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When investors start asking “What are we FOR instead of just what we’re against?” everything changes—from deal selection to due diligence to the very definition of success. In this 200th episode of Faith Driven Investor, Henry Kaestner, Luke Roush, and Richard Cunningham reflect back at where the movement started and where it is headed. What began with a handful of investors has grown into a global community spanning nearly 100 countries, yet with Christians controlling over half the world’s wealth, the opportunity ahead is staggering—and this milestone conversation exposes why we’re still in the “top of the second inning” of a fundamental shift in how capital gets deployed.

Please note that the views expressed by the hosts and guests are their own and do not necessarily represent the opinions of Faith Driven Investor.

Episode Transcript

Richard Cunningham [00:00:00] You’re listening to Faith Driven Investor, a podcast that highlights voices from a growing movement of Christ-following investors who believe that God owns it all and cares deeply about the heart posture behind our stewardship. Thanks for listening. 

Intro [00:00:17] Hey everyone, all opinions expressed on this podcast, including the team and guests, are solely their opinions. Host and guests may maintain positions in the companies of securities discussed. And this podcast is for informational purposes only, and should not be relied upon as specific investment advice for any individual or organization. Thanks for listening. 

Richard Cunningham [00:00:44] Friends, welcome back to the Faith Driven Investor podcast. And today is not a normal episode as it is a time for celebration. We have reached a milestone. It is episode 200 of the Faith-Driven Invester podcast. And I have got a couple of the OGs with me. The two guys that helped start this ministry. Well, we’d love to have John Coleman and Justin Forman here with us as well. A couple of mainstays you always hear. I’ve got Henry Kasener and Luke Rausch. And gentlemen, we’re celebrating. We have hit 200 episodes. HK, let’s start with you. Do you know when you recorded your first ever Faith Driven Investor podcast? Nope, no idea. 

Henry Kaestner [00:01:17] 200, that’s incredible. Richard, that is amazing. It’s amazing. And it’s been so much fun. You know, in the early days, Luke and I would do them and hang out and celebrate the mission that God put us on and had some fun doing it. And, I mean, I remember the feeling. I remember really looking forward to doing them. And as we started, as I started spending more and more time on faith-driven entrepreneur and faith-drive investor and Luke continued to. Run Sovereign’s Capital as we did a divide and conquer. I remember really looking forward to hanging out with Luke and just joking around before the mic went on and joking around while the mic was on. And then, you know, coming back together, it makes me feel like 200 is a long, I mean, it’s a lot of them, but really it’s just celebrating what God has done through the movement. It’s just awesome. But you know they come back and now we’ve got the video going, Luke’s got the dignified gray in the beard. You know, I think when we started doing these, you were in like second grade and now look at you and- It’s more salt, more salt and pepper these days. That’s for sure. There is. I’d do it. I’d invest in you though. I mean, you look like you know what you’re doing. Hey, a little gray in the beard is good when you’re raising capital, and so that’s helpful. We’ve already established I need a haircut. I don’t know how many of you are going to be watching this on video, hopefully none of you. 

Luke Roush [00:02:30] It’s Gavin Newsom’s Doppelganger right now on the pod. 

Henry Kaestner [00:02:34] I don’t know how I feel about that. 

Luke Roush [00:02:36] Hey look, he’s not 

Henry Kaestner [00:02:37] He’s not a bad looking guy. He’s a good looking guy, he’s got great hair. He’s got a great taste in nice restaurants, right? I mean, let’s look at the positives. 

Richard Cunningham [00:02:46] It’s an edgy reframing you guys always talk about. Well, Henry, to answer the question, it was July of 2019. So we’re almost six years to the date of when the first FDI pod was launched. But I know the story goes back even further than that of kind of launching faith-driven entrepreneur, faith- driven investor shortly after. I’d love to hear, I mean, and travel back both of you guys as far as you want. Cause today’s the day of celebration. We’re kind of going back to the origins and we’re gonna talk about where God might be taking all of this next, of course, and celebrate some of what’s happened along the way. But go back as far as you’d like and tell us kind of how your paths crossed, how this idea of faith-driven investing kind of started. And I know faith- driven entrepreneur may have proceeded it a little bit, so it’s worth maybe getting into some of that. But Henry, we’ll start with you. Go back as the story needs to go to kind of orient us to where we are today. 

Henry Kaestner [00:03:33] Well, we could go really far back. A great friend of ours, Luke and mine, is a guy named J.D. Greer. And J. D. Is the head pastor of Summit Church and co-author of the Fate Journal and Osprey Book, and just a great encouragement to both of us. And this is going back probably 16 or 17 years. He called me up and said, hey, I’ve got this guy in a Bible study I’m doing that I think you’d like a lot. What would you get together with him? And he probably said a version of the same to Luke, and J.T. Grear was… Matchmaker just said, you know, this is somebody who’s really serious about using his guests in the marketplace is trying to figure it all out. I know you’re trying to do the same. And so we got together and went to a place called Joe’s Diner, downtown Durham, North Carolina. Great hot dogs. That’s right. It’s famous for the hot dogs that you could have a hot dog with mustard. You can have a Hot Dog with chili. You could have. A hot dog would hot dog. So we had the hot dog and it was just like, I really like this guy is awesome. And then he was living in the same neighborhood as. My best friend, business partner, as we were running bandwidth at the time, David Morgan, and hung out, mutual friends. And then over time, we really just had this sense of shared mission, that there’s actually, rather than just talking about faith in the workplace and the struggles we had and the challenges and the opportunities, what might it look like if we actually got together and did something about it? And this is the point in time where… Through the grace of God, bandwidth was having some success and I’d meet some other Christian business owners, but most of them felt uncomfortable in sharing their faith in the same type of way that Dave and I felt liberty to do so because they had outside venture capital and what they’re doing. And we’d gotten together along the way with another guy that JD introduces to, Andre Mann. And Andre had also had this thought that there’s an opportunity to blend work and investing in business excellence. And so we got together and decided that the way to… Really seize the opportunity that we saw was to start a fund whereby we would be an encouragement to faith-driven entrepreneurs coming alongside them. And yes, absolutely helping them with customer acquisition and intellectual property distribution channels and things like that, but also encourage them as they encouraged us in our faith. What does it look like to have a chaplain? What does look like to pray with non-believing employees? And so Sovereign’s Capital was started. And then life went on for five or six years as we endeavored to start a fund and run it with excellence, believing that you could get great returns, spiritual and financial bottom line, not at the expense of biblical values, but because of them. And through the grace of God and some great deal flow and some great entrepreneurs and great advisors and great investors, oh, my goodness, you know, six or seven years into it, we were finding great success and that we could throw it with some of the biggest venture capital funds. And deliver good results. But then we saw another opportunity. 

Luke Roush [00:06:26] Yeah. So, you know, just to jump in to break up the monolog. 

Henry Kaestner [00:06:32] Please. 

Luke Roush [00:06:33] The reality of our work is that we were looking at all these companies and we’d look at 100 companies and there’d be like one that really fit the right stage, the right geography, the right industry, something that we felt like we could bring some value beyond just down stroke and a check. I think all of us were a little bit troubled, but Henry probably most of all, that like the other 99 people that we met, many of whom were running really great businesses, But it just wasn’t in the right sweet spot for us. You know, they were looking for something a little more than some prayer on the way out the door, you know, and like, don’t call us, we’ll call you, let us pray for you and you know send you on your way. There’s an issue with that in that it felt as though even as we were called to kind of build sovereigns capital and focus on the investing work and reinvesting time and energy in the companies where we invested, we had all these other companies that were looking for community, like they needed content. They needed a place to be able to come together and collaborate like with other entrepreneurs who were like them trying to build something for God’s glory, but like wanted community in that. And so Henry, I think really identified that like we’ve got to do something for these folks because the sovereign’s team at the time or even now today, like we can’t pour into every entrepreneur that we meet. And yet every faith-driven entrepreneur needs someone or something to pour into them. And so FDE was really born out of this. Kind of heartbreaking for all these entrepreneurs that we were turning loose because we couldn’t invest in them and we couldn t spend as much time with them as we wanted to. And then Faith Driven Investor came a couple of years later because we were really trying to say, all right, ultimately these builders are looking for ways to tap capital markets. They need help in being able to re-envision what they’re building. But as they build, there’s capital requirements for for creating new things, right, for scaling growth stage companies, for… Facilitating transitions in multigenerational family businesses that are more mature. And so Faith Driven Investor was a way of actually creating some content, some lexicon vocabulary for how do we actually educate people on how they can reflect their faith in the way they invest to complete the other side of the market. Henry’s great analogy that I reuse weekly is that in the early days of sovereigns 2012, 13, 14, our industry was a little bit like the Eastern Black Bodega. But at least with an Eastern Block Bodega, there was a line wrapped around the block. In our case, there wasn’t really much product on the shelf. What had been there was mixed in terms of quality, and there weren’t really many people shopping in the store. And so with FTE, we started to actually develop more product in terms of companies that were being born. And with FDI, we actually started to develop a queue that started to form outside the building. But it’s still early days.

Henry Kaestner [00:09:26] Today is a Spanish term for like a little Latin American market, and they probably have a different word for Eastern Europe. 

Luke Roush [00:09:33] And mixed metaphors have never stopped me. 

Henry Kaestner [00:09:34] No, me neither. I think it was awesome. You know, one of the things that I remember about that is there are these kind of these infamous stories of Anatole Melanchier coming in, who’s a fate-driven entrepreneur that want us to invest in and he’s from Moldova and we said, I’m so sorry we can’t invest. But then there’s John Porter, who came in after we’d started fate driven entrepreneur. And we thought, gosh, you know, we’ve got these resources, this content and community. By then, gosh fate driven entrepreneur probably had watch parties in 300 different locations around the world. And John Porter wanted to look for capital. And I said, well, I’m sorry, we can’t invest in you because we’re not investing in Africa. But we have all these incredible resources and really realize and talk to them that we weren’t scratching his itch. But I went to Luke, we’re talking about what does it look like to open up our LP base to invest in somebody like a John Porter. We knew that we had some LPs that had been to Rwanda, which is where this guy was running this company, Misaka Creamery. And this was not Luke’s problem, this was my problem. I was just like, you know what? Gosh, if 80% of businesses in America fail, what are the chances of the business in Rwanda working out? And it’s just, I don’t know what it looks like. And if we refer this on to some of our LPs that have been to Africa, have an interest in Africa, maybe that just doesn’t work well, and they’re gonna assume we did some discovery and diligence on it, and this is just like a no-win, so we’re just not gonna do it. But really, as Luke and I were processing that, it was really a Holy Spirit moment where we can realize that that was not for us to decide, and that we were being tight gripped. On our LPs and we weren’t thinking first about the kingdom of God and that let’s leave it to God and the Holy Spirit to help lead these LPs about where they’d allocate capital. And while we’re at it, maybe we’re not the only game in town. By then we’d had some success and we thought, gosh, if somebody is motivated by their Christian faith and they’ve got investment capital to deploy, of course, they’d choose sovereigns. But we never really just thought like Who else is God calling to the same thing that he’s called us to? Is there anybody else out there? And there are lots of people, especially in real estate. And so we just said, gosh, we need to get out there and expose our investors to other fund managers motivated by their Christian faith. We did the first one in partnership with Chuck Bentley out at the Christian Economic Forum, which that year has been held in Deer Valley, Utah. We invited our LPs to an event. We found some. Faith-driven real estate fund managers that were very much started and run by their Christian faith, delivering incredible financial returns and incredible spiritual impact to their LPs by including things like chaplaincy in the way that they invested. And we said, all right, this needs to be a broader movement. This is not the sovereign’s capital story. This is something that needs to much broader. And so that was this moment where we said all right here’s an opportunity. To instead focus on just sovereign’s capital, to instead, focus on a broader movement of the body of Christ looking to steward their investment capital in a way that built God’s kingdom under his power for his glory with men and women who were driven by investment excellence. And that was the beginning of FDI. That’s awesome. And somewhere around that, we decided let’s talk about what we’re discovering and let’s interview some of these other fund managers and let’ look at what spiritual integration looks like across investing in a bunch of asset classes. That we didn’t have any any expertise in. I remember talking to a guy who was running a natural gas and an oil fund. I’m like, guys, where’s the spiritual integration in that? I mean, how do you evangelize like a, you know, a barrel of oil, right? Because like, how about all the oil field workers? Like, oh, yeah, of course. And then we had a guy on the podcast early on had written the book, Thank God for Bitcoin, Jimmy song, I still haven’t figured that completely out. But you know, there’s spiritual integration and that or at least the guys completely convinced of it. But it really just, you know, part of this whole movement has been about just a personal quest of mine to just see God at work, to see God working through other fund managers. And you know it’s the C.S. Lewis thing, right? It’s like, I thought I was the only one that cared about this, but Luke and I have had the opportunity to interview really literally now hundreds of people that God has also given a calling to to start his capital with excellence. And so every time we talk to somebody, we hear more about just another one of God’s image bearers doing some incredible things all around the world. And it’s instead of this feeling like, oh my goodness, gosh, another competitor. It’s like, oh my gosh, Luke and I and the team at Sovereign and the Team at FDI get to be involved with some unbelievable men and women. And it has been really cool. 

Luke Roush [00:14:19] Well, I think actually like one of the things that was a shift is that the early days of the faith and work movement and the early days of what was traditionally called biblically responsible investing. So the faith in work, and this is actually first time Henry and I have actually talked out about it out loud. So it’s kind of fun to process this together with him. But my sense of the early faith and work movement was largely about personal transformation, right? How am I going to actually contextualize my faith in the way I show up at work? And it was really more kind of internally focused, heart posture, head posture, stewardship, a lot of focus on generosity, but less focused on like, how do I actually leverage my business to change the way I build product and service, change the ways I engage with my community and actually be salt and light in a more catalytic way, not just individually being transformed in one or two people that I might work with, but actually more broadly. Like, how do I actually take this idea of what was originally called business as mission, which is more ministry people trying to become more sustainable in their work? How do I flip it and actually take red meat-eating capitalist pigs who are by the grace of the Holy Spirit being awoken in their faith and now actually looking to take their business and reshape it or take something new that they’re trying to build and build in a way that is very, very catalytic? That’s actually, I think the shift is actually moving away from. Early days of kind of faith and work, how do I see these two things come together in my life? No, no, no. How do we actually take a business and think about transforming the industry that we’re playing in by virtue of the way we develop product and service, the way deliver product and service to our clients and engage with the community? I think the other thing that I would say is that going back to sort of the early days of faith-driven investor, before we waded into this and again, like all by God’s grace for his glory. I think that the emphasis was more on like, what do we want to avoid? So biblically responsible investing was very much around what are the things that we really probably shouldn’t own and profit from because they’re antithetical to human flourishing and they rely on some form of addictive behavior in humans to make the business model work. So gambling, adult entertainment, you know, things like that. I think what Henry and I and Andre all got aligned on early is we want to be known not just for what are we against as believers, but more so what can we fall in love with? Where do we see human flourishing occurring in the marketplace? How do we want positively screen for businesses that are making a difference? Let’s focus on that. That’s the main narrative. There will be some things that we want avoid. There may be some other things where we want a presence on their cap table and then with management to see if we might reframe some of how they do their work. Primary motivating factor in the early days of the phase of investor movement, certainly sovereigns, was very much of like, let’s be known for what we’re for. 

Henry Kaestner [00:17:18] This is a good time, so I really wanna make sure that I highlight some of the other influences. A lot of it was God speaking through His Holy Spirit to Luke and I, and then a whole bunch of others. Justin Foreman, who was running the Featured Entrepreneur at the time, was an early contributor, of course. But there’s also a group that we got together maybe six, seven years ago at a French bistro after a Sovereign’s Capital LP meeting. And it was people like Josh Kwan from The Gathering, and Mark Wesson from Eversource, and David Wells from the National Christian Foundation, And there may be a 25 or 30 getting together and just saying, okay, so what does it look like for there to be a broader movement in the way that we’re able to hit at some of these themes that Luke is talking about right now, about what are we for as Christ followers? And that’s really important. So it just has not been the Luke and Henry show by any stretch, although the team at Faith Driven has been nice enough to let us be on the mics a lot at the expense of the overall quality of the podcast. But there have been a lot of great. Great people that have really sown into our lives, prayed with us, for us, inspired us. You think about the redemptive work that Praxis does in helping to reshape the way that people think about how they’re running their businesses. Lots of folks. God has removed the scales from lots of our eyes to include the listener to this podcast. And this is a movement. If you’re listening to this podcast, this is something to bring to your community. One of the things we have been able to do over years is with the faith-driven team put together a community group course of six weeks that explores some of these concepts. And you do that in a peer-based community of 12 to 15 folks and with a great facilitator. So this is something that God is bringing us all into. 

Luke Roush [00:18:59] Well, and two things that I’ve learned from Henry, one is we serve a god of abundance. We don’t serve a God of scarcity. The early years of my career were very focused on direct competition and a bit of a zero-sum game. That’s kind of how I thought. And that is not the reality of the world that we live in. And one of the things I’ve learnt from watching Henry is that like, now we need to be rooting for rivals. Like we need to be rooting for people who are doing work well. And there’s a bunch of people, you know, even as the movement has evolved that went before, right? You think about Praxis, you think about Timothy, you think of Ave Maria, you think a whole bunch of other early movers that were down the road, at least wrestling with this question of what does it look like? And that work continues. You think of Eventide, you think Robert Netslade inspired, a whole of bunch of different people that have actually been circling on this area for a long time. And one of the things that I think has allowed. The movement to flourish is that broadly speaking, with maybe a couple of exceptions, broadly speaking the movement is for each other. Like there’s obviously places where there’s direct competition kind of A versus B, but by and large, like the movement has grown and rising tide raises all boats. I think people have kind of leaned into that. And also the broader idea that like, it is not about any one of the private equity firms or any one to the advisory firms, RIAs that are in this arena. It’s really about like, what does God want to do? And Lord willing, He does it through us, but if He chooses to do it through someone else, we need to be excited about that because the mission is fulfilled. It’s not about us individually, it’s about the mission. 

Henry Kaestner [00:20:34] Well, and it is a broader movement. I mean, maybe nobody better to speak about the expanse of the movement and the growth of movement than you, Richard, right? You know, so you’re providing leadership for the fate driven investor, institutional investors summit. And gosh, how many folks did you have out at the Rosewood? 

Richard Cunningham [00:20:52] I mean, what you guys are getting at is there’s multiple expressions of what this can look The answer is 180. 180. You had 180 out. It was awesome. I like giving indirect answers, Henry, and kind of arriving after a nice monolog. Well, thank you guys for all of that. But yes, we’ve gathered- Keep on going. I’m sorry. I should have let you go. 150 to 200 the last couple of years of private equity and venture capital. 180. Managers. 180 is the round number. Gavin Newsom, thank. The desire is like you guys said, is hey, they all have a unique expression of faith-driven investing. There’s a hundred plus trillion dollars in managed assets across the globe. Only a couple hundred billion of those are in explicitly faith-aligned products. But there’s, Pew Research says there’s 60% Christ followers in the U.S. Or at least people that identify with a Christian faith. And so just the numbers don’t add up in terms of the number of assets within faith- driven investing made a couple 100 billion. There being a hundred trillion in managed assets in the US. And there’s just such an opportunity for Christ followers to keep leaning further and further in. Like the math just doesn’t make sense. And so the desire here is to say, hey, private equity and venture capital managers, you probably have an outsized opportunity to rethink the shaping of your portfolio or the spiritual integration practices you have. Not that a public equities manager can’t. I mean, Luke could speak to that extensively in terms of the influence you can have on a public company CEO. Henry, you took a company public. Private equity and venture in particular, and private companies, when you have direct influence on the owner operator of the company, there’s just an opportunity there. And so that’s why we gathered those folks. 

Luke Roush [00:22:22] Well, and to your point also, like, you know, I think that just to tie into that, one of the things that we’ve said since the beginning, and I think it continues to be true, is we want to be descriptive of what faith-driven entrepreneurship, faith- driven investing looks like, but not prescriptive. One size fits one, you now, and, I failed to mention Bob Dahl, now over at Crossmark earlier, but he’s been thinking about this for a long time in different contexts, really active within the kingdom advisor community, think about Rob West and the whole K.A. Crew and the journey they’ve been on. So I mean, there’s a plethora of different ways. To represent faithfulness in the way we do our work. And it’s important to not become too myopic on our particular flavor of what it looks like. What is important and what I think is a mandate is you gotta be seeking Godly counsel. You gotta be on your knees in prayer and you gotta look at God’s word. If you’re doing those three things as you interpret where God’s calling you as an entrepreneur or an investor, you’re gonna end up in a good spot, but it’s gonna be different. And I think that giving some grace as we all figure this out together is important. The good news, here’s the good news. We’re probably in the top of the second inning of a very long baseball game. So it is early. It feels like at times like we’ve been at this forever. But the reality is in the long arc of history and sort of what are we trying to build together for God’s glory? Like really, really early innings still, still a wonderful time to jump in. 

Henry Kaestner [00:23:45] Thousands, thousands of podcast episodes in front of us. 

Richard Cunningham [00:23:50] I love a good baseball analogy, Luke. Thank you, guys. That’s a lot of fun coverage. I guess the question that has to be asked next is what happens next? Luke, you mentioned we’re in the top of the second inning of a really long baseball game. Where do you guys want to see this go? And I know, is this a domestic thing? You know, Luke, You spent a season in Indonesia building out sovereigns capital over there, making some Southeast Asia investments. Henry, we know about your passion for Africa, the school of hard knocks video that just went viral. You reframed kind of. What stewardship can look like in talking to Africa. Justin Forman is currently on the continent of Africa. As you guys think about where faith-driven investing goes next and broadly just kind of faith- driven movements, how do you frame up the global kind of domestic conversation? 

Luke Roush [00:24:33] I’ll comment super briefly and I’ll turn it over to Henry, but I think our view from the beginning is that this is a global movement. The pacing, the way it shows up around the world is going to be a little bit different. But if we believe capital has influence to be able to shape culture, then that’s an important opportunity, I think, as Christ followers, to be salt and light all over the world and to be to find ways to reflect our faith in the way we put capital to work and help shape cultures, many of which are still in the process of being born, developed, shaped. So I think it’s a global thing and we’ve seen that at work very much in Southeast Asia, which is the only place outside of the US that we currently invest. But Henry, I mean, you’ve been much more globally exposed. Your thoughts. 

Henry Kaestner [00:25:15] Well, from a movement perspective, and this is as you’re saying, this is outside of what sovereigns capital as an investment fund does. But from a moving perspective, the singular thing I’m most excited about is the development of a faith driven investment industry in Africa with some unbelievably talented men and women with great investment backgrounds, Ivy League educated, Wall Street, 10 years. Real assets under management, really great performance. And then just a spiritual integration that is really almost unparalleled. Just the development, the maturity of an industry. As an investor, I get excited about the macro environment too. You’re talking about a place where there is an average age of 19. It’s gonna be the only continent that’s gonna to be growing. Average age of cross-country is 19.2 years. The number of producers and consumers coming into a marketplace is astounding. There’s been some great political stability. As much in Africa as anywhere, any other continent in the world. And you’ve got this incredible sense of just individual economies growing, six of the ten fastest growing economies in the World will be in Africa and yet only 0.5% of the world’s venture capital and private equity are going on to that continent. Now I get excited about it from an investment perspective that’s one that’s seeking alpha, you know, you want to steward the capital that guys entrusted you with with excellence. But I also get excited about it because I also know that in a world in which USAID is pulling out, but believing that trade, as opposed to aid, works. Now that’s not to say that the way that we pulled out has not been very, very shaky, and I would have done it differently, to be clear. And yet, as a Christ follower that is stored in individual capital, or maybe institutional capital, to look at an opportunity in Africa where there are hundreds of millions of people living on less than $5 a day, believing that as we… Invest in that marketplace, providing employment, and doing that with faith-driven entrepreneurs, faith- driven fund managers. There’s a chance that 20 years from now, that is a vibrant marketplace, that it’s all about spiritual integration. You know, one of the things I love about Africa is that when I go and speak to faith- driven entrepreneurs in Africa, I don’t have to tell them that the work matters to God. When I’m here in America, in my hometown, there’s some amount of work for people to just kind of lean into the fact that God has glorified through our work in the marketplace. And this is something I picked up from Brian Fickert. We had the vestiges of this evangelical Gnosticism, right? Which is a thing that comes from the Greek faith, which is the separation from the secular with the spiritual. They don’t have that in Africa. So like, of course we should pray before our board meetings. Of course we shouldn’t pray for the healings of our employees that are sick. And of course, we should have a winsome witness to those who don’t yet share our faith. Of course, of of course. And so we have this opportunity as faith-driven investors to be able to put capital and encouragement and in prayer support. Behind these entrepreneurs as they in turn develop relationships with us and they pray for us a big part of the reason I get excited about Africa is this selfish thing as I do that as I get involved in these stories of these African fund managers that are doing this with excellence I come to know God more fully myself you know it’s all about me right I get more as I stored capital now. To be clear, this is not about an Africa story. This is about a bigger, broader thing. It’s about us as the body of Christ getting on our knees and just asking God how he’d have us steward the capital he hasn’t trusted us with. And for some of us, it will be check out what’s going on in Africa, it’s amazing. For others, it’ll be let’s look at innovative ways to continue to think about real estate investing across multifamily or retail or office, incredible things going on and co-working. There’s more of an opportunity to expand what’s going on in the lower to middle market. Incredible things that are going on the venture side. Think about all the just incredible technologies and artificial intelligence and the opportunity to come alongside investors like a Mark Sears that’s coming up with a novel approach, the redemptive way to do domestic AI investing. So there is incredible opportunity all around the world, but this is one that’s not to be prescriptive. As Luke said before, it’s meant to be descriptive. Opportunities virtually in every asset class, in every geography, but it’s an invitation to us all to just ask God how he’d lead us and with a hopeful expectancy that as we ask that question, he’ll answer. 

