capital idea. Walk us through it. What is it? Where does it come from? Is it something brand new? Is something that’s old that people are finding again? What is the essence of it and why are you too fascinated by it? Well, I can start with that.

Tom Blaisdell: I got fascinated by it when I was doing this research up at Tuck and they came at it from two different angles. One was clearly the returns angle. I was always been a big fan of Warren Buffett and Charlie Munger and what they’d been doing, a Berkshire Hathaway, and they had, you know, their famous saying, know, our favorite holding period is forever. And they had this holding company, which is in essence a permanent capital structure for the companies that they’re buying that give them lots of leeway to pursue their growth strategies and their missions individually as well. I also took it from the point of view of the entrepreneur, though, and that’s really where I thought I saw the whole and the market was, as I said, look, I want to get more involved in mission driven entrepreneurs. You know, a mission driven on tour is on a mission. Most of the investors out there that they’re going to pair up with are on a mission to make more money. And this might be a good time to talk about a really important differentiation I make between investors and what I call capital allocators and thinking. I think all the people who are listening to this podcast should be recasting in their mind, thinking to themselves as a capital allocator as opposed to an investor. And the simple differentiation is an investor. Invest money to make more money. That’s what their job is. A capital allocator. Their job is to allocate capital to worthy endeavors while respecting and honoring the value of the capital. Capital is not free. Capital has costs. It has to be respected. That’s what the parable of talents is about. But the capital needs to be allocated to what I would consider you would consider the individual investor a worthy cause. So if you’re thinking of your job as being a steward to the capital entrusted to you, that means being a trustworthy allocator of capital, not just an investor. And I just want to say this is an extra degree of difficulty. Being a good investor is very hard. Being responsible allocator of capital is even harder. Warren Buffett and Charlie Munger had this concept, the too hard pile. Generally, it’s a good idea. Keeps you focused on your specific giftedness or your core competencies. But within your circle of competence, you need to be responsible in what you’re investing in. And one thing I want a big takeaway from this podcast to be is don’t put values align investing in the too hard pile. This is important. This is worth doing. And, you know, John can talk more about how he made that transition to taking that out of the too hard pile and putting it into action of going from an investor to actually starting a business like that.

Henry Kaestner: So I want to get into that a bit and actually dystrophin on what William was just talking about in terms of career progression. John had I think about that T-shirt which talks about the evolution of man. So it starts off life as an attorney, then investment banker and then venture capitalist being a higher form of life and now maybe the highest form of life, being a missional entrepreneur in a permanent capital type of structure. Maybe we might even get some feedback from the audiences, what they think that makes sense or not, or if there’s a next progression in the in the evolution. But I actually really like the way that that’s gone in in that it connotes that there are some aspects of venture capital or private equity that may have some limitations to it. So maybe it can deal with Tom and and Jon. I’d love to get your comments on this, too, when we talk about permanent capital. And I think that I’m glad that you brought Berkshire Hathaway. It’s a model that a lot of people can be comfortable with and familiar with. But what are some of the inherent limitations to the traditional private equity and venture capital model that maybe permeate capital solves for.

Tom Blaisdell: Absolutely. Yeah, first and foremost. Traditionally, all venture capital funds are private equity funds have a 10 year structure, which is, you know, they raise a fun one hundred million dollars, a billion dollars, 10 billion dollars for the big P funds, and that as a 10 year life. And normally they’re going to invest, make new investments in the first three years and then spend the next seven years harvesting those investments. And so a typical model for a private equity investment, for example, is they want three to five backs in three to five years. So they want to put. Money end. They went to work it for three to five years and they want to get the money out. Similarly, on the venture capital side, especially the early stage folks coming into the series A, Series B, we know that out there, the time period from initial investment to liquidity event, which is either getting an M&A getting bought out or an IPO has been extending from, you know, typically used to be five years, seven years, 10 years, 12 years. And we know that’s getting longer and longer. But those are the first two constraints just built in to the venture capital. Private equity models is that 10 year fund life now immediately put that up against the perspective of the Michigan entrepreneur who is building a multi decade or maybe even a multigenerational business to attack a problem that’s very important to them.