Luke Roush [00:29:38] And here’s the vision. The vision is that every Christ follower, independent of net worth, independent of asset class, independent of geography, has an opportunity to reflect their faith in the way they put capital to work. That’s the mission. And so back to kind of what does the store shelf look like, still really, really early, there’s tons of opportunities. And there’s areas of the world, there’s different industries, there’s different types of businesses, where you can have more or less impact. Doesn’t make one better than the other, but there are highly catalytic parts of the world. And sectors of the economy where I think that, you know, the impact can be multiplied. So super exciting about where things are going. 

Henry Kaestner [00:30:14] Guys, it’s been great to do this with you. I’m just, I’m grateful for you, your friendship, your partnership. I’m thankful for all of our listeners. My request is that as you’re listening to this, this is a movement of God and it’s not meant to be consumed, it is meant to be passed along and encouraged and maybe you get together, a group of people there in your small group and just wrestle with things like this. But thank you for tuning in over these 200 episodes. We wouldn’t have a podcast if we didn’t have listeners and we wouldn’t a movement if God wasn’t. Inviting others to participate. So you as the listener are a big part of what God’s doing. 

Richard Cunningham [00:30:47] Well folks, this has been episode 200. It’s coming out on June 30th as you listen to this. Going forward, one of the things I wanted to say from a housekeeping standpoint is that the Marks on the Markets will continue as every other episode for Faith Driven Investing podcast and the video podcast will start to be more and more normal. We’ve seen a couple teased out with Brent, be sure. Henry thought today was a video podcast and so we’ll see, there might be some social clips of Henry today. But going forward, the actual in-studio live FBI video podcasts are coming to kind of match more of the Fates of an Entrepreneur podcast. But pump for the next 200, Luke, pump for next 200 Henry, thank you guys for your time today. What a joy to celebrate the FBI pod together. 

Henry Kaestner [00:31:26] We are grateful for the opportunity to serve this community and see listeners come in from more than 100 countries. Faith-driven investing can be a lonely journey, but it doesn’t have to be. The best way to stay connected is to join a group study with other investors looking to get the same answers to questions you have and find great community as they do so. There’s no cost, no catch. In person or online, you can meet an hour a week with other peers from your backyard or the other side of the world. You can also stay connected by signing up for our monthly newsletter at faithdriveninvesting.org. This podcast wouldn’t be possible without the help of many of our friends, executive producer Justin Forman, intro mixed and arranged by Summer Draggs, audio and editing by Richard Barley. Our theme song is Sweet Ever After by Ellie Holcomb. 

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The venture capital world can currently feel like chaos—founders are “quietly freaking out” about AI’s explosive impact while trapped in a brutal liquidity crisis that’s left investors without returns for years. Yet beneath the turmoil, top VCs believe we’re at the precipice of the most transformative technological revolution since the Industrial Revolution, with AI reshaping everything from software to hardware investing. In this raw conversation, three battle-tested investors reveal why they’re more bullish than ever on venture capital and how faith-driven founders are stepping up to shape AI’s future where social media let us down.

Please note that the views expressed by the hosts and guests are their own and do not necessarily represent the opinions of Faith Driven Investor.

Episode Transcript

Richard Cunningham [00:00:00] You’re listening to Faith Driven Investor, a podcast that highlights voices from a growing movement of Christ-following investors who believe that God owns it all and cares deeply about the heart posture behind our stewardship. Thanks for listening.

Host [00:00:17] Hey everyone, all opinions expressed on this podcast, including the team and guests, are solely their opinions. Host and guests may maintain positions in the companies and securities discussed. And this podcast is for informational purposes only, and should not be relied upon as specific investment advice for any individual or organization. Thanks for listening.

Richard Cunningham [00:00:45] Well, friends, welcome back to another episode of the Faith Driven Investor Podcast. A joy to have you with us for what is episode 201. If you missed episode 200, it was a joy to have Luke Rausch and Henry Kasner with us, a couple founders of this FDI movement in space, talking all about the history and landscape and kind of where this broader movement has been and where God has taken it. And we’re back with Marks on the Markets here for our July episode of Marks in the Market, joined by John Coleman. And John, we’ve got a couple of heavy hitters with us as we’re talking venture markets today. And Jake Thompson, who runs the venture business at Sovereign’s Capital, and Rob Goh out of the Boston area who runs NextVue Ventures. Gentlemen, this is gonna be a lot of fun talking venture market. We are just off the heels of 4th of July. How is everybody after their Independence Day? Oh man, doing well.

John Coleman [00:01:33] Well, it was a relaxed weekend for the Coleman family, and I feel like with the venture focus, we are doing our version of All In right now, and since JCal gets to falsely claim they’re the biggest podcast in the world, I think it’s safe to say Faith Driven Investor is the biggest podcasts in the word, so Rob and Jake, you make it that way.

Jake Thomsen [00:01:51] Awesome, Booth, you guys, and yeah, really a privilege. All the Thompson kids have all fingers after the long weekend, which is always a success. So we’re excited to meet again.

Rob Go [00:02:00] Awesome. And we had a good long weekend as well. I actually was preceded by my 20th anniversary. So I went away with my wife for about a week before the long weekend. So getting back in the swing of things here. That’s awesome.

Richard Cunningham [00:02:12] Man, that is awesome. Good deal. Well, yeah, the Cunninghams are here in Austin, Texas, where just, you know, worth saying, we are on the heels of some pretty devastating flood tragedy. Oh yeah. I was able to escape away to the Pacific Northwest with some extended family, which is just a beautiful place, but definitely coming home to heavy hearts and a lot of thoughts and prayers for the people around kind of the greater Hill Country area here in Austin. We had a boat swept away in the. Floods on Lake Travis in particular and that is about as small of an issue you could imagine considering what others are going through and just kind of the devastation and loss but shifting back to let’s talk more positive things let’s get into the docket today. Jake Thompson I kind of want to give you a chance because venture markets have been under the microscope if you will over the last few years there was kind of the peak valuations and the venture frenzy of 21 and 22 a little bit of a fall post that. The wave of artificial intelligence is taking off as of recent, it seems like there’s some momentum and optimism back in IPO markets, but we maybe just kind of canvas the venture landscape for us over the last few years to kind of set our conversation today, and then I’ll let Rob chime in after you. Yeah, small question. Yeah, very small, we’re starting small.

Jake Thomsen [00:03:22] We’re starting small. How much time do we have here? Absolutely happy to, Richard. Yeah, you know, even you asking that question just makes me think how resilient and unique the founders are in this season, because you think about these last five years and it’s just been, we often talk about being a venture founder is like being a boxing match where you’re just getting punched in the face over and over again. You’re bobbing, you’re weaving, you’re trying to get some punches in. And this has been a season of a lot of those punches where you start off and there’s relative normalcy right pre-COVID and all of a sudden everything changes, lockdowns, everybody wonders what’s going to happen to these companies, are they just going to sort of shrivel and die, and all sudden there’s unexpected boon with working from home and just a whole lot of optimism, right, as there’s more money out in the system, a lot more people investing in these companies, valuations just shoot up, right. All the fundamentals get very, very positive. People assume big growth rates, low risk rates, and so even as you run the discounted flows of these companies. A bunch of reasons why it just ballooned up and became quite a bubble. And then you get to 2022, you have interest rates start to go up. That just let out a lot of the air from the system and it just got really, really hard to raise venture funds. 2021, early 2022, we saw this kangaroo explosion of new fund managers, oftentimes first time managers getting out there. It seemed like every dollar you deployed was just up and to the right, like, oh, this stuff’s easy. How come not everybody’s been doing this for so long? But then that 2022 came, rates went up, and just everything ground to a halt. You looked at the deal count just started to fall through the floor. You got the amount of money deployed, just so much uncertainty. Then you get to everybody’s capital being locked up in the banks because you had the banking crisis that was soon after that. Everybody got to the other side of that thinking, okay, what kind of sigh of relief can we breathe? Rates started to come down, but then that stopped. Then you had AI, which is just such a fundamental revolution in so many ways. I mean, if you get back to the boxing match, now it’s like a boxing match during earthquake. Where you just don’t even have firm footing as you’re trying to take these punches and give them. And AI today, and we’ll get in more into this, but there’s this term that was in a well-known blog recently that everybody is quietly freaking out, right? You might have money in the bank, you might have venture backers, you may not, which might be its own benefit, and yet everybody’s quietly freaking out because you just don’t know what’s going to happen in three months, in six months, in three years, right. But there are these IPOs now, right, we went about two years with no tech IPOs. And then 2023 started to crack that open with a couple of Clavio, Instacart, a couple others over the next few months. 2024 is better, but especially the last few months, you started to see a decent number of IPOs. And again, we’ll probably get more into that. But these are IPOs that are across a lot of different types of sectors that seem to be validating that people are ready to go back and go public, get DPI, right? Distributed Come back. And yet the fundamentals are still so uncertain, right? Today, capital markets do not like uncertainty. And so you get to where, okay, well, inflation seems to be low, but is that going to jump back up with tariffs, right. Economic activity seems to strong, but is, that can totally change with AI if people aren’t backfilled as they’re acquitting and just, what does that look like? So I think the number one thing that I would say today is there’s just so much uncertainty that the last few years have been this combination of, well, pockets of really good data and fact patterns. Pockets of really challenging data and fact patterns, and a whole lot of uncertainty politically, economically. It’s just a really hard time. And so back to my first point, founders in the season, a really, really special breed. Many of them are fit in terms of the fundamentals of the companies, and yet a really hard time to be running a company and to be investing in these kinds of companies, given some of that uncertainty.

Richard Cunningham[00:07:01] All right, that’s a world-class canvassing. I can see John and Rob both kind of jumping out of their seats to jump in. So gentlemen, I’m just gonna kind of open the floor and say, Jake just opened up the Pandora’s box. What thread would you like to pull on? Rob, go, we’ll start with you.

Rob Go [00:07:13] Jake, that was an outstanding overview of the last few years and description of where we are. So kudos to you for sharing that. So I have this view that it’s easy to think of where we are in the venture markets as sort of like a normal venture cycle, right? By nature of what we do, it’s a little bit of a boom and bust dynamic. I actually think that we’re not in the normal venture circle and that things have fundamentally changed, especially for early stage investors. So bear with me for a little bit. I think that there are essentially like four major shifts that have changed this market and more or less for good. So number one, I think the industry has matured, right? So we went from a world where venture was a cottage industry into a world where it’s much more of a mature industry. What happens mature industry, there tends to be concentration at the top of the market. As the big players tend to compete on scale and scope, and there are small players, but a lot of the economic rents get concentrated. So that’s number one. Number two, there’s been a rise of two unstoppable forces in the venture market. Force number one is Y Combinator, which basically eats up, by my estimate, 10% to 15% of the early stage supply. The other unstoppable force are mega funds. That essentially take up another 10% to 15% of the market with essentially price and sensitive activity at the early stage. And so you basically have this shrinking canvas for early stage investors, because it’s very, very difficult to compete against those two forces. The third is the idea of the power law went from being. Sort of like a non-consensus right idea to be something that everybody believes in and believes in to like the nth degree. And I think that that has huge implications in terms of how the different players in this market are behaving. And the last is we’re at the beginning of this AI super cycle, which has a much longer time horizon than a typical venture boom and bust cycle. This is more of like 20 to 30 year horizon as opposed to a typical, I don’t know, like five to seven year or like. You know, good times, bad times kind of cycle. And so you put those all together and man, we are in a different moment in time than we have been in since I think I started in the venture business more than, you know 15 years ago.

John Coleman [00:09:25] So I’ll try and be controversial on the other side. Jake laid out some of the challenges to the industry. I think this is probably the most bullish I’ve been on venture capital, at least in my career. And I think the reason for that is, you know, venture capital ultimately is about disruption first, right? About the ability to start new companies that have the potential to disrupt or change industries and more mature companies. And about the advancement of technology, because the vast majority of venture capital today is oriented towards either hardware or software. And I thinking if you look at the underlying dynamics of the macro environment right now, we are on the precipice of what could be the biggest … A series of technological changes in human history. So at least since the Industrial Revolution, but I could argue that it’s greater than the Industrial revolution because the fundamental technologies are more advanced and capable of advancing more quickly. So if you break that down, what’s good for venture investing? First is technological disruption. And I think disruption cycles in markets, in business, are faster than ever. I think new technologies quickly overwhelm old technologies. Business models change more quickly. I think there is more disruption in mature and immature businesses alike than ever before, which I think actually lends itself to new models and new businesses that can participate in that disruption. At the same time, I think we’re on the precipice of several different technological advances that would be world-historic in their own rights and actually feed into one another in unique ways, right? The internet is probably the most disruptive thing that we’ve all experienced in our investing career in terms of fundamental change to technology. But I think a series of things around energy production, around artificial intelligence, around robotics, around medical and scientific advances, and maybe some other categories are all coming together right now in a mutually reinforcing way, which means that we could go through a transformation in the underlying nature of the economy, the way that people work and businesses work, that it’s more radical than at any point in history. Now, that is predicated on the continued advances in things like quantum computing and energy, But if you think about it, artificial intelligence is like the backbone of that. But with the artificial intelligence, not only do you get this disruption in every single industry in the way that we have now machines that can perform like humans in terms of thinking, but those actually reinforce the technological advancement in those other areas. You need energy, for example, in order to support artificial intelligence. And so now we’re seeing nuclear markets open. We’re seeing advances in energy production technologies. We’re seeing governments be more open to alternative methods of production of energy, both because of resource scarcity and the increasing needs of AI. You’re seeing robotics advance in a way that, you know, robotics have been around for a long time. But the combination of robotics and artificial intelligence are going to create fundamental advances in those areas, I think, that are different than in the past, right? If you have humanoid robots, if you have self-driving cars or planes, now we’ve got hypersonic jet engines, which are making a comeback and more accessible and cheaper to produce. And AI is able to advance those technologies more quickly than they would have advanced in the absence of that. And that bleeds into things like medical technology, et cetera. And so if I think about just the fundamental opportunity to try and get in on the ground floor of the creation of new businesses that can fundamentally grow into massive businesses in a much quicker cycle than ever before with limited resources, I think that capability is greater. And the ability to dig into these technologies that are gonna influence the way every mature business operates in the world, right? Every single business has to pay attention to robotics, artificial intelligence, energy and other technologies right now. And I think new companies are best positioned to at least start those and pioneer those. And then, Jake, what you mentioned is the other side of the capital markets is now wide open. Rob, you mentioned mega funds. Jake, you mention IPOs. There’s less, I think, constriction on the ability of big companies to participate. We’re seeing Google and Meta and Microsoft done hundreds of billions of dollars into these markets now through acquisitions, acquihires, funding new startups. So, I think we could be on the precipice of a massive, massive technological change. The best way to access that change being through venture investing and venture backed companies. So, that might be the optimist’s view for why now is actually one of the most exciting times to be in the market despite its challenges.

Jake Thomsen [00:13:55] Yeah, I’d agree with you, Jonathan. I’d say that’s almost two sides of the same coin, because what I hear you saying, I draw a distinction a little bit, there’s the technology markets generally and completely agree with what you’re saying, because technology is being supercharged in all those ways. And some people ask, well, hey, is there still generally the advantage of having venture versus public markets? And to your point, right, there are these category-defining companies. If you look at the 1980s, 1990s with the personal computer revolution. And there’s been research done that says, well, every dollar of revenue for the Microsoft’s, IBM’s, the Apple’s in that season led to about $10 of GDP, right? You have this 10X multiplier of the underlying technology. I’ve got to believe that AI, I mean, it could easily be 10X at, right? For every dollar that is spent on revenue in these AI solutions, could lead to 100X at in terms of general growth of the economy, economic activity, and good companies have always been able to capture the value they create. And so I think we’ll continue to see that. We’ll continue see in the longer term, our performance and venture. And at the same time, it’s never been easier to write code to start a company. We’ve never had so many companies, right? You just look at base 44 acquired by Wix after six months, right, for $80 million, right. To be a venture investor and say, well, it used to be the software that was really hard to develop. And so, I could bet on a good team that could develop software. Well, now that’s the easy part of it. So almost the picking the winners as a venture investor and all the competition you have as a Venture Founder, I would say makes it harder as an individual in that system. And yet the system overall will continue to go in a really exciting direction, because I agree with your analysis there, John, that the market in general will drive forward in really compelling ways. It’s interesting though, that

Rob Go[00:15:36] But there’s this very stark dissonance where I think most people agree with what you share, John, at the macro level, right? Like a huge amount of optimism about the potential of these technologies to be transformative and be, you know, kind of multiplicative in the economy. But at the same time, you have a lot of folks on the ground who are having a really either raising money, building companies, exiting. Lack of liquidity. So that dissonance I find very, very interesting. It’s not that those two things are in conflict with one another, but there are other things going on that we need to get through to enjoy this period of flourishing that hopefully will be on the other end.

John Coleman [00:16:13] The illiquidity in capital markets, particularly because Jake mentioned DPI in his opening comments. I mean, any time you talk to a limited partner right now, they are not getting the money back for the last three years that they expected from their private funds, from private equity, from venture capital, et cetera. And so I do think one of the challenges for the industry is like, how do we shorten that liquidity cycle in such a way that people actually have the liquidity to reinvest? In these markets because the hold times have just been too long for people to get the liquidity to reinvest. And so Rob, I think you and Jake are entirely right. The capital markets are still a little frozen for investors who have traditionally participated in venture because they remain over-allocated into old funds from which they haven’t gotten distributions. Right? And I think the IPO markets and, you know, big companies like Meta or Google or Microsoft acquiring are helpful to introducing capital for acquisitions, but not for funding from the ground up, or at least dominantly not for finding from the ground up except internally. And so there is a disconnect right now, I think, in the capital markets and the opportunities that might be out there if they were.

Richard Cunningham [00:17:17] All right, we’ve got three really intelligent gentlemen going at it here. And then I consider myself the people’s host because then there’s me. And so just to kind of level set, because you’ve thrown out a lot of terminology, Jake and Rob in particular sit in the general partner seat, which is they are fund managers. They go raise limited partner capital from wealthy individuals, family offices, high capacity folks, institutional investors, things, endowments, pensions, foundations, things of that nature. They pull that capital together as venture managers and then go deploy it into Deals, founders, startups, and those folks. And so they kind of have this unique perspective where they’ve got their limited partners they need to care for because they’re stewarding and shepherding their capital. And then they go out and they pour the capital they get into companies they want to take bets on. And so I just want to kind of orient people around to where expectations are. And you’ve got this liquidity issue where the limited partners who have invested in the funds are eager to get DPI. So distributions back to themselves as investors. They’re saying, hey, we need these companies that Jake and Rob have invested in. To exit to generate some type of return so we can get our capital back and go invest in another fund or whatever it might be, or we’re just, we’re liquidity strapped and we need to get some cash back in the door. So just kind of want to get some terminology right there. So Jake and Rob, in that seat you’re sitting in right now, what are you thinking about the most? Cause you’ve got to source new deals, you’ve gotta go find the founders out there. You’ve got the founders you have invested in across your funds. And then you’ve also got the demands of limited partners who are asking you, knocking on the door, Hey, when are we going to get those distributions? I mean, you’re in an incredibly complex role right now with all the dynamics we’ve spoken to. Maybe the question is just how are the founders doing? Like those that you interact with on a day-to-day front that you’re investing in. Jake, you mentioned their resilience early on. What are they thinking about right now and all the founders that you’ve invested in?

Jake Thomsen [00:19:03] Yeah, so it is, it’s a difficult time where I think I’ll go back to what I mentioned earlier of just not quite knowing what things will look like for the next few years, largely related to artificial intelligence. I mean, late 2022, when chat should be first came out. I remember being at a Christmas party and just making Christmas poems from it and thinking, oh, this is going somewhere. This is going somewhere pretty fundamentally potentially changing of everything we do. And yet we don’t know what that looks like. I couldn’t have guessed how I’d be using various LLMs and AI and CLOD today. And I think you generalize that and you say, well, what does that look like over the next few years? And it’s almost a, you don’t know what you don’t t know where so much of technology has been linear, where you can kind of see, okay, the internet, you can track where we thought it would go. Right. First, you had more of a linear progression of everything that was already being done came online. Right. All of a sudden you had the white pages, yellow pages online. And you had Pepsi.com, right? Business as usual is now online, but we couldn’t have foreseen were those internet native companies, social media and others would probably wouldn’t have said this is going to happen down the line and yet those are some of the biggest companies of that era. And so I think the question is, how does it fundamentally change? What does it look like to be AI native to implement these tools? Because if you’re not implementing tools at every level of your stack, if you are not hiring people that are thinking kind of first, how do I adopt the efficiencies of a lot of If you have this framework where there’s perfect competition on one end, venture has always been very clunky, right? Again, the software, trying to get venture investment. Well, it’s becoming more and more increasingly through AI of a perfect competition construct. And you’re going head to head with a whole lot of people. So we see a lot of founders that they’ll raise around, they’ve got 12, 18 months, and they kind of can breathe for a little bit, but they’re already terrified of what 12,18 months looks like because they’re going to build with working hypothesis. They don’t know how that needs to change. So they just can’t. Have a magic crystal ball and try to figure out what that looks like. So it’s just, it’s that uncertainty is what a lot of these founders are experiencing day to day. That’s what we’re seeing.

Rob Go [00:21:02] Yeah, maybe if I can chime in, we were thinking about all the things that you mentioned, right, liquidity, new investing, you know, supporting the companies that have been out there, right? Like the beauty and the curse of being a fund, you know, having multiple funds that are in different stages is you kind of have. You know, I’m thinking about a founder who just raised their first seed round last week and they’re just trying to find early signs of product market fit, and then I’m talking about founders that, you know, they’re 12, 13 years into their journey and they are either thinking. How do I get an exit or like maybe it’s day one and I see another 10 to 20 year horizon here for this company to keep on growing. And how do I be aggressive about that? Right. So it’s kind of funny being a GP, you kind of like live all these parallel lives at the same time. I actually think that there is general optimism, I would say, you know, in our portfolio among the founders, right? Because if you started a new company. You’re hopefully optimistic, right? Like you’re still trying to take the first hill and you build conviction around this problem and this product that you’re building and you’re excited about that. I think for a lot of companies that are in the mid or later stages in life, they just got through this very, very difficult period where maybe they were sitting on a super high valuation, had a lot burn, they had to get fit and get their companies in shape, but they’ve sort of done that. You’ve either done that or you haven’t, you’re not gonna survive if you haven’t done that And now you have this like new substrate of like really, really interesting capabilities that hopefully you’re forward thinking and are applying into your businesses. And you’re seeing really great returns. Like one of the interesting things about AI is that a lot of the returns can accrue to scale players, right? Because if you save, you know, 10 or 20% of costs somewhere. Like it doesn’t matter that much if you’re like a 10% startup, it matters a ton if you are like a, you know, thousand person company or a company of really significant scale. And so, you now we’ve seen a lot of our late stage companies, you have new lines of business or massive efficiencies gained through some of the, you kind of low hanging fruit presented by AI and that’s just really the beginning. So I think that generally there’s actually a lot optimism in the portfolio, albeit with full awareness of a lot the challenges that folks are encountering as well.

John Coleman [00:23:13] Are you seeing a bifurcation amongst type of companies? So like one of the things that strikes me, because Jake mentioned it earlier. You know, we are seeing companies now that barely even exist with people leaving OpenAI or Apple or whatever and getting like a billion, eight billion dollars. Johnny, I haven’t got these crazy valuations. You can build a billion dollar company with a couple of people now that’s software oriented, that’s AI oriented. But we’re also seeing a shift to hardware investing and venture and breakthrough hardware technologies, where obviously the capital intensity of those businesses is greater. So it’s a little opposite of what you guys described, where there’s just so many founders, things are getting created so quickly. You know, to create, you know Jake a cloud seating platform or something like that. You actually need more capital intensity to make that work. But we’re also seeing some of the most interesting companies being hardware oriented now rather than software oriented which I think is a bit of a pivot. Are you guys seeing kind of a break in the types of companies in the way in which founders are acting or VCs are acting at the moment?