You know, what that means is you’re going to have to recapitalize their business every three to five years that they’re using private equity or every seven to 10 years if they’re using venture capital money. And I’m not saying that that model is broken. That’s a terrific model that’s created tons of creative power and financial success for venture capital and private equity. The whole I saw in the market was these longer term thinking mission driven on tourism. I’ll just take one more moment to talk about, you know, there isn’t every entrepreneur mission driven. Sure. They all say, oh, here, here’s our mission. We got our mission. We’ve got a vision. I have to test for what’s my definition of a mission driven entrepreneur. The first question is, and this isn’t I don’t sort of ask this, but it’s what comes out in a conversation. And as you ask what they’re doing right now. And you’re gonna get two answers read and get some that essentially you talk to the CEO of a startup, ABC, or private equity backed startup. They’re either going to need a description that says, this is my current gig. This is what I’m working on right now. And if you talk to mission driven entrepreneur, they’re gonna be telling you about their life’s passion, their life’s work. They wouldn’t know what they would be doing if they weren’t doing this. That’s question number one. Question number two is. And this is more perhaps from the investor’s point of view, but also a lot of funds from the private equity CEO’s point of view is always begin with the exit in mind. I never make an investment if I don’t know what the X is going to look like on the other end. When you’re talking to a mission, you’re an entrepreneur. They say, what’s an exit? We’re not exiting. We’re solving a problem. This is our mission. This is our cause. This is what we’re here to do. And so now you have these mission driven operators that are fundamentally different than the other entrepreneurs. And now if you take a traditional again, let’s go back to that venture capital model. So now you go out, you raise your share easy. And all these people, you need growth, growth, growth, growth, growth.

You raise your series A. Then your series B, then you need your series C, then you need your series D.

It’s hard to find the money in each round. Now find people that have values alignment in each of those rounds. Or even just financial incentive alignment. In each round in terms of what their timeframe is, et cetera. Keeping that alignment, this is almost more than just about the permanent capital. It’s about the alignment of the capital. And that just becomes increasingly impossible in that traditional venture model. And then private equity model, it’s essentially we have a mission for three to five years. We don’t have a mission for 20 or 30 years. We have a mission for thirty five years. And that’s do just start right out of the gate with some serious alignment problems.

Henry Kaestner: John, you’ve been on all sorts of different angles on this from the venture capital world, more permanent capital entrepreneur. How would you respond to permanent capital and make the case for that as something that really helps support mission?

John Denniston: We imagine somebody gives you a choice, an immediate payment of one million dollars or a magic penny that doubles every day for 30 days. Tell me, which do you choose?

Cash upfront, million dollars. I bet you the answer is number two. OK. That is correct. Would you hazard a guess? You can’t put your calculator right now. I’m watching you. Yeah.

OK. If you got a penny at a doubled every day for 30 days, what is in your bank account at day 30?

Henry Kaestner: Tell me what can be more than a million dollars? We know that many of the owners say it’s going to be a big number. Go with three point seven form billion dollars.

John Denniston: Man, are you smart that rounds to the five million dollars that it is, OK. That’s the idea in our minds.

Deusen. Is it five million or five Divino I hinders that billion. OK. I don’t know.

William Norvell: I think I now know we have a recording Henders a billion here. Smart enough to the right answer. But math, you know, still working on it.