Jake Thomsen [00:24:15] Yeah, I’ll chime in and say, absolutely. And I credit that with a couple of different trends. One, because software is no longer the scarce resource, right, we’re investing in things that five years ago, we would have said, well, there’s friction there because it’s hardware, because it is hard tech, because there’s a services component. That friction was a negative back then because you really wanted to focus on the software piece. Now that software is almost interchangeable, all of a sudden that friction becomes your economic mode. And so it’s the way that you protect your positioning. And so we are, I mean, we’ve invested in a handful of companies that wouldn’t have been on the target in the past. I think there’s that piece of it that the hard things are more defensible. There’s also, I love to hear Rob Stotz on this too, but there’s almost a change in the zeitgeist a little bit of kind of what founders are most motivated by. Probably the confluence of whether it’s the elites in Silicon Valley, right? There are more and more, you mentioned all in podcasts, right. And there’s a couple of those guys just have gone a little bit more right and unpack that in ways that they’re being listened to. You’ve always had Peter Thiel’s and Elon Musk and Mark Andreessen with American dynamism, right? You have more of that where there are the cultural elites, you have this almost political narrative, which not to get too much kind of sociological, but the difference in just the tenor of the two different administrations. Right this administration is much more the vision of the good life is quite different therefore the threat we face is quite difficult and that threat tends to be external right it’s different nation states it’s the the future of american prosperity right there are a lot of founders that have been there quietly building that now have a renewed sense of agency and a new voice and so we’re seeing i’ll just give a shout out to the reindustrialized conference right it in its second year up in detroit on this week there’s like discipulous ventures that are all hard tech investors. I mean, Rob talked about Y.C. And the bellwether they are. You know, Gary Tan, just I think it was last week, had said, hey, we’ve really been focused on agents and the rest, like we need to focus on hard tech, too. So they’re making a call for startups all around the hard tech space. And you see, take those two things that the elites, the political narrative and then even the policy where there is more I mean tariffs do lead to reindustrialization in a way that we saw a lot of interest in a company just recently that their thesis was the U.S. Produces the most cotton in the world. And we import the most cotton products, but all the steps in between, right, it’s going all over the world before it comes back. Why don’t we just have technology that are 3D printing for knitting, right? Let’s build something like that. And a bunch of ECs were clamoring to get an awesome entrepreneur. But that is something that wouldn’t have been nearly as competitive a deal even just two, three, four years ago, because you have the type of policy like tariffs that make that possible. You know, the Pentagon launched its Office of Strategic investment right to invest in long term hard tech and that was. Signed under Biden but wasn’t operationalized until just now. You have a lot of things coming together that I do think you’re seeing like cloud seeding, like nuclear small modular reactors, a lot that just would not have been considered kind of core venture that are getting closer and closer to the core just over the last couple years, especially the last year in particular.

Rob Go [00:27:15] I’m going to take a little bit of a contrarian view here. I think this is a point of view that like software is commoditized because of AI. I don’t think that’s going to be true. I actually think that great products will still distinguish themselves. I think that crappy products will be commoditize, but I think really great software products will still stand out and you’re going to build amazing companies around that. I think that there is a couple smoke screens on the two extremes, right? Like the 10 person billion dollar startup. I don’t know if that we’ve seen that yet. I don’t know if we’re actually going to get there. There is a billion dollar valued companies with 10 people, which are essentially acquihires. But like, you know, are 10 people going to build great products that customers use and pay for and are defensible? I don’t really know if thats going to happen. On the flip side, I think the hardware thing… We have some hardware companies in our portfolio, and so I’m not going to knock that, but I think it’s a little naive to think that like, okay, like things are just going to be easier for hardware startups today. I think there’s two forces going on. I think one, we’re in a boom cycle within sort of AI robotics and that sort of thing. And so capital is just flowing there more easily. I think the second is that like because it’s been a hard period in sort of traditional software or, you know, software exits, there’s the sense of like, If I’m not going to get a decent outcome from a software company, I may as well bet the farm on a crazy hardware company, right? And by the way, the mega funds have a ton of capital that they’re pouring into these things. So I’m probably going to getting a markup or my chance of getting a markup is just as good, right. As a software. But like when this is all said and done, like what are the best companies going to look like? I think there’s still going to. Look mostly like software.

John Coleman [00:28:58] Can I ask a second question to you guys? So, I remember a very contrary intake I heard, gosh, nearly 20 years ago now, 15 years ago maybe, from Peter Thiel, where he was arguing that basically there hadn’t been much scientific progress since the computing revolution, that most of the new technologies that are really exploded. Were not actually human advancement in the way that cars were, industrial technology were, like social media, which I would argue has been arguably one of the only tech advancements that’s been like a net negative for society, at least in the ways that it’s impacted individuals for human flourishing and on, you know, metrics that we can measure, there are a lot of problems as a result of that. It strikes me picking up what Jake said with this tenor of American dynamism, solving hard problems, and maybe Elon was a part of this or others were. That a lot of entrepreneurs now are thinking about impact more than they were in the prior cycles. Like a lot people rather than just saying, I’m gonna create the new social platform or a new dating site or whatever, are really leaning into structural problems that humanity faces, whether that’s manufacturing. Defense technology, energy production, weather influence, things like that, where they can define what they’re doing in terms of the positive ways it will impact flourishing in society and represent more fundamental scientific and technological advances. Am I just like an optimist about the environment right now or are you guys seeing a similar vibe shift, so to speak, amongst founders? Like how do you see that versus maybe 10 or 15 years ago?

Rob Go  [00:30:30] So embedded in that question would be the thought that 10 or 15 years ago, founders maybe were less ambitious or saw less of a connection between what they were building and sort of like the meaningful problems of the day. I don’t think that’s the case.

Jake Thomsen [00:30:47] I agree. I think the founders that do really well, you’ve got to have that conviction that you’re doing something for a very good outcome, not just financial outcome, to put yourself through this kind of wringer. And I do think this maybe is a bit of vibe shift just more recently than 10, 15 years ago. And it’s a gross oversimplification. But if the prior spirit of the age was almost like seeing the good life is a bit different and therefore the threat’s a bit different, I think there was almost a sense of the threat is internal in some ways. And the way that people, not both what they built, but also how they built I think was very much aligned with their value system, right? This is where you got to a lot of, how do you think about who we hire? How do we think about addressing some of the problems in society through various structures and systems, right. A lot of just the conversation of the last few years, you saw that as a big conversation in the tech community. And so it’s almost like the problem that was being solved more recently, might’ve been different than addressing that threat externally, a little bit more of like, hey, we’re addressing the threat in our systems and structures. So that there’s always, I think ever since the beginning of Silicon Valley, where you got all the hippies going out and saying that we’re going to build new things for society, I think that’s still there. It just takes different shapes over time.

Rob Go[00:31:56] I also think that companies like over time earn the right to expand their ambition. And that’s not really a problem. And sometimes you have companies that go out with huge ambitions out of the gate, but it’s just not practical or, you know, it’s more narrative than it is reality. One of the things that I really can’t stand in the market right now is this concept that like, you need to have this infinite narrative in order to be a successful startup company. And I think that that’s just like so backwards. Like we’ve totally lost the script if that’s what we’re telling founders at this point. Because like, I think building great products and solve real problems is like the ultimate narrative. And if you have success and scale that earns you the right to expand the narrative down the road. And in an example of that in our portfolio, we’re investors in this company called Whoop which is a human health and performance company. We’ve been in this country for 12 years. You know, I think Will is a very ambitious founder, but it had a very narrow goal around trying to understand rest and recovery for elite athletes, of which he was a part of and he had connections to those type of people. And in the last year, they’ve expanded the vision of the company beyond what originally was around human performance to lifespan and healthspan and longevity. And I actually think that this is a company that they could have gone out with that mission out of the gate, and maybe that was in the background, but they had to should earn the right to be able to do that and to do it credibly. Instead of just being a business that like, okay, we’re saying we’re going to do this great thing, but like, do we really deliver outcomes for our customers? Or are we just like, you know, trying to feed into an infinite narrative so that folks will fund us down the road? I don’t know. I just don’t like that.

Richard Cunningham [00:33:32] All right, shifting gears a little bit, wanna go into the performance conversation some. Both of you guys, Jake, Rob, John, you as well, I mean, you’ve been in market raising funds, private market funds in particular, and the MAG-7 went on such a run. How was it defending private markets investing to limited partners who were just saying, hey, if I just put money in the S&P 500 or the NASDAQ, whatever it is, it just goes up into the right and this is easy. Like, why on earth would I tie up money for long periods of time in the liquidity window? Where are you at sentiment wise? What are you recognizing in the market as people kind of LPs in particular look to the private markets, ventures specifically, with kind of this private versus public and how folks are kind of reconciling that conversation and just kind of the overall performance of the asset class.

Rob Go[00:34:19] So this goes back to the point I had around the power laws consensus. And I think we’ve really seen the power lot work over the last few years, not just in early stage investing, but across all stages of investing, right? So you talk about the mag seven. We don’t hear that as much, but what we do hear is, boy, I could have just bought late stage SpaceX or, you know, shouldn’t I have just like bought Nvidia stock and like, how are you going to beat that, right. We’ve seen this like concentration of performance in a very, very small number of companies. And so if you’re, you know, because when you buy venture capital, the whole idea is you’re trying to buy alpha, trying to by like outperformance while absorbing a greater amount of risk. And, you there are other ways to do that. I think that in the last few years, that’s actually been a very compelling argument. It’s hard to actually argue against that. My view, though, is it goes back to sort of where we are in the innovation cycle. I think that we are in the very baby step ages of the super cycle around AI, which over the arc of the next 20 or 30 years, I think, that you’re going to continue to see our performance from early stage private and liquid investing in the application layer. But early on, you actually don’t, right? If you think about the early days of the internet, most of the outperformance comes from a very small number of infrastructure and sort of enabling technology players, right? And that’s where we are on this innovation wave. Or, at the end of the last cycle… You know, all the performance is concentrated in a couple like big, big mega late stage companies. So we’ve been in this like moment in time where I’d say early stage venture is almost destined to underperform. But I think if you look over the arc of several decades, there’s reason to be optimistic because, you know the stage that we’re in is not going to last forever.

Jake Thomsen [00:35:58] And that question, too, is a little bit of selection bias. If you knew the Meg 7 were going to be the Meg 7 number of years ago, well, yeah, it makes all the sense in the world. And if you knew, the hottest venture names are going to the hottest names, and you bet on the fund that had those, I mean, you’d drastically outperform the Meg seven. So I think one of the benefits of a venture capital is you do have professional managers that are going out finding these companies, that you have a distribution that the median is still going to outperform. You can’t always pick the winners ahead of time. If you invest. If you take that view now, only time will tell. But if you have a basket just in the mag seven, who knows what that’ll look like over the next three to five years, especially compared to the up and coming private companies that venture would invest in.

John Coleman [00:36:38] In a couple of macro comments, and Rob touched on this, the outperformance of public markets generally has been enormous, particularly since the great financial crisis starting in 2008, 2009 after the collapse. We have been in basically an uninterrupted bull run with little dips around COVID and some other things that’s like historic in relation to public markets and one of the biggest bull runs in the history of public market. A lot of that outside of these Mag-7 was fueled by monetary policy, honestly. You dump trillions and trillions of dollars into an economy like you did after the great financial crisis, like you do during COVID and after COVID probably too long, and you’re going to inflate markets. That money has to go somewhere. Public markets are going to go up. U.S. Public markets are the biggest destination for capital in the world right now. U. S. Public market are the flight to quality. They’re going to go up. And so the return to the S&P 500, particularly for the last 15 years, since the great financial crisis or a little bit longer, have been an historic bull run, even outside the mag seven, even without selection bias, which I agree with Jake, private markets over that period of time, still outperform public markets, but by less than they used to And I think one of the things that Rob and Jacob already mentioned is the number of new GPs in private markets has exploded over the last 10 or 15 years, particularly that COVID bubble where in 2021, we were just seeing a radical expansion of the venture capital industry. But what that’s led to is a bifurcation between the best venture capital firms and the worst. If you look at top quartile venture and private equity firms, they’re still blowing away public markets. If you look at the average or the median. It’s a little bit more compressed because the bottom quartile performers significantly underperform public markets. I mean, the gap between a bottom quartel and top quartile venture firm is like 2,000 basis points, right? It’s not, you know, 100 basis points. There’s a huge difference between the quality managers in this area and those managers who aren’t consistently able to produce quality. And so I think… You know, we do hear that a lot. I mean, you know, the famous example, the Buss family is selling the Lakers right now for $10 billion. It’s the biggest sale in the history of American sports. He bought the team for $68 million in 1979, got $10 million for the family here in 2025. If he had invested that $69 million in the S&P 500 in 1979 it would now be worth $13 billion, right? I mean you know you get these anecdotes all the time. But I do think, look, bull markets don’t last forever. I think private markets still outperform. I think particularly with the winnowing of GPs that’s come over the last four or five years where the number of new funds started has declined, that you will see better funds continuing to kind of outperform public markets, particularly as they plateau. And the only question mark now is, do we now live in a winner-take-all world where the mag-7 or the top 10 or 20 companies in public markets that are massive, that have tons of cash, whether that’s Apple or Google or Microsoft or Tesla or maybe OpenAI, once they public, etc. Are just so scaled and better able to compete in this new environment because of the capital at their disposal that they can continue to accumulate the vast majority of returns in public markets. And Rob, you mentioned like late stage SpaceX, like 50% of the returns of the S&P 500, not the alpha, the returns to the S& P 500 have been the magnificent seven over the course of the last, I think it’s like three or four years, right? 50% of the returns of 3,000 stocks have been seven stocks, right? And the question I think some people are asking is, is this just the new normal where it is more of a winner-take-all in public? And that is a question, I think, but I think the average performance of private markets versus public markets is likely to be a bit better going forward, and particularly if you can get an above-median manager or top-quartile manager, their outperformance has actually been pretty steady over that time and will continue to be.

Richard Cunningham [00:40:48] Good reflections. Thank you, guys. Hey, let’s go around the horn one last time before we get into our final question and just, hey, what’s that last thought kind of thing on top of your mind that we didn’t get to, I got my eye on the clock, that you’d want to share maybe just a quick kind of comment on the venture markets you’d like to leave the listeners with. Rob, we’ll start with you.

Rob Go [00:41:03] I continue to believe, and actually it’s validated with folks I talk to actually know a thing or two, I think, about the technology, we are much more likely to underestimate the impact of AI than we are to overestimate it. And that’s easy to say now, I guarantee you, in two years or so, it’s going to like an AI wasteland because these markets have this sort of boom and bust dynamic. So just remember, when we’re in the bust period, sometime in the next couple of years, even when we were optimistic, we were underestimating how great this is gonna be. So that’s my last thought. All right. Jake, what do you got?

Jake Thomsen [00:41:42] That’s a great thought and totally agree I might take a little bit different perspective just given this subject matter we have around faith. We’ve had a lot of conversations recently about technology and at what point are we playing God and we’re all kind of nervous around this and how do we think about it faithfully and I just love that the simple framework as believers where we can look to scripture we can say okay where’s technology show up in scripture well a couple of illustrative examples right you got God quite literally prescribing technology right you read in early and assess where he gave. Most advanced maritime technology, like quite literally the schematics to go and build tech, right? So, so God has prescribed that at times. You go to the Tower of Babel where there’s this construction technology able to build something, but for all the wrong reasons, well, God decided to step in and actually thwart something that was going in the wrong direction for his overall plan. And you look even further on and you can see where he repurposes technology. I mean, the Cross was quite literally, the most advanced kill chain technology of the Romans. And we all know that that took something that was so awful and horrible and turned in the most beautiful day three days later of all of history. Right? So God can prescribe technology, can thwart it, can repurpose it. And so we don’t have to be afraid, I guess, to the point. We serve a sovereign God. We are His hands and His feet. We can go and develop thoughtfully, right? We can build. We can use products. And I think we can have an optimistic perspective of technology and of investing in technology, even from the fundamentals of our faith.

John Coleman [00:43:05] And I just want to build on both of those comments. Rob, I think you’re 100% right. I mentioned it earlier. I think we’re underestimating the technological change that’s coming. I mean, the only thing I can think of that’s even remotely similar would be the Industrial Revolution, which fundamentally changed humanity. I mean GDP per capita now is something that one or 200 times what it was for the 3,000 years prior to the Industrial revolution, right? And I think this change that’s coming, you know, absent some sort of intervening force. Technology continues. We are in for as radical a transformation of the human experience as the Industrial Revolution, maybe even more so now. And there’s reason for optimism. Rob, I think every technology everyone has ever been afraid of in the history of humanity has worked out better for humanity. There have always been anti-technology movements, they’ve always been wrong. However, you know, there are visions of the future you can paint now where we have humanoid robots and artificial intelligence and people are out of work. Disruption cycles like the Industrial Revolution lead to abuse. They can last for decades, not months or years, right? And so I think particularly as people of faith who care about individual human flourishing, we have to be optimistic because of our sovereign goddess, as Jake articulated, but we have be uniquely attentive to what is changing about the human experience and how can we as investors and people help to shape that in a positive and constructive way and help the people who are struggling with this adjustment find their purpose, meaning their way of life through that, right? Because you can picture this going bad and us ending up in idiocracy or wally, you know, this terrible vision of humanity where we serve the machines or the matrix or the Terminator if you’re really, really negatively inclined. You could also picture like a Star Trek future where all this technology enables us to explore the stars, to learn more about ourselves and the universe, to really uncover something beautiful about humanity. And that choice is going to be not ours to make. We have a sovereign God, but we have an influence here as people of faith, I think. In the way that humanity navigates this transition. And if Rob is right, that this is gonna be bigger than we even anticipate right now, I think we have to be more attentive to what that does to individual people and how we as investors and technologists shape that future such that it can be a continuing positive story rather than an era that we look back on and say, wow, there was so much that was broken then, there were so many people who were lost, there were many people that didn’t navigate it, right? And so. That’s one thing I think about a lot is like, this technology is coming. No one can stop it. Absent God in a Tower Babylon moment, no one can stop it! How can we navigate that in a way that the average person’s life gets better, not worse, and that humanity in the future looks better, not worse.

Jake Thomsen [00:45:50] If I can, not to extend this too much longer, but let me just pick up on that. It’s been so encouraging, you know, at Sovereigns, we invest in faiths and founders. And this weightiness and this sense of stewardship that you’re talking about, John, it’s so cool to see the body of Christ stepping into. And there’s this felt sense that we kind of missed the boat in social media, right? And there wasn’t a strong view of human flourishing in a lot of the companies that really shaped social media. And we kind see what happened with mental health and depression and the rest. And there was this felt of sense of We can’t miss a boat with AI. And so believers have to step in. We have to build with excellence, but we have to built with the meta narrative and view of what it means to be human, like what it mean to flourish, right? And that’s been a really cool thing to see from my vantage point of the way that we are the hands and feet of Christ, even in technology and to see the charge that a lot of faith from founders are taking. I’ve been encouraged by that and just values driven founders for that matter, right. It doesn’t necessarily have to be from faith, but that’s cool to see.

Richard Cunningham [00:46:45] Well, Rob, your comment was so profound that it caused John and Jake to misbehave and jump the gun and start giving a kind of a scriptural spiritual reference before I ask the question. So we’re gonna give you the final word on anything God’s been teaching you and then through his word lately, it would take us home.

Rob Go[00:47:02] Yeah, so there are a couple of things that I’ll tie together and I’ll make a couple of recommendations to while I’m at it. So we’re investors in this company called Hallow, which is primarily Catholic focused, but really it’s an app that I use every day and there’s a bunch of different types of content that you can consume there, but anyway, so this morning the scripture reading was around Jacob wrestling with God. And one of the things that really struck me about that passage was how kind of like in awe and fearful. But also anxious, but also amazed he was to have had a direct encounter with this being. His response is both like, he’s fighting with this person. He’s like, wait, who are you? Tell me your name. Oh my gosh, I can’t believe I survived. It’s just like this amalgamation of emotions because of how rare and unusual it was, I think, for him to have this direct encounter. So that really struck me. I’ve also been reading a book by Greg Boyd. I’d previously read a book of his called Cross Vision, which is pretty dense. He essentially created a, like, 120-page, easy-to-read, good parts version called God Looks Like Jesus. And his basic thesis is, you know, it’s very hard to understand the God of the Bible unless you think of Jesus as the full reflection of God’s person and character and the ultimate reflection of that. And when I put these two together, the reflection that comes to mind is just, like how privileged we are that we live in the era of post Jesus, where we don’t need to. Have an encounter with God that feels so mysterious and weird and unclear where we have a person that is a more complete reflection of who God is and then that person invites us into a relationship with them. And so it’s just like such an amazing privilege that we can have that intimacy and a reminder that we didn’t always have that. So that was kind of the thing that was on my heart today.

Richard Cunningham [00:48:51] Perfect word. Well, folks, what an epic edition of the FDI pod. Thank you so much for joining us. Jake Thompson of Sovereign’s Capital, Rob Go of Next View Ventures, what a treat to have you guys on. For John Coleman, I’m Richard Cunningham, and we will catch you next time.

Host [00:49:07] We are grateful for the opportunity to serve this community and see listeners come in from more than 100 countries. Faith-driven investing can be a lonely journey, but it doesn’t have to be. The best way to stay connected is to join a group study with other investors looking to get the same answers to questions you have and find great community as they do so. There’s no cost, no catch. In person or online, you can meet an hour a week with other peers from your backyard or the other side of the world. You can also stay connected by signing up for our monthly newsletter at faithdriveninvesting.org. This podcast wouldn’t be possible without the help of many of our friends. Executive producer Justin Forman, intro mixed and arranged by Summer Draggs, audio and editing by Richard Barley. Our theme song is Sweet Ever After by Ellie Holcomb.

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Today’s episode, we’re talking to someone who is an expert in his field but also a dear friend to all of us who host this show. Luke Roush co-founded Sovereign’s Capital in 2012 and serves today as Managing Partner. 

On today’s episode, he shared the story of the startup that spans from Jakarta to Silicon Valley and Washington DC. As you know, the Faith Driven Investor movement is a global one, and Luke provided some great insight on some of the snares and pitfalls, as well as trends he’s seeing emerging, as we head into the future.

As always, thanks for listening.

Useful Links:

Sovereign’s Capital

Impact Investing with Sovereign’s Capital

Creative Destruction and Work as Transformation

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: [00:02:34] Welcome back to the Faith Driven Investor podcast. You know, we haven’t spent much time at all talking in either the Faith Driven Entrepreneur or the Faith Driven Investor podcast about what some of us do during our day jobs. And a lot of that’s been neglect. And just thinking that other people’s stories are really interesting because they are. In part, that’s also because we’ve never wanted this to be anything that would be self-promotional. And yet we very much do feel called by God to do the work that we do at Faith Driven Entrepreneur in Faith Driven Investor and at Sovereign’s Capital. [00:03:06][32.4]

[00:03:07] And for those of you don’t know, Sovereign’s Capital is an investment fund that Andre Mann, Luke Roush, who’s our guest for today, and I started about eight years ago coming out of the experience that we collectively had in running faith driven enterprises and believing that there is an opportunity to have aligned capital coming alongside and encouraging the entrepreneur to be able to love their partner, vendor, customer or employee in a way that might have some level of marketplace witness and transformation. And so we started Sovereign’s Capital, which is a fund to do that. We did it eight years ago and over the course of those eight years have invested just about 45 companies in the southeast and in Asia and along the way have brought onboard just an incredible staff to include William Norvel, frequent co-host and co-founder of Faith Driven Entrepreneur. So it’s been with the Faith Driven Entrepreneur podcast and Faith Driven Investor podcast since the beginning. Many of you may not have known what he did. You may have thought that he was a color commentator for Alabama football or basketball. But no, actually, he is a full-time investor. [00:04:07][59.9]

William Norvell: [00:04:08] Honestly, the color commentator for Alabama basketball is pretty bored. In fairness, I might get that job one day. [00:04:15][7.2]

Henry Kaestner: [00:04:18] Luke, welcome to the podcast. You have never been—have you ever been on the show? [00:04:21][3.4]

Luke Roush: [00:04:22] I have not. Long time listener, first-time guest. [00:04:23][1.8]

Henry Kaestner: [00:04:24] It’s awesome. What do you think? [00:04:25][0.7]

Luke Roush: [00:04:27] Thrilling. [00:04:27][0.0]

Henry Kaestner: [00:04:30] So why don’t you do this, why don’t you take us back to the beginning and tell us what Sovereign’s Capital does, what’s its theory of change? Why does it do what it does and then just bring us up to speed? And then as you do that, I’d love for William to chime in a bit as well, because the funds have matured and gotten bigger and there’s been more opportunities. We’ve seen other niches in some of those are ones that Williams involved in particular. But take us through again the problem we’re trying to solve, the theory of change, all that. [00:04:58][28.8]

Luke Roush: [00:04:59] Yeah. So just to back up a little bit before that. My background was really as an operator and I think that Sovereign’s was really born out of our experience collectively as operators and we had seen the impact that capital can have on the direction that corporate cultures and corporate values take. And my background is really in medical devices and healthcare consumer products. And I had seen the impact that venture capital had on companies that I’ve been a part of and started to have, you know, what I would call just a holy discontent around the disconnect that I had seen between my own faith and who I was on Saturday, Sunday and who I was during the week. And I hadn’t been involved in anything unethical or anything crazy, but I just really felt a sense of real sacred secular divide in my own work and my own faith. And I had a desire to try to figure out how to bring those two worlds together, something the Holy Spirit put on my heart. And he also put some people around me that I think pushed me to better understand how those two worlds might intersect in a way that was winsome and relevant. And so our real theory of change at the beginning of Sovereign’s Capital, which has really persisted over the last eight years, is that people who are leading companies and building businesses are ones who are truly shaping culture. If you think about the entrepreneurs the last fifteen or twenty years, they’re all impacting the way we work, the way we play, the way we interact and communicate with one another. The way we live, the way we work. And there’s a huge opportunity in the midst of those enterprising businesses to be able to really create new culture and define the way people interact with one another. So we really felt as though the opportunity as an investor to come alongside entrepreneurs and to be able to speak into their journey in both who they were in terms of their identity, but also how they thought about using their businesses to be a blessing to others and impact culture in positive, redemptive, restorative ways. Just a huge opportunity. We weren’t a hundred percent sure what that looked like, but we knew there was something there and that was kind of how our journey began. [00:06:54][114.8]

William Norvell: [00:06:55] Thanks for taking us through that amazing journey from where you guys got started. I’m sure it’s an amazing effort to have the world’s greatest co-founder, not just next to you, but along the journey around, it’s good to have Henry on board. [00:07:07][12.3]

Henry Kaestner: [00:07:08] Who’s that? [00:07:08][0.3]

William Norvell: [00:07:09] Yeah, yeah. that’s you. [00:07:10][0.7]

Henry Kaestner: [00:07:10] That’s a shout out to Andre Mann right there. [00:07:12][1.9]

William Norvell: [00:07:13] Yeah. I hope Andrew is listening. But Luke that’s an ambitious goal. You know, you guys set out on an ambitious journey here. There were like you said, it’s kinda shown itself to work. I’m sure it wasn’t that easy, though. I’m sure you learned a lot of things along the way to our investing audience. I feel like most investors. Right. You go out trying to prove a couple of big things, right. You think they’re true. That’s why you rally support. That’s why you raise capital. That’s why you build a team. That’s why you go out to make investments, to try to make a market return, but also make an impact in the world. What were those three or four big things for you guys as you started and how those play themselves out of three years? [00:07:49][35.9]

Luke Roush: [00:07:50] Well, one of the things that we really were hoping to be able to prove out was something that you just said, which is we hope to be able to deliver both an at market rate of return, but also see businesses be salt and light where they were planted. And, you know, I grew up with this two part gospel of we are sinners and we need a savior. And that was really the extent of a lot of what I heard on Sunday mornings. But there was also, as I came to better understand this creation narrative in the early part of the Bible and then a restoration narrative in the latter part of the Bible that I really came to believe were central to the journey that many of us as business people were on. And so now we had this idea that many thought was really crazy at the time because the prevailing winds back in 2011 and 2012 were that there was a tradeoff between sacred returns or spiritual impact and secular returns or at Market Alpha or better than at market real achievement of Alpha in terms of investment results. [00:08:42][51.9]

[00:08:42] And so we had this idea that actually biblical values generally correlated with good business principles and we wanted to be able to actually test that out and to evaluate and prove in the context of a professionally managed fund, not an investment or a company, but actually a portfolio of companies that both spiritual returns and financial returns could be pursued in parallel, not at the expense of one another. But in some part because entrepreneurs had a clear sense of who they were and what they were trying to do in and through their companies and were able to instill that belief in that ethos within their employees who ultimately extended that into, you know, customers and the entire ecosystem that a business operates. So that was one of the big things that we wanted to prove out. [00:09:21][38.5]

Henry Kaestner: [00:09:21] Do you ever find any conflict in that? [00:09:22][1.3]

Luke Roush: [00:09:23] Absolutely. Absolutely. So, you know, particularly when you think about short term, medium term, what’s going to happen this month, what’s going to happen this quarter, what’s gonna happen, you know, in the next year or two? There are absolutely some Zero-Sum games to be played in that timeframe. [00:09:39][15.8]

[00:09:40] But our view, my view, is that over a longer time period. Call it four, five, 10, 15 years to the extent that you make businesses that really value employees. And then those employees are able to make decisions to value customers and to develop things that customers love. It affects the economic engine of the business such that you’re able to acquire customers and retain customers way more cost-effectively than your peer group. And so over a long haul, we actually. To the integration of gospel into core business practices has actually correlated positively with returns, not at the expense. But you’ve got to take a long view. Short term is definitely some sacrifices. [00:10:17][36.9]

Henry Kaestner: [00:10:18] Are there enough companies out there to invest in? [00:10:20][1.6]

Luke Roush: [00:10:20] Well, so there was another big thing that when we went around and actually spoke with folks about this is kind of what we feel like. That’s been our hearts. We’ve been operators, but we want to transition over into being investors. What a lot of people said is that’s great. You know, there’s likely to be five or 10 world-class entrepreneurs over the next five years in the U.S.. Good luck on finding as many as you need to be able to find to generate that many well-qualified deals. [00:10:44][23.4]

[00:10:44] Because the general rule in venture investing, which our first two funds were really more focused on venture capital style investments. General rule is you got to look at 100 deals to be able to find one that actually passes muster. And so, you know, if you want to find, you know, 10 companies or 15 companies as we had and found one, that means you got to find fifteen hundred or a thousand entrepreneurs that meet the criteria. And nobody really thought there were that many out there. In fact, I think even those of us on the team had some questions about are we can end up with a portfolio of seven or eight, which is going to make us a little bit overindexed and over concentrated. [00:11:16][31.7]

[00:11:17] Are we really gonna be able to get 15? And what we found was actually there are a boatload of believers who are also building companies, many of whom have been largely underground because secular capital doesn’t really understand these entrepreneurs, which is something that we believed and also saw proven out over time. [00:11:33][15.8]

[00:11:34] Many of them are actually just kind of underground in their faith and they hadn’t actually come up and become visible in terms of being a Faith Driven Entrepreneur. They’d been living really a dual life, much the way I’d done much of my professional career. [00:11:46][12.6]

William Norvell: [00:11:47] Well, that sounds like it was just an easy journey. You found a lot of people who believed in you. You got everybody together. But how was raising money? So we’re an investing podcast, right? There’s a couple of different parts of it. You just talked about finding the companies and that was, you know, a little bit easier. Maybe in the numerical sense. I want to hear how you actually found them. So maybe it is that I’m sure it’s more difficult than it sounds. But what about raising money? What about convincing others? You said the team even had questions. How was the fundraising trail? [00:12:13][25.9]

Luke Roush: [00:12:14] Yeah. So, you know, you would think. Absolutely. And both Henry and I and Andre and Tom, all the folks that were really around the table in the early days, believed that because of some of the entrepreneurial successes, that we would have to be really easy to go out and raise a $20 million fund. In fact, we had alloted ourselves 90 days to go out and raise 20 million dollars, which we thought we would then put to work over the ensuing 12 months, and then we’d be able to raise a follow up fund about 18 months after the initial inception of the fundraising process for fund one and then raise fifty to a hundred million dollars as a fund two in short order. Mind you, and what actually happened was that fundraising process originally supposed to be 90 days turned into 18 months and we ended up after we called literally everyone in our family Rolodex. We were able to scrape together 12 million dollars of investable capital. [00:13:05][51.1]

[00:13:06] And, you know, again, just something that is now actually a real blessing. But at the time, we were just like, you know, hand slapped face. We had 75 LP’s. We had to have 75 people invest in the fund to be able to get the twelve million dollars. Now, as fund one has had some success, I can tell you that there is infinitely more joy in sending out 75 distribution checks to individuals, mostly individuals, infinitely more joy in that than sending out 10 distribution checks to, you know, some fund manager in Connecticut. So what we originally were incredibly frustrated with has actually become one of the great moments of joy, particularly the last two years with a fun one. [00:13:47][41.2]

William Norvell: [00:13:48] That’s great. That’s great. And look, just thanks for walking us through that. And one of the things I always love and you get into investing is really looking at a few specific companies. A few examples, if you would maybe walk us through a couple of companies you invested in where you can really show what not only what the company has done and what God has done through them, but what you think Sovereign’s has been able to do as a unique niche investment partner along the way. And then potentially as well as share one that, hey, you met an entrepreneur who loved the vision everyone bought and you invested. But the story, wasn’t one of wild financial success, but it was something else. And maybe the company didn’t work out because that is the nature of investing capital is some of these companies don’t work out. And God still teaches us so much through those investments and through those journeys. [00:14:33][45.3]

Luke Roush: [00:14:35] Yeah. So maybe the first company I’ll talk about is Cloud Factory, and I think Mark Sears has been a guest on before, and so you’ve heard parts of his story either through FDE or FDI podcast. But you know, Mark’s story and what God really called him to in Cloud Factory is a unique one. And what really resonated with us was the scope of his vision. So this idea that there are a million workers around the world who want to be connected with work and are prepared to actually work hard and produce, but really just need access to work that needs to get done and being able to pair that source of labor with demand for labor in developed countries where work cannot be efficiently outsourced and whether it’s machine learning or whether it’s artificial intelligence or big data analytics. There is an amazing story that has been written through Cloud Factory. The work that that country has done, not just now in Nepal, but also in Kenya and in other countries around the world. And so, you know, that’s an example of like an early stage company where he needed a few things. He needed an investor that was going to both understand and resonate with where God had called him in terms of Ezekiel, 37, of the valley of dry bones and what he was called to do in and through that workforce. We understood that vision. We supported it. We’re excited about it. We actually were looking to help him even reinforce that in ways that he maybe hadn’t thought through. And I think that really resonated with him. The other thing that he needed was some amount of patient capital. This was not a story—at the time that we invested, they had, well, less than $400,000 in revenue—I think about one hundred or one hundred fifty thousand dollars in revenue. So there was enough success in customer product market fit to be able to reinforce, but it was still really, really early. And so he needed somebody to be able to come alongside and be patient with them over the long haul. And the last thing he needed was somebody that was willing to just think a little bit differently, whether it was currency risk or whether it was sovereignty risk. And some of the environments he worked in, particularly in the early days where there was less of a cushion, because one of the other things that we wanted to be able to set out prove—back to an earlier question, William—was this idea that almost any company can be a biblically oriented company. There are no Christian companies. There are Christian leaders who lead companies, and that can be done in almost any context. [00:16:43][128.5]

[00:16:44] And so just to give you an example of a different kind of company was an organization called Lock It, which we invested in in Southeast Asia, which was focused on effectively making live events safe and transparent, both for the organizer as well as the attendees, as well as for a government who were trying to assess how people are getting in, getting out. And, you know, if there are problems, who do we contact? And so the entrepreneur there had seen some real challenging things in the live ticketing industry in Indonesia and had a vision to really bring a Livenation type business model to that country. And we got excited about his vision for impact and were able to come alongside and encourage and support him as his first institutional investor. And ultimately that company sold to another company. And now he’s got an opportunity to impact a much broader universe in the company that acquired him. So it’s a good example of like how do we think about investment, but also how do we think about exit? Ultimately, these are not companies that we’re going to own forever. There are companies that are going to own for a period of time. We’re going to help to shepherd and steward for a time. And ultimately they’re going to end up either as a publicly traded company or as a part of a larger entity. And as that happens, oftentimes the ministry platform that existed pre acquisition actually expands. It doesn’t contract or go away. It expands after a company’s bought. So there are a few examples. [00:18:01][76.6]

William Norvell: [00:18:02] That’s great and it’s a great segue. Let’s switch gears just a little bit. Investing is a relationship driven business, as are most businesses. But specifically, you took up a pretty unique mantle here when you were starting Sovereign’s Capital with Andre, Henry and Tom. And you actually moved your family to Jakarta, Indonesia. You just mentioned a few Southeast Asia investments as that might throw some people off. Talk about why you did that. As the legend goes. You made the decision about two hours from what I hear. I don’t know if that’s accurate or not? We can ask, Brooke, if that’s accurate or not. But I would love to hear the story of why you did it and what you learned through it. What was true, what wasn’t true, being in the place, fully immersed in where you’re investing. And tell us about that story. [00:18:45][43.1]

Luke Roush: [00:18:47] So we had this idea of like, wow, wouldn’t it be interesting if we could come alongside entrepreneurs who are motivated in their faith and wanted to live that out in the work that they were doing and also had a desire to really build sustainable economic engine companies. And so as we were talking through just the convergence of 10 40 window and emerging middle class, we started to actually do a little bit of a boil the ocean. So we spent time on the ground in Middle East, spent time in Eastern Europe. Andre took a trip down to Latin America. We looked at parts of Africa and ultimately decided the through process of elimination around the demographics, local demand, geopolitical risk, instability. We ultimately decided that Southeast Asia was the place that we wanted to focus. And as we got further into Southeast Asia being the right place to begin, specifically a focus on Malaysia, Singapore and Indonesia. We had this awkward conversation when they were like, well, you know, we all know that the lifeblood of any deal of any fund is deal flow. How are we going to source deal flow in Southeast Asia from Durham, North Carolina? And I always remember the old tobacco warehouse where we had our office in originally. And it, I think, hit us all at once that it was going to be very difficult for three white dudes who were in Durham, North Carolina, to try to come in every month or two or three to Southeast Asia and actually get access to the best deals. The only way you get access to great deals is being in community. And as we became more aware of what was going on in Indonesia specifically, we realized that there was no western venture capital money on the ground. There were a number of people that had tried to do it. Living in Singapore, living in Hong Kong or living in Tokyo. But nobody had actually like moved to Indonesia and done it in so in a relatively short order. We had this conversation as a partnership. I went home, talked to my wife and then about it wasn’t two hours, it was about 45 days later, we got on a plane and moved to initially to Kuala Lumpur and then ultimately to Jakarta. And then Andre and his family joined us about six months later. [00:20:45][118.7]

[00:20:46] It was the best decision we ever could’ve made, but it didn’t feel that way about six months in because six to nine months into that adventure, we had yet to find a single deal. There wasn’t really anything that was even in our pipeline of things like we might do at some point. And so you had those moments in life where you really start questioning what are we doing here? And if I wasn’t having these questions, my wife was definitely having those questions. But by God’s grace, in the three months after that, we ended up finding our first couple of deals and we got going and ended up in an amazing four year run. [00:21:19][32.6]

[00:21:19] And that continues today with full time staff that are Indonesian that that really shepherd those investments and are also making new investments. [00:21:25][6.4]

William Norvell: [00:21:26] Amen. Okay. Let’s switch gears a little bit. We’ve talked about fundraising. We’ve talked about funding investments. I’ve got about 45 of those in the books now. We’ve talked about the niche of sovereign’s capital investing in Christian led businesses. What does that look like? We’ve talked about it as a spiritual integration. What is that look like coming alongside and being a part of this journey? Practically right. Could mean a lot of different things to a lot of people. What does it mean at Sovereign’s to come behind Christian led businesses and encourage them in the work that they are doing and called to by God in the marketplace? [00:21:57][30.9]

Luke Roush: [00:21:58] Yeah. So one of the things that we’ve learned is that one size fits one. And there are some things, though, that we think are consistent across the body, the portfolio, and that for anybody who is tracking content on faith driven investor Web site, you’ll see some things that I think we’ve posted in blog posts in the past. But there are really five characteristics that we look to reinforce as we come alongside entrepreneurs. The first is that we want to make sure that they’ve got a real clear sense of identity and who they are. It’s one of the things that we see most often corrupted amongst entrepreneurs is that the narrative of the world in the narrative of most venture capital, private equity, is that it’s all about you as the CEO of a fast growing startup that’s, you know, getting a whole bunch of attention and creating a lot of value, at least on paper. There’s a real easy and slippery slope to get on around, just a mistaken sense of identity and ultimately were know children of the king and that’s who we are. But even though we know that to be true on the journey day to day, that something can get warped. And so we really want to try to focus on that as we get to know an entrepreneur and make sure that they in their heart know who they are so that we then have permission to be able to remind them of that on a regular basis. [00:23:10][71.7]

[00:23:10] If we end up investing, the second thing that we really care a lot about is business excellence. If the product that we produce is not high quality, then the quality of the testimony that we have is compromised. So we’ve got to make sure that we’re producing high quality products or services. Otherwise, we run the risk of potentially being a negative witness. The third thing that we focus on and we think these are things that can apply, by the way, to every business. This is not a one size fits one thing. This is one size fits all. The specific manifestations of each of these things are actually quite different depending on the nature of the business. The third thing is that we want to make sure there’s a real theology of work. Who owns this business ultimately? [00:23:47][36.8]

[00:23:48] Who do we report to? We report to a board of directors or, you know, a set of investors. The best entrepreneurs in our portfolio had a real clear sense of a holy calling and a holy ambition that they work mightily and heartily under the Lord. Now, they are thoughtful in terms of how they surround themselves with the right advisors and counselors, but ultimately they don’t report to me as an investor. And in the last two things we intentionally put last, but we think they’re really, really, really important. And the fourth is ministry indeed. And then the last one is ministry in word ministry indeed looks a lot like what corporate social responsibility typically looks like in the world. So how do we love our employees? How do we love our customers? How do we engage with our community in ways that are winsome and relevant and loving? And we feel like we need to. Demonstrate to people that we truly love them, irrespective of where they are on their own faith journey, because we do not believe in the idea of creating holy huddles inside businesses. We got to be able to recruit, retain, promote and celebrate the best and brightest, irrespective of where they are and anything other than performance and the quality of their work. But we do want to make sure that we demonstrate through ministry, indeed that we really love them. In the last one is ministry and word. When we’ve done the other four things well, we ultimately believe it’s important to be able to share the hope that we have and why we do what we do in four. Again, the best entrepreneurs in our portfolio have a tremendous platform to be able to provide a winsome testimony as to why they do what they do. And so those are the five marks of how we engage with our entrepreneurs on the spiritual element. [00:25:22][93.6]

William Norvell: [00:25:22] That’s great. That’s great. And it’s fun to see how they work at every company, you know, in different places and different formats that one size fits one mentality. I think it’s really good just on that for our listeners to remember, you know, there’s not a playbook at Sovereign’s, you don’t sort of get your chaplain after you get your investment and then you get this next thing and then, you know, there’s not this thing that’s handed to you. It’s really significant to understand what God’s weaving through each person, each company, each geography individually. [00:25:50][28.2]

Luke Roush: [00:25:52] Yeah. And, you know, it’s one of the things that we often have requested of us is like, show us what your score card is or, you know, a real formulaic approach around metrics in evaluating where each business is in terms of spiritual integration. And there are some things that we can measure, particularly around prayer and, you know, scriptural reference in how scripture underpins core business practices. But one of the things that we have learned is that we don’t want to be formulaic in the kinds of tactics that make sense, because what makes sense, you know, in a country like the US or a company in California versus North Carolina can be pretty dramatically different. And certainly when you look at some of the US or Nepal or Kenya or Indonesia or Singapore, what’s acceptable and what’s culturally appropriate can be quite varied. We still think that those five elements are true in every business, but the specific game plan, depending on size and stage in the style of the leader or the founder. Very, very important to try to get that right. On a 1 to 1 basis. [00:26:49][57.9]

Henry Kaestner: [00:26:51] So it’s been eight years since you raised that first fund and a lot’s transpired since then and a lot of development and team in Indonesia. And then along the way, though, you found an opportunity not just to invest in fast growth companies, companies that are growing at, say, 10, 15 percent month over month, but also in the lower to middle markets, companies, companies that might be going through a level of generational transfer. And that’s really where William comes in, too, because that’s part of the team that he helps to lead. Walk us through that transition and how you’ve seen opportunity to stay doing some of the things on the fast growth side, but then to merge that in with some the opportunities you’ve seen with some businesses here in the United States that more of us might be familiar with. [00:27:32][40.9]

Luke Roush: [00:27:33] So one of the other things that I think is really important and is just a lesson that we’ve learned, particularly in the first four or five years of investing outside the U.S., is the importance of having local partners. [00:27:43][10.0]

[00:27:43] And one of the things that we’ve been pitched on any number of times is entrepreneurs who live in the U.S. who have grand plans of being able to take their business either to Southeast Asia, to Africa, to Europe or wherever. And what we’ve seen on the ground is that in different countries, each country’s different. [00:28:00][16.2]

[00:28:00] Investing in Southeast Asia, which I’d put in air quotes if you could see me, is something that’s not a good idea unless you’ve got a really huge fund, because what it looks like to get capital into and out of Indonesia is completely different than Malaysia or Vietnam or Cambodia or Singapore. And so contextual awareness as investors put capital to work is really important because the people who really understand what ministries can be most effective on the ground in emerging markets and also understand who can be trusted in business and also understand how to ethically in a Foreign Corrupt Practices Act context, navigate the governmental authorities. You have to be on the ground to be able to understand who those men and women of peace are. And that’s something that was a really important lesson that we learned in the early days of Indonesia. It’s something that we continue to apply today as we think about, you know, our work with Fund Three just in terms of our work with lower middle market sector. One of the trends that we observed of the last four or five years in that we’ve had a lot of conversation not just with our own team internally at Sovereign’s, but also with our limited partners, is that on a comparative basis, venture investments have gone quite a bit more expensive over the last four or five years. And at the same time, what we’ve witnessed with the baby boomer generation here in the U.S. is that there’s well over a hundred thousand businesses that are going to go through generational transition in the next 10 to 15 years. Many of those businesses don’t really have any idea about what that transition is going to look like in terms of leadership and in terms of continuity around the culture and ethos of the business. So as we’ve waded into now our third fund, we’ve become a lot more focused on businesses that we would describe as generational transition or tightly controlled family style companies that are in the lower middle market sector. And so our focus has really been on the southeastern part of the U.S., although these businesses exist everywhere. And, you know, on the venture side, we oftentimes are talking with entrepreneurs about what it might be like some day for them to have 50 or 100 or 200 or 300 employees on the lower middle market side. We’re talking about businesses that already have 50 or 100 or 200 employees and oftentimes have tremendous witness and testimony and impact in communities where they’ve been planted for 10 or 20 or 30 years. And so a big focus in our third fund has is coming alongside these entrepreneurs and providing long term think 10 to 15 year plus hold periods aligned capital that celebrates where they are in terms of values. We’re okay being a minority investor and we value, particularly in the current economic climate, the ability to maintain low leverage. So we think about return on equity, not as a leveraged ratio, but as a straight ratio. [00:30:46][165.8]

William Norvell: [00:30:47] Now that’s I mean so one thanks for branching off into that market so that I have a job. [00:30:51][3.5]

Luke Roush: [00:30:51] Wait, let me ask you a question. So, William, what gets you excited at lower middle markets? Like what other kinds of businesses that you get really ginned up on? [00:31:00][9.1]

William Norvell: [00:31:01] It’s fun. I mean, I I get excited that I get to be a part of Sovereign’s Capital because I get to hear about venture stage companies. Right. That’s exciting. You read about them a lot. I think they have the potential to be cultural change agents in really unique ways. These are companies that end up on the cover of Time magazine. Right. And do really world changing things. I guess for me in my life, I’ve never been a home run hitter. I love a good single right between the first and second baseman. And I feel like that’s a little more the way my mind works. And so when you talk about one size fits one, what I think it’s the same for investors, right. So my investment philosophy is I love seeing a business that has been an anchor tenant in their community for a long time, they’ve been kind of on this long obedience in the same direction mentality, just continuing to get, you know, half a percent better every single day at what they do. And we had a guest on Don Flow who said one of my favorite lines that I keep repeating the other day. And he said, you know, when someone entrust their scarce labor capital to me, I take that very seriously. And in contrast to, not that this is bad, it’s just different. In contrast to the moving around nature of startups where you work in a barge and you kind of try new things. And a lot of these companies in lower middle market and in these communities, people entrust their scarce label capital for 25 years. I mean, they go to work at this company and they never leave if it’s done well and if it’s done right. [00:32:26][84.8]

[00:32:27] And while you’re unlikely to end up on the cover of time and you’re unlikely to have, you know, five, ten thousand employees, because that’s probably not the scale of the company that you’re going for, you are likely to have a really impactful vision into a company in the community. And for me, a lot of that comes from my personal story. My dad more or less ran a small business. It was a small unit of a bigger business. And he probably had eight to 10 employees. And I just grew up seeing the impact he had on their lives and that just God planted a seed in my heart to be a part of that. And I saw what happened when he left and I saw how they were treated afterwards. And eventually the office actually closed. And so I saw the impact that leadership could have. And Stauber, my holy ambition, my highly ambitious life is to be a phenomenal number. Two, to visionary entrepreneurs and leaders of well-run small businesses. And being able to come alongside them in unique ways is great. And lastly, I’d just say the way my mind works to think about different investing is just I’m really good at taking a canvas and making it better. Having 10 20 years of data to build on had in that to make decisions on is just the way my mind works. I don’t work as well with kind of the blank canvas and come up with something out of the blue. [00:33:38][71.0]

Luke Roush: [00:33:38] Good. Thanks for sharing then. [00:33:41][2.2]

William Norvell: [00:33:41] And as we come to a close, you’re going to get the hot seat question that everybody gets. It’s amazing to see how God’s work continues to move through us and through our companies, but specifically through us and then therefore through other people. [00:33:53][11.7]

[00:33:53] And so would love, if you would tell us maybe a portion of scripture that has come alive to you in this season of life, maybe something you’ve been meditating on for a while or even this morning, just something, God’s word that maybe you could share with our listeners that’s impacting you and how you do your job as an investor. [00:34:09][15.7]

Luke Roush: [00:34:10] So it’s a great question. And one of the things that I’ve been doing in the last couple of years is actually reading through the Bible on youversion. And at the end of each day, you can actually go through all the verses that you read and then you can highlight and then copy paste. So I’ve been building this note’s file over the last couple of years and then over time I hope to be able to actually pass effectively a Bible off to each my kids that has all the scripture that has spoken to me and then some notes on how that scripture spoke to me at the time that it found me. And as we know, the Bible is alive. And so one of the things that I’ve just observed is the rediscovery of scripture and what it said to me ten years ago or 15 years ago or 30 years ago. As a kid is oftentimes common, but sometimes different. But I was doing a devotional with my son and one of his friends at a football combine down in Southern California a couple of weeks ago, we were going through proverbs, as I’m prone to do periodically when I’m just looking for something quick. I’ll go to whatever day it is. And then the proverbs. You know, if it’s March 16th, it’ll be Proverbs 16. [00:35:11][60.9]

[00:35:12] But we were going through Proverbs 16 on this day and I highlighted the verses most important to me. And and my son and his friend did the same thing. Just really interesting. The narrative of these three verses from different parts of Proverbs is proverbs 16 to 9 and 10. And in 16, I won’t read ’em in sequential, although note to listeners that there’s some other scripture between each of these, but all persons ways seem pure to them. The motives are weighed by the Lord in their hearts. Humans plan their course, but the Lord establishes their steps. The lives of a king speak as an oracle in his mouth does not betray justice. How much better to get wisdom and goal to get insight rather than silver? And one of the things that has just been a great joy in Sovereigns is both the partnership that I’ve had with William, you and Henry and Andre and Tom and Jake and Michael now and others that are on our team. It’s been an incredible joy because our hearts are prone to corruption and our hearts run after things that are not always the Lord’s design. And so the joy to be able to do things in partnership and also to have our hearts start to chart our course, but also having people around us that can try to make sure that the Lord is speaking directly into decisions that we make, knowing that the heart is deceitful and trying to build up a hedge of protection around that through both fellowship as well as God’s word and prayer. That’s something the Lord’s been teaching me lately, in part based on my own failings. So that’s what I’d want to share. [00:36:38][86.1]

William Norvell: [00:36:39] Amen. Thank you so much for joining us. Thank you so much for sharing the Sovereign’s story and what God’s been doing for so many years and just highlighted someone who’s got to be a part of it. Catching a vision from the Holy Spirit and taking one step forward and seeing what happens and then taking another step forward is something I see and you and Henry and Andre and Tom and something that investors should be thinking about as they get into faith driven investing. This is not mapped out. This is not a clear strategy on what to do in every situation. [00:37:11][31.7]

[00:37:12] So thank you for sharing that story of how you guys just kept putting one foot in front of the other. Trust in the Lord, exactly what that verse said and continue to learn along the way and humbling yourself to what God’s plan is. [00:37:12][0.0]

[2027.7]

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Today’s guest is Greg Lernihan. Greg and his family work together to faithfully steward the resources God has entrusted to them. They grant to Christian ministries and invest from a faith-driven perspective, seeking spiritual, social and financial returns.  