John Denniston: Henry thinks big everything specked. The answer is five million dollars. Five million dollars. OK. That is an astonishing phenomenon. It’s wonderful. So wonderful that Albert Einstein called that compounding the eighth wonder of the world. Now, that’s the idea. And so who knows? Ten year convention came in to the private equity and venture capital world, I imagine, in my mind’s eye. The early funds, they find some investors categories that don’t even exist today. And the investor said, well, certainly I’ll get my money back. And so the people raised in the voice, OK, well, 10 years will give your money back. I mean, something like. But there’s no rhyme or reason. Here’s what it does from perspective of Eighth Wonder of the World. It interrupts it. Imagine that you take your penny and 10 days in the compounding stops or slows down for a while, or you don’t get the full 10 days amount because there’s a fee that you pay somebody and then you have to find a reinvestment. And by the way, you’re doubling with the penny that you had. And what you’re reinvested in is not doubling. It’s five percent growth every year. So from a financial perspective, there is a permanent capital movement taking place right now and there’s a lot of the big money coming into it. Blackstone has raised hundreds of billions of dollars on this Apollo. I think roughly half of their assets under management are in roughly the category of permanent capital. Last week, KKR and our private equity firm bought an insurance company. That’s how Berkshire Hathaway began. That was an insight for the purpose of getting more permanent capital. So here’s the point. And now I’m coming around to answering your question. How is that relevant to redemptive imagination? The gospel in the market? How is that relevant? Because the same principle applies. Imagine there is a for profit company also delivering the gospel into the market in some form or fashion chaplains, poverty alleviation, education, health, you name it. Romans twelve says many parts of one body. Right. A lot of different ways to deliver the gospel into the market. OK, well, imagine you have invested in a company that’s doing that really well, making a difference in the world. And compounding the gospel on the market over time at your 10, you’re going to want to keep going with that from a redemptive perspective. And so the idea is to allow the eighth wonder of the world to be realized for both financial return and from a redemptive perspective, both.

Henry Kaestner: So it makes a big impression on me. And I think that also building off of that dynamic, which is not just the concept of compounding interest in financial return and not interrupting that, it is suboptimal time. One of the reasons why Solomon’s Capital Fund, we want to twelve year funds because we saw so much agitation from co-investors in your six and seven. Looking for an exit and then taking less a lower price. But because they had to get out. It just doesn’t make sense if you’re getting the flywheel going on, really figuring out product market fit and really scaling a business to get out just in an arbitrary time doesn’t seem to make sense. Permanent capital headset. But even more powerfully, more powerfully, I think on the spiritual side, when Tom talks about an entrepreneur warm coming about this because this is their mission and their consuming thing, especially if it has a gospel integration to have somebody on your cap tables like I’m with you. I also see this as life mission, and we’re going to go, hey, let’s do this together and let’s not talk about the exit. Let’s talk about the mission. Let’s talk about it. How to reinforce success without any type of artificial, arbitrary type of thing of needing to get out. That would seem to be powerful as an investor and it maybe having a strategic advantage, because we all know if we’re in the fund business, it’s all about deal flow. And it’s the getting the looks at the deals, which means that you need to be able to show an entrepreneur that there’s something special about you and your partnership that’s different. If you can say to an entrepreneur whose life has a mission is going to come on board with you and I don’t need to get out. That would seem to give you an advantage versus a different funding vehicle that says we love you, but we love you for six and half years.

Tom Blaisdell: I saw a great cartoon. It was people sitting across the desk, each other. And one person was saying to the other one. Think of it as permanent capital that you have to get back in three years.

So not permanent capital. So investing, not again, is moving from being ambassador to being a capital allocator. You’re not just investing your dollars for the high to maximize your return, but you’re investing your dollars to solve a problem that matters to God. I picked that phrase up actually from a podcast you guys had recently, I think was Dick Blanc from Cedarville University. Somehow I pulled out from what are you saying? Were solving problems that matter to God. And there may be a terrific investment opportunity around doing the next caffeinated hard seltzer. But is that a problem that matters to God, you know? Or is there something where you’re leaning in and saying, you know, even when times are tough, I can continue to lean in?

Because what we’re doing matters to God. And by the way, if it’s a problem that matters to God, there will be an investment return profile there as well. This is, of course, separated from philanthropy. And I don’t know if you get into that. William and Henry, on any of your other podcasts, have, you know, where is that line? And that’s certainly an interesting topic in itself. But I think what we’re talking about here are real investments with real market returns, capital Honorine Returns. But, you know, it’s capital with a mission, not a deadline. And that’s what we’re talking about with permanent capital. And I do think, Kendry, to your point. It’s a differentiated value proposition.

William Norvell: OK, Tom. John, this may be self-proclaimed self-proclaimed provocative person on the show here. Some here in this. And I’m entrapped. I’m in. I’m actually thinking, you know, why would I ever work for someone that doesn’t have personal capital? Why would I ever tell an entrepreneur to take money from someone who’s not permanent capital? I mean, this is good Kool-Aid here. And Tom, you made a comment earlier. The tenure model wasn’t totally broken, that it had value. But I want to dove in back. I think someone could listen to this and both an entrepreneur award investor and say, well, that’s the only model. I mean, clearly, you’ve made a compelling case. That’s what God would value, is that you’re along for the mission. You don’t have investors pounding on your door. You know, you can build the company as long as you want, you know, and and, of course, God requires companies to sell and opportunities come along. We always have to be looking for that.

But, man, I would never take money from a tenure fund that doesn’t feel God honoring. Let me ask that question. Is that how you guys feel? And you’re welcome to feel that way. I’m just interested in where you stand today as you’ve done this research over so many years.

John Denniston: So I think it’s an excellent question. William, let me offer this perspective.

As I said, there is a growing market for permanent job, but there’s also a growing market for impact, redemptive imagination, startup companies that integrate financial and redemptive for secular impact. There’s the equation that I use to describe the current dynamic in that marketplace of capital and ideas.

See is greater than I. That is to say, the volume of impact capital currently exceeds the volume of great breakthrough impact or redemptive business ideas. That’s a problem, but it’s also a creative opportunity. And Christian entrepreneurs should consider attacking that with all the creativity God gave them in new novel ways to integrate finance and business with redemptive imagination. That’s an opportunity. And we’re in the early days of it. And so the thing that I’ll say about shifting offers impact and permanent. We’re combining the two in this podcast. But on permanent Kamper Watch is a permanent capital investor. Want permanent capital investor wants a high probability of permanence. The penny keeps on doubling every single day. So a demonstrated momentum that, yeah, I’ll put my money in for more than 10 years. But if I’m a university endowment or insurance company or pension plan, maybe 20 or 30 or 50, maybe there’s no limit on it. Something like that. But for me to feel good about doing it, I want to see momentum that just me a strong feel. This has some competitive differentiation and that’s going to keep on going. That’s what Warren Buffett has done successfully, a virtual ask away. The last thing I’ll say on this. Likewise for faith driven investor would like to see the same thing. To make a permanent investment in a redemptive imagination company. See the momentum and the success that gives you a very good feeling that that redemptive activity will continue to compound going forward.

Henry Kaestner: It’s if the world you know, as I’m thinking about this, I’m thinking of venture capital and private equity are getting a little bit potentially of a bad rap. Now, to be clear. Part of me looks at this through the lens of an entrepreneur. Most of my life has not been as an investor, has been as an entrepreneur. And I know how it’s really encouraging when you’ve got somebody alongside strapped in mass with you. Just like I’m in it with you. And I’m nothing about exit, but it also makes me think about the role that venture capital plays in. I’d be remiss if I didn’t talk about that with two guys who spent a lot more time in venture capital than I. But I think that there’s maybe an occasion, I think particularly in both. Have you made significant investments overseas in emerging markets? John, you’re living that out right now. But as I think about deploying capital overseas in places like East Africa where they need startup capital, and you look at and say, gosh, there’s a generation right now of entrepreneurs that need capital, but this can be another generation of entrepreneurs who get a new capital seven or eight years. So if I have a certain amount of money to invest, if I invest in these people and it’s tied up for 30 years or 40 years, then I’m not able to invest in the next generation. But it strikes me that you won’t invite those entrepreneurs into this partnership. Like, here’s the money Amen invest in you. And to be clear, my model dictates that I don’t need to get this money back out six or seven years. I get a 10 year fund because you’re going to participate. The returns that you have are going to be part of what provides the startup capital for the next generation of faith driven investor in Nairobi. That’s why I’m looking for an exit, because we want to continue to invest in. And you going to be a part of that story before we completely and I want to get back to permanent capital to be clear it, before we completely dismiss all of venture capital in its redemptive purpose. Do you want to either you want to riff on that and comment on that?