He is the Co-Founder of Convergint Technologies, which started in a basement in 2001, and is now the world’s largest electronic security firm with over 5,000 colleagues globally. He’s also been one of the leaders of this Faith Driven Investing movement over the past decade, and we’re thrilled to have him join us. 

We’re going to hear some of his journey towards Faith Driven Investing and the insights he has for those just starting the journey. As always, thanks for listening…

Useful Links:

Convergint

Make Fun Part of Your Mission

Impact Investing – Greg Lernihan

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: [00:02:44] Welcome back to the Faith Driven Investor podcast. It is a distinct pleasure to be back on with my co-host, William Norvel, and then also with a good friend of ours, Greg Lernihan. We’d like to think and maybe it’s because we’re involved in the production, a show that we get a great chance to talk to a great number of our friends, not just people who are guests, but people who have done some level of life with and have some kindred spirits with. And I can think of no better example of that than Greg. I have not known Greg for very long, but I’ve known him long enough that he’s made such an impression on my life that there are few select people that I have put in this kind of almost macabre document that is to be open in the event something bad happens to me. And I’ve told my kids about this and told my wife about this because I really want to make sure that my three boys in particular get a chance to learn about different things from people who I know and trust, who are subject matter experts at a whole bunch of different subjects. But one of them is the topic of faith driven investing as the Lord might put them in a position to be able to steward his investment assets. I want them to learn well and I want them to learn from somebody who will be able to share with them their experience. And so I’ve put in this document. If something bad happens and I want you to learn about faith driven investing, I need you to call Greg Lernihan. And that’s what we’re gonna be doing today on this episode. We’re gonna be talking to Greg Lernihan, somebody I personally admire, somebody who’s thoughtful about this space and to talk to him about the way he thinks, the framework that he leads his family through, how he places investment capital, what’s important to him, how his faith drives, what he does. Maybe one of the other things that really gravitates me towards Greg is the fact that we have very similar backgrounds. We both care a lot about college basketball. Different teams, but we more importantly have an entrepreneurial background. God used this to build different companies and both have had some degree of exits coming from those companies that has afforded us an opportunity to be thoughtful about stewarding resources. So Greg, with that, let me just say first off, give you a chance to say hi. It’s awesome to ave you on the show. [00:04:48][124.0]

Greg Lernihan: [00:04:49] Thank you. Very thoughtful, Henry. And obviously an honor to be part of the team. I’m a consumer of the faith driven podcast and part of this community. It’s a pleasure. [00:04:58][9.2]

Henry Kaestner: [00:04:59] Well, super grateful to have you on. As we get started, tell us about that background. It starts with an entrepreneurial background. It’s creating wealth. It’s creating a company. It’s growing value in that undoubtedly informs also, of course, the way that you think about investments. But tell us about that story first. [00:05:16][16.9]

Greg Lernihan: [00:05:17] Yeah, I worked for Siemens for about 20 years, which is a large Fortune 100 company and various leadership capacities. And then in 2001, end of 2000, my co-founder and myself decided to start an electronic security integration via life safety company. It’s called Convergint Technologies. And so what that means to the listeners is when you walk into a building and swipe a card, it allows you to go to certain parts of the building and there’s cameras watching you. We design service, then install those types of systems for very large companies. Now, globally, the banking industry in the entertainment industry, Fortune 500 companies, airports, things like that. And it’s been an incredible journey. We now have over 5000 colleagues across the globe. And what I’m proudest of is the culture that we built. Henry and that we really have a tremendous culture. We have people join us only for our culture and we give back to the community. We make it an environment that everyone feels special, very empowered. And it was a real delight to build that company still carrying on today. I’ll tell you this story and how I got into faith driven investing in that in around 2011 or so God put on my heart Haiti. I really can’t tell you why. Only thing I can think of it was on TV a lot from the earthquake in 2010. And so in 2012 I took 31 other colleagues to Haiti, which was my first trip to a developing country. I’d never been part of that. And so I was emotionally wrecked from the experience, the lack of infrastructure, the depth of poverty, the living conditions were deplorable. And of course, we’ve all seen that on CNN. But when you’re in the environment and you’re speaking to this people and they’re so religious and thankful to God, it really, really changed my life. And it’s kind of like a halftime moment, which is a book written by Bob Buford, where it was time in my life to go from success to significance. It really was clear to me. And at that same time, we were actually in a process and selling majority interests of our company to a private equity firm. And so I had to figure out how we were going to steward these new financial resources that were coming our way that we really weren’t prepared for. So I decided to leave day to day operations still on the board. I’m still an investor involved in strategy, but day to day I’m not. And it was a really challenging time for me to leave a company that I co-founded. And all I knew was that I wanted to have purpose in my life. I wanted a purpose. Well, I think back to a quote from Steve Jobs, and you may know this from John Sculley. And I was it was in the 80s when Steve Jobs was young. And you need a gray-haired guys to be on the leadership team. And he goes to John Sculley and CEO of PepsiCo and says, Do you want to sell colored sugar water the rest of your life or do you want to come with me and change the world? And I can remember that resonated with me when I was young. A boy would I love to work for a company that’s actually changing the world. And so I committed myself when I left to using the resources God had entrusted with us and our family. And I was going do something purposeful with it. And so that’s my entry point now into impact investing was from that perspective. [00:08:25][187.7]

Henry Kaestner: [00:08:27] So expand on something I’ve come to know from many of the talks that you’ve given it, just about how you think about the assets you stored. So you think about generosity, for instance, and you’ve come to understand that we were served this generous God and think that a step towards faith driven investing begins with seeing the resources as his. And being generous with me modeled that out. But tragically, for a lot of our conversations, people will circle the subject of giving and focus on that and not so much. It invests things like they’re focusing on the left pocket of giving and come to understand increasingly that guidance at all. And they can give away and and as they give, they come closer knowing God. And that’s awesome development that’s been happening in the global Christian church as the church becomes more generous, but not so much on the investing side. So a lot of people might think I’ve been in this kind of framework that I make as much money as I can on my investments over here in my right pocket. And then with all the money that I make from my investments, then I can go ahead and give it away. You, of course, have come to a different thought, different place where you’ve come to understand that the very process of investing your capital might advance some of the same goals that you feel that God has put on your heart as you do with your given goals. But I don’t wanna put words in your mouth. How do you process that relationship? [00:09:40][73.2]

Greg Lernihan: [00:09:42] Well, it’s complicated. First, after resigning from day to day operations, I actually thought it was gonna go into the nonprofit space and use my time talent resource the best I could to help the nonprofit world. [00:09:52][10.6]

[00:09:54] Then the first thing I looked at was how much capital is going into that space. And it turns out this past year, 2018 was 428 billion dollars. And the challenge with that is that had grown less than 1 percent net after inflation. It’s been basically same over last 40 years. And there are 1.5 million nonprofits trying to get a piece of that pie. That’s pretty much stagnant. So I happen to be on a trip that I went to with Bob Lupton and Charity Detox, also toxic charity author. And he talked to me about this in his book. You Can’t Serve a Community Out of Poverty. And I remember sitting there saying that, you know, God had blessed me with some leadership skills and business skills, skills to communicate effectively with people. My brain was wired to be more in the for profit side. So I felt if we’re going to make an impact. I had to look at the capital assets. And it turns out that the investable assets in the U.S. are 200 to 250 times more Finance Square that we’re giving away. So if we’re gonna solve these social issues that we’re facing, both in the US and globally, we’re going to need other capital matter if you grew that by 50 percent. There’s you maybe from wealthy ones sustainable development goals for 2030, where they talk about all major issues facing the world, whether it’s poverty, health, education, and they have goals for every one of them. And they estimate that will take two to three trillion dollars each year for the next 15 years. So impact investing started to gain traction. And the reality is, if we’re going to make a difference in this space, we can’t do it with just care of capital. It’s not even up for discussion. We need both investable capital plus charitable capital. And fortunately, this impact investing market is emerging and trying to fill a space that has been doubling over years. There’s now 500 billion in market size and all predictions are it’ll be 3 trillion the next five to seven years. And people are pouring money in from foundations, from private equity firms, from investment banks. And so now we have more capital coming into the space. We need better deal flow. But I want to make sure that I comment that I’m not talking about not doing granting. This is in addition to we have to do granting. We just can’t rely on social and government programs and grants to solve our problems. We need more capital from the outside world. So that’s why I focused my time. [00:12:17][143.5]

Henry Kaestner: [00:12:18] So I think that that’s incredibly important. I think of, you know, just set box of Tic Tacs and all of them, they’re kind of like allocated for being able to achieve the different goals that we might all have with this U.N. Millennium Development Goals or whether it’s goals that we have that are driven by our faith. But one of those tic-tacs is giving three or four of them are government spending plus giving. But the rest of the entire box of those tic-tacs are all units of investment. And so if we really want to move the needle, harnessing the power of the rest of our Tic-Tac box, and it’s just a lousy illustration, but you’ll see it from the slide in show notes is super important. And yet you’re saying, of course, as important as it is, it’s also really important to give as well. Tell us about as you have progressed in your giving, in your investing. What are some of the aha moments that you’ve had? What are some of the things that have been kind of several places along the road where you’ve made some shifts, maybe some pivots to kind of get where you are right now? [00:13:15][57.0]

Greg Lernihan: [00:13:16] Yeah, there’s been a few of us here. When we started back in 2013, we had this philanthropic focus and then also added onto it a family fund that we were gonna start investing and impact investing I’d say I entered the space from a secular perspective. I wasn’t really familiar with or connected to this emerging faith driven movement back then, but it started reaching out to people and connecting and we ended up going to some Christian conferences, one of which being the gathering. And there’s where we got connected with leaders in this space, specifically from Praxis, which was a light bulb moment for us because their thought leaders and everything they were presenting was challenging the way we were going to steward God’s capital. So over the next year or so, I would say we finally got exposed to social, spiritual and financial returns. Up until that point, we were just social and financial. [00:14:07][51.0]

[00:14:08] And this was an aha moment that we can literally go out and invest in entrepreneurs and companies that are going to disciple and make more followers of Christ. But the biggest moment for our family, I would say, was when we figured out that these really aren’t our resources. Henry, I’d like to say that we’ve known that for our entire lives have been a Christian my entire life. But it wasn’t until we prayed on it. We had excess capital. We didn’t feel good about it. And we finally understood. [00:14:37][29.1]

[00:14:37] It took years because I literally wrote in my prayer journal. Lord helped me to get comfortable with giving all of these assets away and that these are not ours. And the steward them as you would want us to. And I remember, not wanting to write it in my prayer journal at all. But my wife talked me into it and then slowly praying on it, it came to be and now we were very comfortable. [00:14:58][20.8]

[00:14:59] So all of our internal discussions with our family are stewarding his resources, and we believe God wants us to not only steward them well, which is by everybody’s definition, what well is we can discuss that, but to take risk. These are God’s resources and to take risk and then to completely trust him. And that’s the journey one. And that’s possibly the hardest part, because when you’re looking at investment, you really don’t know whether they’re gonna be successful or not. And when you put a faith lens on, it gets a lot harder. And you have to. And we’re learning and growing from this to trust him. [00:15:31][32.3]

William Norvell: [00:15:33] It’s amazing. William here, thanks so much for walking us through that and your story. You know, it’s funny. I do want to share one quick story I ran into the other day, though I don’t think I’ve shared with you yet. We’re talking about Convergint. You talked about the culture and how much that meant to you and how much you thought about that and spent so much time. Well, I ran into a business leader who’s in a similar space as yours. [00:15:53][20.0]

[00:15:54] And unprompted, I was talking about, you know, where you get people that are kind of getting going a little bit. So they’re taking people from other companies. They’re like getting people from those places. Just this one company. No one will leave it. We call them all the time and no one will lead this company. And it was Convergint. They just said, you know, we feel like we can get anyone we want unless they work for them. And they were like, we don’t know what they’re doing over there. [00:16:20][25.7]

Greg Lernihan: [00:16:20] Well, that’s a great compliment that I get to receive today. We’re proud of the culture. And as you know, people can work for anyone and they choose to work with. We never say they work for us. They work with us. And we use verbiage that matters to their colleagues are equal. They’re not employees that work for me or anybody else that comes. That’s that’s a real compliment. [00:16:40][19.4]

Henry Kaestner: [00:16:41] I want to expand on it a little bit. If you know, of course, that we also have the Faith Driven Entrepreneur podcast, which is a sister podcast. And there’s a lot of there’s a good amount of overlap. And so on one hand, you say, well, this is just about investing, you know, Henry, just stay to the script. And yet as investors, we’re investing in other companies. Angel investing through funds, et cetera. And maybe one of the biggest things that you might be able to impart to some of these entrepreneurs that are starting and running their businesses that you’re now investing in is how to help them to understand how to think through a framework of culture. Culture leads to more employee retention, which is what William just spoke to. And that leads in turn to better investment returns. So I think that maybe it is helpful if you just spent just a minute or two. What is the framework that you went through a conversion that led to this culture where Wayne says nobody would leave? [00:17:29][47.6]

Greg Lernihan: [00:17:30] Well, as I mentioned in the open, he worked for a Fortune 100 company for 20 years and were very well trained on business processes and leadership in growing PNL. And we had responsibilities for it across North American. When we started our own business, the first thing we did was just stand and myself, we were in the basement. We wrote down all the things we liked about big companies, professional think about growth, no such thing as not thinking about growth, well-trained, strong leaders, things like that, all the things they’re not good at, not necessarily giving back, not necessarily treating people the way you become a number of not very family friendly. You don’t know everybody. It’s more of you’re just there to get through with your day. And then we went to small companies which are small companies do well, president answered the phone in the middle of the night. They’re easy to do business. They have the easy button. They’re never hard to do business with. They’re always local. Hyper-local tough side is very normally live. Lifestyle businesses. You know, if they’re successful in Birmingham, Alabama, they have no reason to go to Florida. It’s just hard. I don’t know how to do it. They’re generally smaller in size. They generally don’t spend as much money on training because they try to cut corners. What we did was we knitted those together and came out with a company with the infrastructure and body of a Fortune 500 company with professionalism growth. But now we added in the ease to do business. Local president type of mentality. And so what we ended up building is this company now that can serve customers globaly, but very decentralized. So our culture was about I am converging. I own my position on the team. You pick up the phone, you own it. It doesn’t matter who you are. We’re all equals. We just have different sets of responsibilities. We expect to be our customers best service provider no matter what business we’re in. That’s a standard that no one can really meet. So we literally say to our clients, well, we’re at other companies, we’d say a one to 10, a scale of one to 10. He’d sit in a room going it went from 8 to 8.2. Aren’t we doing great? And then our company is. Are we your best service provider against Amazon, against the painter, against whoever you’re dealing with? Will you give us the mark that says Convergintis the best. And if they say no, we can accept that because we don’t skew to any of this. We want the real truth. And what that drives is a culture of accountability, empowerment. And I read this book. Our whole company read this book called Founders Mentality, where they studied that only one in ten companies grow their EBITDA, their profits for more than 10 years and convert. We’ve been blessed with 18 years of record growth each year, even through the difficult times. And they said two or three things. And number one is you have this enemy. They call something else in the book. But it’s where you are. In our case, it was the big billion dollar companies that we wanted to go and beat and we wanted to be better, more professional prepared. They wouldn’t be able to tell the difference because we had capital and knowledge and expertise. And the second one was ownership and we shared equity. Henry, William, quite a bit of equity, but really it’s also shared ownership that they own the success of those offices like president’s. And then the third one is it’s very decentralized and we allow our colleagues to make all the decisions. So our decisions are on the edge. Nothing came back to Dan or I. If it’s a customer issue ann you’re in San Francisco, you know what you need to do you’re empowered to do that. So I’d say putting all that together now, 18, 19 years later, people join because they like the empowerment. And then we have one last volume. We have 10. I go my last value and belief is fun and laughter on a daily basis. So our whole culture is it’s OK to make fun of ourselves. It’s OK to have fun. We constantly are doing events and dressing up as rock stars at our national meetings and anything we can do to make the environment a fun work environment. [00:21:19][229.1]

Henry Kaestner: [00:21:20] What rock star did you dress up as well? [00:21:23][2.7]

Greg Lernihan: [00:21:24] That’s a very good question. In my case, since I was the leader of the company at that event, they were kiss rock stars and I was more the director. But I’ve been a Cookie Monster before and I called booking Monster and I had the Cookie Monster outfit. We’ve had all types of things. I’ll just leave it at that. But the kiss one is actually one of our famous ones, all just in full gear. We didn’t short suit it either. [00:21:46][21.7]

William Norvell: [00:21:47] That’s incredible. Thank you for going on that tagent with us on that will shift back a little bit. You bet you if you’d ever terms on the show. We tried to get into these terms with a lot of people. Of course, you know different people to find them differently. You mentioned impact investing. You’ve mentioned faith driven investing. How do you define these terms? How do they work with your investing strategy, with the assets and resources that you’re stewarding? [00:22:10][23.4]

Greg Lernihan: [00:22:11] Well, there is some differences in the interpretations of each and from the impact investing side. Boy, I would say there’s broad agreement across the entire investing spectrum or impact spectrum. That Global Impact Investing Network, which is known as GINE, is the central repository for these types of things. And everyone’s accepted the definition of investing in enterprises with the intention to generate measurable, beneficial social enviromental alongside a financial return. That sounds like a lot of words, but what it really the two key words are intentional and measurable. So for to be an impact investment can’t say that I’ve invested in Yahoo or Facebook and they connect people in world. It has to be an intent. Your intent is to make a difference in the world. Your intent is to drive behavior and then you’re going to measure that social behavior. And in our case, that could be measuring jobs in impoverished areas. What are we paying them? Are there children now going to school? Do they have medical benefits? Those are measurable social issues on the face driving side. Everything starts now with a faith lens. So in our case, we refer to ourselves as faith driven investors. And we start everything from the Christian entrepreneur is that that he or she is faithful and Christian in this case and that they’re going to. Lead that company from a kingdom world view. They’re going to use biblical principles to run their company and the leadership is willing to share their faith openly throughout the company. In the end, we seek a triple bottom line and spiritual impact, social and financial. And so at the end of the day, as investors were investing from Christ perspective, and we’re hoping that these companies will honor God and the way to conduct business and they’ll do business in an excellent way. [00:23:53][102.0]

William Norvell: [00:23:54] Hey, Greg, thanks so much. You know, we’ve been going through the conceptual stage, which is awesome. Thank you so much for walking us through how you architect the assets that you’re steward egg. That’s just so interesting. And it’s one of the best articulations of it that I’ve heard. I’ve got to hear you do this a few times. If you could go a layer deeper for us to be really, I think, great for our listeners to hear maybe about some specific companies and how this has actually played out, both from the leader perspective, the product and then the returns, of course, both in all those categories. [00:24:22][28.3]

Greg Lernihan: [00:24:23] Sure. Let me highlight two. One is a company called Join and they’re based in India and the founders, a person by the name of Mel Murray. And she went and actually moved to India for better part of six years and immersed herself living amongst the poor and tried to figure out how she could use the skills that they have there locally. And so what they could do is manufacture high quality, high end purses. And so she has a nonprofit side called Joy Corps that takes care of all the holistic services for these women that they don’t even know what to do with the capital, that they’re paying them, how to go to work. What are the responsibilities of, you know, having these resources? And then on the other side, she’s selling purses through boutique shops and online. And we bought them for my wife and her daughters. And we’re not buying them because we’re trying to be nice. It’s because they’re really, our daughters and females in our lives that get these, love them. And what we’re doing there, William, is she’s probably between 2 and 300. She may be as much as 400 now people that she’s hired in the poorest areas of northern India. And she got a low interest loan from us. We didn’t do equity. We wanted something that would allow her to start to think bigger and still afford to be able to do it. And so we’ve been doing that for about four years. I speak with her almost on a monthly basis. We’re very connected with her and we’re actually going on trip for the first time. I didn’t tell you that she ends up getting kicked out of India due to Christian beliefs in her company and some other nuances. And she came back to states for a couple of years and then moved back to northern Thailand to ching ry so she could be as close as she possibly could to still living amongst the poor. And she’s kind of a modern day Mother Teresa in my life that really makes us better for just being around her. So the spiritual is she walks up and down the streets and converted people to Christ on a daily basis. Just when you meet her, speak with her and just have the opportunity and presence with her. Our social impact is tremendous with the hiring of the colleagues that we have. The pay we track, the pay, the benefits and those types of things. [00:26:34][130.9]

William Norvell: [00:26:35] That’s a perfect place. Great. So we’ve mentioned a few different types. You said you’ve invested debt. You’ve obviously invested equity convertible notes a couple of times. Then obviously there’s the spiritual financial impact. I’ve seen you talked before about how you think through four different types of investments and how this graph, both from a financial return or a spiritual return, you might walk in our listeners through that framework. [00:26:54][19.8]

Greg Lernihan: [00:26:55] Sure. I’ll do my best to make it easy. A couple of years ago, we started to literally plot out our investment on a two by two, which is on the X axes or the bottom axes is financial returns and on the Y up-down axes of social and spiritual terms. And then you divide that into four quadrant. So in the lower left quadrant would be low social, low spiritual and low financial where you generally don’t want to be. And in our case, we called that buried talents because we studied the parable of talents. We’re all familiar with that. You’re not using those resources appropriately. And then if you go to the right. So now you’re in a high financial still low spiritual, low social. We call that capitalistic. And most of the capital in the world is in this quadrant. These are investors seeking the highest returns. First and foremost. That’s perfectly normal. Nothing wrong with that. But then as you go to the top right corner is normally the winning quadrant because it’s high social and spiritual and high financial. And of course, we had investments in that quadrant. But what we didn’t expect is we had investments in the upper left quadrant, which is high social, spiritual, but low financial. And we tried to understand it, you know, how did this happen? And so what we learned is that these turned out to be some of our favorite investments. And we ended up kind of. These are all internal terms that we use in our family is called spirit led because we couldn’t justify financially why we made investments on this left upper quadrant, because there’s always a better investment further to the right. There’s always a higher return. And so after study in those, William, we learned in the upper left quadrant in particular and how it happened and why it moves us. We found those four things. The first thing we found is it’s biblical. This is we have gleaning going on in here the dignity of work for the underserved. And then we found it. Our faith in God and our faith in the entrepreneur superseded our fear of losing dollars or capital. We were willing to accept lower returns because we believe so much. In this case, Join is an example. If all the business opportunities that we invest in. Look perfect on paper, we said, where are we allowing God to show His Majesty and his power and give them glory and impossible situations? We like that these require God to be successful. The second is we employ the marginalized. This is where all the people are uneducated, lack employable skills, returning citizens in rural areas and predominantly women. And then the third thing was difficulty in raising capital. I’ve certainly heard Henry talk about walking up and down Silicon Valley’s Sand Hill Road saying he got turned down 40 times. Imagine and he was trying to raise capital in the capitalistic square. Now go up and over to a very high spiritual social content, but low financials, it makes that look easy. It’s impossible, difficult to raise capital in this quadrant. First and foremost, because they don’t have any planned exits, there’s no venture capital is going to come in. And most likely by a rural business in northern India, it’s probably not probable or strategic. Most of these are debt instruments in our family. About half of the investments in the upper left quadrant are debt versus equity. And we have used charitable capital, which I’d encourage other listeners to think about. Less than half of our capital net Quadrani from charitable from our daughter advice fund that you can use Impact Foundation or other people to help you invest in that. And then the last thing in that section is scaling is not important, William, to these particular entrepreneurs. Sustainability is they’re not looking to go global. They’re trying to keep people employed and adding. And then the last one, which is why we call this spirit led, is because these entrepreneurs are truly spirit led. The impacting humanity or human flourishing is more important than their return on investment. That’s the honest truth. Most of these investments are with women or minority led founders. And then the last thing is these, whether it’s Britney or whether it’s male. That reference, Sherley are incredibly humble. Leaders have no egos and they’re just there to serve the poor to the best of their abilities. And our family’s very motivated by them. [00:30:56][240.4]