Tom Blaisdell: Absolutely. Henry, and you’re exactly right about the role. Venture capital plays a very specific role. Right. And if you think about it in the typical sense, you’re putting that venture. It’s venture money. It’s very risky money at a very early time, at a point where that company’s going to be growing like crazy. In fact, there’s a metric out there for SAS companies. Software’s a service company right now, which is a triple, triple, double, double, double. Right. So in the first two years, you triple your revenue and then after that, you’re doubling your revenue. These are amazing growth rates, right? So say you do a million dollars and you’re supposed to do three million dollars, which was nine million dollars and 80 million and 36 million and seventy two million dollars. That is a rocket ship, right? A rocket ship takes a different kind of fuel. And that fuel is the venture capital because they’re investing in these hits misses. And some of those rock chips are going to get, you know, escape velocity and go into orbit and be amazing. And a lot of you are going to blow up on the launchpad. And so you’re invested in that super risky period of the company, which is that first 10 years and really more like the first three to five years of the company. Right. So that’s the role of venture capital. If you sort of zoom out, though. Venture capital is only a appropriate fuel for a tiny segment of all the companies that are going to get started in the world. Right. So every thousand companies that get start, including the local bagel shop or a car wash or a paving company, they don’t need venture capital. Right. So already we’re talking about out of 1000 companies, one of them needing venture cap. Now, within that world are the same people, again, as I had defined as these mission driven opener’s building, multi decade or multigenerational companies. And maybe they’re trying to build it on a more sustainable path. They’re not going to do the triple, triple, double, double, double, but they’re going to try and get profitable sooner. There’s something called the Evergreen Journal, which has specifically been de Borten is building this community of evergreen businesses that are, you know, sort of safe and sane, profitable growth businesses.

And that’s a terrific, different way to go. And then I’ll finally just fall back on the fact what I said at the top of being a capital allocator versus an investor. It’s hard. So I came out, you know, bright eyed, bushy tailed, come out of the academic world. I’m going to go to permanent capital. Right. William And the next thing I know, I’ve got three or four angel investments in a series seed going out to raise the series A, Series B, you know, it’s who I am. It’s where I live. It’s the network I have. It’s the model that I know works. And, you know, obviously, we’re very important Vestas to have in that ecosystem as well. And to have at least one investor on your cap table who’s able and you know this very well from sovereigns cap. And even just having one mission driven, faith driven investor in your cap table is a huge encouragement to the CEOs. I’m still working at this coal face. Henry of. We get more of that permanent capital to actually, you know, extend out to more of those companies that aren’t the traditional targets gonna triple, triple, double, double.

Henry Kaestner: Makes me think about something from in and out burger, like a menu item before we come back into permanent capital. From your perspective to what you see as the redemptive purpose of venture capital.

John Denniston: Yeah, I think that the question of redemptive verse is venture capital. They’re both good. So venture capital has provided the fuel for a great many discoveries and innovations that have done good in the world.

A great many. Now, there’s a current debate about is all of that good?

I don’t want to get into that, but you can read about that every single week or day in the newspaper. Get into it. So what did the focus on hypergrowth. Is very good and helpful. Or if it’s just.

Well, the purpose of the company to begin with and its method and its integrity and and and and all of that. All of that, you can read about it. I’m not taking a side much, but, you know, so. Yeah, sure. Is hypergrowth required? Are there different ways to go about growth that, you know, all of that. But it’s a hard growth, but also what’s the purpose of the company? And redemptive companies are declaring some of them a dual purpose. Financial return. Yes. But also redemptive return through their imagination. A dual purpose.

Henry Kaestner: Tell us about that redemptive and mental purpose that you’ve got it shared. We didn’t spend a lot of time at the outset talking about that. But what of your last five years been? Was it look like as you’ve sought to provide investors that have come along side? And just in a quick disclaimer. We’ve done some convincing to get go done some co-investor together with Tom as well. And we are a shareholder and shared ex and one and without having an exit in mind. But talk to us about the five years that you’ve had and what share tax does is you blend the redemptive purpose and the financial purpose.

Was it look like. Yeah, well, first and Rick, thank you for your confidence and faith in us. And actually, let me just riff off of that. One of the great joys over the past five years has been just the great, amazing set of impact, faith based other investors that are looking to do this, to looking to do this. And so we have investors from North America, South America, Europe and Asia. A lot of different categories, including faith based. And it’s been marvelous, really just one of the great parts of deciding to embark on this adventure. So here’s the Shattuck’s. We’ve designed what we call an inherent impact business model, which is to say that the financial model that we have designed inherently produces impact in lifting smallholder farmers or deploying regenerative responsible farming methods. And correspondingly, the fact that we are doing good in the world itself brings financial benefit because the market wants more of that. It’s in the data. Consumer markets, work or markets.

Capital markets are all there’s this triple up shift and demand curves for purpose, and it’s gone largely unseen under cover of darkness over the past five or 10 years. And so companies that decide in an authentic way to come in to combining the two have a very good surprise in front of them, which is they’re going to be embraced to some degree by the triple up shift in those demand curves. So the question that I want a bridge off that a little bit, when you find investment vehicles like yours and others that have a redemptive purpose in them and where somebody can be brought into the mission. Do you ever see a danger with capital sources coming in and possibly distorting the market? Give me an example. Company comes out and there’s some redemptive part of what they’re doing. And it’s a feel good story. They’re providing employment or they’re feeding people and because of their redemptive purpose on the economic side. So maybe they’re doing a million dollars of top line. Maybe they’re going at 20 percent and they come out and they say, well, we’re going to raise two million dollars and we do that at thirty five million primary valuation. That would seem to be at odds with where they are in terms of their numbers. But it’s a really good story. People love the impact they’re making. Do you see any danger there? How do you think about pricing those deals? It’s a lot of the people they can be listening to. This is like I get it. I get it. I’m listening in favor of an investor podcast motivated by my faith. I want to see a redemptive edge in what I’m doing. But I also want to still be a really good investor. And how do I think about valuing these companies at the entry point? I get what you’re saying in this episode of the podcast you’re talking about. Let’s not focus so much on the exit, but how do I think about the entry and how do I provide counsel to the entrepreneur about the right entrance valuation riff on that bit?

Sure. Short answer is the market determines that. And.

Henry Kaestner: Lynette, but so the market determines that at a particular time, so if a company is raising a million dollars and you’re saying I’m going to raise 20000 kids from five different people in your practice, have you ever seen a situation where they are able to raise money at an out of market valuation that then hurts them longer term, that it took them too long to grow into that valuation?

John Denniston: I’m sure that happens. I’m sure that happens as it does in the venture capital world. I’m sure it does. And so, yeah, just that put a risk if, you know, there’s a down round and that company’s future. Definitely. So that poses a risk for both conventional and a redemptive company. And I’m very sure that happens.

Henry Kaestner: Yeah. Tom, talk to us about entrance valuations, whether it’s in venture capital, but then especially in permanent capital, when you find a business that’s aligned on impact, but because they’re not so much focused on, hey, here’s how you’re going to get triple your money back in four years, we’re gonna be building this for long term. How do you think about entrance valuations?