Henry Kaestner: [00:30:57] So great. I think that’s also one of the things that I heard from you. That this upper left hand quadrant is comprised some of your favorite stories, people who have been taking great risk for the gospel, getting out there in very difficult places and their encouragement to you and their encouragement to me and our listeners. One of the things that some people who are listening to this might wonder is, do I have to in order to be able to have a gospel integration to what I do, do I have to find out that all of my investments are going to be in that upper left hand quadrant where necessarily in order to be able to have spiritual impact, to be able to invest as the Bible might lead me, that I have to have a lower financial return or take on higher risk or something like that? What does that upper right hand quadrant look like? Maybe. Maybe it’s not there the way you want to see it right now. But maybe you have hopes. You see developments in the industry so that somebody listens to this podcasts and say, well, I might have investments in both the upper left and the upper right. And the upper right doesn’t necessarily just need to be Fidelity Magellan Fund. It could be some other things that have some gospel inclusion as well. Talk to us a little bit about that. [00:31:59][62.1]

Greg Lernihan: [00:32:00] Well, it’s a good question, Henry. We definitely are fans in favor of companies are in the upper right hand quadrant. We would not expect, orwWhat we learned from this exercise is that in our view, kingdom, impact investing isn’t one quadrant over the other for our families. Both quadrants. And so we actively seek investments in both areas. Those have higher social returns, spiritual returns and financial in the upper right. And then we are willing to sacrifice some financial returns. And we also have funds in both sides. Henry and that we have a great investments, for instance, is a fund that does microfinancing in Southeast Asia and Indonesia, and that’s a very high performing fund, very strong Christian principles and leading it. And at the same time, we have a fund in the left quadrant, which is talented, which is trying to leverage companies in East Africa to give them capital to scale. And so they can go across both. And I wouldn’t want anyone that’s listening to think that it has to be in one quadrant of the other. First, Fortis is a family decision between you and God. And second of all, we’re fortunate that we have investments that look just like a cola or just like joint that are in the right quadrant. And One World Pharmaceuticals, which is this company called OWBP, where they’re actually making a drug. Multiple drugs. One of them is epileptic drug. That’s a branded generic that they make profit high margins here in the states. And then sell it for pennies on the developing world because they can’t afford it. And one of the problems with epilepsy is once you’re on that drug and you create a generic, if it’s not the exact same ingredients, which according to these scientists, it only has to do with eighty to one hundred and twenty percent of the actual brand, it can cause them seizures. So they created an exact duplicate, called it a branded generic, so that, you know, when you take this drug, you’re not going to have epileptic procedure. And so they’re making profit here in the states and then using that goodwill in developing countries. And it has a great opportunity to make good money and change the world. And it’s an upper right hand quadrant investment. [00:34:06][126.1]

Henry Kaestner: [00:34:07] One key takeaway and we can’t go over too quickly is that you said that the process doesn’t lead with a prescription of how much you put in the upper left or the upper right or even if you’re in all the different quadrants. But the prescription, if I heard you right, is it’s the process by which you submit that decision to God and do that as a family and then seek his direction. I think that’s really important that this is a heart posture thing rather than cash. You have that 20 percent in this fund or 10 percent of that fund. How do you do that as a spiritual discipline, particularly with your family? A lot of people, listeners are going to be doing this multi generationally. What kind of format? How do you guys do that in submitting that to God? [00:34:46][38.3]

Greg Lernihan: [00:34:47] Well, you’re right with your answer, Henry, and that it isn’t scientific as much as it’s more heart. We have three measurements that we use. The first thing we use is, are they Christ centered? So it starts with a scale of 1 to 5 and 5 is now and in some cases living amongst the poor. Their entire lives are dedicated to the marginalized. And so they get a higher score and it’s all subjective. Between 5 down to 1 1 would be somebody who’s not necessarily faith driven and they shouldn’t be in investment criteria anyway. The second would be are they employing the marginalized for our family? That’s our number one criteria. If we have a choice, we won’t invest in companies that are spiritually strong and invest in the marginalized. So marginalized to us includes returning citizens, previously incarcerated individuals, one of the hardest to employ. It also includes people that we described earlier in Uganda and also includes people in the south side of Chicago that are under-educated or un employed. And so we write that in and the last thing we write for is the potential for a financial return. And so we arbitrarily go through one through five that some of the funds I referenced earlier have a higher opportunity for higher returns. The debt ones that we’ve invested in the debt companies or companies we provided debt to are always lower. We know that going in. We know that they can’t afford generally the capital, but they can have a good business that’s sustainable, repeatable and can pay us back our debt so that we can redeploy it. And I think some people think if you’re in that upper left hand quadrant, it’s a bad deal. It’s a weak deal. You’re not supporting excellence. We just fundamentally don’t agree with that. It can be an excellent company that can afford a 4 to 5 percent return that’s helping marginalized or underserved community. And we’ll do just fine. [00:36:34][107.3]

William Norvell: [00:36:35] Thank you so much for walking us through that. Unfortunately, as this happens, sometimes we’re going to have to move towards closed now. But will love will likely beg you for more time later. We do that with a lot of people, too, as we’d like to close. Loved to just let our listeners in to your world a little bit. Amazing how God’s word continues to be alive life every day. And we would love to maybe let our listeners know what is God doing in your life through his word in this season, potentially, or today, even maybe this morning. Just where is he taking you? What is he teaching you and what journeys have you on right now? [00:37:06][31.0]

Greg Lernihan: [00:37:08] Well, William mine has has been today. It’s been for weeks and probably over the last year or two. And that’s for me and my family working to be obedient to God’s wishes. In the short scripture that works for me is “apart from me you can do nothing,” which is John 15:5. And I would say I mentioned earlier, I’ve been a Christian my entire life, but I’m not sure I believe that verse until the last several years have really been working, I thought. And even my Convergint days, my hard work, extra hours, motivating people was more my efforts. And I don’t think I gave God enough credit. And I now have completely understood in the past several years in particular that without reservation, I need the Lord. I can’t do this on my own. It’s not from my efforts. And so surrendering and being obedient to his wishes is far and away. The number one thing I’m working on, and that includes everything from small sacrificial things on a day to day to him trying to memorize scripture and make sure that reading the word morning and night praying over every decision we make. And so I don’t think this is going to end in a week or two. I think it’s a lifelong journey. But we’re going to continue to. I’m going to continue to do my best to render complete as well. [00:38:21][73.7]

William Norvell: [00:38:24] Amen can’t think of a better place to end. Just thanks so much for joining us, such a gift, such pleasure. [00:38:28][4.5]

Greg Lernihan: [00:38:29] Thanks, William. It was an honor. [00:38:29][0.0]

[2109.4]

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A raw conversation reveals how wealth’s isolation is driving an unexpected movement of faith-driven investors to find their tribe. Leaders Justin Foreman and Samantha Couch join Richard Cunningham showcase Faith Driven Investor’s global expansion in 2024, from European watch parties to intimate mastermind groups uniting investors seeking deeper purpose. Their bold message for 2025? “The riskiest thing is to do nothing” – and their growing network of Christian investors is proving it.

Please note that the views expressed by the hosts and guests are their own and do not necessarily represent the opinions of Faith Driven Investor.

Episode Transcript

Richard Cunningham [00:00:00] You’re listening to Faith Driven Investor, a podcast that highlights voices from a growing movement of Christ, following investors who believe that God owns it all and cares deeply about the heart posture behind our stewardship. Thanks for listening.

Speaker 2 [00:00:17] Hey everyone. All opinions expressed on this podcast, including the team and guests, are solely their opinions. Hosted guests may maintain positions in the companies of securities discussed, and this podcast is for informational purposes only and should not be relied upon as specific investment advice for any individual or organization. Thanks for listening.

Richard Cunningham [00:00:46] Welcome back, everybody, to another episode of the Faith Driven Investor podcast. What is the final FDI pod of 2024? So with that in mind, friends, Merry Christmas. I know this podcast will release the week of Christmas, so maybe you’re catching us on a drive to see people you love. Maybe you’re taking a break in the Christmas tunes wrap in that final Christmas present, what have you, and we’re hanging out with you. But regardless of where you are, I hope you have yourself a wonderful Merry Christmas. And hey, with that in mind, a couple of quick housekeeping things. We’re going to return to the FDI podcast after a little break around Christmas and New Year’s on January 13th. So mark your calendars. That will be our likely first release date of 2025 will be coming in hot with a marks on the markets. And then one final thing to say about today’s episode is no Luke Roush or John Coleman with us. A couple of our mainstays. We’re bringing in another one of our mainstays who’s been a frequent guest of the FDI podcast recently, as we’ve been doing a couple of blended FTE and FDI pods, President and executive director of the Faith Driven Movements, Justin Foreman. And just so we’re doing something special today is we’re just going to highlight what all is going on in the FDI movement, what our guide has done in 2024. And you’ve brought someone exceptionally special with us today to do that.

Justin Forman [00:01:59] We have. I thought this was the podcast we were talking about Baylor football. Was this not the Baylor football like pre-game, but.

Richard Cunningham [00:02:04] That’s our next.

Justin Forman [00:02:04] One. That’s an.

Richard Cunningham [00:02:05] Excellent one. Yeah. After we’re going to spare, I guess you and I eight and four takes on the Baylor Bears, even though you think we think we won the national championship.

Justin Forman [00:02:12] Yeah, we might get recording before we go way too far. And that indeed it is good to be back. You know it’s fun. I feel privileged to be here to really kind of bring together friends, you know, in any good office, friendship, family rivalry, whatever word you choose to use, there are sometimes a couple of people that just are just like culture core. And when I think about that, when I think about faith driven investing, I think about Richard. But I also think about Samantha and I think about just the fun banter that you guys have had over the years about the movement, about the mission. And it’s fun just getting friends together here, just to talk about to celebrate what God’s done. You know, I know our faith during we’re often so quick to build, to think. To do that, we need those moments to reflect and we need those moments to celebrate. And I think that there’s ample amounts of scripture when we think about reflection and stones of remembrance. And I hope that in some ways, you know, the conversation today is a chance to do that, to reflect upon what God has done over this past year. And when I think about what God has done, certainly a huge part of that has been the work of Samantha leading the team Faith Driven Investor for the coaching and community and so much else. And so it’s really fun to be together here again.

Richard Cunningham [00:03:28] Yeah. So welcome to the podcast studio from the Louisville, Kentucky area. Samantha Couch Sam is a vice president and helps lead the team at Faith Driven Investor. So oftentimes with Luke, John and myself and then the guests we bring in, we’re talking markets, we’re talking asset classes, what it might be, just kind of things we’re seeing as investors and the movement ourselves. And I just don’t say and rarely do we kind of take a step back and just say, hey, let’s focus on the team. Who is building this movement? Sam is helping lead out the FDI team. And let’s just pause and acknowledge, Hey, look at all that like God did in 2020 for you. So faithful it’s celebrating. Kind of tease out some of the things to come in 2025. So Sam, great to have you on the spot.

Samantha Couch [00:04:07] Thank you so much. Like just inside, it’s really, really fun to have the group back together and to be with you. So I’m excited to be here.

Richard Cunningham [00:04:14] I’m going to be great. So let’s travel back in time a little bit to beginning of the year. And there was the first kind of standalone FDI conference is all around this theme of getting in the game, saying maybe kind of take us back to it. Was January correct, when this conference came out and just highlight some of what took place? We did a number of podcasts following the conference with guests who spoke on it. But take us back to kind of the genesis of 2020 fourth annual FDI Conference.

Samantha Couch [00:04:41] Yeah, it was a great time. And like you said, it was the first time that we’d ever done it as a standalone. You know, previously we’ve been kind of tacked on to the podcast, so we didn’t really know what to expect, but we just knew that we were excited about it and it just took off like wildfire. So we had watch parties all around the world. I think we had over 90 large parties and people stepping into this and saw just great celebrations in places like Chicago. We had over 100 people attend the launch party in Chicago. I think two of the top five launch party locations were in Europe, which was really fun to see in the Ukraine and the Netherlands and the things that we’ve seen come out of the community and the group together in the Netherlands have been incredibly inspiring, really fun to watch. And it just seemed to really be such a pivotal moment for the Faith Driven Investor movement and the growth that we’ve seen over this past year. And everybody who’s been stepping into communities, stepping in to lead a foundation group, be a part of a foundation group, all of the many, many conversations we’ve been able to have with individuals over the last year have really. Because of how fantastic that conference was in January.

Richard Cunningham [00:05:50] Absolutely. We had a big conference watch party here in Austin. Reiner Center of the National Christian Foundation, helped host it in partnership with FDI, which is great. And so, Justin, why did kind of you bifurcate what was the decision that it’s like, hey, let’s keep the conference in September, let’s move FDI out on its own? It’s hard to believe that only happened this year. This shows how much growth there’s been in the movement that was still in 2020 for calendar year. And what was kind of the heart there?

Justin Forman [00:06:14] Yeah. You know, I think one of the things to pause for a moment to say, like what’s the method of the madness? And some that’s still being figured out, right? But when you figure out just kind of what the mission of Faith Driven Entrepreneur feature and investing is, and at its core, it’s really about awakening the body of Christ to see in this moment, in this unique time the unique role that entrepreneurs and investors have to play. And the world is surrounded in full of darkness and we can see that we don’t have to look far to find it. I think the question for us is, is, as we would say, what does it look like to kind of take that beachhead of darkness and bring light to it? And when we think about that, maybe it’s kind of like if you were drawn up, battle plans coming ashore on the beach and you were saying, okay, woman What would be the tip of the spear? And when we thought about that, we know the entrepreneurship culture. There’s no doubt that we don’t have to look far down the street from your hometown to find, you know, an entrepreneur creating self-driving cars, robots and reusable rockets. And there is no doubt when we see that happening that it’s shaping culture and we see that same thing happening in faith driven investing.

We see the stories of Anthony Tan, we see Sam read some of those stories. We see stories of Susanne Daniel and so many others that are getting involved in partnering with other entrepreneurs. And so when we think about the mission of Faith driven, it really starts with that entrepreneur. Changing culture. Shifting culture. But any entrepreneur can’t get very far without having that supply line and that support. And that’s where the Faith Driven Investor and conversation has come in. And, you know, as you said, we’re smile at the fact that it kind of like in some ways it was really the first year for the Faith Driven Investor conference. But for the past few years, it paired up with the conference and there was a conference on one day and you have the conference. And the second thing, I think what we found out was there was just a lot of people that, you know, you get fatigued and the two day conference for there is a lot of content. You don’t get a fair chance to really absorb it, but also to find the unique people that should be there for it.

Justin Forman [continued] And so the decision to spread those out was to give each their own room and a chance to breathe and to be that top of funnel moment to introduce people. We really look at this as the front door. It’s the front porch of a conversation to say, you know, a couple of hours from the convenience of a zoom screen or in-person with friends that you can really get a chance to say, how do I find out about this big trend, this big thing that’s happening? And I’m hearing a lot of people talk about, but I just don’t know what it is. I don’t know what’s happening and I don’t know how to get involved. And so it’s that really kind of one, two, three set up that when we really think about this event, it’s designed to do and we think that the content starts the conversation. We think then it moves into something further with these foundation groups, and I’m sure Sam will share a little bit more about. But it was an exciting time for us to really say there is a bigger thing happening and Faith Driven Investor to separate it, make it its own day.

And I think what it also was exciting for our team is it changed the dynamic of who you partner with when you partner with NEF. The conference, a lot of times that was a church and it makes sense. That’s where the entrepreneurs are. When we think about the Faith Driven Investor event, it really has opened up the door for so many great partnerships with advisors and friends like National Christian Foundation and Blue Trust and others that have been hosting these, saying, You really called to bring this content and this mission and this message to our people and we want a place to do that. And if you can help us set the table for it and what a great chance it is to partner. And so, yeah, it was fun For many years that we’ve done it. We really believe that this was kind of really the first one where the FDI flag was planted. And I think we saw that both in the response with, you know, close to 100 watch parties, 2000 people in attendance and high capacity investors, people are giving up their time then are really saying, hey, I’m stewarding large sums of capital and we want to find those ways to make a difference with it.

So, yeah, a fun moment for the movement. It’s one of those stones of remembrance when you see organizations and ministries partnering with it to really push the conversation forward.

Richard Cunningham [00:10:12]

And love it. And we’re going to talk about the 2025 conference coming up here shortly as we kind of hit on some of the things coming down the pipeline. But Sam, you lead a stellar team, a full team, and I swear no one has more jam packed calendars in the FDI team. And so naturally, the conference in January is not the only thing that’s happened. And so then kind of from there, Justin mentioned this audience that you serve the high capacity investor who wants to get in the game to use the conference team with their capital. What is then kind of the year look like in these foundation groups and what have you?

Samantha Couch [00:10:42]

Yeah, so the natural next step. For anybody who’s coming into the conference is to either host a foundation group or to be a part of one. And for those of you who are listening, if you aren’t familiar with our foundation’s group, it really is. It’s a great time of community to come together with your peers for six weeks, to watch some of our content and know walk through some great conversations and talking about really the heart posture and what Faith Driven Investor is, and to be able to have that in community with other people. Right. Because so often if we are working really hard to listen to the Word of God and to be obedient and that’s what this is, this hard posture of getting down on your knees and praying about how God wants you to steward the resources that you’ve been gifted with. Having a community to also be in that conversation with and be prayerful and intentional about that with you is so important because if you hard to discern your voice verses the voice of God. And so having your peers and some people for accountability to walk through that is critical when you’re talking about things like this. And walking through that, we have those cohorts, gosh, we do basically four different cycles of cohorts a year and we’ll do that again in 2025. So it’s just been an incredible year of growth, like I said earlier, and looking at even 2023 versus 2024, we almost doubled in size in the number of people who are intentionally stepping into this community. We even had opportunities to go deeper and more specific topics like real estate and emerging markets and public markets, direct investing, solving the world’s greatest problems, which is something else that we’ve been talking a lot about. And so it’s been really, really fun not only to see people take this first step into community, but also come out of it on the other side of like understanding where they feel like God has called them to, and then having a deeper community to step into and have those conversations around real estate or emerging markets and things like that.

Justin Forman [00:12:35] You know, I think Sam’s hitting on something huge. Wealth isolates. Let’s face it. We need to say the very clear thing out loud and that oftentimes it’s hard to find a safe place. You know, one of the things I love about what Sam has really talked about here is creating both a high bar and a safe place, but creating a place of affinity. And I think to find a safe place and to find that high bar, you have to find a place of affinity. And it’s not because that we’re trying to push people into it’s about numbers and scales, but it’s about the unique challenges that we face. Depending upon how much God is entrusted us to steward, depending upon the structure of how that is set up, family offices and donor advised funds and whatever that might look like. It just looks different.

And so what I’ve loved is, is this year we’ve been able to step into that where we can say, Hey, here’s a group for advisors, here’s a good friend Busters. They’re at the stage, here’s a group for advisors are stepping into that stage. And I think that one of the things that I’ve loved is, is that we’ve been able to drill down and kind of some of the questions, kind of the personas of people are in this journey. And Sam can allude to some of this, but I think that we find that there’s probably three personas that people step in in this conversation with. One, they’re intimidated. They’re just afraid. They just don’t know what is under the hood. And and candidly, some of us just don’t want to spend the time to. It’s not because it’s not good. It’s not because it’s a worthwhile endeavor. We just are afraid or afraid of what we might find there. Maybe our investing is canceling out our philanthropic initiatives and we’re we just don’t want to spend the time and we need some help.

Now, obviously, there’s great people in the movement, river Guides, that will help you with that process and make that accessible. But I think the unassuming, kind of easy, accessible online nature of some of these community groups really makes it easy for people to get in. I think the second person that we find that’s coming to this group is entrepreneurs that are scaling. They believe in the power of entrepreneurship, a culture. They know that for a fact. They’re convinced of it in their heart, but they just don’t know what that looks like. To do that and to invest in faith driven entrepreneurs in the way that maybe they’ve been invested in. And so I think that’s a fun dynamic that’s coming of age and you’re seeing that growing as these are scaling.

Justin Forman [continued] And then a third one and this is, you know, something we really want to make clear, it’s the teachers and it’s the leaders. It’s the pioneers of this movement. And we have to really pause here to say this movement is a your movement and it only goes as far as you roll up your sleeves to help make it go. Like oftentimes we can think that there’s somebody else that’s going to do something. But that’s not the case here. This is an active movement where everybody that’s called into it needs to be a part of it. And our call is is really to say, okay, what does it look like to get these teachers, to get these leaders to realize that you might feel like you’re only a couple of steps ahead. But in this movement, that’s new and that’s for me, it’s those couple steps that make all the difference. The person right behind you.

And we need these leaders to step in to say, what does it look like to facilitate a group? What does it look like to facilitate a watch party to make this stuff happen? We try to make it easy. We try to make it easy so that the easy button can get pushed and we can set the table for it. But nonetheless, this is one of those times where there’s needs to be that are a factor, that replication factor. That pay it forward kind of moment. Otherwise, this thing doesn’t go very far. But thankfully, we’ve seen people rolling up their sleeves and saying with humility, I don’t pretend to be the expert. I just know a couple of things that I’ve learned from somebody else in this movement, and I want to pay that forward. And so I just love that as we think about groups in the work that Sam and her team has done, the maturing that’s happened that we’ve made it, we’ve gotten better at matchmaking. We’ve gotten better at being able to match people to the stage of group where they’ll have the best experience, but also the stage to find the best leaders to lead that next group.

Richard Cunningham [00:16:21] Yeah, it’s well said from both of you. And I think, you know, in an effort to make sure that folks listening are not like, gosh, this is super promotional about groups or what all FDI is doing, like that is not the heart of this at all. Because I want to kind of talk about this real quickly is that, one, as we know, discipleship and growth spiritually is a hand to hand combat sport like it happens and intimate settings between you and the Lord or you in tight knit community. And that’s what this facilitates.

Richard Cunningham [continued] But also the groups are kind of the first line of defense of like what is taking place. These are the front lines in the movement, like the themes we’re unpacking on a podcast oftentimes bubbled back up to us because a real estate group is talking about how much equity is locked up in church real estate. And so then last week we have Nick Bonner on the FDI podcast, or folks are getting together and saying, Man, the content inside our home that we’re watching on whatever streaming platform it is, is just not redemptive. And so then all of a sudden we’re processing that on an FDI podcast with a filmmaker or someone at a studio, and that’s informing investment product that now is out in market and people can go into or hey, there’s prohibitively high investment minimums across some of these private market funds. What kind of vehicles can exist that an everyday investor who’s maybe not accredited or a QC or he could get in the game? And so it’s what’s taking place in FDI groups that are informing the themes that we’re talking about on the pod, that are also informing what’s taking place on the conference and what have you. And so it’s just I think it helps to kind of call out and point out how this ecosystem in this movement almost feeds itself. And Sam, it’s your team is kind of leading the charge there. So a couple of things I want Sam you to hit on real quickly are some of the key partnerships that have formed and you’ve been encouraged by in 2024 with just other leaders across the movement. Justin’s mentioned some of them, but then also just who’s on your team and servant and kind of building this out in the day to day?

Samantha Couch [00:18:04] Yeah, absolutely. And it was really fun what you hit on real quick. And Nick Bonner, that name just reminded me like a lot of the guests on the podcast are also leaders of these foundation groups, you know, so it’s just it really is such a full circle movement. I love to see that happen. But partnerships over the last year, a couple that have been super fun to step into one would be next. It is so fun to get to know these individual chapter presidents. I had a great time at their impact gathering in Arizona a couple months ago and then just getting to meet people in person who I’ve been talking to for the last two and a half years has been super rewarding. And these chapters are such champions of the Faith Driven Investor movement. I’m a huge fan of everything that they’re doing and so it’s just been great to step into that and like just instead to use some of that language of setting the table, you know, that’s a lot of what we’re working to do is just setting the table and asking and inviting these people to step into this and giving them an opportunity to gather together in person.

Samantha Couch [continued] And these kinds of chapters are a great opportunity to do that. Like you said, Brian de Santo in Austin is such a champion for us and always hosts an amazing watch party. We’ve got some fun things coming up with him later on this year. I have a chapter in my own backyard. I got together with them for coffee last week and so it’s just been a really, really great year of sharpening those relationships and getting to know one another and how we can serve one another better. And then on the heels of that trust, we have a great relationship with the folks over at Blue Trust. And this year they really wanted to step into having all of their advisors go through our our foundation script. So we kicked that off with our staff, leading them kind of like a train, the trainer type of group with 50 of the Blue Trust members stepping into and walking through that content with us. And it was such a great time. It was really good to get to know them better. And then they’ve gone on to lead internally with their team. Some of them have gone on to lead their customers and their clients. We’ve got an incredible course that echoes a lot of what’s in our foundation’s course, but it’s specifically targeted towards couples. And so we’ve had some of them step into that with their clients. It’s just a great tool to be having those deeper conversations together with the people that they’re serving. So that’s been a really good one to step into this year as well.

Justin Forman [00:20:13] You know, one of the things that I think is so encouraging about those partnerships as well as so many others, is that we need to recognize there’s a moment in the movement that’s happened that we’ve figured out some of the plumbing. And what I mean by that is we’ve figured out how to to set up the donor advised fund account and just what that looks like. Well, what I love is hearing the leaders from National Christian Foundation, Blue Trust and so many others there saying it’s as much about that, but it’s about the community around it. And there’s an emphasis of saying we will only go as far. We will only. Be encouraged to use those tools to use those tools more effectively, more deeply, more generously. If we have a good community surrounding us, because the world is going to tell us now, the world is going to say, slow down, stop. Wait a second. Let’s see how this plays out.