Tom Blaisdell: Yeah, I think the term that comes up all the time is concessionary returns. Right. Are you willing to accept a concessionary return? So if a venture capital investment supposed to return 20 to 30 percent IRR, you know, on average, should you be willing to suggest that, you know, you’ll do 15 percent or 10 percent?

Tom Blaisdell: And is that okay? It’s so case dependent. And I think this also gets to, you know, how many people have to come around the table. If you have a pool of Perman capital and you can go in and you can fund the series A and B and the C and keep pure people around the table, then this becomes much less important. Right. It’s just we all decide how much equity needs to be in the hands of the employees and how much equity needs to be enhancing investors. Once you start getting multiple entities around the table, that’s where the alignment issues really start to perk up. I think this is also. And again, this is why William Perman capital isn’t the answer to all the problems right now, because while there’s a lot of permanent capital out there, there really is. It’s not in structures that are very easy for entrepreneurs to tap into. And I know that’s probably one question I want to talk about is where can you go find this permanent capital? But I think one thing, if you think of one source of Perman capital, especially in the faith driven investor movement, it’s going to come from family offices. Right. Family foundations, family endowments, high net worth individuals. And those people need to be more active in aligning, you know, the why of how their money is being invested. There’s a general problem in economics and investing called the principal agent problem. Right. Which is that the principal, who’s the one who’s putting up the money and the agent who say is the general partner in the fund have different incentives. Right. In terms of like how quickly they put out the money, how much they charge for fees, how quickly they sell the company and, you know, decisions they might make internal to the company about sharing the wealth with employees and how they treat their communities and things like that. So there’s a principal agent problem. I actually see that sort of expanding into a principal agent, agent, agent, agent problem, which is, you know, you have the high net worth individual who has the estate planner, who hires a money manager, who puts it into a fund of funds, who puts it into a venture capital fund, who hands it to a general partner. You now have five agents in that chain who are all making different alignment choices. So, Henry, when you said his venture capital, good or bad, I think that all too easy answer is it’s very simple for venture capital to be a moral right. It’s just it’s neither good or bad. This is what it is. And normally what’s said when the money is given is maximize my value, maximize the return on my investment within the bounds of legality.

That’s the guardrails. Don’t break any laws, but otherwise maximize my return.

That’s how you know, clearly something like Jewel, the vaping company, can get funded and can make a ton of money for investors. And it’s within the guardrails. It’s legal. But is that what that principle? All the way back at the beginning, that change is now with the principal wanted to do. And that’s why I think the principals are the ones that have to take the responsibility or to pull that chain back in and say, I want to be in direct communication with the agent, whether that’s Henry and William, sovereign’s capital or somewhere else.

And I want to make sure we’re on the same page about where our guardrails are, which are gonna be different than what the guardrails of society at large are.

Henry Kaestner: That has got to be an episode on podcasts. We’ve got to unpack that. The principal agent, agent, agent. Do you think about some of the the very large venture capital funds that have been known for saying you want to know what our investment thesis is and how we invested seven deadly. You want to know why we made investment? Jordache. That’s easy. SLOSSON Gluttony. Well, it did. All the LP is all the people who provide that money behind the investment. Did they know that or is that a victim of this whole principle agent, agent, agent thing? There’s a lot there. We need to come back to that.

Tom Blaisdell: I think the people listening to your podcasts here are interested in having their capital solving problems that matter to God. And if you’re listening to this podcast and you care about your capital, you’re stewarding, working to solve problems that matter to God. You’re going to get closer to the agents that you’re working with to make sure that’s happening.

William Norvell: That’s a great point, Tom. And yeah, it’s a great lead on. It’s the same in the public markets, right? You give either through a money manager or either through an ETF or most people have no idea what their money is in. And there’s people out there trying to solve that problem to at some level. But it’s a similar issue that I think God obviously all of us here agree. I think they got cares about that right. At some level. Probably each of us have different levels of where we think that matters. But so we did open a big topic. We had 45 minutes to get through permanent capital. How it impacts entrepreneurs, the pros, the cons. It’s a huge idea. I’ve really just thank you both for doing that with us. I would encourage anyone to read Tom’s paper. I think it does a great job in three to four pages of talking about the pros and cons, transaction costs and return thresholds and and all these different things that come about the structure and a really eloquent way. So I know we’ll link to that. And as we wrap up, one of our favorite things to do is connect our listeners to our guest through the word of God. And so if you wouldn’t mind sharing a quick bit on maybe where God has you in his word, that could be this morning. Something you read or heard. It could be a season that maybe God has you in meditating on a specific verse or story. Can any of those things we loved know what God’s word is and how it’s coming alive to you during this time today?

John Denniston: Yeah. Thank you, William, for me. I recently have been reflecting quite a bit on Matthew 13. The parable of the sower and the seed that falls on good soil yields one hundred sixty thirty fold. And so for me, I think spiritually seeing that in a new and fresh light. But also, this is true of a great number of Jesus parables based on agriculture, farming, because people could understand it. So, I mean, and actually a shirt ex were working on yield enhancement as one of the things that we do. So, yeah. Matthew 13, the parable of the Sower. Good word.

Tom Blaisdell: We recently just wrapped up an eight week sermon series actually stretching all the way back to Easter on Hope, which was really terrific and so timely for so many reasons. Just a timestamp. This we’re in month five of the pandemic, the Cauvin pandemic now. And in California, we just went back into a more tighter form of lockdown.

One of the key learnings for me in that series was that in Jesus’s day, hope would have been considered a character flaw, wishful thinking, by most of the mainstream religions and philosophies of the day. But the burse that we keyed on throughout the entire series was Romans 15, 13, made the God of hope fill you with all joy and peace as you trust in him so that you may overflow with hope by the power of the Holy Spirit. So Paul is calling God the God of hope. For Christians, hope is a virtue, not a flaw. It’s a feature, not a bug. And so hope is very different from optimism, of course. Optimism is just the expectation that things are going to turn out well. Hope, as explained in the sermon series, is a combination of imagination, desire and importantly, belief. Its trust in God. Right. And so Psalm 27, some trust in chariots and some in horses. But we trust in the name of the Lord, our God. When your revenue goes down 97 percent. Who do you trust and where is your trust? Where’s your hope? Right. It’s not in your bank balance. Not your contingency plan. It’s not your all star board or your reseize. Nobody can or should have had a business contingency plan for this kind of havoc that’s going on in the market right now. It doesn’t matter whether you’re an ant or a grasshopper all summer. Right. When your business literally goes to zero or all night, whether you were putting away stuff or whether you were playing, when your revenue goes to zero, it doesn’t matter. So where is your hope? And so the path is it’s been speaking to me is Isaiah 40 31, which says that those who hope in the Lord will renew their strength, they will soar on wings like eagles. They will run and not grow weary. They will walk and not be faint. We’ve been called to a mission that’s much greater than our personal comfort or sustainability. And so, again, I just close with don’t put faith driven investing in the too hard pile. Invest in just causes. Because it’s our joy to do this work together.

Henry Kaestner: That’s a great word, guys. I’m very grateful. Pray to you. Thank you for spending time. Thank you for your leadership in the movement. Thank you for being with us today.

Tom Blaisdell: Thank you so much. And Ray, William, Tom, thank you so much.

Henry Kaestner: As we finish up, we like to spotlight a ministry that is locking arms with our listeners. We know that many listening to the show are business owners and entrepreneurs looking to live out your faith in the marketplace. So this week, we want to make sure everyone knows about the faith driven entrepreneur. It’s a weekly podcast, a monthly newsletter, a daily blog, along with other video Bible studies and events that help you get provisioned for. Journey you are on. Check it out at Faith Driven Entrepreneur, dawg.