Justin Forman [continued] But it’s when you’re surrounded by peers that are seeing how there’s a compounding impact, that if you deploy this capital now, think about the impact that that’s going to have or generations. And so I think what’s fun is you’re seeing in those partnerships a push towards community. And I think that one of the things I just continue to emphasize is we are figuring out ways to partner with people every day. And so if you’re an organization out there that’s hearing this and saying, gosh, how would we do this? We would love to engage with it because we love serving behind the scenes. We love kind of being that backstop to support with the content and the tools for community. But it’s fun to see A growing number of organizations are now saying, okay, this is how we can implement it in it. Because they have that renewed emphasis and purpose on community.

Richard Cunningham [00:21:44] Awesome. And Justin, I think that kind of help sets the stage for where we’re going next on the pod and we’re going to close with some kind of FDI 2025 conference and more things in 2025. But I think there’s kind of three things that I want each of you to tug on a little bit of building out this community further. And those are FDI plus solving the world’s greatest problems. And on that one in particular, Justin, I’ve actually done a couple of recent joint SWGP FDI podcast releases, so the audience has a little bit of an understanding of what this is or solving the world’s greatest problems kind of theme is. And maybe the third one is halftime and what will happen there. And so all kind of seminal moments and seminal kind of cornerstone things inside the movement studies, FDI Plus and halftime. So maybe I’ll let you start and then Justin will go to you to kind of wrap up comments on those three kind of particular initiatives and just big things that are unfolding across the FDI space.

Samantha Couch [00:22:37] Yeah, absolutely. FDI Plus, this has really been born out of all of these conversations we’ve been having with these individuals who come through Foundations group that we were just talking about, who, when I’m having these next steps calls and helping them determine like, what’s the right next step for them? What does that look like? We get a lot of questions about how do I do this? Who do I do it with? And to just this point earlier, this is overwhelming. I don’t even know if I want to look under the hood. I don’t know what’s happening. I’m very intimidated by this. And so there’s just a lot of questions and confusion. And I think a demand really to be able to go deeper and to be able to do this with peers and to get a really deep six weeks is great. It is a great first step. But this is an opportunity to step into this and really go deeper.

And so we’re launching something in January called Faith Driven Investor Plus. And that’s really what this is. It is an opportunity to step into what’s next and to be able to go deeper. And so we’ll start that with what we’re calling our launch weekend. We’re going to do that in 4 to 5 different cities this year. But in January, we’re kicking off in Chapel Hill and we are bringing families together to talk about in that weekend specifically just to gather together and kind of find your people, but also, you know, understanding, solving the world’s greatest problems. So what does that look like for you? How does God break your heart for the kingdom? Where are you called? To give generously but also invest. And when it comes to those causes and those issues and understanding that and like, what does it look like when you start to craft out an investment thesis for your family? What does that look like when you’re having that conversation with your spouse or with your adult children? That is a blessing of this time together. Most people are coming with their significant other with their spouse. We even have some people who are bringing their adult children so they can all be a part of this and then go together for this content. So it starts with an in-person gathering and then we’ll get together monthly afterwards online for about five months as we continue these conversations and kind of this sharpening as we talk more about how do you get in the game. So if you haven’t yet really starting to make those moves forward in order to do that and if you have, how do you go deeper and how do you do that with peers and trusted friends and even an advisory board? And what does that look like?

Justin Forman [00:24:49] You know, I think you said it best, Richard, when we talked about this episode. It’s going to sound like we’re up here pitching and sharing about things. But what we’re really doing is we’re building places that people have asked for to say, okay, how do I find a chance to take the next step in? I think that as fired up as we can get about a podcast or a piece of content, in many ways it’s a stop sign that causes a U-turn to get people to say, The world might be telling me to go this direction, but how do I turn things around? And as you do that, that’s what a foundation course might be. And so over six weeks, you get a chance to really say, man, there’s a there there, there’s a destination to go to. But just because you see a podcast, just because you go through a six week course doesn’t mean you’re going to flip to the other side of the world, flip the portfolio reallocation completely on its head because the world is going to be one of those things is going to tempt you, pull you in different directions, and you need peers and you need people that. Aren’t just wondering if they should, but are convinced that there is a better thing out there and they want to go to the same destination.

And so I think that’s what’s exciting to me about FDI Plus, is this is a group of people that are raising their hand, saying there’s an intentionality that I want to have to make sure that there’s a map and there’s a frame that when we start out for this journey that we’re going to have checkpoints know for on the right track. And that’s what this road map and that’s what this family investment thesis on family investment policy that seems talking about is really all about. And so yeah, it’s been a fun journey for us to have some of these groups. But then people are saying, Hey, what does it look like to do this with fellow travelers that are coming from a similar stage? They have a similar destination in mind. And so we’ve been able to pull in some of the ingredients of kind of the half time process. But really, this one is kind of further down that stage, maybe from some other half time courses and experience and program because it’s about the allocation. It’s about starting to say, Hey, I have some clarity on some family strengths. We have some understanding that we want to dethrone the hold that money might have on our life, but we want to be intentional about our giving and investing with friends, and I love it.

Justin Forman [continued] It was fun to start the invitations all credit to Sam and her team. The way that we were able to do that was this fun boxes that we’re able to send out to people maybe with something between 007 or The Incredibles in terms of these invitations. It didn’t explode after you watched it, but it was a fun way to really say this is a big deal, this is a big deal and a big thing and something’s happening. And we want to say what could happen if we could bring people that aren’t lookers, but they’re intentional about it and saying, what more could we do together? And so in the year ahead, you know, we’ve already got for these gatherings confirmed, I think we’re working on a first. But these are intentional communities and conversations where people through a launch weekend and then through 5 or 6 other monthly gatherings are going to be intentional about discovering peers are in the same direction following that path and getting in the game. And so it was an honor and privilege to invite many friends in the movement that we knew were looking for this had expressed that they were looking for this, But many times we don’t know what God’s doing in your heart. So if you’re in that stage and you’re in that place and something’s provoked news, you’re hearing this and saying, and that might be me, check it out at Faith Driven Investor plus.org and you can be able to learn about what’s happening there and talk to somebody from our team to see if this might be a fit of something to explore because of the types of things that we’re sharing about and connecting people with.

You know, guidelines would say that this has to be a qualified purchaser, somebody stewarding 5 million or more in terms of capital to get in the game. But if you’re at that stage, if you’re at that place, that’s the season and position that God has you in and you’re committed to doing something. We want to make sure that you’re surrounded with like minded peers that can do that. So yeah, it is one of the things we’re most excited about. And you know, to bookend kind of what you said, Richard, the conference that we have coming up here and February 7th, you know, we’re not going to hold any punches back. One of the things that we often talk about Faith Driven Investor investing, you say like, hey, what’s the style? What’s the tone, What’s the way that we’re doing this? And if you’re refining a, you know, an avatar or somebody that was like from a pastoral voice to say, what’s the tone? It’s a Francis Chan David Black kind of tone that says, Hey, time is short. What’s live for the things that matter and what does that look like?

Justin Forman [continued] And so this FDI conference coming up on February 7th and will be happening online or happening also in person, over 100 different watch parties around the world. We’re already seeing just on a path of growth of how that’s growing significantly from where it was last year. And I think that’s just a testament to so many fund managers, advisors, leaders in the movement that are pushing this conversation for it. And we hope it’s a front porch and a chance to gather. We think that kind of the theme, this riskiest thing is to do nothing is really that call to say, you know, it truly is the riskiest thing. When you look at the parable of the talents, it’s pretty clear when you do nothing, when you bury it, that’s not what God’s looking for. He’s looking for us to get around people that are going to push us, encourage us to deploy it, and to do that with intentionality. And so that’s the theme of the event. Some incredible stories. The thing that I love most about this conference is I’m seeing the content come together is this is not a movement in theory anymore. This is born out in reality. This is deeply intertwined in the stories of families and individuals that have looked under the hood, found out how it was canceling out some of their philanthropic efforts, and they said, that’s not enough. We’ve got to change it. We’ve got to look differently at the way that we invest, the way that we give. And so my hope is that this year, particularly people see themselves in the story, that they see somebody that maybe it’s a Susanne Daniels or Alice or whoever it is, and the content that they would see themselves and say, I can do that too. Yeah, it might take a step, might take a first step and my take a little bit of work. But there’s a joy in the journey that I see them on. There’s a life that I want and I want that for me. I want that for my marriage. I want that for my. Family. And I think that it’s just, again, further evidence of what God’s been doing over these last couple of years. So when you see these theories turn into stories. And so really looking forward to that. And we’re so grateful for the work that Sam and her team is doing to serve and support so many of these different watch parties.

Richard Cunningham [00:31:02] Sam, what else would you add to that with the big February 7th event? Some of the themes you’re excited about seeing come to life and maybe help just distinguish like the global FDI event and then kind of the FDI plus offering, because I think we hit on a number of events, but maybe just kind of help real quickly clarify what those are each individually.

Samantha Couch [00:31:18] Yeah. So the conference again is February 7th. And to find out more, you can go to Faith Driven Investor conference.org. But that is a great first step. It is a great like Justin said, it’s a front porch to the movement so you can look to see if there’s a watch party happening in your area. If there’s not and you want to host one, we’d love to talk to you about that. And you can do that or you can stream online and just watch individually. But that is about two and a half, three hours of content that really sets the tone for the year with the Faith Driven Investor movement. But it is a really, really good time to be able, if there is one, in your area, you may not know who else has stepped into the movement in your city. And you can meet new people, you can find peers, you can have people to rustle through these conversations with. And so it’s just a really great first step. The Faith Driven Investor Plus is different than the conference, of course, right? So this is an opportunity to go deeper into those conversations to join us for a launch weekend at one of the 4 to 5 events that we’ll be having this year. And to be able to kind of walk through that journey of what God’s calling you to do and to be able to step into that deeper and have those conversations around people. I think something we’ve said a lot this year is that we can do more together than we can apart, and that is the the blessing of community and finding those people, whether it’s at a watch party for the conference or if you want to go super deep into Faith Driven Investor plus finding those people so you can do more together so you can have those conversations together, have that accountability, have those relationships and those friendships to kind of steward those conversations and that obedience and what God’s calling you into doing.

Richard Cunningham [00:32:51] Good clarification. Thank you. So February 7th, 2025, FDI conference. It is kind of the launch of the new year, if you will. I’m sure we will have speakers on the conference back on the pod and then these FDI plus gatherings. And just that’s a line Justin uses all the time. If you follow him on socials or hear him speak, as the movement goes wider, there is such a necessity to go deeper. And that really is the FDI plus audience in that kind of cup range who can really go out there and do something about what God is putting on their heart. Given the different kind of thresholds and markets they might be able to enter into. I want to kind of hit on this real quickly and we’re going to ask the question we ask at the close of every FDI part, and that is, hey, one theme about 2025 that you just think is paramount to where this movement is headed, whether it’s something that’s going to be pulled on in the conference or just something in particular for FDI, what is one theme in 2025? You’re like, Yeah, I think God’s really going to be doing something in that kind of realm. Justin, I’ll start with you.

Justin Forman [00:33:49] Action. It’s all about action. You know, I think that it’s funny, so many things in life that you can kind of be, you know, firefighter aim. I think sometimes in the Christian world, in the space, which sometimes we can. Amy may, may, may, may, may, may never fire. And what excites me is I think we’re getting to a place in a season where people have taken aim, their hearts are calibrated, something’s changing and they’re ready to take action. And so when I think about that, there’s just a virtuous cycle that just one feeds the other. And when you act, it just changes your heart in that way. And so I love that virtuous cycle. And I think that that word action really embodies where I think the stage, the Faith Driven Investor movement is right now.

Richard Cunningham [00:34:35] Spoken like a guy who started an organization called Faith Driven Entrepreneur happens to meet a number of businesses himself. Something about action and Justin Foreman saying, What would you say?

Samantha Couch [00:34:45] He stole My answer. I’ll go a little bit different, which is activation, right? That is, I think, what is happening now. And because we know wealth isolates and fear paralyzes and so faith produces action. And so being able to set the table and inviting people into this, to give them the opportunity to take action or to start thinking about that, that’s what I’m seeing right now. And my big hopes and dreams for the year ahead is activation.

Richard Cunningham [00:35:11] Come on. All right. Well, you guys get the privilege of answering this for the final time of 2020 for what is God been teaching you and and through his word lately. Sam, let’s go to you, and then Justin will finish with you.

Samantha Couch [00:35:22] Yeah. The word that keeps coming to mind when I think about this and just the prayers that have had in the quiet time of God has been obedience. You know, we know that resistance doesn’t mean that you aren’t going in the right direction. You know, we are prepared for resistance, right? Because often we don’t know. It hangs in the balance. And so it’s these steps of obedience along the way that gets you into, you know, what God has in store for you. And so many times we’re battling resistance or hard and God’s just pruning us into something really, really beautiful that’s just on the other side. It’s hard to see sometimes. So for me, it’s just kind of been meditating on this word of obedience. I’m really leaning into that relationship with God. You know, I heard something not too long ago that the rabbis, when they were teaching the 14 or 15 year olds and they called them to follow them, you know, the saying was like, go be covered in the dust of your rabbi. And so that is so beautiful to me. And I want to be walking so closely in obedience with the Lord that I’m just covered in his dust. And so that’s where I am right now. That’s what he’s telling me.

Justin Forman [00:36:29] That’s hard to follow, but it’s beautiful to see that. And I think that that speaks to a lot of the journey that we’ve been on as a ministry. But I think maybe I’ll use a cheat code here and maybe not a particular verse, but I’ll maybe just kind of a theme. I think that oftentimes the home that I grew up in, it was really about the father, the son, and then this other retired guy. And I think it has just been a journey and a joy and like a childlike wonder these last ten years to see the Holy Spirit work. And this sounds silly, but I think some people who are listening will relate to it when you’re looking for it. You see the Holy Spirit in an email. You see it in a text. You see it in conversation. You see it in a closed door. You see it in an open door. You see it in a frustrating conversation. You see it everywhere. And I think pausing to see the thing behind the thing is just that season that I’m in, but celebrating it with this, like, childlike wonder is been a fun, fun thing for me. So when I say, what is God speaking, it’s I think he’s speaking in a way that again, for many years of my life it was historical and it was factual, but now it’s real. And watching the little things and that’s just been a childlike wonder. Maybe as we think about this Christmas in the holiday season, we talk about that childlike wonder at this time of year that’s been amplified for me to see the childlike wonder how he works, things that are unexpected.

Richard Cunningham [00:37:52] Samantha Couch and Faith Driven Investor Justin Foreman, of all the faith driven movements, but very much involved and tapped in to what’s going on at Faith Driven Investor. Thank you guys for joining us today. Thank you for what you’re doing to build out a movement that myself and so many others here listening are beneficiaries of. Friends, Merry Christmas. Hope you have a wonderful closed year 2024 start to 2025. And thank you again. We’ll get you next time.

Speaker 5 [00:38:17] We are grateful for the opportunity to serve this community and see listeners come in for more than 100 countries. Faith Driven Investor. It can be a lonely journey, but it doesn’t have to be. The best way to stay connected is to join a group study with other investors looking to get the same answers to questions you have and find great community as they do so. There’s no cost, no catch. In person or online, you can meet an hour a week with other peers from your backyard or the other side of the world. You can also stay connected by signing up for our monthly newsletter and faith driven investing Dawg. This podcast wouldn’t be possible without the help of many of our friends. Executive Producer Justin Foreman. Intro mixed and arranged by Summer Drags Audio and Editing by Richard Barley. Our theme song is Sweet Ever After by Ellie Holcomb.

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Episode Transcript

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

Speaker 2 Hey everyone. All opinions expressed on this podcast, including the team and guests, are solely their opinions. Hosted guests may maintain positions in the companies and securities discussed, and this podcast is for informational purposes only and should not be relied upon as specific investment advice for any individual or organization. Thanks for listening.

Richard Cunningham Welcome back, everyone, to what is the first Faith Driven Investor podcast of 2025. Happy New Year. Hope that you and your family and loved ones had a phenomenal Christmas celebration and wishing you just a number of blessings in 2025.

We are kicking off the SDI podcast in style here today as we’ve got a very special guest, David Johnson, who we will introduce momentarily. And we’re doing a mark’s on the markets. And so joined as always remarks on the markets episodes as the one and only John Coleman. John, great to have you in the podcast studio. And before we introduce our special guest man. How are the Christmas and New Year holidays and everything like that?

John Coleman It is awesome. Richard. We get to stay local for the most part because we got family around Atlanta. Great time with the kids.

Sovereign’s adopted the practice of shutting down the whole firm between Christmas and New Year’s. A couple of years ago, which makes sure none of us are bothering each other too much during that time for a faith driven firm. Obviously that’s a very special time of year. And so I think we’re all refreshed and headed in New Year. Excited for what’s next.

Richard Cunningham Awesome, man. Well, folks, I mentioned it. We are starting off the FDA podcast right here in 2025 today As a marks on the Markets episode, we’re joined by someone who just lives and breathes the markets. It’s David Johnson, who is the founder managing partner and chief investment officer of the Johnson Group, a firm that oversees $6 billion in client assets.

He’s coming to us today from New York. He splits time between New York and sunny Newport Beach, California. In addition to the Johnson Group, he is often a guest on CNBC, Bloomberg, Fox News and Fox Business. He’s the author of several bestselling books, including his recent one from 2024. David Full Time Work in The Meaning of Life, released in February.

Just a storied career. Someone who’s been in the markets, knows the markets extremely well, is a committed, devoted believer. A family man loves USC football, a husband to Jolene and father, to Mitchell, Sadie and Graham. So, David, what a privilege to have you on, just a guest of your stature. Grateful to be talking markets with you and John Day.

David Bahnsen Well, thanks so much for all the kind words and thank you for getting those priorities right with Jolene and the kids in USC football all on an equal footing. So, yeah.

Richard Cunningham That is awesome. Well, we’re glad to have you here, David. Maybe one highlight from you all is Christmas break.

David Bahnsen You know, we went to a ski resort in Vermont with our whole family. My oldest is off in college now, and he spent the whole semester studying abroad in Europe. And so we had not been all together as a family since the summer and getting a week away, skiing and enjoying a very cold, white Christmas and just that kind of family time. It was really quite lovely. That was definitely the highlight of my Christmas break.

Richard Cunningham And good for you guys. That’s fantastic. Vermont in the snow. Well, guys, we’re talking markets today. And I think before we start looking forward to 20, 25, 2024, it’s pretty wild, to say the least.

So now you both have a number of just pieces out there and kind of commentary out there. But maybe let’s have both of you just kind of highlight what you believe are kind of the seminal moments, whether it be in the markets, economy, political landscape, and let’s spend some time there just kind of camping out in 2024 as it sets the foundation for where we are today.

David Bahnsen Well, in terms of the highlights of 24, it’s very interesting that a lot of people are going to focus on the election last year and the political moment, which I make a point in White paper I’ve just published, kind of summarizing the year behind and projecting a lot of things for the year forward. It’s our Dividend cafe.com. It’s a free paper that I’ve done every year for a long, long time.

I make the point that the election may have been one of the largest news stories of the year and obviously the largest political, but it’s hard for me to justify it even being in the top five as a market story that you had a year in which corporate profits met and exceeded expectations, which were frankly quite lofty.

You had a year in which forward guidance on corporate profits into next year, which is really what markets always trade on. Markets don’t trade on the profits that just were they trade on the profits we expect to be because markets are forward looking what we call discounting mechanisms that expectations for profit growth next year is very strong.

You did have a Federal Reserve that began to cut rates. But I want to point out people say, well, the Fed really goosed markets by cutting rates in September. We started off the year believing that there was going to be eight rate cuts beginning in March. By September, markets were up thousands of points and they hadn’t cut at all. And so the Fed was not even really driving of markets.

You more or less had the narrative and that the tightening of 2022 was going to lead to recession. It didn’t happen in 23. Markets went up a lot. The job. The environment was mostly very constructive and 20 for wage growth was mostly very constructive. That’s not to say there aren’t pockets of issues within the economy, but those who were worried about something worse in the economy, it didn’t materialize.

So markets had to reprice in a little bit more sanguine environment for the macro economy. Then you add that with the end of Fed tightening, so to speak, and a very robust corporate profit environment. So do I think markets are at a high valuation? Very much so. Do I think there’s frothiness in the market? Absolutely.

And do I think there’s some questions about whether or not a lot of what people hope will happen in 25. Myself included around Trump 2.0 deregulation, tax reform, energy policy, all of those things I think should be constructive, but they’re not going to happen easily. There’s going to be some volatility around, you know, getting all this executed. So that’s kind of our high level position on where markets are in 24 and going into 25.

John Coleman Yeah, I would tend to agree with David on a number of fronts. You know, if I move through the public markets, the story has been this just massive increase in the price of the Magnificent Seven and the concentration of the index amongst some of the largest growth oriented technology stocks in the world has been noted a lot of places.

It’s the biggest gap between the equal weight and asset weight. Russell 3000 since the.com burst although I’ll circle back I think is structurally different. And those are really solid companies even if their valuations might be a bit lofty at the moment, unlike the.com burst, that obviously creates a number of dynamics in markets.

There’s if you look at the subset of public markets, small cap mid-cap stocks are actually a bit undervalued potentially right now on a historical basis because there’s been this large cap run for 8 or 9 years now that’s been kind of a bull run in that sector driven by these growth oriented technology stocks. And so there are pockets of value opportunity within that.

But there’s such concentration in the asset weighted indexes today on a few of these massive flight to quality growth technology stocks that I think understanding the future trajectory of those and how investors will react to those even in the way they treat indexes in their portfolios in public markets is a huge part of the story.

And underlying that I think is a fundamental change in the US economy that I think is partially legitimate and that we have a series of new technologies right now that, you know, every 2 or 3 years we project there’s something as big as the Internet, right? Like blockchain was supposed to be that.

I think fundamentally, though, artificial intelligence, autonomy, robotics actually are step change technologies that can reroute the fundamental economy of the US, which is why you’re seeing some of these market consolidation movements that are worth talking about. We’ll see that materialize over the course of the next 3 to 5 years.

And then in private markets, what’s been interesting is just there was this collapse for a period of time in valuations in private markets, a complete freeze up of those in kind of 21 and 22. Those markets have come back, particularly venture markets, but distributions still have not materialized.

Right. And so it’s still a little bit sluggish on the private market side because distributions from old funds and investments have not yet materialized. So institutional investors are waiting to re-up into those strategies until they get distributions, which has cause continued sluggishness.

I think that will change in this coming year, which we can talk about why, with Lina Khan leaving the FTC with distributions just coming forward as the economy has improved with people trimming their public markets positions, there are a lot of dynamics at play, but I think those are defining.

And then in terms of the fundamental economy, which David touched on when we entered last year, we were still talking harder, soft landing from inflation and whether we could navigate that. It feels to me as if we’ve navigated some form of a soft landing, although there’s still some debate about what that actually means.

And the Fed did reduce rates, but less than expected. And the bond markets haven’t reflected that. Right. If you look at the way that most people get debt right now, the rates and debt markets, whether that be mortgages or corporate debt, have remained kind of stubbornly high versus some of the decreases in rates that the Fed has enacted, which means that the underlying economy is kind of rejecting, at least in certain areas, this decline in interest rates in a high interest rate environment has persisted in certain areas of lending, which obviously impacts homeowners, people running businesses, big corporations, even more in some ways than the Fed funds rate. Right.

And so that disconnect between those two areas of the market, I think is a really interesting story headed into this year. Like, why is that the case? Will that cause some some sluggishness in the business sector, in the housing sector, or do we start to see those things more converge in a more typical way over the course of the next year or so?

Those were some of the big stories to me in 24. I mean, the Trump election obviously is a huge topic. The global ramifications of what might happen in Canada and parts of Europe have huge positive. Implications, like David said, for deregulation, for business growth, for innovation, for mergers and acquisitions. But I do feel that that’s more a 25 discussion than a 24 discussion in terms of its impact on the economy.

Richard Cunningham Well, guys, great recap. I think we covered a lot of ground there. And David, you teased out a little bit your annual kind of year behind your head white paper that you put out, the Dividend Cafe, which is just massive fan of the Dividend Cafe and your weekly writing on Fridays.

Let’s look at that. Your head kind of sentiment and outlook. You know, would you say optimism, caution or where do you kind of fall on the spectrum? You guys hit on a lot of different topics and kind of macro and economic environment, even kind of political environments. What is your general kind of take and why is that looking forward?

David Bahnsen You know, it really is a mixed bag that there are some components in which I have a very constructive view and I think John will appreciate something I want to share here in a moment about private markets. And then there are areas of caution and concern.

And the easiest part is to cover that. The caution and concern is that an S&P 500 is trading at 23 times earnings and it’s averaged about 16 to 17 times earnings for 20, 30, 40 years. So you’re a couple standard deviations ahead of your average valuation.

But it’s really not just that, because I accept that the last time we were into the mid 20s of a valuation, that the quality of the companies was much less. If you go back to 1999 and 2000 before the.com implosion. I think that’s very true. But the top ten companies in the market then were about 20% of the market. They’re now 40% of the market, 38.6%, to be precise.

So really, people need to understand that the S&P 500 is 60%, the S&P for 90 and 40%, the S&P ten, and that the yield that the S&P is paying them is 1.1%. It was 2.8% 25 years ago. The price to book ratio, which is not the best metric, a valuation price to earnings because stocks are and should be valued off of profits. But the price to book value is the highest it’s ever been in history.

And so you not only have expensive market and yet with some good companies at the top, but those good companies are valued above perfection. And so I think what that does is it skews the risk reward. Can everything go perfectly for another year? Maybe. I don’t believe that’s likely.

I think at some point in time, and I just wouldn’t dare to offer a timing around this, there are some quarters coming. We’re in Video announces Microsoft ordered a lot less from us this quarter than we thought. And both Microsoft and Nvidia have a day that people are not going to believe and bring down Nasdaq in a way people are not going to believe. I think that’s inevitable, but it’s not really the focus of my concern going into 25 long term.

My concern is always that we have a society that is dealing with excessive government indebtedness and that there’s been too much crowding out of the private sector from a very high debt to GDP ratio and no political will or public will to do anything about it from an investment standpoint within that.

I do think there are sectors that are not overvalued. I do think there are companies that are not overvalued. And this is the part I was referencing earlier that I think John might appreciate from some of his earlier comments. I have a chart in my aforementioned year behind year ahead paper the ratio of private equity exits to investments, the ratio between how many companies are being sold to how many are newly being invested in has collapsed to a level we’ve never seen.

It’s down about half from where it was ten years ago. There is a big need not for new purchases, but for new sales companies that, by the way, have performed. These are not distressed companies or traumatic exits. These would be rewarding exits. But there’s just a ton of dry powder that is built up that they cannot deploy because there’s still a lot of companies they have not been able to sell companies for and return money to the limited partners.

So private markets, corporate transactions, I think that the Trump administration would be successful in some needed financial market deregulation. The FTC will be less cumbersome about approving M&A. The interest rate environment will be somewhat more favorable than it’s been, and the fundamentals are necessary in both public and private markets for a lot of corporate activity that should drive efficiency, it should drive returns to private markets and it should ultimately move capital, which then allows for new investment and ultimately greater opportunity.

John Coleman If I could just pick up on that last point, I couldn’t agree more with David’s comments in the private markets. So I’ll start by saying I think the fundamental economy in the U.S. is actually positioned for a decent year in 25.

I have David’s mid to long term concerns about indebtedness of the country and the way that that impacts us. But I think from a 2025 perspective, the underlying economy to me is looking strong and I think some of the deregulatory impact of the Trump administration certainty around taxes from any new election, etc., is likely to lead to stronger underlying performance in the real economy in the United States. I somewhat bullish on that.

I think the way that might work out in private markets, which David was just touching on, is one of the great things about the lack of distributions and some of the disruption in private markets over the last few years is it has created a lot of pent up activity that has to happen at some point. And I think 25 might be that point and it’s washed out a lot of the poorer managers.

So there is a stat I saw recently that fund one to fund two venture firms, typically 50% survive. The last two years it’s been 15%, basically. Many funds have not reached their target fund raises. And so the higher quality managers in private equity and venture in real estate are still surviving. But many of the lower quality managers are washing out, which I think could be good for creating constructive transactions in that space, particularly if M&A from public companies opens up more under the new FTC and some of these venture backed companies can begin going public, joining larger firms and, you know, the Googles, Microsoft, Apples of the World, they’ve got a ton of cash.

They’ve got really good currency in their public market prices right now. It should be a great acquisition environment for them if they can get past the regulatory hurdles of that. It’s my perspective. The public market implication is that I do think, David, I’d be interested in your take. It could be a tale of two markets. I like your S&P ten versus S&P for 90.

You know, if you look at the small cap and mid-cap markets, they’re actually trading below or about at the long term valuations of the public markets. But there’s always a flight to quality when there’s economic uncertainty. And so we feel more settled this year. What I think could happen is some reversion to more typical valuations between that top 10 or 30 stocks and the bottom, you know, 2970 stocks where we see those mid-cap and small cap gain a bit and get more confidence.

And we do see a retraction, not in a dot.com way, but in a return to some more reasonable level that bakes in some margin for error amongst the most powerful growth stocks in the world. That will have a huge impact on the index overall. But for an investor who’s positioning their portfolio smartly, there are easy ways to mitigate that impact.

I mean, it’s simple. Sometimes it’s going equal weight rather than asset weight or as simple as, you know, increasing your exposure to value stocks or to things in the small amid timing is always super difficult. David, as you noted, if you’d made that call a year ago, you would have gotten pummeled in the markets. But it does feel with the current valuation disconnects, inevitable that at some point that gap will normalize some even if those growth equity stocks at the top right now are higher quality than they used to be. At least that’s kind of the way I see the coming market correction.

David Bahnsen Yeah. You know, John, it’s funny, you bring up two points in there that are a little bit different from one another, but overlap. And I think both of them are important. It’s the big cap versus small cap delta that has materialized and the growth versus value. And they’re not one in the same. There are two different stories.

Listen to these statistics because they’re just fascinating to me. Over ten years, the Russell 2000 is only up 7.7% per year. The S&P is up 13.5, almost doubling. But listen to this. Just over the last four years since Covid, the Russell is only up 3.9. The S&P is up 13.4, a 10% per year difference between big cap and small cap.

Now, to John’s point, it’s one I reiterate. Timing of this has been very difficult. And keep in mind when we say, well, you could have got pummeled if you did last year, you still would have been up. It’s just you would have had a big opportunity cost. You know, value is up. Last year, small cap was up, even weight was up. It just wasn’t up as much as market cap weight.

But it is a way to maybe mitigate risk. Now, look at my firm. I happen to know this about John’s firm. We’re not index investors, and so I don’t have a dog in the hunt about even weight versus cap weight. But if I did, I would very much be leaning into even weight right now versus cap weight.

I think it’s a great way to play a broadening out of the market and get more exposure to laggards, health care, consumer staples, energy, real estate that are very likely on a relative basis going to do differently. Heard the communication services, technology and even consumer discretionary that have done so well the last couple of years.

So those are very good meta narratives around where the market stands. That it makes it different. You hear this theme from both the comments I’ve made and John has made. We’re not really talking about do you want to be invested or not invested? We’re not really having one of those kinds of years or one of those kinds of conversations. It’s not risk on versus risk off. It’s what types of risks are most prudent right now.

And I think people believing that in video will go from a $3.5 trillion market cap to a $4.5 trillion market cap. You know, keep in mind, from video to be up another 20%, not another 160%, another 20%. It has to go up next year alone more than the entire value of the rest of the market, besides about five companies. Okay. That’s just what you’re dealing with when these companies are now worth 3 to $4 trillion. 20% of 3.5 trillion is $700 billion. Is Nvidia going to go up in one year after being up 1,200% in the last few years? Is it going to go up in one year? The amount of Tesla’s entire market cap. But that’s what most investors are invested to.

John Coleman And what’s important to what David said is you can still believe in very as a great company with fundamental transformational technology and also believe that that’s a difficult narrative for its future valuation. Right. Which is what’s different than.com. A lot of those were kind of empty shell companies at that time. You know, Microsoft, Nvidia, Apple seem to be solid, really good companies. That doesn’t mean their valuation is reflective of an appropriate level right now.

David Bahnsen I agree 100%. But it’s funny people mention that a lot because it’s so true that the cash flow generation was so subpar in 1999 compared to where it is now. However, Amazon went from 400 to 6.

John Coleman That’s true.

David Bahnsen But before it, you know, ended up storming back. So there’s nothing that says Nvidia won’t be a huge success story in ten years with a few very difficult years along the way. But I try to reiterate that point John made all the time. I’m not saying anything bad about Apple, Google, Metta or Nvidia, I’m merely just talking about valuation.

And I believe most of us, those that are now 50 year old professional investment advisors, are byproducts of lessons we learned in our 20s and 30s and in the late 90s when I was coming of age as a professional investor, I watched Intel, Cisco, Microsoft give up 15 years of return by being so bought at such an excessive valuation. But they never had a negative year in earnings. They never had a bad operating performance. They were just so overpriced.

In 1999, Microsoft didn’t get back to its pre 2000 high till 2016. Cisco still hasn’t got back to it and they’ve grown earnings every single year since. So valuation matters.

Richard Cunningham Well, man, this is good. I’m enjoying this a lot. And one of the things you both have hit on as we think about this kind of so recording this podcast on January 8th, it’ll release around Monday the 13th, the following Monday, the 20th, we have a changing a guard and Donald Trump will be inaugurated.

And one of the things you both have hit on is just kind of the Trump administration’s mandate to take off some of the handcuffs and the guardrails around M&A activity we’ve talked about just all that is possible, what could take place. Everyone, of course, sees the headlines of what’s taking place with doge and more efficiency in the government and slashing away at that deficit, the massive government kind of just debt spiral we’re in.

And David, you’re a very transparent individual. You never shy away from calling yourself a lifetime movement conservative, a proud Reagan supporter of the 80s, a permanent leader of the National Review. But you’ve also been pretty critical of Trump in that this recent Nippon Steel situation where Japanese company Nippon Steel wants to acquire U.S. Steel. Biden has raised his hand to block the transaction. Trump has actually showed support of that same blocking the transaction.

So that doesn’t kind of showcase what you guys were alluding to with just the lack of regulation, hopefully to come in 2025. So as you think about the new guard and everything that’s going to come with kind of the new Trump administration, I mean, the mandate he received in the election. What’s kind of the overall outlook there?

David Bahnsen There’s a part of me that paradoxically, I hope people can take this the right way. I hope he has been lying to us about his opposition to the Nippon Steel deal, because I would be more favorable to him having to politic around the issue than I would the inconsistency in the policy.

He did a press conference a couple weeks ago and I was very fond of most of the things he said where he was bragging about SoftBank wanting to put in $100 billion of foreign direct investment in the primary equity deals the United States. And he joked, I’m going to try to upsell them to 200 billion. Where is SoftBank located? Japan.

Japan has over 800 billion, a direct investment in United States, including a company called Nippon Steel that currently has factories in Kentucky, Indiana, West Virginia, Louisiana. Some of those have been there for over 25 years. We just got done selling $3.5 billion of missiles to Japan. I don’t believe anybody can take this national security argument seriously.

I understand the politics. I understand the cosmetics around union bosses. But union workers want this deal to happen. Blue collar union workers in Pennsylvania are going to lose their job if this deal doesn’t happen. They’ve offered $15 billion for U.S. steel since the Biden administration blocked it. The company’s trading in 7.4 billion. This is not a material deal to the U.S. economy. 7 billion these days as a small cap company.

And so there’s one entity that benefits from this deal not happening. China. China steelmakers are over 50% of global steel production. They flood the world with steel. There are legitimate adversary to the United States, a legitimate opponent to the values of our country. Those are actual state owned enterprises. Nippon Steel is a private company in Japan. It is not part of the Japanese government. Japan is an ally of the United States.

When I was a managing director at Morgan Stanley, we took $9 billion from Mitsubishi to save Morgan Stanley with the Treasury Department and State Department begging them to do the deal. Do we want foreign direct investment or not? We have 1 million jobs that have been created because of Japanese foreign direct investment.

So I think your greater point is, are we really looking at a deregulatory apparatus in the Trump administration? And I’m optimistic about it. I think that that was one of the great underrated things that they did in his prior term. And I think philosophically and most of the personnel he’s surrounded himself with in this transition are largely pretty Reaganite about deregulation, tax reform, energy policy. But on this Nippon Steel deal, I’m just mystified. Other than the cosmetics of not wanting to look like you’re contradicting union bosses. But that’s not good enough for me.

John Coleman Yeah. And I would say, as I look at the potential policy implications of the Trump administration this year, and I’ll just comment on the economic impacts of this, maybe I’ll say a word about the social impacts or why you might do this otherwise. But deregulation would obviously be positive for the economy, particularly if deregulation allows greater innovation that allows greater dynamism in the capital markets, that allows easier business formation, etc.. Those are always stimulatory for the economy.

If the Trump administration follows through on keeping taxes where they are, or potentially selectively reducing those in certain areas, that tends to be very stimulating for the economy. If they can really then apart from the regulation reform, the size and scope of the federal government as a component of that, I think that’s a bigger question mark That buzzsaw is difficult to encounter. Right. But if they could do that, I actually think that would receive a positive response from markets.

I think immigration is a separate issue that’s being done for other reasons. The kind of idea of closing the border, enforcing legal immigration has a broader set of social consequences. The market impacts are likely to be somewhat mixed of that. But I think that’s not really the primary reason that people are arguing for that. And it’s dominantly in national security, in a national autonomy point of view, which I think is a very valid set of reasons to have that immigration discussion.

And then the fear I would have, as David notes, I do think what Trump has is an intuition about using trade policy and the tools of national policy to assure that the United States competes on equal footing and ensures its national interests with its partners around the world. I do know that there’s a great deal of concern here in Europe and other places that if that were to go too far, that could actually be quite disruptive of the global economic system.

Like if we get back into a series of trade wars, you know, higher tariffs and countries around the world, that certainly has a set of negative consequences both in the United States and abroad. What I don’t know, David, and I think you’re hinting at this, is how much of that are him using a set of policy tools to achieve a different set of objectives that he has? And how much of that is a real ideological commitment to increasing tariffs, to restricting trade in a more dramatic way, apart from real national security stuff like pharmaceutical supply lines?

Chipmaking. There are some areas I think we’re all aware now. We have a national security interest and a national interest in assuring we have domestic capabilities on those or allied capabilities on those, rather than some of our foreign adversaries dominating those. But, you know, the nuts and bolts tariffs and trade stuff is where if it went too far, it could cause a significant disruption, I think, to our economy and the global economy, which David was was outlining.

David Bahnsen I agree so much that it makes me more upset when they use national security as a pretense for not doing a deal illegitimately because it undermines the credibility when there’s a legitimate. National security interest, supply chains on national defense, pharmaceuticals, some of the areas you bring up. I think it’s really important for markets that we have credibility here. And when there is a disingenuous argument that’s made, it undermines the credibility of a more serious and constructive argument that needs to be made.

Tariffs are a big part of my annual white paper because it’s a very tricky thing for anyone with a view of markets to understand right now, because the president has been so effective in the past using it as a negotiating tactic, and it’s difficult to separate ideology from tactics. And so sometimes I wonder if I’m giving him too much benefit of the doubt. And sometimes I wonder if I’m not giving him enough.

I got to say, most of his rhetoric since the election has not been very protectionist or trade restrictive. It’s especially with Canada and Mexico focused on domestic policy objectives crime, drugs, border security, immigration cooperation. And so if he’s going to threaten tariffs, they’re to extract better domestic policy outcomes with allies, neighboring nations. That’s not going to be market impactful. Markets might even like it to the extent that he says things at times like tariffs are going to raise a bunch of revenue.

I just have to hope he doesn’t really believe it. Obviously, tariffs are a cost. They’re paid by American importers and and there’s a cost to it. And it sometimes may fill another policy objective. But, you know, all things being equal, I always say, do we want more trade or less trade? And when people say, well, I don’t know, it depends. I say, well, not if you understand what I mean.

Because all I mean by trade is a buyer and seller voluntarily doing something. And how could the answer ever be that we want less of it? If it’s two people voluntarily doing it, they must have a reason they want to do it. They get deemed to be in their own best interest. And so much of what we import from other countries are unfinished, unprocessed goods that play a part in our own manufacturing of an eventual finished product. And it really does have a big impact on other elements of the American economy.

But again, very candidly, the Trump administration, I think, knows a lot of this. And I am reasonably optimistic that connected to energy policy objectives and tax policy objectives. I think it will be a net constructive part of 2025.

John Coleman The one other brief comment I’d make, Richard, since we haven’t touched on it and I know you want to move on to the next question is another big pillar of the Trump administration that I think could be good for global markets. A little less impactful on U.S. markets is if he actually is able to end the wars in the Middle East and Ukraine.

Obviously, there’s a whole human component to that that obviously outweighs any economic component. So I’m not trying to diminish that or overlook that in any way. But I think a settled global security system where Russia is not actively at war in Ukraine, where the Middle East is more stabilized, would likely be a boon, especially for international markets in Europe. And I think we certainly have a period of time where there seems to be a better chance of those getting settled in a constructive way in the next 5 or 6 months than we’ve had over the last 12 months, so to speak. And I think that if they were settled on the right terms, that that would be a benefit to global markets in addition to the humanitarian benefits, etc., that that would bring.

Richard Cunningham Yeah, I’m glad you brought that up, John. And one other thing, John, I specifically want to ask you about and then David, we’re going to hit on some of your writing from last year as well, because I think there are good things to zoom on and they dovetail into this conversation as John, over kind of the Christmas holidays. You put out a Fox News piece on Pax Americana and just great piece. And I think it’d be worth just kind of given a little 62nd flyover of the thesis and there because so much of that parlays into this conversation we’re having right now about kind of Trump’s next presidency.

John Coleman Yeah. So I’m an American and an American optimist, which is sometimes in short supply these days. And the piece so Pax Americana is a Latin phrase. It’s kind of derived. There was this period called Pax Romana a couple of thousand years ago where under the Roman Empire there was this 200 year period of relative stability. I mean, this is we’re talking about the ancient world. So relative stability under Roman rule, basically under the stability that Rome created.

People have used that phrase Pax, et cetera, to describe various areas of peace. And what we’re in now is year 80. This year, since the end of 1945 of Pax Americana, which is basically the era of peace and stability and global prosperity brought about by the American world order. Post-World War two. After the Nazis were defeated, Imperial Japan was defeated. The Cold War erupted, but the Soviet Union was kept at bay. Communist China was kept at bay.

John Coleman (continued) And there was this just historic rise in prosperity, rising global safety. Rise in free trade, in global travel that persists to this day. It’s the most prosperous, peaceful period in the history of the world right now. Right. And that’s happened under the American security umbrella, an American economic umbrella for 80 years.

People have been commenting on the end of that for some time. And my article argued that actually I personally think the Pax Americana could persist for the rest of this century, that we are underestimating the possibility that this is a continued American century. And the data is there to give you confidence that this American security umbrella and economic umbrella could extend for quite some time.

America is not quite as powerful as it was in the 50s, right after World War Two. We were 50% of world GDP, 80% of the world’s hard currency. But today we’re 4% of global population, 26% of GDP. GDP per capita in Mississippi and Arkansas is greater than almost every country in Europe except for Switzerland. Some of the Nordics, which have oil and gas reserves, Monaco, Japan, cheap per capita, I think is on the order of $30,000. That would be by far the poorest American state.

American strength is incredibly high economically on a relative basis. We’re still the most innovative country in the world by far. If you look at things like artificial intelligence, every dominant firm in artificial intelligence is American based. A lot of the robotics firms are a lot of the biotechnology firms are a lot of the autonomy firms are. We are blessed in that American companies are really dominating the innovation landscape, space travel, etc..

And we still have the strongest military in the history of the world, right? There are adversaries now who have greater equality with us than they have in the past. But I also believe that while America is strong and continuing to accelerate some of those adversaries, it’s easy to overestimate.

I mean, China is set to decline its population by more than 50% by the end of this century because of the inhumane implications of the one child policy that they implemented. There’s weakness in their economy. Their fundamental economy is slowed. And for those of us who believe in the fundamental operating system of representative government and democracy, we also know that restricting people’s political and economic freedoms in the way that communist countries do historically leads them to decline and to collapse. Right.

And so the piece was really about us having optimism in this operating system of representative government that America and its allies operate under. And the idea that America is not peaked, that we aren’t out of the Pax Americana, but that that can actually I think it’s better than likely that that persists in an unexpected way over the next couple of decades.

If we can avoid some of the big existential problems in our own economy like debt, which is certainly a concern, but I think that the chess pieces are there for us to continue to prosper. If we can be responsible with our government and lean into the dynamism that’s created this era of American peace to begin with.

Richard Cunningham Funny who you talk about, John. Just love the sense of optimism and parlays nicely into David. Going over to you to talk about your book that you released last year, full time work in the Meaning of Life. So as we drive this conversation kind of towards a close, I think this will kind of help all of us step back and have that more kind of redemptive eternal world view, if you will. So I want to give you a moment there, and then we’ll go to our final question, gents.

David Bahnsen Yeah, hopefully the underlying premise of the book and the reason that I felt the need to write it can tie into an optimistic conclusion, because there’s times in which I feel that I’ve become very pessimistic about a declining work ethic in American society, both as a man of faith who feels sometimes very discouraged by the church’s teaching and messaging around this subject, and then even the underlying kind of American ethos and DNA that is really rooted in something very pro-industry and pro labor, pro entrepreneurial activity, pro risk taking, that does seem at times to be altering in terms of its overall view of work.

The book is making an argument that God made us from the Garden of Eden to be productive, to be creative, to be innovative. And that part of our status as image bearers of God is that we are to take the raw materials of creation that He made and even that we cannot make out of nothing as he can. We are to make out of something that something being his creation.

We are to go be fruitful and multiply and fill the earth and cultivate it. And this was all said before sin entered the world. So we talk so much about work being a curse instead of understanding that work was a blessing that was made by God as basically the very thing that he was making us to do. And then because of sin, it was tainted with the curse of toil. Sweat of the brow. But nevertheless, the work itself was never presented as the curse.

I look around at our society now, and I believe the most contented people, the those that have the most fulfilling lives, they generally wake up every day with a particular purpose. I believe people achieve the maximum flourishing in their life when they’re living in obedient communion with their creator. But I believe that even apart from other things that can really enhance our quality of life loving marriage, healthy children, an active social life and community with other friends, these are all vitally important for the good life.

But a purpose in waking up every day have something to do and buy something to do. I do not mean those things that are purely recreational and consumptive, but rather that are productive. I think these things are existentially important to the human person. And I very much want to see the church get back to this message.

And I want to see America not abandon this message because, you know, he was referring to China’s declining birth rates. We’ve seen what’s happened in Japan, countries that end up having a declining view of family, end up having a declining view of work. And that becomes a negative feedback loop that you can’t get out of. It is fatal for a society.

So the solution to America’s problems of despair, of hopelessness, oftentimes substance abuse. The solution is purpose in working productive activity. And this is a message I care a great deal about. And I’ve been very encouraged by the response to the book and hopeful that that message will continue to get out there.

Richard Cunningham And that’s a good one. Well, hey, guys, I know we just got a ton of wisdom right there. But I do think it’s worth just as we kind of start off the new year, 2025, just fun to hear about what God’s been teaching you in his Word lately. What you’re thinking about as we take on a new year. And we’ll be quick here. But John, go ahead.

John Coleman Yeah, I actually spent the holiday. I had one other piece come out over the holidays about Jesus because I was reflecting on that a lot over Christmas and it compared Jesus and Emperor Augustus Octavian, who lived at the same time. And it was such an interesting contrast for me to reflect that two of the greatest, you know, 5 or 10 people in history, you know, lived at that same time and were such opposite characters.

Augustus or Octavian was arguably the greatest political leader in history. And that doesn’t mean necessarily he did everything I would want to or he was. People may confuse that. But I mean, the man created the Roman Empire that lasted for hundreds of years. He consolidated power in Rome. He set off this period of time that was the most peaceful in the ancient world. And he did so through his political skill. But he was also ruthless. He was focused on power. He was focused on consolidating, that he was violent.

And then at the same time, you know, any historian of that time would have said, gosh, Augustus, his name is going to reign through history. And what was so fascinating to me is for the average person in the world right now, Augustus, his name is a footnote in a passage about the actual best known person in the world. Right. That in the midst of this incredible political power and consolidation, there was this fragile, tiny baby born in a barn who nobody would have picked out at that time and wouldn’t have picked out for hundreds of years on a global basis other than those who knew him as truly the most influential person ever born. And something more than that for those of us who are believers, right?

God made flesh this miraculous moment in the history of the universe that happened. And just totally for me, it was like a demonstration of how God sometimes totally upends what we think is important and powerful and meaningful and displays it with such contrast that he could send Jesus who was augustus’s opposite at this time, and now this man who otherwise would have been one of the most famous in history, is kind of a footnote, even though he’s so learned about. And over Christmas, you know, we had billions of people around the world singing songs to Jesus Christ, this baby born in a barn. And, you know, it’s academics on campuses who study Augustus.

And I just I mean, I love the way God works sometimes. And it’s still like every time I think about the Christmas story and the redemptive nature of God sacrificing of himself to send his son to us, it’s just overwhelmingly powerful to me. And so I know that’s pretty cliche to talk about right after Christmas, but I can’t help it. Every year I just feel overwhelmed by, you know, the glory of God, the miraculous way in which he works and just the contrast of his values to our sometimes in the way that we think short term.

Richard Cunningham That’s great. Come on. Well, David, take us home.

David Bahnsen Yeah, I love that. That’s really encouraging, John. And edifying and such a neat way to think about all that. You know, I really enjoyed the kind of New Year’s resolution process this year. And and I know a lot of people say, no, you don’t. Need New Years. You know, you can make resolutions at any time, and that’s true. But I also don’t think there’s anything terribly unconstructive about using the calendar year to reflect and so forth.

And 2024 was a wonderful year for me, for my family, for our business, for just a lot of things. And, you know, 24 was a difficult year for a lot of people. But what all of us have in common is that 2025 is a new year. And regardless of how the year prior, the month prior, when when one kind of thinks about goal setting or things about where they want to be spiritually, personally in going into a new year, it’s kind of a clean slate.

And this is a biblical concept. As I was doing my New Year’s resolutions last week, I read Isaiah 43 that talked about forgetting the former things, not dwelling on the past. God is going to do a new thing. And I think that’s the story of our lives. It’s a story of redemption. It’s a story of recreation. Sometimes it’s more profoundly reiterated in our lives than others, but it’s a constant that we’re not captive to anything from the year prior, the month prior, the decade prior, that there’s opportunity to go forward with newness. And that ought to present an excitement and a motivation for us and to be encouraged in what God can do. It’s the entire story of the gospel, God making things new.

Richard Cunningham Man David Bahnsen of the Bahnsen Group. John Coleman Sovereign’s Capital. I don’t think I could think of a better way to start off 2025. Some some dialed market commentary, some good patriotism and just great hope and optimism about a new year. So thank you both for your time today. Friends, thanks for listening. Let’s go have a wonderful year and we’ll catch you next time.

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